A study released last week that includes a list of the top 20 fund websites changed its selection methodology for the second straight year, a factor that may have contributed to four firms being dropped from the list, said Lee Kowarski, a consultant with kasina LLC of New York, the technology consulting firm that conducted the study.

The four new companies on kasina's top 20 list include; Founders Asset Management and INVESCO Funds Group of Denver, Gabelli Asset Management of Rye, N.Y., and Oppenheimer Funds of New York. The firms replace Kemper Funds and Scudder Funds of Boston, Morgan Stanley Dean Witter of New York and Safeco Funds of Seattle.

"Ideally we would like to keep categories consistent for awhile," Kowarski said. "But we can't neglect changes that are going on the web. I would imagine next year will be the same." Because the web and the fund industry are constantly changing, the firm needs to adjust the study's selection criteria in order to remain relevant, he said.

While the new funds added to this year's list were probably close to making the list last year, the change in methodology could have given the funds an added edge this year, he said.

This year's study, which evaluated 421 fund websites, added a new category to its selection criteria and merged two others into one category, Kowarski said. This year's study measures a website's branding effectiveness and it merged criteria that measured a site's connectivity and a site's design and presentation, into new categories.

The study now measures each site on branding, content, online services, usability and web technology.

Last year's study also involved several changes from the previous year's study that were factors in adding new fund companies to the firm's top 20 list, said Steven Miyao, the firm's senior vice president, at the time.

Despite this year's changes, the study is a good one because of its thoroughness in evaluating each site, Kowarski said. The evaluation requires firms to answer 200 questions as well as participate in an interview, he said. The interview holds the greatest weight in the overall scoring and is used to determine if a firm's online strategy matches its overall strategy, he said.

In addition to naming the top 20 overall fund websites, the study names the top 10 small fund websites, the top 10 websites for financial professionals and the top three firms in each selection criteria.

The lists are posted at www.kasina.com/top20sites.

The study also examines the fund industry's online strategies and trends. While the study found that the number of fund websites has grown from 186 in 1997 to 421 in 2000, there are several areas where the fund industry is lagging in its online business strategy.

"Many fund companies still do not fully understand the impact that the Internet is having on the industry," said Miyao in a statement. "We are seeing some firms continue to welcome and employ new Internet technologies, but at the same time many firms are stagnating; 42 percent of fund companies do not have account applications available online and 58 percent do not allow clients to check their account balances via the Web. While these numbers are improvements from previous years, it is difficult to believe that some firms would still require prospective clients to make a telephone call for an account application."

Still, the study reveals significant changes in the industry's overall online capabilities have occurred since last year. Some of the notable changes include - 25 percent of websites evaluated allow investors to perform transactions, up from 15 percent last year; 38 percent have an investor education section, up from 28 percent last year; and 67 percent of sites update their fund prices within 24 hours, up from 60 percent last year.

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