SOMETHING IS going on. There is no doubt about that. Are we watching the biggest market bubble since the Dutch went bananas about tulip bulbs or is there, as the cognoscenti like to say, a paradigm shift going on?

Earlier this week Dixons, the electrical chain, confirmed plans for a separate flotation of Freeserve, its free Internet service, which has racked up more than one million new customers since launch in late 1998. Valuations of Freeserve range from pounds 1.8bn to pounds 3bn.

Is Freeserve - and the many other Internet-linked firms whose dizzying rise in share prices have confounded stockmarket experts - really worth that much?

On 19 April, some Wall Street watchers thought the crash had come. The 15 constituent companies in the Dow Jones Internet Commerce Index fell by a record 17 per cent while the technology-heavy Nasdaq Index recorded its second-worst points fall, down 138.43 or 5.6 per cent. Yet, since then, it has been back to normal for many Internet stocks, taking the up elevator.. Two days later Nasdaq roared up 6.1 per cent.

The Internet feeding frenzy has been mostly an US phenomenon, but it has not entirely passed the UK by. On 1 January, 1998, the new FTSE Information Technology sub-index began. It had a bumpy ride last year but managed to outperform the FTSE All-Share by about 25 per cent.

In the first three months of 1999, Dixons itself was the FTSE 100's top performing share.

On 1 April this year, the FTSE International set up the Internet Index, with just eight shares, six of which are listed on AIM (the Alternative Investment Market). One, AIM-listed firm, Voss Net, that markets e-commerce software, was the London market's top performer in March, up almost 140 per cent. Other firms in the new index are: Dialog Corporation; Gresham Computing; Easynet; Intelligent Environment Group; Internet Technology Group; Netcall, and

As with many Internet investments, there are big promises of jam tomorrow. Edward Forwood, of stockbroking firm Durlacher, admits: "There is an element of speculative bubble", and believes it would be very difficult for private investors to pick the eventual Internet winners over other companies that he writes off as a mixture of "doggy and dodgy".

Most of the few Internet firms with stock market quotations have actually floated only a small proportion of their shares. Lack of supply has helped boost prices to stellar heights. Which brings us back to Dixons, now considering the flotation of its Freeserve subsidiary, apparently.

As a pure Internet service provider Freeserve might be worth maybe pounds 250m, according to analysts at Fletcher Research, but as an e-commerce provider in the future it is likely that you could add at least another nought to that number. In fact, William Reeve, at Fletcher Research says: "Freeserve's relationship with its users is deeper than merely as a website, so it may be able to aspire to become a major e-commerce player," and he suggests a possible value of around pounds 3bn.

The next question is how much of your hard-earned savings should you consider putting into Internet stocks? - as a private investor, only the gambling money that you can afford to lose.

Edward Forwood of Durlacher says individuals looking for exposure to the internet should consider Framlington's new NetNet fund, launched in April. It is the first UK-based unit trust dedicated to investing in Internet and Internet-related companies. You may invest from pounds 1,000 as a lump sum, or from pounds 50 per month. It is managed by the same team that set up an US-based Internet fund in August 1996: that's grown by an annualised 106 per cent since then.

The NetNet fund, available in both Maxi and Mini ISAs, as well as a unit trust, aims to invest roughly 40 per cent in pure Internet plays, such as Amazon and eBay, with the balance being in other companies which either generate revenue through the Net or have a strategic commitment to it. The fund has an annual management fee of 1.75 per cent with an initial charge of 5.25 per cent.

NetNet Fund: www.