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The Open Fund, a fund designed specifically for online investors, may become the latest fund to employ a relatively new concept in the mutual fund world - proxy solicitations sent via e-mail to fund shareholders.

In a preliminary proxy statement filed with the SEC Dec. 27, MetaMarkets said that the fund's "adviser and the fund's other service providers may solicit proxies over the Internet or by phone and mail." Details of the impending OpenFund Internet proxy solicitation were not available. Open Fund is one of a new breed of online funds that asks investors to receive all fund documents and communications electronically.

While many fund groups have come to accept the Internet as an alternate channel by which shareholders can vote their fund proxies, soliciting proxies via e-mail to fund shareholders is still a novel idea. Only a handful of funds have sent out their proxies via e-mail. American Century Investments of Kansas City, Mo. and Lincoln National Life Insurance Company of Fort Wayne, Ind. have in the past few months tested their own e-proxy solicitations with fund or annuity sub-account shareholders.

The test e-proxy solicitation will arise from the fact that MetaMarkets Investments of San Francisco, adviser to the four-month-old Open Fund, will be restructuring the firm's ownership. It will sell a 25 percent equity stake in its advisory firm to Europ@Web B.V., an investment fund majority-owned by Group Arnault of Paris. Group Arnault is the private investment arm of Bernard Arnault which, together with Arnault's family, owns 47 percent of the French luxury goods company Moet Hennessy Luis Vuitton. Arnault is the chairman of LVMH.

This change in ownership will cause the fund's existing investment advisory agreement with MetaMarkets to terminate and will require investors to approve a new investment advisory agreement with the reconstituted advisory firm. This is the proxy that MetaMarkets will, for the first time, send out by e-mail, according to the firm's proxy statement submitted to the SEC.

According to Mary Ann Butera, senior vice president of sales and marketing at Automated Data Processing, a proxy solicitor in Edgewood, NY, e-proxying has gained popularity within corporate America over the past two years and is now gaining acceptance in the mutual fund arena.

Funds themselves are more accustomed to paper-based proxy statements with accompanying ballot cards that are mailed to shareholders at their address of record. But paper proxies can be bulky and are costly to produce and mail, said Butera.

Advisers will become big fans of e-proxies once they realize their cost efficiency and see for themselves the remarkably fast vote turnaround time, said Peter C. Suhr, executive vice president of ALAMO DIRECT, a proxy solicitation firm in Hauppauge, N.Y. E-proxy voters tend to vote within 24 hours of notification versus days or even weeks for other methods, said Suhr. Butera of ADP receives the bulk of her firm's e-proxy ballots within two to three days. That can shave days or even weeks off the time it takes for paper ballots to return, said the proxy firms.

E-proxy messages are quicker and funds save the cost of postage. An e-proxy usually includes an invitation asking fund shareholders to come to the fund's website. Alternatively, investors may be asked to visit a specially-designed website that is controlled by a proxy solicitation firm to vote their proxies.

At least two proxy solicitation firms currently make electronic proxy solicitation even easier by imbedding in their e-mail to investors direct hot links to the fund's proxy statement and proxy ballot.

Proxies being solicited for more than one fund can even be combined so that investors only need to visit the site once to vote several proxies within the same group. Firms that now print paper fund proxies can easily produce an electronic HTML version of the same proxy document to facilitate electronic solicitations, said proxy firm executives.

In the fall, American Century sent proxies via e-mail to 145 of its 5,900 shareholders of the $118 million American Century Real Estate Fund for a mid-December meeting. These investors had agreed to accept electronic documents.

"It was very simple," said Janet Nash, an attorney with American Century, who was involved in the process.

One major concern of fund advisers is what the real payoff will be.

"How many people will use it [the electronic format]?" asked Richard DeMay, executive vice president of proxy solicitor D.F. King of New York. "Nine out of ten times, people like to have a hard copy in front of them."

"Right now, you are seeing a very small percent of the population consenting to this," said ALAMO's Suhr. The challenge to advisers "will be to actively convert shareholders to electronic delivery," he said.

Another hurdle funds face when soliciting votes by e-mail is getting the e-proxy to the investor.