-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HooBeHhOLht2oCgHF1EYpzoDU2Kllq8xU5Ptvwv2IPl4kQcH6P4Tean20inlQnCL wAyhEiJMayR79glYs6YkYw== 0000947871-03-001562.txt : 20030707 0000947871-03-001562.hdr.sgml : 20030704 20030707171843 ACCESSION NUMBER: 0000947871-03-001562 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20030707 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH PIERCE FENNER & SMITH INC CENTRAL INDEX KEY: 0000728612 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 333-33362 FILM NUMBER: 03777448 BUSINESS ADDRESS: STREET 1: 4 WORLD FINANCIAL CENTER STREET 2: NORTH TOWER FL 12 CITY: NEW YORK STATE: NY ZIP: 10080 BUSINESS PHONE: 2124496202 MAIL ADDRESS: STREET 1: 4 WORLD FINANCIAL CENTER STREET 2: NORTH TOWER FL 12 CITY: NEW YORK STATE: NY ZIP: 10080 POS AM 1 posam_070303-semiconductor.txt POST-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1 As filed with the Securities and Exchange Commission on July 7, 2003 Registration Statement No. 333-33362 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- POST-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated Initial Depositor (Exact name of registrant as specified in its charter) ----------------- Semiconductor HOLDRS(SM) Trust [Issuer with respect to the receipts]
Delaware 6211 13-5674085 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or organization) Classification Code Number) Identification Number)
---------------- 250 Vesey Street New York, New York 10281 (212) 449-1000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ---------------- Copies to:
Judith Witterschein, Esq. Andrew B. Janszky, Esq. Corporate Secretary Shearman & Sterling LLP Merrill Lynch, Pierce, Fenner & Smith Incorporated 599 Lexington Avenue 250 Vesey Street New York, New York 10022 New York, New York 10281 (212) 848-4000 (212) 449-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service)
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. |X| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_| ================================================================================ PROSPECTUS - ---------- [GRAPHIC OMITTED] 1,000,000,000 Depositary Receipts Semiconductor HOLDRS(SM) Trust The Semiconductor HOLDRS(SM) trust issues 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 is 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. The Semiconductor HOLDRS(SM) trust will issue Semiconductor HOLDRS on a continuous basis. Investing in Semiconductor HOLDRS involves significant risks. See "Risk Factors" starting on page 5. Semiconductor HOLDRS are neither interests in nor obligations of Merrill Lynch, Pierce, Fenner & Smith Incorporated. Semiconductor HOLDRS are not interests in the Bank of New York, as trustee. Please see "Description of the Depositary Trust Agreement" in this prospectus for a more complete description of the duties and responsibilities of the trustee, including the obligation of the trustee to act without negligence or bad faith. The Semiconductor HOLDRS are listed on the American Stock Exchange under the symbol "SMH." On July 1, 2003, the last reported sale price of Semiconductor HOLDRS on the American Stock Exchange was $28.94. ---------------- 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. ---------------- The date of this prospectus is July 7, 2003. "HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill Lynch & Co., Inc. 2 TABLE OF CONTENTS Page ---- Summary........................................................................4 Risk Factors...................................................................5 Highlights of Semiconductor HOLDRS............................................11 The Trust.....................................................................18 Description of Semiconductor HOLDRS...........................................18 Description of The Underlying Securities......................................19 Description of The Depositary Trust Agreement.................................21 United States Federal Income Tax Consequences.................................25 Erisa Considerations..........................................................28 Plan of Distribution..........................................................28 Legal Matters.................................................................29 Where You Can Find More Information...........................................29 --------------- 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 refer to "United States Federal Income Tax Consequences -- Non-U.S. receipt holders" and we recommend that non-U.S. receipt holders consult their tax advisors regarding U.S. withholding and other taxes which may apply to ownership of the Semiconductor HOLDRS or of the underlying securities through an investment in the Semiconductor HOLDRS. 3 SUMMARY The Semiconductor HOLDRS trust was 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 currently holds shares of common stock issued by a group of specified companies that were, at the time of the initial offering, 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 company's common stock currently 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, and the securities of any company that may be added to Semiconductor HOLDRS, are collectively referred to in this prospectus as the underlying securities. There are currently 20 companies included in Semiconductor HOLDRS, which may change as a result of reconstitution events, distributions of securities by underlying issuers or other events. The Semiconductor HOLDRS are separate from the underlying securities that are represented by the Semiconductor HOLDRS. On July 1, 2003, there were 29,704,600 Semiconductor HOLDRS outstanding. 4 RISK FACTORS An investment in Semiconductor HOLDRS involves risks similar to investing directly in each of the underlying securities outside of the Semiconductor HOLDRS, including the risks associated with a concentrated investment in semiconductor companies. General Risk Factors o 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. o Discount trading price. Semiconductor HOLDRS may trade at a discount to the aggregate value of the underlying securities. o Ownership of only fractional shares in the underlying securities. As a result of distributions of securities by companies included in the Semiconductor HOLDRS or other corporate events, such as mergers, a Semiconductor HOLDR may represent an interest in a fractional share of an underlying security. You will only be entitled to voting, distribution and other beneficial ownership rights in the underlying securities in which you own only fractional shares to the extent that the depositary aggregates your fractional shares with the other shares of such underlying securities and passes on beneficial ownership rights, including distribution and voting rights, to you based on your proportional, fractional shares in the underlying securities. In addition, if you surrender your Semiconductor HOLDRS to receive the underlying securities you will receive cash in lieu of your fractional shares. You will not be entitled to any securities if your interest in an underlying security is only a fraction of a share. o Not necessarily representative of the semiconductor industry. At the time of the initial offering, the companies included in Semiconductor HOLDRS were generally considered to be involved in various aspects of the semiconductor industry. However, the market price of the underlying securities and the Semiconductor HOLDRS may not necessarily follow the price movements of the entire semiconductor industry. 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 industry generally increase in value. In addition, since the time of the initial offering, the companies included in Semiconductor HOLDRS may not be involved in the semiconductor industry. In this case, Semiconductor HOLDRS may not consist of securities issued only by companies in the semiconductor industry. o Not necessarily comprised of solely semiconductor companies. As a result of distributions of securities by companies included in the Semiconductor HOLDRS or other corporate events, such as mergers, securities of companies that are not currently included in the Semiconductor HOLDRS and that are not involved in the semiconductor industry may be included in the Semiconductor HOLDRS. The securities of a new company will only be distributed from the Semiconductor HOLDRS if the securities have a different Standard & Poor's Corporation sector classification than any of the underlying issuers included in the Semiconductor HOLDRS at the time of the distribution or the corporate event or if the securities are not listed for trading on a U.S. national securities exchange or through Nasdaq National Market System. As of January 2, 2002, Standard & Poor's Corporation sector classifications are based upon the Standard & Poor's Global Industry Classification Standard ("GICS") sectors. As there are only 10 broadly defined GICS sectors, the use of GICS sectors to determine whether a new company will be included in the Semiconductor HOLDRS provides no assurance that each new company included in the Semiconductor HOLDRS will be involved in the semiconductor industry. Currently, the underlying securities included in the Semiconductor HOLDRS are represented in the Information Technology GICS sector. As each Standard & Poor's GICS sector is defined so broadly, the securities of a new company could have the same GICS sector classification as a company currently included in the Semiconductor HOLDRS, and yet not be involved in the semiconductor industry. In addition, the GICS sector classifications of securities included in the Semiconductor 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 5 both. Therefore, additional GICS sectors may be represented in the Semiconductor HOLDRS, which may also result in the inclusion in the Semiconductor HOLDRS of the securities of a new company that is not involved in the semiconductor industry. o No investigation of underlying securities. The underlying securities initially included in the Semiconductor HOLDRS were selected by Merrill Lynch, Pierce, Fenner & Smith Incorporated based on the market capitalization of the issuers and the market liquidity of common stocks in the semiconductor industry, 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 each of their respective 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 respective affiliates. o Loss of diversification. As a result of industry developments, reorganizations or market fluctuations affecting issuers of the underlying securities, Semiconductor HOLDRS may not necessarily be a diversified investment in the semiconductor industry. In addition, reconstitution events, distributions of securities by an underlying issuer or other events, which may result in the distribution of securities from, or the inclusion of additional securities in, the Semiconductor HOLDRS, may also reduce diversification. 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. o Conflicting investment choices. In order to sell one or more of the underlying securities individually, participate in a tender offer relating to one or more of the underlying securities, or participate in any form of stock repurchase program by an issuer of an underlying security, 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 or any form of stock repurchase program. The cancellation of Semiconductor HOLDRS will involve payment of a cancellation fee to the trustee. o Trading halts. Trading in Semiconductor HOLDRS on the American Stock Exchange may be halted if trading in one or more of the underlying securities is halted. Trading in Semiconductor HOLDRS may be halted even if trading continues in some or all of the underlying securities. If trading is halted in Semiconductor HOLDRS, you will not be able to trade Semiconductor HOLDRS and you will only be able to trade the underlying securities if you cancel your Semiconductor HOLDRS and receive each of the underlying securities. o Delisting from the American Stock Exchange. If the number of companies whose securities are held in the trust falls below nine, the American Stock Exchange may consider delisting the 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 U.S. national securities exchange or through the Nasdaq National Market System within five business days from the date the Semiconductor HOLDRS are delisted. There are currently 20 companies whose securities are included in Semiconductor HOLDRS. o Possible conflicts of interest. Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, selected the underlying securities that were originally included in Semiconductor HOLDRS and may face possible conflicts of interest as Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates may engage in investment banking or may provide other services for issuers of the underlying securities in connection with its business. o Delays in distributions. The depositary trust agreement provides that the trustee will use its reasonable efforts to distribute any cash or other distributions paid in respect of the underlying securities to you as soon as practicable after receipt of such distribution. However, you may receive such cash or other 6 distributions later than you would if you owned the underlying securities outside of the Semiconductor HOLDRS. In addition, you will not be entitled to any interest on any distribution by reason of any delay in distribution by the depositary. Risk Factors Specific to Companies Involved in the Semiconductor Business o The stock prices of companies in the semiconductor industry have been and will likely continue to be extremely volatile, which will directly affect the price volatility of the Semiconductor HOLDRS, and you could lose all or a substantial part of your investment. The trading prices of the common stocks of semiconductor companies have been extremely volatile. Semiconductor companies' stock prices could be subject to wide fluctuations in response to a variety of factors, including the following: o general market fluctuations; o actual or anticipated variations in companies' quarterly operating results; o announcements of technological innovations or new services by competitors of the companies included in the Semiconductor HOLDRS; o announcements by semiconductor companies or their competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; o failure to integrate or realize projected benefits from acquisitions; o manufacturing yields; o changes in government regulations; o fluctuations in quarterly and annual operating results; and o difficulty in obtaining additional financing. In addition, the trading prices of semiconductor stocks in general have experienced extreme price and volume fluctuations. These fluctuations may be unrelated or disproportionate to the operating performance of these companies. The valuations of many semiconductor stocks are high when measured by conventional valuation standards such as price to earnings and price to sales ratios. Some of the companies do not, or in the future might not, have earnings. As a result, these trading prices may decline substantially and valuations may not be sustained. Any negative change in the public's perception of the prospects of semiconductor companies, generally, could depress the stock prices of a semiconductor company regardless of semiconductor companies' results. Other broad market and industry factors may decrease the stock price of semiconductor stocks, regardless of their operating results. Market fluctuations, as well as general political and economic conditions such as recession, war or interest rate or currency rate fluctuations, also may decrease the market price of semiconductor stocks. For example, there can be no assurance that any future terrorist attacks or other acts of war will not have a negative effect on the market price of semiconductor stocks. As a result of fluctuations in the trading prices of the companies included in the Semiconductor HOLDRS, the trading price of Semiconductor HOLDRS has fluctuated significantly. The initial offering price of Semiconductor HOLDR, on May 4, 2000, was $93.32 and during 2002, the price of a Semiconductor HOLDR reached a high of $50.19 and a low of $17.32. o Companies whose common stocks are included in the Semiconductor HOLDRS may need additional financing, which may be difficult to obtain. Failure to obtain necessary financing or doing so on unattractive terms could adversely affect development and marketing efforts and other operations of companies whose common stocks are included in the Semiconductor HOLDRS. Companies whose 7 common stocks are included in the Semiconductor HOLDRS may need to raise additional capital in order to fund the continued development and marketing of their products or to fund strategic acquisitions or investments. Their ability to obtain additional financing will depend on a number of factors, including market conditions, operating performance and investor interest. These factors may make the timing, amount, terms and conditions of any financing unattractive. If adequate funds are not available or are not available on acceptable terms, companies whose common stocks are included in the Semiconductor HOLDRS may have to forego strategic acquisitions or investments, reduce or defer their development activities, delay their introduction of new products and services or reduce or terminate their operations generally. Any of these actions may reduce the market price of stocks in the semiconductor business. o Reduced demand for end-user products, underutilization of manufacturing capacity, and other factors could adversely impact the operating results of companies whose common stocks are included in the Semiconductor HOLDRS. During the 1990s and continuing into 2000, the semiconductor industry enjoyed unprecedented growth, benefiting from the rapid expansion of the Internet and other computing and communications technologies. Many of the companies whose common stocks are included in the Semiconductor HOLDRS were adversely affected by a general economic slowdown and an abrupt decline in demand for many of the end-user products that incorporate their semiconductor devices. There can be no assurance that this reduction in demand for end-user products will not continue in the future. o 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. 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. o Some of the companies involved in the semiconductor industry 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 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. o The semiconductor industry is highly cyclical, which may cause the operating results of many semiconductor companies to vary significantly. The semiconductor industry 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 companies' 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 8 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. o 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 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. o 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. o 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. o The semiconductor industry 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 that 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 that 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. o 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 be no assurance that these companies will be able to attract and retain qualified personnel from acquired businesses or be 9 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. o 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: o general economic, social and political conditions; o the difficulty of enforcing intellectual property rights, agreements and collecting receivables through certain foreign legal systems; o differing tax rates, tariffs, exchange controls or other similar restrictions; o currency fluctuations; o 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 o reduction in the number or capacity of qualified manufacturing subcontractors in international markets. o 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. 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. o 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 on the experience, abilities and continued services of key executive officers and key technical personnel. If these companies lose the services of any of these officers or key technical personnel, their future success could be undermined. Competition for personnel is intense. There is no certainty that any of these semiconductor companies will be able to continue to attract and retain qualified personnel. 10 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 was 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 and was amended on November 22, 2000. 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, is the trustee and receives compensation as set forth in the depositary trust agreement. The trustee is responsible for receiving deposits of underlying securities and delivering Semiconductor HOLDRS representing the underlying securities issued by the trust. The trustee holds the underlying securities on behalf of the holders of Semiconductor HOLDRS. 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 industry 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 buying and selling Semiconductor HOLDRS in the secondary market are expected to be less than separately buying and selling each of the underlying securities in a traditional brokerage account with transaction-based charges. Trust assets..................... The trust holds shares of common stock issued by specified companies that, when initially selected, were involved in the semiconductor business. Except when a reconstitution event, distribution of securities by an underlying issuer or other 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 -Distributions" and "-Reconstitution events." There are currently 20 companies included in 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. The Semiconductor HOLDRS......... The trust has issued, and may continue to issue, Semiconductor HOLDRS that represent an undivided beneficial ownership interest in the shares of U.S.-traded common stock that are held by the trust. The Semiconductor HOLDRS themselves are separate from the underlying securities that are represented by 11 the Semiconductor HOLDRS. The following chart provides: o the names of the 20 issuers of the underlying securities currently represented by a Semiconductor HOLDR, o the stock ticker symbols, o the share amounts currently represented by a round-lot of 100 Semiconductor HOLDRS, and o the principal U.S. market on which the shares of common stock of the selected companies are traded.
Share Primary Trading Name of Company Ticker Amounts Market --------------------------------- -------------- ----------- ------------------- Advanced Micro Devices, Inc. AMD 4 NYSE Altera Corporation ALTR 6 NASDAQ Amkor Technology, Inc. AMKR 2 NASDAQ Analog Devices, Inc. ADI 6 NYSE Applied Materials, Inc. AMAT 26 NASDAQ Atmel Corporation ATML 8 NASDAQ Broadcom Corporation BRCM 2 NASDAQ Intel Corporation INTC 30 NASDAQ KLA-Tencor Corporation KLAC 3 NASDAQ Linear Technology Corporation LLTC 5 NASDAQ LSI Logic Corporation LSI 5 NYSE Maxim Integrated Products, Inc. MXIM 5 NASDAQ Micron Technology, Inc. MU 9 NYSE National Semiconductor NSM 3 NYSE Corporation Novellus Systems, Inc. NVLS 2 NASDAQ SanDisk Corporation SNDK 1 NASDAQ Teradyne, Inc. TER 3 NYSE Texas Instruments, Inc. TXN 22 NYSE Vitesse Semiconductor VTSS 3 NASDAQ Corporation Xilinx, Inc. XLNX 5 NASDAQ
