As filed with the Securities and Exchange Commission on February 28, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Initial Depositor
(Exact name of registrant as specified in charter)
----------------------
ABC HOLDRSSM Trust 2000-D
yet-to-be formed
[Issuer with respect to the receipts]
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 6211 13-5674085
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
----------------------
250 Vesey Street
New York, New York 10281
(212) 449-1000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
Andrea L. Dulberg, Esq. Copies to:
Corporate Secretary Andrew B. Janszky
Merrill Lynch, Pierce, Fenner & Smith Incorporated Shearman & Sterling
250 Vesey Street 599 Lexington Avenue
New York, New York 10281 New York, New York 10022
(212) 449-1000 (212) 848-4000
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
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
<TABLE>
<CAPTION>
====================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Be Offering Price Aggregate Offering Amount of
Securities to Be Registered Registered Per Receipt(1) Price(1) Registration Fee(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABC HOLDRS............ 100,000 $100 $10,000,000 $2,640
shares
====================================================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act.
(2) This Registration Statement also registers, where required, an indeterminate amount of securities to be sold by Merrill Lynch,
Pierce, Fenner & Smith Incorporated in market-making transactions.
</FN>
</TABLE>
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.
================================================================================
<PAGE>
PROSPECTUS
- ----------
Subject to Completion
Preliminary Prospectus dated February 28, 2000
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.
[LOGO]
[ ] Depositary Receipts
ABC HOLDRSSM Trust 2000-D
The ABC HOLDRSSM Trust 2000-D will issue Depositary Receipts called ABC
HOLDRSSM representing your undivided beneficial ownership in the U.S.-traded
common stock of a group of specified companies that are involved in various
segments of the [__________] industry. The Bank of New York will be the
trustee. You only may acquire, hold or transfer ABC HOLDRS in a round-lot amount
of 100 ABC HOLDRS or round-lot multiples. ABC HOLDRS are separate from the
underlying deposited common stocks that are represented by the ABC HOLDRS. For a
list of the names and the number of shares of the companies that make up an ABC
HOLDR, see "Highlights of ABC HOLDRS--The ABC HOLDRS" starting on page 6. The
trust will issue the additional ABC HOLDRS on a continuous basis.
Investing in ABC HOLDRS involves significant risks. See "Risk factors"
starting on page 4.
The initial public offering price for a round-lot of 100 ABC HOLDRS
will equal the sum of the closing market price on the primary trading market on
the pricing date for each deposited share multiplied by the share amount
specified in this prospectus, plus an underwriting fee.
ABC HOLDRS are neither interests in nor obligations of either the
initial depositor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or The
Bank of New York, as trustee.
Before this issuance, there has been no public market for ABC HOLDRS.
Application has been made to list the ABC Receipts on the American Stock
Exchange under the symbol "[_______].".
- -----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Initial
Price to Underwriting
Public* Fee
------- ---
Per ABC HOLDR........................................ 2%
- -----------------------
* Includes underwriting fee.
For purchases of ABC HOLDRS in excess of ABC HOLDRS, the underwriting
fee will be %.
----------------------
Merrill Lynch & Co.
----------------------
The date of this prospectus is , 2000.
"HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
Page
----
Summary................................................................ 3
Risk Factors........................................................... 4
Highlights of ABC HOLDRS............................................... 6
The Trust.............................................................. 12
Description of ABC HOLDRS.............................................. 12
Description of the Underlying Securities............................... 13
Description of the Depositary Trust Agreement.......................... 16
Federal Income Tax Consequences........................................ 18
ERISA Considerations................................................... 20
Plan of Distribution................................................... 20
Legal Matters.......................................................... 22
Where You Can Find More Information.................................... 22
- ----------------------
This prospectus contains information you should consider when making
your investment decision. With respect to information about ABC HOLDRS, you
should rely only on the information contained in this prospectus. We have not
authorized any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not making an offer to sell ABC HOLDRS in any jurisdiction where the
offer or sale is not permitted.
<PAGE>
SUMMARY
The ABC HOLDRS trust will be formed under the depositary trust
agreement, dated as of March , 2000 among The Bank of New York, as trustee,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the
owners of the ABC HOLDRS. The trust is not a registered investment company under
the Investment Company Act of 1940.
The trust will hold shares of common stock issued by [_________]
specified companies generally considered to be involved in various segments of
the [__________] industry. The number of shares of each common stock held by
the trust with respect to each round-lot of ABC HOLDRS is specified under
"Highlights of ABC HOLDRS--The ABC HOLDRS." This group of common stocks is
referred to as the underlying securities. Except when a reconstitution event
occurs, the underlying securities will not change.
Under no circumstances will a new company be added to the group of
issuers of underlying securities.
The trust will issue ABC HOLDRS that represent your undivided
beneficial ownership interest in the shares of common stock held by the trust on
your behalf. The ABC HOLDRS are separate from the underlying common stocks that
are represented by the ABC HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in ABC HOLDRS involves risks similar to investing in each
of the underlying securities outside of the ABC HOLDRS, including the risks
associated with concentrated investments in the [ ] industry.
General Risk Factors
o Loss of investment. Because the value of ABC HOLDRS directly
relates to the value of the underlying securities, you may lose
all or a substantial portion of your investment in the ABC HOLDRS
if the underlying securities decline in value.
o Discount trading price. ABC HOLDRS may trade at a discount to the
aggregate value of the underlying securities.
o Not necessarily representative of the [ ] industry. While the
underlying securities are common stocks of companies generally
considered to be involved in various segments of the [ ]
industry, the underlying securities and the ABC HOLDRS may not
necessarily follow the price movements of the entire [ ] industry
generally. If the underlying securities decline in value, your
investment in the ABC HOLDRS will decline in value even if common
stock prices in the [ ] industry generally increase in value.
