Subject: File No. S7-08-04
From: Colin F Smith

February 18, 2004

My comments pertain to the ill-conceived proposed changes to 12-b-1 fees.

As a primary proponent of A share class funds,limited to those funds with total annual expenses less than the industry average for that category, the 12-b-1 fee average is 23 basis points annually.

If the concern surrounding 12-b-1 fees is focused on this rather paltry charge, then I would submit everyones time could be spent elsewhere more profitably.

If the concern is that the 12-b-1 fees levied in the B and C share classification, currently topped at 1, are excessive, then why not just eliminate B and C share classes forthwith?

Seemingly, that would be simpler and:

1. encourage the use of A share classes where expenses are generally less than in any other share class and,

2. allow investors to receive, in any one of three ways, a reduced and eventually eliminated sales charge and low expenses.

One must also ask the question: what do representatives such as myself, do with the 12-b-1 fees?

1. we pay tax on them...and if we are self-employed, we pay an exorbitant tax on them

2. we use them to defray the costs attendant to ateending conferences....Morningstars annual event in Chicago for example, so that we might, through exposure to education, better assist our clients in reaching their goals and objectives

3. we use them to underwrite, in part, educational sessions for our retirement plan participants...commonly referred to as lunch and learns to comply with the requirements of ERISA section 404

4. we use them, if anything remains, to defray again in part, the cost of our malpractice premiums.

So,if as the Chairman suggests the the 12-b-1 rule might have outlived their usefulness, would the Chairman have us return to the days of 8.5 sales charges as mandated, if memory serves, under the Investment Company Act of 1940?

And, why did no one, from Eliot Spitzer to Senator Peter Fitzgerald complain about 12-b-1 fees during the period 1990 through 2000?