-----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, BHW8I/oiw3YY0WJ4sSAAwevktkSTX+CwKY/jzl0EGa3i5hXQMMZnIWgADpFSfYHs JU148YApKEyA5xGvwYVZaw== 0000947871-03-001563.txt : 20030707 0000947871-03-001563.hdr.sgml : 20030704 20030707172346 ACCESSION NUMBER: 0000947871-03-001563 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: 333-52022 FILM NUMBER: 03777469 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-oilservice.txt POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1 As filed with the Securities and Exchange Commission on July 7, 2003 Registration No. 333-52022 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------- POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------- Merrill Lynch, Pierce, Fenner & Smith Incorporated Initial Depositor (Exact name of registrant as specified in charter) ----------- Oil Service HOLDRS(SM) Trust [Issuer with respect to the receipts] Delaware 6211 13-5674085 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification incorporation or organization) Classification Code Number) 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 599 Lexington Avenue Incorporated New York, New York 10022 250 Vesey Street (212) 848-4000 New York, New York 10281 (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(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. [_] ================================================================================ PROSPECTUS [HOLDRS OIL SERVICE logo] 1,000,000,000 Depositary Receipts Oil Service HOLDRS(SM)Trust The Oil Service HOLDRS(SM)Trust issues Depositary Receipts called Oil Service HOLDRS(SM) representing your undivided beneficial ownership in the common stock of a group of specified companies that, among other things, provide drilling, well-site management and related products and services for the oil service industry. The Bank of New York is the trustee. You only may acquire, hold or transfer Oil Service HOLDRS in a round-lot amount of 100 Oil Service HOLDRS or round-lot multiples. Oil Service HOLDRS are separate from the underlying deposited common stocks that are represented by the Oil Service HOLDRS. For a list of the names and the number of shares of the companies that make up an Oil Service HOLDR, see "Highlights of Oil Service HOLDRS--The Oil Service HOLDRS" starting on page 10. The Oil Service HOLDRS trust will issue Oil Service HOLDRS on a continuous basis. Investing in Oil Service HOLDRS involves significant risks. See "Risk Factors" starting on page 5. Oil Service HOLDRS are neither interests in nor obligations of Merrill Lynch, Pierce, Fenner & Smith Incorporated. Oil Service 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 Oil Service HOLDRS are listed on the American Stock Exchange under the symbol "HHH." On July 1, 2003 the last reported sale price of the Oil Service HOLDRS on the American Stock Exchange was $59.52. ----------- 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 Oil Service HOLDRS..............................................10 The Trust.....................................................................20 Description of Oil Service HOLDRS.............................................20 Description of the Underlying Securities......................................21 Description of the Depositary Trust Agreement.................................23 United States Federal Income Tax Consequences.................................27 Erisa Considerations..........................................................30 Plan of Distribution..........................................................30 Legal Matters.................................................................31 Where You Can Find More Information...........................................31 This prospectus contains information you should consider when making your investment decision. With respect to information about Oil Service 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 Oil Service HOLDRS in any jurisdiction where the offer or sale is not permitted. The Oil Service 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 Oil Service HOLDRS or of the underlying securities through an investment in the Oil Service HOLDRS. 3 SUMMARY The Oil Service HOLDRS trust was formed under the depositary trust agreement, dated as of February 6, 2001 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Oil Service 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, at the time of the initial offering, among other things, provided drilling, well-site management and related products and services for the oil service industry. The number of shares of each company's common stock currently held by the trust with respect to each round-lot of Oil Service HOLDRS is specified under "Highlights of Oil Service HOLDRS--The Oil Service HOLDRS." This group of common stocks, and the securities of any company that may be added to the Oil Service HOLDRS, are collectively referred to in this prospectus as the underlying securities. There are currently 18 companies included in the Oil Service HOLDRS, which may change as a result of reconstitution events, distributions of securities by underlying issuers or other events. The Oil Service HOLDRS are separate from the underlying common stocks that are represented by the Oil Service HOLDRS. On July 1, 2003, there were 8,480,600 Oil Service HOLDRS outstanding. 4 RISK FACTORS An investment in Oil Service HOLDRS involves risks similar to investing directly in each of the underlying securities outside of the Oil Service HOLDRS, including the risks associated with a concentrated investment in oil service companies. General Risk Factors o Loss of investment. Because the value of Oil Service HOLDRS directly relates to the value of the underlying securities, you may lose a substantial portion of your investment in the Oil Service HOLDRS if the underlying securities decline in value. o Discount trading price. Oil Service 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 Oil Service HOLDRS or other corporate events, such as mergers, an Oil Service 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 Oil Service 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 oil service industry. At the time of the initial offering, the companies included in the Oil Service HOLDRS were generally considered to be involved