Subject: File No. S7-03-04
From: Nicholas Gerber

June 16, 2006

RE: Investment Company Governance- File No. S7-03-04

Dear Chairman and Commissioners:

Requiring the board of directors of most mutual funds to have an independent chair and 75 percent independent membership will ruin the incentive to form new and innovative funds. It should NOT be made into law. Without new and innovative funds, competition and capital formation in the United States will be endangered.

Investment companies have been the drivers of financial product innovation in America. Mutual funds gave people the money market fund, daily pricing of 401(k)s, most investors first experience investing overseas, ETFs and many other firsts. These firsts were not done for the protection of the funds or fund shareholders but because small individual business people (like Mr. Johnson of Fidelity, Thomas Rowe Price Jr. of T.Rowe Price, Jack Dreyfus of Dreyfus/Mellon and Bruce Bent of The Reserve Funds to name just a few) saw an opportunity to create something they thought others would want. They were able to build businesses which they owned out of those opportunities.

Funds do not come into being by themselves. Someone has to take the risk of seeding the fund, gathering service providers like pricing and transfer agents, hiring lawyers and accountants, and investing the money. That someone, in all but name, is the owner. Without true ownership, the incentive for new people to enter the business, to bring creative and innovative ideas to the industry, disappears. Implementing the rule to have an independent chair and 75 percent independent membership breaks the sense of ownership that currently exists and threatens future competition and capital formation.

Nicholas Gerber - Portfolio Manager, Director, and Owner.
Ameristock Mutual Fund (AMSTX)
United States Oil Fund (USO)