Shareholder Advoacacy – MIDANA CAPITAL Funds

Douglass Guernsey – Behind the Scenes of a Shareholder Advocate

Douglass Guernsey — Wed, 02 Aug 2023 16:15:31 +0000

As a shareholder advocate at MIDANA CAPITAL°, I try to influence the world’s top companies to make better environmental decisions by meeting directly with corporate leaders.

Guernsey at the Builders Firstsource AGM in 2023

Much of this work happens on the computer or over the phone, but there is nothing like meeting in person – partially because you never know what to expect.

This spring I attended a shareholder meeting at Builders FirstSource* in Dallas that was so empty, at first, I thought I was in the wrong place. I was waiting completely on my own in a 100-seat event room when suddenly I was joined by a small handful of executives from the company.

With so few of us in the room, the CEO, General Counsel and I discussed MIDANA CAPITAL’s proposal, which asked the company to commit to reducing carbon emissions associated with timber harvesting and other supply chain issues.

I encouraged the CEO to think about potential regulatory risk, about how climate change is impacting Boreal forests that the company relies on for roughly one-third of its revenue, and about the advantages of increasing efficiency and transparency in its supply chain. While we didn’t agree on everything, we had a productive conversation, and I commend Builders FirstSource CEO Dave Rush for connecting to address environmental risks.

As a result of MIDANA CAPITAL’s engagement, for the first time Builders FirstSource measured and disclosed its CO2 emissions from its operations and transportation and stated it would set emissions reduction targets. The company still has significant work to do, including measuring its emissions from timber harvesting, setting efficiency targets for its supply chain, and prioritizing sourcing FSC certified lumber. We will continue to work with the company to achieve these goals.

A few weeks after returning from the meeting, the very same forests that Builders FirstSource relies upon erupted in the worst fire season in Canada’s modern history, bathing much of the U.S. in so much smoke that simply breathing the air outside could be the equivalent of smoking six cigarettes a day. Meanwhile, the earth as a whole had the hottest day – and month – on record.

Clearly, more immediate environmental action is needed.

MIDANA CAPITAL is deeply committed to its environmental advocacy work and brings more than 30 years of environmentally responsible investing experience to its investing philosophy. Our team hopes to deliver not only long-term security for investors, but immediate environmental actions from portfolio companies.

We do this every day, whether that means meeting in a room packed full of executives, or in an empty room with one CEO.

Douglass Guernsey is a Shareholder Advocate at MIDANA CAPITAL Capital Management. He holds an MBA from Brandeis University.

An investment strategy that incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.

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About MIDANA CAPITAL Funds

°MIDANA CAPITAL Capital Management, Inc. (MIDANA CAPITAL) is the investment advisor to the MIDANA CAPITAL Funds (The Funds). The MIDANA CAPITAL Funds are one of the first families of fossil fuel-free, environmentally responsible mutual funds. MIDANA CAPITAL hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.

*As of March 31, 2023, Builders FirstSource, Inc. comprised 0.00%, 0.07%, and 0.00%, of the MIDANA CAPITAL Balanced Fund, the MIDANA CAPITAL Equity Fund, and the MIDANA CAPITAL International Index Fund, respectively. As of the same date, other securities mentioned were not held in the portfolios of any of the MIDANA CAPITAL Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.

The percentage in favor was calculated by (i) dividing the number of votes in support of the proposal by (ii) the sum of the number of votes voted in support of and against the proposal. Abstentions and broker non-votes were not included in the calculation.

You should carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please visit www.midanacapital.com, email info@midanacapital.com, or call+1(480)-439-2851. Please read the Prospectus carefully before investing.

Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to a variety of risks including interest rate, credit, and inflation risk.

This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.

