From: Ron Pray [rgpco@garlic.com]
Sent: Friday, April 30, 2004 2:18 PM
To: SEC
Subject: File No. S7-09-04 - The Possibility of 12b-1 Repeal

I am a licensed life insurance professional also licensed by the NASD
(series 7, series 24, series 63 and series 65).  Further, I have been
licensed as a Registered Investment Advisor since 1989.  My practice has
grossed in excess of $500K per year for years and an increasing
proportion of this has been the growth of our 12b-1 fees.  I have been
in the business since 1971 and I have watched the evolution of the
industry for 30 years while trying to build my practice.

I cannot emphasize enough how positive I feel 12b-1 fees to be for the
consuming public.  If anything, I would suggest lowering the initial
sales load as opposed to reducing or eliminating the 12b-1 “trail fee”.

My suggestion here is based on the fact that I must maintain a
professional staff to adequately service our clients’ ongoing investment
demands.  The advent of 12b-1 fees tells someone like me that indeed,
when you begin a business relationship with a customer that you can tell
them that you will be there in the future despite where their life may
go, despite what requirements may be made to re-title the investment,
etc.  They will have someone to call to track down their lost dividend
check or call their bank to be sure is was properly credited, etc.  The
service expectations are unlimited and in a personal service business
such as mine they must be paid for.  The 12b-1 fees do that.

Repeal of such fees will throw the business back years in that every
time a customer asks a broker for help, the answer would be, “you need a
new mutual fund” (replacement).  This, of course, prompts discussion of
a new sale and if this were done on an industry-wide basis, it would be
much more deleterious to the consuming public.  Personally, and not for
my reasons but for the reasons I have observed with the consumer, 12b-1
fees are the best thing that ever happened for the mutual fund investor
because it supports a very basic premise of the industry which is, one
single fund family can theoretically provide for your investment
requirements for a lifetime.  If that is not the point of the mutual
fund industry, then I am missing the point as to what is.  Again, these
12b-1 fees support that concept.

In summary, I sincerely believe that repeal of 12b-1 fees would be the
worst thing that could happen in terms of regulating the mutual fund
industry.  It would turn it into what I believe it once was: a shark
tank of sales people looking for a one shot sale with no interest in
“being there” for that customer after the fact.

Ronald G Pray CLU