THE FIRST NATIONAL BANK OF BOSTON, Hon. LEE METCALF, DEAR SENATOR METCALF: Your letter of March 11 addressed to our President, William L. Brown, has been referred to me since I am in charge of the Trust Division. We have not published, nor do we have in the works a "report dealing with your trust department's investments in portfolio companies as of the end of 1973." However, we have no reluctance about furnishing you data on our major holdings, as long as the confidentiality of our trust accounts is not affected, and I enclose a list of our 25 largest-with market values as of February 25, 1974. Please note that these are holdings in supervised accounts and do not include simple custody accounts, etc. I am sure your staff will already have for you our 20 largest holdings at December 31, 1972, as reported in the July, 1973 issue of FORTUNE. For your possible interest, I have also enclosed a list of our 20 largest holdings in supervised accounts as of January 27, 1964. Finally, to save your staff the trouble, I enclose a copy of our annual report to the Comptroller of the Currency, covering total market value of supervised holdings in the Trust Division as of December 31, 1973. Cordially yours BEN AMES WILLIAMS, Jr., If values as of review dates are used, indicate approximately the percentage of assets valued during the following period for each type of account: If review dates are not used, indicate date market values were determined in last 60 days July, August, (Over) CHEMICAL BANK (Report from the Trust and Investment Bank) I-Introduction Chemical Bank is organized into four functional units Metropolitan Bank Corporate Bank Trust and Investment Bank Each unit renders its particular services in different areas of the financial world. In this report, the purposes and operations of the Trust and Investment Bank are described. Because these services are used by so many people, they should be understood by all. WHAT IS THE TRUST AND INVESTMENT BANK? In general, the Trust and Investment Bank furnishes investment management or advice in the handling of other people's property, together with all types of administrative services. To provide the specialized services which meet customers' needs and problems, the Bank serves them through two groups, the Personal Group and the Corporate and Institutional Group. V-"CORPORATE CONTROL"-VOTING OF PROXIES In recent years, the spectre of the trust departments of the nation's banks investing their trust assets for the purpose of acquiring control of corporations has been raised repeatedly in surveys, investigations, reports and speeches. Chemical Bank believes that any such inferences are unrealistic and incorrect. As far as Chemical itself is concerned, it buys stocks for its personal and corporate fiduciary accounts solely for the purpose of investment and not, to the slightest extent, for control. As executor and as trustee, the Bank is under the serious legal responsibility of managing the accounts solely for the benefit of the beneficiaries and no other considerations affect its investment policy. The Trust and Investment Bank does not want to control corporations or to manage their affairs. Not only does it lack the experience and the time to manage national businesses, but its only purpose is to make prudent and promising investments for the estates and trusts committed to it. It cannot be restated too emphatically: In its capacity as executor or as trustee, Chemical buys stocks because they appear to be attractive investments and not for any other ulterior purpose. Inevitably, a large corporate fiduciary will find itself with substantial holdings of stock of one or more corporations. Where this exists at Chemical, it is because the stock was received from the decedent as part of his estate or was placed in trust by the person creating the trust, and the companies are usually small or closely held corporations. In those instances, and to the extent that the Bank does have a substantial voice in the corporations' affairs, it uses its position solely in the interests of the estate or trust involved. The tables which appear subsequently in this Report show that (aside from such situations) the combined holdings of the estates and trusts administered by the Bank do not approach anything like control of any corporation. Voting of Proxies: The Bank recognizes its responsibility in voting proxies for shares in trust accounts. Only those shares which the Bank holds as sole trustee with complete investment discretion are voted. Proxies held in custody or agency accounts or where there is shared control (such as a co-trustee) are forwarded to the customer or co-trustee to be voted by him. A special proxy review committee of senior officers thoroughly reviews all proxy material and shareholder proposals. Available to this committee is the objective factual material provided by the Investor Responsibility Research Center, Inc. which analyzes shareholder positions in corporate voting. The recommendations of the proxy review committee are submitted to senior management of the Trust and Investment Bank. 37-733 74 pt. 3 26 |