in various aspects of the oil service industry. However, the market price of the underlying securities and the Oil Service HOLDRS may not necessarily follow the price movements of the entire oil service industry generally. If the underlying securities decline in value, your investment in the Oil Service HOLDRS will decline in value, even if the common stock prices of the companies in the oil service industry generally increase in value. In addition, since the time of the initial offering, the companies included in Oil Service HOLDRS may not be involved in the oil service industry. In this case, the Oil Service HOLDRS may not consist of securities issued only by companies involved in the oil service industry. o Not necessarily comprised of solely oil service companies. As a result of distributions of securities by companies included in the Oil Service HOLDRS or other corporate events, such as mergers, securities of companies that are not currently included in the Oil Service HOLDRS and that are not involved in the oil service industry may be included in the Oil Service HOLDRS. The securities of a new company will only be distributed from the Oil Service HOLDRS if the securities have a different Standard & Poor's Corporation sector classification than any of the underlying issuers included in the Oil Service 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 Oil Service HOLDRS provides no assurance that each new company included in the Oil Service HOLDRS will be involved in the oil services industry. Currently, the underlying securities included in the Oil Service HOLDRS are represented in the Energy 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 Oil Service HOLDRS, and yet not be involved in the oil service industry. In addition, the GICS sector classifications of securities included in the Oil Service 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 Oil Service HOLDRS, which may also result in the inclusion in the Oil Service HOLDRS of the securities of a new company that is not involved in the oil service industry. o No investigation of underlying securities. The underlying securities initially included in the Oil Service 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 oil service industry, without regard for the value, price performance, volatility or investment merit of the underlying securities. The Oil Service 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, Oil Service HOLDRS may not necessarily continue to be a diversified investment in the oil service industry. In addition, reconstitution events, distribution 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, Oil Service HOLDRS may also reduce diversification. Oil Service 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 any form of stock repurchase program by an issuer of an underlying security or participate in a tender offer relating to one or more of the underlying securities, you will be required to cancel your Oil Service HOLDRS and receive delivery of each of the underlying securities. The cancellation of your Oil Service HOLDRS will allow you to sell the individual underlying securities or to deliver the individual underlying securities in a tender offer or any form of stock repurchase program. The cancellation of Oil Service HOLDRS will involve payment of a cancellation fee to the trustee. o Trading halts. Trading in Oil Service HOLDRS on the American Stock Exchange may be halted if trading in one or more of the underlying securities is halted. Trading in Oil Service HOLDRS may be halted even if trading continues in some or all of the underlying securities. If trading is halted in the Oil Service HOLDRS, you will not be able to trade Oil Service HOLDRS and you will only be able to trade the underlying securities if you cancel your Oil Service 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 Oil Service HOLDRS. If the Oil Service HOLDRS are delisted by the American Stock Exchange, a termination event will result unless the Oil Service 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 Oil Service HOLDRS are delisted. There are currently 18 companies whose securities are included in the Oil Service HOLDRS. o Possible conflicts of interest. Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, selected the underlying securities that were originally included in Oil Service 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. 6 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 distributions later than you would if you owned the underlying securities outside of the Oil Service 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 Oil Service Industry o Downturns in the oil and gas industry have had, and may in the future have, a negative effect on the sales and profitability of oil service companies. Oil service companies depend upon the level of activity in oil and gas exploration and production for their revenues. Negative short-term and long-term trends in oil and gas prices affect the level of this activity. Factors that contribute to the volatility of oil and gas prices include the following: o the ability of the Organization of Petroleum Exporting Countries (OPEC) to set and maintain production levels and pricing; o the level of production in non-OPEC countries; o the demand for oil and gas, which is negatively impacted by economic downturns; o the policies of various governments regarding exploration and development of oil and gas reserves; o advances in exploration and development technology; and o the political environment of oil-producing regions. Market fluctuations, as well as general political and economic conditions such as recession, war or interest rate or currency rate fluctuations, may decrease the market price of oil service stocks. For example, the war in Iraq and related events may cause disruptions in the supply of oil, which may adversely affect the business of the companies included in the Oil Service HOLDRS. There can also be no assurance that any future terrorist attacks or other acts of war will not have a negative effect on the market price of oil service stocks. Following the terrorist attacks of September 11, 2001, demand for oil products softened, resulting in a reduction in international crude oil prices. Similar declines in crude oil prices may adversely affect the