<PAGE>
As filed with the Securities and Exchange Commission on February 23, 2000.
Registration No. 333-96069
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT No. 2
TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Initial Depositor
(Exact name of registrant as specified in charter)
---------------
Internet Infrastructure HOLDRS SM Trust
yet-to-be formed
[Issuer with respect to the receipts]
<TABLE>
<S> <C> <C>
Delaware 6211 13-5674085
<CAPTION>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
---------------
250 Vesey Street
New York, New York 10281
(212) 449-1000
(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
<TABLE>
<S> <C>
Andrea L. Dulberg, Esq. Copies to:
Corporate Secretary Andrew B. Janszky
Merrill Lynch, Pierce, Fenner & Smith Shearman & Sterling
Incorporated 599 Lexington Avenue
250 Vesey Street New York, New York 10022
New York, New York 10281 (212) 848-4000
(212) 449-1000
<CAPTION>
(Nae,maddress, including zip code, and telephone number,
including area code, of agent for service)
</TABLE>
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Maximum
Title of Each Class of Proposed Maximum Aggregate Amount of
Securities Amount to Be Offering Price Offering Registration
to Be Registered Registered Per Receipt(1) Price(1) Fee(2)(3)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Internet Infrastructure
HOLDRS................. 1,000,000,000 receipts $100 $1,099,000,000 $290,136
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act. 10,000,000 receipts are
estimated to be offered in the initial offering at $100 per receipt and
990,000,000 receipts are estimated to be offered continuously after the
initial offering at $0.10 per receipt.
(2) This Registration Statement also registers, where required, an
indeterminate amount of securities to be sold by Merrill Lynch, Pierce,
Fenner & Smith Incorporated in market-making transactions.
(3) Merrill Lynch, Pierce, Fenner & Smith Incorporated previously paid on
February 3, 2000 and on February 10, 2000, $2,640 and $287,496,
respectively.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We +
+have filed a registration statement relating to these receipts with the +
+Securities and Exchange Commission. We cannot sell these receipts until the +
+registration statement becomes effective. This prospectus is not an offer to +
+sell these receipts and we are not soliciting offers to buy these receipts in +
+any state where such offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated February 23, 2000
PROSPECTUS
[LOGO OF HOLDRS INTERNET INFRASTRUCTURE]
1,000,000,000 Depositary Receipts
Internet Infrastructure HOLDRS SM Trust
The Internet Infrastructure HOLDRS SM Trust will issue Depositary Receipts
called Internet Infrastructure HOLDRS SM representing your undivided beneficial
ownership in the U.S.-traded common stock, of a group of specified companies
that, among other things, provide software and related services, which allow
Internet companies to better manage their Web sites and improve online
communications. The Bank of New York will be the trustee. You only may acquire,
hold or transfer Internet Infrastructure HOLDRS in a round-lot amount of 100
Internet Infrastructure HOLDRS or round-lot multiples. Internet Infrastructure
HOLDRS are separate from the underlying deposited common stocks that are
represented by the Internet Infrastructure HOLDRS. For a list of the names and
the number of shares of the companies that make up an Internet Infrastructure
HOLDRS, see "Highlights of Internet Infrastructure HOLDRS--The Internet
Infrastructure HOLDRS" starting on page 10. The trust will issue the additional
Internet Infrastructure HOLDRS on a continuous basis.
Investing in Internet Infrastructure HOLDRS involves significant risks. See
"Risk factors" starting on page 4.
The initial public offering price for a round-lot of 100 Internet
Infrastructure HOLDRS will equal the sum of the closing market price on the
primary trading market on the pricing date for each deposited share multiplied
by the share amount specified in this prospectus, plus an underwriting fee.
Internet Infrastructure HOLDRS are neither interests in nor obligations of
either the initial depositor, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, or The Bank of New York, as trustee.
Before this issuance, there has been no public market for Internet
Infrastructure HOLDRS. Application has been made to list the Internet
Infrastructure HOLDRS on the American Stock Exchange under the symbol "IIH."
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
<TABLE>
<CAPTION>
Initial
Price to Underwriting
Public* Fee
-------- ------------
<S> <C> <C>
Per Internet Infrastructure HOLDR.................. 2%
</TABLE>
-----
* Includes underwriting fee.
For purchases of Internet Infrastructure HOLDRS in excess of Internet
Infrastructure HOLDRS, the underwriting fee will be %.
-----------
Merrill Lynch & Co.
-----------
The date of this prospectus is , 2000.
"HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill
Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................... 3
Risk Factors............................................................... 4
Highlights of Internet Infrastructure HOLDRS............................... 9
The Trust.................................................................. 16
Description of Internet Infrastructure HOLDRS.............................. 16
Description of the Underlying Securities................................... 17
Description of the Depositary Trust Agreement.............................. 19
Federal Income Tax Consequences............................................ 22
ERISA Considerations....................................................... 23
Plan of Distribution....................................................... 23
Legal Matters.............................................................. 24
Where You Can Find More Information........................................ 24
</TABLE>
----------------
This prospectus contains information you should consider when making your
investment decision. With respect to information about Internet Infrastructure
HOLDRS, you should rely only on the information contained in this prospectus.
We have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making an offer to sell Internet
Infrastructure HOLDRS in any jurisdiction where the offer or sale is not
permitted.
2
<PAGE>
SUMMARY
The Internet Infrastructure HOLDRS trust will be formed under the
depositary trust agreement, dated as of February , 2000 among The Bank of
New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
other depositors and the owners of the Internet Infrastructure HOLDRS. The
trust is not a registered investment company under the Investment Company Act
of 1940.
The trust will hold shares of common stock issued by 20 specified
companies generally considered to be involved in various aspects of the
Internet infrastructure segment of the Internet industry. The Internet
infrastructure segment of the Internet industry consists of companies that,
among other things, provide software and related services, which allow
Internet companies to better manage their Web sites and improve online
communications. The number of shares of each common stock held by the trust
with respect to each round-lot of Internet Infrastructure HOLDRS is specified
under "Highlights of Internet Infrastructure HOLDRS--The Internet
Infrastructure HOLDRS." This group of common stocks is referred to as the
underlying securities. Except when a reconstitution event occurs, the
underlying securities will not change.
Under no circumstances will a new company be added to the group of
issuers of underlying securities.
The trust will issue Internet Infrastructure HOLDRS that represent your
undivided beneficial ownership interest in the shares of common stock held by
the trust on your behalf. The Internet Infrastructure HOLDRS are separate from
the underlying common stocks that are represented by the Internet
Infrastructure HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in Internet Infrastructure HOLDRS involves risks similar to
investing in each of the underlying securities outside of the Internet
Infrastructure HOLDRS, including the risks associated with concentrated
investments in Internet infrastructure companies.
General Risk Factors
. Loss of investment. Because the value of Internet Infrastructure
HOLDRS directly relates to the value of the underlying securities,
you may lose all or a substantial portion of your investment in
the Internet Infrastructure HOLDRS if the underlying securities
decline in value.
. Discount trading price. Internet Infrastructure HOLDRS may trade
at a discount to the aggregate value of the underlying securities.
. Not necessarily representative of the Internet infrastructure
segment of the Internet industry. While the underlying securities
are common stocks of companies generally considered to be involved
in various aspects of the Internet infrastructure segment of the
Internet industry, the underlying securities and the Internet
Infrastructure HOLDRS may not necessarily follow the price
movements of the entire Internet infrastructure segment generally.
If the underlying securities decline in value, your investment in
the Internet Infrastructure HOLDRS will decline in value even if
common stock prices in the Internet infrastructure segment
generally increase in value. Furthermore, after the initial
deposit, one or more of the issuers of the underlying securities
may no longer be involved in the Internet infrastructure segment
of the Internet industry. In this case, the Internet
Infrastructure HOLDRS may no longer consist of securities issued
only by companies involved in the Internet infrastructure segment.
. No investigation of underlying securities. The underlying
securities included in the Internet Infrastructure HOLDRS were
selected by Merrill Lynch, Pierce, Fenner & Smith Incorporated
based on the market capitalization of issuers and the market
liquidity of common stocks in the Internet infrastructure segment
of the Internet industry, without regard for the value, price
performance, volatility or investment merit of the underlying
securities. Consequently, the Internet Infrastructure HOLDRS
trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and their affiliates, have not performed any
investigation or review of the selected companies, including the
public filings by the companies. Investors and market participants
should not conclude that the inclusion of a company is any form of
investment recommendation by the trust, the trustee, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, or their affiliates.
. Loss of diversification. As a result of business developments,
reorganizations, or market fluctuations affecting issuers of the
underlying securities, Internet Infrastructure HOLDRS may not
necessarily continue to be a diversified investment in the
Internet infrastructure segment of the Internet industry. As a
result of market fluctuation and/or reconstitution events,
Internet Infrastructure HOLDRS may represent a concentrated
investment in one or more of the underlying securities which would
reduce investment diversification and increase your exposure to
the risks of concentrated investments.
. Conflicting investment choices. In order to sell one or more of
the underlying securities individually or to participate in a
tender offer relating to one or more of the underlying securities,
you will be required to cancel your Internet Infrastructure HOLDRS
and receive delivery of each of the underlying securities. The
cancellation of your Internet Infrastructure HOLDRS will allow you
to sell individual underlying securities or to deliver individual
4
<PAGE>
underlying securities in a tender offer. The cancellation of
Internet Infrastructure HOLDRS will involve payment of a
cancellation fee to the trustee.
. Trading halts. Trading in Internet Infrastructure HOLDRS may be
halted if trading in one or more of the underlying securities is
halted. If so, you will not be able to trade Internet
Infrastructure HOLDRS even though there is trading in some of the
underlying securities; however, you will be able to cancel your
Internet Infrastructure HOLDRS to receive the underlying
securities.
. Delisting from the American Stock Exchange. If the number of
companies whose common stock is held in the trust falls below
nine, the American Stock Exchange may consider delisting the
Internet Infrastructure HOLDRS. If the Internet Infrastructure
HOLDRS are delisted by the American Stock Exchange, a termination
event will result unless the Internet Infrastructure HOLDRS are
listed for trading on another national securities exchange or
through NASDAQ within five business days from the date the
Internet Infrastructure HOLDRS are delisted.
. Possible conflicts of interest. Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as initial depositor, has selected the
underlying securities and may face possible conflicts of interest
in connection with its activities. For example, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and its affiliates,
collectively referred to as Merrill Lynch, may engage in
investment banking and other activities, may provide services to
issuers of the underlying securities in connection with its
business, or may trade in the underlying securities for its own
account. All of these activities may result in conflicts of
interest with respect to the financial interest of Merrill Lynch,
on the one hand, and, on the other hand, the initial selection of
the underlying securities included in the Internet Infrastructure
HOLDRS, the selection of the Internet infrastructure segment of
the Internet industry, Merrill Lynch's activity in the secondary
market in the underlying securities, and the creation and
cancellation of Internet Infrastructure HOLDRS by Merrill Lynch.
