Subject: File No. S7-11-04
From: Laurence C McBride, Ph.D.

March 18, 2004

Your proposed regulation of a 2 percent short term redemption fee for purchased mutual funds held less than 5 days is a perfect way for you to punish individual investors while enriching the crooked fund companies that have allowed excessive trading for a few which is prohibited by their prospectuses.

While I rarely sell newly purchased funds within 5 days, I do have a stop loss discipline that causes me to exit a position if the market should go strongly against my entry point. The fact that you would seek to penalize me when this situation does occur adds to losses I will sustain. The idea that I should somehow be forced to hold a position in the face of a plunging market is truely offensive to me. Dont you understand that it is important to manage risk in ones portfolio?

Some funds have a rule that says investors are allowed only four buy/sell transactions in a fund per year. I find a rule such as this entirely reasonable. It addresses the problem of excessive trading while neither punishing the individual investor for selling when markets decline nor enriching the fund companies at the expense of the investor. Please consider a more neutral rule such as this.