NEW YORK - Few mutual fund companies are using e-mail to communicate directly with their shareholders, executives said at a conference here recently. Furthermore, less than half are taking advantage of e-mail or their Internet sites to post unwieldy compliance documents. The failure to do so represents a valuable lost opportunity, the executives said.

"E-mail is a beautiful, zero-cost channel that exists to communicate with our investors and build a rapport with them," said Steve Dunlap, vice president of CDA/Wiesenberger, a mutual fund tracking firm in Rockville, Maryland, that is owned by Thomson Financial Services. Thomson also owns Securities Data Publishing, the publisher of this newsletter.

"E-mail is a vastly under-utilized resource," Dunlap said. "It is also a communications channel that most on-line investors are very familiar and comfortable with."

It is important to use direct channels, such as e-mail, to communicate a mutual fund's news directly to investors, even if it is a simple piece of information like a decision by a portfolio manager, said Dunlap.

Dunlap and others spoke at a conference on mutual fund supermarkets, earlier this month, sponsored by International Business Communications of Southborough, Mass., a company that organizes educational conferences and seminars on financial services.

Communicating on-line with investors is also very popular in this age of on-line trading, said Eugene Daly, vice president, western region, for ICON Funds of Englewood, Colo.

Daly suggested that mutual funds begin making their portfolio managers available to shareholders through e-mail and provide separate sites for financial advisors and retail accounts.

Garrett Wiley, vice president of strategic alliances for NewRiver Investor Communications of Watertown, Mass., suggested that mutual funds cut down on their budgets for mailing compliance documents to shareholders by posting the reports on their web sites, or sending them via e-mail.

Wiley estimated that the cost of sending "e-documents" averages only 25 cents. The same documents cost an average of 90 cents to send through the mail.

The conference speakers agreed that if a mutual fund company uses e-mail to communicate directly with investors, it must provide more customized service than a customer would receive through conventional communications but without inundating customers with junk mail.

Wiley estimated that only 45 percent of mutual fund companies are electronically delivering compliance documents. He did not estimate how many are currently e-mailing their customers.

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