<PAGE>
As filed with the Securities and Exchange Commission on February 23, 2000
Registration No. 333-96061
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT No. 2
To
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)
--------------
Internet Architecture HOLDRSSM Trust
yet-to-be formed
[Issuer with respect to the receipts]
<TABLE>
<S> <C> <C>
Delaware 6211 13-5674085
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
--------------
250 Vesey Street
New York, New York 10281
(212) 449-1000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Copies to:
<TABLE>
<S> <C>
Andrea L. Dulberg, Esq. Andrew B. Janszky
Corporate Secretary Shearman & Sterling
Merrill Lynch, Pierce, Fenner & Smith Incorporated 599 Lexington Avenue
250 Vesey Street New York, New York 10022
New York, New York 10281 (212) 848-4000
(212) 449-1000
(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>
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to Be Amount to Be Offering Price Aggregate Registration
Registered Registered Per Receipt(1) Offering Price(1) Fee(2)(3)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Internet Architecture 1,000,000,000 $100 $1,099,000,000 $290,136
HOLDRS................ receipts
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- --------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act. 10,000,000 receipts are
estimated to be offered in the initial offering at $100 per receipt and
990,000,000 receipts are estimated to be offered continuously after the
initial offering at $0.10 per receipt.
(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.
(3) Merrill Lynch, Pierce, Fenner & Smith Incorporated previously paid on
February 3, 2000 and on February 10, 2000, $2,640 and $287,496,
respectively.
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 February 23, 2000
PROSPECTUS
- ------------
H O L D R S /SM/
INTERNET ARCHITECTURE
1,000,000,000 Depositary Receipts
Internet Architecture HOLDRS SM Trust
The Internet Architecture HOLDRSSM Trust will issue Depositary Receipts
called Internet Architecture HOLDRSSM representing your undivided beneficial
ownership in the U.S.-traded common stock of a group of specified companies
that, among other things, develop and market computer, Internet hardware and
other related products designed to enhance the speed and efficiency of
connections within and to the Internet, connections within a company's internal
networks and end user access to networks. The Bank of New York will be the
trustee. You only may acquire, hold or transfer Internet Architecture HOLDRS in
a round-lot amount of 100 Internet Architecture HOLDRS or round-lot multiples.
Internet Architecture HOLDRS are separate from the underlying deposited common
stocks that are represented by the Internet Architecture HOLDRS. For a list of
the names and the number of shares of the companies that make up an Internet
Architecture HOLDR, see "Highlights of Internet Architecture HOLDRS--The
Internet Architecture HOLDRS" starting on page 10 . The trust will issue the
additional Internet Architecture HOLDRS on a continuous basis.
Investing in Internet Architecture HOLDRS involves significant risks. See
"Risk factors" starting on page 4.
The initial public offering price for a round-lot of 100 Internet
Architecture 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.
Internet Architecture 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 Internet
Architecture HOLDRS. Application has been made to list the Internet
Architecture HOLDRS on the American Stock Exchange under the symbol "IAH".
-----------
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 Internet Architecture HOLDR................. 2%
</TABLE>
-----
* Includes underwriting fee.
For purchases of Internet Architecture HOLDRS in excess of Internet
Architecture 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 Internet Architecture HOLDRS................................. 9
The Trust.................................................................. 16
Description of Internet Architecture HOLDRS................................ 16
Description of the Underlying Securities................................... 17
Description of the Depositary Trust Agreement.............................. 19
Federal Income Tax Consequences............................................ 22
ERISA Considerations....................................................... 23
Plan of Distribution....................................................... 23
Legal Matters.............................................................. 24
Where You Can Find More Information........................................ 25
</TABLE>
----------------
This prospectus contains information you should consider when making your
investment decision. With respect to information about Internet Architecture
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 Internet
Architecture HOLDRS in any jurisdiction where the offer or sale is not
permitted.
2
<PAGE>
SUMMARY
The Internet Architecture HOLDRS trust will be formed under the
depositary trust agreement, dated as of February , 2000 among The Bank of
New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
other depositors and the owners of the Internet Architecture 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 20 specified
companies generally considered to be involved in various aspects of the
Internet architecture business. Companies involved in the Internet
architecture business are companies that, among other things, design, develop
and market computer, Internet hardware and other related products designed to
enhance the speed and efficiency of connections within and to the Internet,
connections within a company's internal networks and end user access to
networks. The number of shares of each common stock held by the trust with
respect to each round-lot of Internet Architecture HOLDRS is specified under
"Highlights of Internet Architecture HOLDRS--The Internet Architecture
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 Internet Architecture HOLDRS that represent your
undivided beneficial ownership interest in the shares of common stock held by
the trust on your behalf. The Internet Architecture HOLDRS are separate from
the underlying common stocks that are represented by the Internet Architecture
HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in Internet Architecture HOLDRS involves risks similar to
investing in each of the underlying securities outside of the Internet
Architecture HOLDRS, including the risks associated with concentrated
investments in Internet architecture companies.
General Risk Factors
. Loss of investment. Because the value of Internet Architecture HOLDRS
directly relates to the value of the underlying securities, you may
lose all or a substantial portion of your investment in the Internet
Architecture HOLDRS if the underlying securities decline in value.
. Discount trading price. Internet Architecture HOLDRS may trade at a
discount to the aggregate value of the underlying securities.
. Not necessarily representative of the Internet architecture
business. While the underlying securities are common stocks of
companies generally considered to be involved in various aspects of
the Internet architecture business, the underlying securities and the
Internet Architecture HOLDRS may not necessarily follow the price
movements of the entire Internet architecture business generally. If
the underlying securities decline in value, your investment in the
Internet Architecture HOLDRS will decline in value even if common
stock prices of companies involved in the Internet architecture
business 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 Internet architecture business. In this
case, the Internet Architecture HOLDRS may no longer consist of
securities issued only by companies involved in the Internet
architecture business.
. No investigation of underlying securities. The underlying securities
included in the Internet Architecture 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 Internet architecture business, without regard for the value,
price performance, volatility or investment merit of the underlying
securities. Consequently, the Internet Architecture 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, Internet Architecture HOLDRS may not
necessarily continue to be a diversified investment in the Internet
architecture business. As a result of market fluctuation and/or
reconstitution events, Internet Architecture 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 Internet Architecture HOLDRS and receive
delivery of each of the underlying securities. The cancellation of
your Internet Architecture HOLDRS will allow you to sell individual
underlying securities or to deliver individual underlying securities
in a tender offer. The cancellation of Internet Architecture HOLDRS
will involve payment of a cancellation fee to the trustee.
. Trading halts. Trading in Internet Architecture HOLDRS may be halted
if trading in one or more of the underlying securities is halted. If
so, you will not be able to trade Internet
4
<PAGE>
Architecture HOLDRS even though there is trading in some of the
underlying securities; however, you will be able to cancel your
Internet Architecture HOLDRS to receive the underlying securities.
. 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 Internet
Architecture HOLDRS. If the Internet Architecture HOLDRS are delisted
by the American Stock Exchange, a termination event will result
unless the Internet Architecture HOLDRS are listed for trading on
another national securities exchange or through NASDAQ within five
business days from the date the Internet Architecture 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 trade in the underlying
securities for its own account. 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 Internet
Architecture HOLDRS, the selection of the Internet architecture
business, Merrill Lynch's activity in the secondary market in the
underlying securities, and the creation and cancellation of Internet
Architecture 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 affect the
market price of the deposited shares. Large volumes of purchasing
activity, which may occur in connection with the issuance of Internet
Architecture HOLDRS, particularly in connection with the initial
issuance of Internet Architecture 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. Consequently,
prices for the underlying securities may decline after these
purchases as the volume of purchases decreases. This in turn is
likely to have an immediate, adverse effect on the trading price of
Internet Architecture HOLDRS.