The companies whose securities were included in the Semiconductor HOLDRS at the time Semiconductor HOLDRS were originally issued were generally considered to be among the 20 largest and most liquid companies with U.S.-traded common stock involved in the semiconductor industry, 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. 12 Purchases........................ You may acquire Semiconductor HOLDRS in two ways: o through an in-kind deposit of the required number of shares of common stock of the underlying issuers with the trustee, or o through a cash purchase in the secondary trading market. Issuance and cancellation fees............................. 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, you will be responsible for paying any sales commission associated with your purchase of the underlying securities that is charged by your broker in addition to the issuance fee charged by the trustee described above. 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 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 the fractional share in the market and the trust, in turn, will deliver cash in lieu of such fractional 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............. Semiconductor HOLDRS represents your beneficial ownership of the underlying securities. Owners of Semiconductor HOLDRS have the same rights and privileges as if they owned the underlying securities beneficially outside of Semiconductor HOLDRS. These include the right to instruct the trustee to vote the underlying securities or you may attend shareholder meetings yourself, the right to receive any dividends and other distributions on the underlying securities that are declared and paid to the trustee by an issuer of an underlying security, the right to pledge Semiconductor HOLDRS and the right to surrender Semiconductor HOLDRS to receive the underlying securities. Semiconductor HOLDRS does not change your beneficial ownership in the underlying securities under United States federal securities laws, including sections 13(d) and 16(a) of the Securities 13 Exchange Act of 1934. As a result, you have the same obligations to file insider trading reports that you would have if you held the underlying securities outside of Semiconductor HOLDRS. However, due to the nature of Semiconductor HOLDRS, you will not be able to participate in any dividend reinvestment program of an issuer of underlying securities unless you cancel your Semiconductor HOLDRS (and pay the applicable fees) and receive all of the underlying securities. A holder of Semiconductor HOLDRS is not a registered owner of the underlying securities. In order to become a registered owner, a holder of Semiconductor HOLDRS would need to surrender their Semiconductor HOLDRS, pay the applicable fees and expenses, receive all of the underlying securities and follow the procedures established by the issuers of the underlying securities for registering their securities in the name of such holder. Your retain the right to receive any reports and communications that the issuers of underlying securities are required to send to beneficial owners of their securities. As such, you will receive such reports and communications from the broker through which you hold your Semiconductor HOLDRS in the same manner as if you beneficially owned your underlying securities outside of Semiconductor HOLDRS "street name" through a brokerage account. The trustee will not attempt to exercise the right to vote that attaches to, or give a proxy with respect to, the underlying securities other than in accordance with your instructions. The depositary trust agreement entitles you to receive, subject to certain limitations and net of any fees and expenses of the trustee, any distributions of cash (including dividends), securities or property made with respect to the underlying securities. However, any distribution of securities by an issuer of underlying securities will be deposited into the trust and will become part of the underlying securities unless the distributed securities are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System or the distributed securities have a Standard & Poor's GICS sector classification that is different from the GICS sector classifications represented in the Semiconductor HOLDRS at the time of the distribution. In addition, if the issuer of underlying securities offers rights to acquire additional underlying securities or other securities, the rights may be distributed to you, may be disposed of for your benefit, or may lapse. There may be a delay between the time any cash or other distribution is received by the trustee with respect to the underlying securities and the time such cash or other distributions are distributed to you. In addition, you are not entitled to any interest on any distribution by reason of any delay in distribution by the trustee. If any tax or other governmental charge becomes due with respect to Semiconductor HOLDRS or any underlying securities, you will be responsible for paying that tax or governmental charge. If you wish to participate in a tender offer for any of the underlying securities, or any form of stock repurchase program by an issuer of an underlying security, you must surrender your Semiconductor HOLDRS (and pay the applicable fees and expenses) and receive all of your underlying securities in exchange for your Semiconductor HOLDRS. For specific information about obtaining your underlying securities, you should read the discussion under the caption "Description of the Depositary Trust Agreement withdrawal of underlying securities." 14 Ownership rights in fractional shares in the underlying securities............. As a result of distributions of securities by companies included in the Semiconductor HOLDRS or other corporate events, such as mergers, a Semiconductor HOLDR may represent an interest in a fractional share of an underlying security. You are entitled to receive distributions proportionate to your fractional shares. In addition, you are entitled to receive proxy materials and other shareholder communications and you are entitled to exercise voting rights proportionate to your fractional shares. The trustee will aggregate the votes of all of the share fractions represented by Semiconductor HOLDRS and will vote the largest possible number of whole shares. If, after aggregation, there is a fractional remainder, this fraction will be ignored, because the issuer will only recognize whole share votes. For example, if 100,001 round-lots of 100 Semiconductor HOLDRS are outstanding and each round-lot of 100 Semiconductor HOLDRS represents 1.75 shares of an underlying security, there will be 175,001.75 votes of the underlying security represented by Semiconductor HOLDRS. If holders of 50,000 round-lots of 100 Semiconductor HOLDRS vote their underlying securities "yes" and holders of 50,001 round-lots of 100 Semiconductor HOLDRS vote their underlying securities "no", there will be 87,500 affirmative votes and 87,501.75 negative votes. The trustee will ignore the .75 negative votes and will deliver to the issuer 87,500 affirmative votes and 87,501 negative votes. Reconstitution events............ The depositary trust agreement provides for the automatic distribution of underlying securities from the Semiconductor HOLDRS to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of securities registered under section 12 of the Securities Exchange Act of 1934, then 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 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. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation, or other corporate combination or other event, the trustee will distribute the consideration paid by and received from the acquiring company or the securities received in exchange for the securities of the underlying issuer whose securities cease to be outstanding to the beneficial owners of Semiconductor HOLDRS, only if the distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Semiconductor 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 will be deposited into the trust. D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through the Nasdaq National Market System and are not listed for trading on another U.S. national securities exchange or through the Nasdaq National Market System within five business days from the date the securities are delisted. 15 To the extent a distribution of underlying securities from the Semiconductor HOLDRS is required as a result of a reconstitution event, 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. In addition, securities of a new company will be added to the Semiconductor 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 Semiconductor HOLDRS or are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System. It is anticipated, as a result of the broadly defined Standard & Poor's GICS sectors, that most distributions or exchanges of securities will result in the inclusion of new securities in Semiconductor HOLDRS. The trustee will review the Standard & Poor's GICS sector classifications of securities to determine whether securities received as a result of a distribution by an underlying issuer or as consideration for securities included in the Semiconductor HOLDRS or distributed to you. Standard & Poor's sector classifications.................. Standard & Poor's Corporation is an independent source of market information that, among other things, maintains the Global Industry Classification Standard, referred to herein as "GICS," 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 as of January 2, 2002. There are 10 Standard & Poor's GICS sectors and each class of publicly traded securities of a company is given only one GICS sector classification. The securities included in the Semiconductor HOLDRS are currently represented in the Information Technology GICS sector. The Standard & Poor's GICS sector classifications of the securities included in the Semiconductor 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. 16 Termination events............... A. The Semiconductor HOLDRS are delisted from the American Stock Exchange and are not listed for trading on another U.S. national securities exchange or through the Nasdaq National Market System 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. Beneficial owners of at least 75% 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. Upon termination of the depositary trust agreement and prior to distributing the underlying securities to you, the trustee will charge you a cancellation fee of up to 10.00 per round-lot of 100 Wireless HOLDRS surrendered, along with any taxes or other governmental charges, if any. United States federal income tax consequences................. The United States federal income tax laws will treat a U.S. holder of Semiconductor HOLDRS as directly owning the underlying securities. The Semiconductor HOLDRS themselves will not result in any United States federal tax consequences separate from the tax consequences associated with ownership of the underlying securities. Listing.......................... The Semiconductor HOLDRS are listed on the American Stock Exchange under the symbol "SMH." On July 1, 2003 the last reported sale price of the Semiconductor HOLDRS on the American Stock Exchange was $28.94. Trading.......................... Investors are only able to acquire, hold, transfer and surrender a round-lot of 100 Semiconductor HOLDRS. Bid and ask prices, however, are quoted per single Semiconductor HOLDRS. Clearance and settlement......... Semiconductor HOLDRS have been issued only in book-entry form. Semiconductor HOLDRS are evidenced by one or more global certificates that the trustee has deposited 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." 17 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 and the amendment to the depository 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 was formed pursuant to the depositary trust agreement, dated as of April 24, 2000. The depository trust agreement was amended on November 22, 2000. The Bank of New York is 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 consists 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 has issued Semiconductor HOLDRS under the depositary trust agreement described in this prospectus under the heading "Description of the Depositary Trust Agreement." 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 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 in "street name" 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." Semiconductor HOLDRS are evidenced by one or more global certificates that the trustee has deposited with DTC and registered in the name of Cede & Co., as nominee for DTC. Semiconductor HOLDRS are available 18 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 specified companies that, at the time of selection, were involved in various aspects of the semiconductor industry and whose common stock is registered under section 12 of the Securities Exchange Act of 1934. The issuers of the underlying securities were, at the time of selection, among the largest capitalized and most liquid companies involved in the semiconductor business as measured by market capitalization and trading volume. The Semiconductor HOLDRS may no longer consist exclusively 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 distribution of securities by an underlying issuer or other event, a revised list of underlying securities will be set forth in a prospectus supplement and filed with the SEC on a periodic basis. No investigation. 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. 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. 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." 19 The following table and graph set forth the composite performance of all of the 20 underlying securities currently represented by a single Semiconductor HOLDR, measured at the close of the business day, 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 through June 30, 2003. 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.
1998 Price 2000 Price 2002 Price - ---- ----- ---- ----- ---- ----- May 1 22.64 January 31 66.11 January 31 45.38 May 29 18.61 February 29 91.88 February 29 40.33 June 30 18.68 March 31 98.07 March 31 46.62 July 31 19.98 April 28 97.01 April 28 41.51 August 31 15.60 May 31 86.93 May 31 38.56 September 30 17.95 June 30 93.64 June 30 30.27 October 30 21.37 July 31 84.39 July 31 26.93 November 30 24.60 August 31 98.67 August 31 24.13 December 31 28.42 September 29 70.84 September 29 19.23 October 31 65.66 October 31 23.96 November 30 48.04 November 30 29.36 December 29 48.97 December 29 22.23
