Investment Strategy

The Fund seeks long-term capital appreciation by investing in the common stocks of high-quality, durable-growth, large capitalization companies that the Fund’s portfolio managers believe incorporate sustainability into their overall strategy. The Fund’s portfolio managers define “high-quality” companies as those businesses that have demonstrated durable growth, operate in large growth markets with high barriers to entry, and have strong competitive advantages.

Why Madison Sustainable Equity Fund

  • Intensive fundamental research.
  • Proprietary sustainable analysis framework.
  • Believe quality plus sustainability leads to long-term value for all stakeholders.
  • High-conviction portfolio of 30-50 holdings.

Key Highlights (As of Friday July 19, 2024)

Class Y

Class I

NAV

10.94

10.94

Change($)

-0.06

-0.05

YTD(%)

14.20%

14.32%

Ticker

MFSYX

MFSIX

Inception Date

12/31/21

12/31/21

Expense Ratio

0.91

0.81

$905.0B

weighted average market cap1

29

Average years of PM industry experience

34

holdings1

$10.1M

net assets1

Commentary

Equity markets have been strong this year despite geopolitical concerns, U.S. election rhetoric, high interest rates, a slowing economy, and above-target inflation. As we enter the back half of the year, we are approaching equities with caution. The S&P 500 is up 15.3% year-to-date and up approximately 33% since the lows in late October. Valuations appear stretched, with the S&P 500 forward price-earnings ratio at 21x. Looking below the surface and removing the top ten stocks by market cap, the remaining 490 companies are trading at 18x.

Performance

Average annual returns, %

Portfolio Highlights

Top Ten Fund Holdings (As of 06/30/24)

MICROSOFT CORP

8.80%

VISA INC CLASS A SHARES

4.27%

ALPHABET INC CL C

6.29%

COSTCO WHOLESALE CORP

4.17%

ELI LILLY + CO

5.76%

LINDE PLC

3.28%

APPLE INC

4.67%

ORACLE CORP

3.26%

UNITEDHEALTH GROUP INC

4.39%

DANAHER CORP

2.97%

The Morningstar Rating™ for funds, or “star rating”, is calculated for funds with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics, and may not indicate positive performance.  Ratings may vary by share class.

1 Data as of March 31, 2024.

2 The weighted average market cap represents the average size of the companies in which the Fund invests. Market capitalization is calculated by the number of a company’s shares outstanding times its price per share.

Performance quoted represents past performance. Past performance does not guarantee and is not a reliable indicator of future results. Investment returns and principal values will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than that shown.

Net Asset Value (NAV) is the amount per share you would receive if you sold shares that day. Change refers to the amount (in dollar terms) that the value of the share price changed from the previous day’s close of trading. The Year-to-date (YTD) return is the net change in the value of the fund’s share price (in percentage terms) at NAV from January 1 to the current date shown above. Expense ratios are as of each fund’s most recent prospectus.  For more detailed information on performance, including returns for the most recent month-end or quarter-end, view Performance.

Investment returns assume all distributions are reinvested and reflect all applicable fees and expenses. Benchmark index returns assume all distributions are reinvested. Indexes are unmanaged and, therefore, have no fees. Investors cannot invest directly in an index.

An investment in the Fund is subject to risk and there can be no assurance the Fund will achieve its investment objective.  The risks associated with an investment in the Fund can increase during times of significant market volatility. The principal risks of investing in the Fund include equity risk, large cap risk, management risk, sustainable investment risk, foreign security and emerging market risk, depository receipt risk, growth and value risks, mid cap risks, capital gains realization risks to taxpaying shareholders, and market risk.

The Fund follows a sustainable investment approach by investing in companies that embed sustainability in their overall strategy and demonstrate adherence to sustainable business practices. In pursuing such a strategy, the Fund may forgo opportunities to gain exposure to certain companies, industries or sectors, and may be overweight or underweight in certain industries or sectors relative to its benchmark index, which may cause the Fund’s performance to be more or less sensitive to developments affecting those sectors. In addition, since sustainable investing takes into consideration factors beyond traditional financial analysis, the investment opportunities for the Fund may be limited at times. Sustainability related information provided by issuers and third parties, upon which the portfolio managers may rely, continues to develop, and may be incomplete, inaccurate, use different methodologies, or be applied differently across companies and industries.

Madison’s criteria for selecting sustainable investments will vary by industry and company. Madison uses a proprietary scoring system to assign an “above average,” “average,” or “below average” rating to each company, and monitors these ratings across the portfolio. Madison will only invest in securities it determines are “average” or “above average.”

Madison’s framework of sustainable investing will vary from other managers. Further, the regulatory landscape for sustainable investing in the United States is still developing and future rules and regulations may require the Fund to modify or alter its investment process. Similarly, government policies incentivizing companies to engage in sustainable practices may fall out of favor, which could potentially limit the Fund’s investment universe. There is also a risk that the companies identified through the investment process may fail to adhere to sustainable business practices, which may result in the Fund selling a security when it might otherwise be disadvantageous to do so. More detailed information regarding these risks can be found in the Fund’s prospectus.

The S&P 500® Index is a large-cap market index which measures the performance of a representative sample of 500 leading companies in leading industries in the U.S.

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