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June 19, 2013

Genocide-Free Shareowner Proposal Gains Strong Support at Fidelity Investments
    by Robert Kropp

Investors Against Genocide continues its campaign to pressure mutual funds and other financial institutions into adopting genocide-free investment policies. -- Shareowners of six of the mutual funds of Fidelity Investments voted their proxies this week, and for the third time since 2008 substantial numbers supported a proposal submitted by Investors Against Genocide (IAG) calling on the company to adopt a genocide-free investing policy.

“Fidelity continues to own large positions in PetroChina, a company widely recognized as the largest business partner of the government of Sudan which is currently bombing, starving, and displacing massive numbers of its own civilians in several regions, and whose president is wanted by the International Criminal Court for genocide, crimes against humanity and war crimes,” Eric Cohen, Chairperson of IAG, said.

Despite the relative unfamiliarity of mutual fund shareowners with proxy voting—IAG's proposal was the only one on the proxy ballot, other than proposals on operational matters submitted by management—vote tallies at the six mutual funds reached as high as 29.2% and none fell lower than 24.1%. The numbers are impressive, which on the one hand should not come as a surprise as surveys reveal that an overwhelming numbers of Americans want their investments to be genocide-free.

On the other hand, there is that unfamiliarity with proxy voting by mutual fund shareowners as well as opposition to the proposal by management. Votes earlier this season on similar proposals at Franklin Templeton and JPMorgan Chase received substantially fewer votes although in both cases shareowner support was enough to qualify them for the next proxy ballot. Despite their financial power and influence, accounting for almost $12 trillion in assets under management, mutual funds are not legally bound by SEC regulations requiring corporations to hold annual general meetings at which resolutions can be introduced and voted on by shareowners.

“Since 1997, US sanctions have prohibited American companies from doing business with Sudan’s oil industry,” Cohen observed at this week's meeting. “Therefore, ExxonMobil is precluded from supporting Sudan’s oil industry. But Fidelity invests hundreds of millions of dollars in foreign companies that provide these same services. Fidelity's investments in companies such as PetroChina clearly conflicts with the spirit, if not the letter, of the law.”

“By opposing the proposal in the voting today, Fidelity has lost an opportunity to hear that voice” of its customers, Cohen continued. However, Fidelity will have another chance, because genocide-free investing has already been submitted to 41 other Fidelity mutual funds and Investors Against Genocide will be coordinating additional submissions.”

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