<PAGE>
RULE NO. 424(b)(1)
REGISTRATION NO. 333-33362
PROSPECTUS
[LOGO]
1,000,000,000 Depositary Receipts
Semiconductor HOLDRS SM Trust
The Semiconductor HOLDRS SM Trust will issue Depositary Receipts called
Semiconductor HOLDRS SM representing your undivided beneficial ownership in
the U.S.-traded common stock of a group of specified companies that, among
other things, develop, manufacture and market integrated circuitry and other
products known as semiconductors, which allow for increased speed and
functionality in components used in computers and other electronic devices.
The Bank of New York will be the trustee. You only may acquire, hold or
transfer Semiconductor HOLDRS in a round-lot amount of 100 Semiconductor
HOLDRS or round-lot multiples. Semiconductor HOLDRS are separate from the
underlying deposited common stocks that are represented by the Semiconductor
HOLDRS. For a list of the names and the number of shares of the companies that
make up a Semiconductor HOLDR, see "Highlights of Semiconductor HOLDRS--The
Semiconductor HOLDRS" starting on page 11. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has sold 1,500,000 Semiconductor HOLDRs in the initial
distribution. The trust will issue the additional Semiconductor HOLDRS on a
continuous basis.
Investing in Semiconductor HOLDRS involves significant risks. See "Risk
factors" starting on page 4.
The initial public offering price for a round-lot of 100 Semiconductor
HOLDRS will equal the sum of the closing market price on the primary trading
market on May 4, 2000 for each deposited share multiplied by the share amount
specified in this prospectus, plus an underwriting fee.
Semiconductor 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 Semiconductor
HOLDRS. The Semiconductor HOLDRS have been approved for listing on the
American Stock Exchange under the symbol "SMH", subject to official notice of
issuance.
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
<TABLE>
<CAPTION>
Initial Price Underwriting
to Public* Fee
------------- ------------
<S> <C> <C>
Per Semiconductor HOLDR......................... $93.32 2%
</TABLE>
--------
* Includes underwriting fee.
---------------
Merrill Lynch & Co. A.G. Edwards & Sons, Inc.
---------------
The date of this prospectus is May 4, 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 Semiconductor HOLDRS......................................... 10
The Trust.................................................................. 16
Description of Semiconductor 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 Semiconductor 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 Semiconductor HOLDRS in any
jurisdiction where the offer or sale is not permitted.
The Semiconductor HOLDRS are not registered for public sale outside of
the United States. Non-U.S. receipt holders should consult their tax advisors
regarding U.S. withholding and other taxes which may apply to ownership of the
Semiconductor HOLDRS or of the underlying securities through an investment in
the Semiconductor HOLDRS.
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SUMMARY
The Semiconductor HOLDRS trust will be formed under the depositary trust
agreement, dated as of April 24, 2000 among The Bank of New York, as trustee,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the
owners of the Semiconductor 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
semiconductor business. Companies involved in the semiconductor industry
develop, manufacture and market integrated circuitry and other products made
from semiconductors which allow for increased speed and functionality in
components for computers and other electronic devices. The number of shares of
each common stock held by the trust with respect to each round-lot of
Semiconductor HOLDRS is specified under "Highlights of Semiconductor HOLDRS--
The "Semiconductor 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 Semiconductor HOLDRS that represent your undivided
beneficial ownership interest in the shares of common stock held by the trust
on your behalf. The Semiconductor HOLDRS are separate from the underlying
common stocks that are represented by the Semiconductor HOLDRS.
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RISK FACTORS
An investment in Semiconductor HOLDRS involves risks similar to investing
in each of the underlying securities outside of the Semiconductor HOLDRS,
including the risks associated with concentrated investments in semiconductor
companies.
General Risk Factors
. Loss of investment. Because the value of Semiconductor HOLDRS
directly relates to the value of the underlying securities, you
may lose all or a substantial portion of your investment in the
Semiconductor HOLDRS if the underlying securities decline in
value.
. Discount trading price. Semiconductor HOLDRS may trade at a
discount to the aggregate value of the underlying securities.
. Not necessarily representative of the semiconductor
business. While the underlying securities are common stocks of
companies generally considered to be involved in various aspects
of the semiconductor business, the underlying securities and the
Semiconductor HOLDRS may not necessarily follow the price
movements of the entire semiconductor business generally. If the
underlying securities decline in value, your investment in the
Semiconductor HOLDRS will decline in value even if common stock
prices of companies involved in the semiconductor business
generally increase in value. Furthermore, after the initial
deposit, one or more of the issuers of the underlying securities
may no longer be involved in the semiconductor business. In this
case, the Semiconductor HOLDRS may no longer consist of securities
issued only by companies involved in the semiconductor business.
. No investigation of underlying securities. The underlying
securities included in the Semiconductor 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 semiconductor business, without regard for
the value, price performance, volatility or investment merit of
the underlying securities. Consequently, the Semiconductor 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, Semiconductor HOLDRS may not necessarily
continue to be a diversified investment in the semiconductor
business. As a result of market fluctuation and/or reconstitution
events, Semiconductor 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 Semiconductor HOLDRS and
receive delivery of each of the underlying securities. The
cancellation of your Semiconductor HOLDRS will allow you to sell
individual underlying securities or to deliver individual
underlying securities in a tender offer. The cancellation of
Semiconductor HOLDRS will involve payment of a cancellation fee to
the trustee.
. Trading halts. Trading in Semiconductor 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 Semiconductor
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HOLDRS even though there is trading in some of the underlying
securities; however, you will be able to cancel your Semiconductor
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
Semiconductor HOLDRS. If the Semiconductor HOLDRS are delisted by
the American Stock Exchange, a termination event will result
unless the Semiconductor HOLDRS are listed for trading on another
national securities exchange or through NASDAQ within five
business days from the date the Semiconductor HOLDRS are delisted.
. Possible conflicts of interest. Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as initial depositor, has selected the
underlying securities and may face possible conflicts of interest
in connection with its activities. For example, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and its affiliates,
collectively referred to as Merrill Lynch, may engage in
investment banking and other activities, may provide services to
issuers of the underlying securities in connection with its
business, or may make purchases or sales, including establishing
long or short positions, in the underlying securities for its own
account. In addition, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, will purchase, in the
secondary market, the underlying securities that will be deposited
into the trust. Merrill Lynch may make these purchases before the
deposit into the trust, or it may borrow securities for the
deposit and subsequently purchase the securities to repay to the
lenders the securities previously borrowed. In either event, the
purchases of the underlying securities will be made at various
prices. As the initial offering price for the Semiconductor HOLDRS
will be based on the closing market price of each of the
underlying securities on the pricing date, Merrill Lynch may
recognize a gain on its purchases of the underlying securities.
Specifically, if the closing market price for the underlying
securities on the pricing date is higher than the price at which
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial
depositor, purchases the underlying securities then it will
recognize a gain in connection with such purchases. Merrill Lynch
may recognize this gain on any of the underlying securities that
comprise the Semiconductor HOLDRS or on all of the underlying
securities in the aggregate. The potential profit of Merrill Lynch
also is affected by any hedging activities that it may engage in
while it purchases the underlying securities in the secondary
market for deposit into the trust. All of these activities may
result in conflicts of interest with respect to the financial
interest of Merrill Lynch, on the one hand, and, on the other
hand, the initial selection of the underlying securities included
in the Semiconductor HOLDRS, the selection of the semiconductor
industry, Merrill Lynch's activity in the secondary market in the
underlying securities, and the creation and cancellation of
Semiconductor HOLDRS by Merrill Lynch.
. Temporary price increases in the underlying securities. Purchasing
activity in the secondary trading market associated with acquiring
the underlying securities for deposit into the trust may
temporarily increase the market price of the deposited shares,
which will result in a higher initial offering price for the
Semiconductor HOLDRS. Large volumes of purchasing activity, which
may occur in connection with the issuance of Semiconductor HOLDRS,
particularly in connection with the initial issuance of
Semiconductor HOLDRS, could temporarily increase the market price
of the underlying securities, resulting in a higher price on that
date. This purchasing activity could create a temporary imbalance
between the supply and demand of the underlying securities,
thereby limiting the liquidity of the underlying securities due to
a temporary increased demand for underlying securities. Temporary
increases in the market price of the underlying securities may
also occur as a result of the purchasing activity of other market
participants. Other market participants may attempt to benefit
from increases in the market price of the underlying securities
that may occur as result of the increased purchasing activity in
the underlying securities resulting from the
5
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issuance of the Semiconductor HOLDRS. Consequently, prices for the
underlying securities may decline immediately after the pricing
date. If the trading prices for the underlying securities decline,
the trading price of Semiconductor HOLDRS will also decline.