business of the companies included in the Oil Service HOLDRS. As a result of fluctuations in the trading prices of the companies included in the Oil Service HOLDRS, the trading price of Oil Service HOLDRS has fluctuated significantly. The initial offering price of Oil Service HOLDRS, on approximately February 11, 2001, was $96.42, and during 2002, the price of an Oil Service HOLDR reached a high of $75.89 and a low of $44.70. o The oil service industry is exposed to significant and numerous operating hazards. Oil service companies' operations are subject to hazards inherent in the oil and gas industry, such as fire, explosion, blowouts, loss of well control and oil spills. The occurrence of any of these events can cause personal injury or loss of life, damage to property, equipment, the environment and marine life, and delays to or suspension of operations. Operations also may be suspended because of machinery breakdowns, abnormal drilling conditions, failure of subcontractors to perform or supply goods or services and personnel shortages. In addition, oil service companies with offshore drilling operations are subject to perils peculiar to marine operations, including capsizing of drilling rigs or other equipment, grounding, collision and loss or damage from severe weather; and insurance and indemnification agreements may not provide complete protection against these losses. 7 o Oil service companies operate in a highly competitive and cyclical industry, with intense price competition. The oil service industry is highly competitive with numerous industry participants, none of which has a dominant market share at the present time. Drilling contracts are traditionally awarded on a competitive bid process. Intense price competition is often the primary factor in determining which qualified contractor is awarded a job. In addition, the oil service industry has historically been extremely cyclical. During periods of slower growth or depressed market conditions, oil service companies compete more aggressively for contracts that result in increased contractual liabilities and lower revenues. o The revenues of oil service companies may be negatively affected by contract termination and renegotiation. Many of the companies included in the Oil Service HOLDRS provide drilling services. In the oil service industry, it is customary for contracts to provide for either automatic termination or termination at the option of the customer if the drilling unit is destroyed or lost or if drilling operations are suspended for a specified period of time as a result of events beyond the control of either party or because of breakdown of equipment. In periods of depressed market conditions, the customers of oil service companies may not honor the terms of existing contracts and may terminate contracts or seek to renegotiate contract rates and terms to reduce their obligations. o The international operations of the companies included in the Oil Service HOLDRS 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. The companies included in the Oil Service HOLDRS have international operations that are essential parts of their businesses. The risks of international business that these companies are exposed to include the following: o volatility in general economic, social and political conditions; o differing tax rates, tariffs, exchange controls or other similar restrictions; o inability to repatriate income or capital; 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; o reduction in the number or capacity of personnel in international markets; and o seizure of equipment. o Oil service companies are subject to extensive federal, state, local and foreign regulatory laws, rules and regulations. Oil service companies are subject to extensive laws and regulations in various countries. The adoption of laws and regulations curtailing exploration and development drilling for oil and gas for economic, environmental and other policy reasons may adversely affect the operations of oil service companies' by limiting available drilling and other opportunities in the oil service industry. Oil service companies may also be required to make significant capital expenditures to comply with governmental laws and regulations. It is also possible that these laws and regulations may significantly add to operating costs. Failure to comply with these laws and regulations could subject oil service companies to substantial civil and criminal penalties as well as potential court injunctions. o Compliance with or breach of environmental laws can be costly for oil service companies. The operations of oil service companies are subject to regulations controlling the discharge of materials into the environment, requiring removal and cleanup of materials that may harm the environment or otherwise relating to the protection of the environment. Laws and regulations protecting the environment have tended to become more stringent in recent years, and may in some cases render a company liable for environmental damage without regard to negligence of fault on the part of that company. These laws and regulations may expose oil service companies to liability for the conduct of 8 or conditions caused by others or for acts that were in compliance with all applicable laws at the time they were performed. The application of these requirements or the adoption of new requirements could have a material adverse effect on the operating results and financial condition of oil service companies included in the Oil Service HOLDRS. 