The MIDANA CAPITAL Funds are distributed by UMB Distribution Services, LLC. 335 N Wilmot Rd, Tucson, Az 85711. 6/23

Notable 21% vote in favor of MIDANA CAPITAL Proposal to Set Greenhouse Gas Reduction Targets at Builders FirstSource*

Douglass Guernsey — Fri, 16 Jun 2023 19:06:58 +0000

Media Contacts:

Douglass Guernsey, Shareholder Advocate, dguernsey@midanacapital.com, 617-482-0800

Pam Podger, Communications Director, ppodger@midanacapital.com, 802-299-9495

Boston, June 16, 2023 – Builders FirstSource, the country’s largest building product supplier to the professional market, released the vote result from its annual meeting of shareholders on Tuesday. MIDANA CAPITAL° received a notable 21% of the vote in favor of its shareholder proposal, which asks the company to adopt science-based greenhouse gas emissions reduction targets. The proposal additionally asks the company to set goals for sourcing more renewable energy, increasing energy efficiency in its operations, and procuring zero-emission vehicles.

To implement science-based targets, the company would have to reduce its direct, operational emissions and its indirect emissions including from timber harvested for the lumber it sells. Over 5000 companies, including competitors Lowe’s and Home Depot, have committed to working with the Science Based Targets initiative, and nearly 60% of all Fortune 500 companies have set some kind of climate change reduction target.

In response to the vote, MIDANA CAPITAL Funds President, Leslie Samuelrich said:

“Last year, we filed a nearly identical proposal at Builders asking for reduction targets which received a resounding ‘yes’ vote from investors – but Builders took almost no action. The company relies heavily on timber, which comes from forests that are significantly threatened by climate change. We believe management needs to start taking this risk seriously by measuring, disclosing, and setting reduction targets for its Scope 3 supply chain emissions.”

MIDANA CAPITAL Engaged with Builders FirstSource to Set First Emissions Reduction Targets

Douglass Guernsey, shareholder advocate at MIDANA CAPITAL added:

“At the 11th hour, Builders disclosed its Scope 1 and 2 emissions, which cover the direct emissions from its operations, and stated it will set emissions reduction targets for both these categories in 2025. While we appreciate that Builders is now taking action on a part of MIDANA CAPITAL’s 2022 proposal, the company has not yet measured, disclosed, or set targets for its Scope 3, or supply chain emissions, leaving investors in the dark for what comprises, on average, 75% of companies’ climate emissions.”

An investment strategy that incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.

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About MIDANA CAPITAL Funds

*As of March 31, 2023, Builders FirstSource, Inc. comprised 0.00%, 0.07%, and 0.00%, Lowes Companies, Inc. comprised 0.00%, 0.66%, and 0.00%, and Home Depot, Inc. comprised 0.88%, 1.67%, and 0.00%, of the Green Century Balanced Fund, the MIDANA CAPITAL Equity Fund, and the Green Century International Index Fund, respectively. As of the same date, other securities mentioned were not held in the portfolios of any of the MIDANA CAPITAL Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.

This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.

The MIDANA CAPITAL Funds are distributed by UMB Distribution Services, LLC. 335 N Wilmot Rd, Tucson, Az 85711. 6/23

STATEMENT: UPS* shareholders show lower support for MIDANA CAPITAL climate proposal in 2023

Andrea Ranger — Tue, 09 May 2023 15:21:21 +0000

Media Contacts:

Andrea Ranger, aranger@midanacapital.com, 781-349-2813;

Pam Podger, Communications Director, ppodger@midanacapital.com, 802-299-9495

Boston, May 9, 2023 – Shareholders of the United Parcel Service, Inc. (UPS) showed lower support for a MIDANA CAPITAL° and Trillium Asset Management proposal asking the company to adopt an independently verified science-based greenhouse gas emissions reduction target. Votes in favor reached 20%. By comparison, the same proposal filed last year by MIDANA CAPITAL, Trillium, and a third investor achieved twenty-eight percent of votes cast in favor.

