Actively-managed mutual funds have been out of favor in recent months because of two rapidly developing trends. Funds pegged to a market index, like Standard & Poor's 500, have gained in popularity, not only because they can outperform many actively-managed funds, but because they take less of a bite out of an investor's earnings through low management fees. In addition, the popularity of Internet stocks has drawn investors away from activelymanaged funds to invest in individual Internet stocks.

These market developments have stimulated the introduction of investment alternatives to mutual funds. At the end of September, Merrill Lynch, Pierce, Fenner & Smith launched one of these alternative vehicles that takes advantage of investors' interest in Internet stocks and their concern about the cost of owning a mutual fund.

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