<PAGE>
As filed with the Securities and Exchange Commission on August 4, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Initial Depositor
(Exact name of registrant as specified in charter)
--------------
ABC HOLDRSSM Trust 2000-I
yet-to-be formed
[Issuer with respect to the receipts]
<TABLE>
<S> <C> <C>
Delaware 6211 13-5674085
(State or other jurisdiction
of incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification Number)
250 Vesey Street
New York, New York 10281
(212) 442-1000
</TABLE>
(Address, including zip code, and telephone number, including area code, or
registrant's
principal executive offices)
--------------
<TABLE>
<S> <C>
Andrea L. Dulberg, Esq.
Corporate Secretary Copies to:
Merrill Lynch, Pierce, Fenner & Smith Andrew B. Janszky
Incorporated Shearman & Sterling
250 Vesey Street 599 Lexington Avenue
New York, New York 10281 New York, New York 10022
(212) 449-1000 (212) 848-4000
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
</TABLE>
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Each Class of Amounts to Be Offering Price Offering Registration
Securities to be Registered Registered per Receipt(1) Price(1) Fee(2)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABC HOLDRS............................ 100,000 $100 $10,000,000 $2,640
shares
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-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act.
(2) This Registration Statement also registers, where required, an
indeterminate amount of securities to be sold by Merrill Lynch, Pierce,
Fenner & Smith Incorporated in market-making transactions.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until this
Registration Statement shall become effective on such date as the Commission,
acting pursuant to such Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We +
+have filed a registration statement relating to these receipts with the +
+Securities and Exchange Commission. We cannot sell these receipts until the +
+registration statement becomes effective. This prospectus is not an offer to +
+sell these receipts and we are not soliciting offers to buy these receipts in +
+any state where such offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated August 4, 2000
PROSPECTUS
[Logo HOLDRS]
[ ] Depositary Receipts
ABC HOLDRSSM Trust 2000-I
The ABC HOLDRS SM Trust 2000-I will issue Depositary Receipts called ABC
HOLDRS SM representing your undivided beneficial ownership in the U.S.-traded
common stock of a group of specified companies that are involved in various
segments of the [ ] industry. The Bank of New York will be the trustee. You
only may acquire, hold or transfer ABC HOLDRS in a round-lot amount of 100 ABC
HOLDRS or round-lot multiples. ABC HOLDRS are separate from the underlying
deposited common stocks that are represented by the ABC HOLDRS. For a list of
the names and the number of shares of the companies that make up an ABC HOLDR,
see "Highlights of ABC HOLDRS--The ABC HOLDRS" starting on page 6. The trust
will issue the additional ABC HOLDRS on a continuous basis.
Investing in ABC HOLDRS involves significant risks. See "Risk factors"
starting on page 4.
The initial public offering price for a round-lot of 100 ABC HOLDRS will
equal the sum of the closing market price on the primary trading market on the
pricing date for each deposited share multiplied by the share amount specified
in this prospectus, plus an underwriting fee.
ABC HOLDRS are neither interests in nor obligations of either the initial
depositor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or The Bank of
New York, as trustee.
Before this issuance, there has been no public market for ABC HOLDRS.
Application has been made to list the ABC Receipts on the American Stock
Exchange under the symbol "[ ]".
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
<TABLE>
<CAPTION>
Initial Price Underwriting
to Public* Fee
------------- ------------
<S> <C> <C>
Per ABC HOLDR................................ 2%
</TABLE>
-----
* Includes underwriting fee.
For purchases of ABC HOLDRS in excess of ABC HOLDRS, the underwriting
fee will be %.
-----------
Merrill Lynch & Co. [ ]
-----------
The date of this prospectus is , 2000.
"HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill
Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................... 3
Risk Factors............................................................... 4
Highlights of ABC HOLDRS................................................... 7
The Trust.................................................................. 14
Description of ABC HOLDRS.................................................. 14
Description of the Underlying Securities................................... 15
Description of the Depositary Trust Agreement.............................. 17
Federal Income Tax Consequences............................................ 20
ERISA Considerations....................................................... 23
Plan of Distribution....................................................... 23
Legal Matters.............................................................. 23
Where You Can Find More Information........................................ 24
</TABLE>
---------------
This prospectus contains information you should consider when making your
investment decision. With respect to information about ABC HOLDRS, you should
rely only on the information contained in this prospectus. We have not
authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not making an offer to sell ABC HOLDRS in any jurisdiction
where the offer or sale is not permitted.
The ABC HOLDRS are not registered for public sale outside of the United
States. Non-U.S. receipt HOLDRS should refer to "Federal Income Tax
Consequences--Non-U.S. receipt holders" and consult their tax advisors
regarding U.S. withholding and other taxes which may apply to ownership of the
ABC HOLDRS or of the underlying securities through an investment in the ABC
HOLDRS.
2
<PAGE>
SUMMARY
The ABC HOLDRS Trust will be formed under the depositary trust agreement,
dated as of , 2000 among The Bank of New York, as trustee, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, other depositors and the owners of the
ABC HOLDRS. The trust is not a registered investment company under the
Investment Company Act of 1940.
The trust will hold shares of common stock issued by [ ] specified
companies generally considered to be involved in various segments of the
[ ] industry. The number of shares of each common stock held by the trust
with respect to each round-lot of ABC HOLDRS is specified under "Highlights of
ABC HOLDRS--The ABC HOLDRS." This group of common stocks is referred to as the
underlying securities. Except when a reconstitution event occurs, the
underlying securities will not change.
Under no circumstances will a new company be added to the group of
issuers of underlying securities.
The trust will issue ABC HOLDRS that represent your undivided beneficial
ownership interest in the shares of common stock held by the trust on your
behalf. The ABC HOLDRS are separate from the underlying common stocks that are
represented by the ABC HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in ABC HOLDRS involves risks similar to investing in each
of the underlying securities outside of the ABC HOLDRS, including the risks
associated with concentrated investments in the [ ] industry.
General Risk Factors
. Loss of investment. Because the value of ABC HOLDRS directly
relates to the value of the underlying securities, you may lose
all or a substantial portion of your investment in the ABC HOLDRS
if the underlying securities decline in value.
. Discount trading price. ABC HOLDRS may trade at a discount to the
aggregate value of the underlying securities.
. Not necessarily representative of the [ ] industry. While the
underlying securities are common stocks of companies generally
considered to be involved in various segments of the [ ]
industry, the underlying securities and the ABC HOLDRS may not
necessarily follow the price movements of the entire [ ]
industry generally. If the underlying securities decline in value,
your investment in the ABC HOLDRS will decline in value even if
common stock prices in the [ ] industry generally increase in
value. Furthermore, after the initial deposit, one or more of the
issuers of the underlying securities may no longer be involved in
the [ ] industry. In this case, the ABC HOLDRS may no longer
consist of securities issued only by companies involved in the
[ ] industry.
. No investigation of underlying securities. The underlying
securities included in the ABC HOLDRS were selected by Merrill
Lynch, Pierce, Fenner & Smith Incorporated based on the market
capitalization of issuers and the market liquidity of common
stocks in the [ ] industry, without regard for the value, price
performance, volatility or investment merit of the underlying
securities. Consequently, the ABC HOLDRS Trust, the trustee,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, and their
affiliates, have not performed any investigation or review of the
selected companies, including the public filings by the companies.