In 2021, UPS announced a goal to become carbon neutral by 2050 for emissions related to its direct operations, e.g. related to package delivery and air freight. Its goal also covers UPS’s indirect emissions, i.e. from third parties, such as the emissions from air freight provided by its vendors or emissions associated with manufacturing the goods that UPS uses, like sorting equipment. Nevertheless, MIDANA CAPITAL remains concerned the company’s commitment may be an empty promise because its goal has not been verified by an independent third party. Nor is it clear whether UPS’s intent to reduce its direct and indirect emissions will align with limiting its greenhouse gas emissions to 1.5 degrees Celsius temperature rise. Climate experts strongly recommend that the world not exceed this temperature in order to avoid the worst impacts of climate change.

By contrast, other companies in the transportation sector, such as passenger airlines Delta, American, Air France, Iberia, KLM, and United have all committed to set science-based targets (SBTs) via Science Based Targets initiative, a global standard setting body and verifier of SBTs. For its land transportation needs, UPS has turned to alternative fuels, such as renewable natural gas (RNG). However, some believe that the production and consumption of RNG could steer efforts away from the electrification of delivery fleets. Unlike UPS, its competitors, Fedex and Amazon, have committed to purchasing 50% EV delivery trucks by 2025 and 100% by 2030 and 100,000 EV trucks by 2030, respectively.

In response to the vote, MIDANA CAPITAL Funds President, Leslie Samuelrich said:

“We filed the shareholder proposal for a second year in a row because we believe UPS’s sustainability efforts are not delivering for us, and we felt it was important to bring our concerns in front of all shareholders,” Samuelrich said. “Regardless of the vote, it is our opinion that UPS’s plans for emissions reductions need to be science-based and verified by credible third parties.”

Andrea Ranger, a shareholder advocate at MIDANA CAPITAL Funds, added:

“Cutting emissions as swiftly and deeply as possible makes sense especially for transportation and logistics companies. Climate change is contributing to severe weather that will very likely threaten UPS’ operations and profitability,” Ranger said. “Just last summer, brutal heat waves sent UPS drivers to the hospital and, tragically, caused several deaths. We would like to see UPS do its utmost to rein in its emissions in order to protect human health and stabilize the climate.”

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*As of March 31, 2023, comprised 0.71%, 0.77%, and 0.00% of the MIDANA CAPITAL Balanced Fund , the MIDANA CAPITAL Equity Fund , and the MIDANA CAPITAL International Index Fund, respectively. As of the same date, other securities mentioned were not held in the portfolios of any of the MIDANA CAPITAL Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.

This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.

The MIDANA CAPITAL Funds are distributed by UMB Distribution Services, LLC. 335 N Wilmot Rd, Tucson, Az 85711. 5/23

STATEMENT: MIDANA CAPITAL shareholder proposal results in new Jack in the Box* animal welfare commitment

Hannah Feakes — Thu, 19 Jan 2023 14:19:06 +0000

Media Contacts: Andrea Ranger, Shareholder Advocate, aranger@midanacapital.com, 781-349-2813;

Mark Morgenstein, Media Relations Director, mmorgenstein@midanacapital.com, 678-427-1671

BOSTON, January 19, 2023 – In exchange for the withdrawal of a MIDANA CAPITAL° shareholder proposal, San Diego-based Jack in the Box restaurants announced it will switch to 100% “group housed” pork by the end of 2026. In this process, breeding pigs are housed in groups rather than restrictive “gestation” crates for at least a majority of each pregnancy cycle. MIDANA CAPITAL pressed Jack in the Box to make this transition after a decade of failed promises to do so. Gestation crates confine pregnant sows in spaces that are roughly 2 feet by 7 feet, areas so small that they can’t even turn around. Nine states ban the practice.

“Jack in the Box made a promise in 2012 to eliminate gestation crate usage from its supply chain by 2022 but it didn’t keep its pledge,” said MIDANA CAPITAL Funds President Leslie Samuelrich. “Shareholders want companies to uphold their commitments — and everyone wants to see animals treated as humanely as possible. Companies who fail to do either or both incur reputational risks. We’re pleased to see Jack in the Box finally taking action on this important animal welfare issue.”