Risk Factors Specific to Companies Involved in the Semiconductor Business
. Semiconductor company stock prices have been and will likely
continue to be volatile, which will directly affect the price
volatility of the Semiconductor HOLDRS, and you could lose all or
part of your investment. The trading prices of the common stocks
of semiconductor companies have been and are likely to be
volatile. Semiconductor companies' stock prices could be subject
to wide fluctuations in response to a variety of factors,
including the following:
. actual or anticipated variations in companies' quarterly
operating results;
. announcements of technological innovations or new services by
semiconductor companies or their competitors;
. announcements by semiconductor companies or their competitors
of significant acquisitions, strategic partnerships, joint
ventures or capital commitments;
. failure to integrate or realize projected benefits from
acquisitions;
. manufacturing yields;
. changes in government regulations; and
. fluctuations in quarterly and annual operating results.
Other broad market and industry factors may decrease the stock
price of semiconductor companies' stocks, regardless of their
operating results. Market fluctuations, as well as general
political and economic conditions, such as recession or interest
rate or currency rate fluctuations, also may decrease the market
price of semiconductor companies' stocks.
. The ability to maintain or increase market share depends on timely
introduction and market acceptance of new products offered by
semiconductor companies. The equipment manufacturing, data
communications and storage, and telecommunications markets which
semiconductor companies serve are characterized by rapidly
changing technology, evolving industry standards and practices,
frequent new product and service introductions and enhancements,
pricing pressure and changing customer demands. It is necessary
for semiconductor companies to adapt to rapidly changing
technologies, adapt their services to evolving industry standards
and to continually improve the price, performance, features and
reliability of their products. They must quickly develop,
introduce and deliver their products, or incur the risk that their
competitors will introduce the same or similar products, or
products which could make their products obsolete. In addition,
the widespread adoption of new technologies could require
substantial expenditures to modify or adapt the existing products
offered by many semiconductor companies. New product research and
development may be costly and time-consuming. Many semiconductor
companies may not successfully introduce new products, develop and
maintain a loyal customer base or achieve general market
acceptance for their products, and failure to do so could have a
material adverse effect on their business, results of operations
and financial condition.
. Some of the companies involved in the semiconductor business are
also engaged in other lines of business unrelated to the
semiconductor business, and they may experience problems with
these lines of business which could adversely affect their
operating results. Some of the companies which comprise the
Semiconductor HOLDRS have lines of business that do not relate to
the semiconductor business and which may present additional risks
not mentioned in this prospectus. The operating results of these
semiconductor companies may
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fluctuate as a result of these additional risks and events in the
industries of these other lines of business. Despite a company's
possible success in the semiconductor business, there can be no
assurance that the other lines of business in which these
companies are engaged will not have an adverse effect on a
company's business or financial condition.
. The semiconductor business is highly cyclical which may cause the
operating results of many semiconductor companies to vary
significantly. The semiconductor business is highly cyclical and
has been subject to significant economic downturns at various
times. These downturns are typically characterized by diminished
product demand, production overcapacity, accelerated decline of
average selling prices and reduced revenues. In addition, many
semiconductor companies' operating results have been harmed in the
past by industry-wide fluctuations in demand for semiconductors,
resulting in under-utilization of companies' manufacturing
capacity. Semiconductor company's revenues depend in large part on
the continued growth of various electronics industries that use
semiconductors, and can fluctuate dramatically depending on the
supply and demand balance within the industry. Semiconductor
companies' business could be harmed in the future by cyclical
conditions in the semiconductor industry or by slower growth in
any of the markets for semiconductor products.
. Many semiconductor companies have created new technologies for the
semiconductor industry and currently rely on a limited number of
customers as purchasers of their products. Several semiconductor
companies rely on a limited number of customers for their
semiconductor products and services. If new customers do not adopt
these technologies for use in their systems, the operating results
and financial condition of these semiconductor companies may be
adversely affected. In addition, many semiconductor products are
marketed to equipment manufacturers who may be reluctant to change
suppliers and incorporate different technologies into their
products due to the significant costs associated with qualifying a
new supplier. As a result, semiconductor companies may experience
barriers to future sales opportunities.
. Many semiconductor companies rely on a single supplier or a
limited number of suppliers for the parts and raw materials used
in their products, and if quality parts and materials are not
delivered by the suppliers on a timely basis, these companies will
not be able to manufacture and deliver their products on a timely
schedule which could adversely affect their financial
condition. Reliance on a single supplier or limited number of
suppliers subjects many semiconductor companies to risks of
delivery delays, price increases, receipt of non-conforming or
poor quality components and inability to obtain long-term supplies
of components. Any reduction or interruption in these third
parties' supply or manufacturing could adversely affect many
semiconductor companies' ability to deliver their products and
meet customer needs, especially since many semiconductor companies
do not maintain extensive inventories of parts and materials for
manufacturing. There can be no assurance that semiconductor
companies will not encounter problems with suppliers which may
result in harm to their reputation and adversely affect their
operations and financial condition.
. The manufacturing processes are highly complex, costly and
potentially vulnerable to impurities and other disruptions that
can significantly increase costs and delay product shipments to
customers. The manufacturing processes of many semiconductor
companies are highly complex, require advanced and costly
equipment and are continuously being modified in an effort to
improve yields and product performance. Impurities or other
difficulties in the manufacturing process can lower yields,
interrupt production and result in loss of customers. As system
complexity has increased and technologies have become more
advanced, manufacturing tolerances have been reduced and
requirements for precision have become even more demanding. There
can be no assurance that semiconductor companies will not
experience production difficulties that cause delivery delays and
quality control problems.
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. The semiconductor business is very competitive, and a
semiconductor company's failure to establish a customer base which
uses its technologies would adversely affect its operating
results. Semiconductor access services can be based on several
different technologies, and the competition among semiconductor
companies to convince a provider to select its technology can be
intense. The semiconductor market is new and rapidly evolving and
it is likely that competitors will expand their business to
produce existing technologies as well as continue to develop new
technologies which compete with, or make obsolete, the existing
technologies. Failure to accurately identify emerging
technological trends and demand for product features and
performance characteristics could place a semiconductor company at
a severe competitive disadvantage. Many semiconductor companies
face significant competition from other companies which have
greater market share and financial resources. These companies may
be better positioned to finance research and development
activities, and they may have greater resources with which to
acquire other companies in the industry.
. Failure to integrate acquisitions could disrupt operations and
prevent the realization of intended benefits. Many semiconductor
companies are active acquirers of other companies as part of their
business plans. There can be no assurance that many semiconductor
companies will be able to integrate these acquired companies,
which may result in failure to realize expected cost savings,
increases in revenue and other projected benefits from such
integration. There can be no assurance that these companies will
be able to develop the capabilities necessary to exploit newly
acquired technologies. There can also no be no assurance that
these companies will be able to attract and retain qualified
personnel from acquired businesses or be successful in integrating
such personnel. Furthermore, semiconductor companies may suffer
material adverse short and long-term effects on operating results
and financial condition as a result of such acquisitions.
. The international operations of many semiconductor companies
expose them to risks associated with instability and changes in
economic and political conditions, foreign currency fluctuations,
changes in foreign regulations and other risks inherent to
international business. Many semiconductor companies have
international operations and derive substantial revenue from
international sales. The risks of international business that the
companies are exposed to include the following:
. general economic, social and political conditions;
. the difficulty of enforcing intellectual property rights,
agreements and collecting receivables through certain foreign
legal systems;
. differing tax rates, tariffs, exchange controls or other
similar restrictions;
. currency fluctuations;
. changes in, and compliance with, domestic and foreign laws and
regulations which impose a range of restrictions on operations,
trade practices, foreign trade and international investment
decisions; and
. reduction in the number or capacity of qualified manufacturing
subcontractors in international markets.
. Inability to adequately protect proprietary rights may harm the
competitive positions of many semiconductor companies. Many
semiconductor companies rely on a combination of copyrights
trademarks, service marks and trade secret law and contractual
restrictions to establish and protect proprietary rights in their
products and services. There can be no assurance that these
companies will be able to protect their intellectual property if
they are unable to enforce their rights or if they do not detect
unauthorized use of their intellectual property. Furthermore, any
steps taken to protect intellectual property may be inadequate,
time consuming and expensive. In addition, semiconductor companies
may be subject to claims that their products and services infringe
the intellectual property rights of others.
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Patent disputes are possible and can preclude the successful
introduction of new products and technologies. Any claim, whether
meritorious or not, could be time consuming, result in costly
litigation, delay product or service introduction or require
semiconductor companies to enter into royalty or licensing
agreements.
. Many semiconductor companies are dependent on their ability to
continue to attract and retain highly-skilled technical and
managerial personnel to develop and generate their business. The
success of many semiconductor companies is highly dependent of the
experience, abilities and continued services of key executive
officers and key technical personnel. If these companies lose the
services of any of these officers or key technical personnel, their
future success could be undermined. Competition for personnel is
intense. There is no certainty that any of these semiconductor
companies will be able to continue to attract and retain qualified
personnel.
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HIGHLIGHTS OF SEMICONDUCTOR HOLDRS
This discussion highlights information regarding Semiconductor HOLDRS; we
present certain information more fully in the rest of this prospectus. You
should read the entire prospectus carefully before you purchase Semiconductor
HOLDRS.
