Subject: File No. S7-11-04
From: Darrell D Wiard

March 17, 2004

SEC: I have submitted some earlier comments. However, I can not get this out of my mind. Let me get this straight. The after hours trading and quick trading you say have driven up fund expenses. So to alleviate this problem you are going to implement rules that will drive up fund expenses by billions of dollars. Sounds like the cure is worse than the problem. I have already talked to some of the variable annuity, 401k providers and fund companies. In order to comply with their contractual agreements to allow unlimited daily exchanges which are in the contracts, I imagine these providers will search out mutual fund companies that specifically allow short term trading such as Rydex and ProFunds. As these companies displace companies that only allow long term investors, more fund companies will change their prospectus and serve all segments of the mutual fund investment audience. Further if they serve all segments of the mutual fund audience they will not have to comply with your expensive record keeping needed to administer the long term funds and protect them from short term selling. Sounds like the short term funds will soon become the low cost preferred provider to much of the industry, and rightfully so.
I also concur with the response that pointed out that your rule would make regular monthly deposits and automatic reallocation plans subject to this inappropriate 2 fee. If you can do up to 20 automatic reallocations per month, how does the investor making his own decisions drive the operating expenses up as much as you say? I do not think it does.
I heard the Commissioner of the SEC yesterday on CNBC state that he was opposed to this rule as it was going to enrich the very funds that broke their fiduciary obligations at the expense of the individual fund investor. This rule is just wrong.
The cost to my investors by not being able to sell on March 8th, and for sure on March 11th was 4.71. That loss in capital can not be made up. Each investor should have the ability to make his investment decisions as they see fit, as they analyze the risk. Event Risk is becoming more real every day, and pays no attention to your 5 day hold idea.
Finally, your time zone arbitrage cncept is breaking down. From the start of this year look at the number of days the US was up and the next day the foreign markets dropped. If the reaon for the rule is gone, why are you pursuing this? Darrell Wiard, Merritt, NC