As a retired attorney, Milton Shaffner loves to jump into a good debate. The 92-year-old is currently on a quest: He wants to persuade the mutual fund industry to stop sending out so many paper reports. He complains that all this paper is wasteful and that producing elaborate reports costs investors too much.

Shaffner has called his mutual fund company, many times, to raise the issue.

"And my fund company refuses to tell me how much it costs to produce this," he said of one of the big, dense reports that fill the mailbox at Shaffner's Pompano Beach, Fla., condo. He doesn't see why, either, his annual and semiannual reports cover every single fund the company offers while he owns shares in just one of them.

"I don't think anyone sits down to read a 242-page report on his funds."

Research from the mutual fund industry backs him up: Seven out of 10 recent mutual fund investors didn't look at shareholder reports before buying their funds.

Shaffner's point -- that investors should be able to opt out of getting a mountain of paper reports -- is in sync with the current goals of the industry and regulators. The Securities and Exchange Commission, under Chairman Christopher Cox, who was an early proponent of the Internet, increasingly is interested in allowing mutual funds to communicate with their shareholders electronically, rather than through reports sent in the mail.

SEC commissioners recently decided that investors can tell companies and mutual funds how they want to receive proxies -- electronically or on paper. Proxy statements are election materials for selecting the board of directors.

More initiatives to cut back the pile of paper are under consideration.

The Investment Company Institute, the mutual fund industry's largest trade group, is a big supporter of streamlined disclosures. So are major fund companies such as Franklin Templeton, one of the fund firms Shaffner has been peppering with questions. He's also called other fund companies, written to the SEC on several occasions, and communicated with the South Florida Sun-Sentinel about the issue countless times.

"Mr. Shaffner's concerns are shared by many," said spokesman Matt Walsh of Franklin Templeton.

So many, in fact, that more than 100,000 shareholders at Franklin Templeton have already opted to get certain kinds of information online, such as their personal statements and tax documents.

ICI President and CEO Paul Schott Stevens said in an interview that the reason for wanting to streamline disclosures "for us has not been about efficiency or cost savings, but about how do you inform people most effectively."

The Internet makes it possible to sweep volumes of information online, he noted, while giving people the information they most need -- a fund's risk and return, its objective and past performance, the fund's expense ratio -- in a concise document.

Stevens said he expects to see an SEC proposed rule on the industry's plan for a "quick start" prospectus sometime this year. It would focus on summarizing the risk versus the return on the fund. A prospectus is the first document investors receive when buying shares.

Extending the streamlining campaign to other reports as Shaffner would like is "a very good idea," Stevens said. "The annual reports probably contain more detail than most people need."

Don't get the idea that all of Shaffner's proposals are making headway. Mutual funds don't seem likely to stop putting all their funds into a single report, which he doesn't like. And Shaffner wants the right to refuse to receive all that paper, but he acknowledges he's not going to be looking for information online, either.

But the streamlined disclosures, if adopted by the SEC, "would represent an acknowledgment that many fund investors currently are overwhelmed with paper," Andrew Donohoe, the director of the SEC's Division of Investment Management, said earlier this year.

Not to mention what mutual funds could do with all the money they save on printing.

"Maybe if they save $5 million in unnecessary expenses, they'll increase the dividend instead of cutting it," Shaffner said.


Harriet Johnson Brackey is a columnist for the South Florida Sun-Sentinel, a Tribune Co. newspaper.