Subject: File No. S7-06-04
From: Thomas A Morrison, CPA, CFP, Principal

March 25, 2004

I have many clients investing 25-100 a month through bank drafts. Besides receiving a confirmation, they will now get an additional 2-page report from the investment group. What a paper-overload and information overload that will be. And confusing.

And larger clients coming in with 500,000 and the money being allocated over maybe 8 funds, and three registrations his IRA, her IRA, joint money. It is assumed even if the same fund is held in each of the three registrations, that we will have to provide a Fees and Payments report for each purchase. And then I dollar-cost-average this money into the recommended funds over 5 months as I want to go slowly. What a lot of paper and client overload.

My proposals provide clients in writing with a sales charge percentage based upon the estimated amount to be invested and we tell clients that my firm annually earns a servicing fee in the range of 0.20 to 0.25 of the asset value on an on-going basis. The cost estimate is not broken down by each purchase as the fund group links all holdings of the same fund held in three registrations together to see what the cumulative breakpoint will be or gives the investors the Statement-of-intent breakpoint.

Since my firm does not have custody of client money, it is assumed the mutual fund group will have to submit the above reports. Many times I do not even know the amount that is going to be invested as the money is rolled over from the prior employer directly to the mutual fund family, or money is transferred from one IRA to another and bypasses my office.

What happens when a client sends money in directly to the fund family? Confirmation and fees statement each time? My concern is that the more we give clients the more they will be baffled by the volume of what they receive.

If I have a hard time understanding what you mean on the top of the hypotheticals that state Back-end load as minimum of present or future NAV versus back-end load as a function of present NAV, how is a client supposed to understand?

I already give individuals alot of information. Now we will be giving them that much more. They already feel overloaded. Privacy notice, account record form, notification about checking them out on a NASD website to make sure they are not a terrorist, net worth and income requirements, prospectus receipts, drivers license copy, etc. And none of that includes explanatory information about the investment or account type information like Tradtional IRA versus Roth IRA, etc..

Im sure I could provide more input, but I have a real concern about the amount of confusion the proposed approach will cause. I am for more disclosure by many brokers who are not providing much information as I already provide that type of information to clients.

How about a hypothetical illustration of 10,000, 100,000, etc. that clients can sign off that they have received that reflects the difference between the various share classes expenses for each of the above dollar amounts over a 1-year, 5-year, 10 year period of time. Something like what is required to be in the current prospectus, with some additional information. I inform clients in writing that my firm earns in the range of 80-85 of the up-front sales charge and earns in the range of 0.20 to 0.25 annually as a servicing fee.

I work alot with the American Fund family, where the total fund expense, including servicing fee, is less than many no-load funds. Reporting all of the proposed information will put reputable fund groups like the American Funds at a disadvantage.

So much focus on your Hypos is put on the first year cost, which typically is the hardest year for A share funds.

Please feef free to discuss any of the above with me. I would be glad to assist. I believe in disclosure, but there is an over-reaction problem stiring.