Company Name: Fidelity Aberdeen Street Trust
Public Availability Date: January 22, 2008
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
[INQUIRY LETTER]
November 2, 2007
VIA HAND DELIVERY
Office of Legal and Disclosure
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Omission of Shareholder Proposal Pursuant to Rule 14a-8 for Certain Fidelity
Funds
Ladies and Gentlemen:
This letter is submitted on behalf of our clients, Fidelity Aberdeen Street
Trust, Fidelity Capital Trust, Fidelity Commonwealth Trust, Fidelity Contrafund,
Fidelity Fixed-Income Trust, Fidelity Investment Trust, Fidelity Mt. Vernon
Street Trust, Fidelity Puritan Trust, Fidelity Securities Fund, Fidelity Select
Portfolios and Fidelity Summer Street Trust (each a "Trust" and collectively,
the "Trusts"),1 on behalf of their separate series listed on Schedule A (each a
"Fund" and collectively, the "Funds"), to request confirmation from the staff of
the Division of Investment Management that it will not recommend an enforcement
action to the Securities and Exchange Commission (the "Commission") if the
shareholder proposal described in this letter is omitted from the proxy
statement and form of proxy (the "Proxy Materials") for the next scheduled
shareholder meeting of each Fund as set forth on Schedule B (the "Shareholder
Meeting").2
Since mid-September 2007, Fidelity Management & Research Company ("Fidelity"),
the Funds' investment advisor, has received letters from shareholders of each
Fund (each a "Proponent" and collectively, the "Proponents"), requesting that a
proposal (the "Proposal") be submitted to shareholders at the next scheduled
meeting for each Fund. The Proponents and the dates their letters were received
by Fidelity are reflected on Schedule A. Each Proposal and its supporting
statement (the "Supporting Statement"), copies of which, along with the
Proponents' letters, are attached hereto as Exhibits A through P, relate to
Fidelity's investment of each Fund's assets.3 The Proposal states:
"RESOLVED:
In order to ensure that Fidelity is an ethically managed company that respects
the spirit of international law and is a responsible member of society,
shareholders request that the Fund's Board institute oversight procedures to
screen out investments in companies that, in the judgment of the Board,
substantially contribute to genocide, patterns of extraordinary and egregious
violations of human rights, or crimes against humanity."
We submit that the Proposal may be properly excluded from each Fund's Proxy
Materials pursuant to subparagraphs (i)(7) and (i)(3) of Rule 14a-8, as
discussed fully below.
I. Discussion
A. The Proposal deals with matters relating to each Fund's ordinary business
operations and therefore is excludable under Rule 14a-8(i)(7).
A proposal may be omitted under Rule 14a-8(i)(7) if it "deals with a matter
relating to the company's ordinary business operations." 4 The Commission has
explained that the policy underlying the ordinary business exclusion under Rule
14a-8(i)(7) rests on two central considerations: (i) "certain tasks are so
fundamental to management's ability to run a company on a day-to-day basis that
they could not, as a practical matter, be subject to direct shareholder
oversight"; and (ii) "the degree to which the proposal seeks to `micro-manage'
the company by probing too deeply into matters of a complex nature upon which
stockholders, as a group, would not be in a position to make an informed
judgment." 5
The Proposal implicates the management of each Fund's portfolio of investments
and the selection of securities for purchase and/or sale by Fidelity on behalf
of each Fund. The staff of the Commission has stated that it is of the view that
"the ordinary business operations of an investment company include buying and
selling portfolio securities." 6 The staff of the Commission has also granted no
action relief to exclude a proposal under 14a-8(i)(7) where the fund argued that
its ordinary business operations included "the selection of investments ..., the
purchase and sale of securities and the management of the [f]und's portfolio of
investments." 7 This is supported by each Fund's management contract with
Fidelity, which provides that, subject to the supervision of the Board, Fidelity
directs "the investments of the [Fund] in accordance with the investment
objective, policies and limitations as provided in the [Fund's] [p]rospectus."