Issuer...................... Semiconductor HOLDRS Trust.
The trust................... The Semiconductor HOLDRS Trust will be formed
under the depositary trust agreement, dated as
of April 24, 2000 among The Bank of New York, as
trustee, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, other depositors and the owners of
the Semiconductor 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 Semiconductor
HOLDRS..................... Semiconductor HOLDRS are designed to achieve the
following:
Diversification. Semiconductor HOLDRS are
designed to allow you to diversify your
investment in the semiconductor business through
a single, exchange-listed instrument
representing your undivided beneficial ownership
of the underlying securities.
Flexibility. The beneficial owners of
Semiconductor HOLDRS have undivided beneficial
ownership interests in each of the underlying
securities represented by the Semiconductor
HOLDRS, and can cancel their Semiconductor
HOLDRS to receive each of the underlying
securities represented by the Semiconductor
HOLDRS.
Transaction costs. The expenses associated with
trading Semiconductor HOLDRS are expected to be
less than trading each of the underlying
securities separately.
Trust assets................ The trust will hold shares of common stock
issued by specified companies involved in the
semiconductor business. Except when a
reconstitution event occurs, the group of
companies will not change. Reconstitution events
are described in this prospectus under the
heading "Description of the depositary trust
agreement--Reconstitution events." Under no
circumstances will the common stock of a new
company be added to the common stocks underlying
the Semiconductor HOLDRS.
The trust's assets may increase or decrease as a
result of in-kind deposits and withdrawals of
the underlying securities during the life of the
trust.
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The Semiconductor HOLDRS....
The trust will issue Semiconductor 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
Semiconductor HOLDRS themselves are separate
from the underlying securities that are
represented by the Semiconductor HOLDRS.
The specific share amounts for each round-lot of
100 Semiconductor HOLDRS are set forth in the
chart below and were determined on May 4, 2000,
the pricing date, so that the initial weightings
of each underlying security included in the
Semiconductor 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 initial weight of 20%.
The share amounts, set forth below, 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 Semiconductor
HOLDRS,
. stock ticker symbols,
. share amounts represented by a round-lot of
100 Semiconductor HOLDRS (as of May 4, 2000),
. initial weightings, and
. principal market on which the shares of
common stock of the selected companies are
traded.
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<TABLE>
<CAPTION>
Primary
Share Initial Trading
Name of Company Ticker Amounts Weightings Market
---------------- ------ ------- ---------- -------
<S> <C> <C> <C> <C>
Intel
Corporation INTC 15 19.84% NASDAQ
Texas
Instruments,
Inc. (1) TXN 11 18.37% NYSE
Applied
Materials, Inc. AMAT 13 13.65% NASDAQ
Micron
Technology,
Inc. MU 9 6.24% NYSE
Analog Devices,
Inc. ADI 6 4.55% NYSE
Broadcom
Corporation BRCM 2 3.91% NASDAQ
Xilinx, Inc. XLNX 5 3.71% NASDAQ
Maxim Integrated
Products, Inc. MXIM 5 3.56% NASDAQ
Teradyne, Inc. TER 3 3.34% NYSE
Altera
Corporation ALTR 3 3.22% NASDAQ
LSI Logic
Corporation LSI 5 3.07% NYSE
Linear
Technology
Corporation LLTC 5 2.88% NASDAQ
KLA-Tencor
Corporation KLAC 3 2.08% NASDAQ
Atmel
Corporation ATML 4 2.01% NASDAQ
Vitesse
Semiconductor
Corporation VTSS 3 1.99% NASDAQ
Advanced Micro
Devices, Inc. AMD 2 1.94% NYSE
National
Semiconductor
Corporation NSM 3 1.94% NYSE
Novellus
Systems, Inc. NVLS 2 1.35% NASDAQ
Amkor
Technology,
Inc. AMKR 2 1.33% NASDAQ
SanDisk
Corporation SNDK 1 1.01% NASDAQ
</TABLE>
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(1) On April 20, 2000, Texas Instruments, Inc.
announced a 2-for-1 stock split payable to
stockholders of record as of May 1, 2000.
As of May 23, 2000, the share amount of
Texas Instruments, represented by a round-
lot of 100 Semiconductor HOLDRS, will be
22.
These companies generally are considered to be
20 of the largest and most liquid companies with
U.S.-traded common stock involved in the
semiconductor business, as measured by market
capitalization and trading volume on April 17,
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,
Semiconductor HOLDRS in a round-lot of 100
Semiconductor HOLDRS and round-lot multiples.
The trust will only issue Semiconductor HOLDRS
upon the deposit of the whole shares represented
by a round-lot of 100 Semiconductor HOLDRS. In
the event that a fractional share comes to be
represented by a round-lot of Semiconductor
HOLDRS, the trust may require a minimum of more
than one round-lot of 100 Semiconductor HOLDRS
for an issuance so that the trust will always
receive whole share amounts for issuance of
Semiconductor HOLDRS.
The number of outstanding Semiconductor 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 Semiconductor HOLDRS on a continuous
basis when an investor deposits the required
shares of common stock with the trustee.
Public offering price....... The initial public offering price for 100
Semiconductor HOLDRS will equal the sum of the
closing market price on the primary trading
market on May 4, 2000, the pricing date, for
each underlying
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security multiplied by the share amount to be
determined on the pricing date, plus an
underwriting fee.
Purchases................... After the initial offering, you may acquire
Semiconductor 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 Semiconductor HOLDRS in the
initial public offering, you will pay an
underwriting fee equal to 2%.
You will not be charged any issuance fee or
other sales commission in connection with
purchases of Semiconductor HOLDRS made in the
initial public offering.
Issuance and cancellation
fees........................ After the initial offering, if you wish to
create Semiconductor HOLDRS by delivering to the
trust the requisite shares of common stock
represented by a round-lot of 100 Semiconductor
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 Semiconductor HOLDRS. If
you wish to cancel your Semiconductor 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 Semiconductor HOLDRS.
Commissions................. If you choose to deposit underlying securities
in order to receive Semiconductor 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 & Co., A.G. Edwards
& Sons, Inc. 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
Semiconductor HOLDRS, to be deducted from any
cash dividend or other cash distributions on
underlying securities received by the trust.
With respect to the aggregate custody fee
payable in any calendar year for each
Semiconductor 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
Semiconductor HOLDRS....... You have the right to withdraw the underlying
securities upon request by delivering a round-
lot or integral multiple of a round-lot of
Semiconductor 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
13
<PAGE>
cancellation. The trustee will not deliver
fractional shares of underlying securities. To
the extent that any cancellation of
Semiconductor 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 Semiconductor
HOLDRS themselves will not have voting rights.
Rights relating to the
underlying securities...... You have the right to:
. Receive all shareholder disclosure materials,
including annual and quarterly reports,
distributed by the issuers of the underlying
securities.
. Receive all proxy materials distributed by
the issuers of the underlying securities and
will have the right to instruct the trustee
to vote the underlying securities or may
attend shareholder meetings yourself.
. Receive dividends and other distributions on
the underlying securities, if any are
declared and paid to the trustee by an issuer
of the underlying securities, net of any
applicable taxes or fees.
If you wish to participate in a tender offer for
underlying securities, you must obtain the
underlying securities by surrendering your
Semiconductor 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 Semiconductor
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 Semiconductor
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
Semiconductor HOLDRS, unless the merger,
consolidation or other corporate combination
is between companies that are already
included in the Semiconductor HOLDRS and the
consideration paid is additional underlying
securities. In this case, the additional
underlying securities will be deposited into
the trust.
14
<PAGE>
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 Semiconductor 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
Semiconductor 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
Semiconductor 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 Semiconductor HOLDRS as directly
owning the underlying securities. The
Semiconductor HOLDRS themselves will not result
in any federal tax consequences separate from
the tax consequences associated with ownership
of the underlying securities.
Listing.....................
The Semiconductor HOLDRS have been approved for
listing on the American Stock Exchange under the
symbol "SMH", subject to official notice of
issuance. Trading will take place only in round-
lots of 100 Semiconductor HOLDRS and round-lot
multiples. A minimum of 150,000 Semiconductor
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
Semiconductor HOLDRS. Bid and ask prices,
however, will be quoted per single Semiconductor
HOLDRS.
Clearance and settlement....
The trust will issue Semiconductor HOLDRS in
book-entry form. Semiconductor 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
Semiconductor HOLDRS."
15
<PAGE>
THE TRUST
General. This discussion highlights information about the Semiconductor
HOLDRS trust. You should read this information about the depositary trust
agreement as well as the depositary trust agreement before you purchase
Semiconductor HOLDRS. The material terms of the depositary trust agreement are
described in this prospectus under the heading "Description of the depositary
trust agreement."
The Semiconductor HOLDRS trust. The trust will be formed pursuant to the
depositary trust agreement, dated as of April 24, 2000. The Bank of New York
will be the trustee. The Semiconductor HOLDRS trust is not a registered
investment company under the Investment Company Act of 1940.