. Temporary price increases in the underlying securities. Purchasing
activity in the secondary trading market associated with acquiring
the underlying securities for deposit into the trust may affect
the market price of the deposited shares. Large volumes of
purchasing activity, which may occur in connection with the
issuance of Internet Infrastructure HOLDRS, particularly in
connection with the initial issuance of Internet Infrastructure
HOLDRS, could temporarily increase the market price of the
underlying securities, resulting in a higher price on that date.
This purchasing activity could create a temporary imbalance
between the supply and demand of the underlying securities,
thereby limiting the liquidity of the underlying securities due to
a temporary increased demand for underlying securities.
Consequently, prices for the underlying securities may decline
after these purchases as the volume of purchases decreases. This
in turn is likely to have an immediate, adverse effect on the
trading price of Internet Infrastructure HOLDRS.
Risk Factors Specific to the Internet Infrastructure Segment of the
Internet Industry
. Internet infrastructure company stock prices have been and will
likely continue to be extremely volatile, which will directly
affect the price volatility of the Internet Infrastructure HOLDRS,
and you could lose all or part of your investment. The trading
prices of the common stocks of Internet infrastructure companies
have been and are likely to be extremely volatile. Internet
infrastructure companies' stock prices could be subject to wide
fluctuations in response to a variety of factors, including the
following:
. actual or anticipated variations in companies' quarterly
operating results;
5
<PAGE>
. announcements of technological innovations or new services by
Internet companies or their competitors;
. changes in financial estimates by securities analysts;
. conditions or trends in Internet online service companies;
. conditions or trends in online securities trading;
. changes in the market valuations of the Internet or online
service companies;
. developments in Internet regulations;
. announcements by Internet infrastructure companies or their
competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
. unscheduled system downtime;
. additions or departures of key personnel; and
. sales of Internet infrastructure companies' common stock or
other securities in the open market.
In addition, the trading prices of Internet infrastructure stocks
in general have experienced extreme price and volume fluctuations
in recent months. These fluctuations often have been unrelated or
disproportionate to the operating performance of these companies.
The valuations of many Internet infrastructure stocks are
extraordinarily high when measured by conventional valuation
standards such as price to earnings and price to sales ratios.
Some of the companies do not or in the future might not have
earnings. As a result, these trading prices may decline
substantially. These trading prices and valuations may not be
sustained. Also, any negative change in the public's perception of
the prospects of Internet or e-commerce companies could depress
the stock prices of an Internet infrastructure company regardless
of its operating results. Other broad market and industry factors
may also decrease the stock price of Internet infrastructure
stocks, regardless of their operating results. Market
fluctuations, as well as general political and economic
conditions, such as recession or interest rate or currency rate
fluctuations, also may decrease the market price of Internet
infrastructure stocks.
. Internet infrastructure companies must keep pace with rapid
technological change to remain competitive. The Internet market is
characterized by rapidly changing technology, evolving industry
standards and practices, frequent new product and service
introductions and enhancements and changing customer demands.
These market characteristics are heightened by the emerging nature
of the Internet and the apparent need of companies from a
multitude of industries to offer Web-based products and services.
Internet companies' success therefore will depend on their ability
to adapt to rapidly changing technologies, to adapt their services
to evolving industry standards and to continually improve the
performance, features and reliability of their service. Failure to
adapt to such changes would harm their business. In addition, the
widespread adoption of new Internet, networking or
telecommunications technologies or other technological changes
could require substantial expenditures to modify or adapt their
services or infrastructure.
. New laws and regulations with respect to the Internet could impede
its commercial development and adversely affect the business of
many Internet infrastructure companies. Due to the increasing
popularity and use of the Internet and other online services, it
is possible that a number of laws and regulations may be adopted
with respect to the Internet or other online services covering
issues such as user privacy, pricing, content, copyrights,
distribution and characteristics and quality of products and
services. Furthermore, the growth
6
<PAGE>
and development of the market for online interaction and commerce
may prompt calls for more stringent consumer protection laws that
may impose additional burdens on companies conducting business
online. The adoption of any additional laws or regulations may
impede the growth of the Internet or other online services which
could have a material adverse effect on the business, results of
operations and financial condition of Internet infrastructure
companies.
. If Internet use fails to grow and be accepted as a medium for
online commerce and communication demand for the products and
services of Internet infrastructure companies will decline. Future
revenues and any future profits of Internet infrastructure
companies depend substantially upon the widespread acceptance and
use of the Internet and other online services as an effective
medium of communication and commerce by consumers. Rapid growth in
the use of and interest in the Web, the Internet and other online
services is a recent phenomenon. There is no assurance that
acceptance and use will continue to develop or that a sufficiently
broad base of consumers will adopt, and continue to use, the
Internet and other online services as a medium of communication
and commerce. Demand and market acceptance for recently introduced
services and products over the Internet are subject to a high
level of uncertainty and few proven services and products exist.
Internet companies rely on consumers who have previously used
traditional means of commerce to exchange information and to
purchase goods and services. For the businesses of Internet
infrastructure companies to grow, consumers must accept and use
new ways of conducting business and exchanging information on the
Internet.
. If Internet infrastructure companies fail to increase market
awareness of their brands they will lose revenue opportunities and
their sales will suffer. Failure of many Internet infrastructure
companies to promote their respective brand names or the
incurrence of significant expenses promoting and maintaining brand
names could have a material adverse effect on the business,
results of operations and financial condition of many Internet
infrastructure companies. Due in part to the emerging nature of
the market for Internet management solutions offered by Internet
infrastructure companies, there may be a time-limited opportunity
to achieve and maintain a significant market share. Therefore,
market awareness of the brand names of many of these companies is
critical to achieving widespread acceptance of their products and
services. There can be no assurance that Internet infrastructure
companies will be successful in increasing market awareness of
their brands.
. The ability of many Internet infrastructure companies to offer
their products and services depends on their ability to manage
rapid growth, which if inefficiently managed, could adversely
affect their revenues. Many Internet infrastructure companies are,
or plan to, rapidly expand their operations. Success of the
marketing strategies of many of these companies will place
extraordinary demands on their network infrastructure and
technical support. This expansion has placed and will continue to
place a significant strain on the management, financial controls,
operations systems, personnel and other resources of many Internet
infrastructure companies. There can be no assurance that these
companies will complete the necessary improvements to their
systems, procedures and controls necessary to support their future
operations in a timely manner or that management will be able to
hire, train, retain and manage required personnel to manage such
rapid growth.
. Inability to adequately protect proprietary rights may harm the
competitive positions of many Internet infrastructure
companies. Many Internet infrastructure companies rely on a
combination of copyrights, trademark, service mark and trade
secret laws and contractual restrictions to establish and protect
proprietary rights in their products and services. There can be no
assurance that these companies will be able to protect their
intellectual property if they are unable to enforce their rights
or if they do not detect unauthorized use of their
7
<PAGE>
intellectual property. Furthermore, any steps taken to protect
intellectual property may be inadequate, time consuming and
expensive. In addition, Internet infrastructure companies may be
subject to claims that their products and services infringe the
intellectual property
rights of others. Any claim, whether meritorious or not, could be
time consuming, result in costly litigation, delay product or
service introduction or require Internet infrastructure companies
to enter to royalty or licensing agreements. Legal standards
relating to the validity, enforceability and scope of protection
of intellectual property rights in Internet-related industries are
uncertain and still evolving, and the future viability or value of
any of the intellectual property rights of Internet infrastructure
companies is uncertain.
. Many Internet infrastructure companies are developing strategies
to generate additional revenues for their products and services
outside the United States and if these strategies fail it could
result in slower revenue growth and losses. Many Internet
infrastructure companies believe that they must expand their
international sales activities to be successful as usage of the
Internet increases globally. The expansion to international
markets will require significant management attention and
financial resources to develop and expand international sales and
marketing activities. However, many Internet infrastructure
companies cannot be certain that investments in establishing
facilities in other countries will produce anticipated revenues as
they have limited experience developing localized versions of
their products and services and marketing products and services
internationally.
. Many Internet infrastructure companies have a limited operating
history which makes financial forecasting difficult. Many Internet
infrastructure companies are not able to forecast operating
expenses based on their historical results. Accordingly, they base
their forecast for expenses in part on future revenue projections.
Most expenses are fixed in the short term and it may not be
possible to quickly reduce spending if revenues are lower than
projected. Internet infrastructure companies ability to forecast
accurately their quarterly revenue is limited because their
software products have a long sales cycle that makes it difficult
to predict the quarter in which they can recognize revenue, and
because of the variability of client demand for professional
services. Internet infrastructure companies would expect their
business, operating results and financial condition to be
materially adversely affected if their revenues do not meet their
projections and that net losses in a given quarter would be even
greater than expected.
. Many Internet infrastructure companies are dependent on their
ability to continue to retain and attract highly skilled technical
and managerial personnel to develop and operate their
businesses. The success of many Internet infrastructure companies
is 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 key officers or
key technical personnel, their future success could be undermined.
Competition for personnel is intense. There is no certainty that
any of these Internet infrastructure companies will be able to
continue to attract and retain qualified personnel.
. Many Internet infrastructure companies have a history of incurring
losses which may make it difficult for these companies to fund
their future operations. Many Internet infrastructure companies
have incurred significant losses since their inception and they
may continue to incur losses for the foreseeable future. Many of
these Internet infrastructure companies will also continue to
incur losses as additional costs are incurred to develop new
technology, products and services, expand marketing and sales
operations in existing and new markets and develop administrative
facilities. If Internet infrastructure companies do not achieve
and sustain profitability, their ability to respond effectively to
market conditions, to make capital expenditures and to take
advantage of business opportunities could be adversely affected.
8
<PAGE>
HIGHLIGHTS OF INTERNET INFRASTRUCTURE HOLDRS
This discussion highlights information regarding Internet Infrastructure
HOLDRS; we present certain information more fully in the rest of this
prospectus. You should read the entire prospectus carefully before you purchase
Internet Infrastructure HOLDRS.
Issuer....................... Internet Infrastructure
HOLDRS Trust.
The trust.................... The Internet Infrastructure HOLDRS Trust will
be formed under the depositary trust agreement,
dated as of February , 2000 among The Bank of
New York, as trustee, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, other depositors
and the owners of the Internet Infrastructure
HOLDRS. The trust is not a registered
investment company under the Investment Company
Act of 1940.
Initial depositor............ Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
Trustee...................... The Bank of New York, a New York state-
chartered banking organization, will be the
trustee and receive compensation as set forth
in the depositary trust agreement.
Purpose of Internet
Infrastructure HOLDRS.......
Internet Infrastructure HOLDRS are designed to
achieve the following:
Diversification. Internet Infrastructure HOLDRS
are designed to allow you to diversify your
investment in the Internet infrastructure
segment of the Internet industry through a
single, exchange-listed instrument representing
your undivided beneficial ownership of the
underlying securities.