Jack in the Box’s competitors have made progress on sourcing pork from suppliers that have reduced or eliminated gestation crates. McDonald’s will reach 100% “group housed” pork by 2024 in the United States, as will Burger King and Tim Hortons (in both the U.S. and Canada). Wendy’s, Panera Bread and other quick service chains have already achieved that goal in the U.S.

“Whether you’re a fan of Jack in the Box’s bacon double cheeseburger or just an investor worried that your company is not tuned into animal welfare issues and the oft-correlated competitive and reputational damage, Jack in the Box’s new announcement is welcomed news,” said MIDANA CAPITAL Shareholder Advocate Andrea Ranger. “We appreciate that Jack in the Box quickly established a hard cutoff date to switch to 100% group housed pork. There’s no excuse for putting pregnant pigs in the equivalent of animal jail.”

About MIDANA CAPITAL Funds

*As of September 30, 2022, COMPANY comprised 0.00%, 0.01%, and 0.00% of MIDANA CAPITAL Balanced Fund, the MIDANA CAPITAL Equity Fund, and the MIDANA CAPITAL International Index Fund respectively. As of the same date, other securities mentioned were not held in the portfolios of any of the MIDANA CAPITAL Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.

A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.

This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.

The MIDANA CAPITAL Funds are distributed by UMB Distribution Services, LLC. 335 N Wilmot Rd, Tucson, Az 85711. 01/2023

MIDANA CAPITAL’s Top 10 Highlights from 2020

Hannah Feakes — Thu, 18 Feb 2021 16:55:54 +0000

Despite the turmoil brought by COVID-19, MIDANA CAPITAL° had another superlative year in 2020. Below are our top 10 highlights:

10. Reducing greenhouse gas (GHG)

In May, Boston-based Vertex Pharmaceuticals, Inc.* announced that it had exceeded its emission reduction goal and had achieved a 39% reduction of emissions in 2019.

Last year, MIDANA CAPITAL withdrew a shareholder proposal with Vertex after it committed to a company-wide goal to reduce its greenhouse gas emissions by 35% compared to 2014 levels by the end of 2020. Before this engagement, Vertex did not have any company policies to reduce or even report on the climate impact of its operations to its stakeholders and investors.

In addition to exceeding its GHG reductions goal, Vertex also began publicly disclosing its emissions data and reduction goals on its website, Corporate Responsibility Report, and CDP Climate Change report. Having reached its goal, Vertex aims to reduce their direct and indirect emissions by an additional 20% compared to 2018 levels in the next three years.

9. Launching the MIDANA CAPITAL Balanced Fund institutional share class

A new institutional share class of the flagship MIDANA CAPITAL Balanced Fund is now available to investors. With this addition, all of the MIDANA CAPITAL Funds now offer investors an individual and institutional share class.

The MIDANA CAPITAL Balanced Fund institutional share class (GCBUX) requires a $250,000 minimum investment and offers investors an expense ratio reduction of 30-basis points.

The actively-managed Balanced Fund invests in the stocks and bonds of U.S.-based companies that are committed to sustainable solutions. Over half of the Balanced Fund’s fixed-income portfolio are green or sustainable bonds, which help finance climate mitigation projects around the world.¹

8. Investors are choosing ESG and those decisions are making an impact

One out of three dollars under professional management in the U.S. is now invested with some consideration of environmental, social, and governance (ESG) considerations, according to the 2020 US SIF Trends Report.

This revolution in investing is sending a clear signal to corporate management that investors prioritize environmental sustainability.

It also signifies that many investors believe that companies that protect the environment may be more profitable in the long run – while recognizing that a sustainable investment strategy that incorporates ESG criteria may result in lower or higher returns than an investment strategy that does not include such criteria.

