Last week, Fidelity cut fees on five index funds to 10 basis points. Then, days later, Vanguard hastily warned investors that an unnamed fund firm's fee cuts could only be temporary. Now, E*Trade has gotten into the game by undercutting Fidelity by one basis point, the brokerage announced on Tuesday.

Smells like a price war.

E*Trade will offer its S&P 500 Index Fund and International Index Funds for nine basis points, one basis point below Fidelity's fee cuts.

E*Trade also highlighted the low cost of its Russell 2000 Index Fund and its Technology Index Funds on its website , with expense ratios of 26 basis points and 60 basis points, respectively.

One catch: like Fidelity, E*Trade is providing investors with no guarantees about the bargain basement prices. "There is no assurance that ETAM will continue these expense limits beyond April 30, 2005," stated E*Trade on its website.  

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