New England Health Care Employees Pension Fund
December 2, 2002
Mr. Jonathan G. Katz, Secretary
Re: File No. S7-36-02
Dear Mr. Katz:
On behalf of the Board of Trustees and the 13,000 participants of the New England Health Care Employees Pension Fund, we are writing to express strong support for the Securities and Exchange Commission's recent proposal, S7-36-02, Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment Companies. Most importantly, we strongly support those provisions that would require mutual fund companies to disclose their actual votes cast.
Though our participants enjoy the benefits of a defined benefit pension plan, many also invest individually in 401(k) plans that offer mutual fund investment options. Like other investment managers that manage our participants' pension assets, mutual funds face conflicts of interest in voting proxies that could lead them to voting contrary to the best interests of our participants. But unlike other investment managers who are required under ERISA to tell us how they vote, mutual funds have until now shielded their proxy voting from investor and regulatory scrutiny.
We commend the Commission for proposing a rule that will end this double standard which has allowed mutual funds to ignore the kinds of corporate governance failures that have cost investors, including our participants, at Enron, WorldCom and others. Mutual funds own about 20% of U.S. corporate equity, so their proxy-voting power can be instrumental in protecting our participants' retirement savings from the consequences of weak corporate governance. The Commission's proposed rule would give investors the information they need to ensure that their mutual funds take this fiduciary responsibility seriously.