Investors and market participants should not conclude that the
inclusion of a company is any form of investment recommendation by
the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, or their affiliates.
. Loss of diversification. As a result of business developments,
reorganizations, or market fluctuations affecting issuers of the
underlying securities, ABC HOLDRS may not necessarily continue to
be a diversified investment in the [ ] industry. As a result of
market fluctuation and/or reconstitution events, ABC HOLDRS may
represent a concentrated investment in one or more of the
underlying securities which would reduce investment
diversification and increase your exposure to the risks of
concentrated investments.
. Conflicting investment choices. In order to sell one or more of
the underlying securities individually or to participate in a
tender offer relating to one or more of the underlying securities,
you will be required to cancel your ABC HOLDRS and receive
delivery of each of the underlying securities. The cancellation of
your ABC HOLDRS will allow you to sell individual underlying
securities or to deliver individual underlying securities in a
tender offer. The cancellation of ABC HOLDRS will involve payment
of a cancellation fee to the trustee.
. Trading halts. Trading in ABC HOLDRS may be halted if trading in
one or more of the underlying securities is halted. If trading is
halted in the ABC HOLDRS, you will only be able to trade HOLDRS if
you cancel your ABC HOLDRS and receive the underlying securities,
even though there is trading in some of the underlying securities.
4
<PAGE>
. Delisting from the American Stock Exchange. If the number of
companies whose common stock is held in the trust falls below
nine, the American Stock Exchange may consider delisting the ABC
HOLDRS. If the ABC HOLDRS are delisted by the American Stock
Exchange, a termination event will result unless the ABC HOLDRS
are listed for trading on another national securities exchange or
through Nasdaq within five business days from the date the ABC
HOLDRS are delisted.
. Possible conflicts of interest. Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as initial depositor, has selected the
underlying securities and may face possible conflicts of interest
in connection with its activities. For example, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and its affiliates,
collectively referred to as Merrill Lynch, may engage in
investment banking and other activities, may provide services to
issuers of the underlying securities in connection with its
business, or may make purchases or sales, including establishing
long or short positions, in the underlying securities for its own
account. In addition, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, will purchase, in the
secondary market, the underlying securities that will be deposited
into the trust. Merrill Lynch may make these purchases before the
deposit into the trust, to it may borrow securities for the
deposit and subsequently purchase the securities to repay to the
lenders the securities previously borrowed. In either event, the
purchases of the underlying securities will be made at various
prices. As the initial offering price for the ABC HOLDRS will be
based on the closing market price of each of the underlying
securities on the pricing date, Merrill Lynch may recognize a gain
on its purchases of the underlying securities. Specifically, if
the closing market price for the underlying securities on the
pricing date is higher than the price at which Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as initial depositor,
purchases the underlying securities then it will recognize a gain
in connection with such purchases. Merrill Lynch may recognize
this gain on any of the underlying securities that comprise the
ABC HOLDRS or on all of the underlying securities in the
aggregate. The potential profit of Merrill Lynch is also affected
by any hedging activities that it may engage in while it purchases
the underlying securities in the secondary market for deposit into
the trust. All of these activities may result in conflicts of
interest with respect to the financial interest of Merrill Lynch,
on the one hand, and, on the other hand, the initial selection of
the underlying securities included in the ABC HOLDRS, the
selection of the [ ] industry, Merrill Lynch's activity in the
secondary market in the underlying securities, and the creation
and cancellation of ABC HOLDRS by Merrill Lynch.
. Temporary price increases in the underlying securities. Purchasing
activity in the secondary trading market associated with acquiring
the underlying securities for deposit into the trust may
temporarily increase the market price of the deposited shares,
which will result in a higher initial offering price for the ABC
HOLDRS. Large volumes of purchasing activity, which may occur in
connection with the issuance of ABC HOLDRS, particularly in
connection with the initial issuance of ABC HOLDRS, could
temporarily increase the market price of the underlying
securities, resulting in a higher price on that date. This
purchasing activity could create a temporary imbalance between the
supply and demand of the underlying securities, thereby limiting
the liquidity of the underlying securities due to a temporary
increased demand for underlying securities. Temporary increases in
the market price of the underlying securities may also occur as a
result of the purchasing activity of other market participants.
Other market participants may attempt to benefit from increases in
the market price of the underlying securities that may occur as
result of the increased purchasing activity in the underlying
securities resulting from the issuance of the ABC HOLDRS.
Consequently, prices for the underlying securities may decline
immediately after the pricing date. If the trading prices for the
underlying securities decline, the trading price of ABC HOLDRS
will also decline.
5
<PAGE>
Risk Factors Specific to the [ ] Industry
6
<PAGE>
HIGHLIGHTS OF ABC HOLDRS
This discussion highlights information regarding ABC HOLDRS. We present
certain information more fully in the rest of this prospectus. You should read
the entire prospectus carefully before you purchase ABC HOLDRS.
Issuer....................... ABC HOLDRS Trust.
The trust.................... The ABC HOLDRS Trust will be formed under the
depositary trust agreement, dated as of ,
2000 among The Bank of New York, as trustee,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, other depositors and the owners
of the ABC HOLDRS. The trust is not a
registered investment company under the
Investment Company Act of 1940.
Initial depositor............ Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
Trustee...................... The Bank of New York, a New York state-
chartered banking organization, will be the
trustee and receive compensation as set forth
in the depositary trust agreement.
Purpose of ABC HOLDRS ....... ABC HOLDRS are designed to achieve the
following:
Diversification. ABC HOLDRS are designed to
allow you to diversify your investment in the
[ ] industry through a single, exchange-
listed instrument representing your undivided
beneficial ownership of the underlying
securities.
Flexibility. The beneficial owners of ABC
HOLDRS have undivided beneficial ownership
interests in each of the underlying securities
represented by the ABC HOLDRS, and can cancel
their ABC HOLDRS to receive each of the
underlying securities represented by the ABC
HOLDRS.
Transaction costs. The expenses associated with
trading ABC HOLDRS are expected to be less than
trading each of the underlying securities
separately.
Trust assets................. The trust will hold shares of common stock
issued by specified companies in the [ ]
industry. Except when a reconstitution event
occurs, the group of companies will not change.
Reconstitution events are described in this
prospectus under the heading "Description of
the depositary trust agreement--Reconstitution
events." Under no circumstances will the common
stock of a new company be added to the common
stocks underlying the ABC HOLDRS.
The trust's assets may increase or decrease as
a result of in-kind deposits and withdrawals of
the underlying securities during the life of
the trust.
The ABC HOLDRS............... The trust will issue ABC HOLDRS that represent
your undivided beneficial ownership interest in
the shares of U.S.-traded common stock held by
the trust on your behalf. The ABC HOLDRS
7
<PAGE>
themselves are separate from the underlying
securities that are represented by the ABC
HOLDRS.
