<PAGE>
As filed with the Securities and Exchange Commission on September 7, 2000
Registration No. 333-43766
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Merrill Lynch, Pierce, Fenner & Smith Incorporated
Initial Depositor
(Exact name of registrant as specified in charter)
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Software HOLDRS SM Trust
yet-to-be formed
[Issuer with respect to the receipts]
<TABLE>
<S> <C> <C>
Delaware 6211 13-5674085
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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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)
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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>
Proposed
Title of Each Class of Maximum Proposed
Securities to Be Amount to Be Offering Price Maximum Aggregate Amount of
Registered Registered Per Receipt(1) Offering Price(1) Registration Fee(2)(3)
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<S> <C> <C> <C> <C>
Software HOLDRS........ 1,000,000,000 $100 $599,500,000 $158,268
receipts
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act. 5,000,000 receipts are
estimated to be offered in the initial offering at $100 per receipt and
995,000,000 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
August 14, 2000 $2,640 of this Registration Fee.
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 September 7, 2000
PROSPECTUS
[LOGO OF HOLDRS]
1,000,000,000 Depositary Receipts
Software HOLDRS SM Trust
The Software HOLDRS SM Trust will issue Depositary Receipts called Software
HOLDRS SM representing your undivided beneficial ownership in the common stock
or American depositary shares of a group of specified companies that are
involved in various segments of the software industry. The Bank of New York
will be the trustee. You only may acquire, hold or transfer Software HOLDRS in
a round-lot amount of 100 Software HOLDRS or round-lot multiples. Software
HOLDRS are separate from the underlying deposited common stocks or American
depositary shares that are represented by the Software HOLDRS. For a list of
the names and the number of shares of the companies that make up a Software
HOLDR, see "Highlights of Software HOLDRS--The Software HOLDRS" starting on
page 11. The trust will issue the additional Software HOLDRS on a continuous
basis.
Investing in Software HOLDRS involves significant risks. See "Risk factors"
starting on page 4.
The initial public offering price for a round-lot of 100 Software HOLDRS
will equal the sum of the closing market price on the primary U.S. trading
market on the pricing date for each deposited share multiplied by the share
amount specified in this prospectus, plus an underwriting fee.
Software 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 Software HOLDRS.
Application has been made to list the Software HOLDRS on the American Stock
Exchange under the symbol "SWH".
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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
to Underwriting
Public* Fee
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<S> <C> <C>
Per Software HOLDR................................. 2%
</TABLE>
___________
*Includes underwriting fee.
For purchases of Software HOLDRS in excess of Software HOLDRS, the
underwriting fee will be %.
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Merrill Lynch & Co.
<TABLE>
<S> <C>
Robert W. Baird & Co. First Union Securities, Inc.
Legg Mason Wood Walker Morgan Keegan & Company, Inc.
Incorporated
Raymond James & Associates, Inc.
Sutro & Co. Incorporated Tucker Anthony Capital Markets
</TABLE>
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 Software HOLDRS.............................................. 10
The Trust.................................................................. 17
Description of Software HOLDRS............................................. 17
Description of the Underlying Securities................................... 18
Description of the Depositary Trust Agreement.............................. 20
Federal Income Tax Consequences............................................ 23
ERISA Considerations....................................................... 26
Plan of Distribution....................................................... 26
Legal Matters.............................................................. 27
Where You Can Find More Information........................................ 27
</TABLE>
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This prospectus contains information you should consider when making your
investment decision. With respect to information about Software 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 Software HOLDRS in any
jurisdiction where the offer or sale is not permitted.
The Software HOLDRS are not registered for public sale outside of the
United States. Non-U.S. receipt holders should refer to "Federal Income Tax
Consequences--Non-U.S. receipt holders" and we recommend that non-U.S. receipt
holders consult their tax advisors regarding U.S. withholding and other taxes
which may apply to ownership of the Software HOLDRS or of the underlying
securities through an investment in the Software HOLDRS.
2
<PAGE>
SUMMARY
The Software HOLDRS Trust will be formed under the depositary trust
agreement, dated as of , 2000, among The Bank of New York, as trustee,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the
owners of the Software HOLDRS. The trust is not a registered investment company
under the Investment Company Act of 1940.
The trust will hold shares of common stock or American depositary shares
issued by 20 specified companies generally considered to be involved in various
segments of the software industry. The number of shares of each company's
common stock or American depositary shares held by the trust with respect to
each round-lot of Software HOLDRS is specified under "Highlights of Software
HOLDRS--The Software HOLDRS." This group of common stocks or American
depositary shares are collectively referred to in this prospectus as the
securities or 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 Software HOLDRS that represent your undivided
beneficial ownership interest in the securities held by the trust on your
behalf. The Software HOLDRS are separate from the underlying securities that
are represented by the Software HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in Software HOLDRS involves risks similar to investing in
each of the underlying securities outside of the Software HOLDRS, including the
risks associated with concentrated investments in software companies.
General Risk Factors
. Loss of investment. Because the value of Software HOLDRS directly
relates to the value of the underlying securities, you may lose a
substantial portion of your investment in the Software HOLDRS if
the underlying securities decline in value.
. Discount trading price. Software HOLDRS may trade at a discount to
the aggregate value of the underlying securities.
. Not necessarily representative of the software industry. While the
underlying securities are securities of companies generally
considered to be involved in various aspects of the software
industry, the underlying securities and the Software HOLDRS may
not necessarily follow the price movements of the entire software
industry generally. If the underlying securities decline in value,
your investment in the Software HOLDRS will decline in value even
if the securities prices of companies in the software industry
generally increase in value. Furthermore, after the initial
deposit, one or more of the issuers of the underlying securities
may no longer be involved in the software industry. In this case,
the Software HOLDRS may no longer consist of securities issued
only by companies involved in the software industry.
. No investigation of underlying securities. The underlying
securities included in the Software HOLDRS were selected by
Merrill Lynch, Pierce, Fenner & Smith Incorporated based on the
market capitalization of issuers and the market liquidity of
securities in the software industry, without regard for the value,
price performance, volatility or investment merit of the
underlying securities. Consequently, the Software 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 industry developments,
reorganizations, or market fluctuations affecting issuers of the
underlying securities, Software HOLDRS may not necessarily
continue to be a diversified investment in the software industry.
As a result of market fluctuation and/or reconstitution events,
Software 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 Software HOLDRS and receive
delivery of each of the underlying securities. The cancellation of
your Software HOLDRS will allow you to sell individual underlying
securities or to deliver individual underlying securities in a
tender offer. The cancellation of Software HOLDRS will involve
payment of a cancellation fee to the trustee.
. Trading halts. Trading in Software HOLDRS may be halted if trading
in one or more of the underlying securities is halted. If trading
is halted in the Software HOLDRS, you will only
4
<PAGE>
be able to trade HOLDRS if you cancel your Software HOLDRS and
receive the underlying securities, even though there is trading in
some of the underlying securities.
. Delisting from the American Stock Exchange. If the number of
companies whose securities are held in the trust falls below nine,
the American Stock Exchange may consider delisting the Software
HOLDRS. If the Software HOLDRS are delisted by the American Stock
Exchange, a termination event will result unless the Software
HOLDRS are listed for trading on another U.S. national securities
exchange or through Nasdaq NMS within five business days from the
date the Software HOLDRS are delisted.
. Possible conflicts of interest. Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as initial depositor, has selected the
underlying securities and may face possible conflicts of interest
in connection with its activities. For example, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and its affiliates,
collectively referred to as Merrill Lynch, may engage in
investment banking and other activities, may provide services to
issuers of the underlying securities in connection with its
business, or may make purchases or sales, including establishing
long or short positions, in the underlying securities for its own
account. In addition, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, will purchase, in the
secondary market, the underlying securities that will be deposited
into the trust. Merrill Lynch may make these purchases before the
deposit into the trust, or it may borrow securities for the
deposit and subsequently purchase the securities to repay to the
lenders the securities previously borrowed. In either event, the
purchases of the underlying securities will be made at various
prices. As the initial offering price for the Software HOLDRS will
be based on the closing market price of each of the underlying
securities on the pricing date, Merrill Lynch may recognize a gain
on its purchases of the underlying securities. Specifically, if
the closing market price for the underlying securities on the
pricing date is higher than the price at which Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as initial depositor,
purchases the underlying securities then it will recognize a gain
in connection with such purchases. Merrill Lynch may recognize
this gain on any of the underlying securities that comprise the
Software HOLDRS or on all of the underlying securities in the
aggregate. The potential profit of Merrill Lynch also is affected
by any hedging activities that it may engage in while it purchases
the underlying securities in the secondary market for deposit into
the trust. All of these activities may result in conflicts of
interest with respect to the financial interest of Merrill Lynch,
on the one hand, and, on the other hand, the initial selection of
the underlying securities included in the Software HOLDRS, the
selection of the software industry, Merrill Lynch's activity in
the secondary market in the underlying securities, and the
creation and cancellation of Software HOLDRS by Merrill Lynch.
. Temporary price increases in the underlying securities. Purchasing
activity in the secondary trading market associated with acquiring
the underlying securities for deposit into the trust may
temporarily increase the market price of the deposited shares,
which will result in a higher initial offering price for the
Software HOLDRS. Large volumes of purchasing activity, which may
occur in connection with the issuance of Software HOLDRS,
particularly in connection with the initial issuance of Software
HOLDRS, could temporarily increase the market price of the
underlying securities, resulting in a higher price on that date.
This purchasing activity could create a temporary imbalance
between the supply and demand of the underlying securities,
thereby limiting the liquidity of the underlying securities due to
a temporary increased demand for underlying securities. Temporary
increases in the market price of the underlying securities may
also occur as a result of the purchasing activity of other market
participants. Other market participants may attempt to benefit
from increases in the market price of the underlying securities
that may occur as a result of the increased
5
<PAGE>
purchasing activity in the underlying securities resulting from
the issuance of the Software HOLDRS. Consequently, prices for the
underlying securities may decline immediately after the pricing
date. If the trading prices for the underlying securities decline,
the trading price of Software HOLDRS will also decline.
