<PAGE>
As filed with the Securities and Exchange Commission on September 27, 2000
Registration No. 333-43142
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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
---------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Initial Depositor
(Exact name of registrant as specified in charter)
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Wireless 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 (Primary Standard Industrial (I.R.S. Employer
of 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>
Title of Each Class of Proposed Maximum Proposed Maximum
Securities to Be Amount to Be Offering Price Aggregate Offering Amount of
Registered Registered Per Receipt(1) Price(1) Registration Fee(2)(3)
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<S> <C> <C> <C> <C>
Wireless HOLDRS......... 1,000,000,000 $100 $799,300,000 $211,016
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, 7,000,000 receipts are
estimated to be offered in the initial offering at $100 per receipt and
993,000,000 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 4, 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
PROSPECTUS Preliminary Prospectus dated September 27, 2000
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[LOGO OF HOLDRS]
1,000,000,000 Depositary Receipts
Wireless HOLDRS SM Trust
The Wireless HOLDRSSM Trust will issue Depositary Receipts called Wireless
HOLDRSSM 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 wireless telecommunications industry. The
Bank of New York will be the trustee. You only may acquire, hold or transfer
Wireless HOLDRS in a round-lot amount of 100 Wireless HOLDRS or round-lot
multiples. Wireless HOLDRS are separate from the underlying deposited common
stocks or American depositary shares that are represented by the Wireless
HOLDRS. For a list of the names and the number of shares of the companies that
make up a Wireless HOLDR, see "Highlights of Wireless HOLDRS--The Wireless
HOLDRS" starting on page 10. The trust will issue the additional Wireless
HOLDRS on a continuous basis.
Investing in Wireless HOLDRS involves significant risks. See "Risk factors"
starting on page 4.
The initial public offering price for a round-lot of 100 Wireless 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.
Wireless 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 Wireless HOLDRS.
Application has been made to list the Wireless HOLDRS on the American Stock
Exchange under the symbol "WMH".
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
<TABLE>
<CAPTION>
Initial Price Underwriting
to Public* Fee
------------- ------------
<S> <C> <C>
Per Wireless HOLDR........................... 2%
</TABLE>
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* Includes underwriting fee.
For purchases of Wireless HOLDRS in excess of Wireless HOLDRS, the
underwriting fee will be %.
-----------
Merrill Lynch & Co.
<TABLE>
<S> <C> <C>
Robert W. Baird & Co. A.G. Edwards & Sons, Inc. First Union Securities, Inc.
Legg Mason Wood Walker Morgan Keegan & Company, Inc.
Incorporated
</TABLE>
Raymond James & Associates, Inc.
Sutro & Co. Incorporated
Tucker Anthony Capital Markets
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 Wireless HOLDRS.............................................. 10
The Trust.................................................................. 17
Description of Wireless 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>
---------------
This prospectus contains information you should consider when making your
investment decision. With respect to information about Wireless 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 Wireless HOLDRS in any
jurisdiction where the offer or sale is not permitted.
The Wireless 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 Wireless HOLDRS or of the underlying
securities through an investment in the Wireless HOLDRS.
2
<PAGE>
SUMMARY
The Wireless 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 Wireless 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 wireless telecommunications 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 Wireless HOLDRS is specified under
"Highlights of Wireless HOLDRS--The Wireless 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 Wireless HOLDRS that represent your undivided
beneficial ownership interest in the securities held by the trust on your
behalf. The Wireless HOLDRS are separate from the underlying securities that
are represented by the Wireless HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in Wireless HOLDRS involves risks similar to investing in
each of the underlying securities outside of the Wireless HOLDRS, including the
risks associated with concentrated investments in wireless telecommunications
companies.
General Risk Factors
. Loss of investment. Because the value of Wireless HOLDRS directly
relates to the value of the underlying securities, you may lose a
substantial portion of your investment in the Wireless HOLDRS if
the underlying securities decline in value.
. Discount trading price. Wireless HOLDRS may trade at a discount
to the aggregate value of the underlying securities.
. Not necessarily representative of the wireless telecommunications
industry. While the underlying securities are securities of
companies generally considered to be involved in various aspects
of the wireless telecommunications industry, the underlying
securities and the Wireless HOLDRS may not necessarily follow the
price movements of the entire wireless telecommunications
industry generally. If the underlying securities decline in
value, your investment in the Wireless HOLDRS will decline in
value even if the securities prices of companies in the wireless
telecommunications 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 wireless telecommunications industry. In this case, the
Wireless HOLDRS may no longer consist of securities issued only
by companies involved in the wireless telecommunications
industry.
. No investigation of underlying securities. The underlying
securities included in the Wireless 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 wireless telecommunications industry, without
regard for the value, price performance, volatility or investment
merit of the underlying securities. Consequently, the Wireless
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, Wireless HOLDRS may not necessarily
continue to be a diversified investment in the wireless
telecommunications industry. As a result of market fluctuation
and/or reconstitution events, Wireless 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 Wireless HOLDRS
and receive delivery of each of the underlying securities. The
cancellation of your Wireless HOLDRS will allow you to sell
individual underlying securities or to deliver individual
underlying securities in a tender offer. The cancellation of
Wireless HOLDRS will involve payment of a cancellation fee to the
trustee.
4
<PAGE>
. Trading halts. Trading in Wireless HOLDRS on the American Stock
Exchange may be halted if trading in one or more of the
underlying securities is halted. Trading in Wireless HOLDRS may
be halted even if trading continues in some or all of the
underlying securities. If trading is halted in the Wireless
HOLDRS, you will not be able to trade Wireless HOLDRS and you
will only be able to trade the underlying securities if you
cancel your Wireless HOLDRS and receive each 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
Wireless HOLDRS. If the Wireless HOLDRS are delisted by the
American Stock Exchange, a termination event will result unless
the Wireless HOLDRS are listed for trading on another U.S.
national securities exchange or through Nasdaq NMS within five
business days from the date the Wireless 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 Wireless
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 Wireless 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 Wireless HOLDRS, the selection of the
wireless telecommunications industry, Merrill Lynch's activity in
the secondary market in the underlying securities, and the
creation and cancellation of Wireless 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 Wireless HOLDRS. Large volumes of purchasing
activity, which may occur in connection with the issuance of
Wireless HOLDRS, particularly in connection with the initial
issuance of Wireless 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
5
<PAGE>
the market price of the underlying securities that may occur as a
result of the increased purchasing activity in the underlying
securities resulting from the issuance of the Wireless 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 Wireless
HOLDRS will also decline.
Risk Factors Specific to Companies Involved in the Wireless Telecommunications
Industry
. The stock prices of companies involved in wireless
telecommunications have been and are likely to continue to be
volatile, which will directly affect the price volatility of the
Wireless HOLDRS, and you could lose all or part of your
investment. The trading prices of the securities of wireless
telecommunications companies have been and are likely to be
volatile and may be subject to wide fluctuations in response to a
variety of factors, including the following:
. actual or anticipated fluctuations in the company's quarterly
or annual operating results;
. announcements of technological innovations or new services by
wireless telecommunications companies or their competitors;
. announcements by wireless telecommunications companies or
their competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
. failure to integrate or realize projected benefits from
acquisitions; and
. changes in government regulations.
. Other broad market and industry factors may decrease the stock
price of wireless telecommunications companies' 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 wireless telecommunications
companies' stocks.
. The wireless telecommunications industry is extremely
competitive, and a wireless telecommunications company's failure
to establish its wireless network and its customer base will
adversely affect its operating results. The competition among
wireless telecommunications companies to build and develop
wireless telecommunications networks, form alliances with
telecommunications and Internet service providers and establish
and maintain a customer base is significant. Customer loyalty can
be easily influenced by a competitor's new offerings, especially
those offerings which provide cost savings or expanded network
geographic coverage areas. Many wireless telecommunications
companies face significant competition from other companies in
the telecommunications and technology industries, including
traditional telecommunications companies, some of which have
greater market share and financial resources. These companies may
be better positioned to finance research and development
activities, provide a wider range of products and services over a
greater geographic area and may have greater resources with which
to purchase additional licenses and radio frequency, acquire
other companies in the industry and reduce prices to gain market
share.
