Fidelity lifts its political profile

When President Bush appears at a Fidelity Investments facility in Merrimack, N.H., today to discuss the economy, his hosts will have a lot riding on his agenda.

The mutual fund giant stands to gain billions of dollars worth of new business from administration proposals to create new private savings accounts. Bush inserted a brief reference to privatizing Social Security in his recent State of the Union address -- a move that could be a potential gold mine for the company. Fidelity also opposes some proposed tighter regulations on the mutual fund industry following the exposure of market-timing practices elsewhere.

Other mutual fund firms also have much to win or lose from the outcome of debates in Washington, but Fidelity's rising political profile is striking. Since 2001, for instance, individual and "soft money" contributions from privately held Fidelity and its employees have totaled $462,948, mainly to Republican causes, according to a database maintained by the Center for Responsive Politics in Washington. That's more than came from any of the 10 largest publicly held employers in the state, including Raytheon Co., EMC Corp., and Gillette Co.

Observers say Fidelity has become more outspoken on various policy issues under its chairman and chief executive Edward C. Johnson III in the past year, and has moved aggressively to embrace some Republican positions. While neither the White House nor Fidelity would discuss how Bush's visit to the Merrimack unit came about, observers like Jim Lowell, editor of Fidelity Investor, an independent newsletter in Needham, say it reflects the new profile Fidelity is taking on.

"The company, from the top, is becoming far more politically active for its own interests," Lowell said.

Certainly the paths between Fidelity and the Bush administration are well-worn. The Boston company has hosted events for Bush's Treasury and Commerce secretaries, and last year Fidelity angered some of its own clients when it urged them to support Bush's dividend tax cuts.

Lowell also noted an opinion piece that Johnson published a year ago with his counterpart at Vanguard Group opposing an effort to require mutual fund companies to disclose how they vote on corporate shareholder ballot questions. They weren't successful, but on Jan. 14 the two companies again joined forces to criticize a plan by the US Securities and Exchange Commission to require chairmen of mutual fund boards to be independent.

Bush hasn't taken a position on the proposed rules, which are opposed by two Republican members of the five-member commission. Lowell said he believes Fidelity has lost faith in the mutual fund trade association, the Investment Company Institute, to sway minds in Washington. Lowell said Bush's visit to Fidelity's high-tech facility might make more of an impression than anything a trade association might say. A spokesman for the institute declined to respond.

Eric Kobren, executive editor of Fidelity Insight, another newsletter, in Wellesley, also noted the public pressure that Fidelity put on the New York Stock Exchange last fall to adopt an electronic-trading system. In Kobren's view, Johnson and other executives decided to steer a higher-profile course a year ago as many financial institutions came under fire.

"He saw the industry being attacked, and unfairly in his estimation, and they said, `We need some help for the industry here,' " Kobren said.

Fidelity wouldn't say whether Johnson or other senior executives would appear with Bush or make them available to be interviewed.

Fidelity spokesman Vin Loporchio said, "We believe it is important to speak out on behalf of our mutual fund shareholders. We have long participated in public affairs."

Fidelity has more than 3,300 employees at its Merrimack campus, which includes two buildings it purchased from Digital Equipment Corp. in the mid-1990s. Fidelity now runs bond and money-market operations there and also has a retail phone center. Earlier this month Fidelity said it is moving about 200 jobs from Boston to Merrimack and to Smithfield, R.I.

Neither the administration nor Fidelity would say who has been invited to Bush's talk, titled "A Conversation on the Economy." Linda Bonetti, executive director of the Merrimack Chamber of Commerce said she heard that the event would be for Fidelity employees only.

Fidelity's Loporchio declined to say whether Democratic politicians have made similar visits to company facilities in the past. Asked how the visit came about, he referred questions to the White House, where spokesman Ken Lisaius declined to discuss specifics.

"The president visits any number of venues across this country to talk about the priorities of the American people," Lisaius said.

Lisaius said Bush might address topics such as tax cuts or Social Security, which he mentioned in his State of the Union speech last week. Managing new private retirement savings accounts could become a vast new market for the mutual fund industry, and Robert Pozen, a former Fidelity executive now teaching at Harvard, served on a board that studied such proposals in 2001.

Kenneth E. Werner, a tax lawyer at Day, Berry & Howard LLP in Hartford, said Bush also might re-introduce the topic of Lifetime Savings Accounts or Retirement Savings Accounts, which were first outlined in his 2004 budget proposal. These would have higher contribution limits than current savings vehicles like Roth IRAs, meaning that individuals could sock away more money with companies like Fidelity.

Some Democrats, speaking privately, called Bush's appearance an attempt to distract attention from their party's nominating primary held in New Hampshire on Tuesday. They also called attention to Fidelity's political contributions. The sums include large amounts by Johnson and his daughter, Abigail, president of Fidelity Management and Research Co., the company's money-management arm. Abigail Johnson, a granddaugter of the company's founder, is widely viewed as the likely successor to her father. The majority of political donations appear to go to Republicans: of the $376,520 worth of Fidelity "soft money" in the 2002 election cycle, $331,520 went to Republican interests, according to the database.

Some Democrats still get support. Researchers at the Center for Public Integrity found Fidelity employees gave $54,725 to US Senator John F. Kerry for his presidential bid, compared to $81,550 to Bush. And perhaps Fidelity's best-known executive, former fund manager Peter Lynch, on April 30, 2001, gave $5,000 to the Democratic Senatorial Campaign Committee. Fidelity also has pledged to provide $1 million to support the Democratic presidential nominating convention to be held in Boston this summer.

Loporchio wouldn't say whether Fidelity plans to sponsor the Republican convention to be held in New York as well.

Ross Kerber can be reached at kerber@globe.com.