Flexibility. The beneficial owners of Internet
Infrastructure HOLDRS have undivided beneficial
ownership interests in each of the underlying
securities represented by the Internet
Infrastructure HOLDRS, and can cancel their
Internet Infrastructure HOLDRS to receive each
of the underlying securities represented by the
Internet Infrastructure HOLDRS.
Transaction costs. The expenses associated with
trading Internet Infrastructure HOLDRS are
expected to be less than trading each of the
underlying securities separately.
Trust assets................. The trust will hold shares of common stock
issued by specified Internet infrastructure
companies. Except when a reconstitution event
occurs, the group of companies will not change.
Reconstitution events are described in this
prospectus under the heading "Description of
the depositary trust agreement-- Reconstitution
events." Under no circumstances will the common
stock of a new company be added to the common
stocks underlying the Internet Infrastructure
HOLDRS.
9
<PAGE>
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 Internet Infrastructure The trust will issue Internet
HOLDRS....................... Infrastructure HOLDRS that represent your
undivided beneficial ownership interest in the
shares of U.S.-traded common stock held by the
trust on your behalf. The Internet
Infrastructure HOLDRS themselves are separate
from the underlying securities that are
represented by the Internet Infrastructure
HOLDRS.
The specific share amounts for each round-lot
of 100 Internet Infrastructure HOLDRS will be
determined on the pricing date so that the
initial issue price will be approximately $90-
$100 per Internet Infrastructure HOLDR and the
initial weightings of each underlying security
included in the Internet Infrastructure HOLDRS
approximates the relative market
capitalizations of the specified companies
(based on the closing market prices of the
underlying securities on the trading day
immediately preceding the pricing date),
subject to a maximum weight of 20%. For
purposes of this preliminary prospectus, the
indicative share amounts and the indicative
weightings of each underlying security, based
on market capitalizations as of February 7,
2000 preliminary prospectus, are set forth in
the table below; however, such share amounts
and weightings are expected to change during
the period between February 7, 2000 and the
pricing date.
After the pricing date, the share amounts will
not change, except for changes due to corporate
events, such as stock splits or reverse stock
splits on the underlying securities, or
reconstitution events. However, the weightings
are expected to change substantially over time
because of price fluctuations.
The following chart provides the
. names of the 20 issuers of the underlying
securities represented by the Internet
Infrastructure HOLDRS,
. stock ticker symbols,
. indicative share amounts represented by a
round-lot of 100 Internet Infrastructure
HOLDRS (as of February 7, 2000),
. indicative weightings as of February 7,
2000, and
. principal market on which the shares of
common stock of the selected companies are
traded.
10
<PAGE>
<TABLE>
<CAPTION>
Indicative Primary
Ticker Share Indicative Trading
Name of Company Amounts Weightings Market
------------------------ ------ ---------- ---------- -------
<S> <C> <C> <C> <C>
EXODUS COMMUNICATIONS
INC. EXDS 8 11.20% NASDAQ
AKAMAI TECHNOLOGIES INC. AKAM 4 10.35% NASDAQ
VERISIGN INC. VRSN 5 10.33% NASDAQ
INFOSPACE.COM INC. INSP 4 7.12% NASDAQ
BROADVISION INC. BVSN 4 6.76% NASDAQ
VIGNETTE CORP. VIGN 3 6.73% NASDAQ
INKTOMI CORP. INKT 5 6.67% NASDAQ
BEA SYSTEMS INC. BEAS 5 5.56% NASDAQ
REALNETWORKS INC. RNWK 6 5.41% NASDAQ
PORTAL SOFTWARE INC. PRSF 7 4.46% NASDAQ
VITRIA TECHNOLOGY VITR 3 3.86% NASDAQ
INTERNAP NETWORK SVCS
CORP. INAP 6 3.80% NASDAQ
DIGITAL ISLAND INC. ISLD 3 3.07% NASDAQ
NETWORK SOLUTIONS INC. NSOL 1 2.82% NASDAQ
KANA COMMUNICATIONS,
INC. KANA 1 2.72% NASDAQ
ALTEON WEBSYSTEMS INC. ATON 2 2.15% NASDAQ
USINTERNETWORKING INC. USIX 3 1.81% NASDAQ
E.PIPHANY INC. EPNY 1 1.74% NASDAQ
NAVISITE INC. NAVI 1 1.68% NASDAQ
SOFTWARE.COM INC. SWCM 2 1.65% NASDAQ
</TABLE>
The actual share amounts and weightings will be
determined on the pricing date and will appear
in the final prospectus delivered in connection
with sales of the Internet Infrastructure
HOLDRS. These companies generally are
considered to be 20 of the largest and most
liquid companies with U.S.-traded common stock
involved in the Internet infrastructure segment
of the Internet industry, as measured by market
capitalization and trading volume on February
7, 2000. The market capitalization of a company
is determined by multiplying the price of its
common stock by the number of outstanding
shares of its common stock.
The trust only will issue and cancel, and you
only may obtain, hold, trade or surrender,
Internet Infrastructure HOLDRS in a round-lot
of 100 Internet Infrastructure HOLDRS and
round-lot multiples. The trust will only issue
Internet Infrastructure HOLDRS upon the deposit
of the whole shares represented by a round-lot
of 100 Internet Infrastructure HOLDRS. In the
event that a fractional share comes to be
represented by a round-lot of Internet
Infrastructure HOLDRS, the trust may require a
minimum of more than one round-lot of 100
Internet Infrastructure HOLDRS for an issuance
so that the trust will always receive whole
share amounts for issuance of Internet
Infrastructure HOLDRS.
The number of outstanding Internet
Infrastructure HOLDRS will increase and
decrease as a result of in-kind deposits and
withdrawals of the underlying securities. The
trust will stand ready to issue additional
Internet Infrastructure HOLDRS on a continuous
basis when an investor deposits the required
shares of common stock with the trustee.
11
<PAGE>
Public offering price........ The initial public offering price for 100
Internet Infrastructure HOLDRS will equal the
sum of the closing market price on the primary
trading market on the pricing date for each
underlying security multiplied by the share
amount to be determined on the pricing date,
plus an underwriting fee. It is expected that
the initial public offering price will be
approximately $90-$l00 per Internet
Infrastructure HOLDR.
Purchases.................... After the initial offering, you may acquire
Internet Infrastructure HOLDRS in two ways:
. through an in-kind deposit of the required
number of shares of common stock of the
underlying issuers with the trustee, or
. through a cash purchase in the secondary
trading market.
Underwriting fees............ If you purchase Internet Infrastructure HOLDRS
in the initial public offering, you will pay
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, in its role as underwriter, an
underwriting fee equal to:
. For purchases of Internet Infrastructure
HOLDRS or fewer, 2%.
. For purchases in excess of Internet
Infrastructure HOLDRS, %.
You will not be charged any issuance fee or
other sales commission in connection with
purchases of Internet Infrastructure HOLDRS
made in the initial public offering.
Issuance and cancellation After the initial offering, if you wish to
fees......................... create Internet Infrastructure HOLDRS by
delivering to the trust the requisite shares of
common stock represented by a round-lot of 100
Internet Infrastructure HOLDRS, The Bank of New
York as trustee will charge you an issuance fee
of up to $10.00 for each round-lot of 100
Internet Infrastructure HOLDRS. If you wish to
cancel your Internet Infrastructure HOLDRS and
withdraw your underlying securities, The Bank
of New York as trustee will charge you a
cancellation fee of up to $10.00 for each
round-lot of 100 Internet Infrastructure
HOLDRS.
Commissions.................. If you choose to deposit underlying securities
in order to receive Internet Infrastructure
HOLDRS after the conclusion of the initial
public offering, you will not be charged the
underwriting fee. However, in addition to the
issuance fee charged by the trustee described
above, you will be responsible for paying any
sales commission associated with your purchase
of the underlying securities that is charged by
your broker, whether it be Merrill Lynch,
Pierce, Fenner & Smith Incorporated or another
broker.
Custody fees................. The Bank of New York, as trustee and as
custodian, will charge you a quarterly custody
fee of $2.00 for each round-lot of 100 Internet
Infrastructure HOLDRS, to be deducted from any
cash
12
<PAGE>
dividend or other cash distributions on
underlying securities received by the trust.
With respect to the aggregate custody fee
payable in any calendar year for each Internet
Infrastructure HOLDR, the Trustee will waive
that portion of the fee which exceeds the total
cash dividends and other cash distributions
received, or to be received, and payable with
respect to such calendar year.
Rights relating to Internet You have the right to withdraw the
Infrastructure HOLDRS........ underlying securities upon request by
delivering a round-lot or integral multiple of
a round-lot of Internet Infrastructure HOLDRS
to the trustee, during the trustee's business
hours, and paying the cancellation fees, taxes,
and other charges. You should receive the
underlying securities no later than the
business day after the trustee receives a
proper notice of cancellation. The trustee will
not deliver fractional shares of underlying
securities. To the extent that any cancellation
of Internet Infrastructure HOLDRS would
otherwise require the delivery of a fractional
share, the trustee will sell such share in the
market and the trust, in turn, will deliver
cash in lieu of such share. Except with respect
to the right to vote for dissolution of the
trust, the Internet Infrastructure HOLDRS
themselves will not have voting rights.
Rights relating to the You have the right to:
underlying securities........
. Receive all shareholder disclosure
materials, including annual and quarterly
reports, distributed by the issuers of the
underlying securities.
. Receive all proxy materials distributed by
the issuers of the underlying securities and
will have the right to instruct the trustee
to vote the underlying securities or may
attend shareholder meetings yourself.
. Receive dividends and other distributions on
the underlying securities, if any are
declared and paid to the trustee by an
issuer of the underlying securities, net of
any applicable taxes or fees.
If you wish to participate in a tender offer
for underlying securities, you must obtain
the underlying securities by surrendering
your Internet Infrastructure HOLDRS and
receiving all of your underlying securities.
For specific information about obtaining
your underlying securities, you should read
the discussion under the caption
"Description of the depositary trust
agreement."
Reconstitution events........ A. If an issuer of underlying securities no
longer has a class of common stock
registered under section 12 of the
Securities Exchange Act of 1934, then its
securities will no longer be an underlying
security and the trustee will distribute the
shares of that company to the owners of the
Internet Infrastructure HOLDRS.
13
<PAGE>
B. If the SEC finds that an issuer of
underlying securities should be registered
as an investment company under the
Investment Company Act of 1940, and the
trustee has actual knowledge of the SEC
finding, then the trustee will distribute
the shares of that company to the owners of
the Internet Infrastructure HOLDRS.
C. If the underlying securities of an issuer
cease to be outstanding as a result of a
merger, consolidation or other corporate
combination, the trustee will distribute the
consideration paid by and received from the
acquiring company to the beneficial owners
of Internet Infrastructure HOLDRS, unless
the merger, consolidation or other corporate
combination is between companies that are
already included in the Internet
Infrastructure HOLDRS and the consideration
paid is additional underlying securities. In
this case, the additional underlying
securities will be deposited into the trust.
