Subject: File No. S7-09-04
From: Donald Steinmann

April 14, 2004

It is time for the 12b-1 rule to be rescinded. One of the SECs primary goals is transparency for the investing public. The 12b-1 rule is one of the prime culprits of investment industry opacity. I talk with investors frequently. I would estimate that 90 percent of them have no idea what their mutual fund fees are. Most believe that a mutual fund without a load is a fund without sales charges. Usually the only disclosure made is in the prospectus. Ive never heard of a single instance where a broker voluntarily told an investor what the mutual fund fee structure was.

The other culprit of the 12b-1 rule are the no fee mutual funds networks at discount brokerages for no-load mutual funds. Individuals are lead to believe that they can buy and sell mutual funds without any fees being charged. Ive never spoken with an investor who understood that the discount brokers receive 12b-1 payments from mutual fund companies. Those fees often end up costing a great deal more to the individual, as they are paid even if the investor doesnt trade in and out of mutual funds.

It would greatly serve the goal of transparency if the 12b-1 rule were rescinded. Buy a loaded mutual fund, pay a fee. Buy a no-load fund from a discount broker and pay a transaction fee. The amount charged would clearly show up on the investors statement. No more hidden charges. I would strongly urge the SEC to take this opportunity to rescind the 12b-1 rule entirely.

Donald Steinmann
Advanced Financial Management