Risk Factors Specific to Companies Involved in the Internet Architecture
Business
. Internet architecture company stock prices have been and will likely
continue to be extremely volatile, which will directly affect the
price volatility of the Internet Architecture HOLDRS, and you could
lose all or part of your investment. The trading prices of the common
stocks of Internet architecture companies have been and are likely to
be extremely volatile. Internet architecture companies' stock prices
could be subject to wide fluctuations in response to a variety of
factors, including the following:
. actual or anticipated variations in companies' quarterly operating
results;
. announcements of technological innovations or new services by
Internet architecture companies or their competitors;
. changes in financial estimates by securities analysts;
. conditions or trends in Internet online service companies;
. conditions or trends in online securities trading;
. changes in the market valuations of the Internet or online service
companies;
5
<PAGE>
. developments in Internet regulations;
. announcements by Internet architecture companies or their
competitors of significant acquisitions, strategic partnerships,
joint ventures or capital commitments;
. unscheduled system downtime;
. additions or departures of key personnel; and
. sales of Internet architecture companies' common stock or other
securities in the open market.
In addition, the trading prices of Internet architecture stocks in
general have experienced extreme price and volume fluctuations in
recent months. These fluctuations often have been unrelated or
disproportionate to the operating performance of these companies. The
valuations of many Internet architecture stocks are extraordinarily
high when measured by conventional valuation standards such as price
to earnings and price to sales ratios. Some of the companies do not
or in the future might not have earnings. As a result, these trading
prices may decline substantially. These trading prices and valuations
may not be sustained. Any negative change in the public's perception
of the prospects of Internet or e-commerce companies, generally,
could depress the stock prices of an Internet architecture company
regardless of its operating results. Other broad market and industry
factors may decrease the stock price of Internet architecture stocks,
regardless of their operating results. Market fluctuations, as well
as general political and economic conditions, such as recession or
interest rate or currency rate fluctuations, also may decrease the
market price of Internet stocks.
. The ability to maintain or increase market share depends on timely
introduction and market acceptance of new products offered by
Internet architecture companies. The Internet market is characterized
by rapidly changing technology, evolving industry standards and
practices, frequent new product and service introductions and
enhancements and changing customer demands. The success of many
Internet architecture companies will depend on their ability to adapt
to rapidly changing technologies, to adapt their services to evolving
industry standards and to continually improve the performance,
features and reliability of their hardware and software products.
They must quickly develop, introduce and deliver their products, or
incur the risk that their competitors will introduce the same or
similar products, or products which could make their product
obsolete. In addition, the widespread adoption of new Internet,
networking or telecommunications technologies or other technological
changes could require substantial expenditures to modify or adapt the
existing products offered by Internet architecture companies. Many
Internet architecture companies may not successfully introduce new
products, develop and maintain a loyal customer base or achieve
general market acceptance for their products, and failure to do so
could have a material adverse effect on their business, results of
operations and financial condition.
. New laws and regulations with respect to the Internet could impede
its commercial development and adversely affect the business of many
Internet architecture companies. Due to the increasing popularity and
use of the Internet and other online services, it is possible that a
number of laws and regulations may be adopted with respect to the
Internet or other online services covering issues such as user
privacy, pricing, content, copyrights, distribution and
characteristics and quality of products and services. In addition,
many Internet architecture companies develop products which interact
with or incorporate telecommunications infrastructure which may be
subject to regulation by the Federal Communications Commission.
Furthermore, the growth and development of the market for online
interaction and commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on companies
conducting business online. The adoption of any additional laws or
regulations may impede the growth of the Internet or other online
services which could have a material adverse effect on the business,
results of operations and financial condition of Internet
architecture companies.
6
<PAGE>
. Some of the companies involved in the Internet architecture business
are also engaged in other lines of business unrelated to Internet
architecture, and they may experience problems with these lines of
business which could adversely affect their operating
results. Several of the companies which comprise the Internet
Architecture HOLDRS have lines of business that do not relate to
Internet architecture and which may present additional risks not
mentioned in this prospectus. The operating results of Internet
architecture companies may fluctuate as a result of these additional
risks and events in the industries of these other lines of business.
There can be no assurance that, despite a company's possible success
in the Internet architecture business, the other lines of business in
which these companies are engaged will not have an adverse effect on
the company's business or financial conditions.
. The international operations of many Internet architecture companies
expose them to risks associated with instability and changes in
economic and political conditions, foreign currency fluctuations,
changes in foreign regulations and other risks inherent to
international business. Many Internet architecture companies have
international operations and derive substantial revenue from
international sales. The risks of international business that the
companies are exposed to include the following:
. general economic, social and political conditions;
. the difficulty of enforcing intellectual property rights,
agreements and collecting receivables through certain foreign
legal systems;
. differing tax rates, tariffs, exchange controls or other similar
restrictions;
. currency fluctuations; and
. changes in, and compliance with, domestic and foreign laws and
regulations which impose a range of restrictions on operations,
trade practices, foreign trade and international investment
decisions.
. Many Internet architecture companies rely on a single supplier or a
limited number of suppliers for the components used in their products
and if quality components are not delivered on a timely basis, these
companies will not be able to deliver their products on a timely
schedule which could adversely affect their financial
condition. Reliance on a single supplier or limited number of
suppliers subjects many Internet architecture companies to risks of
delivery delays, price increases, receipt of non-conforming or poor
quality components and inability to obtain long-term supplies of
components. Any reduction or interruption in these third parties'
supply or manufacturing would adversely affect an Internet
architecture company's ability to deliver its products and meet
customer needs. There can be no assurance that Internet architecture
companies will not encounter problems with suppliers, which may harm
their reputation and adversely affect their operations and financial
condition.
. If Internet use fails to grow and be accepted as a medium for online
commerce and communication demand for some of the products and
services of Internet architecture companies will decline. Future
revenues and any future profits of many Internet architecture
companies depend upon the widespread acceptance and use of the
Internet and other online services as an effective medium of
communication and commerce by consumers. Rapid growth in the use of
and interest in the Internet and other online services is a
relatively recent phenomenon. There is no assurance that acceptance
and use will continue to develop or that a sufficiently broad base of
consumers will adopt, and continue to use, the Internet and other
online services. For many Internet architecture companies to grow,
customers must continue to accept and use new ways of conducting
business and exchanging information on the Internet.
. Failure to integrate acquisitions could disrupt operations and
prevent the realization of intended benefits. Many Internet
architecture companies are active acquirers of other companies as
part
7
<PAGE>
of their business plans. There can be no assurance that Internet
architecture companies will be able to integrate these acquired
companies, which may result in failure to realize expected cost
savings, increases in revenue and other projected benefits from such
integration. There can also
no be no assurance that Internet architecture companies will be able
to attract and retain qualified personnel from acquired businesses or
be successful in integrating such personnel. Further, Internet
architecture companies may suffer material adverse short and long-
term effects on operating results and financial condition as a result
of such acquisitions.
. Unanticipated high inventory levels could increase the costs of many
Internet architecture companies. Many Internet architecture companies
maintain medium to high levels of inventory and a decrease in market
demand or an increase in supply, among other factors, could result in
higher inventory levels which could adversely affect the
profitability of these Internet architecture companies.
. Many Internet architecture companies are dependent on their ability
to continue to attract and retain highly-skilled technical and
managerial personnel to develop and generate their business. The
success of many Internet architecture companies is highly dependent
of the experience, abilities and continued services of key executive
officers and key technical personnel. If these companies lose the
services of any of these officers or key technical personnel, their
future success could be undermined. Competition for personnel is
intense. There is no certainty that any of these Internet
architecture companies will be able to continue to attract and retain
qualified personnel.
. Some Internet architecture companies have a history of incurring
losses which may make it difficult for these companies to fund their
future operations. Some Internet architecture companies, such as
Cobalt Networks, Inc., Foundry Networks, Inc., Juniper Networks, Inc.
and Sycamore Networks, Inc., have incurred significant losses since
their inception and they may continue to incur losses for the
foreseeable future. Many of these Internet architecture companies
will also continue to incur losses as additional costs are incurred
to develop new products and services, expand marketing and sales
operations in existing and new markets and develop administrative
facilities. If Internet architecture companies do not achieve and
sustain profitability, their ability to respond effectively to market
conditions, to make capital expenditures and to take advantage of
business opportunities could be adversely affected.
8
<PAGE>
HIGHLIGHTS OF INTERNET ARCHITECTURE HOLDRS
This discussion highlights information regarding Internet Architecture
HOLDRS; we present certain information more fully in the rest of this
prospectus. You should read the entire prospectus carefully before you purchase
Internet Architecture HOLDRS.
Issuer....................... Internet Architecture HOLDRS Trust.