. Changes in the regulatory environments in which wireless
telecommunications companies operate could affect their ability
to offer products and services. The licensing, construction,
ownership and operation of wireless communications systems, the
grant, maintenance and renewal of applicable licenses and radio
frequency allocations and the rates charged to customers are all
subject to significant regulation. Delays in receiving required
regulatory approvals and licenses or the enactment of new and
adverse regulatory requirements may
adversely affect the ability of wireless telecommunications
companies to continue to offer
6
<PAGE>
existing and new products and services. In addition, legislative,
judicial and regulatory agency actions could negatively affect the
ability of many wireless telecommunications companies to maintain
required licenses or renew licenses upon their expiration.
. If wireless telecommunications companies do not anticipate and
respond to the rapid technological changes in the industry, they
could lose customer or market share. The wireless
telecommunications industry is experiencing significant
technological change, as evidenced by the introduction of new
products and services and increased availability of transmission
capacity, changes in consumer requirements and preferences and
the utilization of Internet-based technologies for voice and data
transmission. Wireless telecommunications companies must be able
to successfully predict which of the many possible networks,
products and services will be important to finance, establish and
maintain. The cost of establishing networks and implementing new
technologies is significant, and there can be no assurance that a
telecommunications company will select appropriate technology and
equipment or that it will obtain appropriate new technology on a
timely basis or on satisfactory terms. The failure to obtain
effective technology and equipment may adversely affect a
wireless telecommunications company's ability to offer
competitive products and services and the viability of its
operations.
. Inability to manage rapid growth could adversely affect financial
reporting, customer service and revenues. Many wireless
telecommunications companies are rapidly expanding their networks
and operations. This expansion has placed and will continue to
place significant demands on their operating, financial control
and billing systems, customer support, sales and marketing and
administrative resources and network infrastructure. This growth
will require many telecommunications companies to enhance
management, financial and information systems and to effectively
develop and train their employee base.
. Some of the companies involved in the wireless telecommunications
industry are also engaged in other lines of business unrelated to
the wireless business, and they may experience problems with
these lines of business which could adversely affect their
operating results. Some of the companies which comprise the
Wireless HOLDRS are engaged in multiple lines of business,
including operating as local and long-distance telephone
providers, Internet service providers and manufacturing new
technologies. These additional lines of business may present
additional risks not mentioned in this prospectus. The operating
results of these wireless telecommunications companies may
fluctuate as a result of these additional risks and events in the
other lines of business. In addition, changes in technology and
telecommunications regulation may expose wireless
telecommunications companies to business risks with which it has
less experience than it has with the business risks associated
with its traditional businesses. Despite a company's possible
success in wireless telecommunications industry, there can be no
assurance that the other lines of business in which these
companies are engaged will not have an adverse effect on a
company's business or financial condition.
. The international operations of some domestic and foreign
wireless telecommunications 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 domestic and foreign companies included in the
Wireless HOLDRS have international operations or investments
which are essential parts of their business. The risks of
international business that the companies are exposed to include
the following:
. general economic, social and political conditions;
7
<PAGE>
. the difficulty of enforcing intellectual property rights,
agreements and collecting receivables through 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, particularly those which affect
telecommunications carriers and service providers, which
impose a range of restrictions on operations, trade practices,
foreign trade and international investment decisions.
. Many wireless telecommunications 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 wireless telecommunications 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 wireless telecommunications companies will be able
to continue to attract and retain qualified personnel.
. It may be impossible to initiate legal proceedings or enforce
judgments against some of the companies included in the Wireless
HOLDRS. Some of the companies included in the Wireless HOLDRS
were incorporated under the laws of a jurisdiction other than the
United States and a substantial portion of their assets are
located outside the United States. As a result, it may be
impossible to effect service of process within the United States
on some of the companies included in the Wireless HOLDRS or
enforce judgments made against them in courts in the United
States based on civil liability provisions of the securities laws
of the United States. In addition, judgments obtained in the
United States, especially those awarding punitive damages, may
not be enforceable in foreign countries.
. Potential voting impediments may exist with respect to the
ownership of some of the underlying securities included in the
Wireless HOLDRS. Holders of American depositary shares, including
those included in the Wireless HOLDRS, may only exercise voting
rights with respect to the securities represented by American
depositary shares in accordance with the provisions of deposit
agreements entered into in connection with the issuance of the
American depositary shares. These deposit agreements may not
permit holders of American depositary shares to exercise voting
rights that attach to the securities underlying the American
depositary shares without the issuer first instructing the
depositary to send voting information to the holder of the
American depositary share. Also, holders of American depositary
shares may not exercise voting rights unless they take a variety
of steps, which include registration in the share registry of the
company that has issued the securities underlying the American
depositary shares. The cumulative effect of these steps may make
it impractical for holders of American depositary shares to
exercise the voting rights attached to the underlying securities.
. Two companies currently included in the Wireless HOLDRS, AT&T
Corp.--AT&T Wireless Group and Sprint Corporation--PCS Group, are
tracking stocks and are therefore subject to additional risks
relating to an investment in tracking stocks. The risks
associated with tracking stocks include the following:
. stockholders of a tracking stock remain invested in the entire
company issuing the tracking stock, even though the tracking
stock reflects the operating performance of a
8
<PAGE>
specific division of the company's operations. Therefore, the
performance and financial results of the non-wireless
operations of AT&T and Sprint could negatively affect the
market price of the AT&T Wireless Group and the PCS Group
tracking stocks and the Wireless HOLDRS.
. the voting power of stockholders of tracking stocks is limited
to that of a common stockholder of the company issuing the
tracking stock. As a result, where the interests of the
holders of tracking stocks differ from those of the holders of
other classes of stock, decisions may be made that may not be
in the best interests of the stockholders of the tracking
stock. For example, as it is not a stand-alone entity, it
would be impossible to merge with or acquire the division
represented by a tracking stock without management consent
and, as a result, stockholders of tracking stock would not be
able to obtain a premium over the market price of the tracking
stocks that may have been obtained through a tender offer or
proxy contest;
. AT&T has the option to convert AT&T Wireless Group tracking
stock into AT&T common stock and Sprint has the option to
convert PCS Group tracking stock into FON Group tracking
stock. It is possible that the consideration received as a
result of any conversion may be lower than the market price at
the time of the deposit into the Wireless HOLDRS and that the
security received in exchange may not reflect the economic
performance of a wireless business; and
. in the event of a dissolution of either AT&T or Sprint, the
holders of tracking stock will not have preferential rights to
the assets of the wireless operations of the respective
companies.
9
<PAGE>
HIGHLIGHTS OF WIRELESS HOLDRS
This discussion highlights information regarding Wireless HOLDRS. We
present certain information more fully in the rest of this prospectus. You
should read the entire prospectus carefully before you purchase Wireless
HOLDRS.
Issuer.......................
Wireless HOLDRS Trust.
The trust....................
The Wireless 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 Wireless 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 Wireless HOLDRS... Wireless HOLDRS are designed to achieve the
following:
Diversification. Wireless HOLDRS are designed
to allow you to diversify your investment in
the wireless telecommunications industry
through a single, exchange-listed instrument
representing your undivided beneficial
ownership of the underlying securities.
Flexibility. The beneficial owners of Wireless
HOLDRS have undivided beneficial ownership
interests in each of the underlying securities
represented by the Wireless HOLDRS, and can
cancel their Wireless HOLDRS to receive each of
the underlying securities represented by the
Wireless HOLDRS.
Transaction costs. The expenses associated with
trading Wireless 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 wireless
telecommunications 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 Wireless 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 Wireless HOLDRS..... The trust will issue Wireless HOLDRS that
represent your undivided beneficial ownership
interest in the shares of U.S.-traded
securities held by the trust on your behalf.
The Wireless HOLDRS themselves are separate
from the underlying securities that are
represented by the Wireless HOLDRS.
10
<PAGE>
The specific share amounts for each round-lot
of 100 Wireless HOLDRS will be determined on
the pricing date so that the initial issue
price will be approximately $90-$100 per
Wireless HOLDR and the initial weightings of
each underlying security included in the
Wireless 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 September 15,
2000, are set forth in the table below.
