FleetBoston Financial Corporation

January 17, 2002

U.S. Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Attention: Jonathan G. Katz, Secretary

Re: File No. S7-21-01; Comments on Proposed Rule: Investment Company Mergers

Mr. Katz:

I am writing on behalf of Fleet National Bank, a national banking organization, and Fleet Investment Advisors, Inc., an investment adviser registered with the Securities and Exchange Commission (the "Commission"). Fleet National Bank and Fleet Investment Advisors are wholly owned subsidiaries of FleetBoston Financial Corporation, a financial services holding company. This is in response to the Securities and Exchange Commission's proposed amendments to Rule 17a-8 under the Investment Company Act of 1940 (Release No. IC-25259). Our comment focuses on the exceptions to the Proposed Rule's echo voting requirement.

We believe that the exceptions to the echo voting requirement should be expanded to permit a related shareholder to vote its shares held on behalf of any fiduciary account in accordance with instructions of an independent third party engaged as a qualified independent fiduciary. The current exception, which is limited to fiduciaries of ERISA plans, is too narrow. Our proposed expansion takes into account current fiduciary practice and comports with the proposed exceptions by ensuring that affiliates are unable to influence merger votes and that the interests of the underlying shareholders are protected.

Banks often appoint independent fiduciaries to avoid potential conflicts of interest in voting for shareholder proposals. This is common in proposed mergers of fund companies sponsored or advised by a bank or its affiliates following a bank merger. The banks involved typically hold and have the power to vote, on behalf of their fiduciary accounts, a significant number of shares in the funds proposed to be merged. Rather than exercise voting authority, a bank will often engage the services of an independent fiduciary, such as an unaffiliated bank or trust company, to review and recommend a vote on the merger proposal. A bank may retain an independent fiduciary for all types of fiduciary accounts, including ERISA plans, trust accounts, and investment management accounts, depending on the requirements of state and federal law. This practice is effective in avoiding the conflict of interest in having the bank vote the shares in a fund merger in which the bank or an affiliate may benefit. However, despite the removal of the bank's influence on the merger vote, the funds involved cannot rely on Rule 17a-8 due to the bank's share holdings, and therefore the funds must obtain an exemptive order.

Including the appointment of a qualified independent fiduciary as an additional exception to echo voting will ensure, as do the other exceptions, that related shareholders and their affiliates do not improperly influence the merger process. Qualified independent fiduciaries are experienced in shareholder voting matters and provide a balanced and impartial review of the shareholder proposals. Typically, the scope of the review is set forth in a written document that identifies the shareholders and types of accounts involved, the materials to be reviewed, and the standards for review. These standards generally include a requirement that the voting recommendations be made solely in the best interests of shareholders. In the fund merger context, particular focus is given to shareholder expenses, shareholder investment expectations, tax impact and possible merger alternatives. The independent review is carefully designed to lead to a voting recommendation that is consistent with the best interests of shareholders and free from the influence of the fund affiliate. As a result, echo voting is unnecessary where an independent fiduciary is involved.

If left unchanged the proposed amendment will not achieve the desired effect of eliminating the need for exemptive orders in many situations where the interests of shareholders are otherwise being protected. Many fiduciaries have a limited ability to utilize echo voting. A fiduciary generally would not be able to safely rely on echo voting absent language in the relevant governing instrument authorizing the practice. For certain existing relationships, this would necessitate amendments, which would be an expensive and time consuming exercise. For other relationships, in particular irrevocable trusts, it will often be impossible to obtain consent from all interested parties, many of whom are not yet known, and echo voting will not be a viable alternative. As a result of these obstacles, fiduciaries will be forced to continue to rely on exemptive orders to effect fund mergers, even though unable to influence merger votes because of the use of an independent fiduciary.

Thus, we respectively request that the Commission expand the exception to include the use of a qualified independent fiduciary. As explained above, the additional exception ensures that related shareholders and their affiliates do not improperly influence the merger process, and achieves the goal of the amendment to avoid the need for exemptive orders where the interests of shareholders are sufficiently being protected. The exception could include reasonable qualification standards, such as requiring that the fiduciary be in the business of providing fiduciary services and have knowledge of the subject matter relating to the proposal being reviewed. In addition, the exception could require that arrangements with independent fiduciaries be in writing, and contain standards for review reasonably designed to protect the interests of the underlying beneficial owners.

Thank you for the opportunity to comment on this proposal. If you have any questions, please contact Joe Turo at 617-434-7860.