The management contract goes on to authorize Fidelity "in its discretion and
without prior consultation with the [Fund], to buy, sell, lend and otherwise
trade in any stocks, bonds and other securities and investment instruments on
behalf of the [Fund]." Selecting the issuers in which to invest each Fund's
assets is the primary means by which Fidelity, through its portfolio management
expertise, seeks to add value for its customers on a daily basis. It is
fundamental to Fidelity's ability to manage each Fund's operations. By seeking
to impose limits on the investments selected for each Fund, we believe that the
Proposal touches on issues central to the day-to-day management of each Fund and
not on a broad or fundamental corporate policy.8
We recognize that the staff of the Commission has indicated that a shareholder
proposal that would normally be excludable under Rule 14a-8(i)(7) may not be
excludable if it raises significant social policy issues.9 Shareholder proposals
involve significant social policies if they involve issues that engender
widespread debate, media attention and legislative and regulatory initiatives.10
We believe the Proposal is distinguishable from other proposals that have been
determined to raise significant social issues. The Proposal, if adopted, would
directly restrict the primary business operation of each Fund,11 Here, the
Proposal requests that each Fund's Board implement procedures that would act as
restrictions on each Fund's investments and impose on Fidelity's discretionary
authority to manage each Fund's assets. The staff of the Commission has granted
no-action relief permitting other funds to exclude proposals that would have had
the similar effect of restricting the manager's oversight of portfolio
investments or restricted the purchase or sale of securities.12 Fidelity and the
Funds appreciate the seriousness of issues raised in the Supporting Statement,
but believe that the Proposal itself relates to the ordinary business activity
of managing each Fund's investment portfolio and selecting issuers in which to
invest.
Finally, in requesting that the Board create procedures to "screen out" certain
investments, the Proposal attempts to "micro-manage" how the business of each
Fund should be conducted, since the ordinary (and primary) business of the Funds
is selecting issuers in which to invest. In addition, shareholders as a group
would not be in a position to make an informed judgment about the selection of
those investment opportunities for each Fund that are consistent with each
Fund's stated objective. The Proposal, accordingly, may be omitted pursuant to
Rule 14a-8(i)(7) because it relates to an ordinary business operation of each
Fund and seeks to "micro-manage" how each Fund's assets are invested.
B. The Proposal should be deemed to contain false and misleading statements in
violation of Rule 14a-9 and, therefore, should be excludable under Rule
14a-8(i)(3).
A shareholder proposal or supporting statement may be omitted under Rule
14a-8(i)(3) when it is "contrary to any of the Commission's proxy rules,
including Rule 14a-9, which prohibits materially false or misleading statements
in proxy soliciting materials." The staff of the Commission has recognized that
reliance on Rule 14a-8(i)(3) to exclude a statement may be appropriate where,
among other things, statements directly or indirectly impugn character,
integrity, or personal reputation, or directly or indirectly make charges
concerning improper, illegal, or immoral conduct or association, without factual
foundation.13 Further, reliance on Rule 14a-8(i)(3) to exclude a shareholder
proposal is appropriate where a proposal is so vague and indefinite that
"neither the shareholders voting on the Proposal, nor the Company in
implementing the Proposal (if adopted), would be able to determine with any
reasonable certainty exactly what actions or measures the Proposal requires." 14
Such a proposal may be "misleading because any action ultimately taken by the [c]ompany
upon implementation of [the proposal] could be significantly different from the
action envisioned by shareholders voting on the proposal" and may, therefore, be
excluded from proxy materials.15
The Proposal and its Supporting Statement should be deemed to be false and
misleading in violation of Rule 14a-8(i)(3) for several reasons. First, portions
of the Supporting Statement and the Proposal directly or indirectly impugn the
character and integrity of the Funds' management. For example, the first clause
of the Proposal states, "In order to ensure that Fidelity is an ethically
managed company that respects the spirit of international law and is a
responsible member of society..." and the first paragraph of the Supporting
Statement says, "...clearly no ethical guidelines regulate Fidelity investment
manager's [sic] investment choices." Each of these statements implies, without
factual basis, that Fidelity is not an ethically managed company and that
Fidelity does not comply with its legal obligations. Moreover, the Supporting
Statement insinuates that Fidelity has breached or is breaching its fiduciary
obligations to the Funds: "Fidelity's damaged reputation can ... diminish the
value of shareholder investments." Such statements should thus be deemed to be
false and misleading for purposes of Rule 14a-3(i)(3).
