HOLDR, PAL, HERE’S A WAY TO GET 20 TOP INTERNET STOCKS IN ONE

Investors craving a piece of the Internet stock craze might get a good amount of exposure by buying into a new idea.

Merrill Lynch’s Internet HOLDRs, selling as American depositary receipts, are a stock of stocks, so to speak, representing investments in the common stock of 20 companies involved in various segments of the Internet industry.

The HOLDRs began trading last month under the symbol “HHH” on the American Stock Exchange, according to a spokesman for Merrill Lynch. They opened at 108 on Sept. 23 and closed at 112 the following day. The HOLDRs were still trading in that range as of last Wednesday.

Merrill Lynch, Pierce Fenner & Smith, the broker-dealer subsidiary of Merrill Lynch & Co. Inc., has priced about 3.8 million HOLDRs at an aggregate offering price of more than $400 million.

The largest holdings in the security are: America Online Inc. (21 shares); At Home Corp. (17); Yahoo! Inc. (13); E*Trade Group Inc. (12); and Amazon.com Inc. (9). The number of shares the HOLDRs hold in each company is not expected to change, barring events such as stock splits, reverse splits on the underlying securities or reconstitutions.

The stocks held are the 20 largest and most liquid Internet companies measured by market capitalization and trading volume. The company said in a statement that the Internet HOLDRs are “the first registered U.S. security to represent investors’ undivided ownership rights in other U.S. securities.”

The actual shares may be purchased on the Amex or through the Bank of New York Co. Inc., which acts as trustee for the Internet HOLDRs Trust, issuer of the stock.

Crain News Service