Subject: File No. S7-11-04
From: barry s augenbraun
Affiliation: Senior VP, Raymond James Financial

May 9, 2005

May 9, 2005

Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, DC 20549-0609

Re: Mutual Fund Redemption Release No. IC-26782, File No. S7-11-04

Dear Sir:

On behalf of Raymond James Financial, Inc. RJF or the Company, I am pleased to submit the following comments with respect to File Number S7-11-04 regarding mutual fund redemption fees.

RJF is a diversified financial services holding company whose subsidiaries engage in securities brokerage, investment banking, asset management and other financial services throughout the United States and internationally. The Companys domestic broker-dealer subsidiaries have approximately 4,400 financial advisors in more than 2,100 locations world-wide; through those subsidiaries, the Company distributes over 9,000 mutual funds marketed by 275 mutual fund complexes; the Companys clients own over 39 billion in mutual fund assets.

In general, we support the Commissions rule that would permit mutual funds to impose redemption fees for the purpose of limiting excessive trading in mutual fund accounts. RJF has long advocated the importance of mutual funds as a cornerstone of the investment program for individual investors, and we have always stressed that they should be purchased as part of a long term investment program.

However, we are extremely concerned that the rule as adopted presents serious administrative and implementation problems which can result in unfairness to some investors and excessive costs. Ultimately, these costs will be borne by mutual fund investors unless the Commission takes prompt action to address these issues:

1. Application of the redemption fee to pooled accounts will result in anomalies and excessive costs.

For the individual holder of mutual funds on the books of a broker-dealer, application of the redemption fee can be relatively straight forward. The records of the broker-dealer will clearly reflect when purchases were made, when redemptions are made, and whether the timeframe set by the mutual fund for application of a redemption fee has been triggered. However, many broker-dealers administer pooled accounts, representing the combined accounts of individual holders of profit sharing programs, 401K accounts and similar accounts. For these accounts, application of redemption fees will be extremely difficult.

Orders received by the broker-dealer for a pooled account do not distinguish among the individual account owners, and the broker dealer has no way of identifying who they are. Accordingly, if an order to buy fund shares is received on Monday and an order to redeem the same fund shares is received on Tuesday, on the books of the broker-dealer that will clearly represent a trade within a prohibited redemption period. However, it is possible - - indeed, likely - - that the purchase and sale were made by two completely different and unrelated accounts. There is no reason why a redemption fee should be applied in those circumstances.

This issue is not really resolved by a establishing a convention like FIFO. It is still possible that fees will be assessed when there is no reason to assess them, and fees may not be assessed when in fact the same account is buying and redeeming within a prohibited period.

We urge the Commission to designate members of its staff to work with representatives of the mutual fund industry and broker-dealer industry and other mutual fund distributors to address this serious issue.

2. The Commission should require mutual fund companies to post their redemption rules on their website to permit ready reference in information furnished to customers.

As noted in our introduction, RJF distributes over 9,000 mutual funds. While a uniform redemption period would certainly be the most effective means for administering redemption fees, this is most unlikely. If we can look to break-point rules as a model, it is likely that different fund complexes will establish totally different rules for the timing of redemption fees, application, exemptions, etc. This proliferation of rules will pose a serious administrative problem for broker-dealers and others who distribute funds, and will create confusion in the minds of purchasers who may not be aware of distinctions in the rules adopted by the different funds.

Accordingly, we recommend that the Commission require that every fund complex place on its website the redemption rules with respect to each fund offered. This would permit broker-dealers and other fund distributors, to refer to those rules in the confirmation sent to purchasers, alerting the customer to review the specific rules adopted by that fund regarding redemption fees.

3. The Commission should require mutual fund companies to use the DTCC Product Profile as a central reference for updated information regarding their redemption policies.

The development of a comprehensive informational utility by DTCC has provided a superior and cost effective method for providing current data to broker-dealers regarding mutual fund policies. By mandating the use of this tool by mutual fund companies for redemption fee policies, the Commission can substantially reduce the cost to broker-dealers for researching mutual fund policies and making them accessible promptly to their financial advisors.

We appreciate the opportunity to comment on these important issues.

Respectfully submitted,

Barry Augenbraun
Senior Vice President and
Corporate Secretary