D. If an issuer's underlying securities are
delisted from trading on a national
securities exchange or NASDAQ and are not
listed for trading on another national
securities exchange or through NASDAQ within
five business days from the date such
securities are delisted.
If a reconstitution event occurs, the trustee
will deliver the underlying security to you as
promptly as practicable after the date that the
trustee has knowledge of the occurrence of a
reconstitution event.
Termination events........... A. The Internet Infrastructure HOLDRS are
delisted from the American Stock Exchange
and are not listed for trading on another
national securities exchange or through
NASDAQ within five business days from the
date the Internet Infrastructure HOLDRS are
delisted.
B. The trustee resigns and no successor trustee
is appointed within 60 days from the date
the trustee provides notice to Merrill
Lynch, Pierce, Fenner & Smith Incorporated,
as initial depositor, of its intent to
resign.
C. 75% of beneficial owners of outstanding
Internet Infrastructure HOLDRS vote to
dissolve and liquidate the trust.
If a termination event occurs, the trustee will
distribute the underlying securities to you as
promptly as practicable after the termination
event.
Federal income tax The federal income tax laws will treat a U.S.
consequences................. holder of Internet Infrastructure HOLDRS as
directly owning the underlying securities. The
Internet Infrastructure HOLDRS themselves will
not result in any federal tax consequences
separate from the tax consequences associated
with ownership of the underlying securities.
14
<PAGE>
Listing...................... Application has been made to list the Internet
Infrastructure HOLDRS on the American Stock
Exchange under the symbol "IIH". Trading will
take place only in round-lots of 100 Internet
Infrastructure HOLDRS and round-lot multiples.
A minimum of 150,000 Internet Infrastructure
HOLDRS will be required to be outstanding when
trading begins.
Trading...................... Investors only will be able to acquire, hold,
transfer and surrender a round-lot of 100
Internet Infrastructure HOLDRS. Bid and ask
prices, however, will be quoted per single
Internet Infrastructure HOLDRS.
Clearance and settlement..... The trust will issue Internet Infrastructure
HOLDRS in book-entry form. Internet
Infrastructure HOLDRS will be evidenced by one
or more global certificates that the trustee
will deposit with The Depository Trust Company,
referred to as DTC. Transfers within DTC will
be in accordance with DTC's usual rules and
operating procedures. For further information
see "Description of Internet Infrastructure
HOLDRS."
15
<PAGE>
THE TRUST
General. This discussion highlights information about the Internet
Infrastructure HOLDRS trust. You should read this information, information
about the depositary trust agreement as well as the depositary trust agreement
before you purchase Internet Infrastructure HOLDRS. The material terms of the
depositary trust agreement are described in this prospectus under the heading
"Description of the depositary trust agreement."
The Internet Infrastructure HOLDRS trust. The trust will be formed
pursuant to the depositary trust agreement, dated as of February , 2000. The
Bank of New York will be the trustee. The Internet Infrastructure HOLDRS trust
is not a registered investment company under the Investment Company Act of
1940.
The Internet Infrastructure HOLDRS trust is intended to hold deposited
shares for the benefit of owners of Internet Infrastructure HOLDRS. The trustee
will perform only administrative and ministerial acts. The property of the
trust will consist of the underlying securities and all monies or other
property, if any, received by the trustee. The trust will terminate on December
31, 2040, or earlier if a termination event occurs.
DESCRIPTION OF INTERNET INFRASTRUCTURE HOLDRS
The trust will issue Internet Infrastructure HOLDRS under the depositary
trust agreement described in this prospectus under the heading "Description of
the depositary trust agreement." After the initial offering, the trust may
issue additional Internet Infrastructure HOLDRS on a continuous basis when an
investor deposits the requisite underlying securities with the trustee.
You may only acquire, hold, trade and surrender Internet Infrastructure
HOLDRS in a round-lot of 100 Internet Infrastructure HOLDRS and round-lot
multiples. The trust will only issue Internet Infrastructure HOLDRS upon the
deposit of the whole shares of underlying securities that are represented by a
round-lot of 100 Internet Infrastructure HOLDRS. In the event of a stock split,
reverse stock split, or other distribution by the issuer of an underlying
security that results in a fractional share becoming represented by a round-lot
of Internet Infrastructure HOLDRS, the trust may require a minimum of more than
one round-lot of 100 Internet Infrastructure HOLDRS for an issuance so that the
trust will always receive whole share amounts for issuance of Internet
Infrastructure HOLDRS.
Internet Infrastructure HOLDRS will represent your individual and
undivided beneficial ownership interest in the common stock of the specified
underlying securities. The 20 companies selected as part of this receipt
program are listed above in the section entitled "Highlights of Internet
Infrastructure HOLDRS--The Internet Infrastructure HOLDRS."
Beneficial owners of Internet Infrastructure HOLDRS will have the same
rights and privileges as they would have if they beneficially owned the
underlying securities outside of the trust. These include the right of
investors to instruct the trustee to vote the common stock, and to receive
dividends and other distributions on the underlying securities, if any are
declared and paid to the trustee by an issuer of an underlying security, as
well as the right to cancel Internet Infrastructure HOLDRS to receive the
underlying securities. See "Description of the depositary trust agreement."
Internet Infrastructure HOLDRS are not intended to change your beneficial
ownership in the underlying securities under federal securities laws, including
Sections 13(d) and 16(a) of the Securities Exchange Act of 1934.
The trust will not publish or otherwise calculate the aggregate value of
the underlying securities represented by a receipt. Internet Infrastructure
HOLDRS may trade in the secondary market at prices that are lower than the
aggregate value of the corresponding underlying securities. If, in such case,
an owner of Internet Infrastructure HOLDRS wishes to realize the dollar value
of the underlying securities, that owner will have to
16
<PAGE>
cancel the Internet Infrastructure HOLDRS. Such cancellation will require
payment of fees and expenses as described in "Description of the depositary
trust agreement--Withdrawal of underlying securities."
Internet Infrastructure HOLDRS will be evidenced by one or more global
certificates that the trustee will deposit with DTC and register in the name of
Cede & Co., as nominee for DTC. Internet Infrastructure HOLDRS will be
available only in book-entry form. Owners of Internet Infrastructure HOLDRS may
hold their Internet Infrastructure HOLDRS through DTC, if they are participants
in DTC, or indirectly through entities that are participants in DTC.
DESCRIPTION OF THE UNDERLYING SECURITIES
Selection criteria. The underlying securities are the common stocks of a
group of 20 specified companies involved in various segments of the Internet
infrastructure segment of the Internet industry and whose common stock is
registered under Section 12 of the Exchange Act. The issuers of the underlying
securities are considered to be 20 of the largest capitalized, most liquid
companies in the Internet infrastructure segment as measured by market
capitalization and trading volume. The following criteria were used in
selecting the underlying securities on February 7, 2000:
. Market capitalization equal to or greater than $3 billion;
. Average daily trading volume of at least 240,000 shares over the 60
trading days before February 7, 2000;
. Average daily dollar volume (that is, the average daily trading
volume multiplied by the average closing price over the 60 day period
prior to February 7, 2000) of at least $16 million over the 60
trading days before February 7, 2000; and
. A trading history of at least 90 calendar days.
The market capitalization of a company is determined by multiplying the
price of its common stock by the number of shares of its common stock that are
held by stockholders. In determining whether a company was to be considered for
inclusion in the Internet Infrastructure HOLDRS, Merrill Lynch, Pierce, Fenner
& Smith Incorporated examined available public information about the company,
including analysts' reports and other independent market sources. The ultimate
determination of the inclusion of the 20 specified companies, however, rested
solely within the discretion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
After the initial deposit, one or more of the issuers of the underlying
securities may no longer be substantially involved in the Internet
infrastructure segment of the Internet industry. In this case, the Internet
Infrastructure HOLDRS may no longer consist of securities issued by companies
involved in the Internet infrastructure segment. Merrill Lynch, Pierce, Fenner
& Smith Incorporated will determine, in its sole discretion, whether the issuer
of a particular underlying security remains in the Internet infrastructure
segment of the Internet industry and will undertake to make adequate disclosure
when necessary.
Underlying securities. For a list of the underlying securities
represented by Internet Infrastructure HOLDRS, please refer to "Highlights of
Internet Infrastructure HOLDRS--The Internet Infrastructure HOLDRS." If the
underlying securities change because of a reconstitution event, a revised list
of underlying securities will be set forth in a prospectus supplement and will
be available from the American Stock Exchange and through a widely used
electronic information dissemination system such as Bloomberg or Reuters.
No investigation. In selecting the underlying securities, the trust, the
trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any affiliate
of these entities, have not performed any investigation or review of the
selected companies, including the public filings by the companies, other than
to the extent required to determine whether the companies satisfied the stated
selection criteria. Accordingly, before you acquire Internet
17
<PAGE>
Infrastructure HOLDRS, you should consider publicly available financial and
other information about the issuers of the underlying securities. See "Risk
factors" and "Where you can find more information." Investors and market
participants should not conclude that the inclusion of a company in the list is
any form of investment recommendation of that company by the trust, the
trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any of their
affiliates.
General background and historical information. For a brief description of
the business of each of the issuers of the underlying securities and monthly
pricing information showing the historical performance of each underlying
issuer's securities, see "Annex A."
The following table and graph set forth the composite performance of all
of the underlying securities represented by a single Internet Infrastructure
HOLDR based upon the indicative share amounts set forth in the table on page 11
of this preliminary prospectus, measured at the close of each business day from
October 29, 1999 the first date when all of the underlying securities were
publicly traded, to February 7, 2000. The performance table and graph data are
adjusted for any splits that may have occurred over the measurement period.
Past movements of the underlying securities are not necessarily indicative of
future values. The actual share amounts will be determined on the pricing date
and may differ from the indicative share amounts.
<TABLE>
<CAPTION>
Internet Internet Internet Internet
Infrastructure Infrastructure Infrastructure Infrastructure
1999 HOLDRS 1999 HOLDRS 2000 HOLDRS 2000 HOLDRS
- ---- -------------- ---- -------------- ---- -------------- ---- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
October 29.. 40.61 December 1... 55.49 January 3... 87.26 February 1.. 83.70
November 1.. 42.59 December 2... 59.04 January 4... 82.86 February 2.. 84.60
November 2.. 43.61 December 3... 62.56 January 5... 79.72 February 3.. 88.25
November 3.. 44.66 December 6... 66.18 January 6... 72.17 February 4.. 87.25
November 4.. 44.26 December 7... 69.35 January 7... 76.97 February 7.. 88.32
November 5.. 46.34 December 8... 72.56 January 10.. 85.26
November 8.. 49.84 December 9... 74.65 January 11.. 83.29
November 9.. 48.93 December 10.. 74.51 January 12.. 78.96
November 10.. 48.86 December 13.. 73.43 January 13.. 80.38
November 11.. 47.76 December 14.. 71.22 January 14.. 80.85
November 12.. 48.58 December 15.. 71.08 January 18.. 83.86
November 15.. 49.47 December 16.. 75.27 January 19.. 84.78
November 16.. 53.26 December 17.. 76.83 January 20.. 88.12
November 17.. 52.56 December 20.. 77.75 January 21.. 93.18
November 18.. 55.09 December 21.. 82.69 January 24.. 90.08
November 19.. 54.95 December 22.. 82.72 January 25.. 92.32
November 22.. 56.50 December 23.. 82.06 January 26.. 90.79
November 23.. 57.53 December 27.. 80.98 January 27.. 91.71
November 24.. 57.77 December 28.. 82.11 January 28.. 84.81
November 26.. 59.33 December 29.. 84.87 January 31.. 81.84
November 29.. 59.73 December 30.. 85.16
November 30.. 56.72 December 31.. 85.66
</TABLE>
[LINE GRAPH]
18
<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of February , 2000,
among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York,
as trustee, other depositors and the owners of the Internet Infrastructure
HOLDRS, provides that Internet Infrastructure HOLDRS will represent an owner's
undivided beneficial ownership interest in the common stock of the underlying
companies.
