Vote against Fidelity genocide-linked assets fails

BOSTON, March 19 (Reuters) - A shareholder proposal seeking to force Fidelity Investment funds to block picks that may contribute to genocide failed on Wednesday when a majority of the owners of two mutual funds voted against it.

The proposal, a first for any U.S. mutual fund, won the support of only 27 percent of the shareholders of Fidelity's Capital & Income Fund and got the backing of only 28 percent of the Select Health Care Portfolio at a meeting, Fidelity said.

"Proposal No. 3 has not been approved," an official at Fidelity, the world's biggest mutual fund company, said at the meeting.

The proposal, filed by some Fidelity fund shareholders, had asked the boards of the funds to "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."

Human rights activists have been campaigning for the past two years to get Fidelity and other mutual fund firms to divest their Sudan-linked holdings in protest against human rights abuses in that country.

Fidelity and the boards of the funds' trustees had recommended that shareholders vote against the proposal. Fidelity has long maintained its investments are legal under U.S. laws and it is obligated to achieve the best investment results for funds' shareholders.

Fidelity had assets under management of about $1.5 trillion as of end-January. (Reporting by Muralikumar Anantharaman; Editing by Andre Grenon)