Furthermore, after the initial deposit, one or more of the
issuers of the underlying securities may no longer be involved in
the [ ] industry. In this case, the ABC HOLDRS may no longer
consist of securities issued only by companies involved in the [
] industry.
o No investigation of underlying securities. The underlying
securities included in the ABC HOLDRS were selected by Merrill
Lynch, Pierce, Fenner & Smith Incorporated based on the market
capitalization of issuers and the market liquidity of common
stocks in the [ ] industry, without regard for the value, price
performance, volatility or investment merit of the underlying
securities. Consequently, the ABC HOLDRS trust, the trustee,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, and their
affiliates, have not performed any investigation or review of the
selected companies, including the public filings by the
companies. Investors and market participants should not conclude
that the inclusion of a company is any form of investment
recommendation by the trust, the trustee, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, or their affiliates.
o Loss of diversification. As a result of business developments,
reorganizations, or market fluctuations affecting issuers of the
underlying securities, ABC HOLDRS may not necessarily continue to
be a diversified investment in the [ ] industry. As a
result of market fluctuation and/or reconstitution events, ABC
HOLDRS may represent a concentrated investment in one or more of
the underlying securities which would reduce investment
diversification and increase your exposure to the risks of
concentrated investments.
o Conflicting investment choices. In order to sell one or more of
the underlying securities individually or to participate in a
tender offer relating to one or more of the underlying
securities, you will be required to cancel your ABC HOLDRS and
receive delivery of each of the underlying securities. The
cancellation of your ABC HOLDRS will allow you to sell individual
underlying securities or to deliver individual underlying
securities in a tender offer. The cancellation of ABC HOLDRS will
involve payment of a cancellation fee to the trustee.
o Trading halts. Trading in ABC HOLDRS may be halted if trading in
one or more of the underlying securities is halted. If so, you
will not be able to trade ABC HOLDRS even though there is trading
in some of the underlying securities; however, you will be able
to cancel your ABC HOLDRS to receive the underlying securities.
4
<PAGE>
o Delisting from the American Stock Exchange. If the number of
companies whose common stock is held in the trust falls below
nine, the American Stock Exchange may consider delisting the ABC
HOLDRS. If the ABC HOLDRS are delisted by the American Stock
Exchange, a termination event will result unless the ABC HOLDRS
are listed for trading on another national securities exchange or
through NASDAQ within five business days from the date the ABC
HOLDRS are delisted.
o Possible conflicts of interest. Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as initial depositor, has selected the
underlying securities and may face possible conflicts of interest
in connection with its activities. For example, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and its affiliates,
collectively referred to as Merrill Lynch, may engage in
investment banking and other activities, may provide services to
issuers of the underlying securities in connection with its
business, or may trade in the underlying securities for its own
account. All of these activities may result in conflicts of
interest with respect to the financial interest of Merrill Lynch,
on the one hand, and, on the other hand, the initial selection of
the underlying securities included in the ABC HOLDRS, the
selection of the [ ] industry, Merrill Lynch's activity in the
secondary market in the underlying securities, and the creation
and cancellation of ABC HOLDRS by Merrill Lynch.
o Temporary price increases in the underlying securities.
Purchasing activity in the secondary trading market associated
with acquiring the underlying securities for deposit into the
trust may affect the market price of the deposited shares. Large
volumes of purchasing activity, which may occur in connection
with the issuance of ABC HOLDRS, particularly in connection with
the initial issuance of ABC HOLDRS, could temporarily increase
the market price of the underlying securities, resulting in a
higher price on that date. This purchasing activity could create
a temporary imbalance between the supply and demand of the
underlying securities, thereby limiting the liquidity of the
underlying securities due to a temporary increased demand for
underlying securities. Consequently, prices for the underlying
securities may decline after these purchases as the volume of
purchases decreases. This in turn is likely to have an immediate,
adverse effect on the trading price of ABC HOLDRS.
Risk Factors Specific to the [ ] Industry
5
<PAGE>
HIGHLIGHTS OF ABC HOLDRS
This discussion highlights information regarding ABC HOLDRS; we present
certain information more fully in the rest of this prospectus. You should read
the entire prospectus carefully before you purchase ABC HOLDRS.
Issuer................................... ABC HOLDRS Trust.
The trust................................ The ABC HOLDRS Trust will be formed
under the depositary trust
agreement, dated as of March , 2000
among The Bank of New York, as
trustee, Merrill Lynch, Pierce,
Fenner & Smith Incorporated,
other depositors and the owners of
the ABC HOLDRS. The trust is not
a registered investment company
under the Investment Company Act of
1940.
Initial depositor........................ Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
Trustee.................................. The Bank of New York, a New York
state-chartered banking
organization, will be the trustee
and receive compensation as set
forth in the depositary trust
agreement.
Purpose of ABC HOLDRS.................... ABC HOLDRS are designed to achieve
the following:
Diversification. ABC HOLDRS are
designed to allow you to diversify
your investment in the [ ]
industry through a single,
exchange-listed instrument
representing your undivided
beneficial ownership of the
underlying securities.
Flexibility. The beneficial owners
of ABC HOLDRS have undivided
beneficial ownership interests in
each of the underlying securities
represented by the ABC HOLDRS, and
can cancel their ABC HOLDRS to
receive each of the underlying
securities represented by the ABC
HOLDRS.
Transaction costs. The expenses
associated with trading ABC HOLDRS
are expected to be less than trading
each of the underlying securities
separately.
Trust assets............................. The trust will hold shares of common
stock issued by specified companies
in the [ ] industry. Except when a
reconstitution event occurs, the
group of companies will not change.
Reconstitution events are described
in this prospectus under the heading
"Description of the depositary trust
agreement--Reconstitution events."
Under no circumstances will the
common stock of a new company be
added to the common stocks
underlying the ABC HOLDRS.
The trust's assets may increase or
decrease as a result of in-kind
deposits and withdrawals of the
underlying securities during the
life of the trust.
The ABC HOLDRS........................... The trust will issue ABC HOLDRS that
represent your undivided beneficial
ownership interest in the shares of
U.S.-traded common
6
<PAGE>
stock held by the trust on your
behalf. The ABC HOLDRS themselves
are separate from the underlying
securities that are represented by
the ABC HOLDRS.
