Subject: File No. S7-06-04
From: Alain Nicolas

February 28, 2004

I am thrilled and all in favor of the redemption fee limits you are proposing. Having said that please dont let this turn out to be an excuse to further benefit mutual companies and hamper the investor.

Fact is some unprofessional fund companies traded after hours and some people took advantage of the fund companies as well. Yet the panalties all seem to be directed towards the investor?? As a smoke screen to show we are cleaning up big bad mutual fund companies, imposing more than a 5 day term is only hurting the investor.

I say this because mutual funds that want to deter this action already have redemption fees in place. Some will only use this as a reason to increase their limits to more than 6 months or a year. Yet while they trade daily, supposidly for our benefit we are tied to them because of a redemption fee. More than 5 days is not beneficial.

The point is that this 5 day limit is all that is needed for a majority of abuse to stop from investors side. The most and the very worse abuse was by the mutual fund companies and except for penalties, I dont see any laws in place or any that are proposed to stop them. The penalty is onesided and the mutual fund companies will make even more money, be less responsable to the investor if this goes to far.

I am all in favor of fair play and honesty. Yet when laws are made to penalize the innocent and help the guilty I wonder what is going on. We dont need more regualtions, Like mopst cases in this country we need more enforcement.

The rule would require all mutual funds to impose a 2 percent fee on the redemption proceeds of shares redeemed within 5 days of their purchase. The fund itself would retain the proceeds from the redemption fees. The rule is designed to require short-term shareholders to reimburse the fund for the direct and indirect costs that the fund pays to redeem these investors shares. In the past, these costs generally have been borne by the fund and its long-term shareholders. Thus the redemption fee would be a user fee to reimburse the fund for the cost of accommodating frequent traders.