Subject: File No. S7-06-04
From: kathleen browning ceicys, mba

March 12, 2004

It is an excellent idea to completely disclose to clients all costs associated with their mutual fund purchase, whether the purchases involves commission or is done at nav.

My objection is the proposal to eliminate 12b1 fees.

The Mutual Fund industry has grown substatially in the last 10 years. The amount of money inside mutual funds is in the trillions. Yet few, if any, funds have reduced their overall internal management costs.

The 12b1 fee, a part of the internal management expense is paid to the broker. That fee is the only payment a broker receives after the initial investment into the mutual fund.
If the ongoing income of 12b1 fees is eliminated, there is no monetary incentive to actually monitor a small clients mutual fund account.

I believe all costs should be reduced. I believe commissions should be reduced. I believe internal management fees should be reduced, which includes the 12b1 fee. But the 12b1 fee should not be eliminated. I believe it will cause brokers to look to move clients money more often to earn new commission.

Through out the last ten years, all decreases in costs
have been done to the commissions, which affects only the broker. The mutual fund companies, with their lobbying power, have increased their fees over the last 10 years.

The reduction in costs, must be borne by the mutual fund companies, not just the brokers.

I feel the people who truly work in this industry providing investment advice to the small client, which is what mutual funds do, are never consulted during these review. Only the ceos of the powerful Bds. People making the decisions, need to talk to more of the honest independent financial advisors before making changes.