The specific share amounts for each round-lot
of 100 ABC HOLDRS will be determined on the
pricing date so that the initial issue price
will be approximately $90-$100 per ABC HOLDR
and the initial weightings of each underlying
security included in the ABC HOLDRS
approximates the relative market
capitalizations of the specified companies
(based on the closing market prices of the
underlying securities on the trading day
immediately preceding the pricing date),
subject to a maximum weight of 20%. For
purposes of this preliminary prospectus, the
indicative share amounts and the indicative
weightings of each underlying security, based
on market capitalizations as of the date of
this preliminary prospectus, are set forth in
the table below; however, such share amounts
and weightings are expected to change during
the period between the date of this preliminary
prospectus and the pricing date.
After the pricing date, the share amounts will
not change, except for changes due to corporate
events, such as stock splits or reverse stock
splits on the underlying securities, or
reconstitution events. However, the weightings
are expected to change substantially over time
because of price fluctuations.
The following chart provides the
. names of the [ ] issuers of the underlying
securities represented by the ABC HOLDRS,
. stock ticker symbols,
. indicative share amounts represented by a
round-lot of 100 ABC HOLDRS as of the date
of this preliminary prospectus,
. indicative weightings as of the date hereof,
and
. principal market on which the shares of
common stock of the selected companies are
traded.
8
<PAGE>
<TABLE>
<CAPTION>
Indicative Primary
Name of Share Trading
Company Ticker Amounts Indicative Weightings Market
------- ------ ---------- --------------------- -------
<S> <C>
</TABLE>
9
<PAGE>
The actual share amounts and weightings will be
determined on the pricing date and will appear
in the final prospectus delivered in connection
with sales of the ABC HOLDRS. These companies
generally are considered to be [ ] of
the largest and most liquid companies with
U.S.-traded common stock involved in the
[ ] industry as measured by market
capitalization and trading volume on ,
2000. The market capitalization of a company is
determined by multiplying the price of its
common stock by the number of outstanding
shares of its common stock.
The trust only will issue and cancel, and you
only may obtain, hold, trade or surrender, ABC
HOLDRS in a round-lot of 100 ABC HOLDRS and
round-lot multiples. The trust will only issue
ABC HOLDRS upon the deposit of the whole shares
represented by a round-lot of 100 ABC HOLDRS.
In the event that a fractional share comes to
be represented by a round-lot of ABC HOLDRS,
the trust may require a minimum of more than
one round-lot of 100 ABC HOLDRS for an issuance
so that the trust will always receive whole
share amounts for issuance of ABC HOLDRS.
The number of outstanding ABC HOLDRS will
increase and decrease as a result of in-kind
deposits and withdrawals of the underlying
securities. The trust will stand ready to issue
additional ABC HOLDRS on a continuous basis
when an investor deposits the required shares
of common stock with the trustee.
Public offering price........ The initial public offering price for 100 ABC
HOLDRS will equal the sum of the closing market
price on the primary trading market on the
pricing date for each underlying security
multiplied by the share amount to be determined
on the pricing date, plus an underwriting fee.
It is expected that the initial public offering
price will be approximately $90-$100 per ABC
HOLDR.
Purchases.................... After the initial offering, you may acquire ABC
HOLDRS in two ways:
. through an in-kind deposit of the required
number of shares of common stock of the
underlying issuers with the trustee, or
. through a cash purchase in the secondary
trading market.
Underwriting fees............ If you purchase ABC HOLDRS in the initial
public offering, you will pay Merrill Lynch,
Pierce, Fenner & Smith Incorporated, in its
role as underwriter, an underwriting fee equal
to:
. For purchases of [ ] ABC HOLDRS or
fewer, 2%.
. For purchases in excess of ABC HOLDRS,
%.
You will not be charged any issuance fee or
other sales commission in connection with
purchases of ABC HOLDRS made in the initial
public offering.
Issuance and cancellation
fees.........................
After the initial offering, if you wish to
create ABC HOLDRS by delivering to the trust
the requisite shares of common stock
10
<PAGE>
represented by a round-lot of 100 ABC HOLDRS,
The Bank of New York as trustee will charge you
an issuance fee of up to $10.00 for each round-
lot of 100 ABC HOLDRS. If you wish to cancel
your ABC HOLDRS and withdraw your underlying
securities, The Bank of New York as trustee
will charge you a cancellation fee of up to
$10.00 for each round-lot of 100 ABC HOLDRS.
Commissions.................. If you choose to deposit underlying securities
in order to receive ABC HOLDRS after the
conclusion of the initial public offering, you
will not be charged the underwriting fee.
However, in addition to the issuance fee
charged by the trustee described above, you
will be responsible for paying any sales
commission associated with your purchase of the
underlying securities that is charged by your
broker, whether it be Merrill Lynch, Pierce,
Fenner & Smith Incorporated or [ ],
collectively, the selling group, or another
broker.
Custody fees................. The Bank of New York, as trustee and as
custodian, will charge you a quarterly custody
fee of $2.00 for each round-lot of 100 ABC
HOLDRS, to be deducted from any cash dividend
or other cash distributions on underlying
securities received by the trust. With respect
to the aggregate custody fee payable in any
calendar year for each ABC HOLDR, the trustee
will waive that portion of the fee which
exceeds the total cash dividends and other cash
distributions received, or to be received, and
payable with respect to such calendar year.
Rights relating to ABC You have the right to withdraw the underlying
HOLDRS....................... securities upon request by delivering a round-
lot or integral multiple of a round-lot of ABC
HOLDRS to the trustee, during the trustee's
business hours, and paying the cancellation
fees, taxes, and other charges. You should
receive the underlying securities no later than
the business day after the trustee receives a
proper notice of cancellation. The trustee will
not deliver fractional shares of underlying
securities. To the extent that any cancellation
of ABC HOLDRS would otherwise require the
delivery of a fractional share, the trustee
will sell such share in the market and the
trust, in turn, will deliver cash in lieu of
such share. Except with respect to the right to
vote for dissolution of the trust, the ABC
HOLDRS themselves will not have voting rights.
Rights relating to the
underlying securities.......
You have the right to:
. Receive all shareholder disclosure
materials, including annual and quarterly
reports, distributed by the issuers of the
underlying securities.
. Receive all proxy materials distributed by
the issuers of the underlying securities and
will have the right to instruct the trustee
to vote the underlying securities or may
attend shareholder meetings yourself.
11
<PAGE>
. Receive dividends and other distributions on
the underlying securities, if any are
declared and paid to the trustee by an
issuer of the underlying securities, net of
any applicable taxes or fees.
If you wish to participate in a tender offer
for underlying securities, you must obtain the
underlying securities by surrendering your ABC
HOLDRS and receiving all of your underlying
securities. For specific information about
obtaining your underlying securities, you
should read the discussion under the caption
"Description of the depositary trust
agreement."
Reconstitution events........ The depositary trust agreement provides for the
automatic distribution of underlying securities
to you in the following four circumstances:
A. If an issuer of underlying securities no
longer has a class of common stock
registered under section 12 of the
Securities Exchange Act of 1934, then its
securities will no longer be an underlying
security and the trustee will distribute the
shares of that company to the owners of the
ABC HOLDRS.
B. If the SEC finds that an issuer of
underlying securities should be registered
as an investment company under the
Investment Company Act of 1940, and the
trustee has actual knowledge of the SEC
finding, then the trustee will distribute
the shares of that company to the owners of
the ABC HOLDRS.