The trustee. The Bank of New York will serve as trustee. The Bank of New
York, which was founded in 1784, was New York's first bank and is the oldest
bank in the country still operating under its original name. The Bank is a
state-chartered New York banking corporation and a member of the Federal
Reserve System. The Bank conducts a national and international wholesale
banking business and a retail banking business in the New York City, New Jersey
and Connecticut areas, and provides a comprehensive range of corporate and
personal trust, securities processing and investment services.
Issuance, transfer and surrender of Internet Infrastructure HOLDRS. You
may create and cancel Internet Infrastructure HOLDRS only in round-lots of 100
Internet Infrastructure HOLDRS. You may create Internet Infrastructure HOLDRS
by delivering to the trustee the requisite underlying securities. The trust
will only issue Internet Infrastructure HOLDRS upon the deposit of the whole
shares represented by a round-lot of 100 Internet Infrastructure HOLDRS. In the
event that a fractional share comes to be represented by a round-lot of
Internet Infrastructure HOLDRS, the trust may require a minimum of more than
one round-lot of 100 Internet Infrastructure HOLDRS for an issuance so that the
trust will always receive whole share amounts for issuance of Internet
Infrastructure HOLDRS. Similarly, you must surrender Internet Infrastructure
HOLDRS in integral multiples of 100 Internet Infrastructure HOLDRS to withdraw
deposited shares from the trust. The trustee will not deliver fractional shares
of underlying securities, to the extent that any cancellation of Internet
Infrastructure HOLDRS would otherwise require the delivery of fractional
shares, the trust will deliver cash in lieu of such shares. You may request
withdrawal of your deposited shares during the trustee's normal business hours.
The trustee expects that in most cases it will deliver your deposited shares
within one business day of your withdrawal request.
Voting rights. The trustee will deliver you proxy soliciting materials
provided by issuers of the deposited shares so as to permit you to give the
trustee instructions as to how to vote on matters to be considered at any
annual or special meetings held by issuers of the underlying securities.
Under the depositary trust agreement, any beneficial owner of Internet
Infrastructure HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith
Incorporated owning Internet Infrastructure HOLDRS for its own proprietary
account as principal, will have the right to vote to dissolve and liquidate the
trust.
Distributions. You will be entitled to receive, net of trustee fees,
distributions of cash, including dividends, securities or property, if any,
made with respect to the underlying securities. The trustee will use its
reasonable efforts to ensure that it distributes these distributions as
promptly as practicable after the date on which it receives the distribution.
Therefore, you may receive your distributions substantially later than you
would have had you held the underlying securities directly. You will be
obligated to pay any tax or other charge that may become due with respect to
Internet Infrastructure HOLDRS. The trustee may deduct the amount of any tax or
other governmental charge from a distribution before making payment to you. In
addition, the trustee will deduct its quarterly custody fee of $2.00 for each
round-lot of 100 Internet Infrastructure HOLDRS from quarterly dividends, if
any, paid to the trustee by the issuers of the underlying securities. With
respect to the aggregate custody fee payable in any calendar year for each
Internet Infrastructure HOLDR, the trustee will waive that portion of the fee
which exceeds the total cash dividends and other cash distributions received,
or to be received, and payable with respect to such calendar year.
Record dates. With respect to dividend payments and voting instructions,
the trustee expects to fix the trust's record dates as close as possible to the
record date fixed by the issuer of the underlying securities.
19
<PAGE>
Shareholder communications. The trustee promptly will forward to you all
shareholder communications that it receives from issuers of the underlying
securities.
Withdrawal of underlying securities. You may surrender your Internet
Infrastructure HOLDRS and receive underlying securities during the trustee's
normal business hours and upon the payment of applicable fees, taxes or
governmental charges, if any. You should receive your underlying securities no
later than the business day after the trustee receives your request. If you
surrender Internet Infrastructure HOLDRS in order to receive underlying
securities, you will pay to the trustee a cancellation fee of up to $10.00 per
round-lot of 100 Internet Infrastructure HOLDRS.
Further issuances of Internet Infrastructure HOLDRS. The depositary trust
agreement provides for further issuances of Internet Infrastructure HOLDRS on a
continuous basis without your consent.
Reconstitution events. The depositary trust agreement provides for the
automatic distribution of underlying securities to you in four circumstances.
A. If an issuer of underlying securities no longer has a class of common
stock registered under section 12 of the Securities Exchange Act of
1934, then its securities will no longer be an underlying security
and the trustee will distribute the shares of that company to the
owners of the Internet Infrastructure HOLDRS.
B. If the SEC finds that an issuer of underlying securities should be
registered as an investment company under the Investment Company Act
of 1940, and the trustee has actual knowledge of the SEC finding,
then the trustee will distribute the shares of that company to the
owners of the Internet Infrastructure HOLDRS.
C. If the underlying securities of an issuer cease to be outstanding as
a result of a merger, consolidation or other corporate combination,
the trustee will distribute the consideration paid by and received
from the acquiring company to the beneficial owners of Internet
Infrastructure HOLDRS, unless the merger, consolidation or other
corporate combination is between companies that are already included
in the Internet Infrastructure HOLDRS and the consideration paid is
additional underlying securities. In this case, the additional
underlying securities will be deposited into the trust.
D. If an issuer's underlying securities are delisted from trading on a
national securities exchange or NASDAQ and are not listed for trading
on another national securities exchange or through NASDAQ within 5
business days from the date such securities are delisted.
If a reconstitution event occurs, the trustee will deliver the underlying
security to you as promptly as practicable after the date that the trustee has
knowledge of the occurrence of a reconstitution event.
Termination of the trust. The trust will terminate if the trustee resigns
and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, within 60 days from the date the trustee
provides notice to Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
initial depositor, of its intent to resign. Upon termination, the beneficial
owners of Internet Infrastructure HOLDRS will surrender their Internet
Infrastructure HOLDRS as provided in the depositary trust agreement, including
payment of any fees of the trustee or applicable taxes or governmental charges
due in connection with delivery to the owners of the underlying securities. The
trust also will terminate if Internet Infrastructure HOLDRS are delisted from
the American Stock Exchange and are not listed for trading on another national
securities exchange or through NASDAQ within 5 business days from the date the
Internet Infrastructure HOLDRS are delisted. Finally, the trust will terminate
if 75% of the owners of outstanding Internet Infrastructure HOLDRS other than
Merrill Lynch, Pierce, Fenner & Smith Incorporated vote to dissolve and
liquidate the trust.
20
<PAGE>
If a termination event occurs, the trustee will distribute the underlying
securities to you as promptly as practicable after the termination event
occurs.
Amendment of the depositary trust agreement. The trustee and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, may amend any
provisions of the depositary trust agreement without the consent of any other
depositor or any of the owners of the Internet Infrastructure HOLDRS. Promptly
after the execution of any amendment to the agreement, the trustee must furnish
or cause to be furnished written notification of the substance of the amendment
to each owner of Internet Infrastructure HOLDRS. Any amendment that imposes or
increases any fees or charges, subject to exceptions, or that otherwise
prejudices any substantial existing right of the owners of Internet
Infrastructure HOLDRS will not become effective until 30 days after notice of
the amendment is given to the owners of Internet Infrastructure HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more Internet Infrastructure HOLDRS. If you wish to
create Internet Infrastructure HOLDRS by delivering to the trust the requisite
underlying securities, the trustee will charge you an issuance fee of up to
$10.00 for each round-lot of 100 Internet Infrastructure HOLDRS. If you wish to
cancel your Internet Infrastructure HOLDRS and withdraw your underlying
securities, the trustee will charge you a cancellation fee of up to $10.00 for
each round-lot of 100 Internet Infrastructure HOLDRS issued. The trustee may
negotiate either of these fees depending on the volume, frequency and size of
the issuance or cancellation transactions.
Commissions. If you choose to create Internet Infrastructure HOLDRS after
the conclusion of the initial public offering, you will not be charged the
underwriting fee. However, in addition to the issuance and cancellation fees
described above, you will be responsible for paying any sales commissions
associated with your purchase of the underlying securities that is charged by
your broker, whether it be Merrill Lynch, Pierce, Fenner & Smith Incorporated
or another broker.
Custody fees. The Bank of New York, as trustee and as custodian, will
charge you a quarterly custody fee of $2.00 for each round-lot of 100 Internet
Infrastructure HOLDRS to be deducted from any dividend payments or other cash
distributions on underlying securities received by the trustee. With respect to
the aggregate custody fee payable in any calendar year for each Internet
Infrastructure HOLDR, the Trustee will waive that portion of the fee which
exceeds the total cash dividends and other cash distributions received, or to
be received, and payable with respect to such calendar year. The trustee cannot
recapture unpaid custody fees from prior years.
Address of the trustee. The Bank of New York, ADR Department, 101 Barclay
Street, New York, New York 10286.
Governing law. The depositary trust agreement and Internet Infrastructure
HOLDRS will be governed by the laws of the State of New York. The trustee will
provide the depositary trust agreement to any owner of the underlying
securities free of charge upon written request.
Duties and immunities of the trustee. The trustee will assume no
responsibility or liability for, and makes no representations as to, the
validity or sufficiency, or as to the accuracy of the recitals, if any, set
forth in the Internet Infrastructure HOLDRS.
The trustee undertakes to perform only those duties as are specifically
set forth in the depositary trust agreement. Subject to the preceding sentence,
the trustee will be liable for its own negligence or misconduct except for good
faith errors in judgment so long as the trustee was not negligent in
ascertaining the relevant facts.
21
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the Internet Infrastructure HOLDRS for:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in the United
States or under the laws of the United States;
. an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source;
. or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial
decisions of the trust (each of the above, a "U.S. receipt holder");
and
. any person other than a U.S. receipt holder (a "Non-U.S. receipt
holder").
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all U.S. federal income
tax consequences applicable to all categories of investors, some of which may
be subject to special rules. In addition, this summary generally is limited to
investors who will hold the Internet Infrastructure HOLDRS as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended. We suggest that you consult with
your own tax advisor.