1999 Price 2001 Price 2003 Price - ---- ----- ---- ----- ---- ----- January 29 35.10 January 31 59.06 January 31 21.46 February 26 29.80 February 28 42.11 February 28 23.58 March 31 31.24 March 30 41.69 March 31 23.14 April 30 31.51 April 30 51.37 April 30 26.38 May 28 31.57 May 31 46.06 May 30 29.99 June 30 39.04 June 29 46.89 June 30 28.31 July 30 41.15 July 31 46.64 August 31 46.03 August 31 43.82 September 30 44.50 September 28 29.69 October 29 48.89 October 31 35.77 November 30 52.17 November 30 42.69 December 31 59.95 December 31 41.84
[GRAPHIC OMITTED] 20 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 depository trust agreement was amended on November 22, 2000 to modify the reconstitution events, described below. The trustee. The Bank of New York serves as trustee for Semiconductor HOLDRS. 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, and 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. You will receive 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. Any distributions of securities by an issuer of underlying securities will be deposited into the trust and will become part of the Semiconductor HOLDRS unless such securities are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System or such securities have a different Standard & Poor's GICS sector classification than any of the underlying securities in the Semiconductor HOLDRS at the time of the distribution of such securities. In addition, if the issuer of underlying securities offers rights to acquire additional underlying securities or other securities, the rights will be distributed to you through the trustee, if practicable, and if the rights and the securities that those rights relate to are exempt from registration or are registered under the Securities Act of 1933. Otherwise, if practicable, the rights will be disposed of and the net proceeds distributed to you by the trustee. In all other cases, the rights will lapse. 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, 21 the trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions received, or to be received, and payable with respect to such calendar year. Record dates. With respect to dividend payments and voting instructions, the trustee expects to fix the trust's record dates as close as possible to the record date fixed by the issuer of the underlying securities. Shareholder communications. The trustee promptly will forward to you all shareholder communications that it receives from issuers of the underlying securities. 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 from the Semiconductor HOLDRS to you in the following 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, corporate combination or other event, the trustee will distribute the consideration paid by and received from the acquiring company to the beneficial owners of Semiconductor HOLDRS, only if the distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Semiconductor 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 trust. D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through the Nasdaq National Market System within five business days from the date such securities are delisted. To the extent a distribution of underlying securities is required as a result of a reconstitution event, 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. As provided in the depositary trust agreement, securities of a new company will be added to the Semiconductor HOLDRS, as a result of a distribution of securities by an underlying issuer or where an event occurs, such as a merger, where the securities of an underlying issuer are exchanged for the securities of another company, unless the securities received have a different Standard & Poor's GICS sector classification than the underlying securities represented in the Semiconductor HOLDRS or if the securities received are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System. 22 It is anticipated, as a result of the broadly defined GICS sectors, that most distributions or exchanges of securities will result in the inclusion of new securities in the Semiconductor HOLDRS. The trustee will review the Standard & Poor's GICS sector classifications of securities to determine whether securities received as a result of a distribution by an underlying issuer or as consideration for securities included in the Semiconductor HOLDRS will be distributed from the Semiconductor HOLDRS to you. Standard & Poor's sector classifications. 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 is given only one GICS sector. The securities included in the Semiconductor HOLDRS are currently represented in the Information Technology GICS sector. The Standard & Poor's GICS sector classifications of the securities included in the Semiconductor 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. 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 the 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 U.S. national securities exchange or through the Nasdaq National Market System within five 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. 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. 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, you will be responsible for paying any sales commissions associated with your purchase of the underlying securities that is charged by your broker, whether it be Merrill Lynch, Pierce, Fenner & Smith Incorporated or another broker, in addition to the issuance fee described above. 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 23 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 the Semiconductor HOLDRS are 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 assumes 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 has undertaken to perform only those duties as are specifically set forth in the depositary trust agreement. Subject to the preceding sentence, the trustee is liable for its own negligence or misconduct except for good faith errors in judgment so long as the trustee is not negligent in ascertaining the relevant facts. 24 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES General The following is a summary of the U.S. federal income tax consequences relating to the Semiconductor HOLDRS for: o a citizen or resident of the United States; o a corporation or partnership created or organized in the United States or under the laws of the United States; o an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; o a trust if either (i) it is subject to the primary supervision of a U.S. court and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person (a "U.S. receipt holder"); and o 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, such as (without limitation) tax-exempt entities, banks, dealers in securities, U.S. receipt holders whose functional currency is not the U.S. dollar, and investors who acquire or hold any Semiconductor HOLDRS as part of a conversion, straddle or other hedging transaction. 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 (the "Code"). Moreover, this summary does not address Semiconductor HOLDRS held by a foreign partnership or other foreign flow through entities. We recommend that you consult with your own tax advisor. Taxation of the trust The trust will provide for flow through tax consequences as it will be treated as a grantor trust or custodial arrangement for U.S. federal income tax purposes. Taxation of 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. Pursuant to recently enacted legislation, qualified dividend income received in respect of Semiconductor HOLDRS by U.S. receipt holders who are individuals, trusts and estates will be eligible for U.S. federal income taxation at preferential rates. Qualified dividend income includes dividends received from domestic corporations and "qualified foreign corporations," as such term is defined below under "Special considerations with respect to underlying securities of foreign issuers." In order for such dividends to qualify for the preferential rates, specific minimum holding period requirements must be met, and for this purpose, a U.S. receipt holder's holding period with respect to an underlying security may be tolled for any period in which such holder has diminished its risk of loss in respect of such security by (for example) entering into a hedging transaction. Special rules apply to a U.S. receipt holder who leverages its investment in Semiconductor HOLDRS. 25 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 adjusted 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, except to the extent that cash is distributed in lieu of fractional shares. The receipt holder's holding period with respect to the distributed securities will include the period that the holder held the securities through the trust. 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. Special considerations with respect to underlying securities of foreign issuers If any of the underlying securities are securities of foreign issuers, the gross amount of any taxable cash distribution will not be eligible for the dividends received deduction generally allowed to corporate U.S. receipt holders. As discussed above, dividends received by certain U.S. receipt holders from an issuer of underlying securities that is a "qualified foreign corporation" will be eligible for U.S. federal income taxation at preferential rates under recently enacted legislation. A qualified foreign corporation includes: o a foreign corporation that is eligible for the benefits of a comprehensive U.S. income tax treaty that includes an exchange of information program, and o a foreign corporation if the stock to which the dividend is paid is readily tradable on an established market in the United States, but will not include: o a passive foreign investment company (as defined below), o a foreign personal holding company (as specially defined in the Code), or o a foreign investment company (as specially defined in the Code). The Treasury Department is expected to issue guidance regarding these requirements. 26 If a foreign issuers pays a dividend in a currency other than in U.S. dollars, the amount of the dividend for U.S. federal income tax purposes will be the U.S. dollar value, determined at the spot rate on the date of the payment, regardless of whether the payment is later converted into U.S. dollars. In this case, the U.S. receipt holder may recognize ordinary income or loss as a result of currency fluctuations between the date on which the dividend is paid and the date the dividend amount is converted into U.S. dollars. Subject to certain conditions and limitations, any foreign tax withheld on dividends may be deducted from taxable income or credited against a U.S. receipt holder's U.S. federal income tax liability. The limitation on foreign taxes eligible for the U.S. foreign tax credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by a foreign issuer generally will constitute passive income or, in the case of some U.S. holders, financial services income. For purposes of the U.S. foreign tax credit limitation, dividends received by a U.S. receipt holder with respect to an underlying security of a foreign issuer generally will be treated as a foreign source income while any gain or loss recognized from the sale of such security generally will be treated as from sources within the United States. The rules relating to the determination of the foreign tax credit are complex and we recommend that U.S. receipt holders consult their own tax advisors to determine whether and to what extent a credit would be available. Dividends and distributions made by a foreign issuer may be subject to a foreign withholding tax. Some foreign issuers may make arrangements through which holders of their American depositary shares can apply for a refund of withheld taxes. If any of the underlying securities are securities of a foreign issuer, holders of Semiconductor HOLDRS may be able to use these arrangements to apply for a refund of withheld taxes. Additionally, special U.S. federal income tax rules apply to U.S. person owning shares of a passive foreign investment company (a "PFIC"). A foreign corporation generally will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying relevant look-through rules, either: o at least 75% of its gross income is "passive income"; or o on average at least 50% of the gross value of its assets is attributable to assets that produce "passive income" or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents, and gains from commodities and securities transactions. If a corporation were classified as a PFIC, a U.S. receipt holder could be subject to increased tax liability, possibly including an interest charge, upon the sale or other disposition of the Semiconductor HOLDRS or of the underlying securities or upon the receipt of "excess distributions," unless the U.S. receipt holder has made one of certain elections (to the extent available under specific rules) including an election to be taxed currently on its pro rata portion of the corporation's income, whether or not the income was distributed in the form of dividends or otherwise. Non-U.S. receipt holders A non-U.S. receipt holder generally will be subject to U.S. withholding tax at a rate of 30% or a lower rate as may be specified by an applicable tax treaty with respect to dividends received on underlying securities of U.S. issuers. However, if that income is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, it is attributable to a permanent establishment maintained in the United States by the holder, then those dividends will be exempt from withholding tax, provided the holder complies with applicable certification and disclosure requirements. 