C. If the underlying securities of an issuer
cease to be outstanding as a result of a
merger, consolidation or other corporate
combination, the trustee will distribute the
consideration paid by and received from the
acquiring company to the beneficial owners
of ABC HOLDRS, unless the merger,
consolidation or other corporate combination
is between companies that are already
included in the ABC HOLDRS and the
consideration paid is additional underlying
securities. In this case, the additional
underlying securities will be deposited into
the trust.
D. If an issuer's underlying securities are
delisted from trading on a national
securities exchange or Nasdaq and are not
listed for trading on another national
securities exchange or through Nasdaq within
five business days from the date such
securities are delisted.
If a reconstitution event occurs, the trustee
will deliver the underlying security to you as
promptly as practicable after the date that the
trustee has knowledge of the occurrence of a
reconstitution event.
Termination events........... A. The ABC HOLDRS are delisted from the
American Stock Exchange and are not listed
for trading on another national securities
exchange or through Nasdaq within five
business days from the date the ABC HOLDRS
are delisted.
12
<PAGE>
B. The trustee resigns and no successor trustee
is appointed within 60 days from the date
the trustee provides notice to Merrill
Lynch, Pierce, Fenner & Smith Incorporated,
as initial depositor, of its intent to
resign.
C. 75% of beneficial owners of outstanding ABC
HOLDRS vote to dissolve and liquidate the
trust.
If a termination event occurs, the trustee will
distribute the underlying securities to you as
promptly as practicable after the termination
event.
Federal income tax The federal income tax laws will treat a U.S.
consequences................. holder of ABC HOLDRS as directly owning the
underlying securities. The ABC HOLDRS
themselves will not result in any federal tax
consequences separate from the tax consequences
associated with ownership of the underlying
securities.
Listing...................... Application has been made to list the ABC
HOLDRS on the American Stock Exchange under the
symbol "[ ]". Trading will take place only
in round-lots of 100 ABC HOLDRS and round-lot
multiples. A minimum of 150,000 ABC HOLDRS will
be required to be outstanding when trading
begins.
Trading...................... Investors only will be able to acquire, hold,
transfer and surrender a round-lot of 100 ABC
HOLDRS. Bid and ask prices, however, will be
quoted per single ABC HOLDR.
Clearance and settlement..... The trust will issue ABC HOLDRS in book-entry
form. ABC HOLDRS will be evidenced by one or
more global certificates that the trustee will
deposit with The Depository Trust Company,
referred to as DTC. Transfers within DTC will
be in accordance with DTC's usual rules and
operating procedures. For further information
see "Description of ABC HOLDRS."
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THE TRUST
General. This discussion highlights information about the ABC HOLDRS
Trust. You should read this information, information about the depositary trust
agreement as well as the depositary trust agreement before you purchase ABC
HOLDRS. The material terms of the depositary trust agreement are described in
this prospectus under the heading "Description of the depositary trust
agreement."
The ABC HOLDRS Trust. The trust will be formed pursuant to the depositary
trust agreement, dated as of , 2000. The Bank of New York will be the
trustee. The ABC HOLDRS Trust is not a registered investment company under the
Investment Company Act of 1940.
The ABC HOLDRS Trust is intended to hold deposited shares for the benefit
of owners of ABC HOLDRS. The trustee will perform only administrative and
ministerial acts. The property of the trust will consist of the underlying
securities and all monies or other property, if any, received by the trustee.
The trust will terminate on December 31, 2040, or earlier if a termination
event occurs.
DESCRIPTION OF ABC HOLDRS
The trust will issue ABC HOLDRS under the depositary trust agreement
described in this prospectus under the heading "Description of the depositary
trust agreement." After the initial offering, the trust may issue additional
ABC HOLDRS on a continuous basis when an investor deposits the requisite
underlying securities with the trustee.
You may only acquire, hold, trade and surrender ABC HOLDRS in a round-lot
of 100 ABC HOLDRS and round-lot multiples. The trust will only issue ABC HOLDRS
upon the deposit of the whole shares of underlying securities that are
represented by a round-lot of 100 ABC HOLDRS. In the event of a stock split,
reverse stock split, or other distribution by the issuer of an underlying
security that results in a fractional share becoming represented by a round-lot
of ABC HOLDRS, the trust may require a minimum of more than one round-lot of
100 ABC HOLDRS for an issuance so that the trust will always receive whole
share amounts for issuance of ABC HOLDRS.
ABC HOLDRS will represent your individual and undivided beneficial
ownership interest in the common stock of the specified underlying securities.
The [ ] companies selected as part of this receipt program are listed
above in the section entitled "Highlights of ABC HOLDRS--The ABC HOLDRS."
Beneficial owners of ABC HOLDRS will have the same rights and privileges
as they would have if they beneficially owned the underlying securities outside
of the trust. These include the right of investors to instruct the trustee to
vote the common stock, and to receive dividends and other distributions on the
underlying securities, if any are declared and paid to the trustee by an issuer
of an underlying security, as well as the right to cancel ABC HOLDRS to receive
the underlying securities. See "Description of the depositary trust agreement."
ABC HOLDRS are not intended to change your beneficial ownership in the
underlying securities under federal securities laws, including Sections 13(d)
and 16(a) of the Securities Exchange Act of 1934.
The trust will not publish or otherwise calculate the aggregate value of
the underlying securities represented by a receipt. ABC HOLDRS may trade in the
secondary market at prices that are lower than the aggregate value of the
corresponding underlying securities. If, in such case, an owner of ABC HOLDRS
wishes to realize the dollar value of the underlying securities, that owner
will have to cancel the ABC HOLDRS. Such cancellation will require payment of
fees and expenses as described in "Description of the depositary trust
agreement--Withdrawal of underlying securities."
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ABC HOLDRS will be evidenced by one or more global certificates that the
trustee will deposit with DTC and register in the name of Cede & Co., as
nominee for DTC. ABC HOLDRS will be available only in book-entry form. Owners
of ABC HOLDRS may hold their ABC HOLDRS through DTC, if they are participants
in DTC, or indirectly through entities that are participants in DTC.
DESCRIPTION OF THE UNDERLYING SECURITIES
Selection criteria. The underlying securities are the common stocks of a
group of [ ] specified companies involved in various segments of the [ ]
industry and whose common stock is registered under Section 12 of the Exchange
Act. The issuers of the underlying securities are considered to be [ ] of the
largest capitalized, most liquid companies in the [ ] industry as measured by
market capitalization and trading volume. The following criteria were used in
selecting the underlying securities on , 2000:
. Market capitalization equal to or greater than $ billion;
. Average daily trading volume of at least million shares over
the 60 trading days before , 2000;
. Average daily dollar volume (that is, the average daily trading
volume multiplied by the closing price on , 2000) of at least
$ million over the 60 trading days before , 2000; and
. A trading history of at least 90 calendar days.