9 HIGHLIGHTS OF OIL SERVICE HOLDRS This discussion highlights information regarding Oil Service HOLDRS. We present certain information more fully in the rest of this prospectus. You should read the entire prospectus carefully before you purchase Oil Service HOLDRS. Issuer..........................................Oil Service HOLDRS Trust. The trust.......................................The Oil Service HOLDRS Trust was formed under the depositary trust agreement, dated as of February 6, 2001 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Oil Service HOLDRS. The trust is not a registered investment company under the Investment Company Act of 1940. Initial depositor...............................Merrill Lynch, Pierce, Fenner & Smith Incorporated. Trustee.........................................The Bank of New York, a New York state- chartered banking organization, 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 Oil Service HOLDRS representing the underlying securities issued by the trust. The trustee holds the underlying securities on behalf of the holders of Oil Service HOLDRS. Purpose of Oil Service HOLDRS...................Oil Service HOLDRS are designed to achieve the following: Diversification. Oil Service HOLDRS are designed to allow you to diversify your investments in the oil service industry through a single, exchange-listed instrument representing your undivided beneficial ownership of the underlying securities. Flexibility. The beneficial owners of Oil Service HOLDRS have undivided beneficial ownership interests in each of the underlying securities represented by the Oil Service HOLDRS, and can cancel their Oil Service HOLDRS to receive each of the underlying securities represented by the Oil Service HOLDRS. Transaction costs. The expenses associated with buying and selling Oil Service 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 oil service industry. Except when a reconstitution event, distribution of securities by an 10 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 18 companies included in the Oil Service 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 Oil Service HOLDRS..........................The trust has issued, and may continue to issue, Oil Service HOLDRS that represent an undivided beneficial ownership interest in the shares of common stock that are held by the trust on your behalf. The Oil Service HOLDRS themselves are separate from the underlying securities that are represented by the Oil Service HOLDRS. 11 The following table provides: o the names of the 18 issuers of the underlying securities currently represented by the Oil Service HOLDRS, o the stock ticker symbols, o the share amounts currently represented by a round-lot of 100 Oil Service HOLDRS, and o the principal U.S. market on which the shares of common stock of the selected companies are traded. Primary U.S. Share Trading Name of Company Ticker Amounts Market -------------------------------- ------ ------- ------ Baker Hughes Incorporated BHI 21 NYSE BJ Services Company BJS 14 NYSE Cooper Cameron Corporation CAM 4 NYSE Diamond Offshore Drilling, Inc. DO 11 NYSE ENSCO International Incorporated ESV 11 NYSE GlobalSantaFe Corporation GSF 19.975 NYSE Grant Prideco, Inc. GRP 9 NYSE Halliburton Company HAL 22 NYSE Hanover Compressor Company HC 5 NYSE Nabors Industries, Inc. NBR 12 AMEX National-Oilwell, Inc. NOI 7 NYSE Noble Corporation NE 11 NYSE Rowan Companies, Inc. RDC 8 NYSE Schlumberger Ltd. SLB 11 NYSE Smith International, Inc. SII 8 NYSE Tidewater Inc. TDW 5 NYSE Transocean Inc. RIG 18 NYSE Weatherford International, Inc. WFT 9 NYSE The companies whose securities were included in the Oil Service HOLDRS at the time Oil Service HOLDRS were originally issued generally were considered to be among the 20 largest and most liquid companies with U.S. traded common stock involved in the oil service industry, as measured by market capitalization and trading volume on December 12, 2000. The market capitalization of a company is determined by multiplying the market price of its common stock by the number of its outstanding shares of common stock. The trust only will issue and cancel, and you only may obtain, hold, trade or surrender Oil Service HOLDRS in a round-lot of 100 Oil Service HOLDRS and round-lot 12 multiples. The trust will only issue Oil Service HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Oil Service HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Oil Service HOLDRS, the trust may require a minimum of more than one round-lot of 100 Oil Service HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Oil Service HOLDRS. The number of outstanding Oil Service 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 Oil Service HOLDRS on a continuous basis when an investor deposits the required number of shares of common stock with the trustee. Purchases.......................................You may acquire Oil Service 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 Oil Service HOLDRS by delivering to the trust the requisite shares of common stock represented by a round-lot of 100 Oil Service 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 Oil Service HOLDRS. If you wish to cancel your Oil Service 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 Oil Service HOLDRS. Commissions.....................................If you choose to deposit underlying securities in order to receive Oil Service 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 Oil Service 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 Oil Service HOLDR, the trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions received, or to be 13 received, and payable with respect to such calendar year. Rights relating to Oil Service 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS themselves will not have voting rights. Rights relating to the underlying securities....Oil Service HOLDRS represents your beneficial ownership of the underlying securities. Owners of Oil Service HOLDRS have the same rights and privileges as if they owned the underlying securities beneficially outside of Oil Service 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 Oil Service HOLDRS and the right to surrender Oil Service HOLDRS to receive the underlying securities. Oil Service 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 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 Oil Service HOLDRS. However, due to the nature of Oil Service HOLDRS, you will not be able to participate in any dividend reinvestment program of an issuer of underlying securities unless you cancel your Oil Service HOLDRS (and pay the applicable fees) and receive all of the underlying securities. A holder of Oil Service HOLDRS is not a registered owner of the underlying securities. In order to become a registered owner, a holder of Oil Service HOLDRS would need to surrender their Oil Service 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. You retain the right to receive any reports and 14 communications that the issuers of underling 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 Oil Service HOLDRS in the same manner as if you beneficially owned your underlying securities outside of Oil Service HOLDRS in "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 underling 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS (and pay the applicable fees and expenses) and receive all of your underlying securities in exchange for your Oil Service 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." 