The specific share amounts for each
round-lot of 100 ABC HOLDRS will be
determined on the pricing date so
that the initial issue price will be
approximately $90-$100 per ABC HOLDR
and the initial weightings of each
underlying security included in the
ABC HOLDRS approximates the relative
market capitalizations of the
specified companies (based on the
closing market prices of the
underlying securities on the trading
day immediately preceding the
pricing date), subject to a maximum
weight of 20%. For purposes of this
preliminary prospectus, the
indicative share amounts and the
indicative weightings of each
underlying security, based on market
capitalizations as of the date of
this preliminary prospectus, are set
forth in the table below; however,
such share amounts and weightings
are expected to change during the
period between the date of this
preliminary prospectus and the
pricing date.
After the pricing date, the share
amounts will not change, except for
changes due to corporate events,
such as stock splits or reverse
stock splits on the underlying
securities, or reconstitution
events. However, the weightings are
expected to change substantially
over time because of price
fluctuations.
The following chart provides the
o names of the [ ] issuers of
the underlying securities
represented by the ABC HOLDRS,
o stock ticker symbols,
o indicative share amounts
represented by a round-lot of
100 ABC HOLDRS, (as of the date
of this preliminary prospectus)
o percentage of market
capitalization as of the date
hereof, and
o principal market on which
the shares of common stock of
the selected companies are
traded.
Indicative Primary
Name of Share Indicative Trading
Company Ticker Amounts Weightings Market
------- ------ ------- ---------- ------
7
<PAGE>
These companies generally are
considered to be [__________] of
the largest and most liquid
companies with U.S.-traded common
stock involved in the [__________]
industry as measured by market
capitalization and trading volume on
_________________, 2000. The market
capitalization of a company is
determined by multiplying the price
of its common stock by the number of
outstanding shares of its common
stock.
The trust only will issue and
cancel, and you only may obtain,
hold, trade or surrender, ABC HOLDRS
in a round-lot of 100 ABC HOLDRS and
round-lot multiples. The trust will
only issue ABC HOLDRS upon the
deposit of the whole shares
represented by a round-lot of 100
ABC HOLDRS. In the event that a
fractional share comes to be
represented by a round-lot of ABC
HOLDRS, the trust may require a
minimum of more than one round-lot
of 100 ABC HOLDRS for an issuance so
that the trust will always receive
whole share amounts for issuance of
ABC HOLDRS.
The number of outstanding ABC HOLDRS
will increase and decrease as a
result of in-kind deposits and
withdrawals of the underlying
securities. The trust will stand
ready to issue additional ABC HOLDRS
on a continuous basis when an
investor deposits the required
shares of common stock with the
trustee.
Public offering price............... The initial public offering price
for 100 ABC HOLDRS will equal the
sum of the closing market price on
the primary trading market on the
pricing date for each underlying
security multiplied by the share
amount to be determined on the
pricing date, plus an underwriting
fee. It is expected that the initial
public offering price will be
approximately $90-$100 per ABC
HOLDR.
Purchases........................... After the initial offering, you may
acquire ABC HOLDRS in two ways:
o through an in-kind deposit of
the required number of shares
of common stock of the
underlying issuers with the
trustee, or
o through a cash purchase in the
secondary trading market.
Underwriting fees................... If you purchase ABC HOLDRS in the
initial public offering, you will
pay Merrill Lynch, Pierce, Fenner &
Smith Incorporated, in its role as
underwriter, an underwriting fee
equal to:
o For purchases of ___ ABC HOLDRS
or fewer, 2%.
o For purchases in excess of ABC
HOLDRS, %.
You will not be charged any issuance
fee or other sales commission in
connection with purchases of ABC
HOLDRS made in the initial public
offering.
8
<PAGE>
Issuance and cancellation
fees................................ After the initial offering, if you
wish to create ABC HOLDRS by
delivering to the trust the
requisite shares of common stock
represented by a round-lot of 100
ABC HOLDRS, The Bank of New York as
trustee will charge you an issuance
fee of up to $10.00 for each round-
lot of 100 ABC HOLDRS. If you wish
to cancel your ABC HOLDRS and
withdraw your underlying securities,
The Bank of New York as trustee will
charge you a cancellation fee of up
to $10.00 for each round-lot of 100
ABC HOLDRS.
Commissions......................... If you choose to deposit underlying
securities in order to receive ABC
HOLDRS after the conclusion of the
initial public offering, you will
not be charged the underwriting fee.
However, in addition to the
issuance fee charged by the trustee
described above, you will be
responsible for paying any sales
commission associated with your
purchase of the underlying
securities that is charged by your
broker, whether it be Merrill Lynch,
Pierce, Fenner & Smith Incorporated
or another broker.
Custody fees........................ The Bank of New York, as trustee and
as custodian, will charge you a
quarterly custody fee of $2.00 for
each round-lot of 100 ABC HOLDRS, to
be deducted from any cash dividend
or other cash distributions on
underlying securities received by
the trust. With respect to the
aggregate custody fee payable in any
calendar year for each ABC HOLDR,
the Trustee will waive that portion
of the fee which exceeds the total
cash dividends and other cash
distributions received, or to be
received, and payable with respect
to such calendar year.
Rights relating to
ABC HOLDRS........................ You have the right to withdraw the
underlying securities upon request
by delivering a round-lot or
integral multiple of a round-lot of
ABC HOLDRS to the trustee, durin
the trustee's business hours, and
paying the cancellation fees, taxes,
and other charges. You should
receive the underlying securities no
later than the business day after
the trustee receives a proper notice
of cancellation. The trustee will
not deliver fractional shares of
underlying securities. To the
extent that any cancellation of ABC
HOLDRS would otherwise require the
delivery of a fractional share, the
trustee will sell such share in the
market and the trust, in turn, will
deliver cash in lieu of such share.
Except with respect to the right to
vote for dissolution of the trust,
the ABC HOLDRS themselves will not
have voting rights.