The market capitalization of a company is determined by multiplying the
price of its common stock by the number of shares of its common stock that are
held by stockholders. In determining whether a company was to be considered for
inclusion in the ABC HOLDRS, Merrill Lynch, Pierce, Fenner & Smith Incorporated
examined available public information about the company, including analysts'
reports and other independent market sources. The ultimate determination of the
inclusion of the [ ] specified companies, however, rested solely within the
discretion of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
After the initial deposit, one or more of the issuers of the underlying
securities may no longer be substantially involved in the [ ] industry. In
this case, the ABC HOLDRS may no longer consist of securities issued by
companies involved in the [ ] industry. Merrill Lynch, Pierce, Fenner & Smith
Incorporated will determine, in its sole discretion, whether the issuer of a
particular underlying security remains in the [ ] industry and will undertake
to make adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities
represented by ABC HOLDRS, please refer to "Highlights of ABC HOLDRS--The ABC
HOLDRS." If the underlying securities change because of a reconstitution event,
a revised list of underlying securities will be set forth in a prospectus
supplement and will be available from the American Stock Exchange and through a
widely-used electronic information dissemination system such as Bloomberg or
Reuters.
No investigation. In selecting the underlying securities, the trust, the
trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any affiliate
of these entities, have not performed any investigation or review of the
selected companies, including the public filings by the companies, other than
to the extent required to determine whether the companies satisfied the
program's stated selection criteria. Accordingly, before you acquire ABC
HOLDRS, you should consider publicly available financial and other information
about the issuers of the underlying securities. See "Risk Factors" and "Where
You Can Find More Information." Investors and market participants should not
conclude that the inclusion of a company in the list is any form of investment
recommendation of that company by the trust, the trustee, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, the selling group and any of their
affiliates.
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General background and historical information. The following table and
graph set forth the composite performance of all of the underlying securities
represented by a single ABC HOLDR based upon the indicative share amounts set
forth in the table on page 10 of this preliminary prospectus, measured at the
close of each business day from , 1999, the first date when all of the
underlying securities were publicly traded, and thereafter as of the end of
each month to , 2000. The performance table and graph data are adjusted for
any splits that may have occurred over the measurement period. Past movements
of the underlying securities are not necessarily indicative of future values.
The actual share amounts will be determined on the pricing date and may differ
from the indicative share amounts.
<TABLE>
<CAPTION>
1999 Value 1999 Value 1999 Value 1999 Value 2000 Value
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
<S> <C>
</TABLE>
[GRAPH]
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<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of , 2000, among
Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as
trustee, other depositors and the owners of the ABC HOLDRS, provides that ABC
HOLDRS will represent an owner's undivided beneficial ownership interest in the
common stock of the underlying companies.
The trustee. The Bank of New York will serve as trustee. The Bank of New
York, which was founded in 1784, was New York's first bank and is the oldest
bank in the country still operating under its original name. The Bank is a
state-chartered New York banking corporation and a member of the Federal
Reserve System. The Bank conducts a national and international wholesale
banking business and a retail banking business in the New York City, New Jersey
and Connecticut areas, and provides a comprehensive range of corporate and
personal trust, securities processing and investment services. The Bank of New
York is a subsidiary of Bank of New York Company, Inc., one of the underlying
securities in the ABC HOLDRS.
Issuance, transfer and surrender of ABC HOLDRS. You may create and cancel
ABC HOLDRS only in round-lots of 100 ABC HOLDRS. You may create ABC HOLDRS by
delivering to the trustee the requisite underlying securities. The trust will
only issue ABC HOLDRS upon the deposit of the whole shares represented by a
round-lot of 100 ABC HOLDRS. In the event that a fractional share comes to be
represented by a round-lot of ABC HOLDRS, the trust may require a minimum of
more than one round-lot of 100 ABC HOLDRS for an issuance so that the trust
will always receive whole share amounts for issuance of ABC HOLDRS. Similarly,
you must surrender ABC HOLDRS in integral multiples of 100 ABC HOLDRS to
withdraw deposited shares from the trust. The trustee will not deliver
fractional shares of underlying securities, and to the extent that any
cancellation of ABC HOLDRS would otherwise require the delivery of fractional
shares, the trust will deliver cash in lieu of such shares. You may request
withdrawal of your deposited shares during the trustee's normal business hours.
The trustee expects that in most cases it will deliver your deposited shares
within one business day of your withdrawal request.
Voting rights. The trustee will deliver you proxy soliciting materials
provided by issuers of the deposited shares so as to permit you to give the
trustee instructions as to how to vote on matters to be considered at any
annual or special meetings held by issuers of the underlying securities.
Under the depositary trust agreement, any beneficial owner of ABC HOLDRS,
other than Merrill Lynch, Pierce, Fenner & Smith Incorporated, owning ABC
HOLDRS for its own proprietary account as principal, will have the right to
vote to dissolve and liquidate the trust.
Distributions. You will be entitled to receive, net of trustee fees,
distributions of cash, including dividends, securities or property, if any,
made with respect to the underlying securities. The trustee will use its
reasonable efforts to ensure that it distributes these distributions as
promptly as practicable after the date on which it receives the distribution.
Therefore, you may receive your distributions substantially later than you
would have had you held the underlying securities directly. You will be
obligated to pay any tax or other charge that may become due with respect to
ABC HOLDRS. The trustee may deduct the amount of any tax or other governmental
charge from a distribution before making payment to you. In addition, the
trustee will deduct its quarterly custody fee of $2.00 for each round-lot of
100 ABC HOLDRS from quarterly dividends, if any, paid to the trustee by the
issuers of the underlying securities. With respect to the aggregate custody fee
payable in any calendar year for each ABC HOLDR, the trustee will waive that
portion of the fee which exceeds the total cash dividends and other cash
distributions received, or to be received, and payable with respect to such
calendar year.
Record dates. With respect to dividend payments and voting instructions,
the trustee expects to fix the trust's record dates as close as possible to the
record date fixed by the issuer of the underlying securities.
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<PAGE>
Shareholder communications. The trustee promptly will forward to you all
shareholder communications that it receives from issuers of the underlying
securities.
Withdrawal of underlying securities. You may surrender your ABC HOLDRS
and receive underlying securities during the trustee's normal business hours
and upon the payment of applicable fees, taxes or governmental charges, if any.
You should receive your underlying securities no later than the business day
after the trustee receives your request. If you surrender ABC HOLDRS in order
to receive underlying securities, you will pay to the trustee a cancellation
fee of up to $10.00 per round-lot of 100 ABC HOLDRS.
Further issuances of ABC HOLDRS. The depositary trust agreement provides
for further issuances of ABC HOLDRS on a continuous basis without your consent.
Reconstitution events. The depositary trust agreement provides for the
automatic distribution of underlying securities to you in four circumstances.
A. If an issuer of underlying securities no longer has a class of common
stock registered under section 12 of the Securities Exchange Act of
1934, then its securities will no longer be an underlying security
and the trustee will distribute the shares of that company to the
owners of the ABC HOLDRS.
B. If the SEC finds that an issuer of underlying securities should be
registered as an investment company under the Investment Company Act
of 1940, and the trustee has actual knowledge of the SEC finding,
then the trustee will distribute the shares of that company to the
owners of the ABC HOLDRS.