The trust.................... The Internet Architecture HOLDRS Trust will
be formed under the depositary trust
agreement, dated as of February , 2000
among The Bank of New York, as trustee,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, other depositors and the owners
of the Internet Architecture 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 Internet
Architecture
HOLDRS...................... Internet Architecture HOLDRS are designed to
achieve the following:
Diversification. Internet Architecture HOLDRS
are designed to allow you to diversify your
investment in the Internet architecture
business through a single, exchange-listed
instrument representing your undivided
beneficial ownership of the underlying
securities.
Flexibility. The beneficial owners of
Internet Architecture HOLDRS have undivided
beneficial ownership interests in each of the
underlying securities represented by the
Internet Architecture HOLDRS, and can cancel
their Internet Architecture HOLDRS to receive
each of the underlying securities represented
by the Internet Architecture HOLDRS.
Transaction costs. The expenses associated
with trading Internet Architecture 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 involved in the
Internet architecture business. 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 Internet Architecture
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.
9
<PAGE>
The Internet Architecture The trust will issue Internet Architecture
HOLDRS....................... 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 Internet Architecture
HOLDRS themselves are separate from the
underlying securities that are represented by
the Internet Architecture HOLDRS.
The specific share amounts for each round-lot
of 100 Internet Architecture HOLDRS will be
determined on the pricing date so that the
initial issue price will be approximately
$90-$100 per Internet Architecture HOLDR and
the initial weightings of each underlying
security included in the Internet
Architecture 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 February 7,
2000, are set forth in the table below;
however, such share amounts and weightings
are expected to change during the period
between February 7, 2000 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 20 issuers of the underlying
securities represented by the Internet
Architecture HOLDRS,
. stock ticker symbols,
. indicative share amounts represented by a
round-lot of 100 Internet Architecture
HOLDRS (as of February 7, 2000),
. indicative weightings as of February 7,
2000, and
. principal market on which the shares of
common stock of the selected companies are
traded.
10
<PAGE>
<TABLE>
<CAPTION>
Indicative Primary
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
---------------- ------ ---------- ---------- -------
<S> <C> <C> <C> <C>
CISCO SYSTEMS, INC. CSCO 14 19.41% NASDAQ
INTERNATIONAL BUSINESS
MACHINES CORPORATION IBM 14 17.68% NYSE
HEWLETT-PACKARD
COMPANY HWP 8 11.40% NYSE
SUN MICROSYSTEMS, INC. SUNW 12 11.38% NASDAQ
EMC CORPORATION/MA EMC 8 10.15% NYSE
DELL COMPUTER
CORPORATION DELL 20 8.35% NASDAQ
COMPAQ COMPUTER
CORPORATION CPQ 13 3.93% NYSE
SYCAMORE NETWORKS, INC. SCMR 3 3.20% NASDAQ
JUNIPER NETWORKS, INC. JNPR 1 1.93% NASDAQ
3COM CORPORATION COMS 3 1.88% NASDAQ
FOUNDRY NETWORKS, INC. FDRY 1 1.44% NASDAQ
GATEWAY, INC. GTW 2 1.39% NYSE
NETWORK APPLIANCE, INC. NTAP 1 1.39% NASDAQ
APPLE COMPUTER, INC. AAPL 1 1.26% NASDAQ
COBALT NETWORKS, INC. COBT 1 1.08% NASDAQ
SEAGATE TECHNOLOGY, INC. SEG 2 0.99% NYSE
EXTREME NETWORKS, INC. EXTR 1 0.98% NASDAQ
CIENA CORPORATION CIEN 1 0.89% NASDAQ
UNISYS CORPORATION UIS 2 0.72% NYSE
ADAPTEC, INC. ADPT 1 0.56% NASDAQ
</TABLE>
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 Internet
Architecture HOLDRS. These companies
generally are considered to be 20 of the
largest and most liquid companies with U.S.-
traded common stock involved in the Internet
architecture business, as measured by market
capitalization and trading volume on February
7, 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,
Internet Architecture HOLDRS in a round-lot
of 100 Internet Architecture HOLDRS and
round-lot multiples. The trust will only
issue Internet Architecture HOLDRS upon the
deposit of the whole shares represented by a
round-lot of 100 Internet Architecture
HOLDRS. In the event that a fractional share
comes to be represented by a round-lot of
Internet Architecture HOLDRS, the trust may
require a minimum of more than one round-lot
of 100 Internet Architecture HOLDRS for an
issuance so that the trust will always
receive whole share amounts for issuance of
Internet Architecture HOLDRS.
The number of outstanding Internet
Architecture 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
Internet Architecture HOLDRS on a
11
<PAGE>
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
Internet Architecture 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
Internet Architecture HOLDR.
Purchases.................... After the initial offering, you may acquire
Internet Architecture 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 Internet Architecture 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 Internet
Architecture HOLDRS or fewer, 2%.
. For purchases in excess of Internet
Architecture HOLDRS, %.
You will not be charged any issuance fee or
other sales commission in connection with
purchases of Internet Architecture HOLDRS
made in the initial public offering.
Issuance and cancellation After the initial offering, if you wish to
fees......................... create Internet Architecture HOLDRS by
delivering to the trust the requisite shares
of common stock represented by a round-lot of
100 Internet Architecture 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 Internet Architecture HOLDRS. If
you wish to cancel your Internet Architecture
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 Internet
Architecture HOLDRS.
Commissions.................. If you choose to deposit underlying
securities in order to receive Internet
Architecture 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 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
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<PAGE>
100 Internet Architecture 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 Internet Architecture 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 Internet
Architecture HOLDRS.........
You have the right to withdraw the underlying
securities upon request by delivering a
round-lot or integral multiple of a round-lot
of Internet Architecture 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 Internet Architecture 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 Internet
Architecture 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.
. 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 Internet Architecture 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........ 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
13
<PAGE>
shares of that company to the owners of
the Internet Architecture 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 Internet Architecture 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 Internet Architecture
HOLDRS, unless the merger, consolidation
or other corporate combination is between
companies that are already included in the
Internet Architecture 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 Internet Architecture 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 Internet Architecture HOLDRS are
delisted.
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
Internet Architecture 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 Internet Architecture HOLDRS as
directly owning the underlying securities.
The Internet Architecture HOLDRS themselves
will not result in any federal tax
consequences separate from the tax
14
<PAGE>
consequences associated with ownership of the
underlying securities.
Listing...................... Application has been made to list the
Internet Architecture HOLDRS on the American
Stock Exchange under the symbol "IAH".
Trading will take place only in round-lots of
100 Internet Architecture HOLDRS and round-
lot multiples. A minimum of 150,000 Internet
Architecture 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
Internet Architecture HOLDRS. Bid and ask
prices, however, will be quoted per single
Internet Architecture HOLDRS.
Clearance and settlement..... The trust will issue Internet Architecture
HOLDRS in book-entry form. Internet
Architecture 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 Internet
Architecture HOLDRS."
15
<PAGE>
THE TRUST
General. This discussion highlights information about the Internet
Architecture HOLDRS trust. You should read this information, information about
the depositary trust agreement as well as the depositary trust agreement before
you purchase Internet Architecture HOLDRS. The material terms of the depositary
trust agreement are described in this prospectus under the heading "Description
of the depositary trust agreement."
The Internet Architecture HOLDRS trust. The trust will be formed pursuant
to the depositary trust agreement, dated as of February , 2000. The Bank of
New York will be the trustee. The Internet Architecture HOLDRS trust is not a
registered investment company under the Investment Company Act of 1940.
The Internet Architecture HOLDRS trust is intended to hold deposited
shares for the benefit of owners of Internet Architecture 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 INTERNET ARCHITECTURE HOLDRS
The trust will issue Internet Architecture 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 Internet Architecture HOLDRS on a continuous basis when an
investor deposits the requisite underlying securities with the trustee.
You may only acquire, hold, trade and surrender Internet Architecture
HOLDRS in a round-lot of 100 Internet Architecture HOLDRS and round-lot
multiples. The trust will only issue Internet Architecture HOLDRS upon the
deposit of the whole shares of underlying securities that are represented by a
round-lot of 100 Internet Architecture 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 Internet Architecture HOLDRS, the trust may require a minimum of more than
one round-lot of 100 Internet Architecture HOLDRS for an issuance so that the
trust will always receive whole share amounts for issuance of Internet
Architecture HOLDRS.