Rights relating to the underlying
securities........................ You have the right to:
o Receive all shareholder
disclosure materials, including
annual and quarterly reports,
distributed by the issuers of
the underlying securities.
o Receive all proxy materials
distributed by the issuers of
the underlying securities and
will have the right to instruct
the
9
<PAGE>
trustee to vote the underlying
securities or may attend
shareholder meetings yourself.
o Receive dividends and other
distributions on the underlying
securities, if any are declared
and paid to the trustee by an
issuer of the underlying
securities, net of any
applicable taxes or fees.
If you wish to participate in a
tender offer for underlying
securities, you must obtain the
underlying securities by
surrendering your ABC HOLDRS and
receiving all of your underlying
securities. For specific information
about obtaining your underlying
securities, you should read the
discussion under the caption
"Description of the depositary trust
agreement."
Reconstitution events............... A. If an issuer of underlying
securities no longer has a
class of common stock
registered under section 12 of
the Securities Exchange Act of
1934, then its securities will
no longer be an underlying
security and the trustee will
distribute the shares of that
company to the owners of the
ABC HOLDRS.
B. If the SEC finds that an issuer
of underlying securities should
be registered as an investment
company under the Investment
Company Act of 1940, and the
trustee has actual knowledge of
the SEC finding, then the
trustee will distribute the
shares of that company to the
owners of the ABC HOLDRS.
C. If the underlying securities of
an issuer cease to be
outstanding as a result of a
merger, consolidation or other
corporate combination, the
trustee will distribute the
consideration paid by and
received from the acquiring
company to the beneficial
owners of ABC HOLDRS, unless
the merger, consolidation or
other corporate combination is
between companies that are
already included in the ABC
HOLDRS and the consideration
paid is additional underlying
securities. In this case, the
additional underlying
securities will be deposited
into the trust.
D. If an issuer's underlying
securities are delisted from
trading on a national
securities exchange or NASDAQ
and are not listed for trading
on another national securities
exchange or through NASDAQ
within five business days from
the date such securities are
delisted.
If a reconstitution event
occurs, the trustee will
deliver the underlying security
to you as promptly as
practicable after the date that
the trustee has knowledge of
the occurrence of a
reconstitution event.
Termination events.................. A. The ABC HOLDRS are delisted
from the American Stock
Exchange and are not listed for
trading on another national
10
<PAGE>
securities exchange or through
NASDAQ within five business
days from the date the ABC
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 ABC HOLDRS vote to
dissolve and liquidate the
trust.
If a termination event occurs,
the trustee will distribute the
underlying securities to you as
promptly as practicable after
the termination event.
Federal income
tax consequences.................. The federal income tax laws will
treat a U.S. holder of ABC HOLDRS as
directly owning the underlying
securities. The ABC HOLDRS
themselves will not result in any
federal tax consequences separate
from the tax consequences associated
with ownership of the underlying
securities.
Listing............................. Application has been made to list
the ABC HOLDRS on the American Stock
Exchange under the symbol "[ ]".
Trading will take place only in
round-lots of 100 ABC HOLDRS and
round-lot multiples. A minimum of
150,000 ABC HOLDRS will be required
to be outstanding when trading
begins.
Trading............................. Investors only will be able to
acquire, hold, transfer and
surrender a round-lot of 100 ABC
HOLDRS. Bid and ask prices, however,
will be quoted per single ABC
HOLDRS.
Clearance and settlement............ The trust will issue ABC HOLDRS in
book-entry form. ABC HOLDRS will be
evidenced by one or more global
certificates that the trustee will
deposit with The Depository Trust
Company, referred to as DTC.
Transfers within DTC will be in
accordance with DTC's usual rules
and operating procedures. For
further information see "Description
of ABC HOLDRS."
11
<PAGE>
THE TRUST
General. This discussion highlights information about the ABC HOLDRS
trust. You should read this information, information about the depositary trust
agreement as well as the depositary trust agreement before you purchase ABC
HOLDRS. The material terms of the depositary trust agreement are described in
this prospectus under the heading "Description of the depositary trust
agreement."
The ABC HOLDRS trust. The trust will be formed pursuant to the
depositary trust agreement, dated as of March, 2000. The Bank of New York will
be the trustee. The ABC HOLDRS trust is not a registered investment company
under the Investment Company Act of 1940.
The ABC HOLDRS trust is intended to hold deposited shares for the
benefit of owners of ABC HOLDRS. The trustee will perform only administrative
and ministerial acts. The property of the trust will consist of the underlying
securities and all monies or other property, if any, received by the trustee.
The trust will terminate on December 31, 2040, or earlier if a termination event
occurs.
DESCRIPTION OF ABC HOLDRS
The trust will issue ABC HOLDRS under the depositary trust agreement
described in this prospectus under the heading "Description of the depositary
trust agreement." After the initial offering, the trust may issue additional ABC
HOLDRS on a continuous basis when an investor deposits the requisite underlying
securities with the trustee.
You may only acquire, hold, trade and surrender ABC HOLDRS in a
round-lot of 100 ABC HOLDRS and round-lot multiples. The trust will only issue
ABC HOLDRS upon the deposit of the whole shares of underlying securities that
are represented by a round-lot of 100 ABC HOLDRS. In the event of a stock split,
reverse stock split, or other distribution by the issuer of an underlying
security that results in a fractional share becoming represented by a round-lot
of ABC HOLDRS, the trust may require a minimum of more than one round-lot of 100
ABC HOLDRS for an issuance so that the trust will always receive whole share
amounts for issuance of ABC HOLDRS.
ABC HOLDRS will represent your individual and undivided beneficial
ownership interest in the common stock of the specified underlying securities.
The [_______] companies selected as part of this receipt program are listed
above in the section entitled "Highlights of ABC HOLDRS--The ABC HOLDRS."
Beneficial owners of ABC HOLDRS will have the same rights and
privileges as they would have if they beneficially owned the underlying
securities outside of the trust. These include the right of investors to
instruct the trustee to vote the common stock, and to receive dividends and
other distributions on the underlying securities, if any are declared and paid
to the trustee by an issuer of an underlying security, as well as the right to
cancel ABC HOLDRS to receive the underlying securities. See "Description of the
depositary trust agreement." ABC HOLDRS are not intended to change your
beneficial ownership in the underlying securities under federal securities laws,
including Sections 13(d) and 16(a) of the Securities Exchange Act of 1934.