Taxation of the trust
The trust will provide for flow through tax consequences as it will be
treated as a grantor trust or custodial arrangement for United States federal
income tax purposes.
Taxation of Internet Infrastructure HOLDRS
A receipt holder purchasing and owning Internet Infrastructure HOLDRS
will be treated, for U.S. federal income tax purposes, as directly owning a
proportionate share of the underlying securities represented by Internet
Infrastructure HOLDRS. Consequently, if there is a taxable cash distribution on
an underlying security, a holder will recognize income with respect to the
distribution at the time the distribution is received by the trustee, not at
the time that the holder receives the cash distribution from the trustee.
A receipt holder will determine its initial tax basis in each of the
underlying securities by allocating the purchase price for the Internet
Infrastructure HOLDRS among the underlying securities based on their relative
fair market values at the time of purchase. Similarly, when a holder sells a
receipt, it will determine the amount realized with respect to each security by
allocating the sales price among the underlying securities based on their
relative fair market values at the time of sale. A holder's gain or loss with
respect to each security will be computed by subtracting its basis in the
security from the amount realized on the security. With respect to purchases of
Internet Infrastructure HOLDRS for cash in the secondary market, a receipt
holder's aggregate tax basis in each of the underlying securities will be equal
to the purchase price of the Internet Infrastructure HOLDRS. Similarly, with
respect to sales of Internet Infrastructure HOLDRS for cash in the secondary
market, the amount realized with respect to a sale of Internet Infrastructure
HOLDRS will be equal to the aggregate amount realized with respect to each of
the underlying securities.
22
<PAGE>
The distribution of any securities by the trust upon the surrender of
Internet Infrastructure HOLDRS, the occurrence of a reconstitution event, or a
termination event will not be a taxable event. The receipt holders holding
period with respect to the distributed securities will include the period that
the holder held the securities through the trust.
Brokerage fees and custodian fees
The brokerage fee incurred in purchasing a receipt will be treated as
part of the cost of the underlying securities. Accordingly, a holder includes
this fee in its tax basis in the underlying securities. A holder will allocate
the brokerage fee among the underlying securities using either a fair market
value allocation or pro rata based on the number of shares of each underlying
security. Similarly, the brokerage fee incurred in selling Internet
Infrastructure HOLDRS will reduce the amount realized with respect to the
underlying securities.
A holder will be required to include in its income the full amount of
dividends paid on the underlying securities, even though the depositary trust
agreement provides that the custodian fees will be deducted directly from any
dividends paid. These custodian fees will be treated as an expense incurred in
connection with a holder's investment in the underlying securities and may be
deductible. If a holder is an individual, estate or trust, however, the
deduction of its share of custodian fees will be a miscellaneous itemized
deduction that may be disallowed in whole or in part.
Non-U.S. receipt holders
Non-U.S. receipt holders should consult their tax advisors regarding U.S.
withholding and other taxes which may apply to an investment in the underlying
securities.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire Internet
Infrastructure HOLDRS should consult with its counsel with respect to the
potential applicability of ERISA and the Internal Revenue Code to this
investment and whether any exemption would be applicable and determine on its
own whether all conditions have been satisfied. Moreover, each plan fiduciary
should determine whether, under the general fiduciary standards of investment
prudence and diversification, an acquisition of Internet Infrastructure HOLDRS
is appropriate for the plan, taking into account the overall investment policy
of the plan and the composition of the plan's investment portfolio.
PLAN OF DISTRIBUTION
In accordance with the depositary trust agreement, the trust will issue
to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch,
Pierce, Fenner & Smith Incorporated will deposit the underlying securities to
receive Internet Infrastructure HOLDRS. Merrill Lynch & Co., as underwriter,
proposes to offer the Internet Infrastructure HOLDRS to the public at the
offering price set forth on the cover page of this prospectus. Merrill Lynch
expects the trust to deliver the initial distribution of Internet
Infrastructure HOLDRS against deposit of the underlying securities in New York,
New York on , 2000. After the initial offering, the public offering price,
concession and discount may be changed. The trust will continue to issue
Internet Infrastructure HOLDRS, in connection with deposits of underlying
securities. This offering is being made in compliance with Conduct Rule 2810 of
the National Association of Securities Dealers, Inc. Accordingly, Merrill Lynch
will not make any sales to a discretionary account without the prior written
approval of a purchaser of Internet Infrastructure HOLDRS.
23
<PAGE>
Merrill Lynch has from time to time provided investment banking and other
financial services to certain of the issuers of the underlying securities and
expects in the future to provide these services, for which it has received and
will receive customary fees and commissions. It also may have served as
counterparty in other transactions with certain of the issuers of the
underlying securities.
Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the Internet Infrastructure HOLDRS.
Merrill Lynch, Pierce, Fenner & Smith Incorporated may act as principal or
agent in such transactions. Market making sales will be made at prices related
to prevailing market prices at the time of sale.
Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to
indemnify the trustee against certain civil liabilities related to acts
performed or not performed by the trustee in accordance with the depositary
trust agreement or periodic reports filed or not filed with the SEC with
respect to the Internet Infrastructure HOLDRS. Should a court determine not to
enforce the indemnification provision, Merrill Lynch, Pierce, Fenner & Smith
Incorporated also has agreed to contribute to payments the trustee may be
required to make with respect to such liabilities.
LEGAL MATTERS
Legal matters, including the validity of the Internet Infrastructure
HOLDRS will be passed upon for Merrill Lynch, Pierce, Fenner & Smith
Incorporated, the initial depositor and the underwriter, by Shearman &
Sterling, New York, New York. Shearman & Sterling, as special U.S. tax counsel
to the trust, also will render an opinion regarding the material federal income
tax consequences relating to the Internet Infrastructure 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 Internet
Infrastructure HOLDRS. While this prospectus is a part of the registration
statement, it does not contain all the exhibits filed as part of the
registration statement. You should consider reviewing the full text of those
exhibits.
The registration statement is available over the Internet at the SEC's
web site at http://www.sec.gov. You also may read and copy the registration
statement at the SEC's public reference rooms in Washington, D.C., New York,
New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges. Merrill
Lynch, Pierce, Fenner & Smith Incorporated will not and the trust may not be
subject to the requirements of the Exchange Act and accordingly may not file
periodic reports.
Because the common stock of the issuers of the underlying securities is
registered under the Exchange Act, the issuers of the underlying securities are
required to file periodically financial and other information specified by the
SEC. For more information about the issuers of the underlying securities,
information provided to or filed with the SEC by the issuers of the underlying
securities with respect to their registered securities can be inspected at the
SEC's public reference facilities or accessed through the SEC's web site
referenced above. In addition, information regarding the issuers of the
underlying securities may be obtained from other sources including, but not
limited to, press releases, newspaper articles and other publicly disseminated
information.
The trust and Merrill Lynch, Pierce, Fenner & Smith Incorporated and its
affiliates are not affiliated with the issuers of the underlying securities,
and the issuers of the underlying securities have no obligations with respect
to Internet Infrastructure HOLDRS. This prospectus relates only to Internet
Infrastructure
24
<PAGE>
HOLDRS and does not relate to the common stock or other securities of the
issuers of the underlying securities. The information in this prospectus
regarding the issuers of the underlying securities has been derived from the
publicly available documents described in the preceding paragraph. We have not
participated in the preparation of these documents or made any due diligence
inquiries with respect to the issuers of the underlying securities in
connection with Internet Infrastructure HOLDRS. We make no representation that
these publicly available documents or any other publicly available information
regarding the issuers of the underlying securities are accurate or complete.
Furthermore, we cannot assure you that all events occurring prior to the date
of this prospectus, including events that would affect the accuracy or
completeness of the publicly available documents described in the preceding
paragraph, that would affect the trading price of the common stock of the
issuers of the underlying securities, and therefore the offering and trading
prices of the Internet Infrastructure HOLDRS, have been publicly disclosed.
25
<PAGE>
ANNEX A
This annex forms an integral part of the prospectus.
The following tables provide a brief description of the business of each
of the issuers of the underlying securities and set forth the split-adjusted
closing market prices, as reported on the applicable primary trading market, of
each of the underlying securities in each month during 1995, 1996, 1997, 1998,
1999 and 2000 through January 2000. All market prices in excess of one dollar
are rounded to the nearest one-sixty-fourth of a dollar. An asterisk (*)
denotes that no shares of the issuer were outstanding during that month. The
historical prices of the underlying securities should not be taken as an
indication of future performance.
AKAMAI TECHNOLOGIES, INC. (AKAM)
Akamai Technologies, Inc. provides software and services that help
deliver the Web site content of Akami customers to their Web site visitors.
Akamai's technology is designed to improve the reliability and access speed to
Web sites and protects Web sites from crashes that may occur during times of
high usage. Akamai's proprietary software also allows its customers to include
enhanced content, such as graphics, banner advertisements, photographs,
animation, audio and video, while maintaining the speed and reliability of the
Web site. Its software also manages Internet traffic patterns and delivers its
customers' Internet content and applications through the most efficient route.
Akamai currently sells its services through a direct sales force that targets
the most heavily used Web sites and plans to use resellers and other indirect
distribution channels to penetrate other markets.
<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 249 1/8
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September *
October * October * October * October * October 145 3/16
November * November * November * November * November 237
December * December * December * December * December 327 3/8
</TABLE>
The closing price on , 2000 was .
A-1
<PAGE>
ALTEON WEBSYSTEMS, INC. (ATON)
Alteon Websystems, Inc. develops products designed to enable companies
that do business over the Internet to adapt to the increased use of the
Internet. Alteon products include software, switches to control network data
traffic and server adapters which attempt to increase the performance of Web
servers and data centers by enabling network traffic to move more quickly and
efficiently. Alteon's primary source of revenue is from sales of its products
to customers such as electronic commerce companies, Web site content products
and Internet service providers who provide Internet access to individuals and
businesses. Alteon markets and sells its products through its own direct sales
force, resellers and original equipment manufacturers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 98 3/8
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September 94
October * October * October * October * October 71 3/4
November * November * November * November * November 96 1/2
December * December * December * December * December 87 3/4
</TABLE>
The closing price on , 2000 was .
BEA SYSTEMS, INC. (BEAS)
BEA Systems, Inc. develops software for companies to use in their
electronic commerce activities. BEA's software allows companies to enhance
their Web site content and functionality, and to integrate their electronic
commerce activities with their existing operations. BEA's products are used in
electronic billing services, customer service, securities trading, electronic
fund transfers, travel reservations and Internet sales. BEA uses its own direct
sales force as well as vendors and system integration companies to market and
sell its products.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January 9 27/32 January 6 29/32 January 75 3/8
February * February * February * February 13 7/16 February 8 9/16
March * March * March * March 14 1/16 March 7 13/16
April * April * April 3 April 11 1/8 April 7 9/16
May * May * May 6 5/8 May 10 1/32 May 10 3/16
June * June * June 9 1/8 June 11 15/32 June 14 9/32
July * July * July 9 11/16 July 9 13/16 July 12 1/4
August * August * August 9 3/16 August 7 5/8 August 12 1/16
September * September * September 8 15/16 September 10 13/16 September 17 21/32
October * October * October 6 3/4 October 9 51/64 October 22 13/16
November * November * November 7 3/16 November 6 November 40 5/8
December * December * December 8 21/32 December 6 1/8 December 69 15/16
</TABLE>
The closing price on , 2000 was .