Internet Architecture HOLDRS will represent your individual and undivided
beneficial ownership interest in the common stock of the specified underlying
securities. The 20 companies selected as part of this receipt program are
listed above in the section entitled "Highlights of Internet Architecture
HOLDRS--The Internet Architecture HOLDRS."
Beneficial owners of Internet Architecture 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 Internet Architecture HOLDRS to receive the
underlying securities. See "Description of the depositary trust agreement."
Internet Architecture 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. Internet Architecture
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 Internet Architecture HOLDRS wishes to realize the dollar value of
the underlying securities, that owner will have to cancel the Internet
Architecture HOLDRS. Such cancellation will require payment of fees and
expenses as described in "Description of the depositary trust agreement--
Withdrawal of underlying securities."
16
<PAGE>
Internet Architecture 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. Internet Architecture HOLDRS will be available
only in book-entry form. Owners of Internet Architecture HOLDRS may hold their
Internet Architecture 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 20 specified companies involved in various aspects of the Internet
architecture business and whose common stock is registered under Section 12 of
the Exchange Act. The issuers of the underlying securities are considered to be
20 of the largest capitalized, most liquid companies involved in the Internet
architecture business as measured by market capitalization and trading volume.
The following criteria were used in selecting the underlying securities on
February 7, 2000:
. Market capitalization equal to or greater than $2.6 billion;
. Average daily trading volume of at least 425,000 shares over the 60
trading days before February 7, 2000;
. Average daily dollar volume (that is, the average daily trading
volume multiplied by the average closing price over the 60 day period
prior to February 7, 2000) of at least $70 million over the
60 trading days before February 7, 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 Internet Architecture 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 20 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 Internet architecture
business. In this case, the Internet Architecture HOLDRS may no longer consist
of securities issued by companies involved in the Internet architecture
business. Merrill Lynch, Pierce, Fenner & Smith Incorporated will determine, in
its sole discretion, whether the issuer of a particular underlying security
remains in the Internet architecture business and will undertake to make
adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities
represented by Internet Architecture HOLDRS, please refer to "Highlights of
Internet Architecture HOLDRS--The Internet Architecture 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 stated
selection criteria. Accordingly, before you acquire Internet Architecture
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, and any of their affiliates.
17
<PAGE>
General background and historical information. For a brief description of
the business of each of the issuers of the underlying securities and monthly
pricing information showing the historical performance of each underlying
issuer's securities see "Annex A."
The following table and graph set forth the composite performance of all
of the underlying securities represented by a single Internet Architecture
HOLDR based upon the indicative share amounts set forth in the table on page 11
of this preliminary prospectus, measured at the close of each business day from
November 5, 1999, the first date when all of the underlying securities were
publicly traded, to February 7, 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>
Internet Internet Internet Internet
Architecture Architecture Architecture Architecture
1999 HOLDRS 1999 HOLDRS 2000 HOLDRS 2000 HOLDRS
- ---- ------------ ---- ------------ ---- ------------ ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
November 5.. 64.63 December 1... 74.83 January 3... 88.58 February 1.. 85.04
November 8.. 65.89 December 2... 77.30 January 4... 83.35 February 2.. 85.36
November 9.. 65.40 December 3... 79.80 January 5... 83.65 February 3.. 88.00
November 10.. 67.16 December 6... 80.62 January 6... 80.97 February 4.. 88.54
November 11.. 68.22 December 7... 81.81 January 7... 83.24 February 7.. 90.31
November 12.. 68.73 December 8... 82.72 January 10.. 86.10
November 15.. 67.86 December 9... 81.55 January 11.. 84.04
November 16.. 69.71 December 10.. 80.86 January 12.. 83.38
November 17.. 69.37 December 13.. 81.37 January 13.. 84.13
November 18.. 73.25 December 14.. 79.21 January 14.. 86.07
November 19.. 74.78 December 15.. 78.52 January 18.. 86.46
November 22.. 74.96 December 16.. 80.50 January 19.. 87.60
November 23.. 74.10 December 17.. 80.94 January 20.. 89.29
November 24.. 75.81 December 20.. 81.73 January 21.. 90.13
November 26.. 76.19 December 21.. 84.06 January 24.. 86.81
November 29.. 76.09 December 22.. 83.35 January 25.. 88.67
November 30.. 74.17 December 23.. 84.97 January 26.. 85.15
December 27.. 84.83 January 27.. 83.69
December 28.. 84.83 January 28.. 81.74
December 29.. 85.85 January 31.. 83.80
December 30.. 86.29
December 31.. 85.94
</TABLE>
[LINE GRAPH]
18
<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of February , 2000,
among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York,
as trustee, other depositors and the owners of the Internet Architecture
HOLDRS, provides that Internet Architecture 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.
Issuance, transfer and surrender of Internet Architecture HOLDRS. You may
create and cancel Internet Architecture HOLDRS only in round-lots of 100
Internet Architecture HOLDRS. You may create Internet Architecture HOLDRS by
delivering to the trustee the requisite underlying securities. The trust will
only issue Internet Architecture HOLDRS upon the deposit of the whole shares
represented by a round-lot of 100 Internet Architecture HOLDRS. In the event
that a fractional share comes to be represented by a round-lot of Internet
Architecture HOLDRS, the trust may require a minimum of more than one round-lot
of 100 Internet Architecture HOLDRS for an issuance so that the trust will
always receive whole share amounts for issuance of Internet Architecture
HOLDRS. Similarly, you must surrender Internet Architecture HOLDRS in integral
multiples of 100 Internet Architecture HOLDRS to withdraw deposited shares from
the trust. The trustee will not deliver fractional shares of underlying
securities, to the extent that any cancellation of Internet Architecture 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 Internet
Architecture HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith
Incorporated owning Internet Architecture 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
Internet Architecture 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 Internet Architecture 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 Internet
Architecture 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.
19
<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 Internet
Architecture 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 Internet Architecture 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 Internet Architecture HOLDRS.
Further issuances of Internet Architecture HOLDRS. The depositary trust
agreement provides for further issuances of Internet Architecture 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 Internet Architecture 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 Internet Architecture 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 Internet
Architecture HOLDRS, unless the merger, consolidation or other
corporate combination is between companies that are already included
in the Internet Architecture 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 5
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 Internet Architecture HOLDRS will surrender their Internet
Architecture 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 Internet Architecture 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
Internet Architecture HOLDRS are delisted. Finally, the trust will terminate if
75% of the owners of outstanding Internet Architecture 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.
20
<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 Internet Architecture 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 Internet Architecture 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 Internet
Architecture HOLDRS will not become effective until 30 days after notice of the
amendment is given to the owners of Internet Architecture HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more Internet Architecture HOLDRS. If you wish to create
Internet Architecture 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 Internet Architecture HOLDRS. If you wish to
cancel your Internet Architecture 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 Internet Architecture 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 Internet Architecture 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated
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 Internet
Architecture 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 Internet
Architecture 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 Internet Architecture
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 Internet Architecture 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.
21
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the Internet Architecture 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 Internet Architecture 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 United States federal
income tax purposes.
Taxation of Internet Architecture HOLDRS
A receipt holder purchasing and owning Internet Architecture HOLDRS will
be treated, for U.S. federal income tax purposes, as directly owning a
proportionate share of the underlying securities represented by Internet
Architecture 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 Internet
Architecture 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 basis in the
security from the amount realized on the security. With respect to purchases of
Internet Architecture 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 Internet Architecture HOLDRS. Similarly, with
respect to sales of Internet Architecture HOLDRS for cash in the secondary
market, the amount realized with respect to a sale of Internet Architecture
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
Internet Architecture HOLDRS, the occurrence of a reconstitution event, or a
termination event will not be a taxable event. The receipt holders
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<PAGE>
holding period with respect to the distributed securities will include the
period that the holder held the securities through the trust.
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 Internet
Architecture 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.