15 Ownership rights in fractional shares in the underlying securities...........................As a result of distributions of securities by companies included in the Oil Service HOLDRS or other corporate events, such as mergers, an Oil Service 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 Oil Service 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 Oil Service HOLDRS are outstanding and each round-lot of 100 Oil Service HOLDRS represents 1.75 shares of an underlying security, there will be 175,001.75 votes of the underlying security represented by Oil Service HOLDRS. If holders of 50,000 round-lots of 100 Oil Service HOLDRS vote their underlying securities "yes" and holders of 50,001 round-lots of 100 Oil Service 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation, or 16 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 Oil Service HOLDRS, only if the distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Oil Service 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. To the extent a distribution of underlying securities from the Oil Service 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 Oil Service 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 Oil Service 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. 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 Oil Service 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 Oil Service HOLDRS or distributed to you. 17 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 Oil Service HOLDRS are currently represented in the Energy GICS sector. The Standard & Poor's GICS sector classifications of the securities included in the Oil Service 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 events..............................A. The Oil Service 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 Oil Service 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS as directly owning the underlying securities. The Oil Service HOLDRS themselves will not result in any United States federal tax consequences separate from the tax consequences associated with ownership of the underlying securities. 18 Listing.........................................The Oil Service HOLDRS are listed on the American Stock Exchange under the symbol "OIH." On July 1, 2003, the last reported sale price of the Oil Service HOLDRS on the American Stock Exchange was $59.52. Trading.........................................Investors are only able to acquire, hold, transfer and surrender a round-lot of 100 Oil Service HOLDRS. Bid and ask prices, however, are quoted per single Oil Service HOLDR. Clearance and settlement........................Oil Service HOLDRS have been issued only in book-entry form. Oil Service 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 Oil Service HOLDRS." 19 THE TRUST General. This discussion highlights information about the Oil Service HOLDRS Trust. You should read this information, information about the depositary trust agreement as well as the depositary trust agreement before you purchase Oil Service HOLDRS. The material terms of the depositary trust agreement are described in this prospectus under the heading "Description of the Depositary Trust Agreement." The Oil Service HOLDRS trust. The trust was formed pursuant to the depositary trust agreement, dated as of February 6, 2001. The Bank of New York is the trustee. The Oil Service HOLDRS Trust is not a registered investment company under the Investment Company Act of 1940. The Oil Service HOLDRS trust is intended to hold deposited shares for the benefit of owners of Oil Service 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, 2041, or earlier if a termination event occurs. DESCRIPTION OF OIL SERVICE HOLDRS The trust has issued Oil Service HOLDRS under the depositary trust agreement described in this prospectus under the heading "Description of the Depositary Trust Agreement." The trust may issue additional Oil Service HOLDRS on a continuous basis when an investor deposits the requisite underlying securities with the trustee. You may only acquire, hold, trade and surrender Oil Service HOLDRS in a round-lot of 100 Oil Service HOLDRS and round-lot multiples. The trust will only issue Oil Service HOLDRS upon the deposit of the whole shares of underlying securities that are represented by a round-lot of 100 Oil Service 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 Oil Service HOLDRS, the trust may require a minimum of more than one round-lot of 100 Oil Service HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Oil Service HOLDRS. Oil Service 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 Oil Service HOLDRS--The Oil Service HOLDRS." Beneficial owners of Oil Service 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, 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, and the right to cancel Oil Service HOLDRS to receive the underlying securities. See "Description of the Depositary Trust Agreement." Oil Service 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, referred to herein as the Exchange Act. The trust will not publish or otherwise calculate the aggregate value of the underlying securities represented by a receipt. Oil Service 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 Oil Service HOLDRS wishes to realize the dollar value of the underlying securities, that owner will have to cancel the Oil Service HOLDRS. Such cancellation will require payment of fees and expenses as described in "Description of the Depositary Trust Agreement--Withdrawal of underlying securities." Oil Service 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. Oil Service HOLDRS are available only in book-entry form. Owners of Oil Service HOLDRS hold their Oil Service HOLDRS through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. 