Subject: File No. 4-500
From: Michelle Hoesly
May 9, 2005
I would like to comment on the proposed redemption fee standards. First, I believe you made an excellent decision in not requiring redemption fees, but instead allowing the funds to determine if redemption fees are necessary. A standard policy should take into account the difficulties that individual investors may have in keeping track of all of their deposits and linking them to a potential redemption fee. In order to make that duty not cumbersome, it is essential that withdrawals are treated on a first in, first out basis. That will eliminate much need for tracking recent deposits. There should also be exceptions to imposition of the fee. One such exemption should be to pay third-party advisors. Without that exemption, it is possible that an individual would get hit with a fee because he/she transferred accounts to an advisor and the advisor may not know all the purchase dates on transferred funds. Lastly, I think it is important for the fund to be required to only use redemption fees where there is a demonstrated abuse of trading and show that the redemption fee is reasonable in relation to the actual expenses caused by the additional trading. I don't think it is anyone's intent to put another layer of fees and requirements on small investors where there isn't a problem.
Thank you for your consideration.