Non-U.S. receipt holders
Non-U.S. receipt holders should consult their tax advisors regarding U.S.
withholding and other taxes which may apply to an investment in the underlying
securities.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire Internet
Architecture 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 Internet Architecture 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 Internet Architecture HOLDRS. Merrill Lynch & Co., as underwriter,
proposes to offer the Internet Architecture HOLDRS to the public at the
offering price set forth on the cover page of this prospectus. Merrill Lynch
expects the trust to deliver the initial distribution of Internet Architecture
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 Internet
Architecture 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, Merrill Lynch will not
make any sales to a discretionary account without the prior written approval of
a purchaser of Internet Architecture HOLDRS.
Merrill Lynch has from time to time provided investment banking and other
financial services to certain of the issuers of the underlying securities and
expects in the future to provide these services, for which it has received and
will receive customary fees and commissions. It also may have served as
counterparty in other transactions with certain of the issuers of the
underlying securities.
23
<PAGE>
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 Internet Architecture 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 Internet Architecture 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 Internet Architecture 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 Internet Architecture HOLDRS.
24
<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 Internet
Architecture 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 sit eat 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated 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 Internet Architecture HOLDRS. This prospectus relates only to Internet
Architecture 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 Internet Architecture 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 Internet Architecture HOLDRS, have been publicly disclosed.
25
<PAGE>
ANNEX A
This annex forms an integral part of the prospectus.
The following tables provide a brief description of the business of each
of the issuers of the underlying securities and set forth the split-adjusted
closing market prices, as reported on the applicable primary trading market, of
each of the underlying securities in each month during 1995, 1996, 1997, 1998,
1999 and 2000 through January 2000. All market prices in excess of one dollar
are rounded to the nearest one sixty-fourth of a dollar. An asterisk (*)
denotes that no shares of the issuer were outstanding during that month. The
historical prices of the underlying securities should not be taken as an
indication of future performance.
3COM CORPORATION (COMS)
3Com Corporation develops and markets networking systems and services to
connect businesses and individuals to information found on companies' private
networks, and wide area networks which connect companies' private networks
together or to the Internet. 3Com's products include switches to control
network data traffic, network software, modems and handheld computers and
products that allow data access and communications from remote locations. 3Com
offers worldwide customer support and service for its products, including
design, installation and maintenance through telephone, Internet and on-site
assistance. 3Com primarily sells its products through third-party systems
integrators, value-added resellers, dealers and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 22 29/32 January 45 7/8 January 67 1/8 January 33 1/16 January 47 January 50 3/4
February 26 1/16 February 48 7/8 February 33 7/64 February 35 3/4 February 31 7/16
March 28 5/16 March 39 7/8 March 32 3/4 March 35 15/16 March 23 5/16
April 28 April 46 1/8 April 29 April 34 1/4 April 26 1/8
May 32 May 49 1/4 May 48 1/2 May 25 3/8 May 27 5/16
June 33 1/2 June 45 3/4 June 45 June 30 11/16 June 26 11/16
July 37 1/32 July 39 3/8 July 54 11/16 July 24 3/4 July 24 1/8
August 39 August 46 3/4 August 49 15/16 August 23 11/16 August 24 13/16
September 45 1/2 September 60 1/16 September 51 1/4 September 30 1/16 September 28 3/4
October 47 October 67 5/8 October 41 7/16 October 36 1/16 October 29
November 45 3/4 November 75 1/8 November 36 1/4 November 38 11/16 November 39 13/16
December 46 5/8 December 73 3/8 December 34 15/16 December 44 13/16 December 47
</TABLE>
The closing price on , 2000 was .
A-1
<PAGE>
ADAPTEC, INC. (ADPT)
Adaptec, Inc. develops, manufactures and markets hardware and software
which increase system performance by increasing the speed at which data is
transferred between personal computers, servers and networks. Adaptec also
designs products which facilitate the transfer of data between hard disk
drives, document scanners and computers. Adaptec works with business and
systems integrators, who design systems using hardware and software developed
by different companies, to create products to meet the specific needs of their
customers. Adaptec primarily markets and sells its products through its own
direct sales force and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 13 11/16 January 22 January 43 3/4 January 22 5/16 January 23 1/8 January 52 3/8
February 16 1/2 February 28 1/32 February 38 1/16 February 26 7/16 February 19 15/16
March 16 1/2 March 24 1/8 March 35 3/4 March 19 5/8 March 22 13/16
April 16 April 28 3/4 April 37 April 23 11/16 April 24 1/16
May 15 1/16 May 29 15/16 May 36 3/4 May 15 3/16 May 30 7/8
June 18 1/2 June 23 11/16 June 34 3/4 June 14 5/16 June 35 5/16
July 21 3/8 July 20 3/4 July 42 1/8 July 11 5/8 July 38 7/8
August 21 1/4 August 24 15/16 August 48 August 11 1/2 August 39
September 20 5/8 September 30 September 46 3/4 September 9 1/2 September 39 11/16
October 22 1/4 October 30 7/16 October 48 7/16 October 16 3/16 October 45
November 23 7/16 November 37 1/4 November 49 1/2 November 16 1/4 November 53 7/8
December 20 1/2 December 40 December 37 1/8 December 17 9/16 December 49 7/8
</TABLE>
The closing price on , 2000 was .
APPLE COMPUTER, INC. (APPL)
Apple Computer, Inc. designs, manufactures and markets personal computers
and related operating systems and software. Apple's primary product is the
Apple Macintosh computer line, which includes desktop and notebook personal
computers and software. Two recent additions to its product line include the
iMAC desktop and iBook laptop computers. Apple sells its computers primarily to
educational institutions, businesses and individuals. Apple markets its
products and services through third-party distributors, authorized resellers,
retail outlets and the Apple online store.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 40 3/8 January 27 5/8 January 16 5/8 January 18 5/16 January 41 3/16 January 103 3/4
February 39 1/2 February 27 1/2 February 16 1/4 February 23 5/8 February 34 13/16
March 35 1/4 March 24 9/16 March 18 1/4 March 27 1/2 March 35 15/16
April 38 1/4 April 24 3/8 April 17 April 27 3/8 April 46
May 41 9/16 May 26 1/8 May 16 5/8 May 26 5/8 May 44 1/16
June 46 7/16 June 21 June 14 1/4 June 28 11/16 June 46 5/16
July 45 July 22 July 17 1/2 July 34 5/8 July 55 11/16
August 43 August 24 1/4 August 21 3/4 August 31 3/16 August 65 1/4
September 37 1/4 September 22 3/16 September 21 11/16 September 38 1/8 September 63 5/16
October 36 5/16 October 23 October 17 1/32 October 37 1/8 October 80 1/8
November 38 1/8 November 24 1/8 November 17 3/4 November 31 15/16 November 97 7/8
December 31 7/8 December 20 7/8 December 13 1/8 December 40 15/16 December 102 13/16
</TABLE>
The closing price on , 2000 was .
A-2
<PAGE>
CIENA CORPORATION (CIEN)
Ciena Corporation develops and markets products for the optical
networking equipment market. Optical networking equipment uses fiber optic
cables, which can transmit larger volumes of data at higher transmission speeds
and more efficiently, to facilitate the transmission of data and telephone
communications. Ciena provides products such as systems based on fiber optic
cables, switches to manage network data traffic and other multi-purpose data
delivery systems to its customers, who include local and long-distance
telephone carriers and Internet service providers, who provide Internet access
to individuals and businesses. Ciena markets and sells its products through its
own direct sales force, and internationally, it also uses third-party
distributors and representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January 55 1/16 January 20 3/16 January 65 5/8
February * February * February 39 1/4 February 41 15/16 February 27 7/8
March * March * March 28 7/16 March 42 5/8 March 22 1/2
April * April * April 31 1/4 April 55 3/4 April 23 1/2
May * May * May 46 3/4 May 52 May 28 3/4
June * June * June 47 1/8 June 69 5/8 June 30 3/16
July * July * July 56 1/8 July 74 1/16 July 33 3/4
August * August * August 47 3/4 August 28 1/8 August 35 1/8
September * September * September 49 17/32 September 14 5/16 September 36 1/2
October * October * October 55 October 17 3/16 October 35 1/4
November * November * November 54 November 17 November 43 15/16
December * December * December 61 1/8 December 14 5/8 December 57 1/2
</TABLE>
The closing price on , 2000 was .
