More Fidelity Fund Holders Vote on Sudan Question
Shareholder voting at 15 more Fidelity Investments mutual funds on a proposal requiring the giant U.S. fund manager to screen out investments in companies that “substantially contribute to genocide” ended without the resolution passing at any of the funds again in May.
The non-binding proposal, spearheaded by activist group Investors Against Genocide, hasn’t yet captured the majority of shareholder votes needed at each fund for approval, but it has drawn unusually high percentages of supporters. Since March, thousands of institutional and individual holders’ proxy votes on this first-time social responsibility proposal for Fidelity have been counted at monthly, grouped annual meetings for a series of funds.
An Appeal to Trustees
Fidelity confirmed that six of the funds achieved quorum and voted on May 14, with the percentage of shares voted in favor ranging from 27 to 31 percent (see table).
Putting such a proposal before a company that manages more than 175 mutual funds hasn’t been done in the United States before.
In a statement at the shareholders meeting, Eric Cohen, chairperson of Investors Against Genocide, told Fidelity representatives, “It is never too late to do the right thing. You have the power to halt the decline in your reputation, to call an end to the bad publicity, to break the cycle of negative and damaging references from customers and potential customers. If you embrace genocide-free investing, rather than actively opposing it, then you will reap the benefits of being a leader among the major mutual funds.”
The nonprofit organization, which was created in 2006 to launch petitions and ultimately to place the genocide-free investing proposal on as many members’ Fidelity mutual fund proxy ballots as possible, has asked the funds’ trustees to adopt a neutral stance on the proposal, rather than recommending against supporting it, as Fidelity now does. Many institutional holders routinely follow Fidelity’s advice in voting the proxies for their extensive blocks of shares at the company’s various mutual funds.
Cohen told RiskMetrics Group that Trustee Dennis Dirks, who represented the board at the May 14 meeting with shareholders, told those assembled that he would take the request for company neutrality on the proposal back to the full board to “reconsider.” Dirks also said a request from the floor at the meeting for Fidelity to change its proxy solicitation method, which is seen as being weighted toward sympathetic institutional holders, would be reviewed. A response on its decisions on these matters was promised “shortly,” Cohen said. “We think it’s significant. We’re eager to hear what steps Fidelity will take.”
Vin Loporchio, a spokesman for Fidelity Investments, declined further comment on the recent fund voting. He reiterated that none of the funds shareholders voted on May 14 or in the two previous meetings hold any of the “problem-company” securities in question, according to the latest public filings by Fidelity.
Focus on PetroChina
The shareholders group has waged this campaign against Fidelity primarily because the fund management company owns shares in PetroChina, a Chinese oil company that has close ties to Sudan. For about two years, activists have been pushing U.S. firms, universities and states to divest their holdings in Sudan-linked entities such as PetroChina to protest human rights abuses in the African country’s Darfur region. Although Fidelity sold off the bulk of its holdings in American depositary receipts of PetroChina several months ago, it still holds a stake in the company on overseas stock markets.
According to a Reuters report this month, 200,000 people have been killed and 2.5 million uprooted in the Darfur conflict, which started in 2003 and pits mostly non-Arab rebel groups against the Khartoum government and Arab militias.
Trying Again for Quorum
The other nine Fidelity funds carrying the anti-genocide proposal failed on May 14 to achieve a quorum of holders’ votes. They will return for additional vote calculation on June 18, the next time such annual meetings for a batch of Fidelity mutual funds will be held at the fund manager’s headquarters in Boston. One of them, the well-known Magellan Fund, with $40.53 billion in net assets at the end of April, faced voting on the genocide-free investing proposal for the first time this month, but the fund’s vote total didn’t reach quorum. The company’s bigger Contrafund, with $75.30 billion in assets, returned this month for a second vote count but again failed to make quorum. Observers of the shareholders’ campaign at Fidelity note that the more broadly held a fund, the more likely it will be that an insufficient number of its large pool of investors have sent in their proxy ballots to reach a quorum.
Also in May 14 vote counting, Fidelity’s Blue Chip Growth; Capital Appreciation; Dividend Growth; Growth and Income; Diversified International; and Growth Company funds missed quorum, so they will return for more vote tallies at the June meeting. At that meeting, the Low Priced Stock Fund will carry over for a third time since March for the same reason, as will the Contrafund. All shareholders, whether they voted previously or not, may re-vote their proxies up until the next month’s meeting date if their fund didn’t achieve quorum, according to the Investors Against Genocide website.
Beyond its Fidelity drive, which includes 11 more funds whose annual meetings await scheduling, the group has submitted the genocide-free investing proposal for voting later this year when funds’ annual meetings are set by other major institutional fund managers such as Vanguard, T. Rowe Price and Barclays. At TIAA-CREF, Investors Against Genocide has launched a campaign to get participants in the $400 billion retirement fund for those in the academic, medical, cultural and research fields to place the same proposal on its funds’ proxy ballots.