C. If the underlying securities of an issuer cease to be outstanding as
a result of a merger, consolidation or other corporate combination,
the trustee will distribute the consideration paid by and received
from the acquiring company to the beneficial owners of ABC HOLDRS,
unless the merger, consolidation or other corporate combination is
between companies that are already included in the ABC HOLDRS and
the consideration paid is additional underlying securities. In this
case, the additional underlying securities will be deposited into
the trust.
D. If an issuer's underlying securities are delisted from trading on a
national securities exchange or Nasdaq and are not listed for
trading on another national securities exchange or through Nasdaq
within five business days from the date such securities are
delisted.
If a reconstitution event occurs, the trustee will deliver the underlying
security to you as promptly as practicable after the date that the trustee has
knowledge of the occurrence of a reconstitution event.
Termination of the trust. The trust will terminate if the trustee resigns
and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, within 60 days from the date the trustee
provides notice to Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
initial depositor, of its intent to resign. Upon termination, the beneficial
owners of ABC HOLDRS will surrender their ABC HOLDRS as provided in the
depositary trust agreement, including payment of any fees of the trustee or
applicable taxes or governmental charges due in connection with delivery to the
owners of the underlying securities. The trust also will terminate if ABC
HOLDRS are delisted from the American Stock Exchange and are not listed for
trading on another national securities exchange or through Nasdaq within 5
business days from the date the ABC HOLDRS are delisted. Finally, the trust
will terminate if 75% of the owners of outstanding ABC HOLDRS other than
Merrill Lynch, Pierce, Fenner & Smith Incorporated vote to dissolve and
liquidate the trust.
If a termination event occurs, the trustee will distribute the underlying
securities to you as promptly as practicable after the termination event
occurs.
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<PAGE>
Amendment of the depositary trust agreement. The trustee and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, may amend any
provisions of the depositary trust agreement without the consent of any other
depositor or any of the owners of the ABC HOLDRS. Promptly after the execution
of any amendment to the agreement, the trustee must furnish or cause to be
furnished written notification of the substance of the amendment to each owner
of ABC HOLDRS. Any amendment that imposes or increases any fees or charges,
subject to exceptions, or that otherwise prejudices any substantial existing
right of the owners of ABC HOLDRS will not become effective until 30 days after
notice of the amendment is given to the owners of ABC HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more ABC HOLDRS. If you wish to create ABC HOLDRS by
delivering to the trust the requisite underlying securities, the trustee will
charge you an issuance fee of up to $10.00 for each round-lot of 100 ABC
HOLDRS. If you wish to cancel your ABC HOLDRS and withdraw your underlying
securities, the trustee will charge you a cancellation fee of up to $10.00 for
each round-lot of 100 ABC HOLDRS issued. The trustee may negotiate either of
these fees depending on the volume, frequency and size of the issuance or
cancellation transactions.
Commissions. If you choose to create ABC HOLDRS after the conclusion of
the initial public offering, you will not be charged the underwriting fee.
However, in addition to the issuance and cancellation fees described above, you
will be responsible for paying any sales commissions associated with your
purchase of the underlying securities that is charged by your broker, whether
it be a member of the selling group or another broker.
Custody fees. The Bank of New York, as trustee and as custodian, will
charge you a quarterly custody fee of $2.00 for each round-lot of 100 ABC
HOLDRS to be deducted from any dividend payments or other cash distributions on
underlying securities received by the trustee. With respect to the aggregate
custody fee payable in any calendar year for each ABC HOLDR, the Trustee will
waive that portion of the fee which exceeds the total cash dividends and other
cash distributions received, or to be received, and payable with respect to
such calendar year. The trustee cannot recapture unpaid custody fees from prior
years.
Address of the trustee. The Bank of New York, ADR Department, 101 Barclay
Street, New York, New York 10286.
Governing law. The depositary trust agreement and ABC HOLDRS will be
governed by the laws of the State of New York. The trustee will provide the
depositary trust agreement to any owner of the underlying securities free of
charge upon written request.
Duties and immunities of the trustee. The trustee will assume no
responsibility or liability for, and makes no representations as to, the
validity or sufficiency, or as to the accuracy of the recitals, if any, set
forth in the ABC HOLDRS.
The trustee undertakes to perform only those duties as are specifically
set forth in the depositary trust agreement. Subject to the preceding sentence,
the trustee will be liable for its own negligence or misconduct except for good
faith errors in judgment so long as the trustee was not negligent in
ascertaining the relevant facts.
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FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the ABC HOLDRS for:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in the United
States or under the laws of the United States;
. an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source;
. or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial
decisions of the trust (each of the above, a "U.S. receipt holder");
and
. any person other than a U.S. receipt holder (a "Non-U.S. receipt
holder").
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all U.S. federal income
tax consequences applicable to all categories of investors, some of which may
be subject to special rules. In addition, this summary generally is limited to
investors who will hold the ABC HOLDRS as "capital assets" (generally, property
held for investment) within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended. We suggest that you consult with your own tax
advisor.
Taxation of the trust
The trust will provide for flow through tax consequences as it will be
treated as a grantor trust or custodial arrangement for U.S. federal income tax
purposes.
Taxation of ABC HOLDRS
A receipt holder purchasing and owning ABC HOLDRS will be treated, for
U.S. federal income tax purposes, as directly owning a proportionate share of
the underlying securities represented by ABC HOLDRS. Consequently, if there is
a taxable cash distribution on an underlying security, a holder will recognize
income with respect to the distribution at the time the distribution is
received by the trustee, not at the time that the holder receives the cash
distribution from the trustee.
A receipt holder will determine its initial tax basis in each of the
underlying securities by allocating the purchase price for the ABC HOLDRS among
the underlying securities based on their relative fair market values at the
time of purchase. Similarly, when a holder sells a receipt, it will determine
the amount realized with respect to each security by allocating the sales price
among the underlying securities based on their relative fair market values at
the time of sale. A holder's gain or loss with respect to each security will be
computed by subtracting its adjusted basis in the security from the amount
realized on the security. With respect to purchases of ABC HOLDRS for cash in
the secondary market, a receipt holder's aggregate tax basis in each of the
underlying securities will be equal to the purchase price of the ABC HOLDRS.
Similarly, with respect to sales of ABC HOLDRS for cash in the secondary
market, the amount realized with respect to a sale of ABC HOLDRS will be equal
to the aggregate amount realized with respect to each of the underlying
securities.
The distribution of any securities by the trust upon the surrender of ABC
HOLDRS, the occurrence of a reconstitution event, or a termination event will
not be a taxable event, except to the extent that cash is distributed in lieu
of fractional shares. The receipt holders holding period with respect to the
distributed securities will include the period that the holder held the
securities through the trust.
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Brokerage fees and custodian fees
The brokerage fee incurred in purchasing a receipt will be treated as
part of the cost of the underlying securities. Accordingly, a holder includes
this fee in its tax basis in the underlying securities. A holder will allocate
the brokerage fee among the underlying securities using either a fair market
value allocation or pro rata based on the number of shares of each underlying
security. Similarly, the brokerage fee incurred in selling ABC HOLDRS will
reduce the amount realized with respect to the underlying securities.