However, such share amounts and weightings are
expected to change during the period between
September 15, 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 Wireless
HOLDRS,
. stock ticker symbols,
. indicative share amounts represented by a
round-lot of 100 Wireless HOLDRS as of
September 15, 2000,
. indicative weightings as of September 15,
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
--------------- ------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
LM Ericsson Telephone
Company* ERICY 51 9.98% Nasdaq NMS
Nokia Corp.* NOK 21 9.93% NYSE
AT&T Corp.--AT&T
Wireless Group** AWE 37 9.93% NYSE
Motorola, Inc. MOT 26 9.89% NYSE
Verizon Communications VZ 21 9.87% NYSE
Vodafone Group p.l.c.* VOD 24 9.74% NYSE
Qualcomm Incorporated QCOM 13 9.36% Nasdaq NMS
Sprint Corporation--PCS
Group** PCS 16 7.90% NYSE
Nextel Communications,
Inc. NXTL 13 7.19% Nasdaq NMS
VoiceStream Wireless
Corporation VSTR 4 4.99% Nasdaq NMS
SK Telecom Co., Ltd.* SKM 13 3.25% NYSE
Aether Systems, Inc. AETH 1 1.52% Nasdaq NMS
RF Micro Devices, Inc. RFMD 3 1.15% Nasdaq NMS
Crown Castle
International Corp. TWRS 3 0.99% Nasdaq NMS
Nextel Partners, Inc. NXTP 3 0.98% Nasdaq NMS
Research In Motion
Limited RIMM 1 0.90% Nasdaq NMS
United States Cellular
Corporation USM 1 0.82% AMEX
Netro Corporation, Inc. NTRO 1 0.74% Nasdaq NMS
Western Wireless
Corporation WWCA 1 0.48% Nasdaq NMS
Telesp Cellular Holding
Company* TCP 1 0.38% NYSE
</TABLE>
----------------
* The securities of this non-U.S. company
trade in the United States as American
depositary receipts. Please see "Risk
Factors" and "Federal Income Tax
Consequences--Special considerations with
respect to underlying securities of foreign
issuers" for additional information relating
to an investment in a non-U.S. company.
** The securities of this company trade as a
tracking stock. Please see "Risk Factors"
and the respective business descriptions in
Annex A for additional information relating
to an investment in tracking stock.
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 Wireless HOLDRS. These
companies generally are considered to be 20 of
the largest and most liquid companies with
U.S.-traded securities involved in the wireless
telecommunications industry, as measured by
market capitalization and trading volume on
September 15, 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
Wireless HOLDRS in a round-lot of 100 Wireless
HOLDRS and round-lot multiples. The trust will
only issue Wireless HOLDRS upon the deposit of
the whole shares represented by a round-lot of
100 Wireless HOLDRS. In the event that a
fractional share comes to be represented by a
round-lot of Wireless HOLDRS, the trust may
require a minimum of more than one round-lot of
100 Wireless HOLDRS for an issuance so that the
trust will always receive whole share amounts
for issuance of Wireless HOLDRS.
The number of outstanding Wireless 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
12
<PAGE>
Wireless 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
Wireless HOLDRS will equal the sum of the
closing market price on the primary U.S.
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 Wireless HOLDR.
Purchases....................
After the initial offering, you may acquire
Wireless 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 Wireless HOLDRS in the initial
public offering, you will pay an underwriting
fee equal to:
. For purchases of Wireless HOLDRS or
fewer, 2%.
. For purchases in excess of Wireless
HOLDRS, %.
You will not be charged any issuance fee or
other sales commission in connection with
purchases of Wireless HOLDRS made in the
initial public offering.
Issuance and cancellation
fees........................ After the initial offering, if you wish to
create Wireless HOLDRS by delivering to the
trust the requisite securities represented by a
round-lot of 100 Wireless 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
Wireless HOLDRS. If you wish to cancel your
Wireless 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 Wireless
HOLDRS.
Commissions..................
If you choose to deposit underlying securities
in order to receive Wireless 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 Wireless
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 Wireless 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 Wireless You have the right to withdraw the underlying
HOLDRS................. securities upon request by delivering a round-
lot or integral multiple of a round-lot of
Wireless 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 Wireless 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 Wireless
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
Wireless 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 Wireless
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 Wireless HOLDRS.
C. If the underlying securities of an issuer
cease to be outstanding as a result of a
merger, consolidation or other corporate
14
<PAGE>
combination, the trustee will distribute the
consideration paid by and received from the
acquiring company to the beneficial owners of
Wireless HOLDRS, unless the merger,
consolidation or other corporate combination
is between companies that are already
included in the Wireless HOLDRS and the
consideration received 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 through 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 Wireless 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
Wireless 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
Wireless 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 Wireless HOLDRS as directly owning the
underlying securities. The Wireless 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 Wireless
HOLDRS on the American Stock Exchange under the
symbol "WMH." Trading will take place only in
round-lots of 100 Wireless HOLDRS and round-lot
multiples. A minimum of 150,000 Wireless 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
Wireless HOLDRS. Bid and ask prices, however,
will be quoted per single Wireless HOLDR.
15
<PAGE>
Clearance and settlement.....
The trust will issue Wireless HOLDRS in book-
entry form. Wireless 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 Wireless
HOLDRS."
16
<PAGE>
THE TRUST
General. This discussion highlights information about the Wireless HOLDRS
Trust. You should read this information, information about the depositary trust
agreement as well as the depositary trust agreement before you purchase
Wireless HOLDRS. The material terms of the depositary trust agreement are
described in this prospectus under the heading "Description of the depositary
trust agreement."
The Wireless 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 Wireless HOLDRS Trust is not a registered investment company
under the Investment Company Act of 1940.
The Wireless HOLDRS Trust is intended to hold deposited shares for the
benefit of owners of Wireless 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 WIRELESS HOLDRS
The trust will issue Wireless 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
Wireless HOLDRS on a continuous basis when an investor deposits the requisite
underlying securities with the trustee.
You may only acquire, hold, trade and surrender Wireless HOLDRS in a
round-lot of 100 Wireless HOLDRS and round-lot multiples. The trust will only
issue Wireless HOLDRS upon the deposit of the whole shares of underlying
securities that are represented by a round-lot of 100 Wireless 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 Wireless HOLDRS, the trust may require a minimum
of more than one round-lot of 100 Wireless HOLDRS for an issuance so that the
trust will always receive whole share amounts for issuance of Wireless HOLDRS.
Wireless 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 Wireless HOLDRS--The Wireless HOLDRS."
Beneficial owners of Wireless 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
Wireless HOLDRS to receive the underlying securities. See "Description of the
depositary trust agreement." Wireless 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. Wireless 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 Wireless
HOLDRS wishes to realize the dollar value of the underlying securities, that
owner will have to cancel the Wireless HOLDRS. Such cancellation will require
payment of fees and expenses as described in "Description of the depositary
trust agreement--Withdrawal of underlying securities."
Wireless 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. Wireless HOLDRS will be available only in book-entry form.
Owners of Wireless HOLDRS may hold their Wireless HOLDRS through DTC, if they
are participants in DTC, or indirectly through entities that are participants
in DTC.
17
<PAGE>
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 wireless telecommunications 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 wireless telecommunications industry as
measured by market capitalization and trading volume. The following additional
criteria were used in selecting the underlying securities on September 15,
2000:
. market capitalization equal to or greater than $500 million;
. average daily trading volume of at least 100,000 shares over the
60 trading days before September 15, 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 September 15, 2000) of at least $5 million over
the 60 trading days before September 15, 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
Wireless 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 wireless
telecommunications industry. In this case, the Wireless HOLDRS may no longer
consist of securities issued by companies involved in the wireless
telecommunications industry. Merrill Lynch, Pierce, Fenner & Smith Incorporated
will determine, in its sole discretion, whether the issuer of a particular
underlying security remains in the wireless telecommunications industry and
will undertake to make adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities
represented by Wireless HOLDRS, please refer to "Highlights of Wireless
HOLDRS--The Wireless 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 Wireless
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.
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."
