From: mr.ira [mr.ira@sbcglobal.net]
Sent: Saturday, March 20, 2004 10:11 AM
To: rule-comments@sec.gov
Subject: S7-11-04:

  *  Mandatory redemption fees, if imposed, will
     detrimentally impact millions of mutual fund investors who
     periodically reallocate their accounts as well as many
     retirees who receive periodic distributions from their
     retirement accounts. It is not these people who are the
     abusive traders of mutual funds.
  *  Mandatory redemption fees penalize investors for
     managing risk in their mutual fund accounts.  In a study of
     the S&P 500 over the past 10 years, there have been 404
     occurrences where an investor waiting five days to avoid a 2%
     redemption penalty would have experienced a greater than 2%
     loss.  46 occurrences would have resulted in losses from 5 to
     10% while 5 of these instances would have resulted in a loss
     of greater than 10%. (this data has been posted to SAAFTINet
     and www.saafti.com ).
  *  Mandatory redemption fees will limit the ability of
     Registered Investment Advisors to manage client accounts
     effectively depriving investors of professional assistance.
     Periodic changes in fund positions for rebalancing or
     changing asset allocations would have to be made on an
     account by account basis to avoid incurring a redemption fee
     in instances where the investors may have added or withdrawn
     funds recently. This will be prohibitively time consuming and
     costly for advisors to administer.
  *  Most experts agree that better solutions to curb abusive
     short term trading are fair value pricing and clearly stated
     policies on purchase and redemption policies that are
     uniformly enforced.
  *  Mandatory fees should NOT be imposed by funds that do
     not have a problem with abusive trading.  The SEC's proposal
     amounts to price fixing. Funds should have the discretion to
     decide whether or not investors should be penalized to remedy
     a problem that may not exist.
  *  Any redemption fees, especially mandatory fees, should
     only be used to recoup actual costs incurred by the fund by
     abusive traders.  Data referred to by the SEC in accounting
     for the costs of abusive trading on a portfolio were over a
     decade old.