A holder will be required to include in its income the full amount of
dividends paid on the underlying securities, even though the depositary trust
agreement provides that the custodian fees will be deducted directly from any
dividends paid. These custodian fees will be treated as an expense incurred in
connection with a holder's investment in the underlying securities and may be
deductible. If a holder is an individual, estate or trust, however, the
deduction of its share of custodian fees will be a miscellaneous itemized
deduction that may be disallowed in whole or in part.
Special considerations with respect to underlying securities of foreign issuers
With respect to underlying securities of foreign issuers, the gross
amount of any taxable cash distribution will not be eligible for the dividends
received deduction generally allowed to corporate U.S. receipt holders.
If a U.S. receipt holder receives a dividend in a currency other than in
U.S. dollars, the amount of the dividend for U.S. federal income tax purposes
will be the U.S. dollar value (determined at the spot rate on the date of such
payment) regardless of whether the payment is later converted into U.S.
dollars. In such case, the U.S. receipt holder may recognize ordinary income or
loss as a result of currency fluctuations between the date on which the
dividend is paid and the date the dividend amount is converted into U.S.
dollars.
Subject to certain conditions and limitations, any foreign tax withheld
on dividends may be deducted from taxable income or credited against a U.S.
receipt holder's U.S. federal income tax liability. The limitation on foreign
taxes eligible for the U.S. foreign tax credit is calculated separately with
respect to specific classes of income. For this purpose, dividends distributed
by a foreign issuer generally will constitute "passive income" or, in the case
of certain U.S. holders, "financial services income." For purposes of the U.S.
foreign tax credit limitation, dividends received by a U.S. receipt holder with
respect to an underlying security of a foreign issuer generally will be treated
as foreign source income while any gain or loss recognized from the sale of
such security generally will be treated as from sources within the United
States. The rules relating to the determination of the foreign tax credit are
complex and U.S. receipt holders should consult their own tax advisors to
determine whether and to what extent a credit would be available.
Additionally, special U.S. federal income tax rules apply to U.S. persons
owning shares of a "passive foreign investment company" (a "PFIC"). We do not
believe that any of the foreign issuers of the underlying securities is
currently a PFIC and do not anticipate that any such issuer will become a PFIC
in the future, although no assurances can be made that the applicable tax law
or other relevant circumstances will not change in a manner which affects the
PFIC determination. A foreign corporation generally will be classified as a
PFIC for U.S. federal income tax purposes in any taxable year in which, after
applying certain look-through rules, either:
. at least 75 % of its gross income is "passive income"; or
. on average at least 50% of the gross value of its assets is
attributable to assets that produce "passive income" or are held for
the production of passive income.
Passive income for this purpose generally includes dividends, interest,
royalties, rents, and gains from commodities and securities transactions.
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If a corporation were classified as a PFIC, a U.S. receipt holder could
be subject to increase tax liability (possibly including an interest charge)
upon the sale or other disposition of the ABC HOLDRS or of the underlying
securities or upon the receipt of "excess distributions", unless such U.S.
receipt holder elected to be taxed currently on its pro rata portion of the
corporation's income, whether or not such income was distributed in the form of
dividends or otherwise.
Non-U.S. receipt holders
A Non-U.S. receipt holder generally will be subject to U.S. withholding
tax at a rate of 30% or such lower rate as may be specified by an applicable
tax treaty with respect to dividends received on underlying securities of U.S.
issuers, unless that income is effectively connected with a U.S. trade or
business conducted by the holder or, where a tax treaty applies, is
attributable to a permanent establishment maintained in the United States by
such holder, in which case, those dividends will be exempt from withholding
tax, provided the holder complies with applicable certification and disclosure
requirements.
A Non-U.S. receipt holder generally will not be subject to U.S. federal
income or withholding tax with respect to dividends received on underlying
securities of foreign issuers, unless that income is effectively connected with
a U.S. trade or business conducted by such holder or, where a tax treaty
applies, is attributable to a permanent establishment maintained in the United
States by such holder.
With respect to dividends of both U.S. and foreign issuers, a Non-U.S.
receipt holder's effectively connected or attributable dividends, net of
certain deductions and credits, will be subject to U.S. federal income taxation
at the same graduated rates applicable to U.S. persons. In addition to this
graduated tax, effectively connected or attributable dividends received by a
corporate Non-U.S. receipt holder may also be subject to a branch profits tax
at a rate of 30% or such lower rate as may be specified by an applicable tax
treaty.
A Non-U.S. receipt holder that is eligible for a reduced rate of
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the
Internal Revenue Service.
A Non-U.S. receipt holder generally will not be subject to U.S. federal
income or withholding tax with respect to gain recognized upon the sale or
other disposition of ABC HOLDRS or of the underlying securities unless:
. that gain is effectively connected with a U.S. trade or business
conducted by the holder or, where a tax treaty applies, is
attributable to a permanent establishment maintained in the United
States by such holder, or
. in the case of any gain realized by an individual Non-U.S. receipt
holder, the holder is present in the United States for 183 days or
more in the taxable year of the sale or other disposition and certain
other conditions are met.
Effectively connected or attributable gains generally will be subject to
U.S. federal income taxation at the same graduated rates applicable to U.S.
persons, and may, in the case of a corporate Non-U.S. receipt holder, also be
subject to the branch profits tax. Non-U.S. receipt holders should consult
their own tax advisors to determine whether any applicable tax treaties provide
for different rules.
The preceding discussion does not address all aspects of U.S. federal
income taxation that may be relevant in light of a Non-U.S. receipt holder's or
an issuer's particular facts and circumstances. Investors should consult their
own tax advisors.
Backup withholding tax, withholding tax and information reporting requirements
Final U.S. Treasury Regulations relating to backup withholding,
withholding and information reporting have been issued that modify certain
rules with respect to payments made after December 31, 2000. Investors
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are urged to consult their own tax advisors regarding the application of the
backup withholding, withholding and information reporting requirements,
including the new regulations, with respect to their particular circumstances.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire ABC HOLDRS
should consult with its counsel with respect to the potential applicability of
ERISA and the Internal Revenue Code to this investment and whether any
exemption would be applicable and determine on its own whether all conditions
have been satisfied. Moreover, each plan fiduciary should determine whether,
under the general fiduciary standards of investment prudence and
diversification, an acquisition of ABC HOLDRS is appropriate for the plan,
taking into account the overall investment policy of the plan and the
composition of the plan's investment portfolio.
PLAN OF DISTRIBUTION
In accordance with the depositary trust agreement, the trust will issue
to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch,
Pierce, Fenner & Smith Incorporated will deposit the underlying securities to
receive ABC HOLDRS. The selling group proposes to offer the ABC HOLDRS to the
public at the offering price set forth on the cover page of this prospectus
which includes an underwriting fee of 2%. Merrill Lynch, Pierce, Fenner & Smith
Incorporated will provide ABC HOLDRS to [ ] at the public offering price, as
set forth on the cover page of this prospectus, less a concession that is not
in excess of [ ]%. The selling group may allow to certain dealers, and such
dealers may reallow, a discount on sales of ABC HOLDRS not in excess of [ ]%
of the public offering price, as set forth on the cover page of this
prospectus. We expect the trust to deliver the initial distribution of ABC
HOLDRS against deposit of the underlying securities in New York, New York on
, 2000. After the initial offering, the public offering price,
concession and discount may be changed. The trust will continue to issue ABC
HOLDRS, in connection with deposits of underlying securities. This offering is
being made in compliance with Conduct Rule 2810 of the National Association of
Securities Dealers, Inc. Accordingly, sales will not be made to a discretionary
account without the prior written approval of a purchaser of ABC HOLDRS.