A-2
<PAGE>
BROADVISION, INC. (BVSN)
Broadvision, Inc. develops and markets software which allows companies to
establish relationships directly with their customers, suppliers, partners,
distributors and employees using the Internet. Broadvision's software
facilitates electronic commerce, online customer service and support and online
financial services. Its software enables companies to personalize and custom-
tailor their Web site to a specific customers' business and personal needs.
Broadvision markets and sells its products through its own direct sales force
and resellers. Broadvision will effect a 3-for-1 stock split on its common
stock in the form of a stock dividend to shareholders of record on February 21,
2000. The stock will begin trading on a split-adjusted basis on March 14, 2000.
The following table does not take into account any adjustments for this stock
split.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January 2 59/64 January 2 39/64 January 13 61/64 January 127 5/16
February * February * February 3 February 4 13/64 February 14 61/64
March * March * March 2 53/64 March 5 61/64 March 19 59/64
April * April * April 1 49/64 April 6 11/64 April 19 23/64
May * May * May 2 27/64 May 5 5/16 May 17 21/64
June * June 2 21/64 June 2 13/64 June 7 61/64 June 24 37/64
July * July 1 53/64 July 2 July 6 27/64 July 23 15/64
August * August 1 7/8 August 1 3/4 August 6 15/64 August 33 3/16
September * September 2 5/8 September 2 19/64 September 3 33/64 September 44 23/64
October * October 2 1/2 October 2 21/64 October 5 October 73 5/8
November * November 2 19/64 November 2 37/64 November 8 7/8 November 93 1/16
December * December 2 5/8 December 2 11/64 December 10 43/64 December 170 1/16
</TABLE>
The closing price on , 2000 was .
DIGITAL ISLAND, INC. ( ISLD)
Digital Island, Inc. provides products and services for companies that
use the Internet to conduct electronic commerce worldwide. Digital Island's
technology and services, which include providing Web site content delivery,
hosting and networking for its customers are designed to enhance the speed,
security and functionality of its customer's Web sites. This allows for faster
and more reliable electronic commerce transactions between Digital Island's
customers and visitors to their Web sites. Digital Island markets its services
predominantly through a direct sales force complemented by a range of external
alliances and channels.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 84 1/2
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June 17 15/16
July * July * July * July * July 20 1/2
August * August * August * August * August 18 7/8
September * September * September * September * September 26
October * October * October * October * October 67 1/2
November * November * November * November * November 46 3/4
December * December * December * December * December 95 1/8
</TABLE>
The closing price on , 2000 was .
A-3
<PAGE>
E.PIPHANY, INC. (EPNY)
E.piphany, Inc. develops and markets software designed to assist
companies establish, maintain and improve customer relationships in traditional
and Internet sales, marketing and distribution channels. E.piphany licenses its
software to large and medium sized businesses and provides consulting,
implementation and maintenance services. E.piphany software collects and
analyzes data from customers' existing software systems and from third-party
data providers to profile them with their customers' characteristics and
preferences. These companies can then use this data to design and execute
marketing campaigns as well as personalize products and services. E.piphany
markets its products through its own direct sales force and indirectly through
agreements with third parties to resell its software.
<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 158
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September 48 3/4
October * October * October * October * October 86
November * November * November * November * November 169 7/16
December * December * December * December * December 223 1/8
</TABLE>
The closing price on , 2000 was .
EXODUS COMMUNICATIONS, INC. (EXDS)
Exodus Communications, Inc. develops and markets Internet hosting
software and services that are intended to improve performance of a Web site
through monitoring to identify and resolve hardware, software, network and
application problems before customer awareness. Exodus markets its products
primarily through its own direct sales force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January 13 1/16 January 114 7/8
February * February * February * February * February 9 11/64
March * March * March * March 3 1/2 March 16 13/16
April * April * April * April 4 3/4 April 22 17/32
May * May * May * May 4 17/64 May 18 3/4
June * June * June * June 5 19/32 June 29 63/64
July * July * July * July 4 11/64 July 30 1/64
August * August * August * August 3 19/32 August 40 3/16
September * September * September * September 3 3/64 September 36 1/32
October * October * October * October 3 31/32 October 43
November * November * November * November 4 7/32 November 53 29/32
December * December * December * December 8 1/32 December 88 13/16
</TABLE>
The closing price on , 2000 was .
A-4
<PAGE>
INFOSPACE.COM, INC. (INSP)
InfoSpace.com, Inc. provides information content for Web sites and
telecommunications equipment with Internet access, such as cellular phones,
personal digital assistants and pagers. InfoSpace.com's content includes yellow
pages, white pages, maps, stock quotes, weather forecasts and information on
local businesses and events. It provides access to this content to the users of
its customers' Web sites in such a way that the user has the impression of
never leaving the originally accessed Web site. InfoSpace.com, Inc. derives
substantially all of its revenues from national and local advertising and
promotions. InfoSpace.com uses its own direct sales force to offer a variety of
national advertising and promotions. It also uses established local independent
yellow pages publishers and direct marketing companies to sell local Internet
yellow pages advertising.
<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 14 3/8 January 140 1/8
February * February * February * February * February 13 5/8
March * March * March * March * March 22 5/32
April * April * April * April * April 35 53/64
May * May * May * May * May 23 1/2
June * June * June * June * June 23 1/2
July * July * July * July * July 22 31/32
August * August * August * August * August 23 1/32
September * September * September * September * September 20 9/16
October * October * October * October * October 27 13/16
November * November * November * November * November 50 27/32
December * December * December * December 9 17/32 December 107
</TABLE>
The closing price on , 2000 was .
INKTOMI CORPORATION (INKT)
Inktomi Corporation develops and markets software applications designed
to enhance the performance and efficiency of large-scale networks and address
the challenges posed by the increase in network users and the resulting
increase in traffic volume. Inktomi's software applications currently consist
of network products which attempt to increase network efficiency by reducing
congestion and data access delays. Its portal services provide the
infrastructure that attempts to increase the efficiency with which Internet Web
sites display information and perform search functions. Inktomi markets its
products and services internationally through its own direct sales force and
has established indirect distribution channels, including value-added resellers
and joint marketing partners.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January 35 31/32 January 99 7/16
February * February * February * February * February 31
March * March * March * March * March 42 3/4
April * April * April * April * April 60 1/16
May * May * May * May * May 51 3/8
June * June * June * June 9 29/32 June 65 3/4
July * July * July * July 14 17/32 July 54 3/32
August * August * August * August 12 1/8 August 56 11/16
September * September * September * September 18 3/4 September 60
October * October * October * October 21 5/64 October 50 23/32
November * November * November * November 33 25/64 November 64 1/2
December * December * December * December 32 31/64 December 88 5/8
</TABLE>
The closing price on , 2000 was .
A-5
<PAGE>
INTERNAP NETWORK SERVICES CORPORATION (INAP)
InterNAP Network Services Corporation develops and markets routing
infrastructure, which are products that move data to and from destinations on
the Internet. InterNAP's customers are directly connected to one of InterNAP's
routes which transfers data the customer receives and sends to its Web site
visitors. InterNAP's routes are designed to increase the speed of data
transmission by bypassing Internet congestion and reducing data loss. InterNAP
markets and sells its products primarily through its own direct sales force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
---- ------- --------- ------- --------- ------- --------- ------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 62 5/8
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September 22 5/16
October * October * October * October * October 46 3/16
November * November * November * November * November 47 1/8
December * December * December * December * December 86 1/2
</TABLE>
The closing price on , 2000 was .
KANA COMMUNICATIONS, INC. (KANA)
Kana Communications, Inc. develops and markets software products and
services which attempt to allow companies conducting business on the Internet
to manage high volumes of e-mail and other Internet communications. Kana's
products and services allow its customers to collect, extract and analyze
information about visitors to their respective Web sites. Kana markets its
products through its own direct sales force in the United States and Europe and
also uses reseller and other strategic relationships. On January 10, 2000, Kana
announced a 2-for-1 stock split on its common stock for shareholders of record
on January 28, 2000. The shares of common stock will begin trading on a split-
adjusted basis on February 23, 2000. The following table does not take into
account any adjustments for this stock split.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 249 15/16
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September 49 7/8
October * October * October * October * October 84 1/8
November * November * November * November * November 147
December * December * December * December * December 205
</TABLE>
The closing price on , 2000 was .
A-6
<PAGE>
NAVISITE, INC. (NAVI)
Navisite, Inc. offers Web site and Internet application hosting and
management services to its customers to manage the creation, configuration,
hosting, management and support of its customers Web sites. Navisite also
provides its customers with access to its own data centers which provide direct
connections to the Internet, and which can increase the reliability and speed
of data transfer to and from the customers Web site. Navisite markets its
services through its own direct sales force and customer referrals based on
industry relationships.
<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 102 7/8
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September *
October * October * October * October * October 47
November * November * November * November * November 53
December * December * December * December * December 100
</TABLE>
The closing price on , 2000 was .
NETWORK SOLUTIONS, INC. (NSOL)
Network Solutions, Inc, is a provider of Web-identity services throughout
the world. Network Solutions' offers domain name registration services. A
domain name is used as a means to identify different addresses or Web sites on
the Internet. Network Solutions is the exclusive registry for some addresses
and one of the leading registrars for business, organizations and individuals
with, or who seek, domain names with the ".com", ".net", ".edu" and ".org"
domains. It also assists in the registration of other existing domain names,
including country code domain names. By registering specific Internet domain
names, Network Solutions enables businesses, organizations and individuals to
establish unique identities on the Internet. Network Solutions also offers
registration search services which assist in brand protection. The registrar
services are primarily marketed through a Web-based advertising and application
process. On February 15, 2000 Network Solutions announced a 2-for-1 stock split
for shareholders of record on February 25, 2000. The shares will begin trading
on a split-adjusted basis on March 13, 2000. The following table does not take
into account any adjustments for this stock split.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January 9 3/8 January 120 1/2 January 216 7/8
February * February * February * February 10 1/8 February 90 3/4
March * March * March * March 18 9/16 March 105 3/4
April * April * April * April 26 1/2 April 77 3/4
May * May * May * May 18 31/64 May 63 5/8
June * June * June * June 22 1/2 June 79 1/8
July * July * July * July 18 July 62 1/4
August * August * August * August 12 7/8 August 57 5/8
September * September * September 10 7/8 September 20 13/16 September 91 7/8
October * October * October 9 1/2 October 26 11/16 October 118 1/2
November * November * November 8 1/8 November 32 13/16 November 149
December * December * December 6 9/16 December 65 7/16 December 217 9/16
</TABLE>
The closing price on , 2000 was .