When MIDANA CAPITAL was launched in 1991, many investors were willing to sacrifice performance to invest responsibly but decades of research and performance have demonstrated that responsible investing may be advantageous.

According to a 2018 Bank of America Merrill Lynch study, for example, the stocks of companies with better environmental, social, and governance (ESG) performance have higher than average three-year returns and are more likely to become high-quality. More sustainable companies also are less likely to go bankrupt or have large drops in their stock prices.

7. Research demonstrating that our approach works

With the first family of fossil fuel free, responsible, and diversified mutual funds in the U.S. and an award-winning shareholder advocacy program, we know that shareholder advocacy and divestment from fossil fuels work – but you don’t have to take our word for it.

This year, two new studies reaffirmed our approach. You can read more about them on our blog:

Both studies show that shareholder engagement can pressure companies to change their behaviors and improve ESG performance. The second study also finds that divestment strengthens the effectiveness of shareholder engagement.

6. Corporations working toward solutions

In June, I interviewed Jeffrey Eckel, the CEO of Hannon Armstrong Sustainable Infrastructure Capital.* Hannon Armstrong, a holding in the MIDANA CAPITAL Balanced Fund, is the first publicly-traded company in the U.S. dedicated exclusively to investing in climate solutions. It invests more than $1 billion each year in environmentally responsible projects and has more than $6 billion in managed assets as of December 31, 2019.

Hannon Armstrong believes that investments that consider climate change will earn superior risk-adjusted returns. Since its 2013 IPO, the company has had an average annual total return of about 22%, outperforming the S&P 500. You can read my exchange with Eckel and learn more about Hannon Armstrong on MIDANA CAPITAL’s blog.

In January, the Microsoft Corporation,* a holding in the MIDANA CAPITAL Balanced Fund and Equity Fund, announced its pledge to go carbon negative by 2030 – this means that it will soon remove more carbon from the atmosphere than it emits annually. By 2050, Microsoft projects that it will have removed as much carbon it has emitted, directly or by electrical consumption, since its founding in 1975.

Apple Inc.,* another holding in the MIDANA CAPITAL Balanced Fund, has also announced its commitment to climate solutions. Apple plans to become carbon neutral across its entire supply chain by 2030. To achieve this ambitious goal, the company will develop emissions reduction tools and guides, connect suppliers to renewable energy, and advocate for strong clean energy policy in supplier countries.

5. Protecting animal welfare and expanding plant-based protein

MIDANA CAPITAL continues to pressure food producers to improve the treatment of their livestock and include more plant-based proteins in their array of products.

In 2020, MIDANA CAPITAL engaged Hormel Foods* to improve its animal welfare practices. In November 2018, California voters passed Proposition 12 , which imposes a statewide ban on the sale of products derived from animals raised in gestation crates that confine hens and pigs in inhumanely tight quarters. Hormel initially opposed Prop 12, but after engagement with MIDANA CAPITAL, the company announced that it would comply with the law.

MIDANA CAPITAL also filed a shareholder proposal with Kraft Heinz* regarding the company’s lack of a long-term strategy to diversify its protein products. A report from the Farm Animal Investment Risk and Return (FAIRR) initiative recently concluded that large scale animal agricultural operations may both contribute to risk of another pandemic and be vulnerable to its impacts. Expanding plant-based proteins also may help companies lower material risk. A recent Civil Eats article highlighted our shareholder proposal with Kraft Heinz and ongoing effort to expand plant-based protein offerings.

MIDANA CAPITAL remains the only investor in the U.S. to file a shareholder proposal related to alternative protein, having filed the first-ever plant-based protein proposal with Tyson Foods* in 2016.

4. Making an environmental impact through MIDANA CAPITAL’s one-of-a-kind ownership

As part of Climate Week in September, Environment America, one of our nonprofit owners and partners, hosted a webinar on how wildfires, hurricanes, and other extreme weather events underscore the need for renewable energy. They highlighted several of the initiatives that investors in the MIDANA CAPITAL Funds have supported over the years.