18
<PAGE>
The following table and graph set forth the composite performance of all
of the underlying securities represented by a single Wireless 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
27, 2000, the first date when all of the underlying securities were publicly
traded, to September 18, 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>
Date
---- Price
<S> <C>
April 27........ 112.31
April 28........ 114.74
May 1........... 117.79
May 2........... 113.67
May 3........... 111.92
May 4........... 111.97
May 5........... 113.72
May 8........... 109.93
May 9........... 107.73
May 10.......... 101.62
May 11.......... 103.45
May 12.......... 103.79
May 15.......... 106.86
May 16.......... 109.76
May 17.......... 107.16
May 18.......... 105.26
May 19.......... 98.75
May 22.......... 96.26
May 23.......... 92.54
May 24.......... 95.05
</TABLE>
<TABLE>
<CAPTION>
Date
---- Price
<S> <C>
May 25.......... 94.75
May 26.......... 95.11
May 30.......... 103.32
May 31.......... 101.77
June 1.......... 106.04
June 2.......... 111.66
June 5.......... 110.59
June 6.......... 109.67
June 7.......... 112.10
June 8.......... 110.68
June 9.......... 111.72
June 12......... 111.78
June 13......... 113.49
June 14......... 111.20
June 15......... 110.05
June 16......... 111.36
June 19......... 112.78
June 20......... 111.99
June 21......... 111.95
June 22......... 108.38
</TABLE>
<TABLE>
<CAPTION>
Date
---- Price
<S> <C>
June 23......... 103.93
June 26......... 103.50
June 27......... 103.28
June 28......... 102.31
June 29......... 99.27
June 30......... 101.91
July 3.......... 104.02
July 5.......... 102.12
July 6.......... 105.40
July 7.......... 106.15
July 10......... 105.14
July 11......... 105.02
July 12......... 108.02
July 13......... 110.85
July 14......... 112.36
July 17......... 113.48
July 18......... 110.05
July 19......... 108.54
July 20......... 110.49
July 21......... 108.39
</TABLE>
<TABLE>
<CAPTION>
Date
---- Price
<S> <C>
July 24......... 106.09
July 25......... 108.42
July 26......... 107.17
July 27......... 99.49
July 28......... 97.47
July 31......... 99.41
August 1........ 99.10
August 2........ 97.81
August 3........ 98.52
August 4........ 96.80
August 7........ 96.58
August 8........ 94.67
August 9........ 94.56
August 10....... 94.36
August 11....... 94.44
August 14....... 95.71
August 15....... 95.60
August 16....... 94.95
August 17....... 96.17
August 18....... 95.72
</TABLE>
<TABLE>
<CAPTION>
Date
---- Price
<S> <C>
August 21....... 94.17
August 22....... 93.14
August 23....... 92.52
August 24....... 93.85
August 25....... 93.85
August 28....... 94.53
August 29....... 93.61
August 30....... 93.97
August 31....... 96.66
September 1..... 98.43
September 5..... 96.04
September 6..... 94.07
September 7..... 95.04
September 8..... 93.21
September 11.... 90.82
September 12.... 91.44
September 13.... 92.55
September 14.... 92.86
September 15.... 91.99
September 18.... 89.89
</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 Wireless HOLDRS, provides that
Wireless 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 Wireless HOLDRS. You may create and
cancel Wireless HOLDRS only in round-lots of 100 Wireless HOLDRS. You may
create Wireless HOLDRS by delivering to the trustee the requisite underlying
securities. The trust will only issue Wireless HOLDRS upon the deposit of the
whole shares represented by a round-lot of 100 Wireless HOLDRS. In the event
that a fractional share comes to be represented by a round-lot of Wireless
HOLDRS, the trust may require a minimum of more than one round-lot of 100
Wireless HOLDRS for an issuance so that the trust will always receive whole
share amounts for issuance of Wireless HOLDRS. Similarly, you must surrender
Wireless HOLDRS in integral multiples of 100 Wireless 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 Wireless
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 Wireless
HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning
Wireless 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
Wireless 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 Wireless 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 Wireless 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 Wireless
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 Wireless
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 Wireless HOLDRS.
Further issuances of Wireless HOLDRS. The depositary trust agreement
provides for further issuances of Wireless 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 Wireless 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 Wireless 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 Wireless
HOLDRS, unless the merger, consolidation or other corporate
combination is between companies that are already included in the
Wireless HOLDRS and the consideration received 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 through 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 Wireless HOLDRS will surrender their Wireless 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 Wireless
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 Wireless HOLDRS are delisted. Finally,
the trust will terminate if 75% of the owners of outstanding Wireless 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
21
<PAGE>
the consent of any other depositor or any of the owners of the Wireless 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 Wireless 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 Wireless HOLDRS will
not become effective until 30 days after notice of the amendment is given to
the owners of Wireless HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more Wireless HOLDRS. If you wish to create Wireless
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 Wireless HOLDRS. If you wish to cancel your Wireless 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 Wireless 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 Wireless 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 Wireless
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 Wireless 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 Wireless 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 Wireless 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 Wireless 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 Wireless 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 Wireless HOLDRS
A receipt holder purchasing and owning Wireless HOLDRS will be treated,
for U.S. federal income tax purposes, as directly owning a proportionate share
of the underlying securities represented by Wireless 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 Wireless 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 Wireless
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
Wireless HOLDRS. Similarly, with respect to sales of Wireless HOLDRS for cash
in the secondary market, the amount realized with respect to a sale of Wireless
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
Wireless HOLDRS, the occurrence of a reconstitution event, or a termination
event will not be a taxable event, except to the extent that cash is
distributed in lieu of fractional shares. The receipt holder's holding period
with respect to the distributed securities will include the period that the
holder held the securities through the trust.
23
<PAGE>
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 Wireless HOLDRS will
reduce the amount realized with respect to the underlying securities.
A holder will be required to include in its income the full amount of
dividends paid on the underlying securities, even though the depositary trust
agreement provides that the custodian fees will be deducted directly from any
dividends paid. These custodian fees will be treated as an expense incurred in
connection with a holder's investment in the underlying securities and may be
deductible. If a holder is an individual, estate or trust, however, the
deduction of its share of custodian fees will be a miscellaneous itemized
deduction that may be disallowed in whole or in part.
Special considerations with respect to underlying securities of foreign issuers
With respect to underlying securities of foreign issuers, the gross
amount of any taxable cash distribution will not be eligible for the dividends
received deduction generally allowed to corporate U.S. receipt holders.
If a U.S. receipt holder receives a dividend in a currency other than in
U.S. dollars, the amount of the dividend for U.S. federal income tax purposes
will be the U.S. dollar value determined at the spot rate on the date of 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 certain conditions and limitations, any foreign tax withheld
on dividends may be deducted from taxable income or credited against a U.S.
receipt holder's U.S. federal income tax liability. The limitation on foreign
taxes eligible for the U.S. foreign tax credit is calculated separately with
respect to specific classes of income. For this purpose, dividends distributed
by a foreign issuer generally will constitute passive income or, in the case of
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 Wireless 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 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.
24
<PAGE>
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 Wireless 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, 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, in which case, those dividends will be exempt from withholding
tax, provided the holder complies with applicable certification and disclosure
requirements.
A non-U.S. receipt holder generally will not be subject to U.S. federal
income or withholding tax with respect to dividends received on underlying
securities of foreign issuers, unless that income is effectively connected
with a U.S. trade or business conducted by 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
certain deductions and credits, will be subject to U.S. federal income
taxation at the same graduated rates applicable to U.S. persons. In addition
to this graduated tax, effectively connected 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 Wireless 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,
. 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.
25
<PAGE>
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
should consult their own tax advisors to determine whether any applicable tax
treaties provide for different rules.
The preceding discussion does not address all aspects of U.S. federal
income taxation that may be relevant in light of a non-U.S. receipt holder's or
an issuer's particular facts and circumstances. We recommend that investors
should consult their own tax advisors.
Backup withholding tax, withholding tax and information reporting requirements
Final U.S. Treasury Regulations relating to backup withholding,
withholding and information reporting have been issued that modify certain
rules with respect to payments made after December 31, 2000. Investors 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 Wireless 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 Wireless 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 Wireless HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Robert W. Baird & Co. Incorporated, A.G. Edwards & Sons, Inc., 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 Wireless
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 Wireless 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 Wireless 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 Wireless 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 Wireless 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 Wireless 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.