CISCO SYSTEMS, INC. (CSCO)
Cisco Systems, Inc. develops and markets hardware and software products
which link computer networks both internally and externally, and provides
worldwide networking capability for the Internet. Cisco produces a range of
products which connect computing devices to networks and connect networks with
each other. Cisco provides routing products, which connect companies' private
networks together, switches to control network data traffic, services to access
networks from any location, network development and design. Cisco markets its
products worldwide through several channels including its own direct sales
force, distributors, value-added resellers, service providers and system
integrators. On February 8, 2000, Cisco announced a 2-for-1 stock split on its
common stock to shareholders of record on February 22, 2000. The stock will
begin trading on a split-adjusted basis on March 23, 2000. The following table
does not take into account any adjustments for this stock split.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 3 45/64 January 9 1/4 January 15 1/2 January 21 1/64 January 55 25/32 January 109 1/2
February 3 3/4 February 10 9/16 February 12 23/64 February 21 61/64 February 48 29/32
March 4 15/64 March 10 5/16 March 10 11/16 March 22 51/64 March 54 25/32
April 4 7/16 April 11 17/32 April 11 1/2 April 24 27/64 April 57 1/32
May 4 55/64 May 12 11/64 May 15 1/16 May 25 13/64 May 54 1/2
June 5 5/8 June 12 37/64 June 14 59/64 June 30 11/16 June 64 1/2
July 6 3/16 July 11 1/2 July 17 11/16 July 31 59/64 July 62 1/8
August 7 19/64 August 11 23/32 August 16 3/4 August 27 19/64 August 67 13/16
September 7 43/64 September 13 5/64 September 16 15/64 September 30 29/32 September 68 9/16
October 8 39/64 October 13 3/4 October 18 15/64 October 31 1/2 October 74
November 9 11/32 November 15 5/64 November 19 11/64 November 37 11/16 November 89 3/16
December 8 19/64 December 14 9/64 December 18 37/64 December 46 13/32 December 107 1/8
</TABLE>
The closing price on , 2000 was .
A-3
<PAGE>
COBALT NETWORKS, INC. (COBT)
Cobalt Networks, Inc. develops and markets server appliances, which is a
type of server specially designed to accomplish specific network functions,
including Internet applications. Cobalt's products differ from general purpose
servers because they focus on specific functions, such as establishing a Web
site, receiving e-mail and accessing software applications over the Internet.
These server appliances are less complex and less expensive than general
purpose servers and are marketed as an alternative to small and medium-sized
businesses. Cobalt primarily uses resellers and distributors to market and sell
its products.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 78 1/2
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September *
October * October * October * October * October *
November * November * November * November * November 168 13/16
December * December * December * December * December 108 3/8
</TABLE>
The closing price on , 2000 was .
COMPAQ COMPUTER CORPORATION (CPQ)
Compaq Computer Corporation develops and markets hardware, software,
technology solutions and services, including desktop and portable computers for
both business and personal use, computer systems for multiple users, servers,
Internet related products and network and communication products. Compaq
provides professional and support services to its customers for its products
and for other companies' products which are used in conjunction with Compaq
products. Compaq sells its products primarily through dealers, value-added
resellers and systems integrators. It also sells products through its own
direct sales force and on the Internet.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 7 5/32 January 9 27/64 January 17 11/32 January 30 3/16 January 47 5/8 January 27 1/4
February 6 29/32 February 10 1/8 February 15 51/64 February 32 1/16 February 35 3/8
March 6 7/8 March 7 23/32 March 15 21/64 March 25 7/8 March 31 11/16
April 7 19/32 April 9 11/32 April 17 5/64 April 28 1/16 April 22 5/16
May 7 27/32 May 9 23/32 May 21 5/8 May 27 3/8 May 23 11/16
June 9 3/64 June 9 53/64 June 19 29/32 June 28 3/8 June 23 11/16
July 10 1/8 July 10 59/64 July 28 9/16 July 32 13/16 July 24 1/16
August 9 35/64 August 11 21/64 August 32 3/4 August 27 15/16 August 23 5/32
September 9 43/64 September 12 53/64 September 37 3/8 September 31 5/8 September 22 7/8
October 11 1/8 October 13 29/32 October 32 October 31 5/8 October 19 1/8
November 9 7/8 November 15 27/32 November 31 7/32 November 32 1/2 November 24 7/16
December 9 19/32 December 14 7/8 December 28 1/4 December 42 December 27 1/16
</TABLE>
The closing price on , 2000 was .
A-4
<PAGE>
DELL COMPUTER CORPORATION (DELL)
Dell Computer Corporation develops, manufacturers and markets information
processing products including desktop and notebook computers, network servers,
storage products, hardware and software. Dell's customers include corporations,
institutions, organizations and individual consumers. Dell offers services such
as custom-designed computer systems, telephone and online technical support and
on-site product service. Dell's sales and marketing is conducted through its
"direct model" through which Dell employees market and sell Dell products and
services directly to its customers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 43/64 January 55/64 January 4 9/64 January 12 7/16 January 50 January 38 7/16
February 21/32 February 1 5/64 February 4 29/64 February 17 31/64 February 40 1/16
March 11/16 March 1 3/64 March 4 15/16 March 16 15/16 March 40 7/8
April 55/64 April 1 7/16 April 5 15/64 April 20 3/16 April 41 3/16
May 25/32 May 1 47/64 May 7 1/32 May 20 39/64 May 34 7/16
June 15/16 June 1 19/32 June 7 11/32 June 23 13/64 June 37
July 1 1/64 July 1 47/64 July 10 11/16 July 27 5/32 July 40 7/8
August 1 13/64 August 2 2/32 August 10 17/64 August 25 August 48 13/16
September 1 21/64 September 2 7/16 September 12 7/64 September 32 7/8 September 41 13/16
October 1 29/64 October 2 35/64 October 10 1/64 October 32 3/4 October 40 1/8
November 1 25/64 November 3 11/64 November 10 17/32 November 30 13/32 November 43
December 1 5/64 December 3 21/64 December 10 1/2 December 36 19/32 December 51
</TABLE>
The closing price on , 2000 was .
EMC CORPORATION (EMC)
EMC Corporation develops, manufactures and markets business storage
systems and software. EMC's system and software are used by businesses to
retrieve data from their own computer systems and act as a central repository
for the information. EMC's products allow a customer whose network is based on
a variety of different hardware and software systems to manage, share and
protect its critical information. EMC markets and sells its products through
its own direct sales force, distributors, resellers and original equipment
manufacturers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 4 21/32 January 4 25/32 January 9 15/32 January 16 9/32 January 54 7/16 January 107 1/4
February 4 9/32 February 5 1/2 February 9 February 18 7/8 February 51 3/16
March 4 3/16 March 5 7/17 March 8 7/8 March 18 29/32 March 63 7/8
April 4 27/32 April 5 1/8 April 9 3/32 April 23 1/8 April 54 15/32
May 5 3/4 May 5 1/2 May 9 31/32 May 20 23/32 May 50 7/32
June 6 1/16 June 4 5/8 June 9 3/4 June 22 13/32 June 55
July 5 23/32 July 4 7/8 July 12 21/3 July 24 1/2 July 60 7/16
August 5 1/8 August 4 13/16 August 12 25/32 August 22 1/4 August 59 7/8
September 4 17/32 September 5 5/8 September 14 19/32 September 28 11/16 September 71 3/8
October 3 7/8 October 6 9/16 October 14 October 32 3/16 October 73
November 4 15/32 November 8 1/16 November 15 5/32 November 36 1/4 November 83 11/16
December 3 27/32 December 8 9/32 December 13 23/32 December 42 1/2 December 109 1/4
</TABLE>
The closing price on , 2000 was .
A-5
<PAGE>
EXTREME NETWORKS, INC. (EXTR)
Extreme Networks, Inc. develops and markets network switches which enable
companies' private networks and Internet service and content providers to
control traffic on their networks. Extreme Networks' switches are designed to
allow faster network access as well as increase a network's capacity and
adaptability. Extreme Networks markets its products to businesses and Internet
service and content providers. Extreme Networks relies on resellers, original
equipment manufacturers, and to a lesser extent, its own sales force, to market
and sell its products.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 84 5/8
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April 55 7/16
May * May * May * May * May 42 5/8
June * June * June * June * June 58 1/16
July * July * July * July * July 48 3/4
August * August * August * August * August 63 15/16
September * September * September * September * September 63 5/16
October * October * October * October * October 80 5/16
November * November * November * November * November 66 3/8
December * December * December * December * December 83 1/2
</TABLE>
The closing price on , 2000 was .