Shareholder voting at 15 more Fidelity Investments mutual funds on a proposal requiring the giant U.S. fund manager to screen out investments in companies that “substantially contribute to genocide” ended without the resolution passing at any of the funds again in May.
The non-binding proposal, spearheaded by activist group Investors Against Genocide, hasn’t yet captured the majority of shareholder votes needed at each fund for approval, but it has drawn unusually high percentages of supporters. Since March, thousands of institutional and individual holders’ proxy votes on this first-time social responsibility proposal for Fidelity have been counted at monthly, grouped annual meetings for a series of funds.
An Appeal to Trustees
Fidelity confirmed that six of the funds achieved quorum and voted on May 14, with the percentage of shares voted in favor ranging from 27 to 31 percent (see table).
Fidelity Fund Name | Yes Votes | Net Assets Under Mgt. (in millions, as of April 30) |
| Blue Chip Value Equity Income Puritan Real Estate Investment Utilities Value | 31 percent 20 percent 28 percent 26 percent 27 percent 27 percent | $617 $28,980 $23,152 $5,192 $1,174 $19,070 |
In a statement at the shareholders meeting, Eric Cohen, chairperson of Investors Against Genocide, told Fidelity representatives, “It is never too late to do the right thing. You have the power to halt the decline in your reputation, to call an end to the bad publicity, to break the cycle of negative and damaging references from customers and potential customers. If you embrace genocide-free investing, rather than actively opposing it, then you will reap the benefits of being a leader among the major mutual funds.”
The nonprofit organization, which was created in 2006 to launch petitions and ultimately to place the genocide-free investing proposal on as many members’ Fidelity mutual fund proxy ballots as possible, has asked the funds’ trustees to adopt a neutral stance on the proposal, rather than recommending against supporting it, as Fidelity now does. Many institutional holders routinely follow Fidelity’s advice in voting the proxies for their extensive blocks of shares at the company’s various mutual funds.
Cohen told RiskMetrics Group that Trustee Dennis Dirks, who represented the board at the May 14 meeting with shareholders, told those assembled that he would take the request for company neutrality on the proposal back to the full board to “reconsider.” Dirks also said a request from the floor at the meeting for Fidelity to change its proxy solicitation method, which is seen as being weighted toward sympathetic institutional holders, would be reviewed. A response on its decisions on these matters was promised “shortly,” Cohen said. “We think it’s significant. We’re eager to hear what steps Fidelity will take.”
Vin Loporchio, a spokesman for Fidelity Investments, declined further comment on the recent fund voting. He reiterated that none of the funds shareholders voted on May 14 or in the two previous meetings hold any of the “problem-company” securities in question, according to the latest public filings by Fidelity.
Focus on PetroChina
The shareholders group has waged this campaign against Fidelity primarily because the fund management company owns shares in PetroChina, a Chinese oil company that has close ties to Sudan. For about two years, activists have been pushing U.S. firms, universities and states to divest their holdings in Sudan-linked entities such as PetroChina to protest human rights abuses in the African country’s Darfur region. Although Fidelity sold off the bulk of its holdings in American depositary receipts of PetroChina several months ago, it still holds a stake in the company on overseas stock markets.
According to a Reuters report this month, 200,000 people have been killed and 2.5 million uprooted in the Darfur conflict, which started in 2003 and pits mostly non-Arab rebel groups against the Khartoum government and Arab militias.
Trying Again for Quorum
The other nine Fidelity funds carrying the anti-genocide proposal failed on May 14 to achieve a quorum of holders’ votes. They will return for additional vote calculation on June 18, the next time such annual meetings for a batch of Fidelity mutual funds will be held at the fund manager’s headquarters in Boston. One of them, the well-known Magellan Fund, with $40.53 billion in net assets at the end of April, faced voting on the genocide-free investing proposal for the first time this month, but the fund’s vote total didn’t reach quorum. The company’s bigger Contrafund, with $75.30 billion in assets, returned this month for a second vote count but again failed to make quorum. Observers of the shareholders’ campaign at Fidelity note that the more broadly held a fund, the more likely it will be that an insufficient number of its large pool of investors have sent in their proxy ballots to reach a quorum.
Also in May 14 vote counting, Fidelity’s Blue Chip Growth; Capital Appreciation; Dividend Growth; Growth and Income; Diversified International; and Growth Company funds missed quorum, so they will return for more vote tallies at the June meeting. At that meeting, the Low Priced Stock Fund will carry over for a third time since March for the same reason, as will the Contrafund. All shareholders, whether they voted previously or not, may re-vote their proxies up until the next month’s meeting date if their fund didn’t achieve quorum, according to the Investors Against Genocide website.
Beyond its Fidelity drive, which includes 11 more funds whose annual meetings await scheduling, the group has submitted the genocide-free investing proposal for voting later this year when funds’ annual meetings are set by other major institutional fund managers such as Vanguard, T. Rowe Price and Barclays. At TIAA-CREF, Investors Against Genocide has launched a campaign to get participants in the $400 billion retirement fund for those in the academic, medical, cultural and research fields to place the same proposal on its funds’ proxy ballots.
— Jane Meacham