Risk Factors Specific to Companies Involved in the Software Industry
. The stock prices of some of the companies included in the Software
HOLDRS have been and will likely continue to be extremely
volatile, which will directly affect the price volatility of the
Software HOLDRS, and you could lose all or part of your
investment. The trading prices of the securities of some companies
included in the Software HOLDRS have been volatile. These stock
prices could be subject to wide fluctuations in response to a
variety of factors, including the following:
. general market fluctuations;
. actual or anticipated variations in companies' quarterly
operating results;
. announcements of technological innovations or new services
offered by competitors of the companies included in the
Software HOLDRS;
. changes in financial estimates by securities analysts;
. legal or regulatory developments affecting the companies
included in the Software HOLDRS or in the software industry;
. announcements by competitors of the companies included in the
Software HOLDRS of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
. departures of key personnel; and
. sales of software companies' securities in the open market.
In addition, the trading prices of some software stocks in general
have experienced extreme price and volume fluctuations recently.
These fluctuations often have been unrelated or disproportionate
to the operating performance of these companies. The valuations of
many software stocks are 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 and valuations may not be sustained. Any negative
change in the public's perception of the prospects of software
companies or Internet-based companies generally could depress the
stock prices of a software company regardless of its operating
results. In addition, other broad market and industry factors may
decrease the stock price of software 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 software stocks.
. The ability of a software company to obtain, maintain or increase
market share depends on timely introduction and market acceptance
of new products offered by software companies. The software 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 software companies will depend on their ability to
adapt to rapidly changing technologies, to adapt their services to
evolving industry standards and to continually improve
performance, features and the reliability of their products.
Software companies must also quickly develop, introduce and
deliver their products, or incur the risk that their competitors
will introduce the same or
6
<PAGE>
similar products or products which could make their product
obsolete. In addition, the widespread adoption of new Internet,
networking or telecommunications standards and other technological
changes could require substantial expenditures to modify or adapt
the existing products offered by software companies. Many software
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, result of operations
and financial condition.
. The products of some software companies have relatively short life
cycles which could result in significant fluctuations in the
operating results of these software companies. The products of
some companies included in the Software HOLDRS have a limited life
cycle and it is difficult to estimate when they will become
obsolete. As a result, it is difficult to forecast future revenue
growth or sources of future revenue. If a software company does
not develop and introduce new products before existing products
have completed their life cycles and ensure existing customers
continue to use their products, it may not be possible for a
software company to sustain its current level of sales.
. Inability to manage rapid growth could adversely affect systems,
management resources and revenues. Some software companies are, or
plan to begin, rapidly expanding their operations. Success of the
marketing strategies of many of these companies will place
extraordinary demands on their network infrastructure and
technical support. This expansion has placed and will continue to
place a significant strain on the financial, operational,
management, marketing, and sales systems and resources of many
software companies. There can be no assurance that these companies
will complete the necessary improvements to their systems,
procedures and controls necessary to support their future
operations in a timely manner or that management will be able to
hire, train, retain and manage required personnel to manage such
rapid growth.
. Inability to adequately protect proprietary rights may harm the
competitive positions of many software companies. Many software
companies rely on a combination of patent, copyrights, trademark,
service mark and trade secret laws and contractual restrictions to
establish and protect proprietary rights in their products and
services. There can be no assurance that these companies will be
able to protect their intellectual property if they are unable to
enforce their rights or if they do not detect unauthorized use of
their intellectual property. Furthermore, any steps taken to
protect intellectual property may be inadequate, time consuming
and expensive. In addition, software companies may be subject to
claims that their products and services infringe the intellectual
property rights of others. Any claim, whether meritorious or not,
could be time consuming, result in costly litigation, delay
product or service introduction or require software companies to
enter to royalty or licensing agreements. Legal standards relating
to the scope of protection of intellectual property rights in
software and related industries are still evolving, and the future
viability or value of any of the intellectual property rights of
software companies is uncertain.
. Demand for some of the products and services of software companies
will decline if Internet use fails to grow and be accepted as a
medium for online commerce and communication. Future revenues and
any future profits of many software 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
software companies to grow, customers must continue to accept and
use new ways of conducting business and exchanging information on
the Internet.
7
<PAGE>
. New laws and regulations with respect to the Internet could impede
its commercial development and adversely affect the business of
many software 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. Furthermore,
the growth and development of the market for online interaction
and commerce may result in 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 many
companies included in the Software HOLDRS.
. Some companies included in the Software HOLDRS derive significant
revenue from only a few customers, a failure to retain these
customers or add new customers could affect the business of the
companies. Sales to a small number of customers generate a
disproportionate amount of the revenue for some companies included
in the Software HOLDRS. If any of these significant customer were
to reduce their purchases, the revenues of these companies would
be substantially affected. Some of the companies included in the
Software HOLDRS do not have long-term contracts or specific volume
purchase contracts with significant customers and therefore cannot
be sure that these customers will continue to purchase products at
current levels and, as a result, a customer that generates
substantial revenue in a particular period may not be a source of
revenue in subsequent periods.
. The international operations of some software 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. Some companies included in the Software HOLDRS 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 software companies are developing strategies to generate
additional revenues for their products and services outside of the
United States and western Europe and if these strategies fail it
could result in slower revenue growth and losses. Many software
companies believe that they must expand their international sales
activities to be successful as usage of the Internet increases
globally. The expansion to international markets will require
significant management attention and financial resources to
develop and expand international sales and marketing activities.
However, many software companies cannot be certain that
investments in establishing facilities in other countries will
produce anticipated revenues as they have limited experience
developing localized versions of their products and services and
marketing products and services internationally.
8
<PAGE>
. Some companies included in the Software HOLDRS have a limited
operating history which makes financial forecasting
difficult. Some companies included in the Software HOLDRS are not
able to forecast operating expenses based on their historical
results. Accordingly, they base their forecast for expenses in
part on future revenue projections. Most expenses are fixed in the
short term and it may not be possible to quickly reduce spending
if revenues are lower than projected. Software companies would
expect their business, operating results and financial condition
to be materially adversely affected if their revenues do not meet
their projections and that net losses in a given quarter would be
even greater than expected.
. The products of some software companies may contain defects or
errors which may make it more difficult to gain market acceptance
for the products of software companies and may reduce
revenues. The products of software companies must be developed
quickly to keep pace with the rapidly changing software market.
Despite extensive product testing, complex software products and
services are likely to contain undetected errors or defects. In
the past some software companies have experienced delays in
releasing some versions of their products until software problems
were corrected. Some products may not be free from errors or
defects after commercial shipments have begun, which could result
in the rejection of products and damage to their reputations, as
well as lost revenues, diverted development resources and
increased service and warranty costs, all of which could
negatively affect the revenues of a software company.
. Many software companies are dependent on their ability to continue
to attract and retain highly skilled technical and managerial
personnel to develop and generate their business. Many software
companies are highly dependent on 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 software companies will be able to
continue to attract and retain qualified personnel.
9
<PAGE>
HIGHLIGHTS OF SOFTWARE HOLDRS
This discussion highlights information regarding Software HOLDRS. We
present certain information more fully in the rest of this prospectus. You
should read the entire prospectus carefully before you purchase Software
HOLDRS.
Issuer....................... Software HOLDRS Trust.
The trust.................... The Software HOLDRS Trust will be formed under
the depositary trust agreement, dated as of
, 2000, among The Bank of New York, as
trustee, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, other depositors and the owners
of the Software 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 Software HOLDRS... Software HOLDRS are designed to achieve the
following:
Diversification. Software HOLDRS are designed
to allow you to diversify your investment in
the software industry through a single,
exchange-listed instrument representing your
undivided beneficial ownership of the
underlying securities.
Flexibility. The beneficial owners of Software
HOLDRS have undivided beneficial ownership
interests in each of the underlying securities
represented by the Software HOLDRS, and can
cancel their Software HOLDRS to receive each of
the underlying securities represented by the
Software HOLDRS.
Transaction costs. The expenses associated with
trading Software HOLDRS are expected to be less
than trading each of the underlying securities
separately.
Trust assets................. The trust will hold securities issued by
specified companies in the software industry.
Except when a reconstitution event occurs, the
group of companies will not change.
Reconstitution events are described in this
prospectus under the heading "Description of
the depositary trust agreement--Reconstitution
events." Under no circumstances will the
securities of a new company be added to the
securities underlying the Software 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.
10
<PAGE>
The Software HOLDRS..... The trust will issue Software HOLDRS that
represent your undivided beneficial ownership
interest in the shares of U.S.-traded
securities held by the trust on your behalf.
The Software HOLDRS themselves are separate
from the underlying securities that are
represented by the Software HOLDRS.
The specific share amounts for each round-lot
of 100 Software HOLDRS will be determined on
the pricing date so that the initial issue
price will be approximately $90-$100 per
Software HOLDR and the initial weightings of
each underlying security included in the
Software HOLDRS approximates the relative
market capitalizations of the specified
companies (based on the market capitalizations
of the underlying securities on the trading day
immediately preceding the pricing date),
subject to a maximum weight of 10%. For
purposes of this preliminary prospectus, the
indicative share amounts and the indicative
weightings of each underlying security, based
on market capitalizations as of August 10,
2000, are set forth in the table below;
however, such share amounts and weightings are
expected to change during the period between
August 10, 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 Software
HOLDRS,
. stock ticker symbols,
. indicative share amounts represented by a
round-lot of 100 Software HOLDRS as of
August 10, 2000,
. indicative weightings as of August 10, 2000,
and
. principal U.S. market on which the
underlying securities are traded.
11
<PAGE>
<TABLE>
<CAPTION>
Indicative Primary U.S.
