Genocide Screens at Fidelity Funds Gain Support
Proposals seeking to ensure that Fidelity Investments screens out holdings in companies that contribute to genocide lost in a second round of voting April 16, but again drew an unusual amount of shareholder support.
High Votes
A month after more than 25 percent of the holders at two other Fidelity mutual funds returned “yes” votes on the same resolution, ballots cast in favor at four more funds fell short of a majority but showed strong backing for the proposal. As in March, several of the funds’ votes failed to reach the required 50 percent quorum level and were adjourned for another round of voting on May 14.
Fidelity has advised shareholders to vote against the genocide-free investment proposal, submitted by an activist group called Investors Against Genocide.
Proposals on the four Fidelity funds that achieved a quorum this month again each captured about a quarter of their shareholders’ support. For the Mid-Cap Stock Fund, with $12.3 billion in assets under management as of March 31, according to Fidelity’s website, the activists’ proposal received 25 percent of its vote; at the $4.4 billion Canada Fund it garnered 23 percent; at the $12.5 billion International Discovery fund, 21 percent; and for the $8.5 billion Overseas fund, 22 percent. A Fidelity spokesman confirmed the voting percentages. Shareholder proposals must gain a majority of shareholder votes to win approval.
Some of the Fidelity funds that will vote again in May because they didn’t reach a quorum in one or both of the last two months’ voting are larger in terms of assets and number of shareholders. They are the Contrafund, with $71.5 billion in assets as of March 31, according to the Fidelity website; the Diversified International fund, with $50.3 billion; the Magellan Fund, $38.4 billion; the Low-Priced Stock fund, $30.5 billion; and the Puritan fund, $22.5 billion. Three—the Contrafund, the Low-Priced Stock Fund and the Puritan fund—were rolled over for lack of quorum from March to the April 16 voting. An additional six funds deferred from earlier voting will also be polled for the May meeting.
'Productive Discussion'
Eric Cohen, chair of Investors Against Genocide, a nonprofit organization created to persuade mutual fund firms to avoid complicity in genocide through their investing, said he was heartened by the discussion and more active participation by Fidelity managers and trustees at the April 16 meeting.
“It felt different to me,” Cohen told RiskMetrics’ Social Issues Service. “We had what felt like a productive discussion, which was missing from the last meeting. Many trustees said they wanted to listen to shareholders. Trustee Cornelia Small said multiple times that the board was discussing and grappling with the issue.”
Investors Against Genocide is changing its tack slightly as ordinary Fidelity mutual fund investors become more familiar with its unprecedented shareholder campaign. At this month’s meeting Cohen asked the Fidelity Board of Trustees to shift its opposing stance on the proxy ballot to a neutral one. “…Fidelity has actively opposed it and is using its control of the machinery of proxy balloting to tilt the vote against the proposal,” he said in a press release after the shareholders meeting in Boston.
Cohen said Fidelity officials at the April meeting didn’t deny a connection between the controversial Chinese oil company Petrochina, some of whose H shares it holds in the Hong Kong stock market, and indirect funding of genocide in Darfur through Petrochina’s connections to the Sudanese government. They also didn’t argue that Petrochina holdings were necessary for Fidelity to earn high returns for its investors, he said.
Instead, Fidelity officials focused on the legality of their funds’ right to hold Petrochina shares or any others, and the importance of not sacrificing to a shareholder proposal the flexibility among assets that the company must maintain as it makes investment choices, Cohen said.
“None of the funds in the last two meetings where there have been [shareholder] votes held Petrochina or other stocks being talked about” in connection with genocide, Ben Loporchia, a spokesman for Fidelity, told RiskMetrics’ Social Issues Service.
New Approach
The genocide-free investing proxy campaign adopts a new approach to socially responsible investing, one that targets several widely held U.S. mutual funds’ stockholdings rather than companies themselves. The strength of the backing that the genocide-free investing proposal has received so far on six of 21 Fidelity fund ballots where it’s been placed means the resolution will be allowed to reappear on at least those six funds’ proxy ballots again next year.
The proposal also has been filed at other Fidelity mutual funds and for funds managed by other large investment companies whose shareholder meetings have yet to be scheduled, including T. Rowe Price, Barclays, Vanguard and Franklin Templeton.
In March’s voting, the two Fidelity funds that achieved a quorum were the Capital & Income Portfolio fund, with $9.3 billion in assets under management as of March 31, according to Fidelity, and votes from 27 percent of its shareholders; and the Select Health Care Portfolio fund, which manages $1.8 billion in assets.
In response to questions from Investors Against Genocide, Fidelity provided more detailed preliminary information about the breakdown of votes recorded as being against the proposal for these two funds. Cohen said the numbers showed that abstentions and socalled broker non-votes together could comprise more than 30 percent of votes tallied as opposing their proposal.
Although that method of proxy vote counting is typical for U.S. public companies, it could prove to be “an empowering message” to individual Fidelity mutual fund holders once they see what final proportion of “against” votes were in fact cast actively in support of Fidelity’s opposition to the resolution, said Susan Morgan, director of communications for the proponent group.
