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EXHIBIT 8.1
January 5, 2001
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center
North Tower - 4th Floor
New York, New York 10281
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Oil Service HOLDRS Trust
Registration Statement on Form S-1
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Ladies and Gentlemen:
We have acted as special Tax Counsel to Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch"), as Initial Depositor, and the Oil
Service HOLDRS Trust in connection with the preparation and filing of a
Prospectus and Registration Statement on Form S-1, as amended from time to time
and filed by the Initial Depositor (the "Registration Statement"), of which the
prospectus forms a part (the "Prospectus"), for the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of 1,000,000,000 Oil
Service HOLDRS (the "HOLDRS") to be issued by the Trust. Capitalized terms used
herein have the meaning ascribed to them in the Prospectus. The HOLDRS are
being issued pursuant to the Depositary Trust Agreement between the Initial
Depositor, The Bank of New York, as trustee (in such capacity, the "Trustee"),
other depositors and owners of HOLDRS (the "Trust Agreement").
In connection with the preparation of this opinion, we have examined
and relied on such documents as we have deemed appropriate, including, inter
alia, (i) the Trust Agreement and (ii) the Prospectus. We have made such
investigations of law as we have deemed appropriate as a basis for the opinion
expressed below.
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Based on the foregoing, it is our opinion that the Trust will provide
for flow through tax consequences since it will be treated as a grantor trust or
custodial arrangement for United States Federal income tax purposes. Moreover,
the discussion set forth under the caption "Federal Income Tax Consequences" in
the Prospectus represents our opinion of and, subject to the limitations
contained therein, accurately describes, the principal United States Federal
income tax consequences to a holder of HOLDRS receipts. The foregoing opinion
is based upon provisions of the Internal Revenue Code of 1986, as amended,
Treasury regulations and administrative and judicial interpretations as of the
date hereof (all of which are subject to change, possibly with retroactive
effect, or different interpretations).
We consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
/s/ Shearman & Sterling
FRS/SM/ABJ/AA/
LLJ/LSN/JFS/ASG
