American Funds partnered with Computershare to execute one of the largest mutual fund proxy campaigns in history. In addition to electing directors, the funds sought to gain approval for proposals during the same proxy campaign. The proposals were intended to:
- Give each of the funds more flexibility to adapt to changing circumstances and market conditions
- Increase efficiency by operating the funds under uniform, modern and flexible governing documents
- Update, standardize and streamline outdated investment restrictions for the funds
American Funds had tens of millions of shareholder accounts that would need to be solicited to cast their vote via mail, email and/or telephone. The voting requirements were demanding. One of the proposals, to reorganize each fund into a Delaware statutory trust, required a majority of the outstanding shares of each fund to pass. The ballot involved nine proposals including a shareholder-submitted proposal.
In addition, the printing requirements were complex. The funds had a total of 30 different boards of directors, which required a customized proxy SmartCard or notice for each shareholder. Lastly, American Funds required that the proxy project include cost-saving measures while still achieving the vote totals necessary to pass the proposals.
We were able to manage this project as a single campaign, acting as:
- Project manager coordinating all service providers
- Inspector of elections
- Print and mail services provider for registered accounts
- Secondary print services provider for beneficial accounts
- Primary proxy solicitor responsible for obtaining 75 percent of the votes cast through telephone solicitation
Our experience has shown that notice-only mailings can be a viable method for mutual funds to save print and mail costs. However, notice-only mailings tend to have lower voting participation rates than full-set proxy mailings.
The challenge, therefore, was to minimize the full-set packages sent while still achieving the goals of the campaign and keeping shareholders satisfied with the process. For this proxy campaign, we first analyzed the entire shareholder base to determine the feasibility of using a notice-and-access hybrid approach, in which one group of shareholders is sent a traditional proxy package and another group is sent only a notice. After determining that the notice-and-access hybrid model was the best approach for this project, we carefully developed a campaign plan that would maximize the chance of success for all funds while also realizing cost savings.
Our phone representatives took more than 3.5 million votes from roughly 4 million connects over a 100-day solicitation period.
Our solution enabled American Funds to complete this historically large project as a single campaign, rather than splitting it into multiple campaigns with varying record and meeting dates. All management proposals were passed for all funds at the scheduled shareholder meeting, except for the proposal to reorganize two of the funds into Delaware statutory trusts. Those proposals passed one month later. American Funds saved approximately 5 to 10 percent on print and mail costs through our partnership.
- Largest mutual fund hybrid notice and access campaign in history, resulting in a cost savings of 5-10 percent
- Largest mutual fund proxy campaign by a factor of two — in terms of total shareholders contacted
- Largest mutual fund proxy telephone solicitation campaign by a factor of five
- Greater than 62% reduction in the mailing of notices and proxy kits