PROSPECTUS SUPPLEMENT                       FILED PURSUANT TO RULE NO. 424(b)(3)
(To Prospectus dated March 12, 2002)             REGISTRATION NO. 333-78575










                        1,000,000,000 Depositary Receipts
                           Internet HOLDRS (SM) Trust

         This prospectus supplement supplements information contained in the
prospectus dated March 12, 2002 relating to the sale of up to 1,000,000,000
depositary receipts by the Internet HOLDRS (SM) Trust.

         The share amounts specified in the table on page 11 of the base
prospectus shall be replaced with the following:

                                                                         Primary
                                                               Share     Trading
                   Name of Company                  Ticker    Amounts     Market
           ---------------------------------------------------------------------
           Amazon.com, Inc.                         AMZN        18        NASDAQ
           Ameritrade Holding Corporation           AMTD         9        NASDAQ
           AOL Time Warner Inc.                     AOL         42        NYSE
           CMGI Inc.                                CMGI        10        NASDAQ
           CNET Networks, Inc.                      CNET         4        NASDAQ
           DoubleClick Inc.                         DCLK         4        NASDAQ
           EarthLink, Inc.                          ELNK       6.23       NASDAQ
           eBay Inc.                                EBAY        12        NASDAQ
           E*TRADE Group, Inc.                      ET          12        NYSE
           Inktomi Corporation                      INKT         6        NASDAQ
           Network Associates, Inc.                 NET          7        NASDAQ
           Priceline.com Incorporated               PCLN         7        NASDAQ
           RealNetworks, Inc.                       RNWK         8        NASDAQ
           Yahoo! Inc.                              YHOO        26        NASDAQ


         The share amounts listed in the table above reflect all previous stock
splits, dividends and business combination transactions.







Recent Developments

         As of January 2, 2002, Standard & Poor's Corporation sector
classifications are based upon the new Standard & Poor's Global Industry
Classification Standard ("GICS") sectors. Standard & Poor's Corporation is an
independent source of market information that, among other things, maintains the
Global Industry Classification Standard, which classifies the securities of
public companies into various sector classifications based upon GICS sectors,
which are derived from its own criteria. The GICS classification standards were
exclusively effective on January 2, 2002. There are 10 Standard & Poor's GICS
sectors and each class of publicly traded securities of a company are given only
one GICS sector.

         The securities included in the Internet HOLDRS are currently
represented in the Consumer Discretionary, Financials, Industrials and
Information Technology GICS sectors. The Standard & Poor's GICS sector
classifications of the securities included in the Internet HOLDRS may change
over time if the companies that issued these securities change their focus of
operations or if Standard & Poor's alters the criteria it uses to determine GICS
sectors, or both.

         As provided in the depositary trust agreement, in addition to the other
reconstitution events described therein, if the underlying securities of an
issuer cease to be outstanding as a result of a merger, consolidation, corporate
combination or other event, the trustee will distribute the consideration paid
by and received from the acquiring company to the beneficial owners of Internet
HOLDRS only if the distributed securities have a different Standard & Poor's
GICS sector classification than any of the underlying securities represented in
the Internet HOLDRS at the time of the distribution or exchange or if the
securities received are not listed for trading on a U.S. national securities
exchange or through the Nasdaq National Market System. In any other case, the
additional securities received as consideration will be deposited into the
Internet HOLDRS trust.

         In addition, securities of a new company will be added to the Internet
HOLDRS, as a result of a distribution of securities by an underlying issuer,
where a corporate event occurs, or where the securities of an underlying issuer
are exchanged for the securities of another company, unless the securities
received have a Standard & Poor's GICS sector classification that is different
from the GICS sector classification of any other security then included in the
Internet HOLDRS or are not listed for trading on a U.S. national securities
exchange or through the Nasdaq National Market System.


            The date of this prospectus supplement is June 30, 2002.