The trust will not publish or otherwise calculate the aggregate value
of the underlying securities represented by a receipt. ABC HOLDRS may trade in
the secondary market at prices that are lower than the aggregate value of the
corresponding underlying securities. If, in such case, an owner of ABC HOLDRS
wishes to realize the dollar value of the underlying securities, that owner will
have to cancel the ABC HOLDRS. Such cancellation will require payment of fees
and expenses as described in "Description of the depositary trust
agreement--Withdrawal of underlying securities."
ABC HOLDRS will be evidenced by one or more global certificates that
the trustee will deposit with DTC and register in the name of Cede & Co., as
nominee for DTC. ABC HOLDRS will be available only in book-entry
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<PAGE>
form. Owners of ABC HOLDRS may hold their ABC HOLDRS through DTC, if they are
participants in DTC, or indirectly through entities that are participants in
DTC.
DESCRIPTION OF THE UNDERLYING SECURITIES
Selection criteria. The underlying securities are the common stocks of
a group of [__________] specified companies involved in various segments of
the [__________] industry and whose common stock is registered under Section
12 of the Exchange Act. The issuers of the underlying securities are considered
to be [_______] of the largest capitalized, most liquid companies in the
[__________] industry as measured by market capitalization and trading volume.
The following criteria were used in selecting the underlying securities on
___________________________, 2000:
o Market capitalization equal to or greater than $__ billion;
o Average daily trading volume of at least ___ million shares over
the 60 trading days before ____________, 2000;
o Average daily dollar volume (that is, the average daily trading
volume multiplied by the closing price on _______________, 2000)
of at least $____ million over the 60 trading days before
_____________, 2000; and
o A trading history of at least 90 calendar days.
The market capitalization of a company is determined by multiplying the price of
its common stock by the number of shares of its common stock that are held by
stockholders. In determining whether a company was to be considered for
inclusion in the ABC HOLDRS, Merrill Lynch, Pierce, Fenner & Smith Incorporated
examined available public information about the company, including analysts'
reports and other independent market sources. The ultimate determination of the
inclusion of the [__________] specified companies, however, rested solely
within the discretion of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
After the initial deposit, one or more of the issuers of the underlying
securities may no longer be substantially involved in the [__________] industry.
In this case, the ABC HOLDRS may no longer consist of securities issued by
companies involved in the [__________] industry. Merrill Lynch, Pierce, Fenner &
Smith Incorporated will determine, in its sole discretion, whether the issuer of
a particular underlying security remains in the [__________] industry and will
undertake to make adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities
represented by ABC HOLDRS, please refer to "Highlights of ABC HOLDRS--The ABC
HOLDRS." If the underlying securities change because of a reconstitution event,
a revised list of underlying securities will be set forth in a prospectus
supplement and will be available from the American Stock Exchange and through a
widely-used electronic information dissemination system such as Bloomberg or
Reuters.
No investigation. In selecting the underlying securities, the trust,
the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any
affiliate of these entities, have not performed any investigation or review of
the selected companies, including the public filings by the companies, other
than to the extent required to determine whether the companies satisfied the
stated selection criteria. Accordingly, before you acquire ABC HOLDRS, you
should consider publicly available financial and other information about the
issuers of the underlying securities. See "Risk factors" and "Where you can find
more information." Investors and market participants should not conclude that
the inclusion of a company in the list is any form of investment recommendation
of that company by the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and any of their affiliates.
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."
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The following table and graph set forth the composite performance of
all of the underlying securities represented by a single ABC HOLDR based upon
the indicative share amounts set forth in the table on page 7 of this
preliminary prospectus, measured at the close of each business day from
____________________________, 1999, the first date when all of the underlying
securities were publicly traded, to ________________________________________,
2000. The performance table and graph data are adjusted for any splits that may
have occurred over the measurement period. Past movements of the underlying
securities are not necessarily indicative of future values. The actual share
amounts will be determined on the pricing date and may differ from the
indicative share amounts.
ABC ABC ABC ABC ABC
1999 HOLDRS 1999 HOLDRS 1999 HOLDRS 1999 HOLDRS 2000 HOLDRS
- ---- ------ ---- ------ ---- ------ ---- ------ ---- ------
[GRAPH]
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DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of March , 2000,
among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York,
as trustee, other depositors and the owners of the ABC HOLDRS, provides that ABC
HOLDRS will represent an owner's undivided beneficial ownership interest in the
common stock of the underlying companies.
The trustee. The Bank of New York will serve as trustee. The Bank of
New York, which was founded in 1784, was New York's first bank and is the oldest
bank in the country still operating under its original name. The Bank is a
state-chartered New York banking corporation and a member of the Federal Reserve
System. The Bank conducts a national and international wholesale banking
business and a retail banking business in the New York City, New Jersey and
Connecticut areas, and provides a comprehensive range of corporate and personal
trust, securities processing and investment services.
Issuance, transfer and surrender of ABC HOLDRS. You may create and
cancel ABC HOLDRS only in round-lots of 100 ABC HOLDRS. You may create ABC
HOLDRS by delivering to the trustee the requisite underlying securities. The
trust will only issue ABC HOLDRS upon the deposit of the whole shares
represented by a round-lot of 100 ABC HOLDRS. In the event that a fractional
share comes to be represented by a round-lot of ABC HOLDRS, the trust may
require a minimum of more than one round-lot of 100 ABC HOLDRS for an issuance
so that the trust will always receive whole share amounts for issuance of ABC
HOLDRS. Similarly, you must surrender ABC HOLDRS in integral multiples of 100
ABC HOLDRS to withdraw deposited shares from the trust. The trustee will not
deliver fractional shares of underlying securities, to the extent that any
cancellation of ABC HOLDRS would otherwise require the delivery of fractional
shares, the trust will deliver cash in lieu of such shares. You may request
withdrawal of your deposited shares during the trustee's normal business hours.
The trustee expects that in most cases it will deliver your deposited shares
within one business day of your withdrawal request.
