Subject: File No. S7-11-04
From: Mark D Pankin

May 7, 2005

I think the idea of establishing a uniform voluntary redemption fees for mutual funds, such as 2 for sales within five days of purchase, is a bad one and should not be adopted by the SEC. The primary reason is that such a standard would be contrary to the SECs prior actions, which were well taken, that any redemption fee should must? be justified by the fund showing that it is related to the costs incurred by the fund and its share owners from short-term trading. Most funds that currently impose short-term trading fees do it in amounts less than 2, so that should mean their costs are below the proposed level.

I am afraid that if the SEC endorses a particular fee level, funds will be encouraged to adopt it. Worse, that would penalize those who sell within the specified period to an extent greater than the actual costs to the fund and its other share owners since those funds would not have demonstrated that 2 is their real cost. Moreover, funds should not be allowed to adopt redemption fees at any level without demonstrating that the short-term trading has a negative impact on the fund. By setting a standard, funds may ignore that and just go ahead and adopt the fee since
they can say they are following SEC specifications.

If the SEC does adopt a fee standard, there are some provisions that should be included. Among these are
a-requiring funds to use first in, first out accounting when determining if fees are applicable
b-allowing errors to be corrected without penalty
c-have a minimum sale amount, say 10,000, below which the redemption fee would not apply

There has been no evidence that lack of an SEC redemption fee standard has been a problem or had a negative impact for mutual funds and their share owners. However, adoption of such a standard may hurt some share owners who are forced to sell shares due to circumstances that are beyond their control or were not reasonable to anticipate. In other words, if it aint broke, dont fix it