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THE HILL

P R E S E N T E D B Y

Scott OrrVice President, Government Relations and Public Affairs

Fidelity Investments

A VIEW FROM

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Provide thought leadership to

associates, clients, and external parties

Assess public policy risks & opportunities

Engage with the media, trade

associations, think tanks, third party

influencers, and academics

Build strong relationships with

policymakers, community leaders, and

the media based on knowledge and trust

Inform our associates on the issues

that matter to our firm, our

customers, and our workforce

Actively engage in our regions, both

within Fidelity and in our communities

PUBLIC POLICY

FEDERAL GOVERNMENT

RELATIONS

REGIONALPUBLIC AFFAIRS

Fidelity Public Policy and Advocacy Structure

EXTERNAL COMMUNICATIONS

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D

i

s

a

p

p

e

a

r

a

n

c

e

o

f

p

o

l

Source: National Journal Vote Rankings, 2013

Disappearance of the Political “Middle”

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Less Competition Drives Partisan Divide

Sources: The Cook Political Report, 2017.

House makeup Partisan Vote Index

■Democratic (D+5 or greater) ■ Swing (D+5 to R+5) ■ Republican (R+5 or greater)

123

139

149 148 147 150 150146

159 160168

164

134111 108 108

103 10399

90 91

72

148

162

175179 180 182 182

190186 184

195

60

80

100

120

140

160

180

200

220

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2017

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Key Leaders of the 116th Congress

SENATE

HOUSE

Mitch McConnell (R-KY)

Senate Majority Leader

Chuck Schumer (D-NY)

Senate Minority Leader

Chuck Grassley (R-IA)

Senate Finance Committee

Chair

Nancy Pelosi (D-CA)

Speaker of the House

Kevin McCarthy (R-CA)

House Minority Leader

Maxine Waters (D-CA)

House Financial Services

Committee Chair

Richie Neal (D-MA)

House Ways and Means

Committee Chair

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Agency Regulatory Priorities & Opportunities

• Regulation Best Interest

• eDelivery

• Cryptocurrencies

• Fund of Funds Rule

• ETF Regulation

• Best interest standard

• Missing participants

• Open multiple employer

plans (MEPs)

• eDelivery

• HSAs/HRAs

• Core Principles reports

• Fintech

• Data aggregation

• Required minimum

distributions (RMDs)

• FSOC reforms

Securities and

Exchange

Commission (SEC)

Department of

Labor

Department of the

Treasury

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Robust regulatory agenda faces potential obstacles

House Financial Services Chair Maxine Waters (D-CA):

“The days of this Committee weakening

regulations...will come to an end.”

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Will Congress strike a balance between oversight and legislating?

O v e r s i g h t / I n v e s t i g a t i o n s I s s u e s i n P l a y

• Infrastructure

• Immigration

• Healthcare

• Tax

• Trade

• Retirement Savings

• Privacy

• Government funding

How far will Democrats go?

• Investigating presidential

activities

• Judiciary investigations

• Challenging regulatory

agendas

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2019 Agenda

TOPIC BOTTOM LINE

Debt ceiling Need to raise the debt ceiling is testing a divided Congress.

Expiring Authorizations

Export-Import Bank, Older Americans Act, and public lands management must

be reauthorized in 2019.

Appropriations Appropriations bills will be more difficult to pass in a divided Congress.

TaxHouse Democrats will likely try to roll back part of tax reform, but changes will

go nowhere in the Senate.

Immigration DACA and wall funding will continue to be politically contentious in 2019.

NominationsSenate Republican leadership will continue to take up judicial nominations

and will have to confirm new Cabinet members.

Trade Expect pushback on USMCA vs NAFTA.

Healthcare Drug pricing and ACA markets will be a topic of debate.

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Retirement Policy May Advance in a Partisan Environment

• Private sector products already

exist

• States are not well-suited to

administer retirement plans

• for private sector workers

• Ensure American workers are

accumulating sufficient savings

• Increase education, planning, and

guidance

• Improve benefit security

PLAN SIMPLIFICATION

• Expand auto features

• Allow flexible investment options

• Maintain annual contribution limits

• Consolidate workplace plans

eDELIVERY

• Make eDelivery the default means

of communication

• Simplify and streamline rules

• Promote auto-enrollment

• Make Open-MEPs viable for small

businesses and independent

workers

• Expand the Saver’s Credit

COVERAGE GAP

RETIREMENT INCOME STATE/CITY PLANS

Bi-partisan legislation; regulatory initiatives could improve savings system

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The SEC has proposed a package of

rules relating to standards of conduct

for broker-dealers and investment

advisers.