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
----------------------------- ------ ---------- ---------- ------------
<C> <S> <C> <C> <C> <C>
Oracle Corporation ORCL 11 9.41% Nasdaq NMS
Veritas Software Corporation VRTS 9 9.32% Nasdaq NMS
Microsoft Corporation MSFT 12 9.31% Nasdaq NMS
SAP AG* SAP 15 9.30% NYSE
i2 Technologies, Inc. ITWO 6 9.24% Nasdaq NMS
Siebel Systems, Inc. SEBL 5 8.49% Nasdaq NMS
TIBCO Software Inc. TIBX 6 6.92% Nasdaq NMS
Check Point Software
Technologies Ltd. CHKP 5 6.67% Nasdaq NMS
Adobe Systems Incorporated ADBE 4 4.82% Nasdaq NMS
Computer Associates
International, Inc. CA 18 4.81% NYSE
Rational Software Corporation RATL 3 3.14% Nasdaq NMS
Sapient Corporation SAPE 2 2.65% Nasdaq NMS
Intuit Inc. INTU 6 2.55% Nasdaq NMS
PeopleSoft, Inc. PSFT 9 2.31% Nasdaq NMS
Phone.Com, Inc. PHCM 2 2.17% Nasdaq NMS
Mercury Interactive
Corporation MERQ 2 2.14% Nasdaq NMS
Nuance Communications, Inc. NUAN 1 1.83% Nasdaq NMS
Macromedia, Inc. MACR 2 1.78% Nasdaq NMS
BMC Software, Inc. BMCS 8 1.67% Nasdaq NMS
Micromuse Inc. MUSE 1 1.47% Nasdaq NMS
</TABLE>
--------
* The securities of this non-U.S. company trade
in the United States as American depositary
receipts.
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 Software HOLDRS. These
companies generally are considered to be 20 of
the largest and most liquid companies with
U.S.-traded securities involved in the software
industry, as measured by market capitalization
and trading volume on August 10, 2000. The
market capitalization of a company is
determined by multiplying the market price of
its securities by the number of its outstanding
securities.
The trust only will issue and cancel, and you
only may obtain, hold, trade or surrender
Software HOLDRS in a round-lot of 100 Software
HOLDRS and round-lot multiples. The trust will
only issue Software HOLDRS upon the deposit of
the whole shares represented by a round-lot of
100 Software HOLDRS. In the event that a
fractional share comes to be represented by a
round-lot of Software HOLDRS, the trust may
require a minimum of more than one round-lot of
100 Software HOLDRS for an issuance so that the
trust will always receive whole share amounts
for issuance of Software HOLDRS.
The number of outstanding Software 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 Software HOLDRS on a continuous
basis when an investor deposits the required
securities with the trustee.
Public offering price........
The initial public offering price for 100
Software HOLDRS will equal the sum of the
closing market price on the primary U.S.
12
<PAGE>
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 Software HOLDR.
Purchases....................
After the initial offering, you may acquire
Software HOLDRS in two ways:
. through an in-kind deposit of the required
number of securities of the underlying
issuers with the trustee, or
. through a cash purchase in the secondary
trading market.
Underwriting fees............
If you purchase Software HOLDRS in the initial
public offering, you will pay an underwriting
fee equal to:
. For purchases of Software HOLDRS or
fewer, 2%.
. For purchases in excess of Software
HOLDRS, %.
You will not be charged any issuance fee or
other sales commission in connection with
purchases of Software HOLDRS made in the
initial public offering.
Issuance and cancellation
fees........................ After the initial offering, if you wish to
create Software HOLDRS by delivering to the
trust the requisite securities represented by a
round-lot of 100 Software 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
Software HOLDRS. If you wish to cancel your
Software 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 Software
HOLDRS.
Commissions..................
If you choose to deposit underlying securities
in order to receive Software 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.
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 Software
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 Software 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.
13
<PAGE>
Rights relating to Software You have the right to withdraw the underlying
securities upon request by delivering a round-
HOLDRS...................... lot or integral multiple of a round-lot
of Software 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 Software 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
Software 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
Software HOLDRS and receiving all of your
underlying securities. For specific information
about obtaining your underlying securities, you
should read the discussion under the caption
"Description of the depositary trust
agreement."
Reconstitution events........ The depositary trust agreement provides for the
automatic distribution of underlying securities
to you in the following four circumstances:
A. If an issuer of underlying securities no
longer has a class of securities 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 Software
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 Software HOLDRS.
14
<PAGE>
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 Software HOLDRS, unless the merger,
consolidation or other corporate combination
is between companies that are already
included in the Software 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 U.S. national
securities exchange or Nasdaq NMS and are
not listed for trading on another U.S.
national securities exchange or through
Nasdaq NMS within five business days from
the date the 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 Software HOLDRS are delisted from the
American Stock Exchange and are not listed
for trading on another U.S. national
securities exchange or through Nasdaq NMS
within five business days from the date the
Software 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
Software 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
consequences................ The federal income tax laws will treat a U.S.
holder of Software HOLDRS as directly owning
the underlying securities. The Software HOLDRS
themselves will not result in any federal tax
consequences separate from the tax consequences
associated with ownership of the underlying
securities.
Listing......................
Application has been made to list the Software
HOLDRS on the American Stock Exchange under the
symbol "SWH". Trading will take place only in
round-lots of 100 Software HOLDRS and round-lot
multiples. A minimum of 150,000 Software 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
Software HOLDRS. Bid and ask prices, however,
will be quoted per single Software HOLDR.
15
<PAGE>
Clearance and settlement.....
The trust will issue Software HOLDRS in book-
entry form. Software 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 Software
HOLDRS."
16
<PAGE>
THE TRUST
General. This discussion highlights information about the Software HOLDRS
Trust. You should read this information, information about the depositary trust
agreement as well as the depositary trust agreement before you purchase
Software HOLDRS. The material terms of the depositary trust agreement are
described in this prospectus under the heading "Description of the depositary
trust agreement."
The Software HOLDRS Trust. The trust will be formed pursuant to the
depositary trust agreement, dated as of , 2000. The Bank of New York will
be the trustee. The Software HOLDRS Trust is not a registered investment
company under the Investment Company Act of 1940.
The Software HOLDRS Trust is intended to hold deposited shares for the
benefit of owners of Software 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 SOFTWARE HOLDRS
The trust will issue Software 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
Software HOLDRS on a continuous basis when an investor deposits the requisite
underlying securities with the trustee.
You may only acquire, hold, trade and surrender Software HOLDRS in a
round-lot of 100 Software HOLDRS and round-lot multiples. The trust will only
issue Software HOLDRS upon the deposit of the whole shares of underlying
securities that are represented by a round-lot of 100 Software 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 Software HOLDRS, the trust may require a minimum
of more than one round-lot of 100 Software HOLDRS for an issuance so that the
trust will always receive whole share amounts for issuance of Software HOLDRS.
Software HOLDRS will represent your individual and undivided beneficial
ownership interest in the specified underlying securities. The 20 companies
selected as part of this receipt program are listed above in the section
entitled "Highlights of Software HOLDRS--The Software HOLDRS."
Beneficial owners of Software 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 securities, 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
Software HOLDRS to receive the underlying securities. See "Description of the
depositary trust agreement." Software 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. Software 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 Software
HOLDRS wishes to realize the dollar value of the underlying securities, that
owner will have to cancel the Software HOLDRS. Such cancellation will require
payment of fees and expenses as described in "Description of the depositary
trust agreement--Withdrawal of underlying securities."
17
<PAGE>
Software 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. Software HOLDRS will be available only in book-entry form.
Owners of Software HOLDRS may hold their Software 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 stock or
American depositary shares of a group of 20 specified companies involved in
various aspects of the software industry and whose securities are 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 software industry as measured by market capitalization and
trading volume. The following additional criteria were used in selecting the
underlying securities on August 10, 2000:
. Market capitalization equal to or greater than $4 billion;
. Average daily trading volume of at least 225,000 shares over the 60
trading days before August 10, 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 August 10, 2000) of at least $20 million over the 60 trading
days before August 10, 2000; and
. A trading history of at least 90 calendar days.
The market capitalization of a company is determined by multiplying the
market price of its securities by the number of its outstanding securities. In
determining whether a company was to be considered for inclusion in the
Software 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 software industry. In
this case, the Software HOLDRS may no longer consist of securities issued by
companies involved in the software industry. Merrill Lynch, Pierce, Fenner &
Smith Incorporated will determine, in its sole discretion, whether the issuer
of a particular underlying security remains in the software industry and will
undertake to make adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities
represented by Software HOLDRS, please refer to "Highlights of Software
HOLDRS--The Software HOLDRS." If the underlying securities change because of a
reconstitution event, a revised list of underlying securities will be set forth
in a prospectus supplement and will be available from the American Stock
Exchange and through a widely used electronic information dissemination system
such as Bloomberg or Reuters.
No investigation. In selecting the underlying securities, the trust, the
trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any affiliate
of these entities, have not performed any investigation or review of the
selected companies, including the public filings by the companies, other than
to the extent required to determine whether the companies satisfied the
program's stated selection criteria. Accordingly, before you acquire Software
HOLDRS, you should consider publicly available financial and other information
about the issuers of the underlying securities. See "Risk factors" and "Where
you can find more information." Investors and market participants should not
conclude that the inclusion of a company in the list is any form of investment
recommendation of that company by the trust, the trustee, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, the selling group or any of their
affiliates.