27 A non-U.S. receipt holder generally will not be subject to U.S. federal income or withholding tax with respect to dividends received on any underlying securities of a foreign issuer, unless that income is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the holder. With respect to dividends of U.S and any foreign issuers, a non-U.S. receipt holder's dividends that are effectively connected with a U.S. trade or business or dividends attributable to a permanent establishment, net of relevant deductions and credits, will be subject to U.S. federal income taxation at the same graduated rates applicable to U.S. persons. In addition to this graduated tax, effectively connected dividends or dividends attributable to a permanent establishment received by a corporate non-U.S. receipt holder may also be subject to a branch profits tax at a rate of 30% or a lower rate as may be specified by an applicable tax treaty. Under some circumstances, a non-U.S. receipt holder whose dividends are so effectively connected or attributable shall be entitled to a dividends received deduction equal to 70% or 80% of the amount of the dividend. A non-U.S. receipt holder that is eligible for a reduced rate of withholding tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service. A non-U.S. receipt holder generally will not be subject to U.S. federal income or withholding tax with respect to gain recognized upon the sale or other disposition of Semiconductor HOLDRS or of the underlying securities unless: o that gain is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the holder, o in the case of any gain realized by an individual non-U.S. receipt holder, the holder is present in the United States for 183 days or more in the taxable year of the sale or other disposition and certain other conditions are met, or o the underlying securities issuer is or has been a U.S. real property holding corporation for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the disposition or the period during which the non-U.S. receipt holder held the common stock of such issuer and (a) the common stock is not considered to be "regularly traded on an established securities market" or (b) the non-U.S. receipt holder owned, actually or constructively, at any time during the shorter of the periods described above, more than 5% of the common stock of such issuer. Effectively connected or attributable gains generally will be subject to U.S. federal income taxation at the same graduated rates applicable to U.S. persons, and may, in the case of a corporate non-U.S. receipt holder, also be subject to the branch profits tax. We recommend that non-U.S. receipt holders consult their own tax advisors to determine whether any applicable tax treaties provide for different rules. Backup withholding and information reporting Information returns will be filed with the Internal Revenue Service in connection with dividend payments made with respect to the underlying securities, or the proceeds of the sale or other disposition of the receipts (or the underlying securities). If you are a non-corporate U.S receipt holder, you will be subject to U.S. backup withholding tax at the applicable rate on these payments unless you provide your taxpayer identification number to the paying agent and comply with certain certification procedures. If you are a non-U.S. receipt holder, you may have to comply with certification procedures to establish that you are not a U.S. person in order to avoid the information reporting and backup withholding tax requirements. However, payments of dividends to non-U.S. receipt holders will be reported on Internal Revenue Service Form 1042-S even if such payments are not otherwise subject to the information reporting requirements. The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is furnished to the Internal Revenue Service. The preceding discussion does not address all aspects of U.S. federal income taxation that may be relevant in light of a non-U.S. receipt holder's or an issuer's particular facts and circumstances. We recommend that investors consult their own tax advisors. 28 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 issued Semiconductor HOLDRS to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce, Fenner & Smith Incorporated has deposited the underlying securities to receive Semiconductor HOLDRS. The trust delivered the initial distribution of Semiconductor HOLDRS against deposit of the underlying securities in New York, New York on approximately May 9, 2000. Investors who purchase Semiconductor HOLDRS through a fee-based brokerage account will pay fees charged by the brokerage account. We recommend that investors review the terms of their brokerage accounts for details on applicable charges. Merrill Lynch, Pierce, Fenner & Smith Incorporated has from time to time provided investment banking and other financial services to certain of the issuers of the underlying securities and expects in the future to provide these services, for which it has received and will receive customary fees and commissions. It also may have served as counterparty in other transactions with certain of the issuers of the underlying securities. Merrill Lynch, Pierce, Fenner & Smith Incorporated has used, and may continue to 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 were passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor and the underwriter in connection with the initial offering of Semiconductor HOLDRS, by Shearman & Sterling LLP, New York, New York. Shearman & Sterling LLP, as special U.S. tax counsel to the trust, also will render an opinion regarding the material U.S. federal income tax consequences relating to the Semiconductor HOLDRS. 29 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 file any reports pursuant to the Securities Exchange Act of 1934. The trust will file modified reports pursuant to the Securities Exchange Act of 1934. Because the common stock of the issuers of the underlying securities is registered under the Securities Exchange Act of 1934, 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. 30 ANNEX A This annex forms an integral part of the prospectus. The following tables provide a brief description of the business of each of the issuers of the underlying securities and set forth the split-adjusted closing market prices, as reported on the applicable primary U.S. trading market, of each of the underlying securities in each month during 1998, 1999, 2000, 2001 and 2002, through June 2003. As a result of the conversion to decimal reporting of trading prices by the markets on which the underlying securities trade, all market prices beginning from January 2001 provided in the following tables are given in decimal form. All historical market prices provided in fractions in excess of one dollar are rounded to the nearest one sixty-fourth of a dollar. A table outlining the primary U.S. stock market on which the securities of the issuers are listed can be found on page 12. An asterisk (*) denotes that no shares of the issuer were trading on a U.S. stock market during that month. The historical prices of the underlying securities should not be taken as an indication of future performance. ADVANCED MICRO DEVICES, INC. (AMD) Advanced Micro Devices, Inc. is a supplier of digital integrated circuits for personal computers, workstations, servers, telecommunications equipment, data and network communications equipment and consumer electronics. AMD's microprocessor products are compatible with Windows, Linux, NetWare and UNIX computer platforms, and its Flash memory devices are used in cellular telephones, networking equipment and other applications that require memory to be non-volatile and electrically rewritten. AMD markets and sells its products through its own direct sales force and through third-party distributors and independent representatives. AMD has manufacturing facilities in the United States, Europe and Asia.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ------------ -------- ------------ -------- ---------- ---------- ----------- -------- ------------ ---------- --------- January 10 3/32 January 11 15/32 January 18 January 24.60 January 16.05 January 5.24 February 11 3/4 February 8 15/16 February 19 3/4 February 21.50 February 13.50 February 5.49 March 14 17/32 March 7 3/4 March 28 17/32 March 26.54 March 14.71 March 6.18 April 13 7/8 April 8 1/4 April 43 3/4 April 31.00 April 11.18 April 7.44 May 9 25/32 May 9 1/4 May 40 7/8 May 28.25 May 11.43 May 7.28 June 8 17/32 June 9 1/32 June 35 31/32 June 28.90 June 9.72 June 6.41 July 8 5/8 July 8 11/16 July 36 July 18.26 July 8.03 August 6 1/2 August 10 11/32 August 37 5/8 August 13.55 August 8.85 September 9 9/32 September 8 19/32 September 23 5/8 September 8.15 September 5.34 October 11 9/32 October 9 29/32 October 22 5/8 October 9.84 October 6.14 November 13 27/32 November 14 1/8 November 15 1/4 November 13.56 November 9.00 December 14 1/2 December 14 15/32 December 13 13/16 December 15.86 December 6.46
The closing price on July 1, 2003 was $6.54. A-1 ALTERA CORPORATION (ALTR) Altera Corporation designs, manufactures and markets semiconductor integrated circuits that can be programmed with its proprietary software on personal computers and engineering workstations. Altera's products consist primarily of high-density programmable logic devices, intellectual property cores and proprietary development tools. Altera's products are used in the telecommunications, data communications and electronic data processing industries, and in industrial applications. Altera markets and sells its products through its own direct sales force, sales representatives and distributors.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ------------ -------- ----------- -------- ----------- -------- ------------ -------- ------------ -------- --------- January 8 9/16 January 15 23/32 January 32 7/8 January 30.25 January 25.12 January 10.98 February 10 25/32 February 12 5/32 February 39 7/8 February 23.13 February 19.07 February 12.53 March 9 7/16 March 14 7/8 March 44 5/8 March 21.44 March 21.87 March 13.54 April 10 1/8 April 18 1/16 April 51 1/8 April 25.29 April 20.56 April 15.81 May 8 13/32 May 17 13/32 May 42 15/16 May 24.00 May 18.03 May 19.30 June 7 25/64 June 18 13/32 June 50 31/32 June 29.00 June 13.60 June 16.43 July 9 1/8 July 18 1/8 July 49 3/32 July 30.06 July 11.83 August 7 9/32 August 21 1/16 August 64 13/16 August 28.40 August 10.71 September 9 25/32 September 21 11/16 September 47 3/4 September 16.38 September 8.67 October 10 13/32 October 24 5/16 October 40 15/16 October 20.20 October 11.72 November 12 17/64 November 26 15/16 November 23 15/16 November 22.76 November 14.53 December 15 7/32 December 24 25/32 December 26 5/16 December 21.22 December 12.33
