From: L. Chen [LChen12@earthlink.net]
Sent: Thursday, May 13, 2004 7:31 PM
To: rule-comments@sec.gov
Subject: Re: File No. S7 09-04


Comment on proposed amendments to rule 12b-1 [17 CFR 270.12b-1] under the 
Investment Company Act of 1940

I am an individual investor; and I have the following comment
regarding the 12b-1 fees.

I don't work in the fund industry and therefore don't have the
statistics to prove it.  But from reading the various financials of
the funds that I owned, I doubt that the larger fund size reduces the
operating expense ratio by a sufficiently large amount to offset the
12b-1 itself, least of all to give the fund shareholdes a net benefit
(after the 12b-1 fee) -- once the fund have been in existence beyond
the start-up period.

I believe the primary beneficiaries of this 12b-1 fee are the the
companies that manage the mutual funds. The compensation of the fund
managers is a percentage of the asset size -- so the larger the fund,
the more they get paid. It is adding insult to injury that the
investors should pay so as to increase fund managers' income.


Best regards,

Lily Chen