To hear marketing managers talk about their technology mutual funds, one might believe that uttered alone, Internet is a word unfit for proper company.

Many of the largest fund complexes - like T. Rowe Price, Invesco Funds Group and Kemper Funds - are intentionally not marketing their technology funds. In explanation, at least one company, T. Rowe Price, said it did not want to take advantage of "all the Internet hype."

Those technology funds that are marketing, are promoting their portfolios as well-balanced products poised to gain tremendously from the Internet revolution - but not from investing exclusively in Internet start-ups.

Instead, technology funds are promoting the fact that their portfolios are invested in older technology firms that have recently developed Internet initiatives. They also stress they are aiming to invest in a wide variety of companies using the Internet as a distribution or marketing channel. And a great many technology funds promote the fact that they are investing in tertiary companies supplying Internet infrastructure: microchips, servers, portals, cabling, data security, software and web design.

Technology funds are taking this tack in an effort to distinguish themselves in the increasingly crowded technology area, their marketing managers say. But more importantly, they are spreading their investments among a variety of technology stocks to mitigate risk.

Last Monday's sudden drop in the value of Internet stocks served as a reminder of how important diversification in a technology fund can be. On April 19, the technology-laden Nasdaq Composite Index fell 138.43 points, or 5.57 percent.

Even a fund named after the Internet, the WWW Internet Fund, is wary of investing in Internet start-ups. The fund's manager, WWW Advisors of Lexington, Ky., does invest in emerging Internet companies with limited financial histories - but invests only one-quarter of the fund's assets in such firms. A full 75 percent of the fund is invested in "established and mid-life technology companies" that have changed their business strategies to "aggressively pursue Internet products," said Lawrence York, the fund manager.

New Internet companies in WWW Internet Fund's basket include America Online, eBay, Excite, CyberCash, DoubleClick, Excite and Yahoo. Older technology companies that have made their way into the fund's portfolio include Microsoft, Sprint, AT&T, BellSouth, CBS, Time Warner, Novel Networks and PeopleSoft.

"We think this three-tier approach helps to mitigate risk in the portfolio," he said.

On its web site, WWW Internet Fund claims to be "the first fund to offer investors a balanced Internet portfolio."

Launched in August 1996, WWW Internet Fund has $24.9 million in assets under management and grew 70.5 percent in 1998. In the first quarter of the year, the fund rose 36.93 percent.

Although the Monument Internet Fund focuses entirely on Internet stocks, it also hedges its position with a variety of companies related to the Internet. Like the WWW Internet Fund, only 25 percent of the Monument Internet Fund is invested in emerging Internet companies.

"We invest in the whole food chain of the Internet," said Dave Kugler, president of Monument Funds of Bethesda, Md.

"We tend to ignore the headline-makers and invest in suppliers to the Internet, which is where the real growth is," Kugler said.

As a result, the Monument Internet Fund has large positions in such companies as DoubleClick, which provides advertising on the Internet, and Security First Financial, which provides back-office services for banking transactions over the Internet.

"It helped that one of their biggest customers is Citigroup," Kugler said.

Since it was launched last November, the Monument Internet Fund has grown 161 percent. In the first quarter of this year alone, the fund grew 91.86 percent. Kugler believes Internet-related firms will continue to grow "until the Internet becomes ubiquitous."

Guinness Flight Global Asset Management of Pasadena, Calif., launched a technology fund five months ago that also takes a broad approach to the Internet. Called the Guinness Flight Wired Index, the fund invests in the 40 companies listed in Wired magazine's New Economy Index.

Thus, half of the fund's current $75 million of assets are invested in technology firms, including America Online, Lucent Technologies, Sony, Sun Microsystems, Microsoft, Yahoo! and PeopleSoft.

But because Wired magazine's index also includes companies with the "strategic vision" to make "innovative use of technology" - like Walt Disney, Wal-Mart and Federal Express - the fund invests in these companies as well, said Stacy Orff, vice president of marketing at Guinness.

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