FOUNDRY NETWORKS, INC. (FDRY)
Foundry Networks, Inc. develops, manufactures and markets switches which
control network traffic on the various types of networks used by businesses and
Internet service providers. Foundry's switches and accompanying networking
products are designed to increase the speed and capacity of networks and to
maximize the efficiency of networks by enabling them to distinguish between and
prioritize different types of network traffic. Foundry markets and sells its
products through its own direct sales force, resellers and an original
equipment manufacturer.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 134 11/16
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September 63
October * October * October * October * October 94 3/4
November * November * November * November * November 117 9/16
December * December * December * December * December 150 27/32
</TABLE>
The closing price on , 2000 was .
A-6
<PAGE>
GATEWAY, INC. (GTW)
Gateway, Inc. develops, manufactures and markets personal computers and
related products and services. Gateway's products include desktop and portable
personal computers, servers, workstations and digital media personal computers,
which are computers that offer entertainment functions, such as digital video
discs, and personal computing activities, such as Internet access, in one
product. Gateway also provides Internet access to individuals and businesses.
Gateway markets and sells its products using "direct marketing" to its
customers through telephone orders, the Internet and Gateway retail stores.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 5 7/32 January 6 15/32 January 15 9/32 January 18 27/32 January 38 5/8 January 61 3/16
February 4 19/32 February 7 3/8 February 14 11/16 February 22 February 36 11/32
March 4 11/16 March 6 31/32 March 12 13/16 March 23 3/8 March 34 9/32
April 4 47/64 April 8 23/32 April 13 23/32 April 29 13/32 April 33 3/32
May 4 25/64 May 9 15/32 May 16 21/32 May 22 17/32 May 30 13/32
June 5 11/16 June 8 1/2 June 16 1/4 June 25 June 29 17/32
July 7 7/32 July 10 1/32 July 19 1/16 July 27 July 38 1/16
August 6 21/32 August 11 7/32 August 19 9/16 August 23 21/32 August 48 15/32
September 7 21/32 September 11 31/32 September 15 3/4 September 26 5/32 September 44
October 8 11/32 October 11 49/64 October 14 17/32 October 27 29/32 October 66 1/16
November 6 29/32 November 13 13/32 November 14 3/8 November 28 1/16 November 76 3/8
December 6 1/8 December 13 25/64 December 16 3/8 December 25 19/32 December 72 1/16
</TABLE>
The closing price on , 2000 was .
HEWLETT- PACKARD COMPANY (HWP)
Hewlett-Packard Company designs, manufactures and services equipment and
systems to be used for measurement, calculation and communications. Hewlett-
Packard products include personal computers, printers, calculators, medical
electronic equipment and computer systems. Hewlett-Packard's services include
systems integration, network systems, management consulting and support and
maintenance for its products. Hewlett-Packard markets its products and services
through its own direct sales operations; however, the majority of its sales and
marketing is handled through third-party channels such as retailers, dealers
and value-added resellers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 25 1/8 January 42 3/8 January 52 5/8 January 60 1/8 January 78 3/8 January 108 1/4
February 28 3/4 February 50 3/8 February 56 1/8 February 67 February 66 7/16
March 30 3/32 March 47 1/16 March 53 3/8 March 63 3/8 March 67 13/16
April 33 1/16 April 52 15/16 April 52 1/2 April 75 3/8 April 78 7/8
May 33 May 53 1/4 May 51 1/2 May 62 5/16 May 94 5/16
June 37 1/4 June 49 13/16 June 56 June 59 7/8 June 100 1/2
July 38 15/16 July 44 July 70 July 55 1/2 July 104 11/16
August 40 August 43 3/4 August 61 1/2 August 48 9/16 August 105 3/8
September 41 11/16 September 48 3/4 September 69 9/16 September 52 15/16 September 90 3/4
October 46 5/16 October 44 1/8 October 61 5/8 October 60 1/4 October 74 3/16
November 41 1/2 November 53 7/8 November 61 1/8 November 62 9/16 November 94 7/8
December 41 7/8 December 50 1/4 December 62 3/8 December 68 5/16 December 113 3/4
</TABLE>
The closing price on , 2000 was .
A-7
<PAGE>
INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM)
International Business Machines Corporation develops, manufactures and
markets information processing products and services, such as computers,
software, network systems and network management services. IBM's business is
divided into several main segments including technology, systems, products,
services, software and financing. IBM operates in more than 150 countries and
markets and sells its products through its worldwide sales and distribution
organization and through third-party distributors and resellers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 18 1/32 January 27 1/8 January 39 7/32 January 49 3/8 January 91 5/8 January 112 1/4
February 18 13/16 February 30 21/32 February 35 15/16 February 52 7/32 February 84 7/8
March 20 17/32 March 27 13/16 March 34 5/16 March 51 15/16 March 88 5/8
April 23 21/32 April 26 15/16 April 40 1/8 April 57 15/16 April 104 19/32
May 23 1/4 May 26 11/16 May 43 1/4 May 58 3/4 May 116
June 24 June 24 3/4 June 45 1/8 June 57 13/32 June 129 1/4
July 27 7/32 July 26 7/8 July 52 7/8 July 66 1/4 July 125 11/16
August 25 27/32 August 28 19/32 August 50 11/16 August 56 5/16 August 124 9/16
September 23 5/8 September 31 1/8 September 53 September 64 1/4 September 121
October 24 5/16 October 32 1/4 October 49 1/4 October 74 1/4 October 98 1/4
November 24 5/32 November 39 27/32 November 54 3/4 November 82 9/16 November 103 1/16
December 22 27/32 December 37 7/8 December 52 5/16 December 92 3/16 December 107 7/8
</TABLE>
The closing price on , 2000 was .
JUNIPER NETWORKS, INC. (JNPR)
Juniper Networks, Inc. manufactures and markets Internet backbone
routers, which are products specifically designed for the Internet to transmit
data from its source to the user. Juniper's routers are designed to accommodate
the increasing size and scope of the Internet and its major customers include
Internet service providers and telecommunications service providers. Juniper's
principal product is the M40 Internet backbone router. Juniper sells its
routers primarily though its own direct sales force and an original equipment
manufacturer.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 135 5/16
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June 49 43/64
July * July * July * July * July 54 9/64
August * August * August * August * August 68 21/64
September * September * September * September * September 60 11/16
October * October * October * October * October 91 7/8
November * November * November * November * November 92 3/8
December * December * December * December * December 113 21/64
</TABLE>
The closing price on , 2000 was .
A-8
<PAGE>
NETWORK APPLIANCE, INC. (NTAP)
Network Appliance, Inc. develops and supplies network appliances, which
is a type of server that performs specific network functions, as opposed to the
variety of functions a general purpose server provides. Network Appliance's
major products include filers which improve the storage and accessibility of
data, and Internet caching appliances which store or "cache" frequently
accessed data close to the end user in order to minimize the delay experienced
by the user in accessing information on the Internet. Network Appliance's
filers provide its business, database and e-commerce customers with data
protection and management capabilities by providing data backup and replication
and disaster recovery. Network Appliance uses its own direct sales force and
value-added resellers to market and sell its products. On February 15, 2000,
Network Appliance announced a 2-for-1 stock split on its common stock to
shareholders of record on March 10, 2000. The stock will begin trading on a
split-adjusted basis on March 23, 2000. The following table does not take into
account any adjustments for this stock split.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January 3 27/32 January 6 13/32 January 7 17/32 January 26 1/2 January 100 3/8
February * February 3 31/32 February 5 February 7 3/8 February 21
March * March 3 31/32 March 4 1/16 March 8 7/8 March 25 5/16
April * April 4 April 3 41/64 April 9 1/64 April 25 5/32
May * May 4 9/32 May 5 5/64 May 8 45/64 May 23 37/64
June * June 3 23/32 June 4 3/4 June 9 47/64 June 27 15/16
July * July 3 July 5 29/64 July 10 7/16 July 27 1/4
August * August 3 1/2 August 5 29/32 August 10 27/64 August 32 27/32
September * September 3 3/4 September 6 25/32 September 12 21/32 September 35 13/16
October * October 4 3/8 October 6 9/32 October 13 11/16 October 37
November 3 25/32 November 4 1/2 November 6 19/64 November 18 25/32 November 58 27/32
December 5 1/64 December 6 23/64 December 8 7/8 December 22 27/64 December 83 1/16
</TABLE>
The closing price on , 2000 was .