20 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, among other things, provided drilling, well-site management and related products and services for the oil service industry and whose common stock is registered under section 12 of the Securities Exchange Act. The issuers of the underlying securities were, at the time of selection, considered to be among the largest, most liquid companies involved in the oil service industry as measured by market capitalization and trading volume. The companies initially included in the Oil Service HOLDRS also met the following minimum selection criteria as of December 12, 2000: o Market capitalization equal to or greater than $500 million; o Average daily trading volume of at least 100,000 shares over the 60 trading days before December 12, 2000; o Average daily dollar volume (that is, the average daily trading volume multiplied by the average closing price over the 60 day period prior to December 12, 2000) of at least $5 million over the 60 trading days before December 12, 2000; and o A trading history of at least 90 calendar days. The market capitalization of a company is determined by multiplying the market price of its common stock by the number of its outstanding shares of common stock. In determining whether a company was to be considered for inclusion in the Oil Service HOLDRS, Merrill Lynch, Pierce, Fenner & Smith Incorporated examined available public information about the company, including analysts' reports and other independent market sources. The ultimate determination of the inclusion of the specified companies, however, rested solely within the discretion of Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Oil Service HOLDRS may no longer consist exclusively of securities issued by companies involved in various segments of the oil service industry. In addition, as a result of a reconstitution event, a distribution of securities, or other event the securities of a non-oil service company may be included in the Oil Service HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated will determine, in its sole discretion, whether the issuer of a particular underlying security continues to have a leading market capitalization and will undertake to make adequate disclosure when necessary. Underlying securities. For a list of the underlying securities represented by Oil Service HOLDRS, please refer to "Highlights of Oil Service HOLDRS--The Oil Service 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. Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any affiliate of these entities, have not performed any investigation or review of the selected companies, including the public filings by the companies. Accordingly, before you acquire Oil Service 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 or any of their respective 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." 21 The following table and graph set forth the composite performance of all of the underlying securities currently represented by a single Oil Service HOLDR, measured at the close of the business day on March 21, 2000, the first date when all of the underlying securities were publicly traded, and thereafter as of the end of each month through June 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.
2000 Value 2001 Value 2002 Value 2003 Value - ---- ----- ----- ----- ---- ----- ---- ----- March 21.......... 74.80 January 31...... 88.05 January 31..... 58.69 January 31...... 54.64 March 31.......... 83.46 February 28..... 87.07 February 28.... 62.21 February 28..... 57.78 April 28.......... 80.55 March 30........ 80.23 March 28....... 68.88 March 31........ 55.01 May 31............ 86.44 April 30........ 92.17 April 30....... 71.52 April 30........ 55.21 June 30........... 83.42 May 31.......... 88.41 May 31......... 71.22 May 30.......... 64.17 July 31........... 81.70 June 29......... 70.11 June 28........ 61.33 June 30......... 60.12 August 31......... 93.53 July 31......... 64.33 July 31........ 52.81 September 29...... 92.47 August 31....... 55.52 August 30...... 53.63 October 31........ 80.35 September 28.... 47.13 September 30... 50.04 November 30....... 67.52 October 31...... 57.31 October 31..... 53.94 December 29....... 86.19 November 30..... 55.32 November 29.... 58.82 December 31..... 60.95 December 31.... 57.41
[GRAPH OMITTED] 22 DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT General. The depositary trust agreement, dated as of February 6, 2001, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as trustee, other depositors and the owners of the Oil Service HOLDRS, provides that Oil Service HOLDRS will represent an owner's undivided beneficial ownership interest in the common stock of the underlying companies. The trustee. The Bank of New York serves as trustee for the Oil Service 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 Oil Service HOLDRS. You may create and cancel Oil Service HOLDRS only in round-lots of 100 Oil Service HOLDRS. You may create Oil Service HOLDRS by delivering to the trustee the requisite underlying securities. The trust will only issue Oil Service HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Oil Service HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Oil Service HOLDRS, the trust may require a minimum of more than one round-lot of 100 Oil Service HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Oil Service HOLDRS. Similarly, you must surrender Oil Service HOLDRS in integral multiples of 100 Oil Service 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 Oil Service 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 solicitation 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 Oil Service HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated, owning Oil Service 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 Oil Service 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 Oil Service 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 Oil Service 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 Oil Service 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 Oil Service HOLDR, the 23 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS. Further issuances of Oil Service HOLDRS. The depositary trust agreement provides for further issuances of Oil Service HOLDRS on a continuous basis without your consent. Reconstitution events. The depositary trust agreement provides for the automatic distribution of underlying securities to you in 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 Exchange Act, 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS, only if the distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Oil Service 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 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 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 Oil Service 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 Oil Service 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. 