The second reason the Proposal should be deemed to be false and misleading in
violation of Rule 14a-8(i)(3) is that it is sufficiently vague such that the
Funds may have difficulty implementing the Proposal. The Proposal requests that
the Board develop procedures to "screen out" investments in companies that
"substantially contribute to genocide, patterns of extraordinary and egregious
violations of human rights, or crimes against humanity." While the Supporting
Statement mentions that the resolution is intended to avoid future investments
in such companies, the language of the Proposal itself uses the imprecise phrase
"screen out," which could be interpreted to mean that the procedures must
address both future investment as well as divestment. While the Supporting
Statement suggests, without factual basis, that "[t]here are ample alternative
opportunities for investment and fund returns are more impacted by overall asset
allocation, sector, and style choices than the individual companies selected,"
divestment of investments in the companies specified in the Supporting Statement
that otherwise comport with each Fund's current policies could negatively impact
Fund investment returns.
In addition, the Proposal does not provide an appropriate mechanism for each
Fund's Board to determine which companies "substantially contribute" to
genocide, patterns of extraordinary and egregious violations of human rights, or
crimes against humanity. To the extent the Board employs a mechanism that does
not align with the Proponents' desired definition of genocide, patterns of
extraordinary and egregious violations of human rights, or crimes against
humanity, it is possible that the implementation of the Proposal could result in
actions that could be significantly different from the actions envisioned by the
Proponents and shareholders voting on the Proposal. For these reasons, each Fund
believes that the Proposal is contrary to the Commission's proxy rules and may
be excluded from the Proxy Materials under Rule 14a-8(i)(3).
II. Conclusion
In view of the fact that (1) the Proposal deals with matters relating to each
Fund's ordinary business operations and (2) the Proposal, because it impugns the
character of the Funds' management and is vague and indefinite, it is our
opinion that each Fund, in accordance with Rules 14a-8(i)(7) and 14a-8(i)(3), is
permitted to exclude the Proponent's shareholder proposal from its Proxy
Material for the 2008 Shareholder Meeting. Based on the foregoing, each Fund
respectfully requests confirmation from the staff that it will not recommend
enforcement action to the Commission if each Fund excludes the Proposal from its
proxy materials for the 2008 Shareholder Meeting.16
If you have any questions or need additional information, please contact the
undersigned at 617.728,7161. If the staff disagrees with our conclusion that the
Proposal may be excluded from the Proxy Materials, we would appreciate an
opportunity to discuss the matter with the staff prior to issuance of its formal
response. As required by Rule 14a-8(j), six copies of this letter and its
attachments are enclosed and a copy is being forwarded concurrently to the
Proponent.
Sincerely,
/s/
Joseph R. Fleming
-----FOOTNOTES-----
1 Each Trust is organized as a Massachusetts business trust.
2 As set forth on Schedule B, some of the Funds are currently scheduled to hold
meetings on March 19, 2008, April 16, 2008 and May 14, 2008, but certain Funds
do not currently have a shareholder meeting scheduled, These funds seek to omit
the proposal from the Proxy Materials when they next hold a shareholder meeting.
For the March, April and May meetings, the Funds expect to file definitive Proxy
Materials on or about January 18, 2008, February 15, 2008, and March 14, 2008,
respectively. The Proxy Materials for each Shareholder Meeting will be used by
all of the Funds holding a meeting in that month.
