Subject: File No. S7-06-04
From: John Doe

December 17, 2005

Secretary Jonathan G. Katz
Securities and Exchange Commission, File No. S7-06-04
450 Fifth Street, NW
Washington, DC 20549-0609

Dear Secretary Jonathan G Katz,

I welcome all and any Implementation of rules and regulations that help reduce investors disappointments with mutual funds, especially since some investors depend on their investments for retirement or college expenses.

I must however make aware or bring to light any rules that Fund Companies enforce without disclosing to the very investors they are trying to protect from harmful transactions such as Market Timing or Short-Term Trading.
For Example I know of a Fund company that has an unwritten rule of that all Monies invested in its funds must be held in that fund for 90 days, this rule is enforce without the investors knowledge. For example the firm has Mutual Funds, which its prospectus clearly states that a short-term trading fee will be enforced if any trade deemed as a short-term investment occurs. All other Mutual Funds in its list of investment options dont contain that same disclosure. So although the prospectus states that the fund allows three exchanges per quarter or 5 per year, any shareholder trying to do an exchange to avoid excessive investment loss due to market fluctuation will be penalized as a short-term trader because of the unwritten 90-day rule. No fee is enforced, but stops are added to the accounts and a letter sent to the client informing then that they have been in violation of the prospectus. So whether the investor is making a 50.00 exchange or a 50,000.00 the 90-day rule is enforced. This rule does not allow the investors to make the number of exchanges stated in the prospectus. Also the training manuals clearly state to the phone reps assisting the investors that 3 exchanges are allow per quarter 5 per year, nothing about the 90-day rule. Shouldnt the fund company be obligated to disclose this information to all investors the unwritten 90-day holding period? This information would definitely help me deciding whether or not I invest my money with this particular Fund Company.

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