SEAGATE TECHNOLOGY, INC. (SEG)
Seagate Technology, Inc. designs, manufactures and markets products which
store, retrieve and manage data for computer and communications systems. Its
main product line is rigid disc drives, which allow users access to large
volumes of information more quickly than other types of disc drives. Rigid disc
drives may be used by computer systems as well as in multimedia applications,
such as graphics, video and animation. Seagate also produces tape drives and
digital audio tape drives, both of which provide customers with additional data
storage alternatives. Seagate markets and sells its products through direct
sales, use of third-party distributors and consignment relationships with
certain distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 12 11/16 January 29 1/2 January 51 1/2 January 23 3/16 January 40 11/16 January 39 3/4
February 12 February 32 5/8 February 47 1/8 February 24 5/16 February 28 13/16
March 13 15/16 March 27 3/8 March 44 7/8 March 25 1/4 March 29 9/16
April 15 15/16 April 29 April 46 April 26 11/16 April 27 7/8
May 17 15/16 May 29 3/8 May 40 5/8 May 23 1/4 May 30 3/16
June 19 3/4 June 22 1/2 June 35 1/4 June 23 7/8 June 25 5/8
July 22 3/16 July 24 3/16 July 41 3/16 July 22 5/8 July 26 7/8
August 22 3/16 August 24 August 38 3/16 August 17 1/8 August 33 3/16
September 21 1/16 September 27 15/16 September 36 1/4 September 25 1/16 September 30 5/8
October 22 5/16 October 33 3/8 October 27 1/8 October 26 1/4 October 29 7/16
November 26 3/8 November 39 1/2 November 22 11/16 November 29 1/2 November 37
December 23 3/4 December 39 1/2 December 19 1/4 December 30 1/4 December 46 9/16
</TABLE>
The closing price on , 2000 was .
A-9
<PAGE>
SUN MICROSYSTEMS, INC. (SUNW)
Sun Microsystems, Inc. develops and markets network computing products
for the Internet and for companies' private networks. Sun Microsystems'
products are based on open industry standards, which are applications available
to users for little or no charge, and include computer systems, workstations,
servers, high-speed microprocessors, which allow a computer to process
information, and software. Some of Sun Microsystems' technologies include its
Java software, which allows a user to access Internet applications regardless
of the hardware or software that its system uses, and its Solaris Operating
Environment, which is an operating system which can support numerous
applications, such as electronic commerce operations and database management
technology. Sun Microsystems operates globally, and markets and sells its
products through its own direct sales force and third-party distributors and
resellers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 2 3/64 January 5 3/4 January 7 16/16 January 11 63/64 January 27 15/16 January 78 9/16
February 2 February 6 9/16 February 7 23/32 February 11 29/32 February 24 21/32
March 2 11/64 March 5 15/32 March 7 7/32 March 10 7/16 March 31 17/64
April 2 1/2 April 6 25/32 April 7 13/64 April 10 19/64 April 29 29/32
May 2 13/16 May 7 53/64 May 8 1/16 May 10 1/64 May 29 7/8
June 3 1/32 June 7 23/64 June 9 5/16 June 10 55/64 June 34 7/16
July 3 1/64 July 6 53/64 July 11 27/64 July 11 13/16 July 33 15/16
August 3 5/8 August 6 51/64 August 12 August 9 29/32 August 39 3/4
September 3 15/16 September 7 49/64 September 11 45/64 September 12 29/64 September 46 1/2
October 4 7/8 October 7 5/8 October 8 9/16 October 14 9/16 October 52 29/32
November 5 17/64 November 7 9/32 November 9 November 18 33/64 November 66 1/8
December 5 45/64 December 6 27/64 December 9 31/32 December 21 13/32 December 77 7/16
</TABLE>
The closing price on , 2000 was .
SYCAMORE NETWORKS, INC. (SCMR)
Sycamore Networks, Inc. creates optical networking products which
facilitate the transmission of voice and data on fiber optic networks. Fiber
optic networks allow for the transmission of larger volumes of data at faster
transmissions speeds and more efficiently. Sycamore's products use existing
fiber optic systems to provide enhanced high-speed data services such as access
to the Internet, video conferencing and remote access to corporate databases.
Sycamore also collaborates with its customers to identify and develop new high
speed data services. Sycamore currently markets its products through its own
direct sales force. Sycamore affected a 3-for-1 stock split on its common stock
in the form of a stock dividend to shareholders of record on February 4, 2000.
The stock began trading on a split-adjusted basis on February 14, 2000. The
following table is adjusted to account for this stock split.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 106 1/3
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September *
October * October * October * October * October 71 2/3
November * November * November * November * November 74
December * December * December * December * December 102 2/3
</TABLE>
The closing price on , 2000 was .
A-10
<PAGE>
UNISYS CORPORATION (UIS)
Unisys Corporation develops and markets high-end network equipment
designed for use in the finance and banking, communication and travel
industries and in a variety of other industries that have electronic commerce
operations. Unisys's technology segment offers servers, desktop and notebook
computers, monitors and storage products. Unisys's services segment offers
systems integration and maintenance services to design systems using network
and systems hardware and software designed by different companies. It also
offers network consulting, integration and management services. These
integration services include adapting information technology to support a
particular customer's business operations. Unisys markets and sells its
products primarily through its own direct sales force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 9 January 7 1/2 January 6 7/8 January 16 1/2 January 33 1/8 January 31 7/8
February 9 February 6 1/8 February 6 5/8 February 17 7/8 February 29 13/16
March 9 3/8 March 6 March 6 1/4 March 19 March 27 11/16
April 10 1/4 April 6 April 6 April 22 5/16 April 31 7/16
May 10 5/8 May 8 1/8 May 6 7/8 May 24 9/16 May 37 15/16
June 10 7/8 June 7 1/8 June 7 5/8 June 28 1/4 June 38 15/16
July 8 7/8 July 5 7/8 July 9 5/8 July 27 7/16 July 40 13/16
August 8 1/8 August 5 7/8 August 11 5/16 August 18 1/16 August 43
September 7 7/8 September 6 1/8 September 15 5/16 September 22 3/4 September 45 1/8
October 5 5/8 October 6 1/4 October 13 5/16 October 26 5/8 October 22 9/16
November 6 1/2 November 7 5/8 November 14 3/8 November 28 1/2 November 28 3/4
December 5 1/2 December 6 3/4 December 13 7/8 December 34 7/16 December 31 15/16
</TABLE>
The closing price on , 2000 was .
A-11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
H O L D R S /SM/
INTERNET ARCHITECTURE
1,000,000,000 Depositary Receipts
Internet Architecture HOLDRS SM Trust
--------------------
P R O S P E C T U S
--------------------
Merrill Lynch & Co.
, 2000
Until , 2000 (25 days after the date of this prospectus), all
dealers effecting transactions in the offered Internet Architecture 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.............. $290,136
Printing and engraving expenses.................................. 150,000
Legal fees and expenses ......................................... 200,000
Rating agency fees............................................... 0
Miscellaneous.................................................... 9,864
--------
Total.......................................................... $650,000
</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
Amendment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, on February
23, 2000.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
*
By: _________________________________
Name: Ahmass L. Fakahany
Title:Senior Vice President,
Chief Financial Officer and
Controller
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities indicated on February 23, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
* Chief Executive Officer,
____________________________________ Chairman of the Board
John L. Steffens and Director
* Director
____________________________________
E. Stanley O'Neal
* Director
____________________________________
George A. Schieren
* Senior Vice President,
____________________________________ Chief Financial Officer
Ahmass L. Fakahany and Controller
/s/ Stephen G. Bodurtha Attorney-in-fact
By: ________________________________
Stephen G. Bodurtha
</TABLE>
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
Opinion of Shearman & Sterling regarding the validity of the Internet
*5.1 Architecture 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>
- --------
* Previously filed.