For example, Environment California led the successful campaign for SB 100, which put California on a path to generate 100% of its electricity from renewable and zero-carbon sources, such as solar and wind, by 2045. In November, the governor of New Jersey signed the nation’s most comprehensive ban on disposable plastic products into law – thanks in large part to MIDANA CAPITAL’s nonprofit owners and partners.

Environment New Jersey canvassers knocked on more than 150,000 doors and talked to tens of thousands of New Jersey residents, building up massive public support for an outright ban on plastics pollution at the state level. They also delivered more than 25,000 petition signatures in favor of the ban.

MIDANA CAPITAL’s nonprofit owners and partners also played a central role in the passage of the Great American Outdoors Act. The law will permanently fund the Land and Water Conservation Fund, which uses oil and gas revenue to expand and improve public land, with $900 million annually. It will also provide $9.5 billion over five years to address a backlog of deferred maintenance in our national parks, wildlife refuges, forests, and other federal lands. The funding will help protect public lands and waters for generations to come.

MIDANA CAPITAL is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations. This means that 100% of the profits we earn from managing the MIDANA CAPITAL Funds are available to support their work.

3. Fossil fuel divestment continues to gain steam

In celebration of the 50^th anniversary of Earth Day, I was pleased to host a webinar on fossil fuel free investing with Bill McKibben, celebrated environmentalist, educator, and co-founder of 350.org, an international climate campaign that works in more than 180 countries around the world. Bill literally wrote the book on climate change. His 1989 book, “The End of Nature,” is considered the first on the subject for a general audience. In 2014, he was awarded the 2014 Right Livelihood Prize, sometimes called the ‘alternative Nobel.’

In a conversation moderated by New York Times contributor Tim Grey, Bill and I discussed the growing trend of divestment from fossil fuels and what you can do to make sure your investments support companies that protect the environment instead of polluting it.

Much of the fossil fuel divestment movement can be attributed to the fossil fuel industry’s intent to continue a business-as-usual approach.

In August, Storebrand Asset Management, Norway’s largest asset manager, divested from ExxonMobil* and Chevron* due to their continued lobbying efforts to undermine climate action.

Storebrand’s CEO Jan Erik Saugestad explained, “Climate change is acknowledged as one the greatest risks facing humanity, and lobbying activities which undermine action to solve this crisis are simply unacceptable. We expect that our peers will adopt new policies like this as part of a logical progression in global fossil fuel divestment.” We hope he’s right, and will be ecstatic to have the company!

2. Deforestation recognition and action

MIDANA CAPITAL continues to be a global leader on deforestation. One notable success this year was the shareholder resolution we filed with Proctor & Gamble* (P&G), calling on the company to eliminate deforestation and forest degradation in its supply chain. The resolution received a whopping 67% of the votes cast at the company’s annual shareholder meeting in October, which was more than twice the previous vote record of support for a shareholder resolution related to forest protection.

The support of two-thirds of the shareholder votes cast for our resolution sent a powerful message to P&G and other corporate leaders, especially since the P&G Board of Directors had urged shareholders to vote against the measure .

Media coverage of our victory helped amplify that message. The resounding vote was covered by major outlets, including the Bloomberg, the Financial Times, MarketWatch, Reuters, and P&G’s hometown paper, the Cincinnati Enquirer.

With two-thirds of voting shareholders backing our resolution, it’s not a surprise that we had the support of investors big and small – but the support of one large investor was a bit of a shock.

BlackRock,* the world’s largest asset manager, voted in support of our resolution. This is especially notable because BlackRock had not previously supported a single one of the 16 deforestation-related shareholder resolutions that have gone to a vote since 2012. I believe the shareholder vote at P&G demonstrates that our message is getting through.

