From: Dennis F. Kratohwil
Sent: March 29, 2005
Subject: File No. S7-06-04

Dear Mr. Katz,

I usually only send the form letter, which you'll get an abundance of, but thought an additional point is necessary. It wouldn't be that damaging to disclose costs if there were a requirement to disclose performance. If helping the consumer is the object, focusing only on cost is probably more harmful than relying on the current prospectus which addresses both.

To do the complete job, how about using the stock software available from companies such as Morningstar or Thompson, which most of us use routinely in our practices, to present relative rankings of a particular fund/annuity relative to the other thousands available. Obviously, similar funds must be compared, i.e. domestic small cap growth. These comparisons would show percentile performance rankings, net of costs, for 1,3,5,10 years and longer durations and would include many other attributes such as number and tenure of managers, volatility, age of fund, load structures available (A,B,C shares...) etc.. At least this way the purchase would resemble the usual buying experience where one is presented with the price tag attached to the item being considered for purchase.

The above applies to a simple fund or other product purchase, but how to deal with wrap fees and practitioners who charge a fee for their services. For example, how to relate a general financial planning consulting fee (perhaps inflated) to the specific part of the plan implementation of investments using "no load" mutual funds? The funds' costs would look great but would not reflect the real cost.

Requiring disclosure of only costs would be like expecting car shoppers to benefit by going into a dealership with the cars covered with tarps but with price tags on them.

So can a consumer really benefit by knowing what a particular product costs without relating it to other available cost/benefit options?

For these reasons, I urge the NASD withdraw the proposed rule until it can be modified to properly aid the consumer.

Thank you for your consideration of my views on this matter.

Dennis F. Kratohwil, CLU, ChFC, CFP