People at the Investment Company Institute's annual conference are used to hearing panelists praise the mutual fund industry or offer discreet warnings about its pitfalls.

But three executives from computer and Internet companies dispensed with such decorum at the start of the trade group's gathering here with blunt assessments of how e-commerce will affect the industry.

"The Web is a giant threat to the financial services industry," Jay S. Walker, founder and vice chairman of, said in response to a question.

The company is an on-line clearing house for everything from airline tickets to mortgages.

His comments drew murmurs, raised eyebrows, and surprised laughter from the audience of several hundred.

Mr. Walker went on to compare the challenge that the mutual fund industry faces from on-line competitors to the threat that the newly invented automobile posed to the horse and buggy, that television posed to movies, and that airplanes posed to trucks as cargo haulers.

Richard Owen, vice president of Dell Online and a member of the same panel, said big, successful fund companies are most at risk because their accomplishments under today's ground rules tempt them to be complacent.

He called the Internet a "huge threat" for those companies that command most of the market. "If you're a winner today I think you've got to reinvent yourself to be successful in the future," he said.

Fund companies must forget the fear that selling their products on-line will cut into sales through traditional channels such as brokers, Mr. Owen said.

"If you're not cannibalizing, you can count on the fact that some fairly smart people are going to do it for you," he said.

Such do-or-die talk, common in the on-line business, is fairly new to the mutual fund establishment.

Peter J. Germain, managing director of mutual fund services at Federated Investors, said the panel discussion was a valuable wake-up call for the fund industry.

"There's a tendency to think you don't need to be ahead of the curve," he said.

Exactly what - or whom - do the established players have to fear? The panelists suggested it would be a nimble new company that has yet to emerge, using as an analogy the way that emerged from nowhere to shake up book sales.

Mr. Walker and Mr. Owen, along with Meg Whitman, the president and chief executive of eBay Inc., a portal company, agreed that e-commerce-the buying and selling of goods and services over the Internet-will come into its own within four years.

By then, voice recognition capabilities will have made the Internet even less intimidating to typical U.S. consumers, they said.

Fund companies that stick exclusively to the old way of selling may avoid the expenditures needed to open a new distribution channel, but they will be "stuck with an eroding profit base," Ms. Whitman said.

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