3 Each Proponent has sent the same Proposal and Supporting Statement.
4 Securities Exchange Act Release No. 40018 (May 21, 1998) (the "1998 Release").
5 Id.
6 See, e.g., College Retirement Equities Fund (May 3, 2004) ("2004 CREF
Letter").
7 Morgan Stanley Africa Investment Fund, Inc. (Apr. 26, 1996) ("Morgan Stanley
Letter").
8 The staff of the Commission generally does not allow exclusion of proposals
relating to a broad or fundamental corporate policy. See, e.g., 2004 CREF
Letter, supra note 6 (citing College Retirement Equities Fund (Aug. 9, 1999)
(proposal to establish a new socially conscious equity fund); Cargill Financial
Markets PLC (Mar. 15, 1996) (proposal to convert the fund to an open-end
investment company); and The Charles Allmon Trust, Inc. (June 10, 1994)
(proposal to change the advisory fee)).
9 1998 Release, supra note 4. See also, 2004 CREF Letter, supra note 6.
10 See, e.g., Staff Legal Bulletin 14A (July 12, 2002); and The Coca-Cola
Company (Feb. 7, 2000).
11 Unlike the Proposal, many of the proposals deemed non-excludable on social
policy grounds would not have resulted in a direct impairment of the company's
business operations. See, e.g., Citigroup Inc. (Feb. 9, 2001) (proposal seeking
report to shareholders regarding company's relationship with entities that
conduct business in Burma); UST, Inc. (Feb. 28, 1991) (proposal requesting
creation of committee to review marketing and use of smokeless tobacco products
by minors); General Electric Company (Jan. 30, 1989) (proposal requesting report
regarding continued involvement in nuclear reactor business and management
considerations for continuing such involvement); Avon Products, Inc. (Mar. 30,
1988) (proposal requesting disclosure regarding animal testing).
12 See, e.g., College Retirement Equities Fund (Mar. 31, 2005) (proposal to
restrict investment in companies that advocate legislation of controlling
firearm possession in the home); 2004 CREF Letter, supra note 6 (proposal to
divest shares of particular company); Morgan Stanley Letter, supra note 7
(proposal to reduce fund's investment in South African securities).
13 Staff Legal Bulletin 14B (Sept. 14, 2004).
14 Id.
15 See, e.g., Nynex Corporation (Jan. 12, 1990); Fuqua Industries, Inc. (Mar.
12, 1991); Philadelphia Electric Co. (July 30, 1992); Bristol-Myers Squibb Co.
(Feb. 1, 1999); Wal-Mart Stores, Inc. (April 2, 2001); and Reylon, Inc. (March
13, 2001). The Staff has also held that proposals are excludable when they
request an action that is so broad and generic that they give no indication as
to what is being voted on. See The Travelers Corporation (Dec. 11, 1980).
16 We respectfully request that the staff waive the requirement under Rule
14a-8(j) that each Fund file its reasons for excluding the Proposal no later
than 80 calendar days before it files its definitive form of proxy with the
Commission with respect to only those Funds holding their meeting on March 19,
2008. We received Proposals for Funds holding March meetings on September 11,
2007, September 24, 2007, September 25, 2007, and October 31, 2007. In order to
hold the meeting on March 19, 2008, as planned, the definitive Proxy Materials
will need to be filed and begin printing no later than January 18, 2008. Those
Proposals received October 31, 2007 are exactly 80 calendar days from the
planned date of filing definitive Proxy Materials. Given the number of Proposals
and Funds involved, the Funds have made all efforts to file this request as
timely as possible.
[INQUIRY LETTER]
November 2, 2007
VIA HAND DELIVERY
Office of Legal and Disclosure
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Fidelity Aberdeen Street Trust, Fidelity Capital Trust, Fidelity
Commonwealth Trust, Fidelity Contrafund, Fidelity Fixed-Income Trust, Fidelity
Investment Trust, Fidelity Mt. Vernon Street Trust, Fidelity Puritan Trust,
Fidelity Securities Fund, Fidelity Select Portfolios and Fidelity Summer Street
Trust
Ladies and Gentlemen:
Enclosed are an original and six copies of a request for a no action letter
under Rule 14a-8, submitted on behalf of the above-referenced entities.
