Two years ago, it was hip to say that the New Economy reigned supreme, but ever since the tech market soured, it’s become even trendier to say that retail E-commerce was never more than a pipe dream.

But before you endorse either of these extreme points of view, maybe you should talk to Gerry Sullivan or David Schwartz. Sullivan is head of E-commerce at John Hancock Funds, and Schwartz is his counterpart at Zurich Scudder Investments. For both of these Boston-based mutual fund distributors, the Web has become very much a fabric of their day-to-day business.

“Ultimately, the truth will come out somewhere in the middle,” says Schwartz. “I see the Internet as an incredible tool to distribute information and empower people to do business when and where they want.”

Randi Purchia, the research director for financial services at AMR Research in Boston, says financial services firms, while viewing the Web as a necessary part of their marketing strategy, have a far more sober view of it than they did a year or two ago.

“Financial institutions, like all of us, got caught up in the hype,” she says. “Now, deployments are taking a lot longer than some vendors expected, and the decisions are taking longer. I don’t see spending on B2C dropping off the charts. But they are certainly reevaluating it.”

But even with the reevaluation of the Web that’s underway, the cost- cutting rationale is only part of the justification for some Web services.

Sullivan says the launch of Hancock Funds’s Web site two years ago helped cut some costs, and in some instances the reduction was significant. But more than that, the Web has been a means of making it easier to market Hancock’s funds to the registered reps who are its primary distribution channel.

Zurich Scudder has had a collection of Web sites for at least five or six years. Schwartz says he was hired from Fidelity Investments in January 1998 to guide the company’s E-business strategy forward.

“At that point, a couple of the units had Web sites that were up and running,” Schwartz says. “It was primarily brochureware, and they wanted to build an infrastructure in E-business.”

As fund distributors, both companies have certainly seen their share of ups and downs as the tech market first posted record gains in 1999 and then plummeted to a 60 percent loss through the second half of 2000 and the first three months of this year.

While the huge losses haven’t helped the performance for either company’s portfolios, they have served to temper the unrealistic expectations at both firms.

Schwartz says, “I view the Web as a channel that’s complementary to other channels, the phone, mail, and investor centers. The buzzword four years ago was channel integration, or channel harmonization. Today, the buzzword is CRM,” or customer relationship management.

Schwartz is hardly alone. Despite everything that’s gone wrong with the Web, more Old Economy firms, particularly those in the financial services sector, view the Web as integral to their success, says Steve Wicker, a senior research analyst at Meta Group, a Boston-based market research firm. More senior executives, including CFOs and CEOs, are taking an active part in assessing whether the Web strategy fits their overall corporate strategy.

For example, Wicker doesn’t consider the recent decisions by NBC and Disney to shut down their separate Internet operations as an indication that these companies are abandoning the Internet. Rather, he sees the companies are deciding, for both financial and product branding reasons, to merge their Internet operations with the rest of their businesses.

The trend is especially pronounced in financial services. “Financial institutions have completely recognized that non-traditional means of access are going to be a huge factor in the success or failure of their institutions.”

At Zurich Scudder, Web sites are being deployed across 14 distinct business units. For example, one site serves the broker/dealers who sell the firm’s funds to individual investors. Another site serves the American Association of Retired Persons, which Scudder has a marketing deal with.

Hancock Funds is also using the Web as a marketing tool, partly to package video presentations of its fund managers to reach a broad cross- section of the investing public.

Last year, Hancock started broadcasting streaming video of interviews with individual portfolio managers. Sullivan says he can call up a fund manager at 10:00 in the morning, have him in the studio a minute after the market closes at 4:00 pm, conduct a 15-minute interview, and ship the video to Digital Island, which then reformats the video into a streaming media format.

By 6:00 pm that same night, the video is stored on Hancock’s server and is ready for viewing.

The great appeal to Sullivan is that the Webcasts slash the cost of a major presentation by as much as 90 percent. The fund company will take advantage of this low-cost approach on May 1, at 8:00 pm EDT, when chief investment officer William Braman will lead four other Hancock fund managers in a Webcast for shareholders. The Webcast will be hosted by Akamai Technologies, and the total cost will be $10,000 to $15,000.

A spokeswoman for the fund group points out that if the same group had been sent on a road trip to five or six cities, they would have been out of the office for a week and taken at least five or 10 support people with them. After all the costs for meals, airfare, and hotel costs are factored in, a road show involving so many people could easily cost $150,000.

While it’s not a one-for-one tradeoff — the Webcasts don’t mean that Hancock is giving up road shows entirely — they do permit the fund company to reduce the number of road shows without abandoning the presentations it makes to shareholders.

That said, the Webcasts have the potential to reach a larger audience: Because they’re on the Internet, the managers can reach many more people than they might have had they just visited a few cities. What’s more, the tape of the Webcast can be archived for several months after it’s original air date.

Sullivan acknowledges that it’s difficult to quantify both the long- term costs and benefits of a Web effort. But he also says, “Any time we do a project, we look at the ROI. It doesn’t have to be profitable, but it has to do something that will enhance our business.”

Moreover, at a time when the bear market has squeezed marketing budgets tighter than a drum, the Webcasts are an inexpensive means for maintaining contact with clients, Sullivan says.

Schwartz says Zurich Scudder has moved away from calculating the returns of specific Internet programs, in part because the projects are woven so tightly into the fabric of the individual businesses that it’s all but impossible to nail down the precise return on investment from the Web component alone.

“There’s a difficulty in even calculating ROI,” Schwartz says. “It’s proved to be a very thorny problem.”

It’s not that Zurich Scudder is ignorant of the costs of its Web efforts. The fund company knows what it costs for a customer service rep to field a phone call and handle a fund redemption. But in other instances, where the Web is essentially one of several distribution channels, the technology, marketing, and customer service components of the Web effort are simply part of the overall budget for the business unit involved.

Still, both E-commerce directors need to get their senior management’s approval before they embark on a new Web project.

Last year, Sullivan says he had to get the approval of the five-member management committee, including the CFO, at Hancock Funds, before he started work on the Webcasts.

At Zurich Scudder, the Web aspect has simply become a part of the overall business plan at each business unit. So when line managers present their annual business plans, the Web is one piece of a larger equation.

The weak economy may have led financial firms to pinch pennies on some of their technology projects, but they’re not about to nickel-and-dime them to death.