26
<PAGE>
Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the Wireless 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 Wireless 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 Wireless 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 Wireless 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 Wireless 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. However, some of the issuers of the underlying securities are
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 an are not required to file periodic financial and other information on
EDGAR. Therefore, the 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 Wireless HOLDRS. This
prospectus relates only to Wireless 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
27
<PAGE>
issuers of the underlying securities in connection with Wireless 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 Wireless 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 Wireless 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.
AETHER SYSTEMS, INC. (AETH)
Aether Systems, Inc. provides wireless data services, systems and
software which enable consumers to use handheld devices for wireless data
communications. Aether designs, develops and supports wireless systems for
companies seeking to make data and information available to its workers or
customers. Aether's products and services include wireless integration and data
management software and wireless data engineering and development.
<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 123
February * February * February * February * February * February 258 3/8
March * March * March * March * March * March 181 1/2
April * April * April * April * April * April 166 1/2
May * May * May * May * May * May 137 7/16
June * June * June * June * June * June 205
July * July * July * July * July * July 152 1/16
August * August * August * August * August * August 138 1/2
September * September * September * September * September *
October * October * October * October * October 69 9/16
November * November * November * November * November 76
December * December * December * December * December 71 5/8
</TABLE>
The closing price on , 2000 was .
A-1
<PAGE>
AT&T CORP.--AT&T WIRELESS GROUP (AWE)
AT&T Corp. provides wireless voice and data telecommunications services
throughout the United States on its digital wireless network and offers a
variety of services to its wireless customers such as voicemail, caller
identification and messaging. AT&T's non-wireless businesses consist of
domestic and international long distance services, cable television and
Internet communications services. In April 2000, AT&T Corp. created the AT&T
Wireless Group tracking stock to track the performance of its wireless
telecommunications operations. Owning the AT&T Wireless Group tracking stock
does not represent a direct legal interest in the assets and liabilities of
AT&T's wireless operations. Rather, stockholders remain invested in AT&T Corp.
Some of the terms of the AT&T Wireless Group tracking stock include:
Voting. Holders of AT&T Wireless Group tracking stock do not have direct
voting rights in the AT&T Wireless Group. The AT&T Wireless Group tracking
stock vote together with all the other classes of AT&T common stock. AT&T
Wireless Group tracking stock currently has one-half of one vote per share.
Conversion. AT&T may convert all the outstanding shares of AT&T Wireless
Group tracking stock for AT&T common stock at 10% premium to the market price
on the occurrence of specific tax events or any time after April 26, 2002. It
may also, at any time, convert all outstanding shares of AT&T Wireless Group
tracking stock for specified amounts of the stock of a subsidiary of AT&T that
holds the assets of the AT&T Wireless Group. In addition, where AT&T disposes
of 80% or more of the assets attributed to the AT&T Wireless Group, AT&T will
be required to provide the holders of AT&T Wireless Group tracking stock with
compensation in the form of AT&T common stock, cash or other property and
securities.
The historical stock prices listed below reflect the performance of the
AT&T Wireless Group tracking stock.
<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 31 15/16
May * May * May * May * May * May 28 9/16
June * June * June * June * June * June 27
July * July * July * July * July * July 27 7/8
August * August * August * August * August * August 26 5/64
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 .
A-2
<PAGE>
CROWN CASTLE INTERNATIONAL CORP. (TWRS)
Crown Castle International Corp. owns, leases and manages wireless
transmission towers and networks for wireless communications and broadcasting
companies in the United States, Puerto Rico and the United Kingdom. Crown
Castle's primary business is to lease capacity on its towers to wireless
telecommunications carriers. Crown Castle also provides related services to its
customers, including network design, radio frequency engineering, site
acquisition, development and construction, antenna installation and network
management and maintenance.
<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 21 5/8 January 31 5/8
February * February * February * February * February 17 February 32 1/4
March * March * March * March * March 18 March 37 7/8
April * April * April * April * April 19 1/8 April 38 3/8
May * May * May * May * May 20 1/8 May 26 3/16
June * June * June * June * June 20 13/16 June 36 1/2
July * July * July * July * July 21 1/16 July 33 3/4
August * August * August * August 8 1/8 August 15 1/8 August 34 11/16
September * September * September * September 9 5/8 September 18 23/32
October * October * October * October 12 7/8 October 19 1/4
November * November * November * November 13 7/16 November 21 1/16
December * December * December * December 23 1/2 December 32 1/8
</TABLE>
The closing price on , 2000 was .
LM ERICSSON TELEPHONE COMPANY (ERICY)
LM Ericsson Telephone Company is an international manufacturer of
advanced systems and products for wireline and wireless communications.
Ericsson's range of telecommunication and data communication products includes
systems and services for handling voice, data, images and text in public and
private wireline and wireless communications networks, power equipment, and
defense systems electronics and telecommunications. American depositary
receipts evidencing American depositary shares of Ericsson are included in the
Wireless HOLDRS and are traded through Nasdaq NMS. Shares of Ericsson also
trade on the Stockholm 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 1 11/16 January 2 37/64 January 4 13/64 January 4 53/64 January 6 31/32 January 18 41/64
February 1 25/32 February 2 3/4 February 3 5/16 February 5 43/64 February 6 1/2 February 24
March 1 15/16 March 2 43/64 March 4 15/64 March 5 61/64 March 5 61/64 March 23 29/64
April 2 3/32 April 2 35/64 April 4 13/64 April 6 7/16 April 6 3/4 April 22 7/64
May 2 19/64 May 2 57/64 May 4 29/64 May 6 11/32 May 6 47/64 May 20 1/2
June 2 1/2 June 2 11/16 June 4 59/64 June 7 5/32 June 8 15/64 June 20
July 2 21/64 July 2 35/64 July 5 21/32 July 6 59/64 July 8 1/64 July 18 1/8
August 24 43/64 August 2 57/64 August 5 7/32 August 5 23/64 August 8 9/64 August 20 1/2
September 3 1/16 September 3 11/64 September 6 September 4 19/32 September 7 13/16
October 2 43/64 October 3 29/64 October 5 17/32 October 5 21/32 October 10 11/16
November 2 31/32 November 3 55/64 November 5 1/16 November 6 29/32 November 12 3/64
December 2 7/16 December 3 25/32 December 4 43/64 December 5 63/64 December 16 27/64
</TABLE>
The closing price on , 2000 was .
A-3
<PAGE>
MOTOROLA, INC. (MOT)
Motorola, Inc. develops, manufactures and markets communications and
electronic products and systems. Motorola offers wireless telephones, satellite
communications products and systems, network and Internet access products,
semiconductors to control and amplify electrical signals in computers,
transportation, space vehicles, major home appliances and electronic systems
for use in the automotive, communications, manufacturing and computer
industries. Motorola markets and sells its products through its own sales
force, distributors, retailers and value-added resellers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- -------- --------- -------- --------- -------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 19 3/4 January 18 January 22 3/4 January 19 55/54 January 24 5/64 January 45 1/2
February 19 11/64 February 18 5/64 February 18 43/64 February 18 35/64 February 23 27/64 February 56 53/64
March 18 13/64 March 17 43/64 March 20 11/64 March 20 1/4 March 24 27/64 March 48 43/64
April 18 61/64 April 20 27/64 April 19 3/64 April 18 37/64 April 26 43/64 April 39 43/64
May 19 61/64 May 22 1/4 May 22 1/8 May 17 43/64 May 27 39/64 May 31 1/4
June 22 3/8 June 20 59/64 June 25 3/8 June 17 33/64 June 31 37/64 June 30
July 25 1/2 July 18 July 26 51/64 July 17 27/64 July 30 27/64 July 33 1/2
August 24 7/8 August 17 51/54 August 24 29/64 August 14 5/16 August 30 3/4 August 36 1/16
September 25 29/64 September 17 11/64 September 23 61/64 September 14 19/64 September 29 21/64
October 21 59/64 October 15 21/64 October 20 43/64 October 17 21/64 October 32 7/16
November 20 1/2 November 18 29/64 November 20 61/64 November 20 5/8 November 38 5/64
December 19 December 20 27/64 December 19 1/16 December 20 23/64 December 49 5/64
The closing price on , 2000 was .