• Regulation Best Interest: provides an

enhanced standard of conduct for

broker-dealers

• Form CRS: updated disclosure

requirements for broker-dealers and

investment advisers

Regulation Best Interest

• Enhance broker-dealer standard without exceeding the

standard that applies to investment advisors:

• Allow broker-dealers to limit the universe of products

and services they recommend through disclosure:

• Minimize regulatory confusion

• Ensure that disclosures meet customers’ needs

KEY CHANGES NEEDED

April 2016

DOL proposes

fiduciary rule

2016

DOL finalizes

fiduciary rule

February 2017

Executive Order

March 2018

Fifth Circuit

invalidates rule

2010

Dodd-Frank passes

2018

SEC proposes

Regulation Best

Interest

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Securities Transaction Tax – Could it Happen?

Wall Street Act of 2019

• Senator Brian Schatz (D-HI)

• Reps Peter DeFazio (D-OR) & Alexandria Ocasio-Cortez (D-NY)

- 3 Senate and 18 House co-sponsors to date (all Democrats)

- Proposed 0.1% tax on financial securities transactions

- CBOE estimates would raise $777 Billion over 10 years, but reduce

taxable business and individual incomes

- 59% of voters (including 45% of Republicans) like the idea

- Similar taxes in effect and gaining steam in Europe

Fidelity Internal Information

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2020 Campaign Kick-off: November 7, 2018

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■ Clinton win ■ Trump win

Trump’s narrow victories in key states leave him vulnerable to

even a small swing in 2020

10 states were decided by less than 5%

14*Clinton won Maine’s statewide vote, but Trump received an electoral vote for winning the 2nd districtSource: National Journal research, 2018.

PA

ME*

NC

MI

WI

MN

NV

FL

NH-4

VT-3

Trump by 3.9 %

(91,682 votes)

Trump by 1%

(27,257 votes)

Trump by 0.3%

(13,080 votes)

Trump by 3.8%

(177,009 votes)

AZ

NH

Trump by 1.2%

(68,236 votes)

Trump by 1.2%

(112,911 votes)

Clinton by 2.4%

(26,434 votes)

Clinton by 1.5%

(44,470 votes)

Clinton by 0.4%

(2,701 votes)

Clinton by 2.7%

(19,995 votes)

OH

WVVA

NY

SC

GA

KY

IN

LATX

OK

ID

OR

WA

CA

NM

CO

WY

MT ND

SD

IA

UT

AR

MO

MS AL

NE

KS

AK

HI

IL

NY

VT

TN

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Senate Republicans will face a tougher reelection map in 2020

THE MAP SWINGS BACK

• A second-term Trump?

• A Democratic sweep?

• Impact on redistricting?

WHAT ISSUES REAPPEAR?

• Health care

• Compensation & wage equality,

minimum wage & living wage

• Federal workforce issues

• Re-regulation

REPUBLICAN SEATS UP: 22

DEMOCRAT SEATS UP: 12

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Democrats have no chance to remove Trump

from office without Republican votes

Impeachment process

• Simple majority vote in House to indict president for “treason,

bribery, or other high crimes & misdemeanors”

• 2/3 vote in the Senate to convict president and remove from

office

25th Amendment process

• VP and a majority of the cabinet tell Congress the president is

“unable to discharge the powers & duties of his office”

• If the president appeals, 2/3 vote in both House and Senate

removes president from office

Simple majority:

2182/3

majority: 291

Sources: Charlie Savage, “How the Impeachment Process Works,” The New York Times, May 17, 2017.