Members of the selling group and their affiliates from time to time
provided investment banking and other financial services to certain of the
issuers of the underlying securities and expect in the future to provide these
services, for which they have received and will receive customary fees and
commissions. They also may have served as counterparties in other transactions
with certain of the issuers of the underlying securities.
Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the ABC HOLDRS. Merrill Lynch, Pierce,
Fenner & Smith Incorporated may act as principal or agent in such transactions.
Market-making sales will be made at prices related to prevailing market prices
at the time of sale.
Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to
indemnify the trustee against certain civil liabilities related to acts
performed or not performed by the trustee in accordance with the depositary
trust agreement or periodic reports filed or not filed with the SEC with
respect to the ABC HOLDRS. Should a court determine not to enforce the
indemnification provision, Merrill Lynch, Pierce, Fenner & Smith Incorporated
also has agreed to contribute to payments the trustee may be required to make
with respect to such liabilities.
LEGAL MATTERS
Legal matters, including the validity of the ABC HOLDRS will be passed
upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial
depositor and the underwriter, by Shearman & Sterling, New York, New York.
Shearman & Sterling, as special U.S. tax counsel to the trust, also will render
an opinion regarding the material federal income tax consequences relating to
the ABC HOLDRS.
23
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Merrill Lynch, Pierce, Fenner & Smith Incorporated has filed a
registration statement on Form S-1 with the SEC covering the ABC HOLDRS. While
this prospectus is a part of the registration statement, it does not contain
all the exhibits filed as part of the registration statement. You should
consider reviewing the full text of those exhibits.
The registration statement is available over the Internet at the SEC's
Web site at http://www.sec.gov. You also may read and copy the registration
statement at the SEC's public reference rooms in Washington, D.C., New York,
New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges. Merrill
Lynch, Pierce, Fenner & Smith Incorporated will not and the trust may not be
subject to the requirements of the Exchange Act and accordingly may not file
periodic reports.
Because the common stock of the issuers of the underlying securities is
registered under the Exchange Act, the issuers of the underlying securities are
required to file periodically financial and other information specified by the
SEC. For more information about the issuers of the underlying securities,
information provided to or filed with the SEC by the issuers of the underlying
securities with respect to their registered securities can be inspected at the
SEC's public reference facilities or accessed through the SEC's Web site
referenced above. In addition, information regarding the issuers of the
underlying securities may be obtained from other sources including, but not
limited to, press releases, newspaper articles and other publicly disseminated
information.
The trust and the selling group and its affiliates are not affiliated
with the issuers of the underlying securities, and the issuers of the
underlying securities have no obligations with respect to ABC HOLDRS. This
prospectus relates only to ABC HOLDRS and does not relate to the common stock
or other securities of the issuers of the underlying securities. The
information in this prospectus regarding the issuers of the underlying
securities has been derived from the publicly available documents described in
the preceding paragraph. We have not participated in the preparation of these
documents or made any due diligence inquiries with respect to the issuers of
the underlying securities in connection with ABC HOLDRS. We make no
representation that these publicly available documents or any other publicly
available information regarding the issuers of the underlying securities are
accurate or complete. Furthermore, we cannot assure you that all events
occurring prior to the date of this prospectus, including events that would
affect the accuracy or completeness of the publicly available documents
described in the preceding paragraph, that would affect the trading price of
the common stock of the issuers of the underlying securities, and therefore the
offering and trading prices of the ABC HOLDRS, have been publicly disclosed.
24
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[ ] Depositary Receipts
ABC HOLDRSSM Trust
---------------------
PROSPECTUS
---------------------
Merrill Lynch & Co.
[ ]
, 2000
Until , 2000 (25 days after the date of this prospectus), all dealers
effecting transactions in the offered ABC HOLDRS, whether or not participating
in this distribution, may be required to deliver a prospectus. This requirement
is in addition to the obligations of dealers to deliver a prospectus when
acting as underwriters and with respect to unsold allotments or subscriptions.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. Except for the registration fee payable
to the Securities and Exchange Commission, all such expenses are estimated:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............... $2,640
Printing and engraving expenses...................................
Legal fees and expenses...........................................
Rating agency fees................................................
Miscellaneous.....................................................
Total........................................................... $
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, provides that under certain circumstances a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or
is or was serving at its request in such capacity in another corporation or
business association, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful.
Article XIV, Section 2 of the Restated Certificate of Incorporation of
Merrill Lynch, Pierce, Fenner & Smith Incorporated provides in effect that,
subject to certain limited exceptions, Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall indemnify its directors and officers to the full extent
authorized or permitted by law.
The directors and officers of Merrill Lynch, Pierce, Fenner & Smith
Incorporated are insured under policies of insurance maintained by Merrill
Lynch, Pierce, Fenner & Smith Incorporated, subject to the limits of the
policies, against certain losses arising from any claim made against them by
reason of being or having been such directors or officers. In addition, Merrill
Lynch, Pierce, Fenner & Smith Incorporated has entered into contracts with all
of its directors providing for indemnification of such persons by Merrill
Lynch, Pierce, Fenner & Smith Incorporated to the full extent authorized or
permitted by law, subject to certain limited exceptions.
Item 16. Exhibits.
See Exhibit Index.
II-1
<PAGE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of the prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(5) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to Item 15 of this
registration statement, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant hereby certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-1 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, on August 4, 2000.
Merrill Lynch, Pierce, Fenner &
Smith
Incorporated
By: /s/ Ahmass L. Fakahany
----------------------------------
Ahmass L. Fakahany
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Joseph Moglia and Stephen G. Bodurtha and each
of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, and supplements to
this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on August 4, 2000.
<TABLE>
<S> <C>
</TABLE>
Signature Title
/s/ John L. Steffens Chief Executive
----------------------------------- Officer, Chairman
John L. Steffens of the Board and
Director
/s/ Stanley O'Neal Director
-----------------------------------
Stanley O'Neal
/s/ George A. Schieren Director
-----------------------------------
George A. Schieren
/s/ Thomas H. Patrick Director
-----------------------------------
Thomas H. Patrick
/s/ Ahmass L. Fakahany Senior Vice
----------------------------------- President and Chief
Ahmass L. Fakahany Financial Officer
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits
--------
<C> <S>
* 4.1 Standard Terms for Depositary Trust Agreements between Merrill Lynch,
Pierce, Fenner & Smith Incorporated and The Bank of Bank of New York,
as Trustee dated as of September 2, 1999, and included as exhibits
thereto, form of Depositary Trust Agreement and form of HOLDRS
* 5.1 Opinion of Shearman & Sterling regarding the validity of the ABC
HOLDRS Receipts
* 8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel regarding
the material federal income tax consequences
24.1 Power of Attorney (included in Part II of Registration Statement)
</TABLE>
--------
* To be filed by amendment.
1
