Genocide-Free
Investing
Shareholder
Proposal for The Cash Management Trust of America (CTAXX)
WHEREAS:
American Funds
portfolio managers make investment decisions based on financial and legal
considerations while seeming to ignore other issues. Even in the face
of the most egregious violations of human rights, such as genocide, American
Funds has released no policy to prevent investments that help fund or support
such human rights violations.
Ordinary
individuals, through their investments in American Funds, may inadvertently
invest in companies funding genocide because of investment decisions made on
their behalf by American Funds. With no policy to prevent these
problem investments, American Funds may at any time increase its holdings or
involve new funds in such problem investments.
We
believe that this problem is not merely theoretical, since many mutual funds are
large holders of PetroChina, which, through its closely related parent, China
National Petroleum Company, is providing funding that the Government of Sudan
uses to conduct genocide in Darfur.
We
believe that in the face of the most extreme human rights crises investors share
responsibility to act, individually and collectively, in addition to the role
and responsibility of governments.
We
believe that investors do not want their pensions and family savings connected
to genocide. In KRC Research’s 2007 study, 71% of respondents said
companies should take extreme cases of human rights abuses, such as genocide,
into account rather than base investment decisions solely on economic
criteria. Further, over 150.000 people have objected to financial
firms about such problem investments. Reasonable people may disagree
about what constitutes socially responsible investing, but few people want their
savings to be complicit in genocide.
We
believe that negative publicity resulting from the many national press reports
and widespread consumer protests can damage the company’s reputation, hurt
employee morale, increase its cost to acquire customers, and reduce the
shareholder base for distributing expenses, all of which can negatively impact
American Funds shareholders.
We
see no compelling reason to invest in companies that fund
genocide. We believe there are ample competitive alternatives and
flexibility of investment choices, even with index funds. As noted by
Gary Brinson’s classic study, investment returns are affected much more by asset
allocation than individual security selections, so avoiding a small number of
problem companies need not result in any significant effect on
performance.
Investor pressure
has proven effective in influencing foreign governments. The campaign
against Talisman Energy contributed to the January 2005 Comprehensive Peace
Agreement between Khartoum and South Sudan.
RESOLVED:
Shareholders
request that the Board institute procedures to prevent holding investments in
companies that, in the judgment of the Board, substantially contribute to
genocide or crimes against humanity, the most egregious violations of human
rights.
DISCUSSION:
In
addition to preventing future investments in problem companies, the proposal
calls for corrective action to address existing investments in problem
companies. If the fund can effectively influence the problem
company’s management, then this may be an appropriate action. If not,
the security should be sold.
[logo – Capital
Research and Management Company SM]
Capital
Research
and
Management Company
333 South Hope
Street
Los Angeles,
California 90071-1406
Phone (213) 486
9447
Fax (213) 486
9455
E-mail:
siik@capgroup.com
Steven
I. Koszalka
Vice
President
Fund
Business Management Group
May 19,
2009
Dear Mr.
Shulman:
This is in response
to your letter received on May 6, 2009. You have asked to place a
genocide-free investing proposal on the upcoming proxies for the following
American Funds: The Investment Company of America (“ICA”), The Bond
Fund of America, Inc. (“BFA”), Fundamental Investors, Inc. (“FI”), American
High-Income Trust (“AHIT”), The Cash Management Trust of America (“CMTA”),
Capital World Growth and Income Fund (“WGI”), The Growth Fund of America, Inc.,
and Capital Income Builder, Inc.
Rule 14a-8 under
the Securities Exchange Act of 1934 states that in order to be eligible to
submit a proposal, you must have continuously held at least $2,000 in market
value, or 1%, of the shares of each of these funds entitled to be voted on the
proposal at the next meeting for at least one year by the date you submit your
proposal.
According to our
records, it appears that you have not satisfied the requirements of the Rule
with regard to submitting this proposal. Therefore, your proposal
does not qualify for inclusion on future proxy statements of ICA, BFA, FI, AHIT,
CMTA and WGI.
If
you feel this determination is in error, please contact me at 213/486-9447 or
send me account statements verifying that you meet the ownership requirement for
ICA, BFA, FI, AHIT, CMTA and WGI within 14 days as required by the
Rule.
Sincerely,
/s/ Steven I.
Koszalka
Steven I.
Koszalka
Encl.
cc: Laura
Hatch
U.S.
Securities and Exchange Commission