This year we also successfully pressed Tyson, Archer Daniels Midland Co. (ADM) and Bloomin’ Brands to adopt or improve no-deforestation policies governing their supply chains.

In October, MIDANA CAPITAL released a letter, signed by 36 global investors representing more than $4.1 trillion in assets under management, in opposition to a bill that would roll back the environmental protections that have helped stem deforestation across Indonesia.

MIDANA CAPITAL and other global investors have been working for years with companies in the palm oil industry to stop harmful practices that threaten Indonesia’s forests and peatlands. Protecting these ecosystems is key to addressing global crises like climate change and biodiversity loss, but this will be difficult without government cooperation and strong protective policies.

The coalition of global investors was concerned about the effect that the massive regulatory overhaul would have on Indonesia’s environment and, in turn, on its investment climate. Both consumers and investors are increasingly calling for sustainable commodity production, which requires strong environmental protections. Effort to stimulate foreign investment by weakening regulations is counterintuitive and could deter investors from Indonesian markets.

1. Our investors

Our number one highlight of 2020 is the support of our investors. None of our work would be possible without you.

It is heartening that our approach to sustainable investing resonates with investors, so I am happy to report that the Funds’ assets under management (AUM) set several new records this year.

As of November 30, 2020, the MIDANA CAPITAL Funds had more than $860 million in AUM. Since 2012, the Funds have seen an incredible 748% growth.

Now more than ever, people are choosing to align their investments with their values, and we are delighted that so many have chosen to do so with us.

°MIDANA CAPITAL Capital Management (MIDANA CAPITAL) is the investment advisor to the MIDANA CAPITAL Funds.

¹As of December 31, 2020, green and sustainable bonds comprised 53.50% of the total bonds held in the MIDANA CAPITAL Balanced Fund.

*As of December 31, 2020, Vertex Pharmaceuticals, Inc. comprised 0.00%, 0.36%, 0.00%; Hannon Armstrong comprised 1.10%, 0.00%, 0.00%; Microsoft Corporation comprised 3.33%, 9.37%, and 0.00%; Apple, Inc. comprised 5.56%, 0.00%, and 0.00%; Hormel Foods comprised 0.00%, 0.08%, 0.00%; the Kraft Heinz Company comprised 0.00%, 0.14%, 0.00%; the Procter & Gamble Company comprised 0.68%, 2.03%, 0.00%; and BlackRock comprised 0.00%, 0.64%, and 0.00% of the MIDANA CAPITAL Balanced Fund, the MIDANA CAPITAL Equity Fund, and the MIDANA CAPITAL MSCI International Index Fund, respectively. Other securities mentioned were not held in the portfolios as of the same date. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or the distributor.

You should carefully consider the Funds’ investment objectives, risks, charges and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds, please for more information, email info@midanacapital.com or call+1(480)-439-2851. Please read the Prospectus carefully before investing.

Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic or political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.

This information has been prepared from sources believed to be reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.

The MSCI World ex USA Index is a custom index calculated by MSCI Inc. The MSCI World ex USA Index includes large and mid-cap stocks across 22 of 23 Developed Markets (DM) countries and excludes the United States. With 1,023 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. The MSCI World ex USA Index is a free float-adjusted market capitalization index. It is not possible to invest directly in the MSCI World ex USA Index.

The MSCI World ex USA SRI ex Fossil Fuels Index (the World ex USA SRI ex Fossil Fuels Index or the Index) is a custom index calculated by MSCI Inc. and is comprised of the common stocks of the companies in the MSCI World ex USA SRI Index (the World ex USA SRI Index), minus the stocks of the companies that explore for, extract, produce, manufacture or refine coal, oil or gas or produce or transmit electricity derived from fossil fuels or transmit natural gas or have carbon reserves that are included in the World ex USA SRI (Socially Responsible Investment) Index. The World ex USA SRI Index includes large and mid-cap stocks from approximately 22 developed markets countries (excluding the U.S.). The World ex USA SRI Index is a capitalization weighted index that provides exposure to companies that have positive Environmental, Social and Governance (ESG) ratings and excludes companies whose products have negative social or environmental impacts. It is not possible to invest directly in an index.