The Semiconductor HOLDRS trust is intended to hold deposited shares for
the benefit of owners of Semiconductor 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 SEMICONDUCTOR HOLDRS
The trust will issue Semiconductor 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 Semiconductor HOLDRS on a continuous basis when an investor deposits
the requisite underlying securities with the trustee.
You may only acquire, hold, trade and surrender Semiconductor HOLDRS in a
round-lot of 100 Semiconductor HOLDRS and round-lot multiples. The trust will
only issue Semiconductor HOLDRS upon the deposit of the whole shares of
underlying securities that are represented by a round-lot of 100 Semiconductor
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 Semiconductor HOLDRS,
the trust may require a minimum of more than one round-lot of 100 Semiconductor
HOLDRS for an issuance so that the trust will always receive whole share
amounts for issuance of Semiconductor HOLDRS.
Semiconductor 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 Semiconductor HOLDRS--The
Semiconductor HOLDRS."
Beneficial owners of Semiconductor 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 Semiconductor HOLDRS to receive the underlying securities. See
"Description of the depositary trust agreement." Semiconductor 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. Semiconductor 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
Semiconductor HOLDRS wishes to realize the dollar value of the underlying
securities, that owner will have to cancel the Semiconductor HOLDRS. Such
cancellation will require payment of fees and expenses as described in
"Description of the depositary trust agreement--Withdrawal of underlying
securities."
16
<PAGE>
Semiconductor 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. Semiconductor HOLDRS will be available only in book-entry
form. Owners of Semiconductor HOLDRS may hold their Semiconductor HOLDRS
through DTC, if they are participants in DTC, or indirectly through entities
that are participants in DTC.
DESCRIPTION OF THE UNDERLYING SECURITIES
Selection criteria. The underlying securities are the common stocks of a
group of 20 specified companies involved in various aspects of the
semiconductor business and whose common stock is registered under Section 12 of
the Exchange Act. The issuers of the underlying securities are considered to be
20 of the largest capitalized, most liquid companies involved in the
semiconductor business as measured by market capitalization and trading volume.
The following criteria were used in selecting the underlying securities on
April 17, 2000:
. Market capitalization equal to or greater than $5.8 billion;
. Average daily trading volume of at least 1.2 million shares over
the 60 trading days before April 17, 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 April 17, 2000) of at least $65 million over the
60 trading days before April 17, 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 Semiconductor 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 semiconductor
business. In this case, the Semiconductor HOLDRS may no longer consist of
securities issued by companies involved in the semiconductor business. Merrill
Lynch, Pierce, Fenner & Smith Incorporated will determine, in its sole
discretion, whether the issuer of a particular underlying security remains in
the semiconductor business and will undertake to make adequate disclosure when
necessary.
Underlying securities. For a list of the underlying securities
represented by Semiconductor HOLDRS, please refer to "Highlights of
Semiconductor HOLDRS--The Semiconductor 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, or any affiliate
of these entities, have not performed any investigation or review of the
selected companies, including the public filings by the companies, other than
to the extent required to determine whether the companies satisfied the
program's stated selection criteria. Accordingly, before you acquire
Semiconductor 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, A.G. Edwards &
Sons, Inc. or any of their affiliates.
17
<PAGE>
General background and historical information. For a brief description of
the business of each of the issuers of the underlying securities and monthly
pricing information showing the historical performance of each underlying
issuer's securities see "Annex A."
The following table and graph set forth the composite performance of all
of the underlying securities represented by a single Semiconductor HOLDR based
upon the share amounts set forth in the table on page 12 of this prospectus, on
May 1, 1998, the first date when all of the underlying securities were publicly
traded, and thereafter as of the end of each month to May 4, 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.
<TABLE>
<CAPTION>
1998 Value
- ---- -----
<S> <C>
May 1............. 22.64
May 29............ 18.61
June 30........... 18.68
July 31........... 19.98
August 31......... 15.60
September 30...... 17.95
October 30........ 21.37
November 30....... 24.60
December 31....... 28.42
</TABLE>
<TABLE>
<CAPTION>
1999 Value
- ---- -----
<S> <C>
January 29........ 35.10
February 26....... 29.80
March 31.......... 31.24
April 30.......... 31.51
May 28............ 31.57
June 30........... 39.04
July 30........... 41.15
August 31......... 46.03
September 30...... 44.50
October 29........ 48.89
November 30....... 52.17
December 31....... 59.95
</TABLE>
<TABLE>
<CAPTION>
2000 Value
- ---- ------
<S> <C>
January 31....... 66.11
February 29...... 91.88
March 31......... 98.07
April 28......... 97.01
May 4............ 91.49
</TABLE>
18
<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of April 24, 2000,
among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York,
as trustee, other depositors and the owners of the Semiconductor HOLDRS,
provides that Semiconductor 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 Semiconductor HOLDRS. You may create
and cancel Semiconductor HOLDRS only in round-lots of 100 Semiconductor HOLDRS.
You may create Semiconductor HOLDRS by delivering to the trustee the requisite
underlying securities. The trust will only issue Semiconductor HOLDRS upon the
deposit of the whole shares represented by a round-lot of 100 Semiconductor
HOLDRS. In the event that a fractional share comes to be represented by a
round-lot of Semiconductor HOLDRS, the trust may require a minimum of more than
one round-lot of 100 Semiconductor HOLDRS for an issuance so that the trust
will always receive whole share amounts for issuance of Semiconductor HOLDRS.
Similarly, you must surrender Semiconductor HOLDRS in integral multiples of 100
Semiconductor 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 Semiconductor 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
Semiconductor HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith
Incorporated owning Semiconductor 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
Semiconductor 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 Semiconductor 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 Semiconductor
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 Semiconductor
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
Semiconductor 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
Semiconductor HOLDRS.
Further issuances of Semiconductor HOLDRS. The depositary trust agreement
provides for further issuances of Semiconductor 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 Semiconductor 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 Semiconductor 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 Semiconductor
HOLDRS, unless the merger, consolidation or other corporate
combination is between companies that are already included in the
Semiconductor 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 Semiconductor HOLDRS will surrender their Semiconductor 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 Semiconductor 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 Semiconductor HOLDRS
are delisted. Finally, the trust will terminate if 75% of the owners of
outstanding Semiconductor HOLDRS other than Merrill Lynch, Pierce, Fenner &
Smith Incorporated vote to dissolve and liquidate the trust.
If a termination event occurs, the trustee will distribute the underlying
securities to you as promptly as practicable after the termination event
occurs.
20
<PAGE>
Amendment of the depositary trust agreement. The trustee and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, may amend any
provisions of the depositary trust agreement without the consent of any other
depositor or any of the owners of the Semiconductor 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 Semiconductor 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 Semiconductor HOLDRS will not become effective
until 30 days after notice of the amendment is given to the owners of
Semiconductor HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more Semiconductor HOLDRS. If you wish to create
Semiconductor 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 Semiconductor HOLDRS. If you wish to cancel your
Semiconductor 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
Semiconductor 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 Semiconductor 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 & Co., A.G. Edwards & Sons, Inc. 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
Semiconductor 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 Semiconductor
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 Semiconductor 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 Semiconductor 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 Semiconductor 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 Semiconductor 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 Semiconductor HOLDRS
A receipt holder purchasing and owning Semiconductor HOLDRS will be
treated, for U.S. federal income tax purposes, as directly owning a
proportionate share of the underlying securities represented by Semiconductor
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 Semiconductor
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 Semiconductor
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
Semiconductor HOLDRS. Similarly, with respect to sales of Semiconductor HOLDRS
for cash in the secondary market, the amount realized with respect to a sale of
Semiconductor HOLDRS will be equal to the aggregate amount realized with
respect to each of the underlying securities.
The distribution of any securities by the trust upon the surrender of
Semiconductor 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.
22
<PAGE>
Brokerage fees and custodian fees
The brokerage fee incurred in purchasing a receipt will be treated as
part of the cost of the underlying securities. Accordingly, a holder includes
this fee in its tax basis in the underlying securities. A holder will allocate
the brokerage fee among the underlying securities using either a fair market
value allocation or pro rata based on the number of shares of each underlying
security. Similarly, the brokerage fee incurred in selling Semiconductor 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 ownership of the Semiconductor
HOLDRS or of the underlying securities through an investment in the
Semiconductor HOLDRS.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire Semiconductor
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 Semiconductor 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 Semiconductor HOLDRS. Merrill Lynch, Pierce, Fenner & Smith
Incorporated and A.G. Edwards & Sons, Inc. propose to offer the Semiconductor
HOLDRS to the public at the offering price set forth on the cover page of this
prospectus which includes an underwriting fee of 2%. Merrill Lynch, Pierce,
Fenner & Smith Incorporated will provide Semiconductor HOLDRS to A.G. Edwards &
Sons, Inc. at the public offering price, as set forth on the cover page of this
prospectus, less a concession that is not in excess of 1.5%. We expect the
trust to deliver the initial distribution of Semiconductor HOLDRS against
deposit of the underlying securities in New York, New York on May 9, 2000.