Voting rights. The trustee will deliver you proxy soliciting materials
provided by issuers of the deposited shares so as to permit you to give the
trustee instructions as to how to vote on matters to be considered at any annual
or special meetings held by issuers of the underlying securities.
Under the depositary trust agreement, any beneficial owner of ABC
HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning ABC
HOLDRS for its own proprietary account as principal, will have the right to vote
to dissolve and liquidate the trust.
Distributions. You will be entitled to receive, net of trustee fees,
distributions of cash, including dividends, securities or property, if any, made
with respect to the underlying securities. The trustee will use its reasonable
efforts to ensure that it distributes these distributions as promptly as
practicable after the date on which it receives the distribution. Therefore, you
may receive your distributions substantially later than you would have had you
held the underlying securities directly. You will be obligated to pay any tax or
other charge that may become due with respect to ABC HOLDRS. The trustee may
deduct the amount of any tax or other governmental charge from a distribution
before making payment to you. In addition, the trustee will deduct its quarterly
custody fee of $2.00 for each round-lot of 100 ABC HOLDRS from quarterly
dividends, if any, paid to the trustee by the issuers of the underlying
securities. With respect to the aggregate custody fee payable in any calendar
year for each ABC HOLDR, the trustee will waive that portion of the fee which
exceeds the total cash dividends and other cash distributions received, or to be
received, and payable with respect to such calendar year.
Record dates. With respect to dividend payments and voting
instructions, the trustee expects to fix the trust's record dates as close as
possible to the record date fixed by the issuer of the underlying securities.
Shareholder communications. The trustee promptly will forward to you
all shareholder communications that it receives from issuers of the underlying
securities.
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Withdrawal of underlying securities. You may surrender your ABC HOLDRS
and receive underlying securities during the trustee's normal business hours and
upon the payment of applicable fees, taxes or governmental charges, if any. You
should receive your underlying securities no later than the business day after
the trustee receives your request. If you surrender ABC HOLDRS in order to
receive underlying securities, you will pay to the trustee a cancellation fee of
up to $10.00 per round-lot of 100 ABC HOLDRS.
Further issuances of ABC HOLDRS. The depositary trust agreement
provides for further issuances of ABC HOLDRS on a continuous basis without your
consent.
Reconstitution events. The depositary trust agreement provides for the
automatic distribution of underlying securities to you in four circumstances.
A. If an issuer of underlying securities no longer has a class
of common stock registered under section 12 of the Securities
Exchange Act of 1934, then its securities will no longer be
an underlying security and the trustee will distribute the
shares of that company to the owners of the ABC HOLDRS.
B. If the SEC finds that an issuer of underlying securities
should be registered as an investment company under the
Investment Company Act of 1940, and the trustee has actual
knowledge of the SEC finding, then the trustee will
distribute the shares of that company to the owners of the
ABC HOLDRS.
C. If the underlying securities of an issuer cease to be
outstanding as a result of a merger, consolidation or other
corporate combination, the trustee will distribute the
consideration paid by and received from the acquiring company
to the beneficial owners of ABC HOLDRS, unless the merger,
consolidation or other corporate combination is between
companies that are already included in the ABC HOLDRS and the
consideration paid is additional underlying securities. In
this case, the additional underlying securities will be
deposited into the trust.
D. If an issuer's underlying securities are delisted from
trading on a national securities exchange or NASDAQ and are
not listed for trading on another national securities
exchange or through NASDAQ within five business days from the
date such securities are delisted.
If a reconstitution event occurs, the trustee will deliver the
underlying security to you as promptly as practicable after the date that the
trustee has knowledge of the occurrence of a reconstitution event.
Termination of the trust. The trust will terminate if the trustee
resigns and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as initial depositor, within 60 days from the date the
trustee provides notice to Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as initial depositor, of its intent to resign. Upon termination, the beneficial
owners of ABC HOLDRS will surrender their ABC HOLDRS as provided in the
depositary trust agreement, including payment of any fees of the trustee or
applicable taxes or governmental charges due in connection with delivery to the
owners of the underlying securities. The trust also will terminate if ABC HOLDRS
are delisted from the American Stock Exchange and are not listed for trading on
another national securities exchange or through NASDAQ within 5 business days
from the date the ABC HOLDRS are delisted. Finally, the trust will terminate if
75% of the owners of outstanding ABC HOLDRS other than Merrill Lynch, Pierce,
Fenner & Smith Incorporated vote to dissolve and liquidate the trust.
If a termination event occurs, the trustee will distribute the
underlying securities to you as promptly as practicable after the termination
event occurs.
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Amendment of the depositary trust agreement. The trustee and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, may amend any
provisions of the depositary trust agreement without the consent of any other
depositor or any of the owners of the ABC HOLDRS. Promptly after the execution
of any amendment to the agreement, the trustee must furnish or cause to be
furnished written notification of the substance of the amendment to each owner
of ABC HOLDRS. Any amendment that imposes or increases any fees or charges,
subject to exceptions, or that otherwise prejudices any substantial existing
right of the owners of ABC HOLDRS will not become effective until 30 days after
notice of the amendment is given to the owners of ABC HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more ABC HOLDRS. If you wish to create ABC HOLDRS by
delivering to the trust the requisite underlying securities, the trustee will
charge you an issuance fee of up to $10.00 for each round-lot of 100 ABC HOLDRS.
If you wish to cancel your ABC HOLDRS and withdraw your underlying securities,
the trustee will charge you a cancellation fee of up to $10.00 for each
round-lot of 100 ABC HOLDRS issued. The trustee may negotiate either of these
fees depending on the volume, frequency and size of the issuance or cancellation
transactions.
Commissions. If you choose to create ABC HOLDRS after the conclusion of
the initial public offering, you will not be charged the underwriting fee.
However, in addition to the issuance and cancellation fees described above, you
will be responsible for paying any sales commissions associated with your
purchase of the underlying securities that is charged by your broker, whether it
be Merrill Lynch, Pierce, Fenner & Smith Incorporated or another broker.