—Jane Meacham
Proposals seeking to ensure that Fidelity Investments screens out holdings in companies that contribute to genocide lost in a second round of voting April 16, but again drew an unusual amount of shareholder support.
High Votes
A month after more than 25 percent of the holders at two other Fidelity mutual funds returned “yes” votes on the same resolution, ballots cast in favor at four more funds fell short of a majority but showed strong backing for the proposal. As in March, several of the funds’ votes failed to reach the required 50 percent quorum level and were adjourned for another round of voting on May 14.
Fidelity has advised shareholders to vote against the genocide-free investment proposal, submitted by an activist group called Investors Against Genocide.
Proposals on the four Fidelity funds that achieved a quorum this month again each captured about a quarter of their shareholders’ support. For the Mid-Cap Stock Fund, with $12.3 billion in assets under management as of March 31, according to Fidelity’s website, the activists’ proposal received 25 percent of its vote; at the $4.4 billion Canada Fund it garnered 23 percent; at the $12.5 billion International Discovery fund, 21 percent; and for the $8.5 billion Overseas fund, 22 percent. A Fidelity spokesman confirmed the voting percentages. Shareholder proposals must gain a majority of shareholder votes to win approval.
Some of the Fidelity funds that will vote again in May because they didn’t reach a quorum in one or both of the last two months’ voting are larger in terms of assets and number of shareholders. They are the Contrafund, with $71.5 billion in assets as of March 31, according to the Fidelity website; the Diversified International fund, with $50.3 billion; the Magellan Fund, $38.4 billion; the Low-Priced Stock fund, $30.5 billion; and the Puritan fund, $22.5 billion. Three—the Contrafund, the Low-Priced Stock Fund and the Puritan fund—were rolled over for lack of quorum from March to the April 16 voting. An additional six funds deferred from earlier voting will also be polled for the May meeting.
'Productive Discussion'
Eric Cohen, chair of Investors Against Genocide, a nonprofit organization created to persuade mutual fund firms to avoid complicity in genocide through their investing, said he was heartened by the discussion and more active participation by Fidelity managers and trustees at the April 16 meeting.
“It felt different to me,” Cohen told RiskMetrics’ Social Issues Service. “We had what felt like a productive discussion, which was missing from the last meeting. Many trustees said they wanted to listen to shareholders. Trustee Cornelia Small said multiple times that the board was discussing and grappling with the issue.”
Investors Against Genocide is changing its tack slightly as ordinary Fidelity mutual fund investors become more familiar with its unprecedented shareholder campaign. At this month’s meeting Cohen asked the Fidelity Board of Trustees to shift its opposing stance on the proxy ballot to a neutral one. “…Fidelity has actively opposed it and is using its control of the machinery of proxy balloting to tilt the vote against the proposal,” he said in a press release after the shareholders meeting in Boston.
Cohen said Fidelity officials at the April meeting didn’t deny a connection between the controversial Chinese oil company Petrochina, some of whose H shares it holds in the Hong Kong stock market, and indirect funding of genocide in Darfur through Petrochina’s connections to the Sudanese government. They also didn’t argue that Petrochina holdings were necessary for Fidelity to earn high returns for its investors, he said.
Instead, Fidelity officials focused on the legality of their funds’ right to hold Petrochina shares or any others, and the importance of not sacrificing to a shareholder proposal the flexibility among assets that the company must maintain as it makes investment choices, Cohen said.
“None of the funds in the last two meetings where there have been [shareholder] votes held Petrochina or other stocks being talked about” in connection with genocide, Ben Loporchia, a spokesman for Fidelity, told RiskMetrics’ Social Issues Service.
New Approach
The genocide-free investing proxy campaign adopts a new approach to socially responsible investing, one that targets several widely held U.S. mutual funds’ stockholdings rather than companies themselves. The strength of the backing that the genocide-free investing proposal has received so far on six of 21 Fidelity fund ballots where it’s been placed means the resolution will be allowed to reappear on at least those six funds’ proxy ballots again next year.
The proposal also has been filed at other Fidelity mutual funds and for funds managed by other large investment companies whose shareholder meetings have yet to be scheduled, including T. Rowe Price, Barclays, Vanguard and Franklin Templeton.
In March’s voting, the two Fidelity funds that achieved a quorum were the Capital & Income Portfolio fund, with $9.3 billion in assets under management as of March 31, according to Fidelity, and votes from 27 percent of its shareholders; and the Select Health Care Portfolio fund, which manages $1.8 billion in assets.
In response to questions from Investors Against Genocide, Fidelity provided more detailed preliminary information about the breakdown of votes recorded as being against the proposal for these two funds. Cohen said the numbers showed that abstentions and socalled broker non-votes together could comprise more than 30 percent of votes tallied as opposing their proposal.
Although that method of proxy vote counting is typical for U.S. public companies, it could prove to be “an empowering message” to individual Fidelity mutual fund holders once they see what final proportion of “against” votes were in fact cast actively in support of Fidelity’s opposition to the resolution, said Susan Morgan, director of communications for the proponent group.
—Jane Meacham