April 17, 2008; Page C13
Shareholders in four Fidelity Investments-managed mutual funds rejected a proposal to create a process for screening out stocks in companies that the funds believe to be abetting genocide.
The shareholder resolution garnered support of 21% to 25% of the shares in each fund, a substantial number given that Fidelity opposed the initiative. Shareholder resolutions, especially those dealing with social issues, usually fail.
In results revealed at an emotionally-charged meeting Wednesday in Boston, 25% of the shares in Fidelity's $12.3 billion Mid-Cap Stock Fund voted for the proposal. The proposal gathered 21% if the votes in Fidelity's $12.5 billion International Discovery Fund, 22% in the $8.5 billion Overseas Fund, and 23% in the $4.4 billion Canada Fund.
Proponents were somewhat fewer than in two earlier votes, taken in March, when the measure garnered 28% and 27% of the votes from two other Fidelity funds.
The nonbinding resolution, advanced by the Boston group Investors Against Genocide, asked that fund managers avoid investing in companies they believe "substantially contribute to genocide." The measure is aimed at companies with stakes in Sudan, where the Darfur region has been the scene of brutal militia attacks widely believed to have the support of the Sudanese government. The U.S. has called the Darfur campaign genocide.
"We were encouraged by the votes," said Eric Cohen, head of the group. "Fidelity's opposition will ultimately fail," he said, because mutual-fund investors don't want their money used to support genocide.
At the meeting, where supporters of the measure argued with fund representatives, Fidelity said it was sensitive to activists' concerns. "We're listening to investors. It's their money," said Eric Roiter, general counsel of Fidelity's mutual-fund unit. But the firm looked to Congress and the government to define its responsibilities, he said, and wanted to preserve its managers' freedom to pursue all lawful investments.
If investors disagree, "we would be the last to tell you that you must keep your money in Fidelity funds," Mr. Roiter said.
Investors will again consider the proposals for several other funds -- including the $72 billion Contrafund and the $38 billion Magellan Fund -- at a meeting to be held May 14.
Fidelity said none of the funds at issue in today's vote currently hold shares of companies targeted by the group, which includes PetroChina Co., whose parent, the state-owned China National Petroleum Co., has partnered with the Sudanese government.
Write to Keith J. Winstein at keith.winstein@wsj.com