After the initial offering, the public offering price, concession and discount
may be changed. The trust will continue to issue Semiconductor HOLDRS, in
connection with deposits of underlying securities. This offering is being made
in compliance with Conduct Rule 2810 of the National Association of Securities
Dealers, Inc. Accordingly, sales will not be made to a discretionary account
without the prior written approval of a purchaser of Semiconductor HOLDRS.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, A.G. Edwards & Sons,
Inc. and their affiliates have from time to time provided investment banking
and other financial services to certain of the issuers of the underlying
securities and expect in the future to provide these services, for which they
have received and will receive customary fees and commissions. They also may
have served as counterparty in other transactions with certain of the issuers
of the underlying securities.
23
<PAGE>
Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this
prospectus, as updated from time to time, in connection with offers and sales
related to market-making transactions in the Semiconductor 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 Semiconductor 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 Semiconductor HOLDRS will be
passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial
depositor and the underwriters, by Shearman & Sterling, New York, New York.
Shearman & Sterling, as special U.S. tax counsel to the trust, also will render
an opinion regarding the material federal income tax consequences relating to
the Semiconductor 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 Semiconductor
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, A.G.
Edwards & Sons, Inc. and their affiliates are not affiliated with the issuers
of the underlying securities, and the issuers of the underlying securities have
no obligations with respect to Semiconductor HOLDRS. This prospectus relates
only to Semiconductor 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 Semiconductor 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 Semiconductor HOLDRS, have been publicly disclosed.
24
<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 April 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.
ADVANCED MICRO DEVICES, INC. (AMD)
Advanced Micro Devices, Inc. is a supplier of integrated circuits for the
personal and networked computer and communications markets. AMD provides
Windows-compatible data processors, memory devices, and communications and
networking products that enhance the power and utility of personal computers as
information-processing and communications tools. AMD's silicon solutions are
designed to improve connectivity, superior visual computing platforms, and
faster, easier Internet access from personal computers. AMD's integrated
circuits are used in product applications such as telecommunications equipment,
data and network communications equipment, consumer electronics, personal
computers and workstations. AMD markets and sells its products through its own
direct sales force and through third-party distributors and independent
representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- -------- --------- -------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 29 3/8 January 19 3/4 January 35 1/8 January 20 3/16 January 22 15/16 January 36
February 30 3/8 February 19 3/8 February 36 February 23 1/2 February 17 7/8 February 39 1/8
March 33 7/8 March 17 3/8 March 41 1/2 March 29 1/16 March 15 1/2 March 57 1/16
April 36 April 18 5/8 April 42 1/2 April 27 3/4 April 16 1/2 April 87 1/2
May 33 May 17 5/8 May 40 May 19 9/16 May 18 1/2
June 36 1/2 June 13 5/8 June 35 7/8 June 17 1/16 June 18 1/16
July 32 5/8 July 12 1/8 July 35 1/8 July 17 1/4 July 17 3/8
August 33 3/4 August 12 3/4 August 37 5/8 August 13 August 20 11/16
September 29 1/8 September 14 3/4 September 32 9/16 September 18 9/16 September 17 3/16
October 23 1/2 October 17 3/4 October 23 October 22 9/16 October 19 13/16
November 20 1/2 November 24 1/4 November 21 13/16 November 27 11/16 November 28 1/4
December 16 1/2 December 25 3/4 December 17 3/4 December 29 December 28 15/16
</TABLE>
The closing price on May 4, 2000 was 90 7/16.
A-1
<PAGE>
ALTERA CORPORATION (ALTR)
Altera Corporation designs, manufactures and markets semiconductor
integrated circuits which can be programmed from its customer's personal
computers. Altera on-site programmability is intended to provide quicker design
cycles for customer's products to allow for increased flexibility and faster
time-to-market. Altera's products are used in the telecommunications, data
communications and electronic data processing industries. Altera markets and
sells its products through its own direct sales force, sales representatives
and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 5 9/16 January 16 15/32 January 21 5/8 January 17 1/8 January 31 7/16 January 65 3/4
February 7 7/64 February 16 5/16 February 22 11/16 February 21 9/16 February 24 5/16 February 79 3/4
March 66 63/64 March 13 31/32 March 21 1/2 March 18 7/8 March 29 3/4 March 89 1/4
April 10 7/64 April 13 3/16 April 24 25/32 April 20 1/4 April 36 1/8 April 102 1/4
May 9 47/64 May 12 3/32 May 26 1/2 May 16 13/16 May 34 13/16
June 10 13/16 June 9 1/2 June 25 1/4 June 14 25/32 June 36 13/16
July 13 63/64 July 10 1/4 July 30 3/16 July 18 15/64 July 36 1/4
August 15 21/32 August 11 August 26 5/8 August 14 9/16 August 42 1/8
September 15 19/32 September 12 21/32 September 25 5/8 September 17 9/16 September 43 3/8
October 15 1/8 October 15 1/2 October 22 3/16 October 20 13/16 October 48 5/8
November 14 1/2 November 18 7/8 November 23 13/32 November 24 17/32 November 53 7/8
December 12 7/16 December 18 11/64 December 16 9/16 December 30 7/16 December 49 9/16
</TABLE>
The closing price on May 4, 2000 was 96.
AMKOR TECHNOLOGY, INC. (AMKR)
Amkor Technology, Inc. researches, develops and provides semiconductor
assembly and testing services, which are designed to prepare semiconductor
devices for commercial use. Amkor also provides testing and related services to
verify operating standards for finished semiconductor devices. Amkor markets
and sells its 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 11 9/16 January 31 3/4
February * February * February * February * February 10 1/2 February 51 15/16
March * March * March * March * March 7 7/8 March 53 1/16
April * April * April * April * April 9/ 3/4 April 61 3/16
May * May * May * May 10 3/8 May 9 1/4
June * June * June * June 9 11/32 June 10 1/4
July * July * July * July 7 13/32 July 15 3/8
August * August * August * August 4 5/8 August 17 5/8
September * September * September * September 4 7/8 September 16 1/8
October * October * October * October 4 7/8 October 20 3/16
November * November * November * November 6 5/16 November 27
December * December * December * December 10 13/16 December 28 1/4
</TABLE>
The closing price on May 4, 2000 was 60 9/16.
A-2
<PAGE>
ANALOG DEVICES, INC. (ADI)
Analog Devices, Inc. designs, manufactures and markets precision high-
performance integrated circuits used in analog and digital signal processing.
Analog Devices' products are incorporated by original equipment manufacturers
for use in their own products in such fields as communications, computer,
industrial, instrumentation, miliary/aerospace, automotive and high-performance
consumer electronics applications. Analog Devices markets and sells its
products through its own direct sales force, third-party distributors and
independent sales representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- -------- --------- -------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 5 3/8 January 8 7/16 January 14 1/2 January 14 3/4 January 14 7/8 January 46 3/4
February 6 9/32 February 10 5/64 February 11 5/8 February 16 5/32 February 12 17/32 February 78 5/8
March 6 3/8 March 10 1/2 March 11 1/4 March 16 5/8 March 14 7/8 March 80 1/2
April 6 23/32 April 9 21/32 April 13 3/8 April 19 15/32 April 17 9/16 April 76 13/16
May 7 25/32 May 10 23/64 May 13 1/4 May 12 11/32 May 19 7/32
June 8 1/2 June 9 33/64 June 13 9/32 June 12 9/32 June 25 3/32
July 9 1/32 July 7 53/64 July 15 3/4 July 10 3/4 July 21 9/16
August 8 21/32 August 9 3/64 August 16 9/16 August 7 1/32 August 25 3/4
September 8 21/32 September 10 11/64 September 16 15/16 September 8 1/32 September 25 5/8
October 9 1/32 October 9 3/4 October 15 9/32 October 9 15/16 October 26 19/32
November 9 7/32 November 12 3/64 November 15 11/16 November 10 7/32 November 28 3/4
December 8 27/32 December 12 45/64 December 13 27/32 December 15 11/16 December 46 1/2
</TABLE>
The closing price on May 4, 2000 was 68.
