The Markets December 22, 2006

Fidelity Launches Four Sector Funds Available Through Advisers

Fidelity Investments launched four new sector funds Tuesday available through financial advisers, increasing the total of Fidelity Advisor funds to 92, including 14 sector funds or Focus Funds.
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The four new funds, Fidelity Advisor Consumer Staples Fund, Fidelity Advisor Gold Fund, Fidelity Advisor Materials Fund, and Fidelity Advisor Telecommunications Fund, will each be available in share classes A, T, B, C and Institutional, the company said. Advisor funds carry a sales load, or fee, for investors who buy into those products.

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These funds are part of a previously announced restructuring of Fidelity’s line-up of Select Portfolios, Advisor Focus Funds and VIP sector funds in an effort to make it easier for investors to track the funds’ performance and use them in building diversified investment portfolios, the company said.

The new funds are:

  • Fidelity Advisor Consumer Staples Fund, managed by Robert Lee, invests at least 80% of assets in securities of companies principally engaged in the manufacture, sale or distribution of consumer staples.

  • Fidelity Advisor Gold Fund, managed by Daniel Dupont, invests at least 80% of assets in securities of companies principally engaged in gold-related activities, and in gold bullion or coins.

  • Fidelity Advisor Materials Fund, managed by Jody Simes, invests at least 80% of assets in securities of companies principally engaged in the manufacture, mining, processing or distribution of raw materials and intermediate goods.

  • Fidelity Advisor Telecommunications Fund, managed by Brian Younger, invests at least 80% of assets in securities of companies principally engaged in the development, manufacture or sale of communications services or communications equipment, generally emphasizing communications services companies and not communications equipment companies.

Compliance December 22, 2006

IRS Lifts Moratorium on Cash Balance Conversion Letter Requests

Facing a backlog of about 1,200 requests for Internal Revenue Service (IRS) determination letters on cash balance conversions, the agency announced Thursday that it had lifted a 1999 moratorium on processing the requests.
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An IRS news release said officials decided lifting the suspension was appropriate with the passage of the Pension Protection Act (PPA). The tax agency had shut down the process, pending a study on issues raised in such conversions, including the impact on older employees – an aspect of the plan changes that has proven immensely controversial and the subject of numerous court cases.

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Even though the PPA included safe harbor protection for new cash balance plans, Thursday’s announcement said the agency will not include age-discrimination issues in the newly activated reviews.

The IRS said in the announcement this approach is consistent with its past practice and with the fact that the PPA’s safe harbor did not address the issue of age discrimination on pre-June 30, 2005, conversions.

The agency said it hopes to resolve a significant majority of the cash balance letter backlog by the end of 2007.

In Notice 2007-6, the IRS also provides interim guidance on provisions of the Pension Protection Act of 2006 involving cash balance plans, and requests public comments.

The IRS notice is here.

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