The closing price on July 1, 2003 was $16.91. AMKOR TECHNOLOGY, INC. (AMKR) Amkor Technology, Inc. is a subcontractor of semiconductor packaging and test services. Amkor also markets the output of fabricated semiconductor wafers provided by a wafer fabrication foundry owned and operated by Anam Semiconductor, Inc. The semiconductors that the Company packages and tests for its customers ultimately become components in electric systems used in communications, computing, consumer, industrial, automotive and military applications. Amkor markets and sells its services through its own direct sales force.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - --------- ------------ -------- ----------- -------- ---------- --------- --------- --------- ----------- -------- ----------- January * January 11 9/16 January 31 3/4 January 22.75 January 18.03 January 4.89 February * February 10 1/2 February 51 15/16 February 16.31 February 13.88 February 4.75 March * March 7 7/8 March 53 1/16 March 16.31 March 22.31 March 5.17 April * April 9 3/4 April 61 3/16 April 21.75 April 20.10 April 7.57 May 10 3/8 May 9 1/4 May 44 3/4 May 19.53 May 14.87 May 11.13 June 9 11/32 June 10 1/4 June 35 5/16 June 22.10 June 6.22 June 13.16 July 7 13/32 July 15 3/8 July 27 1/2 July 18.20 July 3.94 August 4 5/8 August 17 5/8 August 34 1/8 August 16.38 August 2.25 September 4 7/8 September 16 1/8 September 26 1/8 September 10.52 September 2.38 October 4 7/8 October 20 3/16 October 22 1/2 October 12.45 October 3.52 November 6 5/16 November 27 November 15 15/16 November 15.57 November 7.26 December 10 13/16 December 28 1/4 December 15 33/64 December 16.03 December 4.76
The closing price on July 1, 2003 was $13.40. A-2 ANALOG DEVICES, INC. (ADI) Analog Devices, Inc. designs, manufactures and markets precision high-performance integrated circuits that are used in signal processing applications. Analog Devices' products are used in the communications, computers, consumer electronics, industrial, instrumentation and military/aerospace and automotive electronics fields. Specifically, Analog Devices services the communications market, which includes manufacturers of wireless handsets, as well as products used for high-speed access to the Internet. Analog Devices also services the personal computer market with products that monitor and manage power usage and process signals used in flat panel displays and multimedia projectors.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ---------- --------- ---------- --------- ---------- ---------- ---------- -------- ----------- -------- ---------- January 14 3/4 January 14 7/8 January 46 3/4 January 62.60 January 43.80 January 23.93 February 16 5/32 February 12 17/32 February 78 5/8 February 37.30 February 37.21 February 29.16 March 16 5/8 March 14 7/8 March 80 1/2 March 36.24 March 45.04 March 27.50 April 19 15/32 April 17 9/16 April 76 13/16 April 47.31 April 36.96 April 33.12 May 12 11/32 May 19 7/32 May 77 May 44.55 May 36.62 May 38.55 June 12 9/32 June 25 3/32 June 76 June 43.25 June 29.70 June 34.82 July 10 3/4 July 21 9/16 July 66 5/8 July 46.00 July 24.10 August 7 1/32 August 25 3/4 August 100 1/2 August 47.87 August 24.10 September 8 1/32 September 25 5/8 September 82 9/16 September 32.70 September 19.70 October 9 15/16 October 26 19/32 October 65 October 38.00 October 26.80 November 10 7/32 November 28 3/4 November 49 5/8 November 42.50 November 30.69 December 15 11/16 December 46 1/2 December 51 3/16 December 44.39 December 23.87
The closing price on July 1, 2003 was $35.25. 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, the Internet and other digital devices. Applied Materials' customers include semiconductor wafer 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 also offers inspection and defect reduction solutions that allow chipmakers to move their products into the market more quickly.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- -------- ------------ ---------- ----------- -------- ---------- -------- ---------- ---------- ------------ January 8 13/64 January 15 51/64 January 34 5/16 January 25.16 January 21.83 January 11.97 February 9 13/64 February 13 29/32 February 45 47/64 February 21.13 February 21.74 February 12.98 March 8 53/64 March 15 27/64 March 47 1/8 March 21.75 March 27.14 March 12.58 April 9 1/32 April 13 13/32 April 50 29/32 April 27.30 April 24.32 April 14.62 May 8 May 13 3/4 May 41 3/4 May 24.97 May 22.18 May 15.56 June 7 3/8 June 18 15/32 June 45 5/16 June 24.55 June 19.02 June 15.84 July 8 3/8 July 17 63/64 July 37 15/16 July 22.93 July 14.87 August 6 9/64 August 17 49/64 August 43 5/32 August 21.55 August 13.36 September 6 5/16 September 19 27/64 September 29 21/32 September 14.22 September 11.55 October 8 43/64 October 22 29/64 October 26 9/16 October 17.06 October 15.03 November 9 11/16 November 24 23/54 November 20 7/32 November 19.87 November 17.05 December 10 43/64 December 31 43/64 December 19 3/32 December 20.05 December 13.03
The closing price on July 1, 2003 was $16.18. A-3 ATMEL CORPORATION (ATML) Atmel Corporation designs, develops, manufactures and sells semiconductor integrated circuits. Atmel's circuits are designed for use in the telecommunications, consumer electronics and computing markets. Atmel is capable of integrating dense nonvolatile memory, logic and analog functions on a single chip, and its products enable its customers to make smaller, smarter and less expensive electronic products. In addition to its manufacturing facilities, Atmel has North American and international sales offices.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - --------- ------------ -------- ----------- -------- ----------- -------- ------------ -------- ----------- -------- ----------- January 4 3/64 January 4 7/16 January 15 17/32 January 17.00 January 7.70 January 2.05 February 4 1/16 February 4 19/64 February 24 3/4 February 10.50 February 7.23 February 1.75 March 3 49/64 March 3 51/64 March 25 13/16 March 9.81 March 10.14 March 1.60 April 5 3/64 April 4 9/16 April 24 15/32 April 13.89 April 9.00 April 1.84 May 3 45/64 May 4 15/16 May 19 3/32 May 11.10 May 8.22 May 3.03 June 3 13/32 June 6 35/64 June 18 7/16 June 13.49 June 6.26 June 2.54 July 2 19/32 July 7 29/64 July 14 31/32 July 10.01 July 3.15 August 1 33/64 August 9 53/64 August 20 August 9.59 August 2.31 September 2 17/64 September 8 29/64 September 15 3/16 September 6.68 September 1.06 October 2 57/64 October 9 21/64 October 14 15/16 October 7.95 October 1.67 November 3 1/32 November 11 13/64 November 9 21/32 November 8.25 November 3.51 December 3 53/64 December 14 25/32 December 11 5/8 December 7.37 December 2.23
The closing price on July 1, 2003 was $2.62. BROADCOM CORPORATION (BRCM) Broadcom Corporation provides highly integrated silicon solutions that enable broadband communications and networking of voice, video and data services. Broadcom designs, develops and supplies complete system-on-a-chip solutions and related hardware and software for major broadband communications markets. Broadcom's product portfolio includes solutions for digital cable and satellite set-top boxes; cable and DSL modems and residential gateways; high-speed transmission and switching for local, metropolitan and wide area networking; home and wireless networking; cellular and terrestrial wireless communications; and broadband network processors. Broadcom markets and sells its products through its own direct sales force, third-party distributors and representatives.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ------------ -------- ------------ -------- ------------ -------- ------------ -------- ------------ -------- ----------- January * January 33 9/32 January 144 21/32 January 109.94 January 42.47 January 13.54 February * February 30 3/32 February 197 3/8 February 49.25 February 30.65 February 14.48 March * March 30 13/16 March 242 7/8 March 28.90 March 35.90 March 12.35 April 12 April 38 9/16 April 172 3/8 April 41.56 April 34.50 April 17.89 May 12 25/32 May 47 7/8 May 130 1/16 May 33.26 May 22.55 May 24.51 June 18 13/32 June 72 9/32 June 218 15/16 June 42.76 June 17.54 June 24.91 July 15 11/16 July 60 1/4 July 224 1/4 July 43.63 July 18.76 August 12 13/16 August 64 3/8 August 250 August 32.15 August 16.49 September 17 3/4 September 54 1/2 September 243 3/4 September 20.30 September 10.68 October 20 47/64 October 63 29/32 October 222 3/8 October 34.41 October 11.98 November 22 21/64 November 89 17/32 November 97 1/2 November 43.99 November 19.55 December 30 3/16 December 136 3/16 December 84 December 40.87 December 15.06
The closing price on July 1, 2003 was $25.74. A-4 INTEL CORPORATION (INTC) Intel Corporation is a semiconductor chip maker that supplies the computing and communications industries with chips, boards, systems and software building blocks that are used in computers, servers and networking and communications products. Intel's major products include microprocessors, chipsets, boards, networking and communications products, such as Ethernet network interface cards and network processors, embedded control chips and flash memory used in cellular handsets and handheld computing devices, as well as cellular baseband chipsets. Intel markets and sells its products to original equipment manufacturers of computer systems, cellular handsets and handheld computing devices, telecommunications and networking communications equipment.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ----------- ------------ -------- ------------ -------- ------------ -------- ------------ -------- ----------- -------- ---------- January 20 1/4 January 35 15/64 January 49 15/32 January 37.00 January 35.04 January 15.70 February 22 27/64 February 29 63/64 February 56 1/2 February 28.56 February 28.55 February 17.26 March 19 33/64 March 29 23/32 March 65 31/32 March 26.31 March 30.41 March 16.28 April 20 13/64 April 30 19/32 April 63 13/32 April 30.91 April 28.61 April 18.37 May 17 55/64 May 27 1/32 May 62 11/32 May 27.01 May 27.62 May 20.82 June 18 17/32 June 29 3/4 June 66 27/32 June 29.25 June 18.27 June 20.81 July 21 7/64 July 34 1/2 July 66 3/4 July 29.81 July 18.79 August 17 51/64 August 41 3/32 August 74 7/8 August 27.96 August 16.67 September 21 7/16 September 37 5/32 September 41 9/16 September 20.44 September 13.89 October 22 19/64 October 38 23/32 October 45 October 24.42 October 17.30 November 26 29/32 November 38 11/32 November 38 1/16 November 32.66 November 20.88 December 29 43/64 December 41 5/32 December 30 1/16 December 31.45 December 15.57
The closing price on July 1, 2003 was $21.41. KLA-TENCOR CORPORATION (KLAC) KLA-Tencor Corporation offers products, software, analysis, services and expertise that facilitate 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 are designed to detect defects in offline engineering applications, as well as in-line at various stages during the wafer, semiconductor and reticle manufacturing processes. KLA-Tencor markets and sells its products through its own direct sales force and third-party distributors.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- -------- ----------- -------- --------- ---------- ----------- -------- ----------- -------- ----------- January 18 3/4 January 28 7/8 January 58 5/8 January 45.88 January 57.28 January 32.64 February 23 5/64 February 25 29/32 February 77 15/16 February 35.75 February 57.91 February 35.75 March 19 1/8 March 24 9/32 March 84 1/4 March 39.38 March 66.50 March 35.94 April 20 5/32 April 24 13/16 April 74 7/8 April 54.96 April 58.97 April 41.00 May 16 7/8 May 22 3/4 May 49 9/16 May 51.62 May 52.13 May 46.23 June 13 27/32 June 32 7/16 June 58 9/16 June 58.47 June 43.99 June 46.46 July 14 15/16 July 33 7/8 July 53 1/4 July 54.39 July 39.39 August 10 5/8 August 31 13/32 August 65 5/8 August 49.14 August 32.91 September 12 7/16 September 32 1/2 September 41 3/16 September 31.58 September 27.94 October 18 7/16 October 39 19/32 October 33 13/16 October 40.86 October 35.61 November 17 1/32 November 42 9/32 November 27 1/2 November 50.23 November 44.17 December 21 11/16 December 55 11/16 December 33 11/16 December 49.56 December 35.37
The closing price on July 1, 2003 was $46.85. A-5 LINEAR TECHNOLOGY CORPORATION (LLTC) Linear Technology Corporation designs, manufactures and markets a broad line of standard high-performance linear integrated circuits. Applications for Linear Technology products include communications, networking, computers, multimedia, industrial instruments, and military and aerospace systems. 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.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ------------ -------- ---------- --------- ---------- --------- ----------- -------- ----------- -------- ----------- January 16 9/16 January 25 7/16 January 47 11/32 January 62.63 January 41.37 January 26.13 February 18 15/16 February 21 29/32 February 52 15/32 February 39.63 February 36.83 February 30.67 March 17 1/4 March 25 5/8 March 55 March 41.06 March 44.22 March 30.87 April 20 1/8 April 28 7/16 April 57 1/8 April 48.04 April 38.86 April 34.44 May 17 31/64 May 26 1/2 May 59 1/16 May 48.00 May 37.25 May 36.43 June 15 5/64 June 33 5/8 June 63 15/16 June 44.22 June 31.43 June 32.38 July 14 61/64 July 30 11/16 July 55 1/4 July 43.58 July 27.08 August 11 3/4 August 31 15/32 August 71 15/16 August 41.08 August 26.22 September 12 1/2 September 29 25/64 September 64 3/4 September 32.80 September 20.72 October 14 29/32 October 34 31/32 October 64 9/16 October 38.80 October 27.64 November 17 33/64 November 35 17/32 November 47 5/16 November 41.03 November 33.23 December 22 25/64 December 35 25/32 December 46 1/4 December 39.04 December 25.72