APPLIED MATERIALS, INC. (AMAT)
Applied Materials, Inc. develops, manufactures, markets and services
semiconductor fabrication equipment and related spare parts for the
semiconductor industry. Many of Applied Materials' products are used to build
chips, the key component in most advanced electronic products such as
computers, telecommunications devices and electronic games. Applied Materials'
customers include semiconductor manufacturers and semiconductor integrated
circuit or chip manufacturers, who either use Applied Materials' chips in their
own products or sell them to other companies. Applied Materials markets and
sells 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 4 13/16 January 9 1/4 January 12 11/32 January 16 13/32 January 31 19/32 January 68 5/8
February 5 49/64 February 8 15/16 February 12 21/32 February 18 13/32 February 27 13/16 February 91 15/32
March 6 57/64 March 8 23/32 March 11 19/32 March 17 21/32 March 30 27/32 March 94 1/4
April 7 45/64 April 10 April 13 23/32 April 18 1/16 April 26 13/16 April 101 13/16
May 9 5/8 May 9 5/16 May 16 5/16 May 16 May 27 1/2
June 10 53/64 June 7 5/8 June 17 45/64 June 14 3/4 June 36 15/16
July 12 15/16 July 5 31/32 July 22 31/32 July 16 3/4 July 35 31/32
August 13 August 6 1/16 August 23 19/32 August 12 9/32 August 35 17/32
September 12 25/32 September 6 29/32 September 23 13/16 September 12 5/8 September 38 27/32
October 12 17/32 October 6 39/64 October 16 11/16 October 17 11/32 October 44 29/32
November 12 5/32 November 9 17/32 November 16 1/2 November 19 3/8 November 48 23/32
December 9 27/32 December 8 63/64 December 15 1/16 December 21 11/32 December 63 11/32
</TABLE>
The closing price on May 4, 2000 was 97 3/4.
A-3
<PAGE>
ATMEL CORPORATION (ATML)
Atmel Corporation designs, manufactures and markets semiconductor
integrated circuits. Atmel's circuits are designed for use in wireless and
other electronic products, and enhance these products by providing additional
features, smaller devices, longer battery life and increased memory capacity.
Atmel also develops specialized memory devices which continue to store
information even after the power source has been turned off. Atmel markets and
sells its products to original equipment manufacturers primarily through
manufacturer's representatives and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 7 27/32 January 14 1/4 January 23 3/16 January 8 3/32 January 8 7/8 January 31 1/16
February 8 17/32 February 13 3/8 February 18 11/16 February 8 1/8 February 8 19/32 February 49 1/2
March 9 21/32 March 12 3/4 March 11 31/32 March 7 17/32 March 7 19/32 March 51 5/8
April 11 April 20 April 12 7/16 April 10 3/32 April 9 1/8 April 48 15/16
May 11 May 17 3/4 May 14 3/8 May 7 13/32 May 9 7/8
June 13 27/32 June 15 1/16 June 14 June 6 13/16 June 13 3/32
July 17 July 13 13/16 July 17 1/16 July 5 3/16 July 14 29/32
August 15 13/16 August 12 15/16 August 17 11/16 August 3 1/64 August 19 21/32
September 16 7/8 September 15 7/16 September 18 7/32 September 4 17/32 September 16 29/32
October 15 5/8 October 12 11/16 October 12 15/16 October 5 25/32 October 19 5/16
November 15 November 16 7/16 November 11 7/32 November 6 1/16 November 22 13/32
December 11 3/16 December 16 9/16 December 9 9/32 December 7 21/32 December 29 9/16
</TABLE>
The closing price on May 4, 2000 was 44 1/8.
BROADCOM CORPORATION (BRCM)
Broadcom Corporation develops and markets products designed to facilitate
high-speed digital data transmission to homes and businesses using existing
communications infrastructure. Broadcom designs and develops integrated
circuits for several communications markets, including television cable set-top
boxes, cable modems for Internet access, high-speed networking for businesses'
private networks, digital broadcast of satellite and free terrestrial
television signals and digital subscriber lines. Broadcom markets and sells its
products through its own direct sales force, third-party distributors and
representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- ------- --------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January * January * January * January 33 9/32 January 144 21/32
February * February * February * February * February 30 3/32 February 197 3/8
March * March * March * March * March 30 13/16 March 242 7/8
April * April * April * April 12 April 38 9/16 April 172 3/8
May * May * May * May 12 25/32 May 47 7/8
June * June * June * June 18 13/32 June 72 9/32
July * July * July * July 15 11/16 July 60 1/4
August * August * August * August 12 13/16 August 64 3/8
September * September * September * September 17 3/4 September 54 1/2
October * October * October * October 20 47/64 October 63 29/32
November * November * November * November 22 21/64 November 89 17/32
December * December * December * December 30 3/16 December 136 3/16
</TABLE>
The closing price on May 4, 2000 was 175 5/16.
A-4
<PAGE>
INTEL CORPORATION (INTC)
Intel Corporation designs, manufactures and markets microprocessors,
chips, memory products, software and networking and communications equipment.
Intel also produces semiconductor integrated circuits used to process
information. Intel markets and sells its products to original equipment
manufacturers of computer systems, Internet service providers, businesses and
individuals though 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 8 43/64 January 13 13/16 January 40 9/16 January 40 1/2 January 70 15/32 January 98 15/16
February 9 31/32 February 14 45/64 February 35 15/32 February 44 27/32 February 59 31/32 February 113
March 10 39/64 March 14 7/32 March 34 25/32 March 39 1/32 March 59 7/16 March 131 15/16
April 12 51/64 April 16 15/16 April 38 9/32 April 40 13/32 April 61 3/16 April 126 13/16
May 14 1/32 May 18 7/8 May 37 7/8 May 35 23/32 May 54 1/16
June 15 53/64 June 18 23/64 June 35 29/64 June 37 1/16 June 59 1/2
July 16 1/4 July 18 25/32 July 45 29/32 July 42 7/32 July 69
August 15 11/32 August 19 61/64 August 46 1/16 August 35 19/32 August 82 3/16
September 15 1/32 September 23 55/64 September 46 5/32 September 42 7/8 September 74 5/16
October 17 15/32 October 27 15/32 October 38 1/2 October 44 19/32 October 77 7/16
November 15 7/32 November 31 23/32 November 38 13/16 November 53 13/16 November 76 11/16
December 14 3/16 December 32 47/64 December 35 1/8 December 59 9/32 December 82 5/16
</TABLE>
The closing price on May 4, 2000 was 119 9/16.
KLA-TENCOR CORPORATION (KLAC)
KLA-Tencor Corporation designs, manufactures and markets the
manufacturing and monitoring systems which are used in the production of
semiconductors. KLA-Tencor's systems are used to analyze product and process
quality at several stages during the semiconductor manufacturing process in
order to provide feedback to its customers on any production problems. KLA-
Tencor's systems attempt to detect defects at any early stage in order to
reduce overall manufacturing costs for its customers. KLA-Tencor markets and
sells its products through its own direct sales force and third-party
distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- ------- --------- -------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 12 1/2 January 14 3/4 January 21 5/16 January 18 3/4 January 28 7/8 January 58 5/8
February 14 1/2 February 12 February 20 27/32 February 23 5/64 February 25 29/32 February 77 15/16
March 15 13/16 March 11 5/16 March 18 1/4 March 19 1/8 March 24 9/32 March 84 1/4
April 15 1/2 April 14 7/16 April 22 1/4 April 20 5/32 April 24 13/16 April 74 7/8
May 17 7/16 May 13 1/2 May 23 25/32 May 16 7/8 May 22 3/4
June 19 5/16 June 11 5/8 June 24 3/8 June 13 27/32 June 32 7/16
July 21 11/16 July 9 7/16 July 30 9/32 July 14 15/16 July 33 7/8
August 21 3/8 August 9 7/8 August 35 7/16 August 10 5/8 August 31 13/32
September 20 1/16 September 11 1/4 September 33 25/32 September 12 7/16 September 32 1/2
October 21 3/8 October 12 1/8 October 21 31/32 October 18 7/16 October 39 19/32
November 17 1/4 November 17 3/4 November 19 3/8 November 17 1/32 November 42 9/32
December 13 1/32 December 17 3/4 December 19 5/16 December 21 11/16 December 55 11/16
</TABLE>
The closing price on May 4, 2000 was 63.
A-5
<PAGE>
LINEAR TECHNOLOGY CORPORATION (LLTC)
Linear Technology Corporation designs, manufactures and markets high-
performance integrated linear circuits. Linear circuits monitor, simplify and
transform analog signals and also regulate the voltage within an electronic
system. Linear Technology products include amplifiers for video and data
signals, voltage regulators, and circuits to transfer signals within electronic
systems and data converters. Linear Technology markets and sells its products
primarily through its own direct sales force, distributors and resellers.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 6 3/16 January 11 1/32 January 12 3/16 January 16 9/16 January 25 7/16 January 47 11/32
February 6 13/16 February 11 5/8 February 11 9/32 February 18 15/16 February 21 29/32 February 52 15/32
March 7 March 10 7/16 March 11 1/16 March 17 1/4 March 25 5/8 March 55
April 7 15/32 April 8 19/32 April 12 9/16 April 20 1/8 April 28 7/16 April 57 1/8
May 7 21/32 May 8 5/8 May 12 17/32 May 17 31/64 May 26 1/2
June 8 1/4 June 7 1/2 June 12 15/16 June 15 5/64 June 33 5/8
July 9 11/16 July 7 7/8 July 16 23/32 July 14 61/64 July 30 11/16
August 10 1/8 August 8 1/2 August 16 25/64 August 11 3/4 August 31 15/32
September 10 3/8 September 9 7/32 September 17 3/16 September 12 1/2 September 29 25/64
October 10 15/16 October 8 3/8 October 15 23/32 October 14 29/32 October 34 31/32
November 11 5/16 November 11 25/32 November 16 3/32 November 17 33/64 November 35 17/32
December 9 13/16 December 10 31/32 December 14 13/32 December 22 25/64 December 35 25/32
</TABLE>
The closing price on May 4, 2000 was 53 7/8.