A-7
<PAGE>
PORTAL SOFTWARE, INC. (PRSF)
Portal Software, Inc. develops and markets customer management and
billing software for businesses that provide Internet-based services. Portal's
software attempts to allow a business to perform enhanced accounting, reporting
and marketing activities. Its software can provide services on a "real-time"
basis for such activities as account creation, user authentication and
authorization, pricing, billing and customer service. Their customers include
Internet service providers, online businesses and online divisions of
telecommunications carriers. Portal markets and sells its products primarily
through its own direct sales force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 49 5/8
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May 24 9/16
June * June * June * June * June 23 5/32
July * July * July * July * July 20 59/64
August * August * August * August * August 23 17/32
September * September * September * September * September 19 3/8
October * October * October * October * October 32 11/16
November * November * November * November * November 58 17/32
December * December * December * December * December 51 7/16
</TABLE>
The closing price on , 2000 was .
REALNETWORKS, INC. (RNWK)
RealNetworks, Inc. develops and markets software products and services
designed to enable users of personal computers and digital devices to send and
receive multi-media content, including audio, video and animation, over the
Internet and on private networks. RealNetworks RealSystem G2 provides
technology to allow Web sites to broadcast live and recorded audio, video and
other multi-media programming simultaneously to a large number of users over
Internet connections. Consumers, using the RealPlayer G2, are able to listen
and view content from Web sites that use RealNetworks technology. RealNetworks
has also developed secure methods for the music industry to distribute, and for
users to record and play, music from the Internet. RealNetworks offers the
basic versions of its products to consumers for free and sells the premium
versions of its products. It derives revenues from software license fees,
service fees and advertising. RealNetworks markets its products and services
directly through the Internet, where substantially all of its products can be
purchased and delivered from its Web site, through its own sales force and
indirectly through value-added resellers and other distributors. On January 25,
2000, Real Networks declared a 2-for-1 stock split on its common stock for
shareholders of record on January 28, 2000. The shares of common stock began
trading on a split-adjusted basis on February 14, 2000. The following table
takes into account adjustments for this stock split.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January 3 3/4 January 17 45/64 January 78 19/32
February * February * February * February 3 3/4 February 17 17/32
March * March * March * March 7 1/4 March 30 35/64
April * April * April * April 8 31/64 April 55 3/8
May * May * May * May 5 25/32 May 35 7/16
June * June * June * June 9 21/64 June 34 7/16
July * July * July * July 7 21/64 July 38 5/32
August * August * August * August 4 15/16 August 40 7/8
September * September * September * September 8 43/64 September 52 9/32
October * October * October * October 8 27/64 October 54 27/32
November * November * November 3 27/32 November 9 1/2 November 69 3/4
December * December * December 3 15/32 December 8 31/32 December 60 5/32
</TABLE>
The closing price on , 2000 was .
A-8
<PAGE>
SOFTWARE.COM, INC. (SWCM)
Software.com, Inc. develops and markets messaging software applications,
such as e-mail, exclusively to companies that provide Internet communications
and services. Software.com offers e-mail messaging services that allow these
Internet service providers to support the Internet communications needs of both
their consumer and business subscribers. Software.com also offers consulting
and support services to its clients. Software.com markets its products and
services through its own direct sales force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 67 7/8
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June 23 3/16
July * July * July * July * July 33 5/8
August * August * August * August * August 45 7/16
September * September * September * September * September 42 7/8
October * October * October * October * October 67 5/16
November * November * November * November * November 97 1/16
December * December * December * December * December 96
</TABLE>
The closing price on , 2000 was .
USINTERNETWORKING, INC. (USIX)
Usinternetworking, Inc. implements, operates and supports packaged
software applications, which are collections of different software applications
from leading software companies. USinternetworking packages these software
applications to meet a broad range of business needs of a company. This
packaged application can be accessed and used over the Internet.
USinternetworking implements these applications in its own data centers,
configures them to meet the needs of its clients and packages them with
security, Internet access, back-up and operational support. USinternetworking's
primary source of revenue is from monthly service fees paid by its customers in
exchange for its services. USinternetworking offers its products and services
through its own direct sales organization based in the United States.
<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 43 1/2
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April 34 5/64
May * May * May * May * May 19 27/64
June * June * June * June * June 28
July * July * July * July * July 18 1/4
August * August * August * August * August 10
September * September * September * September * September 20 53/64
October * October * October * October * October 22 13/64
November * November * November * November * November 36 35/64
December * December * December * December * December 69 7/8
</TABLE>
The closing price on , 2000 was .
A-9
<PAGE>
VERISIGN, INC. (VRSN)
Verisign, Inc. provides Internet-based services used by Web sites,
businesses and consumers to conduct secure communications and transactions over
the Internet and on private networks. Organizations that provide large-scale
electronic commerce services, communications and other information services
over the Internet typically offer these security services to consumers to
attract users. Verisign markets its services directly through its Web site and
its own direct sales force and through value-added resellers and affiliates.
<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 6 3/8 January 23 13/16 January 161 3/8
February * February * February * February 7 5/32 February 24 1/2
March * March * March * March 11 March 38 1/2
April * April * April * April 9 19/32 April 28 3/4
May * May * May * May 7 63/64 May 29 5/8
June * June * June * June 9 11/32 June 43 1/8
July * July * July * July 7 3/4 July 37 1/16
August * August * August * August 7 3/32 August 54 5/32
September * September * September * September 6 13/16 September 53 1/4
October * October * October * October 7 43/64 October 61 3/4
November * November * November * November 10 1/32 November 92 29/32
December * December * December * December 14 25/32 December 190 5/8
</TABLE>
The closing price on , 2000 was .
VIGNETTE CORPORATION (VIGN)
Vignette Corporation develops and markets software products and services
that are designed to enable Internet companies to communicate with customers to
develop and manage online customer relationships, attract and retain new
customers and increase customer satisfaction. Vignette's StoryServer 4
software, which it licenses to its customers, is designed to allow businesses
to provide personalized and immediate communications with visitors to their Web
site, and provide Web site user profiling and reporting services to track
customer profiles. Vignette primarily markets its products through its own
direct sales force.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- ------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January * January 195
February * February * February * February * February 27 1/8
March * March * March * March * March 37 5/8
April * April * April * April * April 47 1/2
May * May * May * May * May 29 5/8
June * June * June * June * June 37 1/2
July * July * July * July * July 32
August * August * August * August * August 33 29/32
September * September * September * September * September 45 1/4
October * October * October * October * October 79
November * November * November * November * November 103 7/16
December * December * December * December * December 163
</TABLE>
The closing price on , 2000 was .
A-10
<PAGE>
VITRIA TECHNOLOGY, INC. (VITR)
Vitria Technology, Inc. provides software for conducting business and
electronic commerce over the Internet. Vitria's product, BusinessWare, enables
companies to conduct business, in real-time, across their private networks and
over the Internet. The BusinessWare technology allows companies to monitor
inefficiencies in online business transactions, and it can adapt to changes in
business conditions. Vitria licenses its product and sells its services
throughout the world primarily through its own direct sales force. Vitria also
uses resellers, technology vendors and value-added resellers to market and sell
its software.
<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 98
February * February * February * February * February *
March * March * March * March * March *
April * April * April * April * April *
May * May * May * May * May *
June * June * June * June * June *
July * July * July * July * July *
August * August * August * August * August *
September * September * September * September * September 18 7/8
October * October * October * October * October 32 31/32
November * November * November * November * November 49 29/32
December * December * December * December * December 117
</TABLE>
The closing price on , 2000 was .
A-11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
H O L D R S /SM/
INTERNET INFRASTRUCTURE
1,000,000,000 Depositary Receipts
Internet Infrastructure HOLDRS SM Trust
--------------------
PROSPECTUS
--------------------
Merrill Lynch & Co.
, 2000
Until , 2000 (25 days after the date of this prospectus), all dealers
effecting transactions in the offered Internet Infrastructure HOLDRS, whether
or not participating in this distribution, may be required to deliver a
prospectus. This requirement is in addition to the obligations of dealers to
deliver a prospectus when acting as underwriters and with respect to unsold
allotments or subscriptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. Except for the registration fee payable
to the Securities and Exchange Commission, all such expenses are estimated.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $290,136
Printing and engraving expenses................................. 150,000
Legal fees and expenses......................................... 200,000
Rating agency fees.............................................. 0
Miscellaneous................................................... 9,864
--------
Total......................................................... $650,000
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, provides that under certain circumstances, a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or
is or was serving at its request in such capacity in another corporation or
business association, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful.
Article XIV, Section 2 of the Restated Certificate of Incorporation of
Merrill Lynch, Pierce, Fenner & Smith Incorporated provides in effect that,
subject to certain limited exceptions, Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall indemnify its directors and officers to the full extent
authorized or permitted by law.
The directors and officers of Merrill Lynch, Pierce, Fenner & Smith
Incorporated are insured under policies of insurance maintained by Merrill
Lynch, Pierce, Fenner & Smith Incorporated, subject to the limits of the
policies, against certain losses arising from any claim made against them by
reason of being or having been such directors or officers. In addition, Merrill
Lynch, Pierce, Fenner & Smith Incorporated has entered into contracts with all
of its directors providing for indemnification of such persons by Merrill
Lynch, Pierce, Fenner & Smith Incorporated to the full extent authorized or
permitted by law, subject to certain limited exceptions.
Item 16. Exhibits.
See Exhibit Index.
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:
II-1
<PAGE>
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of the prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(5) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to Item 15 of this
registration statement , or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant hereby certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-1 and has duly caused this
Amendment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, on February
23, 2000.
Merrill Lynch, Pierce, Fenner &
Smith
Incorporated
*
By: _________________________________
Name: Ahmass L. Fakahany
Title: Senior Vice President,
Chief Financial Officer and
Controller
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities indicated on February 23, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chief Executive Officer,
___________________________________________ Chairman of the Board and Director
John L. Steffens
* Director
___________________________________________
E. Stanley O'Neal
* Director
___________________________________________
George A. Schieren
* Senior Vice President, Chief
___________________________________________ Financial Officer and Controller
Ahmass L. Fakahany
/s/ Stephen G. Bodurtha Attorney-in-Fact
By: _______________________________________
Stephen G. Bodurtha
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits
--------
<C> <S>
*4.1 Standard Terms for Depositary Trust Agreements between Merrill Lynch,
Pierce, Fenner & Smith Incorporated and The Bank of New York, as
Trustee dated as of September 2, 1999, and included as exhibits
thereto, form of Depositary Trust Agreement and form of HOLDRS
*5.1 Opinion of Shearman & Sterling regarding the validity of the Internet
Infrastructure HOLDRS Receipts
*8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel regarding
the material federal income tax consequences
*24.1 Power of Attorney (included in Part II of Registration Statement)
</TABLE>
- --------
* Previously filed