18
<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 Software HOLDR based upon
the indicative share amounts set forth in the table on page 12 of this
preliminary prospectus, measured at the close of each business day from April
13, 2000, the first date when all of the underlying securities were publicly
traded, to August 31, 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>
2000 Value
---- -----
<S> <C>
April 13........ 79.92
April 14........ 72.25
April 17........ 80.15
April 18........ 85.00
April 19........ 82.35
April 20........ 82.09
April 24........ 77.25
April 25........ 85.34
April 26........ 83.87
April 27........ 87.05
April 28........ 89.64
May 1........... 91.25
May 2........... 86.77
May 3........... 84.43
May 4........... 86.13
May 5........... 88.02
May 8........... 82.73
May 9........... 80.27
May 10.......... 76.02
May 11.......... 79.91
</TABLE>
<TABLE>
<CAPTION>
2000 Value
---- -----
<S> <C>
May 12.......... 80.71
May 15.......... 83.56
May 16.......... 87.71
May 17.......... 86.82
May 18.......... 83.18
May 19.......... 79.25
May 22.......... 78.33
May 23.......... 73.86
May 24.......... 77.76
May 25.......... 76.41
May 26.......... 77.29
May 30.......... 85.40
May 31.......... 82.58
June 1.......... 88.37
June 2.......... 94.67
June 5.......... 94.72
June 6.......... 91.39
June 7.......... 94.89
June 8.......... 94.82
June 9.......... 95.93
</TABLE>
<TABLE>
<CAPTION>
2000 Value
---- -----
<S> <C>
June 12......... 90.28
June 13......... 93.65
June 14......... 91.91
June 15......... 93.50
June 16......... 94.60
June 19......... 98.36
June 20......... 98.82
June 21......... 98.16
June 22......... 94.53
June 23......... 91.33
June 26......... 94.30
June 27......... 93.36
June 28......... 94.69
June 29......... 92.85
June 30......... 95.06
July 3.......... 94.49
July 5.......... 87.48
July 6.......... 90.17
July 7.......... 92.81
July 10......... 92.12
</TABLE>
<TABLE>
<CAPTION>
2000 Value
---- -----
<S> <C>
July 11......... 91.50
July 12......... 94.98
July 13......... 98.88
July 14......... 99.39
July 17......... 99.91
July 18......... 96.86
July 19......... 92.08
July 20......... 96.61
July 21......... 94.03
July 24......... 91.51
July 25......... 90.76
July 26......... 89.34
July 27......... 86.49
July 28......... 82.95
July 31......... 87.76
August 1........ 85.52
August 2........ 86.84
August 3........ 89.59
August 4........ 91.32
August 7........ 94.06
</TABLE>
<TABLE>
<CAPTION>
2000 Value
---- ------
<S> <C>
August 8........ 96.09
August 9........ 94.81
August 10....... 92.38
August 11....... 93.43
August 14....... 94.16
August 15....... 93.57
August 16....... 94.29
August 17....... 96.48
August 18....... 95.21
August 21....... 95.08
August 22....... 95.37
August 23....... 96.20
August 24....... 98.92
August 25....... 99.91
August 28....... 101.55
August 29....... 101.56
August 30....... 102.10
August 31....... 105.30
</TABLE>
19
<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of , 2000, among
Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as
trustee, other depositors and the owners of the Software HOLDRS, provides that
Software HOLDRS will represent an owner's undivided beneficial ownership
interest in the securities 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 Software HOLDRS. You may create and
cancel Software HOLDRS only in round-lots of 100 Software HOLDRS. You may
create Software HOLDRS by delivering to the trustee the requisite underlying
securities. The trust will only issue Software HOLDRS upon the deposit of the
whole shares represented by a round-lot of 100 Software HOLDRS. In the event
that a fractional share comes to be represented by a round-lot of Software
HOLDRS, the trust may require a minimum of more than one round-lot of 100
Software HOLDRS for an issuance so that the trust will always receive whole
share amounts for issuance of Software HOLDRS. Similarly, you must surrender
Software HOLDRS in integral multiples of 100 Software HOLDRS to withdraw
deposited shares from the trust. The trustee will not deliver fractional shares
of underlying securities, and to the extent that any cancellation of Software
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 Software
HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning
Software 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
Software 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 Software 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 Software 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.
Shareholder communications. The trustee promptly will forward to you all
shareholder communications that it receives from issuers of the underlying
securities.
20
<PAGE>
Withdrawal of underlying securities. You may surrender your Software
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 Software
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 Software HOLDRS.
Further issuances of Software HOLDRS. The depositary trust agreement
provides for further issuances of Software 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 the following four
circumstances:
A. If an issuer of underlying securities no longer has a class of
securities 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 Software 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 Software 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 Software
HOLDRS, unless the merger, consolidation or other corporate
combination is between companies that are already included in the
Software 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
U.S. national securities exchange or Nasdaq NMS and are not listed
for trading on another U.S. national securities exchange or through
Nasdaq NMS within 5 business days from the date the 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 Software HOLDRS will surrender their Software 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 Software
HOLDRS are delisted from the American Stock Exchange and are not listed for
trading on another U.S. national securities exchange or through Nasdaq NMS
within 5 business days from the date the Software HOLDRS are delisted. Finally,
the trust will terminate if 75% of the owners of outstanding Software 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.
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 Software HOLDRS. Promptly after the
execution
21
<PAGE>
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 Software 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 Software HOLDRS will not become effective until
30 days after notice of the amendment is given to the owners of Software
HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more Software HOLDRS. If you wish to create Software
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 Software HOLDRS. If you wish to cancel your Software 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 Software 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 Software 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 are charged by your broker, whether
it be any of the members of the selling group or another broker.
Custody fees. The Bank of New York, as trustee and as custodian, will
charge you a quarterly custody fee of $2.00 for each round-lot of 100 Software
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 Software 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 Software 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 Software 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.
22
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the Software 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;
. 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 Software 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 recommend that you consult with
your own tax advisor.
Taxation of the trust
The trust will provide for flow through tax consequences as it will be
treated as a grantor trust or custodial arrangement for U.S. federal income tax
purposes.
Taxation of Software HOLDRS
A receipt holder purchasing and owning Software HOLDRS will be treated,
for U.S. federal income tax purposes, as directly owning a proportionate share
of the underlying securities represented by Software 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 Software HOLDRS
among the underlying securities based on their relative fair market values at
the time of purchase. Similarly, when a holder sells a receipt, it will
determine the amount realized with respect to each security by allocating the
sales price among the underlying securities based on their relative fair market
values at the time of sale. A holder's gain or loss with respect to each
security will be computed by subtracting its adjusted basis in the security
from the amount realized on the security. With respect to purchases of Software
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
Software HOLDRS. Similarly, with respect to sales of Software HOLDRS for cash
in the secondary market, the amount realized with respect to a sale of Software
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
Software HOLDRS, the occurrence of a reconstitution event, or a termination
event will not be a taxable event, except to the extent that
23
<PAGE>
cash is distributed in lieu of fractional shares. The receipt holder's 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 Software HOLDRS will
reduce the amount realized with respect to the underlying securities.
A holder will be required to include in its income the full amount of
dividends paid on the underlying securities, even though the depositary trust
agreement provides that the custodian fees will be deducted directly from any
dividends paid. These custodian fees will be treated as an expense incurred in
connection with a holder's investment in the underlying securities and may be
deductible. If a holder is an individual, estate or trust, however, the
deduction of its share of custodian fees will be a miscellaneous itemized
deduction that may be disallowed in whole or in part.
Special considerations with respect to underlying securities of foreign issuers
With respect to underlying securities of foreign issuers, the gross
amount of any taxable cash distribution will not be eligible for the dividends
received deduction generally allowed to corporate U.S. receipt holders.
If a foreign issuer pays a dividend in a currency other than in U.S.
dollars, the amount of the dividend for U.S. federal income tax purposes will
be the U.S. dollar value (determined at the spot rate on the date of the
payment) regardless of whether the payment is later converted into U.S.
dollars. In this case, the U.S. receipt holder may recognize ordinary income or
loss as a result of currency fluctuations between the date on which the
dividend is paid and the date the dividend amount is converted into U.S.
dollars.
Subject to conditions and limitations, any foreign tax withheld on
dividends may be deducted from taxable income or credited against a U.S.
receipt holder's U.S. federal income tax liability. The limitation on foreign
taxes eligible for the U.S. foreign tax credit is calculated separately with
respect to specific classes of income. For this purpose, dividends distributed
by a foreign issuer generally will constitute passive income or, in the case of
some U.S. holders, financial services income. For purposes of the U.S. foreign
tax credit limitation, dividends received by a U.S. receipt holder with respect
to an underlying security of a foreign issuer generally will be treated as
foreign source income while any gain or loss recognized from the sale of such
security generally will be treated as from sources within the United States.
The rules relating to the determination of the foreign tax credit are complex
and we recommend that U.S. receipt holders consult their own tax advisors to
determine whether and to what extent a credit would be available.
Dividends and distributions made by a foreign issuer may be subject to a
withholding tax. Some foreign issuers have made arrangements through which
holders of their American depositary shares can apply for a refund of withheld
taxes. It is expected that holders of Software HOLDRS will be able to use these
arrangements to apply for a refund of withheld taxes.
Additionally, special U.S. federal income tax rules apply to U.S. persons
owning shares of a "passive foreign investment company" (a "PFIC"). We do not
believe that any of the foreign issuers of the underlying securities is
currently a PFIC and do not anticipate that any issuer will become a PFIC in
the future, although no assurances can be made that the applicable tax law or
other relevant circumstances will not change in a
24
<PAGE>
manner which affects the PFIC determination. A foreign corporation generally
will be classified as a PFIC
for U.S. federal income tax purposes in any taxable year in which, after
applying relevant look-through rules, either:
. at least 75% of its gross income is "passive income;" or
. on average at least 50% of the gross value of its assets is
attributable to assets that produce "passive income" or are held for
the production of passive income.
Passive income for this purpose generally includes dividends, interest,
royalties, rents, and gains from commodities and securities transactions.
If a corporation were classified as a PFIC, a U.S. receipt holder could
be subject to increased tax liability, possibly including an interest charge,
upon the sale or other disposition of the Software HOLDRS or of the underlying
securities or upon the receipt of "excess distributions," unless the U.S.
receipt holder elected to be taxed currently on its pro rata portion of the
corporation's income, whether or not the income was distributed in the form of
dividends or otherwise.