Please acknowledge receipt of these documents by stamping the enclosed copy of
this letter and the copy of the first page of the no-action request and
returning it with our messenger.
If you have any questions or comments regarding this request, please contact
Joseph R. Fleming at 617.728.7161.
Sincerely,
/s/
Megan C. Johnson
[APPENDIX 1]
EXHIBIT A
August 29, 2007
Secretary of the Trust
Fidelity Freedom 2020
82 Devonshire Street
Boston, Massachusetts 02109
Dear Secretary:
I am writing to submit the attached shareholder resolution for inclusion in the
fund's next proxy statement and for presentation at the next shareholder
meeting. I hold 3,540 shares of Fidelity Freedom 2020 (Fidelity SEP-IRA Account
#224-045403). I have been a Fidelity Freedom 2020 shareholder continuously for
over one year. I am attaching a statement from Fidelity Investments confirming
my ownership of shares with a market value in excess of $2,000 over a year ago.
I have continuously held at least $2,000 of the fund since that date and it is
my intention to continue to do so.
Please confirm receipt of this letter. If for any reason you choose to exclude
this proposal from your proxy please notify me at the above address.
Thank you for your consideration.
Sincerely,
/s/
Nechama Liss-Levinson
[APPENDIX 2]
Basic Principle for Ethical Investing Shareholder Resolution for Fidelity
Freedom 2020
WHEREAS:
Fidelity stated that "Fidelity portfolio managers make their investment
decisions based on business and financial considerations, and take into account
other issues only if they materially impact these considerations or conflict
with applicable legal standards." Since Fidelity maintains this position, even
in the face of the most egregious violations of human rights, clearly no ethical
guidelines regulate Fidelity Investment manager's investment choices.
Fidelity held 1,085,007,500 PetroChins shares in December 2006 and 346,000,000
Sinopec shares. We believe Sinopec and PetroChina's closely related parent, the
China National Petroleum Company, are implicated in supporting genocide by
providing funding the Government of Sudan's military needs to conduct genocide
in Darfur.
Thus, ordinary investors, through their Fidelity mutual funds and pension plans,
inadvertently invest in companies funding genocide. Not every Fidelity and holds
these companies but many shareholders don't know which do. Since no policy
prevents these investments, holdings in these companies may increase or involve
new funds in the future.
In a 2007 study by KRC Research, 71% of respondents said companies should take
extreme cases of human rights abuses such as genocide into account rather than
base investment decisions safely on economic criteria.
In our opinion Fidelity has become a symbol of investor inesponsibility by
refusing to consider even extreme ethical issues when making investment
decisions. Fidelity's damaged reputation can impact employee morale, increase
Fidelity's cost to acquire customers, reduce the shareholder base for
distributing expenses, and diminish the value of shareholder investments.
There is no compelling reason to invest in companies that fund genocide. There
are ample alternative opportunities for investment and fund returns are more
impacted by overall asset allocation, sector, and style choices than the
individual companies selected.
Repeated attempts to engage Fidelity on this issue have not resulted in policy
changes or recognized standards of ethical responsibility.
Stock divestment has proven effective at modifying policies of foreign
governments. For example, the campaign against Talsman Energy contributed to the
January 2005 Comprehensive Peace Agreement between Khartoum and South Sudan.
RESOLVED:
In order to ensure that Fidelity is an ethically managed company that respects
the spirit of international law and is a responsible member of society,
shareholders request that the Fund's Board institute overnight procedures to
screen out investments in companies that, in the judgment of the Board,
substantially contribute to genocide, patterns of extraordinary and egregious
violations of human rights, or crimes against humanity.