The closing price on July 1, 2003 was $33.04. LSI LOGIC CORPORATION (LSI) LSI Logic Corporation designs, develops, manufactures and markets integrated circuits and storage systems 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's chips are used in wireless broadband networking and cable set-top-box products. LSI markets and sells its products primarily to original equipment manufacturers that sell products targeted for applications in consumer products, communications storage components and storage area network systems.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- -------- ----------- -------- ----------- -------- ----------- -------- ----------- -------- ----------- January 12 January 13 31/32 January 40 3/4 January 24.75 January 16.58 January 4.41 February 11 27/32 February 12 15/16 February 64 February 16.11 February 14.99 February 4.44 March 12 5/8 March 15 19/32 March 72 5/8 March 15.73 March 17.00 March 4.52 April 13 9/16 April 17 April 62 1/4 April 20.47 April 12.85 April 5.36 May 10 21/32 May 18 17/32 May 53 1/4 May 18.31 May 11.40 May 6.40 June 11 17/32 June 23 1/16 June 54 1/8 June 18.80 June 8.75 June 7.08 July 10 11/32 July 25 3/16 July 33 7/8 July 21.78 July 7.80 August 6 1/8 August 28 3/8 August 35 15/16 August 20.25 August 7.33 September 6 5/16 September 26 September 29 1/2 September 11.75 September 6.35 October 7 9/16 October 26 19/32 October 32 5/8 October 16.95 October 5.90 November 7 13/16 November 30 7/32 November 18 November 16.25 November 8.54 December 8 1/16 December 33 3/4 December 17.09 December 15.78 December 5.77
The closing price on July 1, 2003 was $7.46. A-6 MAXIM INTEGRATED PRODUCTS, INC. (MXIM) Maxim Integrated Products, Inc. designs, develops, manufactures and markets a broad range of linear and mixed-signal integrated circuits, commonly referred to as analog circuits. Maxim also provides a range of high-frequency design processes and capabilities that can be used in custom designs. Some of Maxim's products include data converters, interface circuits, microprocessor supervisors, operational amplifiers, power supplies and multiplexers. Its products are sold to customers in numerous markets, including the automotive, communications, consumer, industrial control, instrumentation and data processing markets. Maxim markets and sells its products through its own direct sales force and its own and other unaffiliated distribution channels.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- -------- --------- --------- --------- --------- --------- -------- ----------- -------- ---------- January 17 5/16 January 25 23/32 January 50 1/8 January 61.06 January 55.49 January 31.21 February 20 3/16 February 20 27/32 February 66 13/16 February 46.13 February 45.76 February 34.54 March 18 7/32 March 27 1/16 March 71 1/16 March 41.59 March 55.71 March 36.12 April 20 3/16 April 28 April 64 13/16 April 50.85 April 49.80 April 39.33 May 16 11/16 May 26 23/32 May 63 7/16 May 51.02 May 46.00 May 39.20 June 15 27/32 June 33 1/4 June 67 15/16 June 44.21 June 38.33 June 34.10 July 16 July 32 1/32 July 66 1/16 July 46.17 July 35.18 August 13 3/4 August 33 21/32 August 87 11/16 August 46.21 August 31.61 September 13 15/16 September 31 35/64 September 80 7/16 September 34.94 September 24.76 October 17 27/32 October 39 15/32 October 66 5/16 October 45.75 October 31.84 November 19 5/8 November 40 5/32 November 51 November 34.81 November 42.05 December 21 27/32 December 47 3/16 December 47 13/16 December 52.51 December 33.04
The closing price on July 1, 2003 was $34.65. MICRON TECHNOLOGY, INC. (MU) Micron Technology, Inc. designs, develops, manufactures and markets semiconductor memory products. Micron's principal semiconductor product is DRAM, a memory component that stores digital information and is designed for the high-speed storage and retrieval of data. Micron also manufactures SRAM and flash products. SRAM performs memory functions similar to DRAM, and is a key component in telecommunications and networking applications. Flash products are semiconductor devices that retain memory content when the power of other devices is turned off; flash products are used in networking applications, workstations, servers, PCs and handheld electronic devices such as digital cellular phones, digital cameras and digital music players. Micron markets and sells its products through its own direct sales force, independent sales representatives and distributors.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- -------- ----------- -------- ----------- -------- ----------- -------- ----------- -------- ---------- January 17 9/32 January 39 January 31 3/32 January 45.77 January 33.75 January 8.21 February 16 19/32 February 28 13/16 February 48 1/2 February 34.22 February 32.15 February 7.99 March 14 17/32 March 24 3/32 March 63 March 41.53 March 32.90 March 8.14 April 15 17/32 April 18 5/8 April 69 21/32 April 45.38 April 23.70 April 8.50 May 11 25/32 May 18 15/16 May 69 15/16 May 37.50 May 23.58 May 11.32 June 12 13/32 June 20 1/4 June 88 1/16 June 41.10 June 20.22 June 11.75 July 16 21/32 July 30 13/16 July 81 1/2 July 42.00 July 19.49 August 11 3/8 August 37 7/16 August 81 41/64 August 37.61 August 17.25 September 15 7/32 September 33 1/4 September 46 September 18.83 September 12.37 October 19 October 35 21/32 October 34 3/4 October 22.76 October 16.00 November 20 21/32 November 33 17/32 November 31 1/2 November 27.16 November 15.81 December 25 9/32 December 38 7/8 December 35 1/2 December 31.00 December 9.74
The closing price on July 1, 2003 was $12.33. A-7 NATIONAL SEMICONDUCTOR CORPORATION (NSM) National Semiconductor Corporation develops, manufactures and markets semiconductor products, including analog, mixed-signal and other integrated circuits. Its analog and mixed-signal devices include amplifiers and regulators, image sensors, power monitors and line drivers, radio frequency, audio amplifiers, display drivers and signal processors. Other products with significant digital-to-analog or analog-to-digital capability include products for local area and wireless networking and wireless communications, as well as products for personal systems and personal communications. National Semiconductor provides products and services to the avionics, defense, space, personal computer, wireless, telecom, data networking and automotive markets, as well as to the U.S. federal government. National Semiconductor markets and sells its products to original equipment manufacturers through its own direct sales force.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- -------- ----------- -------- ---------- -------- ----------- -------- ----------- -------- ---------- January 28 1/8 January 12 15/16 January 52 1/2 January 28.70 January 28.21 January 13.20 February 23 7/8 February 10 1/2 February 75 1/8 February 20.42 February 25.15 February 17.13 March 20 15/16 March 9 5/16 March 60 3/4 March 26.75 March 33.69 March 17.04 April 22 April 12 1/2 April 60 April 28.80 April 31.52 April 18.73 May 16 1/4 May 19 3/8 May 53 3/4 May 26.52 May 30.70 May 24.96 June 13 1/8 June 25 5/16 June 56 3/4 June 29.12 June 29.17 June 19.72 July 12 5/16 July 24 9/16 July 36 1/8 July 32.05 July 18.11 August 9 1/16 August 28 3/16 August 44 1/2 August 33.05 August 15.99 September 9 11/16 September 30 9/16 September 40 1/4 September 22.00 September 11.94 October 12 11/16 October 29 15/16 October 26 October 25.98 October 13.28 November 14 3/8 November 42 1/2 November 18 9/16 November 30.13 November 20.30 December 13 1/2 December 42 13/16 December 20 1/8 December 30.79 December 15.01
The closing price on July 1, 2003 was $19.77. NOVELLUS SYSTEMS, INC. (NVLS) Novellus Systems, Inc. supplies manufacturing systems that are used to create advanced integrated circuits. Novellus builds equipment and develops processes used to manufacture the interconnect structures that tie together the growing number of transistors within a semiconductor chip. Novellus' products are designed to provide productivity and quality control solutions to semiconductor manufacturers, and its product portfolio includes a broad range of solutions for all integrated circuit interconnect technologies. Novellus markets and sells its products domestically through its own direct sales force and internationally through wholly owned subsidiaries.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- --------- ---------- --------- ----------- -------- ----------- --------- ----------- -------- ---------- January 12 1/64 January 24 3/8 January 49 1/8 January 48.38 January 42.71 January 29.45 February 15 63/64 February 19 11/16 February 59 5/16 February 38.63 February 42.59 February 29.15 March 14 27/64 March 18 3/8 March 56 1/8 March 40.56 March 54.14 March 27.27 April 15 61/64 April 15 3/4 April 66 11/16 April 55.15 April 47.40 April 28.03 May 12 39/64 May 16 17/64 May 48 3/16 May 47.90 May 42.48 May 34.67 June 11 57/64 June 22 3/4 June 56 9/16 June 56.79 June 34.00 June 36.65 July 13 5/64 July 21 29/64 July 53 15/16 July 50.97 July 26.99 August 8 7/8 August 17 63/64 August 61 9/16 August 44.31 August 24.46 September 8 3/4 September 22 31/64 September 46 9/16 September 28.56 September 20.81 October 12 15/16 October 25 53/64 October 40 15/16 October 33.03 October 31.60 November 16 35/64 November 27 3/8 November 25 15/16 November 38.07 November 36.29 December 16 1/2 December 40 27/32 December 35 15/16 December 39.45 December 28.08
The closing price on July 1, 2003 was $36.61. A-8 SANDISK CORPORATION (SNDK) SanDisk Corporation designs, manufactures and markets flash memory storage products that are used in a wide variety of electronic systems. SanDisk's flash products have storage capacities ranging from eight megabytes to 2 gigabytes, and are used in a number of consumer electronics applications, such as digital cameras, personal digital assistants, portable digital music players, digital video recorders and smart phones, as well as in industrial and communications applications, such as communications routers and switches and wireless communications base stations. SanDisk markets and sells its products through a direct sales force and through distributors' and manufacturers' representatives.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- --------- --------- ---------- --------- --------- ----------- -------- ----------- -------- ---------- January 10 January 14 7/16 January 66 15/16 January 31.94 January 15.41 January 15.25 February 12 23/32 February 14 February 89 February 21.63 February 14.71 February 16.68 March 12 7/16 March 13 1/4 March 122 1/2 March 20.38 March 21.70 March 16.82 April 10 7/16 April 10 1/8 April 91 5/8 April 26.86 April 16.36 April 24.19 May 8 1/16 May 15 1/2 May 58 1/8 May 23.45 May 14.00 May 36.34 June 6 29/32 June 22 1/2 June 61 3/16 June 27.89 June 12.40 June 40.57 July 5 5/16 July 38 3/8 July 63 3/4 July 23.64 July 14.40 August 4 3/8 August 42 3/16 August 83 1/2 August 20.51 August 16.21 September 3 7/8 September 32 19/32 September 66 3/4 September 9.86 September 13.11 October 4 13/16 October 30 5/16 October 53 47/64 October 10.94 October 19.77 November 5 15/16 November 33 1/32 November 39 13/16 November 14.19 November 27.75 December 7 1/16 December 48 1/8 December 27 3/4 December 14.40 December 20.30
The closing price on July 1, 2003 was $41.62. TERADYNE, INC. (TER) Teradyne, Inc. supplies automatic test equipment, interconnection systems and electronic manufacturing services. Teradyne's automatic test equipment products include systems that test semiconductors, test and inspect circuit boards and test high-speed voice and data communication lines quality and capacity. 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 also manufactures connectors used in electronic systems.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- --------- ---------- --------- ----------- --------- ---------- -------- ----------- --------- ----------- January 19 3/4 January 32 1/2 January 64 3/4 January 43.82 January 29.86 January 10.39 February 23 19/32 February 24 February 87 February 31.23 February 33.51 February 11.59 March 20 1/32 March 27 9/32 March 82 March 33 March 39.43 March 11.64 April 18 1/4 April 23 19/32 April 110 April 39.50 April 32.95 April 11.60 May 15 3/8 May 26 13/32 May 86 May 39.85 May 27.08 May 17.15 June 13 3/8 June 35 7/8 June 73 1/2 June 35 June 23.50 June 17.31 July 11 15/32 July 37 1/8 July 63 3/8 July 33.98 July 15.00 August 8 11/16 August 34 1/32 August 64 53/64 August 32.78 August 12.65 September 9 1/8 September 35 1/4 September 35 September 19.50 September 9.60 October 16 1/4 October 38 1/2 October 31 1/4 October 23.05 October 12.11 November 16 1/32 November 43 9/16 November 30 1/16 November 27.86 November 16.39 December 21 3/16 December 66 December 37 1/4 December 30.14 December 13.01
