David P. Rakestraw
P.O. Box 2436
Blue Ridge, GA 30513

February 18, 2004

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Dear Mr. Katz,

Thank you for the opportunity to provide comments to the above proposed Rule.

Attachment 1 of Release No. 33-8358 provides an example of confirmation disclosures in the sale of class A mutual fund shares to a retail investor. The confirmation example shows a NAV of $18.17 and a price {NAV plus load} to a customer of $18.93 or $321.18. To arrive at the retail price the sales charge would be 4% of $18.17 computed as 100-4=18.17x100/96=18.927083 {18.93}. The front-end sale charge is applied to an investment before the investment is made. This method of calculating a sales charge on an open-end mutual fund retail transaction appears to render excessive compensation and is material to an investing customer regardless of the quantity of shares purchased.

When a customer purchases on a principal basis an equity security from a broker-dealer SEC Rule 10b10 requires the confirmation to disclose the amount of markup separate from the prevailing marker price or the price to the broker-dealer. The percentage amount of markup is readily determined without the customer having to go through a convoluted computation. A prevailing market price of $18.17 on a principal retail sale of an equity security with a markup of 4% would have a confirmation price of $18.90 {18.18 x 104%=18.8968}. The computational difference is material and a customer should be fully and fairly informed on a confirmation of the cost over and above the net asset value. The industry practice in calculating a sales charge on an open-end mutual fund transaction is costing the investing public an unjustified fractional amount of sales charge.

Some investment companies have up to 5.75% sale charge. The effective sale charge to a customer would be 6.10%. I believe such a sales charge is an unacceptable burden on the investing public. It is my understanding that most of a sale charge is a dealer commission. A broker-dealer is entitled to a reasonable profit but a retail customer should not have to bear the cost of sales campaigns and promoting investment company products. There should be a requirement that the higher the sales charge the lower the breakpoint. Many small investors never see the benefit of a breakpoint sales charge when the breakpoint is at the level of $50,000.00 as is in some mutual funds. A Letter of Intent serves no useful purpose when the breakpoint is out of reach.

The National Association of Securities Dealers, Inc. has a 5% Mark-Up Policy and determines the fairness of retail pricing based upon this policy on a transaction-by-transaction basis. It would be fair and equitable and in the interest of the investing public for the markup in a principal transaction and the sales charge in an open-end mutual fund transaction to be determined by the same method of computation. Would not the interest of the investing public be served if consideration were given to a similar policy Mark-Up Policy on sales charges in open-end mutual fund transactions?

Sincerely,

David P. Rakestraw