New HOLDRs To Focus on Tamer Regional Bank, Utility Sectors

Taking a cue from the market, Merrill Lynch (MER Quote) has filed to launch two new HOLDRs that focus on the relatively tame banking and utility sectors.

Merrill's nine existing HOLDRs track high-growth areas like B2B (business-to-business Internet stocks) (BHH Quote) and Biotech (BBH Quote).

But the Nasdaq selloff has hit many of them particularly hard, as a recent story pointed out. The B2B holders, for example, are off 61.6% since March 10, compared with a 24.4% decline in the Nasdaq Composite Index. Merrill is obviously expanding its HOLDRs roster to include products for less daring investors.

Both regional banks and utilities have fared quite nicely during the recent market turmoil. The (FRBAX Quote)John Hancock Regional Bank fund -- a good proxy for the industry -- has climbed 13.2% since March 10, compared with a 2.7% gain in the broader S&P 500 index. Utilities stocks, regarded as a defensive play for their steady, reliable earnings, have done even better. The Dow Jones Utilities index has jumped 14.6% over the same period.

Despite their more conservative bent, Merrill's forthcoming Regional Bank and Utilities HOLDRs will look similar to existing HOLDRs securities.

Each HOLDR will own 20 of the largest, most liquid stocks in their respective sectors and trade on the American Stock Exchange as a single security. These securities can only be bought and sold in increments of 100 shares, also known as round lots. (The Amex now has an area on its Web site dedicated to the products.)

It's unclear when these HOLDRs will launch, but they usually start trading about three weeks after the initial filing.

Evidently, some investors try to load up on HOLDRs holdings in advance, knowing that Merrill will eventually have to buy them in large quantities for its portfolios. So here's a look at the stocks Merill eventually will be buying:

Regional Bank HOLDRs
Company	Share Amount*	Initial Weighting
Wells Fargo (WFC Quote)	22	9.87%
Bank One (ONE Quote)	29	9.79
First Union (FTU Quote)	25	8.9
FleetBoston Financial (FBF Quote)	23	8.76
Bank of New York (BK Quote)	19	8.63
Firstar (FSR Quote)	25	7
Fifth Third Bancorp (FITB Quote)	8	5.5
Mellon Financial (MEL Quote)	13	4.62
SunTrust Banks (STI Quote)	8	4.51
State Street (STT Quote)	4	4.48
Unites States Bancorp (USB Quote)	19	4.34
Northern Trust (NTRS Quote)	6	4.21
Wachovia (WB Quote)	5	3.45
PNC Financial Services (PNC Quote)	7	3.26
National City (NCC Quote)	15	2.82
BB&T (BBT Quote)	9	2.62
KeyCorp. (KEY Quote)	11	2.21
Comerica (CMA Quote)	4	1.85
AmSouth (ASO Quote)	10	1.68
Synovus Financial (SNV Quote)	7	1.48
Source: Merrill Lynch; per 100 HOLDRs shares

Utilities HOLDRs
Company	Share Amount*	Initial Weighting
Enron (ENE Quote)	12	9.82%
Duke Energy (DUK Quote)	16	9.78
The Williams Companies (WMB Quote)	21	8.85
The Southern Company (SO Quote)	32	8.42
PG&E (PCG Quote)	19	5.3
El Paso Energy (EPG Quote)	11	5.04
Texas Utilities Company (TXU Quote)	13	4.71
Unicom (UCM Quote)	11	4.63
FPL Group (FPL Quote)	9	4.38
Dominion Resources (D Quote)	9	4.19
Peco Energy (PE Quote)	9	3.94
Reliant Energy Resources (REI Quote)	14	3.9
Public Service Enterprise Group (PEG Quote)	10	3.75
Consolidated Edison (ED Quote)	10	3.63
Edison International (EIX Quote)	17	3.47
American Electric Power (AEP Quote)	9	3.45
Dynegy (DYN Quote)	5	3.41
Entergy (ETR Quote)	12	3.28
Carolina Power & Light (CPL Quote)	8	3.09
FirstEnergy (FE Quote)	11	2.97
Source: Merrill Lynch; *per 100 HOLDRs shares