Non-U.S. receipt holders
A non-U.S. receipt holder generally will be subject to U.S. withholding
tax at a rate of 30% or a lower rate as may be specified by an applicable tax
treaty with respect to dividends received on underlying securities of U.S.
issuers. However, if that income is effectively connected with a U.S. trade or
business conducted by the holder or, where a tax treaty applies, is
attributable to a permanent establishment maintained in the United States by
the holder, then those dividends will be exempt from withholding tax, provided
the holder complies with applicable certification and disclosure requirements.
A non-U.S. receipt holder generally will not be subject to U.S. federal
income or withholding tax with respect to dividends received on underlying
securities of foreign issuers, unless that income is effectively connected with
a U.S. trade or business conducted by the holder or, where a tax treaty
applies, is attributable to a permanent establishment maintained in the United
States by the holder.
With respect to dividends of both U.S. and foreign issuers, a non-U.S.
receipt holder's dividends that are effectively connected with a U.S. trade or
business or dividends attributable to a permanent establishment, net of
relevant deductions and credits, will be subject to U.S. federal income
taxation at the same graduated rates applicable to U.S. persons. In addition to
this graduated tax, effectively connected dividends or dividends attributable
to a permanent establishment received by a corporate non-U.S. receipt holder
may also be subject to a branch profits tax at a rate of 30% or a lower rate as
may be specified by an applicable tax treaty. Under some circumstances, a non-
U.S. receipt holder whose dividends are so effectively connected or
attributable shall be entitled to a dividends received deduction equal to 70%
or 80% of the amount of the dividend.
A non-U.S. receipt holder that is eligible for a reduced rate of
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the Internal
Revenue Service.
A non-U.S. receipt holder generally will not be subject to U.S. federal
income or withholding tax with respect to gain recognized upon the sale or
other disposition of Software HOLDRS or of the underlying securities unless:
. that gain is effectively connected with a U.S. trade or business
conducted by the holder or, where a tax treaty applies, is
attributable to a permanent establishment maintained in the United
States by the holder,
25
<PAGE>
. in the case of any gain realized by an individual non-U.S. receipt
holder, the holder is present in the United States for 183 days or
more in the taxable year of the sale or other disposition and certain
other conditions are met, or
. the underlying securities issuer is or has been a U.S. real property
holding corporation for U.S. federal income tax purposes at any time
during the shorter of the five-year period ending on the date of the
disposition or the period during which the non-U.S. receipt holder
held the common stock of such issuer and (a) the common stock is not
considered to be "regularly traded on an established securities
market" or (b) the non-U.S. receipt holder owned, actually or
constructively, at any time during the shorter of the periods
described above, more than 5% of the common stock of such issuer.
Effectively connected or attributable gains generally will be subject to
U.S. federal income taxation at the same graduated rates applicable to U.S.
persons, and may, in the case of a corporate non-U.S. receipt holder, also be
subject to the branch profits tax. We recommend that non-U.S. receipt holders
consult their own tax advisors to determine whether any applicable tax treaties
provide for different rules.
The preceding discussion does not address all aspects of U.S. federal
income taxation that may be relevant in light of a non-U.S. receipt holder's or
an issuer's particular facts and circumstances. We recommend that investors
consult their own tax advisors.
Backup withholding tax, withholding tax and information reporting requirements
Final U.S. Treasury Regulations relating to backup withholding,
withholding and information reporting have been issued that modify certain
rules with respect to payments made after December 31, 2000. Investors are
urged to consult their own tax advisors regarding the application of the backup
withholding, withholding and information reporting requirements, including the
new regulations, with respect to their particular circumstances.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire Software 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 Software 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 Software HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Robert W. Baird & Co. Incorporated, First Union Securities, Inc., Legg Mason
Wood Walker, Incorporated, Morgan Keegan & Company, Inc., Raymond James &
Associates, Inc., Sutro & Co. Incorporated and Tucker Anthony Incorporated, the
selling group, propose to offer the Software HOLDRS to the public at the
offering price set forth on the cover page of this prospectus, which includes
an underwriting fee of 2%. Merrill Lynch, Pierce, Fenner & Smith Incorporated
will provide Software HOLDRS to the other members of the selling group at the
public offering price, as set forth on the cover page of this prospectus, less
a concession that is not in excess of %. The selling group may allow to
certain dealers, and the dealers may reallow, a discount on sales of Software
HOLDRS not in excess of % of the public offering price as set forth on the
cover page of this prospectus. We expect the trust to deliver the initial
distribution of Software HOLDRS against deposit of the
26
<PAGE>
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 Software HOLDRS in connection with deposits of
underlying securities. This offering is being made in compliance with Conduct
Rule 2810 of the National Association of Securities Dealers, Inc. Accordingly,
sales will not be made to a discretionary account without the prior written
approval of a purchaser of Software HOLDRS.
Members of the selling group and their affiliates have from time to time
provided investment banking and other financial services to some of the issuers
of the underlying securities and expect in the future to provide these
services, for which they have received and will receive customary fees and
commissions. They also may have served as counterparties in other transactions
with some of the issuers of the underlying securities.
Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the Software HOLDRS. Merrill Lynch,
Pierce, Fenner & Smith Incorporated may act as principal or agent in these
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 some 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 Software 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 these liabilities.
LEGAL MATTERS
Legal matters, including the validity of the Software HOLDRS, will be
passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial
depositor and the underwriters, 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 Software HOLDRS.
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 Software HOLDRS.
While this prospectus is a part of the registration statement, it does not
contain all the exhibits filed as part of the registration statement. You
should consider reviewing the full text of those exhibits.
The registration statement is available over the Internet at the SEC's
Web site at http://www.sec.gov. You also may read and copy the registration
statement at the SEC's public reference rooms in Washington, D.C., New York,
New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges. Merrill
Lynch, Pierce, Fenner & Smith Incorporated will not file any reports pursuant
to the Exchange Act. The trust will file modified reports pursuant to the
Exchange Act.
Because the securities of the issuers of the underlying securities are
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.
27
<PAGE>
However, some of the issuers of the underlying securities are considered
foreign issuers. The requirements for filing periodic financial and other
information for foreign issuers differ from that of domestic issuers. In
particular, foreign issuers are not required to file quarterly reports with the
SEC and are not required to file periodic financial and other information on
EDGAR. Therefore, this information may not be accessible through the SEC's Web
site. Information regarding the issuers of the underlying securities may be
obtained from other sources including, but not limited to, press releases,
newspaper articles and other publicly disseminated information.
The trust and the selling group and their affiliates are not affiliated
with the issuers of the underlying securities, and the issuers of the
underlying securities have no obligations with respect to Software HOLDRS. This
prospectus relates only to Software HOLDRS and does not relate to the 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 Software 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 securities of the issuers of the
underlying securities, and therefore the offering and trading prices of the
Software HOLDRS have been publicly disclosed.
28
<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 U.S. trading
market, of each of the underlying securities in each month during 1995, 1996,
1997, 1998, 1999 and 2000 through August 2000. All market prices in excess of
one dollar are rounded to the nearest one sixty-fourth of a dollar. A table
outlining the primary U.S. stock market on which the securities of the issuers
are listed can be found on page 12. The primary foreign stock market on which
the securities of the foreign issuers included in the Software HOLDRS are
listed is described below. An asterisk (*) denotes that no shares of the issuer
were trading on a U.S. stock market during that month. The historical prices of
the underlying securities should not be taken as an indication of future
performance.
ADOBE SYSTEMS INCORPORATED (ADBE)
Adobe Systems Incorporated develops and markets graphic design,
publishing and imaging software for Web sites, print publishing and other types
of media. Adobe also offers application software products for creating,
distributing and managing information. Adobe's customers include hardware
manufactures, software developers, Internet service providers, graphic
designers, businesses and consumers.
<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 14 15/32 January 17 January 18 15/16 January 19 1/4 January 23 7/8 January 55 1/16
February 17 7/8 February 16 3/4 February 18 1/4 February 22 3/32 February 20 1/8 February 102
March 24 3/4 March 16 1/8 March 20 1/16 March 22 19/32 March 28 3/8 March 111 5/16
April 29 1/8 April 21 1/2 April 19 9/16 April 25 1/32 April 31 11/16 April 120 15/16
May 26 May 18 9/16 May 22 5/16 May 19 31/32 May 37 1/16 May 112 9/16
June 29 June 17 15/16 June 17 7/32 June 21 7/32 June 41 5/64 June 130
July 30 7/8 July 15 3/16 July 18 11/16 July 16 5/32 July 42 7/8 July 114 1/2
August 25 1/2 August 17 7/16 August 19 11/16 August 13 1/8 August 49 13/16 August 130
September 25 7/8 September 18 5/8 September 25 3/16 September 17 11/32 September 56 3/4
October 28 1/2 October 17 5/16 October 23 7/8 October 18 9/16 October 69 15/16
November 33 13/16 November 19 3/4 November 21 November 22 3/8 November 68 11/16
December 31 December 18 11/16 December 20 5/8 December 23 3/8 December 67 1/4
</TABLE>
The closing price on , 2000 was .
BMC SOFTWARE, INC. (BMCS)
BMC Software, Inc. provides systems management software for businesses.
BMC's software is designed to allow businesses to integrate different
components of their information technology systems with each other and with the
Internet and Internet-related applications such as electronic-business
offerings. BMC's products include software for databases, operating systems,
servers and Internet applications.