LSI LOGIC CORPORATION (LSI)
LSI Logic Corporation supplies communications chips for data transfer and
networking and wireless applications. LSI also provides chips and circuit
boards for network computing and supplies storage solutions for networks. LSI
markets and sells its products primarily to original equipment manufacturers
through its own direct sales force and through independent sales
representatives and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 10 21/32 January 14 1/8 January 17 3/8 January 12 January 13 31/32 January 40 3/4
February 13 5/8 February 13 13/16 February 17 1/4 February 11 27/32 February 12 15/16 February 64
March 13 1/8 March 13 7/16 March 17 3/8 March 12 5/8 March 15 19/32 March 72 5/8
April 16 21/32 April 18 April 19 April 13 9/16 April 17 April 62 1/4
May 16 7/8 May 15 9/16 May 21 May 10 21/32 May 18 17/32
June 19 9/16 June 13 June 16 June 11 17/32 June 23 1/16
July 23 3/8 July 9 3/4 July 15 3/4 July 10 11/32 July 25 3/16
August 24 5/8 August 10 15/16 August 16 1/8 August 6 1/8 August 28 3/8
September 29 September 11 5/8 September 16 1/16 September 6 5/16 September 26
October 23 7/16 October 13 1/4 October 11 1/16 October 7 9/16 October 26 19/32
November 20 15/16 November 15 1/16 November 11 5/8 November 7 13/16 November 30 7/32
December 16 3/8 December 13 3/8 December 9 13/16 December 8 1/16 December 33 3/4
</TABLE>
The closing price on May 4, 2000 was 55 1/2.
A-6
<PAGE>
MAXIM INTEGRATED PRODUCTS, INC. (MXIM)
Maxim Integrated Products, Inc. designs, develops, and manufactures
linear and mixed-signal integrated circuits which detect, measure, amplify, and
convert signals such as temperature, pressure, and sound, into the digital
signals necessary for computer processing. Maxim's products include
microprocessor and display circuits, data converters, amplifiers, switches,
voltage detectors, fiber optic products and wireless products. Maxim's products
are used in personal computers and external devices attached to computers, test
equipment, hand-held devices, wireless communicators and video displays. Maxim
markets and sells its products through its own direct sales force and its own
and other unaffiliated distribution 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 3 5/8 January 8 7/8 January 14 1/16 January 17 5/16 January 25 23/32 January 50 1/8
February 4 7/64 February 9 1/16 February 12 13/32 February 20 3/16 February 20 27/32 February 66 13/16
March 4 9/16 March 7 3/4 March 12 3/32 March 18 7/32 March 27 1/16 March 71 1/16
April 4 17/32 April 8 9/16 April 13 7/32 April 20 3/16 April 28 April 64 13/16
May 5 47/64 May 8 1/2 May 13 7/16 May 16 11/16 May 26 23/32
June 6 3/8 June 6 53/64 June 14 7/32 June 15 27/32 June 33 1/4
July 7 25/64 July 7 1/8 July 17 9/32 July 16 July 32 1/32
August 9 17/32 August 7 43/64 August 17 9/32 August 13 3/4 August 33 21/32
September 9 1/4 September 8 27/32 September 17 55/64 September 13 15/16 September 31 35/64
October 9 11/32 October 8 3/4 October 16 9/16 October 17 27/32 October 39 15/32
November 9 3/8 November 11 19/32 November 17 9/32 November 19 5/8 November 40 5/32
December 9 5/8 December 10 13/16 December 17 1/4 December 21 27/32 December 47 3/16
</TABLE>
The closing price on May 4, 2000 was 67 1/4.
MICRON TECHNOLOGY, INC. (MU)
Micron Technology, Inc. designs, develops, manufactures and markets
semiconductor memory products and personal computer, or PC, systems. Micron's
principal product is the DRAM, a memory component which stores digital
information and provides high-speed storage and retrieval of data. Micron's PC
operations develop, manufacture and market a wide range of desktop and notebook
PC systems and network servers. They also sell, resell and support a variety of
external computer devices, software and services. Micron markets and sells its
products through its own direct sales force, independent sales representatives
and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 11 1/16 January 17 1/8 January 17 3/8 January 17 9/32 January 39 January 31 3/32
February 15 1/2 February 16 February 18 7/8 February 16 19/32 February 28 13/16 February 48 1/2
March 19 1/32 March 15 13/16 March 20 3/16 March 14 17/32 March 24 3/32 March 63
April 20 5/8 April 18 3/16 April 17 5/8 April 15 17/32 April 18 5/8 April 69 21/32
May 22 5/16 May 16 1/16 May 21 1/8 May 11 25/32 May 18 15/16
June 27 1/2 June 12 15/16 June 20 June 12 13/32 June 20 1/4
July 31 3/16 July 9 7/16 July 24 1/4 July 16 21/32 July 30 13/16
August 38 7/16 August 11 3/8 August 22 1/4 August 11 3/8 August 37 7/16
September 39 11/16 September 15 1/4 September 17 11/32 September 15 7/32 September 33 1/4
October 35 1/4 October 12 1/2 October 13 7/16 October 19 October 35 21/32
November 27 1/8 November 16 9/16 November 12 7/16 November 20 21/32 November 33 17/32
December 19 13/16 December 14 9/16 December 12 31/32 December 25 9/32 December 39 1/16
</TABLE>
The closing price on May 4, 2000 was 61 1/2.
A-7
<PAGE>
NATIONAL SEMICONDUCTOR CORPORATION (NSM)
National Semiconductor Corporation develops, manufactures and markets
semiconductor products, including microprocessors for personal computers and
various types of integrated circuits. Integrated circuits employ analog, mixed
signal and digital technologies and are used in personal computers and other
data processing products, telecommunications products, networks and industrial
applications. National Semiconductor markets and sells its products to original
equipment manufacturers 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 18 1/4 January 17 1/8 January 27 3/4 January 28 1/8 January 12 15/16 January 52 1/2
February 17 February 15 5/8 February 26 1/4 February 23 7/8 February 10 1/2 February 75 1/8
March 17 1/2 March 13 7/8 March 27 1/2 March 20 15/16 March 9 5/16 March 60 3/4
April 23 April 15 3/4 April 25 April 22 April 12 1/2 April 60
May 25 May 16 1/4 May 28 1/8 May 16 1/4 May 19 3/8
June 27 3/4 June 15 1/2 June 30 5/8 June 13 1/8 June 25 5/16
July 27 July 14 1/8 July 31 1/2 July 12 5/16 July 24 9/16
August 28 1/4 August 18 1/2 August 34 1/4 August 9 1/16 August 28 3/16
September 27 5/8 September 20 1/8 September 41 September 9 11/16 September 30 9/16
October 24 3/8 October 19 1/4 October 36 October 12 11/16 October 29 15/16
November 21 3/8 November 24 1/2 November 33 1/8 November 14 3/8 November 42 1/2
December 22 1/8 December 24 1/2 December 25 15/16 December 13 1/2 December 42 13/16
</TABLE>
The closing price on May 4, 2000 was 57 15/16.
NOVELLUS SYSTEMS, INC. (NVLS)
Novellus Systems, Inc. manufactures, markets and services systems used in
the production of computer chips to some of the largest semiconductor
manufacturers. Novellus' products are used to provide productivity and quality
control solutions to the worldwide semiconductor industry. Novellus markets and
sells its products domestically through its own direct sales force and
internationally through wholly owned subsidiaries.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- ------- --------- -------- --------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 7 13/64 January 8 7/8 January 13 13/64 January 12 1/64 January 24 3/8 January 49 1/8
February 8 51/64 February 8 47/64 February 13 5/8 February 15 63/64 February 19 11/16 February 59 5/16
March 10 21/64 March 7 27/64 March 11 1/2 March 14 27/64 March 18 3/8 March 56 1/8
April 10 1/8 April 9 3/64 April 9 5/8 April 15 61/64 April 15 3/4 April 66 11/16
May 10 21/64 May 8 11/64 May 13 41/64 May 12 39/64 May 16 17/64
June 11 19/64 June 6 June 14 27/64 June 11 57/64 June 22 3/4
July 13 19/64 July 6 July 17 1/2 July 13 5/64 July 21 29/64
August 12 9/32 August 6 19/64 August 19 7/64 August 8 7/8 August 17 63/64
September 11 43/64 September 7 7/64 September 21 September 8 3/4 September 22 31/64
October 11 31/64 October 6 7/8 October 14 53/64 October 12 15/16 October 25 53/64
November 10 21/64 November 9 37/64 November 12 35/64 November 16 35/64 November 27 3/8
December 9 December 9 1/32 December 10 49/64 December 16 1/2 December 40 27/32
</TABLE>
The closing price on May 4, 2000 was 64.