Custody fees. The Bank of New York, as trustee and as custodian, will
charge you a quarterly custody fee of $2.00 for each round-lot of 100 ABC HOLDRS
to be deducted from any dividend payments or other cash distributions on
underlying securities received by the trustee. With respect to the aggregate
custody fee payable in any calendar year for each ABC HOLDR, the Trustee will
waive that portion of the fee which exceeds the total cash dividends and other
cash distributions received, or to be received, and payable with respect to such
calendar year. The trustee cannot recapture unpaid custody fees from prior
years.
Address of the trustee. The Bank of New York, ADR Department, 101
Barclay Street, New York, New York 10286.
Governing law. The depositary trust agreement and ABC HOLDRS will be
governed by the laws of the State of New York. The trustee will provide the
depositary trust agreement to any owner of the underlying securities free of
charge upon written request.
Duties and immunities of the trustee. The trustee will assume no
responsibility or liability for, and makes no representations as to, the
validity or sufficiency, or as to the accuracy of the recitals, if any, set
forth in the ABC HOLDRS.
The trustee undertakes to perform only those duties as are specifically
set forth in the depositary trust agreement. Subject to the preceding sentence,
the trustee will be liable for its own negligence or misconduct except for good
faith errors in judgment so long as the trustee was not negligent in
ascertaining the relevant facts.
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FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the ABC HOLDRS for:
o a citizen or resident of the United States;
o a corporation or partnership created or organized in the United
States or under the laws of the United States;
o an estate, the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its source;
o or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one
or more U.S. persons have the authority to control all substantial
decisions of the trust (each of the above, a "U.S. receipt
holder"); and
o any person other than a U.S. receipt holder (a "Non-U.S. receipt
holder").
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all U.S. federal income tax
consequences applicable to all categories of investors, some of which may be
subject to special rules. In addition, this summary generally is limited to
investors who will hold the ABC HOLDRS as "capital assets" (generally, property
held for investment) within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended. We suggest that you consult with your own tax advisor.
Taxation of the trust
The trust will provide for flow through tax consequences as it will be
treated as a grantor trust or custodial arrangement for United States federal
income tax purposes.
Taxation of ABC HOLDRS
A receipt holder purchasing and owning ABC HOLDRS will be treated, for
U.S. federal income tax purposes, as directly owning a proportionate share of
the underlying securities represented by ABC HOLDRS. Consequently, if there is a
taxable cash distribution on an underlying security, a holder will recognize
income with respect to the distribution at the time the distribution is received
by the trustee, not at the time that the holder receives the cash distribution
from the trustee.
A receipt holder will determine its initial tax basis in each of the
underlying securities by allocating the purchase price for the ABC HOLDRS among
the underlying securities based on their relative fair market values at the time
of purchase. Similarly, when a holder sells a receipt, it will determine the
amount realized with respect to each security by allocating the sales price
among the underlying securities based on their relative fair market values at
the time of sale. A holder's gain or loss with respect to each security will be
computed by subtracting its basis in the security from the amount realized on
the security. With respect to purchases of ABC HOLDRS for cash in the secondary
market, a receipt holder's aggregate tax basis in each of the underlying
securities will be equal to the purchase price of the ABC HOLDRS. Similarly,
with respect to sales of ABC HOLDRS for cash in the secondary market, the amount
realized with respect to a sale of ABC HOLDRS will be equal to the aggregate
amount realized with respect to each of the underlying securities.
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The distribution of any securities by the trust upon the surrender of
ABC HOLDRS, the occurrence of a reconstitution event, or a termination event
will not be a taxable event. The receipt holders 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 ABC HOLDRS will
reduce the amount realized with respect to the underlying securities.
A holder will be required to include in its income the full amount of
dividends paid on the underlying securities, even though the depositary trust
agreement provides that the custodian fees will be deducted directly from any
dividends paid. These custodian fees will be treated as an expense incurred in
connection with a holder's investment in the underlying securities and may be
deductible. If a holder is an individual, estate or trust, however, the
deduction of its share of custodian fees will be a miscellaneous itemized
deduction that may be disallowed in whole or in part.
Non-U.S. receipt holders
Non-U.S. receipt holders should consult their tax advisors regarding
U.S. withholding and other taxes which may apply to an investment in the
underlying securities.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire ABC HOLDRS
should consult with its counsel with respect to the potential applicability of
ERISA and the Internal Revenue Code to this investment and whether any exemption
would be applicable and determine on its own whether all conditions have been
satisfied. Moreover, each plan fiduciary should determine whether, under the
general fiduciary standards of investment prudence and diversification, an
acquisition of ABC HOLDRS is appropriate for the plan, taking into account the
overall investment policy of the plan and the composition of the plan's
investment portfolio.
PLAN OF DISTRIBUTION
In accordance with the depositary trust agreement, the trust will issue
to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch,
Pierce, Fenner & Smith Incorporated will deposit the underlying securities to
receive ABC HOLDRS. Merrill Lynch & Co., as underwriter, proposes to offer the
ABC HOLDRS to the public at the offering price set forth on the cover page of
this prospectus. Merrill Lynch expects the trust to deliver the initial
distribution of ABC HOLDRS against deposit of the underlying securities in New
York, New York on ___________, 2000. After the initial offering, the public
offering price, concession and discount may be changed. The trust will continue
to issue ABC HOLDRS, in connection with deposits of underlying securities. This
offering is being made in compliance with Conduct Rule 2810 of the National
Association of Securities Dealers, Inc. Accordingly, Merrill Lynch will not make
any sales to a discretionary account without the prior written approval of a
purchaser of ABC HOLDRS.
Merrill Lynch has from time to time provided investment banking and
other financial services to certain of the issuers of the underlying securities
and expects in the future to provide these services, for which it has received
and will receive customary fees and commissions. It also may have served as
counterparty in other transactions with certain of the issuers of the underlying
securities.
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Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the ABC HOLDRS. Merrill Lynch, Pierce,
Fenner & Smith Incorporated may act as principal or agent in such transactions.
Market-making sales will be made at prices related to prevailing market prices
at the time of sale.
Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to
indemnify the trustee against certain civil liabilities related to acts
performed or not performed by the trustee in accordance with the depositary
trust agreement or periodic reports filed or not filed with the SEC with respect
to the ABC HOLDRS. Should a court determine not to enforce the indemnification
provision, Merrill Lynch, Pierce, Fenner & Smith Incorporated also has agreed to
contribute to payments the trustee may be required to make with respect to such
liabilities.
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LEGAL MATTERS
Legal matters, including the validity of the ABC HOLDRS will be passed
upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial
depositor and the underwriter, by Shearman & Sterling, New York, New York.
Shearman & Sterling, as special U.S. tax counsel to the trust, also will render
an opinion regarding the material federal income tax consequences relating to
the ABC HOLDRS.
WHERE YOU CAN FIND MORE INFORMATION
Merrill Lynch, Pierce, Fenner & Smith Incorporated has filed a
registration statement on Form S-1 with the SEC covering the ABC HOLDRS. While
this prospectus is a part of the registration statement, it does not contain all
the exhibits filed as part of the registration statement. You should consider
reviewing the full text of those exhibits.
The registration statement is available over the Internet at the SEC's
web site at http://www.sec.gov. You also may read and copy the registration
statement at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges. Merrill Lynch,
Pierce, Fenner & Smith Incorporated will not and the trust may not be subject to
the requirements of the Exchange Act and accordingly may not file periodic
reports.
Because the common stock of the issuers of the underlying securities is
registered under the Exchange Act, the issuers of the underlying securities are
required to file periodically financial and other information specified by the
SEC. For more information about the issuers of the underlying securities,
information provided to or filed with the SEC by the issuers of the underlying
securities with respect to their registered securities can be inspected at the
SEC's public reference facilities or accessed through the SEC's web site
referenced above. In addition, information regarding the issuers of the
underlying securities may be obtained from other sources including, but not
limited to, press releases, newspaper articles and other publicly disseminated
information.
The trust and Merrill Lynch, Pierce, Fenner & Smith Incorporated and
its affiliates are not affiliated with the issuers of the underlying securities,
and the issuers of the underlying securities have no obligations with respect to
ABC HOLDRS. This prospectus relates only to ABC HOLDRS and does not relate to
the common stock or other securities of the issuers of the underlying
securities. The information in this prospectus regarding the issuers of the
underlying securities has been derived from the publicly available documents
described in the preceding paragraph. We have not participated in the
preparation of these documents or made any due diligence inquiries with respect
to the issuers of the underlying securities in connection with ABC HOLDRS. We
make no representation that these publicly available documents or any other
publicly available information regarding the issuers of the underlying
securities are accurate or complete. Furthermore, we cannot assure you that all
events occurring prior to the date of this prospectus, including events that
would affect the accuracy or completeness of the publicly available documents
described in the preceding paragraph, that would affect the trading price of the
common stock of the issuers of the underlying securities, and therefore the
offering and trading prices of the ABC HOLDRS, have been publicly disclosed.
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ANNEX A
This annex forms an integral part of the prospectus.
The following tables provide a brief description of the business of
each of the issuers of the underlying securities and set forth the
split-adjusted closing market prices, as reported on the applicable primary
trading market, of each of the underlying securities in each month during 1995,
1996, 1997, 1998, 1999 and 2000 through January 2000. All market prices in
excess of one dollar are rounded to the nearest one sixty-fourth of a dollar. An
asterisk (*) denotes that no shares of the issuer were outstanding during that
month. The historical prices of the underlying securities should not be taken as
an indication of future performance.
[COMPANY DESCRIPTIONS AND MONTHLY SHARE PRICE CHART]
A-1
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================================================================================
LOGO
[ ] Depositary Receipts
ABC HOLDRS SM Trust
P R O S P E C T U S
Merrill Lynch & Co.
, 2000
Until ______________________, 2000 (25 days after the date of this
prospectus), all dealers effecting transactions in the offered ABC HOLDRS,
whether or not participating in this distribution, may be required to deliver a
prospectus. This requirement is in addition to the obligations of dealers to
deliver a prospectus when acting as underwriters and with respect to unsold
allotments or subscriptions.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance
and distribution of the securities being registered, other than underwriting
compensation, are as set forth below. Except for the registration fee payable to
the Securities and Exchange Commission, all such expenses are estimated:
Securities and Exchange Commission registration fee..........$ 2,640
Printing and engraving expenses..............................
Legal fees and expenses......................................
Rating agency fees...........................................
Miscellaneous................................................
----------
Total.....................................................$
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:
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(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of the prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(5) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to Item 15 of this registration statement, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant hereby certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-1 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, on February 28, 2000.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Ahmass L. Fakahany
-----------------------------------
Name: Ahmass L. Fakahany
Title: Senior Vice President,
Chief Financial Officer and
Controller
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Joseph Moglia and Stephen G. Bodurtha and each of
them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any and
all amendments, including post-effective amendments, and supplements to this
Registration Statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 28, 2000.
Signature Title
--------- -----
/s/ John L. Steffens
- ------------------------------
John L. Steffens Chief Executive Officer,
Chairman of the Board
and Director
/s/ E. Stanley O'Neal
- ------------------------------
E. Stanley O'Neal Director
<PAGE>
/s/ George A. Schieren
- ------------------------------
George A. Schieren Director
/s/ Ahmass L. Fakahany
- ------------------------------
Ahmass L. Fakahany Senior Vice President,
Chief Financial Officer
and Controller
<PAGE>
INDEX TO EXHIBITS
Exhibits
*4.1 Standard Terms for Depositary Trust Agreements between Merrill Lynch,
Pierce, Fenner & Smith Incorporated and The Bank of Bank of New York, as
Trustee dated as of September 2, 1999, and included as exhibits thereto,
form of Depositary Trust Agreement and form of HOLDRS
*5.1 Opinion of Shearman & Sterling regarding the validity of the ABC HOLDRS
Receipts
*8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel regarding the
material federal income tax consequences
24.1 Power of Attorney (included in Part II of Registration Statement)
- -----------------------------
* To be filed by amendment.