<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 17 3/16 January 13 13/16 January 21 11/16 January 33 7/8 January 46 11/16 January 37 7/8
February 8 1/32 February 13 15/16 February 21 13/32 February 38 1/4 February 40 7/8 February 46
March 7 31/32 March 13 11/16 March 23 1/16 March 41 29/32 March 37 1/16 March 49 3/8
April 7 25/32 April 15 7/32 April 21 5/8 April 46 25/32 April 43 1/16 April 46 13/16
May 8 1/32 May 15 3/4 May 27 1/16 May 46 1/16 May 49 7/16 May 44
June 9 21/32 June 14 15/16 June 27 11/16 June 51 15/16 June 54 June 36 31/64
July 9 11/16 July 16 July 30 1/8 July 49 5/16 July 53 7/8 July 18 7/8
August 10 21/32 August 18 5/8 August 31 5/16 August 42 5/16 August 53 13/16 August 27
September 11 1/2 September 19 7/8 September 32 3/8 September 60 1/16 September 71 9/16
October 8 29/32 October 20 3/4 October 30 3/16 October 48 1/16 October 64 3/16
November 10 9/16 November 21 3/4 November 32 7/16 November 51 1/16 November 72 13/16
December 10 11/16 December 20 11/16 December 32 13/16 December 44 9/16 December 79 15/16
</TABLE>
The closing price on , 2000 was .
A-1
<PAGE>
CHECK POINT SOFTWARE TECHNOLOGIES LTD. (CHKP)
Check Point Software Technologies Ltd. develops and markets resource
protection, or firewall, software that shields corporate networks from both
internal and external unauthorized access. Check Point products are designed to
verify remote users, control access to corporate networks, block viruses and
other unwanted Web content from entering corporate networks and permit
companies to set up virtual private networks for secure internal and remote
communications. Check Point sells its products through manufacturers 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 * January * January 6 11/16 January 7 5/8 January 12 1/8 January 55 3/32
February * February * February 4 15/32 February 9 41/64 February 9 19/32 February 101 31/32
March * March * March 5 1/8 March 11 27/64 March 10 3/4 March 85 17/32
April * April * April 5 29/32 April 7 11/32 April 8 13/16 April 86 1/2
May * May * May 7 May 7 May 11 1/16 May 93 15/16
June * June * June 5 27/32 June 8 3/16 June 13 13/32 June 105 7/8
July * July 4 July 6 3/4 July 5 7/8 July 17 7/64 July 116
August * August 6 1/8 August 6 7/16 August 4 17/32 August 19 9/32 August 145 13/16
September * September 8 7/16 September 7 3/4 September 4 31/32 September 21 7/64
October * October 6 7/8 October 10 21/32 October 5 11/16 October 28 59/64
November * November 5 11/16 November 11 9/32 November 8 7/64 November 35 13/32
December * December 5 7/16 December 10 3/16 December 11 29/64 December 49 11/16
</TABLE>
The closing price on , 2000 was .
COMPUTER ASSOCIATES INTERNATIONAL, INC. (CA)
Computer Associates International, Inc. develops and markets systems
management, information management and business management software for use on
numerous computer operating systems. Computer Associates offers numerous
products, including data access and network management tools, which, among
other things, measure and improve computer hardware and software performance
and programmer productivity.
<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 14 25/32 January 30 25/64 January 30 1/4 January 53 3/16 January 50 5/8 January 68 1/2
February 16 31/32 February 30 9/16 February 29 5/64 February 47 1/4 February 42 February 64 1/4
March 17 19/32 March 31 53/64 March 25 59/64 March 57 3/4 March 35 9/16 March 59 3/16
April 19 5/64 April 32 39/64 April 34 43/64 April 58 5/8 April 42 11/16 April 55 13/16
May 19 13/32 May 32 21/64 May 36 1/2 May 52 1/2 May 47 5/16 May 51 1/2
June 20 June 31 9/16 June 37 1/8 June 55 9/16 June 54 3/4 June 51 3/16
July 21 47/64 July 33 59/64 July 45 1/4 July 33 1/4 July 45 7/8 July 24 13/16
August 20 19/32 August 35 August 44 37/64 August 27 August 56 1/2 August 31 3/4
September 18 25/32 September 39 59/64 September 47 7/8 September 37 September 61 1/8
October 24 7/16 October 39 27/64 October 49 1/2 October 39 3/8 October 56 1/2
November 29 7/64 November 43 53/64 November 52 1/16 November 44 1/4 November 64 3/4
December 25 9/32 December 33 11/64 December 53 December 42 5/8 December 69 15/16
</TABLE>
The closing price on , 2000 was .
A-2
<PAGE>
INTUIT INC. (INTU)
Intuit Inc. develops, markets and supports software that is designed to
automate and simplify financial activities for small businesses and
individuals. Intuit's product and service offerings include desktop software,
Internet software and products to connect desktop software to the Internet.
Intuit offers software for small business accounting, tax preparation and
consumer finance and financial supplies such as computer checks, envelopes and
invoices. Intuit's personal finance products and services are primarily
marketed under the "Quicken" brand.
<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 11 January 20 35/64 January 9 3/4 January 12 29/64 January 30 21/64 January 60 5/16
February 11 3/64 February 22 1/4 February 7 35/64 February 15 1/2 February 32 63/64 February 52 1/2
March 13 March 15 March 7 3/4 March 16 1/8 March 33 59/64 March 54 3/8
April 11 19/64 April 17 21/64 April 7 3/8 April 17 47/64 April 28 45/64 April 35 15/16
May 10 35/64 May 17 21/64 May 9 3/64 May 15 51/64 May 27 1/8 May 36 1/4
June 12 43/64 June 15 3/4 June 7 41/64 June 20 27/64 June 30 3/64 June 41 3/8
July 14 3/8 July 11 43/64 July 8 25/64 July 16 37/64 July 27 17/64 July 34
August 14 23/64 August 12 11/64 August 8 45/64 August 11 25/64 August 29 55/64 August 59 7/8
September 15 43/64 September 10 1/2 September 10 43/64 September 15 33/64 September 29 7/32
October 24 October 9 October 10 7/8 October 15 53/64 October 29 1/8
November 28 November 11 59/64 November 10 1/16 November 19 19/64 November 50
December 26 December 10 1/2 December 13 3/4 December 24 11/64 December 59 15/16
</TABLE>
The closing price on , 2000 was .
I2 TECHNOLOGIES, INC. (ITWO)
i2 Technologies, Inc. develops and markets electronic business software
that assists companies in optimizing electronic-business processes both
internally and among trading partners. i2 products are designed to allow
companies to improve efficiencies, collaborate with suppliers and customers,
respond to market demands and engage in business over the Internet. i2 recently
launched a business-to-business software product that is intended to permit
customers, partners, suppliers and service providers to conduct business
together in real time.
<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 9 1/16 January 13 13/32 January 17 7/16 January 96 5/16
February * February * February 7 9/32 February 14 9/64 February 12 15/32 February 163 1/2
March * March * March 8 1/4 March 16 13/32 March 13 19/64 March 122 1/8
April * April 10 3/16 April 9 1/2 April 16 11/16 April 16 15/16 April 129 1/4
May * May 10 1/16 May 10 11/16 May 14 57/64 May 15 13/16 May 106 11/16
June * June 10 11/16 June 7 3/4 June 17 9/16 June 21 1/2 June 104 17/64
July * July 6 1/4 July 12 July 12 3/16 July 15 3/8 July 129 3/4
August * August 7 3/16 August 11 9/16 August 7 1/16 August 15 7/8 August 169 3/16
September * September 9 1/2 September 10 3/8 September 7 3/32 September 19 13/32
October * October 9 1/2 October 11 23/64 October 9 5/16 October 39 15/32
November * November 9 1/2 November 11 3/8 November 12 3/8 November 42 1/2
December * December 9 9/16 December 13 3/16 December 15 3/16 December 97 1/2
</TABLE>
The closing price on , 2000 was .
A-3
<PAGE>
MACROMEDIA, INC. (MACR)
Macromedia, Inc. develops and markets Web design software and multimedia
playback and graphics development tools. Macromedia software streamlines
workflow on the Web from concept to design and development to production.
Macromedia also makes interactive learning products and is focusing on the
consumer entertainment Web site market.
<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 1/4 January 40 January 11 1/8 January 8 25/32 January 35 1/16 January 68 7/16
February 14 11/16 February 40 1/16 February 9 13/16 February 12 1/2 February 30 9/16 February 86 7/16
March 16 7/8 March 42 3/4 March 9 1/16 March 14 7/8 March 45 5/16 March 90 5/16
April 16 3/4 April 37 11/16 April 7 5/8 April 14 15/16 April 41 7/16 April 87
May 17 3/8 May 42 5/8 May 10 1/16 May 15 27/32 May 38 11/32 May 79 27/64
June 21 5/8 June 21 7/8 June 8 5/8 June 18 11/16 June 35 1/4 June 96 11/16
July 23 7/8 July 16 1/8 July 9 9/16 July 16 3/8 July 34 7/8 July 76 1/2
August 24 7/8 August 22 5/8 August 9 9/16 August 12 9/16 August 39 5/8 August 69 7/64
September 28 9/16 September 20 3/4 September 12 1/16 September 16 1/4 September 40 7/8
October 37 October 16 5/8 October 10 3/8 October 20 October 64 7/16
November 46 1/2 November 18 1/8 November 9 31/32 November 27 15/16 November 65 3/4
December 52 1/4 December 18 December 8 5/16 December 33 11/16 December 73 1/8
</TABLE>
The closing price on , 2000 was .
MERCURY INTERACTIVE CORPORATION (MERQ)
Mercury Interactive Corporation develops and markets integrated
management products that are designed to enable businesses to test and monitor
their Internet applications so they can quickly identify problems. Mercury's
software products and services are designed to assist electronic businesses in
improving the performance, availability, reliability and adaptability of their
Web sites. Mercury's products include test management products, which automate
the testing of Internet applications and other applications, and Web
performance monitoring products, which monitor and measure Web site performance
from the user's perspective and alert users to performance problems.