The closing price on July 1, 2003 was $17.69. A-10 TEXAS INSTRUMENTS, INC. (TXN) Texas Instruments, Inc. designs and supplies digital signal processors and analog integrated circuits. Texas Instruments also designs and manufactures other semiconductor products, including standard logic devices, application-specific integrated circuits, reduced instruction-set computing microprocessors, microcontrollers and digital imaging devices. Texas Instruments' semiconductor products are used in a range of electronic systems, including cellular telephones, personal computers, servers, communications infrastructure equipment, digital cameras, digital audio players, motor controls, automobiles and digital imaging systems, including projector and television systems. Products are sold to original equipment manufacturers, contract manufacturers and distributors. Texas Instruments also sells electrical and electronic controls, 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.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- --------- ---------- --------- ----------- -------- ---------- --------- ---------- --------- ---------- January 13 21/32 January 24 23/32 January 53 7/8 January 43.80 January 31.21 January 15.90 February 14 1/2 February 22 19/64 February 83 1/16 February 29.55 February 29.35 February 16.75 March 13 17/32 March 44 13/16 March 80 March 30.98 March 33.10 March 16.37 April 16 1/32 April 25 17/32 April 81 7/16 April 38.70 April 30.93 April 18.49 May 12 55/64 May 27 11/32 May 72 1/4 May 34.12 May 28.67 May 20.50 June 14 37/64 June 36 June 68 11/16 June 31.90 June 23.70 June 17.60 July 14 27/32 July 36 July 59 3/8 July 34.50 July 23.15 August 11 27/32 August 41 1/32 August 66 27/32 August 33.10 August 19.70 September 13 3/4 September 41 1/8 September 47 3/8 September 24.98 September 14.77 October 15 63/64 October 4 7/8 October 49 1/16 October 27.99 October 15.86 November 19 3/32 November 48 1/32 November 37 5/16 November 32.05 November 20.01 December 21 13/32 December 48 5/16 December 47 3/8 December 28.00 December 15.01
The closing price on July 1, 2003 was $17.62. VITESSE SEMICONDUCTOR CORPORATION (VTSS) Vitesse Semiconductor Corporation designs, develops and manufactures high-bandwidth, high-speed communication integrated circuits and optical modules to original equipment manufacturers in the communications and storage industries. Vitesse's products are designed to address the needs of optical transport network equipment manufacturers for Enterprise, Storage, Access, Metro and Core applications and includes physical media devices, physical layer devices, optical modules and switches, devices for framing, mapping and other overhead processing functions, network processors and traffic managers, switch fabrics and storage and serial backplane products. Vitesse also supplies integrated circuits to the automatic test equipment market. Vitesse markets and sells its products primarily through its own direct sales force and distributors.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ------------ --------- ----------- ---------- ----------- --------- ----------- -------- ----------- -------- ---------- January 10 55/64 January 25 27/32 January 43 1/2 January 71.06 January 12.65 January 2.07 February 12 45/64 February 22 31/32 February 103 13/16 February 39.44 February 7.02 February 2.26 March 11 51/64 March 25 5/16 March 96 1/4 March 23.81 March 9.80 March 2.14 April 14 27/64 April 23 5/32 April 68 1/16 April 33.90 April 5.98 April 3.11 May 12 13/16 May 27 15/32 May 50 5/8 May 24.71 May 5.03 May 5.03 June 15 7/16 June 33 23/32 June 73 9/16 June 21.04 June 3.11 June 4.89 July 16 7/16 July 31 15/16 July 59 5/8 July 19.79 July 2.42 August 13 9/16 August 34 August 88 13/16 August 14.60 August 1.33 September 11 13/16 September 42 11/16 September 88 15/16 September 7.75 September 0.68 October 16 1/8 October 45 7/8 October 69 15/16 October 9.44 October 1.76 November 17 13/16 November 45 1/16 November 43 1/8 November 12.19 November 3.32 December 22 13/16 December 52 7/16 December 55 5/16 December 12.43 December 2.14
The closing price on July 1, 2003 was $4.83. A-10 XILINX, INC. (XLNX) Xilinx, Inc. designs, develops and markets programmable logic solutions, including advanced integrated circuits, software design tools and predefined system functions delivered as intellectual property cores, design services, customer training, field engineering and technical support. Xilinix's products are designed to provide high integration and quick time-to-market for electronic equipment manufacturers primarily in the telecommunications, networking, computing, industrial and consumer markets. Xilinx does not own or operate silicon wafer production facilities. Rather, Xilinx forms strategic alliances with chip manufacturers, which allows it to focus on research and development, marketing, and technical support. Xilinx markets and sells its products through a worldwide network of independent sales organizations, manufacturer representatives and distributors.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price - ---------- ----------- ---------- ----------- --------- ---------- ----------- ----------- -------- ---------- -------- ---------- January 9 31/64 January 20 3/4 January 45 3/4 January 54.00 January 43.35 January 19.79 February 10 31/32 February 17 7/16 February 79 3/4 February 38.88 February 35.92 February 22.90 March 9 23/64 March 20 9/32 March 82 13/16 March 35.13 March 39.86 March 23.41 April 11 7/16 April 22 13/16 April 73 1/4 April 47.47 April 37.76 April 27.05 May 9 33/64 May 22 7/32 May 76 1/8 May 41.25 May 35.26 May 29.90 June 8 1/2 June 28 5/8 June 82 9/16 June 41.24 June 22.43 June 25.30 July 9 3/8 July 31 3/16 July 75 1/16 July 40.00 July 19.19 August 7 5/8 August 34 31/32 August 88 7/8 August 39.04 August 19.32 September 8 3/4 September 32 49/64 September 85 5/8 September 23.53 September 15.84 October 11 11/64 October 39 5/16 October 72 7/16 October 30.42 October 18.99 November 12 11/16 November 44 3/4 November 39 November 36.11 November 24.64 December 16 9/32 December 45 15/32 December 46 1/8 December 39.05 December 20.60
The closing price on July 1, 2003 was $26.21. A-11 - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] 1,000,000,000 Depositary Receipts Semiconductor HOLDRSSM Trust ----------------------- P R O S P E C T U S ----------------------- July 7, 2003 - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Indemnification of Directors and Officers. Section 145 of the General Corporation Law of the State of Delaware, as amended, provides that under certain circumstances a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation or is or was serving at its request in such capacity in another corporation or business association, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. Article XIV, Section 2 of the Restated Certificate of Incorporation of Merrill Lynch, Pierce, Fenner & Smith Incorporated provides in effect that, subject to certain limited exceptions, Merrill Lynch, Pierce, Fenner & Smith Incorporated shall indemnify its directors and officers to the full extent authorized or permitted by law. The directors and officers of Merrill Lynch, Pierce, Fenner & Smith Incorporated are insured under policies of insurance maintained by Merrill Lynch, Pierce, Fenner & Smith Incorporated, subject to the limits of the policies, against certain losses arising from any claim made against them by reason of being or having been such directors or officers. In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated has entered into contracts with all of its directors providing for indemnification of such persons by Merrill Lynch, Pierce, Fenner & Smith Incorporated to the full extent authorized or permitted by law, subject to certain limited exceptions. Item 16. Exhibits. See Exhibit Index. Item 17. Undertakings. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of the prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (5) For purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to Item 14 of this registration statement, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant hereby certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Post-Effective Amendment No. 4 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, on July 3, 2003. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: * ------------------------------------- Name: John J. Fosina Title: Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 4 to the Registration Statement has been signed by the following persons in the capacities indicated on July 3, 2003. Signature Title --------- ----- * - -------------------------------------- Co. Chief Executive Officer, James P. Gorman Co. Chairman of the Board and Director * - -------------------------------------- Co. Chief Executive Officer, Arshad R. Zakaria Co. Chairman of the Board and Director * - -------------------------------------- Director Carlos M. Morales * - -------------------------------------- Chief Financial Officer John J. Fosina * - -------------------------------------- Controller Dominic A. Carone *By: /s/ Mitchell M. Cox Attorney-in-Fact ----------------------------- Mitchell M. Cox II-3 INDEX TO EXHIBITS Exhibits - -------- *4.1 Standard Terms for Depositary Trust Agreements between Merrill Lynch, Pierce, Fenner & Smith Incorporated and The Bank of New York, as Trustee dated as of September 2, 1999, and included as exhibits thereto, form of Depositary Trust Agreement and form of HOLDRS and Form of Amendment No. 2 to the Standard Terms for Depositary Trust Agreements, filed on April 13, 2000 as an exhibit to amendment no. 1 to the registration statement filed on Form S-1 for Semiconductor HOLDRS. *4.2 Amendment No. 2 to the Standard Terms for Depositary Trust Agreements, dated as of November 22, 2000, filed on November 28, 2000 as an exhibit to post-effective amendment no. 1 to the registration statement filed on Form S-1 for Semiconductor HOLDRS. *5.1 Opinion of Shearman & Sterling regarding the validity of the Semiconductor HOLDRS Receipts, filed on April 13, 2000 as an exhibit to amendment no. 1 to the registration statement filed on Form S-1 for Semiconductor HOLDRS. *8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel regarding the material federal income tax consequences, filed on April 13, 2000 as an exhibit to amendment no. 1 to the registration statement filed on Form S-1 for Semiconductor HOLDRS. *24.1 Power of Attorney (included in Part II of Registration Statement), filed on March 27, 2000 as part of the registration statement filed on Form S-1 for Semiconductor HOLDRS. *24.2 Power of Attorney of Dominic A. Carone, filed on November 28, 2000, as an exhibit to post-effective amendment no. 1 to the registration statement filed on Form S-1 for Semiconductor HOLDRS. *24.3 Power of Attorney of John J. Fosina, E. Stanley O'Neal, George A. Schieren, Thomas H. Patrick and Dominic A. Carone. 24.4 Power of Attorney of James P. Gorman, Arshad R. Zakaria and Carlos M. Morales - ------------------ * Previously filed. II-4 EX-24.4 3 posam_070303-semi244.txt POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears below constitutes and appoints Mitchell M. Cox and Stephen G. Bodurtha and each of them, with full power to act without the other, his true and lawful attorneys-in-fact and agents with full and several power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, and supplements to the Registration Statements for each of the Biotech HOLDRS(SM) Trust, B2B Internet HOLDRS(SM) Trust, Broadband HOLDRS(SM) Trust, Europe 2001 HOLDRS(SM) Trust, Internet HOLDRS(SM) Trust, Internet Architecture HOLDRS(SM) Trust, Internet Infrastructure HOLDRS(SM) Trust, Market 2000+ HOLDRS(SM) Trust, Oil Service HOLDRS(SM) Trust, Pharmaceutical HOLDRS(SM) Trust, Regional Bank HOLDRS(SM) Trust, Semiconductor HOLDRS(SM) Trust, Software HOLDRS(SM) Trust, Telecom HOLDRS(SM) Trust, Wireless HOLDRS(SM) Trust, Utilities HOLDRS(SM) Trust and Retail HOLDRS(SM) Trust, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he might or could do in person, hereby ratifying and conforming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Signature Title --------- ----- /s/ James P. Gorman - ------------------------------- Co-Chief Executive Officer, Co-Chairman of the James P. Gorman Board and Director /s/ Arshad R. Zakaria - ------------------------------- Co-Chief Executive Officer, Co-Chairman of the Arshad R. Zakaria Board and Director /s/ Carlos M. Morales - ------------------------------- Director Carlos M. Morales -----END PRIVACY-ENHANCED MESSAGE-----