A-8
<PAGE>
SANDISK CORPORATION (SNDK)
SanDisk Corporation designs, manufactures and markets digital imaging and
audio storage products used in a wide variety of electronic systems. SanDisk's
products are used in digital cameras, portable digital music players, digital
video recorders, smart phones and other consumer electronics devices. SanDisk
markets and sells its products through a direct sales force and through
distributors and manufacturers' representatives.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- -------- --------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January * January 9 5/8 January 6 January 10 January 14 7/16 January 66 15/16
February * February 7 February 6 5/8 February 12 23/32 February 14 February 89
March * March 6 1/2 March 4 15/16 March 12 7/16 March 13 1/4 March 122 1/2
April * April 7 7/16 April 6 3/8 April 10 7/16 April 10 1/8 April 91 5/8
May * May 7 1/2 May 7 3/16 May 8 1/16 May 15 1/2
June * June 6 1/16 June 7 5/16 June 6 29/32 June 22 1/2
July * July 5 13/16 July 11 July 5 5/16 July 38 3/8
August * August 5 13/16 August 13 9/16 August 4 3/8 August 42 3/16
September * September 7 15/16 September 18 September 3 7/8 September 32 19/32
October * October 6 5/8 October 11 15/16 October 4 13/16 October 30 5/16
November 11 1/8 November 6 7/8 November 12 1/4 November 5 15/16 November 33 1/32
December 7 1/2 December 4 7/8 December 10 5/32 December 7 1/16 December 48 1/8
</TABLE>
The closing price on May 4, 2000 was 90 1/2.
TERADYNE, INC. (TER)
Teradyne, Inc. manufactures product testing equipment and software for
the electronics and communications industries. Teradyne's products are used by
electronics and communication systems manufacturers to test semiconductors,
circuits, telephone lines and networks, electrical connection systems and
software. Teradyne's testing products are designed to allow its customers to
measure product performance, improve product quality and shorten time to
market. Teradyne 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 8 1/8 January 11 1/16 January 15 7/16 January 19 3/4 January 32 1/2 January 64 3/4
February 9 3/32 February 10 5/16 February 13 5/8 February 23 19/32 February 24 February 87
March 10 3/8 March 8 3/8 March 14 7/16 March 20 1/32 March 27 9/32 March 82 1/4
April 12 21/32 April 10 1/4 April 16 3/8 April 18 1/4 April 23 19/32 April 110
May 13 17/32 May 10 1/16 May 20 1/2 May 15 3/8 May 26 13/32
June 16 11/32 June 8 5/8 June 19 3/4 June 13 3/8 June 35 7/8
July 20 15/32 July 6 3/4 July 23 5/16 July 11 15/32 July 37 1/8
August 18 15/16 August 7 3/4 August 27 27/32 August 8 11/16 August 34 1/32
September 18 September 8 5/16 September 26 29/32 September 9 1/8 September 35 1/4
October 16 11/16 October 7 15/16 October 18 23/32 October 16 1/4 October 38 1/2
November 13 1/16 November 11 13/16 November 16 13/32 November 16 1/32 November 43 9/16
December 12 9/16 December 12 3/16 December 16 December 21 3/16 December 66
</TABLE>
The closing price on May 4, 2000 was 104 15/16.
A-9
<PAGE>
TEXAS INSTRUMENTS, INC. (TXN)
Texas Instruments Incorporated designs and supplies digital signal
processors and analog integrated circuits, which aim to convert electronics
from analog to digital. Texas Instruments' semiconductor products are used in
digital cell phones, computers, printers, hard disk drives and modems. Texas
Instruments also sells electronic controls and connectors, sensors, radio-
frequency identification systems and educational and graphing calculators.
Texas Instruments markets and sells its products through its own direct sales
force and third-party distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 8 5/8 January 11 19/32 January 19 19/32 January 27 5/16 January 49 7/16 January 107 3/4
February 9 27/32 February 12 15/32 February 19 9/32 February 29 February 44 19/32 February 166 1/8
March 11 1/16 March 12 23/32 March 18 23/32 March 27 1/16 March 49 5/8 March 160
April 13 1/4 April 14 1/8 April 22 5/16 April 32 1/16 April 51 1/16 April 162 7/8
May 14 29/64 May 14 1/16 May 22 7/16 May 25 23/32 May 54 11/16
June 16 47/64 June 12 15/32 June 21 1/64 June 29 5/32 June 72
July 19 17/32 July 10 13/16 July 28 3/4 July 29 11/16 July 72
August 18 21/32 August 11 11/16 August 28 13/32 August 23 11/16 August 82 1/16
September 19 31/32 September 13 25/32 September 33 1/2 September 26 1/2 September 82 1/4
October 17 1/8 October 12 1/32 October 26 43/64 October 31 31/32 October 89 3/4
November 14 15/32 November 15 15/16 November 24 13/16 November 38 3/16 November 96 1/16
December 12 7/8 December 15 15/16 December 22 1/2 December 42 13/16 December 96 5/8
</TABLE>
The closing price on May 4, 2000 was 155 3/8.
VITESSE SEMICONDUCTOR CORPORATION (VTSS)
Vitesse Semiconductor Corporation designs, manufactures and markets high-
performance integrated chips used by systems manufacturers in the
communications and automatic test equipment market. These integrated circuits
are designed to handle the increased speed and capacity requirements of local
and long distance communications providers and Internet service providers.
Vitesse markets and sells its products primarily through its own direct sales
force and distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- ------- --------- ------- --------- -------- --------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 51/64 January 2 7/64 January 9 9/64 January 10 55/64 January 25 27/32 January 43 1/2
February 55/64 February 3 13/64 February 6 63/64 February 12 45/64 February 22 31/32 February 103 13/16
March 51/64 March 3 51/64 March 6 29/32 March 11 51/64 March 25 5/16 March 96 1/4
April 1 April 4 63/64 April 7 7/8 April 14 27/64 April 23 5/32 April 68 1/16
May 1 1/8 May 4 43/64 May 8 31/32 May 12 13/16 May 27 15/32
June 1 17/64 June 4 June 8 11/64 June 15 7/16 June 33 23/32
July 1 29/64 July 4 21/64 July 12 3/32 July 16 7/16 July 31 15/16
August 1 43/64 August 5 5/16 August 11 25/32 August 13 9/16 August 34
September 2 3/8 September 6 7/16 September 12 25/64 September 11 13/16 September 42 11/16
October 1 61/64 October 5 5/16 October 10 27/32 October 16 1/8 October 45 7/8
November 1 55/64 November 7 61/64 November 11 3/16 November 17 13/16 November 45 1/16
December 2 1/8 December 7 37/64 December 9 7/16 December 22 13/16 December 52 7/16
</TABLE>
The closing price on May 4, 2000 was 61 3/8.
A-10
<PAGE>
XILINX, INC. (XLNX)
Xilinx, Inc. designs, develops and markets integrated circuits, software
design tools, predefined system functions and field engineering support. Xilinx
forms strategic alliances with chip manufacturers, allowing Xilinx to focus on
research and development, marketing and technical support. Xilinx markets and
sells its products through independent sales representative firms, franchised
domestic distributors and foreign distributors.
<TABLE>
<CAPTION>
Closing Closing Closing Closing Closing Closing
1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price
- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 4 13/16 January 9 21/32 January 11 3/8 January 9 31/64 January 20 3/4 January 45 3/4
February 5 37/64 February 9 21/32 February 11 9/32 February 10 31/32 February 17 7/16 February 79 3/4
March 5 41/64 March 7 15/16 March 12 3/16 March 9 23/64 March 20 9/32 March 82 13/16
April 6 25/64 April 9 7/32 April 12 1/4 April 11 7/16 April 22 13/16 April 73 1/4
May 7 1/64 May 8 11/16 May 13 13/32 May 9 33/64 May 22 7/32
June 7 53/64 June 7 15/16 June 12 17/64 June 8 1/2 June 28 5/8
July 9 63/64 July 8 3/32 July 11 27/32 July 9 3/8 July 31 3/16
August 10 23/32 August 8 3/4 August 11 7/8 August 7 5/8 August 34 31/32
September 12 1/32 September 8 1/2 September 12 21/32 September 8 3/4 September 32 49/64
October 11 1/2 October 8 3/16 October 8 17/32 October 11 11/64 October 39 5/16
November 8 1/32 November 10 31/32 November 8 41/64 November 12 11/16 November 44 3/4
December 7 5/8 December 9 13/64 December 8 49/64 December 16 9/32 December 45 15/32
</TABLE>
The closing price on May 4, 2000 was 66 3/4.
A-11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF SEMICONDUCTOR HOLDERS]
1,000,000,000 Depositary Receipts
Semiconductor HOLDRSSM Trust
---------------------
P R O S P E C T U S
---------------------
Merrill Lynch & Co.
A.G. Edwards & Sons, Inc.
May 4, 2000
Until May 29, 2000 (25 days after the date of this prospectus), all
dealers effecting transactions in the offered Semiconductor 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