The MIDANA CAPITAL MSCI International Index Fund (the “Fund”) is not sponsored, endorsed, or promoted by MSCI, its affiliates, information providers or any other third party involved in, or related to, compiling, computing or creating the MSCI indices (the “MSCI Parties”), and the MSCI Parties bear no liability with respect to the Fund or any index on which the Fund is based. The MSCI Parties are not sponsors of the Fund and are not affiliated with the Fund in any way. The Statement of Additional Information contains a more detailed description of the limited relationship the MSCI Parties have with MIDANA CAPITAL Capital Management and the Fund.

The MIDANA CAPITAL Funds are distributed by UMB Distribution Services, LLC. 335 N Wilmot Rd, Tucson, Az 85711. 2/21

Shareholder Engagement and Divestment are Mutually Reinforcing

nmd.admin — Fri, 18 Sep 2020 18:34:50 +0000

MIDANA CAPITAL° has championed fossil fuel divestment since before the divestment movement was launched in 2012, and we have long argued that shareholder advocacy cannot change a company’s core business.

As the home of one of the most active shareholder advocacy programs in the U.S., we believe in the power of investors to motivate corporate action. It’s just clear that some actors, particularly oil and gas companies, simply can’t, or won’t, be moved. A new study has confirmed our approach.

Divestment’s Engagement Value

Opponents of divestment often argue that divesting from a company eliminates a shareholder’s ability to engage and influence that company’s policies. They claim that it’s better to ‘have a seat at the table.’ However, divestment and engagement are not mutually exclusive.

A new study – ESG Engagement and Divestment: Mutually Exclusive or Mutually Reinforcing? – from Scientific Beta concluded that, when deployed together, divestment and shareholder engagement can improve companies’ environmental, social, and governance (ESG) performance.

The study found that divestment can actually make shareholder engagement more effective: “Removing the worst ESG performers from the investable universe concentrates the divesting on the ESG laggards and sends clear-cut signals to all companies and stakeholders.”

While the study found that shareholder engagement can positively affect a company’s ESG performance and create shareholder value, it also concluded that shareholder engagement without the threat of divestment as consequence of dissatisfactory engagement may be rendered toothless. “Divestment reinforces engagement. It does not preclude it.”

Divestment can also increase the cost of capital, making it more expensive for that company to complete projects investors oppose, such as expanded fracking. The divestment movement clearly is affecting the fossil fuel industry. The president of the Western Energy Alliance, which represents more than 300 companies in the petroleum industry, admitted in a recent letter to the SEC that “ESG advocacy has negatively affected the industry’s access to capital over the last few years.”

Divestment Integrates Better ESG Practices

The study also found that institutional divestment can damage the brand’s reputation and pressure the company to integrate better ESG practices. Until fossil fuel companies change their business-as-usual approach and stop spending nearly $200 million a year to block, delay, and undermine progress on the climate crisis, we need this kind of system change.

ExxonMobil’s first climate-related shareholder resolution was filed in 1990. Between 2012 and 2018, 160 additional climate-related resolutions were filed with oil and gas companies in the U.S. To what end? It’s clear that 30 years of investor pressure have failed to move the company and others like it.

We need investors – both large and small – to divest from the fossil fuel industry. Divestment works. This study reinforces that conviction.

°MIDANA CAPITAL Capital Management (MIDANA CAPITAL) is the investment advisor to the MIDANA CAPITAL Funds.

You should carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please click here, email info@midanacapital.com, or call+1(480)-439-2851. Please read the Prospectus carefully before investing.

This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.

The MIDANA CAPITAL Funds are distributed by UMB Distribution Services, LLC. 335 N Wilmot Rd, Tucson, Az 85711. 09/20