NETRO CORPORATION, INC. (NTRO)
Netro Corporation, Inc. provides wireless networking equipment to
telecommunications service providers which provide businesses with high-speed
telecommunications connections and Internet access. Netro's wireless
telecommunications system provides high-speed voice and data connections
delivering data from a single point to multiple destinations.
<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 43
February * February * February * February * February * February 42 5/8
March * March * March * March * March * March 65 1/64
April * April * April * April * April * April 43 1/8
May * May * May * May * May * May 29 7/8
June * June * June * June * June * June 57 3/8
July * July * July * July * July * July 49 7/8
August * August * August * August * August 31 1/16 August 82 5/8
September * September * September * September * September 27 3/8
October * October * October * October * October 22 13/64
November * November * November * November * November 26 1/2
December * December * December * December * December 51
</TABLE>
The closing price on , 2000 was .
A-4
<PAGE>
NEXTEL COMMUNICATIONS, INC. (NXTL)
Nextel Communications, Inc. provides digital and analog wireless
communications services to its customers in the United States. Nextel
Communication's network offers an integrated wireless communications system
with digital cellular, text and numeric paging capabilities and a digital two-
way radio feature that allows users to instantly contact other users. Nextel
Communications also has ownership interests in wireless companies in Latin
America, Asia and Canada.
<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 6 7/8 January 7 11/16 January 13 21/32 January 16 January 53 3/16
February 6 1/16 February 7 9/16 February 7 1/8 February 14 25/32 February 15 1/32 February 68 3/8
March 6 13/16 March 9 7/16 March 6 11/16 March 16 7/8 March 18 5/16 March 74 1/8
April 8 1/16 April 9 1/16 April 6 19/32 April 14 11/32 April 20 15/32 April 54 23/32
May 6 3/4 May 10 3/8 May 7 3/8 May 11 25/32 May 18 7/16 May 46 5/16
June 7 1/16 June 9 17/32 June 9 15/32 June 12 7/16 June 25 3/32 June 6 13/16
July 9 11/16 July 7 9/16 July 12 1/16 July 13 25/64 July 26 25/32 July 55 7/8
August 8 15/16 August 8 3/16 August 12 17/32 August 9 1/32 August 28 29/32 August 55 7/16
September 8 7/16 September 9 1/4 September 14 7/16 September 10 3/32 September 33 29/32
October 6 15/16 October 8 October 13 1/8 October 9 1/16 October 43 3/32
November 7 11/16 November 7 1/2 November 12 5/8 November 10 3/4 November 49 9/16
December 7 3/8 December 6 17/32 December 13 December 11 13/16 December 51 9/16
</TABLE>
The closing price on , 2000 was .
NEXTEL PARTNERS, INC. (NXTP)
Nextel Partners, Inc. provides digital wireless communications services
in mid-sized and smaller markets throughout the United States. Nextel Partners
offers integrated services under the Nextel brand name targeted to business
users and accessible through a single wireless telephone. These services
include paging and the services that allow users to contact co-workers
instantly on private one-to-one calls or on group calls. In addition, Nextel
Partners has recently launched its Nextel Online service that provides
Internet-accessible handsets with wireless Internet services, including Web-
based applications and content.
<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 32
March * March * March * March * March * March 29
April * April * April * April * April * April 21 15/16
May * May * May * May * May * May 17
June * June * June * June * June * June 32 9/16
July * July * July * July * July * July 31 5/8
August * August * August * August * August * August 30 3/16
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 .
A-5
<PAGE>
NOKIA CORP. (NOK)
Nokia Corp. is a manufacturer of wireless telephones and a supplier of
wireless and wireline network products and services to telecommunications
operators and Internet service providers. Nokia telecommunications products
include wireless telephones using major digital and analog standards and
network access, switching and management systems. Nokia also develops and
markets digital satellite, cable and land-based television receivers for
broadcast and multimedia applications. American depositary receipts evidencing
American depositary shares of Nokia are included in the Wireless HOLDRS and are
traded on the New York Stock Exchange. Shares of Nokia also trade on the
Helsinki 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 2 9/32 January 21 1/32 January 4 3/16 January 4 3/4 January 18 1/64 January 45 23/32
February 2 23/64 February 2 3/16 February 3 21/32 February 6 19/64 February 16 61/64 February 50 7/8
March 2 19/64 March 2 9/64 March 3 41/64 March 6 3/4 March 19 15/32 March 55 1/2
April 2 9/16 April 2 9/32 April 4 3/64 April 8 23/64 April 18 35/64 April 56 1/2
May 2 29/32 May 22 3/32 May 4 1/8 May 8 1/8 May 17 13/16 May 52
June 3 3/4 June 2 5/16 June 4 39/64 June 9 3/32 June 22 57/64 June 50 1/16
July 4 1/8 July 2 13/64 July 5 23/64 July 10 29/32 July 21 17/64 July 44
August 4 21/64 August 24 1/64 August 4 27/32 August 8 23/64 August 20 29/32 August 44 7/8
September 4 23/64 September 2 49/64 September 5 55/64 September 9 25/32 September 22 15/32
October 3 31/64 October 2 29/32 October 5 33/64 October 11 41/64 October 28 31/32
November 3 25/64 November 3 33/64 November 5 13/64 November 12 1/4 November 34 1/2
December 2 7/16 December 3 39/64 December 4 11/32 December 15 1/16 December 47 49/64
</TABLE>
The closing price on , 2000 was .
QUALCOMM INCORPORATED (QCOM)
Qualcomm Incorporated develops and markets digital wireless
communications products, technologies and services for use in wireless
networks. Digital wireless communications technology increases system capacity,
provides more secure communications channels and improves reliability. Several
of Qualcomm's major product lines are based on its own Code Division Multiple
Access, or CMDA, technology. CMDA technology is a communications industry
standard for digital cellular, personal communications services and wireless
services. Qualcomm also licenses CMDA technology to telecommunications
equipment suppliers throughout the world. Qualcomm markets and sells its
products and CMDA technology through its own direct sales force and through
third parties.
<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 5/16 January 5 19/32 January 7 January 6 31/64 January 8 15/64 January 127
February 32 1/32 February 4 15/16 February 6 31/32 February 6 3/8 February 9 1/8 February 142 7/16
March 4 3/32 March 5 3/16 March 7 3/64 March 6 11/16 March 15 35/64 March 149 5/16
April 3 9/32 April 4 27/32 April 5 27/32 April 7 1/32 April 25 April 108 7/16
May 3 13/64 May 6 13/16 May 6 1/32 May 6 33/64 May 24 5/16 May 66 3/8
June 4 21/64 June 6 41/64 June 6 23/64 June 7 1/32 June 35 7/8 June 60
July 5 11/32 July 5 27/64 July 5 25/32 July 7 51/64 July 39 July 62 7/16
August 6 3/32 August 5 27/64 August 5 25/32 August 5 1/2 August 48 3/64 August 59 7/8
September 5 47/64 September 5 5/16 September 7 31/32 September 6 September 47 19/64
October 41 3/16 October 4 31/32 October 7 3/64 October 6 61/64 October 55 11/16
November 5 11/64 November 5 1/4 November 8 15/32 November 6 55/64 November 90 37/64
December 5 3/8 December 4 63/64 December 6 5/16 December 6 31/64 December 176 1/8
</TABLE>
The closing price on , 2000 was .
A-6
<PAGE>
RESEARCH IN MOTION LIMITED (RIMM)
Research in Motion Limited designs, manufactures and markets wireless
telecommunications products and services. Research in Motion's products are
designed to facilitate wireless data transmission and include wireless pagers,
e-mail, personal computer cards and modems. Research in Motion integrates its
hardware and software products and services to provide wireless access to time-
sensitive information including e-mail, messaging, Internet and intranet-based
applications. Shares of Research in Motion also trade on the Toronto 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 * January 65 3/4
February * February * February * February * February 8 7/8 February 135 1/4
March * March * March * March * March 10 1/2 March 106 1/2
April * April * April * April * April 12 3/16 April 42 1/2
May * May * May * May * May 14 1/16 May 32 3/16
June * June * June * June * June 20 1/4 June 45 1/4
July * July * July * July * July 23 3/8 July 50 5/8
August * August * August * August * August 29 3/4 August 75 9/16
September * September * September * September * September 30 15/16
October * October * October * October * October 30 3/4
November * November * November * November * November 51 1/4
December * December * December * December * December 46 3/16
</TABLE>
The closing price on , 2000 was .