<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 3/16 January 5 3/16 January 3 1/8 January 7 5/16 January 15 25/32 January 54 11/16
February 3 1/4 February 4 1/16 February 3 1/4 February 9 5/16 February 16 13/64 February 96 3/8
March 4 7/32 March 4 March 2 7/16 March 9 1/8 March 17 13/16 March 79 1/4
April 5 3/8 April 3 7/16 April 3 1/16 April 10 1/8 April 14 3/32 April 90
May 5 9/16 May 3 5/8 May 4 3/8 May 8 5/16 May 16 7/16 May 84 3/4
June 5 1/32 June 3 7/16 June 3 23/32 June 11 5/32 June 17 11/16 June 96 3/4
July 6 1/4 July 3 11/16 July 4 29/64 July 10 11/32 July 23 1/16 July 99 17/64
August 5 21/32 August 3 1/2 August 4 13/16 August 8 13/32 August 23 7/8 August 122 3/16
September 6 15/16 September 3 15/32 September 4 25/32 September 9 59/64 September 32 9/32
October 5 1/8 October 3 3/16 October 5 5/8 October 10 3/8 October 40 9/16
November 5 3/4 November 2 1/2 November 6 3/32 November 11 15/32 November 41 9/16
December 4 9/16 December 3 1/4 December 6 11/16 December 15 13/64 December 53 31/32
</TABLE>
The closing price on , 2000 was .
A-4
<PAGE>
MICROSOFT CORPORATION (MSFT)
Microsoft Corporation develops, manufactures, licenses and supports a
range of software products for various computing devices. Microsoft software
includes operating systems, various personal computers and servers, server
applications and software development tools. Microsoft's online businesses
include the MSN network of Internet products and service, electronic-commerce
platforms and alliances with companies involved with broadband Internet access
and digital network services. Microsoft is currently appealing an antitrust
ruling from the Federal District Court of the District of Columbia, received on
June 7, 2000, ordering that Microsoft be divided into separate operating
systems and software applications companies.
<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 27/64 January 11 9/16 January 25 1/2 January 37 19/64 January 87 1/2 January 97 7/8
February 7 1/8 February 12 11/32 February 24 3/8 February 42 3/8 February 75 1/16 February 89 3/8
March 8 57/64 March 12 57/64 March 22 59/64 March 44 3/4 March 89 5/8 March 106 3/4
April 10 7/32 April 14 5/32 April 30 3/8 April 45 1/16 April 81 5/16 April 69 3/4
May 10 19/32 May 14 27/32 May 31 May 42 13/32 May 80 11/16 May 62 9/16
June 11 19/64 June 15 1/64 June 31 19/32 June 54 3/16 June 90 3/16 June 80
July 11 5/16 July 14 47/64 July 35 11/32 July 54 31/32 July 85 13/16 July 69 13/16
August 11 9/16 August 15 5/16 August 33 3/64 August 47 31/32 August 92 9/16 August 69 13/16
September 11 5/16 September 16 31/64 September 33 5/64 September 55 1/32 September 90 9/16
October 12 1/2 October 17 5/32 October 32 1/2 October 52 15/16 October 92 9/16
November 10 57/64 November 19 39/64 November 35 3/8 November 61 November 91 3/64
December 10 31/32 December 20 21/32 December 32 5/16 December 69 11/32 December 116 3/4
</TABLE>
The closing price on , 2000 was .
MICROMUSE INC. (MUSE)
Micromuse Inc. develops and markets software that monitors and manages
the elements of information technology infrastructures. Micromuse's products
consolidate network data and events, customize network information and allow
operators to automatically resolve service problems. Micromuse sells its
products directly and through distribution partners.
<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 15 9/32 January 81 19/32
February * February * February * February 9 1/2 February 16 1/8 February 141 13/16
March * March * March * March 12 3/16 March 23 March 138 13/16
April * April * April * April 11 1/8 April 17 7/32 April 98 1/8
May * May * May * May 10 3/4 May 19 15/16 May 99 9/16
June * June * June * June 20 13/32 June 24 15/16 June 165 1/2
July * July * July * July 12 15/16 July 23 1/4 July 129 47/64
August * August * August * August 6 7/8 August 28 9/16 August 151 7/8
September * September * September * September 8 15/16 September 32 1/8
October * October * October * October 8 17/32 October 53 7/16
November * November * November * November 11 13/32 November 57 3/16
December * December * December * December 9 3/4 December 85
</TABLE>
The closing price on , 2000 was .
A-5
<PAGE>
NUANCE COMMUNICATIONS, INC. (NUAN)
Nuance Communications, Inc. develops, markets and supports voice-
responsive software that is designed to make information and services from the
Internet and other sources accessible from any telephone. Nuance's speech
recognition, natural language understanding and voice authentication software
technologies are intended to enable information systems to recognize what an
individual says, derive the meaning of what an individual says and verify the
identity of the individual. Nuance has also developed a voice browser that
allows users to interact with automated information and services using a
telephone.
<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 *
February * February * February * February * February * February *
March * March * March * March * March * March *
April * April * April * April * April * April 30 3/16
May * May * May * May * May * May 39 1/2
June * June * June * June * June * June 83 5/16
July * July * July * July * July * July 140 3/8
August * August * August * August * August * August 131 5/8
September * September * September * September * September *
October * October * October * October * October *
November * November * November * November * November *
December * December * December * December * December *
</TABLE>
The closing price on , 2000 was .
ORACLE CORPORATION (ORCL)
Oracle Corporation develops, manufactures and markets computer software
that allows businesses to engage in electronic commerce and information
management. Oracle's primary products include systems software for development
of Internet applications and business applications software for a company's
data processing, financial management and customer service needs.
<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 13/64 January 7 5/64 January 8 41/64 January 7 3/4 January 18 29/64 January 49 61/64
February 4 41/64 February 7 45/64 February 8 23/32 February 8 13/64 February 18 5/8 February 74 1/4
March 4 5/8 March 6 63/64 March 8 9/16 March 10 33/64 March 13 3/16 March 78 1/16
April 4 33/64 April 7 1/2 April 8 53/64 April 8 5/8 April 13 17/32 April 79 15/16
May 5 9/64 May 7 23/64 May 10 23/64 May 7 7/8 May 12 13/32 May 71 7/8
June 5 23/32 June 8 49/64 June 11 3/16 June 8 3/16 June 18 9/16 June 84 1/16
July 6 13/64 July 8 11/16 July 12 3/32 July 8 53/64 July 19 1/32 July 75 3/16
August 5 15/16 August 7 53/64 August 12 45/64 August 6 41/64 August 18 1/4 August 90 15/16
September 5 11/16 September 9 29/64 September 12 9/64 September 9 45/64 September 22 3/4
October 6 15/32 October 9 13/32 October 11 59/64 October 9 55/64 October 23 25/32
November 6 23/32 November 10 57/64 November 11 7/64 November 11 27/64 November 33 29/32
December 6 9/32 December 9 9/32 December 7 7/16 December 14 3/8 December 56 1/32
</TABLE>
The closing price on , 2000 was .
A-6
<PAGE>
PEOPLESOFT, INC. (PSFT)
PeopleSoft, Inc. designs, develops and supports business application
software. PeopleSoft's software is designed to provide customer relationship
management, human resource management and financial accounting services
applications. PeopleSoft also offers software with applications customized for
a specific industry. In addition, PeopleSoft provides consulting, education and
technical support for its software products. PeopleSoft's customers include
businesses, educational institutions and government agencies.
<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 3/64 January 11 7/8 January 27 1/4 January 35 January 19 13/16 January 22 1/2
February 4 11/32 February 13 1/2 February 19 15/16 February 44 11/16 February 18 7/8 February 20 11/16
March 5 17/32 March 14 3/8 March 20 March 52 11/16 March 14 5/8 March 20
April 6 13/32 April 15 3/4 April 20 3/4 April 46 1/2 April 13 11/16 April 13 15/16
May 6 3/16 May 17 11/16 May 25 7/8 May 43 11/16 May 16 3/16 May 13 13/16
June 6 25/32 June 17 13/16 June 26 3/8 June 47 June 17 1/4 June 16 3/4
July 8 15/16 July 16 57/64 July 29 1/4 July 37 11/16 July 13 5/8 July 21 13/16
August 8 5/8 August 19 3/16 August 28 1/8 August 28 1/8 August 14 1/8 August 32 1/4
September 11 23/64 September 20 13/16 September 29 7/8 September 32 5/8 September 16 15/16
October 10 3/4 October 22 7/16 October 31 7/16 October 21 3/16 October 15
November 10 1/2 November 22 7/8 November 32 23/32 November 20 9/16 November 18 13/16
December 10 3/4 December 23 31/32 December 39 December 18 15/16 December 21 5/16
</TABLE>
The closing price on , 2000 was .
PHONE.COM, INC. (PHCM)
Phone.com, Inc. develops software that is designed to allow for the
delivery of Internet-based services to wireless telephones. Phone.com sells its
products to wireless telecommunications service providers and wireless
telephone manufactures who integrate the software into their products and
services to provide users of wireless telephones with access to Internet
services, including e-mail, news, stocks, weather, travel and sports. On August
9, 2000, Phone.com announced that it had entered into a merger agreement with
Software.com, Inc. This transaction is subject to regulatory and stockholder
approval and customary closing conditions.
<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 110
February * February * February * February * February * February 139 5/8
March * March * March * March * March * March 163 1/8
April * April * April * April * April * April 84
May * May * May * May * May * May 69 15/16
June * June * June * June * June 28 June 65 1/8
July * July * July * July * July 31 3/32 July 79 7/8
August * August * August * August * August 59 1/16 August 92 7/16
September * September * September * September * September 75 3/4
October * October * October * October * October 102 3/4
November * November * November * November * November 145
December * December * December * December * December 115 15/16
</TABLE>
The closing price on , 2000 was .
A-7
<PAGE>
RATIONAL SOFTWARE CORPORATION (RATL)
Rational Software Corporation develops products that are intended to
automate the software development process. Rational Software's products and
services are designed to allow its customers to more efficiently develop and
deploy their software. Rational Software markets its software development
products and services to companies involved in Internet businesses and to
companies involved in designing Internet infrastructure and equipment.