DISCUSSION:
This resolution requests establishing procedures to avoid future investments in
companies that contribute to genocide. Funds with lasting investments in problem
companies have two acceptable options. If the holding is substantial enough that
the fund can effectively influence the problem company's management to work to
end the genocide and the company is receptive to engagement, then this may be
appropriate. If the holding is relatively small or the company does not respond
adequately to engagement efforts, then the shares should be sold.
[INQUIRY LETTER]
January 22, 2008
Joseph R. Fleming, Esq.
Dechert LLP
200 Clarendon Street, 27\th/ Floor
Boston, MA 02116-5021
Re: Omission of Shareholder Proposal Pursuant to Rule 14a-8 for Certain Fidelity
Funds.
Dear Mr. Fleming:
In a letter dated November 2, 2007, on behalf of Fidelity Aberdeen Street Trust,
Fidelity Capital Trust, Fidelity Commonwealth Trust, Fidelity Contrafund,
Fidelity Fixed-Income Trust, Fidelity Investment Trust, Fidelity Mt. Vernon
Street Trust, Fidelity Puritan Trust, Fidelity Securities Trust, Fidelity Select
Portfolios and Fidelity Summer Street Trust on behalf of their separate series
(each a "Fund" and collectively, the "Funds"), you requested confirmation from
the staff of the Division of Investment Management that it would not recommend
an enforcement action to the Securities and Exchange Commission if the
shareholder proposal ("Proposal") submitted by shareholders of each Fund
described in your letter is omitted from the proxy statement and form of proxy
(the "Proxy Materials") for the next scheduled shareholder meeting of each Fund
the dates of which are set forth in Schedule B to your letter. The Proposal
states:
RESOLVED: In order to ensure that Fidelity is an ethically managed company that
respects the spirit of international law and is a responsible member of society,
shareholders request that the Fund's Board institute oversight procedures to
screen out investments in companies that, in the judgment of the Board,
substantially contribute to genocide, patterns of extraordinary and egregious
violations of human rights, or crimes against humanity.
You request our assurances that we would not recommend enforcement action if the
Funds omit the Proposal from the proxy materials at the next scheduled
shareholder meeting for each Fund pursuant to Rule 14a-8(i)(3) under the
Securities Exchange Act of 1934. This rule permits a company to exclude a
proposal if the proposal or supporting statement is contrary to any of the
Commission's proxy rules, including Rule 14a-9, which prohibits materially false
or misleading statements in proxy soliciting materials. After considering your
request,1 we are unable to concur with your view that the Funds may exclude the
Proposal under Rule 14a-8(i)(3). Accordingly, we do not believe that the Funds
may omit the Proposal from their Proxy Materials for the next scheduled
shareholder meeting for each Fund in reliance on Rule 14a-8(i)(3).
You request our assurances that we would not recommend enforcement action if the
Funds omit the Proposal from the proxy materials at the next scheduled
shareholder meeting for each Fund pursuant to Rule 14a-8(i)(7) under the
Securities Exchange Act of 1934. This rule permits a company to exclude a
proposal if the proposal deals with a matter relating to the company's ordinary
business operations. After considering your request, we are unable to concur
with your view that the Funds may exclude the Proposal under Rule 14a-8(i)(7).
Accordingly, we do not believe that the Funds may omit the Proposal from their
Proxy Materials for the next scheduled shareholder meeting for each Fund in
reliance on Rule 14a-8(i)(7).
Attached is a description of the informal procedures the Division follows in
responding to shareholder proposals. If you have any questions or comments
concerning this matter, please call me at (202) 551-6949.
Sincerely,
Christian T. Sandoe
Senior Counsel
Office of Disclosure and Review
Attachment
cc: Nechama Liss-Levinson
Judith Blanchard
James Maisels
Mary Haskell
Steven Karsch
Andrea Wagner
Peter Barrer
Nancy Lee Goldbaum Peterson
-----FOOTNOTES-----
1 We also considered a letter submitted on behalf of the Proponents dated
November 16, 2007.
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