From: GCaveness@aol.com Sent: Friday, January 23, 2004 4:24 PM To: rule-comments@sec.gov Subject: S7-26-03: Although stated as a suggestion, I am afraid that companies will simply adopt this following as the SEC recommendation and endorsement. "For example, a fund might state that a 2% redemption fee will be applied to all redemptions within 60 days after purchase or, in describing any restrictions on the volume or number of purchases, redemptions, or exchanges that a shareholder may make within a given time period, a fund might state that it prohibits more than 3 exchanges per year ". 60 days or even 30 or 15 days is too long to curb the type of violations in which they and the fund companies are most interested, whether the offenders are fund managers or individual investors doing in-and-out trading. A time period of 3 to 5 days is appropriate to curb rapid in and out trading, with a maximum acceptable of about 12 days. A fee of more like 1% is more fair than 2%, but the fee is not as important as the time period. If a fund company adopts the SEC suggestion and I sell their fund within the adopted time period, I will lose the amount of the redemption fee. I would rather these misguided companies be better directed, or in fact controlled by the SEC to not have unreasonable redemption policies so that we do not need to eliminate them from consideration in the FTI System. The part about the 3 exchanges per year is also a little weak in that it does not refer specifically to just one fund. It could be interpreted as 3 exchanges per year in any and all funds of the particular company. I have a concern that relates to the importance of fund companies telling us more specifically what their short-term trading policies and restrictions are, rather than many existing statements which read something like: "If we deem a person is engaging in market timing we may limit or restrict future trading", etc. However, this can be carried to an extreme, something I call double redemption fees. Some companies (Munder for example) have had a 1%-1-year redemption fee supposedly to discourage short-term trading. In November, they added a 2%/60-day fee. Thus, you would pay 3% if you sold one of their funds in under the shorter time period. This is an excessive practice and I suggest that it be stopped.