<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 5/8 January 6 5/32 January 12 11/16 January 5 21/32 January 16 17/32 January 26
February 2 1/4 February 9 15/64 February 12 15/16 February 6 3/4 February 14 27/32 February 35 9/16
March 2 49/64 March 9 7/8 March 10 5/16 March 6 1/2 March 13 13/32 March 38 1/4
April 3 3/32 April 13 11/32 April 6 29/32 April 8 13/32 April 14 13/16 April 42 9/16
May 2 29/32 May 15 17/32 May 9 7/16 May 7 5/8 May 16 29/32 May 36 21/32
June 3 13/32 June 13 7/16 June 8 13/32 June 7 5/8 June 16 15/32 June 46 15/32
July 4 3/16 July 11 3/32 July 9 5/8 July 8 1/4 July 16 11/16 July 50 7/8
August 3 27/32 August 13 5/16 August 8 1/4 August 5 9/16 August 13 17/32 August 64 11/32
September 3 29/32 September 17 1/16 September 8 September 8 13/32 September 14 41/64
October 3 29/32 October 19 3/16 October 4 9/16 October 11 3/16 October 21 3/8
November 4 13/32 November 17 5/8 November 5 1/16 November 11 11/32 November 25 9/16
December 5 19/32 December 19 25/32 December 5 11/16 December 13 1/4 December 24 9/16
</TABLE>
The closing price on , 2000 was .
SAP AG (SAP)
SAP AG develops and markets software that integrates the way businesses
interact internally and with third parties. SAP software enables companies of
all sizes and industries to fully interact with their employees, customers and
partners. Specifically, SAP software is designed to optimize supply chains,
manage strategic relationships, reduce time to market and share information.
SAP's preferred stock, which is listed on the New York Stock Exchange through
American depositary shares, also trades on the Swiss Stock Exchange.
<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 33 15/16 January 65 3/16
February * February * February * February * February 32 February 71 5/16
March * March * March * March * March 26 5/16 March 59 3/4
April * April * April * April * April 31 3/8 April 49 1/8
May * May * May * May * May 33 9/16 May 42 7/8
June * June * June * June * June 34 5/8 June 46 5/8
July * July * July * July * July 31 11/16 July 55 3/4
August * August * August * August 41 7/8 August 33 August 64 3/16
September * September * September * September 38 15/16 September 37 3/4
October * October * October * October 42 1/16 October 36 9/16
November * November * November * November 42 5/16 November 33 9/16
December * December * December * December 36 1/16 December 52 1/16
</TABLE>
The closing price on , 2000 was .
A-8
<PAGE>
SAPIENT CORPORATION (SAPE)
Sapient Corporation designs, develops and implements systems that allow
businesses to create and offer their Internet-related businesses. Its services
include business and Internet strategy consulting, creative design, technology
development and systems integration. Sapient primarily targets its services to
the needs of the financial services, media and entertainment, communications
and manufacturing and retail industries.
<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 5 27/32 January 9 7/16 January 18 15/32 January 44 3/16
February * February * February 4 53/64 February 9 59/64 February 16 23/32 February 35 3/4
March * March * March 4 March 11 27/32 March 17 27/32 March 41 15/16
April * April 6 19/32 April 4 31/64 April 12 11/32 April 15 11/16 April 39 19/32
May * May 6 1/4 May 5 19/32 May 11 3/16 May 15 15/16 May 49 31/32
June * June 5 9/32 June 6 3/16 June 13 3/16 June 14 5/32 June 53 15/32
July * July 4 7/8 July 6 29/32 July 11 7/16 July 13 13/16 July 56 7/8
August * August 5 13/32 August 6 27/32 August 9 49/64 August 18 1/4 August 52 1/2
September * September 5 9/16 September 6 23/64 September 8 17/32 September 23 9/16
October * October 5 25/32 October 6 21/32 October 11 17/64 October 31 31/32
November * November 4 15/16 November 6 1/2 November 11 9/16 November 38 3/4
December * December 5 17/64 December 7 21/32 December 14 December 70 15/32
</TABLE>
The closing price on , 2000 was .
SIEBEL SYSTEMS, INC. (SEBL)
Siebel Systems, Inc. develops and markets customer relationship software
that is designed to automate the sales and customer service operations of large
corporations across multiple channels, including the Web. Siebel's principal
software products offer client information and support services to customer
service call centers, direct sales teams, resellers, retailers and Web-based
sales forces. Siebel has announced a 2-for-1 stock split on its common stock to
shareholders of record as of August 18, 2000. The stock will begin trading on a
split-adjusted basis on September 11, 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 * January 4 3/8 January 12 5/16 January 21 7/8 January 91 11/16
February * February * February 4 7/16 February 15 3/8 February 22 February 140
March * March * March 4 3/16 March 14 3/8 March 23 3/4 March 119 7/16
April * April * April 4 17/32 April 12 15/16 April 19 7/32 April 122 7/8
May * May * May 6 9/16 May 11 3/8 May 22 49/64 May 117
June * June 3 27/32 June 8 1/16 June 16 1/8 June 33 5/32 June 163 9/16
July * July 3 23/32 July 8 1/2 July 13 9/16 July 29 9/16 July 145
August * August 5 9/64 August 9 1/32 August 9 3/8 August 34 11/32 August 197 13/16
September * September 5 13/64 September 10 41/64 September 14 11/32 September 33 5/16
October * October 6 13/16 October 10 3/32 October 10 7/32 October 54 29/32
November * November 5 5/8 November 10 13/32 November 12 1/8 November 70 1/8
December * December 6 3/4 December 10 29/64 December 16 31/32 December 84
</TABLE>
The closing price on , 2000 was .
A-9
<PAGE>
TIBCO SOFTWARE INC. (TIBX)
TIBCO Software Inc. develops and markets electronic-business
infrastructure software which is designed to allow businesses to integrate
their internal operations, dealings with business partners and relations with
customers in real time. TIBCO products and services are designed to assist in
the distribution of information by connecting a business' applications, Web
site and databases to the Internet and Internet-based applications.
<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 51 27/64
February * February * February * February * February * February 131
March * March * March * March * March * March 81 1/2
April * April * April * April * April * April 89 1/16
May * May * May * May * May * May 55 5/8
June * June * June * June * June * June 107 1/4
July * July * July * July * July 10 July 103
August * August * August * August * August 9 3/64 August 101 15/16
September * September * September * September * September 10 1/32
October * October * October * October * October 13
November * November * November * November * November 32 21/64
December * December * December * December * December 51
</TABLE>
The closing price on , 2000 was .
VERITAS SOFTWARE CORPORATION (VRTS)
Veritas Software Corporation develops and markets storage management
software for operating systems, including versions of UNIX and Windows NT.
Veritas software is designed to improve the level of centralization, control
and automation in computing environments. The products developed from Veritas'
software are intended to offer protection against data loss and file
corruption, allow rapid recovery after disk or computer system failure, enable
information technology managers to work efficiently with large numbers of files
and make it possible to manage data distributed on large networks of computer
systems.
<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 37/64 January 2 29/64 January 5 9/64 January 7 9/32 January 18 37/64 January 97 1/4
February 3/4 February 2 3/64 February 3 9/64 February 8 27/64 February 15 25/32 February 131 59/64
March 61/64 March 2 1/8 March 2 59/64 March 8 49/64 March 17 15/16 March 131
April 1 5/64 April 2 63/64 April 3 21/64 April 8 7/64 April 15 25/32 April 107 9/32
May 1 15/54 May 2 31/64 May 4 29/32 May 8 31/32 May 19 39/64 May 116 1/2
June 1 15/32 June 2 53/64 June 4 31/32 June 9 3/16 June 21 3/32 June 113 1/32
July 1 25/32 July 2 1/16 July 6 1/8 July 12 15/32 July 24 15/16 July 101 15/16
August 1 43/64 August 3 3/64 August 6 15/64 August 9 31/32 August 26 21/64 August 120 9/16
September 1 23/32 September 4 21/32 September 6 33/64 September 12 9/32 September 33 3/4
October 2 1/8 October 4 63/64 October 6 11/64 October 11 9/64 October 47 15/16
November 2 3/8 November 4 37/64 November 6 31/64 November 13 9/32 November 61 3/64
December 2 1/2 December 4 29/32 December 7 9/16 December 13 5/16 December 95 27/64
</TABLE>
The closing price on , 2000 was .
A-10
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[LOGO OF HOLDRS]
1,000,000,000 Depositary Receipts
Software HOLDRS SM Trust
---------------------
PROSPECTUS
---------------------
Merrill Lynch & Co.
Robert W. Baird & Co.
First Union Securities, Inc.
Legg Mason Wood Walker
Incorporated
Morgan Keegan & Company, Inc.
Raymond James & Associates, Inc.
Sutro & Co. Incorporated
Tucker Anthony Capital Markets
, 2000
Until , 2000 (25 days after the date of this prospectus), all dealers
effecting transactions in the offered Software 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............. $158,268
Printing and engraving expenses................................. 150,000
Legal fees and expenses......................................... 200,000
Rating agency fees.............................................. 0
Miscellaneous................................................... 6,732
--------
Total......................................................... $515,000
========
</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.
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-1
<PAGE>
(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. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, on September
7, 2000.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: *
----------------------------------
Ahmass L. Fakahany
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities indicated on September 7, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chief Executive Officer,
___________________________________________ Chairman of the Board
John L. Steffens and Director
* Director
___________________________________________
E. Stanley O'Neal
* Director
___________________________________________
George A. Schieren
* Director
___________________________________________
Thomas H. Patrick
* Senior Vice President
___________________________________________ and Chief Financial
Ahmass L. Fakahany Officer
* First Vice President and
___________________________________________ Controller
Dominic Carone
/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 New York, as
Trustee dated as of September 2, 1999, and included as exhibits
thereto, form of Depositary Trust Agreement and form of HOLDRS
5.1 Opinion of Shearman & Sterling regarding the validity of the Software
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)
24.2 Power of Attorney of Dominic Carone
</TABLE>
--------
* Previously filed.
II-4