House of Representatives Senate

Simple majority:

512/3

majority: 67

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Many states that lost seats in 2010 will lose even more in 2020, while Florida and Texas will continue to gain seats

Changes to congressional apportionment with total number of representatives after 2022

BASED ON 2017 US CENSUS ESTIMATES; UNC CAROLINA DEMOGRAPHY PROJECT ANALYSIS

Lose 1 No change Gain 1 Gain 2 Gain 3

Alabama (6)

Illinois (17)

Michigan (13)

Minnesota (7)

New York (26)

Ohio (15)

Pennsylvania (17)

Rhode Island (1)

West Virginia (2)

AK (1)

AR (4)

CA (53)

CT (5)

DE (1)

GA (14)

HI (2)

IA (4)

ID (2)

IN (9)

KS (4)

KY (6)

LA (6)

MA (9)

MD (8)

ME (2)

MO (8)

MS (4)

MT (1)

ND (1)

NE (3)

NH (2)

NJ (12)

NM (3)

NV (4)

OK (5)

SC (7)

SD (1)

TN (9)

UT (4)

VA (11)

VT (1)

WA (10)

WI (8)

WY (1)

Arizona (10)

Colorado (8)

N. Carolina (14)

Oregon (6)

Florida (29) Texas (39)

Sources: US Census Bureau, February 22, 2018. UNC Carolina Population Center, “Carolina Demography Project” December 21, 2017.

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Anticipated Gains/Losses in Reapportionment

2021

Source: The Cook Political Report, 2018

39

29

1410

8

26

6

17

7

13

152

17

26RI (1)

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Most state legislatures control the congressional district map-making process, although governors in many states can veto

Who decides congressional district boundaries?

†Rhode Island is expected to lose one of its 2 House seats

**Nebraska has a non-partisan unicameral legislature

Sources: Justin Levitt, “All About Redistricting,” Loyola Law School. National Conference of State Legislatures, “2017 State & Legislative Partisan Composition,” November 10, 2017

■ Independent commission ■ No redistricting (only 1 rep)

■ Republican legislature alone/Politician commission ■ Republican advisory commission (subject to legislative

vote)/Backup commission (in case of legislative gridlock)

■ Democratic legislature alone/Politician commission ■ Democratic advisory commission/backup commission

■ Split legislature alone/Politician commission ■ Split legislature with advisory commission/backup commission

ASTERISK-MARKED STATES HAVE A GOVERNOR OF A DIFFERENT PARTY THAN THE LEGISLATURE’S CONTROLLING PARTY AND ARE SUBJECT TO A

GUBERNATORIAL VETO

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Texas is Growing and Changing Demographically Numeric Change By Race – DFW Metro Area – 2000 – 2017

Source: US Census Bureau, 2017 Population Estimates

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Population Pyramid for White Non-Hispanics in Texas

2017

Source: US Census Bureau, 2017 Population Estimates

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Population Pyramid for Hispanics in Texas

2017

Source: US Census Bureau, 2017 Population Estimates

23Source:

TEXAS POLITICS

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REPUBLICAN SENATE MAJORITY REPUBLICAN HOUSE MAJORITY

836719

Lt. Gov. Dan Patrick (R)

Governor Greg Abbott (R)

Speaker Dennis Bonnen (R)

Current Composition of the Texas Legislature

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Top Issues – Texas 86th Legislature

TOPIC BOTTOM LINE

School FinancePublic School funding, formulas, basic allotment, teacher pay raises, property

tax rate compression, charter schools, vouchers, higher education

Property Taxes Tax revenue caps, appraisal reform, local responsibility, tax swaps

Economic Development

Reauthorize Chapter 312/313, Texas Enterprise Fund transparency,

Preemption of local ordinances (e.g. mandatory sick leave)

Infrastructure Transportation funding, eminent domain, water

Privacy/Cybersecurity Data privacy, breach reporting, biometrics

Healthcare Medicaid wavers, funding, rural hospitals

Social Issues Religious Freedom, Non-Discrimination Ordinances, Amendments

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QUESTIONS?

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The views and opinions presented reflect the opinions of the speaker(s) and may be based upon information obtained from third party

sources believed to be reliable, but not guaranteed. These opinions do not necessarily represent the views of Fidelity Investments or its

affiliates and may change at any time based on market or other conditions. Fidelity disclaims any responsibility to update such views.

These materials are provided for informational purposes only and should not be used or construed as a recommendation of any security,

sector, or investment strategy. Any companies, securities, and/or markets referenced are solely for illustrative purposes regarding

economic trends and conditions. Fidelity does not provide legal or tax advice. Consult an attorney or tax professional regarding a

specific legal or tax situation. Past performance is not indicative of future performance. Reproduction of this webinar in any way, in

whole or in part, is strictly prohibited.

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