Subject: File No. S7-09-04
From: John A Buetow, CLU

May 13, 2004

A significant number of clients are public school teachers. I meet with each teacher at least once/year to conduct a thorough review of their accounts. The 12b-1 service fee is what allows me to meet with the teacher who participates in the emploer sponsored 403b Plan at a relatively low contribution level, i.e., less than 100/pay. A typical commission rate for this business is 3 of the elective deferral amount. For the teacher who contributes just 25/pay 650/year, my commission compensation would be 19.50. At that amount, without the 12b-1 service fee, I simply could not afford to meet with that teacher on a regular basis.

A particularly service intensive time for me is from Febraury 15-April 15. During these two months, I average 3 phone calls per week from CPAs looking for cost basis information for our mutual clients. I devote a significant amount of time to research my client files to construct the basis for various mutual fund sells. I receive no direct compensation from the client, or the CPA, for this valuable service which I provide. Receipt of the 12b-1 fees is my only compensation for this service work. If the CPA were to construct the cost basis without my assistance, I assure you that the client would pay the CPA far more in additional tax preparation fees than they are paying me in 12b-1 fees.

On a typical day in my office, I spend 2-3 hours dealing with service related issues: Beneficiary changes, address changes, re-registration of accounts i.e.,Joint to Trust, bank account changes, fund exchanges, RMD calculations, and most of all, education. Without the 12b-1 fee, I would have to bill the client an hourly rate for services provided, just as their accountant or attorney does. A client who has 10,000 of assets with me would pay me a 12b-1 fee of 25/year based on the typical 12b-1 fee of 25 basis points. On a bill for service basis,in lieu of a 12b-1 fee, the client will absolutely pay me far in excess of 25. It will cost the client 25 just for me to answer the phone.