RF MICRO DEVICES, INC. (RFMD)
RF Micro Devices, Inc. designs, manufactures and markets radio frequency
integrated circuits, which are the physical pathways for the transmission of
information, for cellular and cordless telephones, wireless networks,
industrial radios and wireless security systems. RF Micro Devices' products,
which include amplifiers, transmitters and receivers, allow data to be
converted so that it can be transmitted across telecommunications lines. RF
Micro Devices markets and sells its products through its own direct sales force
and through third parties.
<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 1 19/64 January 9 3/64 January 40 1/2
February * February * February * February 1 55/64 February 9 5/8 February 69 5/32
March * March * March * March 1 53/64 March 11 31/32 March 67 3/16
April * April * April * April 2 April 13 31/32 April 52 1/32
May * May * May * May 1 39/64 May 10 21/32 May 52 1/2
June * June * June 2 25/64 June 1 23/64 June 18 21/32 June 43 13/16
July * July * July 2 7/64 July 2 5/32 July 19 7/64 July 37 11/16
August * August * August 2 11/32 August 1 5/8 August 21 31/32 August 44 5/8
September * September * September 2 21/64 September 2 17/64 September 22 7/8
October * October * October 1 7/8 October 2 31/32 October 25 13/16
November * November * November 1 49/64 November 3 45/64 November 33 31/32
December * December * December 1 35/64 December 5 51/64 December 34 7/32
</TABLE>
The closing price on , 2000 was .
A-7
<PAGE>
SK TELECOM CO., LTD. (SKM)
SK Telecom Co., Ltd. is a leading wireless telecommunications service
providers in Korea. SK Telecom offers digital wireless telecommunications and
paging services over its wireless network in Korea. It also offers wireless
data and wireless networking services, including news and information, stock
trading, e-mail and banking services. American depositary receipts evidencing
American depositary shares of SK Telecom are included in the Wireless HOLDRS
and are traded on the New York Stock Exchange. Shares of SK Telecom also trade
on the Korea 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 14 7/16 January 8 3/4 January 10 3/16 January 36 11/16
February * February * February 12 1/64 February 8 5/8 February 10 1/8 February 44 15/16
March * March * March 9 61/64 March 7 15/16 March 12 3/16 March 39
April * April * April 9 7/32 April 7 7/16 April 13 7/8 April 32 1/16
May * May * May 8 63/64 May 6 3/8 May 14 1/4 May 40 1/16
June * June 16 9/64 June 9 49/64 June 5 9/16 June 17 June 35 5/16
July * July 15 25/32 July 11 11/64 July 7 3/4 July 14 3/16 July 29 13/16
August * August 15 5/64 August 8 47/64 August 6 August 11 5/16 August 25 5/8
September * September 14 1/4 September 8 47/64 September 7 1/16 September 10 5/16
October * October 11 25/32 October 5 11/32 October 10 5/16 October 13 1/16
November * November 12 1/4 November 5 49/64 November 10 5/16 November 23 9/16
December * December 12 1/2 December 6 1/2 December 10 3/16 December 38 3/8
</TABLE>
The closing price on , 2000 was .
A-8
<PAGE>
SPRINT CORPORATION--PCS GROUP (PCS)
Sprint Corporation's PCS Group operates a fully digital wireless
telecommunications network in the United States with licenses to provide
nationwide service using a single frequency and technology. The PCS Group
currently serves many of the largest metropolitan markets in the United States
and Puerto Rico and the United States Virgin Islands. In November 1998, Sprint
Corporation reclassified its publicly traded common shares into PCS Group
tracking stock, which tracks the performance of Sprint's wireless
telecommunications operations and FON Group tracking stock, which tracks the
performance of all Sprint's non-wireless operations including its long distance
and local telecommunications divisions, its product distribution and directory
publishing businesses and its interests in other telecommunications investments
and alliances. Owning either stock does not represent a direct legal interest
in the assets and liabilities of the PCS Group or the FON Group. Rather,
shareholders remain invested in Sprint Corporation.
Some of the terms of the PCS Group tracking stock include:
Voting. Holders of PCS Group tracking stock do not have direct voting
rights in the PCS Group. The PCS Group tracking stock votes with all the other
classes of Sprint stock. The number of votes attributed to each share of the
PCS Group tracking stock is equal to the ratio of the average trading prices of
one share of PCS Group tracking stock to one share of FON Group tracking stock.
Conversion. Sprint may convert, any time after November 23, 2000, each
share of PCS Group tracking stock into FON Group tracking common stock at 10%
premium to the market price. Sprint may also convert all outstanding shares of
PCS Group tracking stock for specified amounts of the stock of a subsidiary of
Sprint that holds the assets of the PCS Group. In addition, where Sprint
disposes of 80% or more of the assets attributed to the PCS Group, Sprint may
be required to distribute to the holders of PCS Group tracking stock the
attributable proceeds of the disposition in the form of cash or securities or
convert the outstanding PCS Group tracking stock into FON Group tracking stock
at a 10% premium to the market price.
The historical stock prices listed below reflect the performance of the
PCS Group tracking stock.
<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 7/8 January 55 1/32
February * February * February * February * February 16 February 51 3/4
March * March * March * March * March 2 25/32 March 65 1/2
April * April * April * April * April 21 1/8 April 55
May * May * May * May * May 22 1/2 May 55 1/2
June * June * June * June * June 28 1/2 June 59 1/2
July * July * July * July * July 30 5/16 July 54 1/4
August * August * August * August * August 29 7/8 August 50 3/16
September * September * September * September * September 37 9/32
October * October * October * October * October 41 15/32
November * November * November * November 7 31/32 November 45 7/8
December * December * December * December 11 9/16 December 51 1/4
</TABLE>
The closing price on , 2000 was .
A-9
<PAGE>
TELESP CELLULAR HOLDING COMPANY (TCP)
Telesp Cellular Holding Company is a leading provider of wireless
telecommunications services in the state of Sao Paulo, Brazil. Telesp offers
both digital and analog wireless telephone services and also offers related
wireless services such as voicemail, caller identification, messaging and
Internet access. Telesp also provides roaming services to other local wireless
service providers in Latin America. American depositary receipts evidencing
American depositary shares of Telesp are included in the Wireless HOLDRS and
are traded on the New York Stock Exchange. Shares of Telesp also trade on the
Sao Paulo 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 17 9/16 January 39 7/8
February * February * February * February * February 21 February 53 7/8
March * March * March * March * March 20 15/16 March 56 11/16
April * April * April * April * April 25 April 44 1/8
May * May * May * May * May 23 5/16 May 37 1/8
June * June * June * June * June 26 3/4 June 44 7/8
July * July * July * July * July 26 July 37 1/8
August * August * August * August * August 23 1/8 August 36 3/4
September * September * September * September * September 26 1/8
October * October * October * October * October 24 5/8
November * November * November * November 26 1/4 November 28 11/16
December * December * December * December 17 1/2 December 42 3/8
</TABLE>
The closing price on , 2000 was .
VERIZON COMMUNICATIONS (VZ)
(Bell Atlantic Corporation doing business as Verizon Communications)
Verizon Communications is a telecommunications company that provides
local telephone, wireless communications, long-distance and Internet services.
On June 30, 2000, GTE Corporation merged into a subsidiary of Bell Atlantic
Corporation and the combined company now operates under the name Verizon
Communications. Verizon provides domestic wireline services, including local
telephone service and voice and data transport, wireless telecommunications
services in the United States and has investments in wireless operations in
Latin America, Europe and the Asia-Pacific region. It also operates domestic
and international publishing businesses, including print directories, Web site
creation and Web hosting. The historical stock prices below are the historical
stock prices of Bell Atlantic Corporation whose shares continue to trade on the
New York Stock Exchange under the new symbol "VZ."
