Why has Invesco's QQQ called me two dozen times in the past few weeks? Is it a scam?

Invesco's QQQ fund is persistently calling shareholders to secure votes for a proxy vote on reclassifying the fund from a unit investment trust to an open-ended fund. This change aims to modernize the fund, improve efficiency, and lower fees. Despite initial assumptions of a scam, these calls are legitimate efforts to gather enough votes, as the fund needs over 50% approval to proceed. The vote has been postponed multiple times due to insufficient participation.

By Beth Pinsker Invesco's QQQ postponed its proxy vote again, so the calls will keep coming QQQ is having a proxy vote, and they won't stop calling until they get enough votes to settle the issue. Invesco's QQQ fund is one of the largest ETFs in the world, with $400 billion put toward tracking the Nasdaq-100 index. What the heck do they want with me? When my phone first started buzzing with QQQ QQQ calls in November, I assumed it was a scam. I hardly ever answer my phone, and especially not if I don't recognize the number, so I just let the calls pass to voicemail. But they kept calling - at least two dozen times, from many different numbers, multiple times a day. Some were ID'd by my phone as from the fund itself, some as a "proxy priority call." They called twice just in the time I was writing this article. If you've been getting calls like this, it's because Invesco's (IVZ) QQQ fund is attempting what is technically called a "reclassification," which requires shareholder approval. There was a proxy vote scheduled for Oct. 24, but they did not get the requisite threshold of votes, so they postponed until Dec. 5 and redoubled their efforts. Hence the phone calls, letters, advertisements and web messages. You, me, several thousand institutional investors and an untold number of other individual investors are the shareholders eligible to vote. So far, Invesco said in an investor communication, the votes they've received have been in favor of the proposed change. But the company needs just more than 50% to vote for or against the proposal to close it out. Each time they postpone, they lock in the votes already made and can then keep searching for more. Update: The second vote also failed to meet the threshold and the vote is adjourned until Dec. 19. "Mailings and calls will stop once you vote," Invesco noted in bold red type in one communication. Another message included a banner that read: "If you're receiving calls or texts from our third-party solicitors Sodali and Alliance, these are not a scam. They are reaching out on behalf of Invesco QQQ to facilitate voting on the proxy." It doesn't matter how many shares you own. You might, like me, own some QQQ in your retirement account, brokerage account or both - just like you might own any of the other huge index ETFs that dominate the marketplace, like Vanguard's VOO VOO, which is considered the largest ETF and tracks the large-cap companies of the S&P 500 SPX. You might just own one share. They still want you. Uphill battle for votes Getting such a large base of people who own a passive index investment to engage is an uphill battle just on its face. "It's a lot like herding cats," said Brennan Hawken, an equity-research analyst for BMO Capital Markets. "Its just a challenging thing. Nobody answers their phone; they are trying emails, whatever they can. But it's just challenging to get the word out." Another obstacle is that the subject of the vote is complicated and people generally don't like to vote on issues that they don't understand - which goes for index funds as well as local ballot initiatives on recycling. Most investment proxy votes are about corporate governance for individual companies, not ETFs. There are activist investors who get very involved in those battles, although many shareholders do not, and there are companies with celebrity CEOs like Elon Musk or Warren Buffett who have followings that increase engagement for their annual meetings. The reason QQQ is having a proxy vote is because Invesco wants to change the fund from a unit investment trust to an open-ended fund. This means very little to most people; the back-end structure of an ETF does not generally affect its performance or worth to investors. QQQ has been able to operate as a passive index fund within the unit-investment-trust structure since it launched in 1999, and Invesco said it does not intend to change any of the features of the fund's management or its direction. It's still going to track the Nasdaq-100 NDX, and shareholders would likely not notice any difference in the future. The reason for action is essentially a modernization process designed to improve efficiency and lower fees. Invesco predicts the annual expense ratio of the fund will decrease 2 basis points to 18 basis points, which it says will save the fund and its shareholders nearly $70 million in aggregate. Financial adviser Sam Huszczo compares it to the transition we have seen over the last two decades of mutual funds into ETF versions. "The unit investment trust is an outdated structure that has inefficiencies, and it's time to get into the new century," said Huszczo, who is a certified financial planner and also a chartered financial analyst based in Michigan. The hitches involve things like slight delays in dividend reinvestments and how the fund managers are paid. "The size of QQQ is also a good motivator. If not now, when?" Huszczo added. QQQ hit $100 billion in assets in 2020, and has jumped 300% since then to $400 billion in the fund today. The number of shareholders involved has also multiplied. If they wait longer to have this proxy vote, the struggle to reach 50.1% would be even greater and require even more phone calls. "They probably should have done it a while ago," Huszczo said. "But I would say now it's probably a net win. I do think Invesco will make more money, but they will be lowering the expense ratio for the consumer, so they're sharing the wealth with the people." What happens if still more proxy votes fall short? "They'll just keep going," said Hawken. "I'd love to have it wrapped up on Friday, but hope is not a strategy." More Fix My Portfolio This was one of my biggest regrets after my mom died - and you can avoid it this holiday season Are taxpayers wasting $86 billion on SilverSneakers and Medicare Advantage goodies they don't use? If you thought getting approved for Medicaid was hard, wait until you try to use it for this -Beth Pinsker This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 12-05-25 1235ET