<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 27 1/8 January 34 7/16 January 33 5/8 January 46 9/32 January 60 January 61 15/16
February 26 13/16 February 33 1/16 February 34 9/16 February 44 7/8 February 57 5/8 February 48 15/16
March 26 7/16 March 30 15/16 March 30 3/8 March 51 1/8 March 51 11/16 March 61 1/8
April 27 5/16 April 32 1/2 April 33 7/8 April 46 25/32 April 57 5/8 April 60
May 27 3/4 May 31 3/16 May 35 May 45 13/16 May 54 3/4 May 52 7/8
June 28 June 31 7/8 June 37 15/16 June 45 5/8 June 65 3/8 June 50 15/16
July 28 5/8 July 29 9/16 July 36 9/32 July 45 11/32 July 64 July 46 3/4
August 29 3/4 August 28 1/8 August 36 3/16 August 44 1/8 August 61 5/16 August 43 33/64
September 30 11/16 September 29 15/16 September 40 7/32 September 48 7/16 September 67 5/16
October 31 3/4 October 30 1/8 October 40 October 53 3/16 October 64 15/16
November 31 1/2 November 31 7/16 November 44 5/8 November 55 5/8 November 63 5/16
December 33 7/16 December 32 3/8 December 45 1/2 December 54 December 61 9/16
</TABLE>
The closing price on , 2000 was .
A-10
<PAGE>
UNITED STATES CELLULAR CORPORATION (USM)
United States Cellular Corporation owns, manages and invests in wireless
systems throughout the United States. The company operates controlling
interests in wireless market licensees in small and mid-sized markets in areas
close to its other markets, thereby building clusters of operating markets
which allows United States Cellular to provide its users with larger service
areas without special roaming arrangements.
<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 29 3/4 January 33 7/8 January 27 January 28 13/16 January 44 15/16 January 67
February 33 3/8 February 36 February 26 1/4 February 30 1/8 February 42 1/8 February 66 15/16
March 30 1/4 March 34 1/2 March 24 7/8 March 33 15/16 March 44 March 71
April 29 April 33 1/8 April 25 April 32 3/4 April 47 7/16 April 60 1/16
May 28 3/4 May 31 5/8 May 27 1/2 May 30 11/16 May 48 1/4 May 62 1/4
June 30 1/4 June 31 June 29 5/8 June 30 3/4 June 53 1/2 June 63
July 33 5/8 July 30 1/8 July 31 July 32 1/2 July 55 1/2 July 67 1/16
August 35 August 30 1/4 August 30 1/4 August 28 7/16 August 56 5/16 August 73 9/16
September 36 1/2 September 30 1/4 September 36 7/8 September 29 13/16 September 68
October 34 1/2 October 29 3/8 October 32 1/2 October 36 5/8 October 88 1/2
November 35 November 28 November 32 3/4 November 37 11/16 November 118 7/8
December 33 3/4 December 27 7/8 December 31 December 38 December 100 15/16
</TABLE>
The closing price on , 2000 was .
VODAFONE AIRTOUCH P.L.C. (VOD)
Vodafone Airtouch p.l.c. provides international wireless
telecommunications services which include selling and renting cellular
telephone equipment, providing messaging and data transmission facilities and
access to information services. Vodafone's principal business is the operation
of digital and analog wireless telephone networks in the United Kingdom.
Vodafone also has investments in several international telecommunications
operations. Services on Vodafone networks is generally sold by third-party
service providers or retailers who also sell or rent cellular telephone
equipment. American depositary receipts evidencing American depositary shares
of Vodafone are included in the Wireless HOLDRS and are traded on the New York
Stock Exchange. Shares of Vodafone also trade on the London International 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 6 1/8 January 7 5/32 January 8 19/32 January 15 3/64 January 39 3/64 January 56
February 6 1/8 February 7 5/64 February 9 1/2 February 17 45/64 February 36 7/16 February 57 11/16
March 6 5/8 March 7 1/2 March 85 3/64 March 20 25/32 March 37 35/64 March 55 9/16
April 6 3/8 April 8 1/32 April 8 27/32 April 21 63/64 April 35 29/32 April 47
May 6 3/4 May 7 59/64 May 8 59/64 May 21 31/32 May 38 9/32 May 45 7/8
June 7 37/64 June 7 3/8 June 9 11/16 June 25 7/32 June 39 13/32 June 41 3/4
July 7 7/8 July 7 5/32 July 10 3/32 July 27 19/64 July 42 3/32 July 42 1/2
August 8 3/8 August 7 37/64 August 10 3/16 August 25 1/8 August 40 7/64 August 41 1/8
September 8 14/64 September 6 53/64 September 10 3/4 September 22 43/64 September 47 35/64
October 8 11/64 October 7 23/32 October 10 31/32 October 26 59/64 October 47 5/8
November 7 13/64 November 8 21/32 November 13 13/64 November 29 17/32 November 47 3/16
December 7 3/64 December 8 9/32 December 14 17/32 December 32 7/32 December 49 1/2
</TABLE>
The closing price on , 2000 was .
A-11
<PAGE>
VOICESTREAM WIRELESS CORPORATION (VSTR)
VoiceStream Wireless Corporation provides wireless communications
services in urban markets in the United States through the ownership and
operation of personal communication systems, or PCS, licenses. VoiceStream has
commenced commercial operations in several markets under the VoiceStream brand
name using Global System for Mobile Communications, or GSM, technology.
VoiceStream also offers paging, dispatch services and wireline telephone
services. On July 23, 2000, VoiceStream announced that it entered into a merger
agreement with Deutsche Telekom AG. 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 117 3/8
February * February * February * February * February * February 133 1/16
March * March * March * March * March * March 128 13/16
April * April * April * April * April * April 99
May * May * May * May * May 27 5/16 May 114 1/2
June * June * June * June * June 28 7/16 June 116 19/64
July * July * July * July * July 45 1/8 July 125 3/8
August * August * August * August * August 41 1/4 August 112 9/16
September * September * September * September * September 61 23/32
October * October * October * October * October 98 3/4
November * November * November * November * November 92 1/4
December * December * December * December * December 142 5/16
</TABLE>
The closing price on , 2000 was .
WESTERN WIRELESS CORPORATION (WWCA)
Western Wireless Corporation provides wireless communications services
primarily in rural markets in the United States. Western Wireless builds, owns
and operates wireless network systems both in the United States and
internationally. It provides services in some of its markets under the Cellular
One brand name.
<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 15 January 20 1/16 January 26 1/4 January 54 1/2
February * February * February 14 1/8 February 18 7/8 February 27 1/16 February 48 1/2
March * March * March 12 1/2 March 23 March 36 1/4 March 45 13/16
April * April * April 10 1/4 April 19 1/2 April 41 1/16 April 49 11/16
May * May 24 1/2 May 13 3/8 May 18 1/2 May 24 1/2 May 47 13/16
June * June 21 3/8 June 15 7/8 June 19 15/16 June 27 June 54 1/2
July * July 15 5/8 July 15 1/16 July 20 13/16 July 35 July 55
August * August 17 1/2 August 15 1/16 August 15 5/8 August 38 11/16 August 51 1/8
September * September 17 September 18 3/4 September 17 7/8 September 44 27/32
October * October 16 1/2 October 17 7/8 October 20 1/4 October 52 7/8
November * November 14 November 18 5/8 November 18 1/8 November 58 9/16
December * December 13 7/8 December 17 3/8 December 22 December 66 3/4
</TABLE>
The closing price on , 2000 was .
A-12
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[LOGO OF HOLDRS]
1,000,000,000 Depositary Receipts
Wireless HOLDRS SM Trust
---------------------
PROSPECTUS
---------------------
Merrill Lynch & Co.
Robert W. Baird & Co.
A.G. Edwards & Sons, Inc.
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 Wireless 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............. $211,016
Printing and engraving expenses................................. 150,000
Legal fees and expenses......................................... 200,000
Miscellaneous................................................... 8,984
--------
Total......................................................... $570,000
</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
27, 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 27, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chief Executive Officer,
___________________________________________ Chairman of the Board and
John L. Steffens Director
* Director
___________________________________________
E. Stanley O'Neal
* Director
___________________________________________
George A. Schieren
* Director
___________________________________________
Thomas H. Patrick
* Senior Vice President and
___________________________________________ Chief Financial Officer
Ahmass L. Fakahany
* First Vice President and
___________________________________________ Controller
Dominic A. Corone
*By: /s/ Stephen G. Bodurtha Attorney-in-fact
___________________________________________
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 Wireless
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.