24 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 Oil Service 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 Oil Service HOLDRS will be distributed from the Oil Service 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 Oil Service HOLDRS are currently represented in the Energy GICS sector. The Standard & Poor's GICS sector classifications of the securities included in the Oil Service 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, of its intent to resign. Upon termination, the beneficial owners of Oil Service HOLDRS will surrender their Oil Service 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 Oil Service 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 Oil Service HOLDRS are delisted. Finally, the trust will terminate if 75% of the owners of outstanding Oil Service 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 Oil Service 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 Oil Service 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 Oil Service HOLDRS will not become effective until 30 days after notice of the amendment is given to the owners of Oil Service HOLDRS. Issuance and cancellation fees. If you wish to create Oil Service 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 Oil Service HOLDRS. If you wish to cancel your Oil Service 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 Oil Service 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 or cancel Oil Service HOLDRS you will be responsible for paying any sales commissions associated with your purchase of the underlying securities that are 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 Oil Service 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 Oil Service HOLDR, the trustee will waive that portion of the fee which exceeds the total 25 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 Oil Service 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 Oil Service 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. 26 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES General The following is a summary of the U.S. federal income tax consequences relating to the Oil Service 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 subjec 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 (each of the above, 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 Oil Service HOLDRS as part of a conversion, straddle or other hedging transaction. In addition, this summary generally is limited to investors who will hold the Oil Service 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 Oil Service 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 Oil Service HOLDRS A receipt holder purchasing and owning Oil Service HOLDRS will be treated, for U.S. federal income tax purposes, as directly owning a proportionate share of the underlying securities represented by Oil Service 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 Oil Service 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 Oil Service HOLDRS. 27 A receipt holder will determine its initial tax basis in each of the underlying securities by allocating the purchase price for the Oil Service 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 Oil Service 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 Oil Service HOLDRS. Similarly, with respect to sales of Oil Service HOLDRS for cash in the secondary market, the amount realized with respect to a sale of Oil Service 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 Oil Service 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 Oil Service 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 elibible for the benefits of a comprehensive U.S. income tax treaty that includes an exchange of informaton 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. 28 If a foreign issuer 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 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 Oil Service 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. persons 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 Oil Service 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, 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. 29 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 Oil Service 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. 30 ERISA CONSIDERATIONS Any plan fiduciary which proposes to have a plan acquire Oil Service 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 Oil Service 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 Oil Service HOLDRS to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce, Fenner & Smith Incorporated has deposited the underlying securities to receive Oil Service HOLDRS. The trust delivered the initial distribution of Oil Service HOLDRS against deposit of the underlying securities in New York, New York on approximately February 11, 2001. Investors who purchase Oil Service HOLDRS through a fee-based brokerage account will pay fees charged by the brokerage account. We recommend that investors review the details 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 they have received and will receive customary fees and commissions. Merrill Lynch, Pierce, Fenner & Smith Incorporated 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 Oil Service HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated may act as principal or agent in these 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 Oil Service 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 these liabilities. LEGAL MATTERS Legal matters, including the validity of the Oil Service HOLDRS, were passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor and the underwriter in connection with the initial offering of the Oil Service HOLDRS, by Shearman & Sterling LLP, New York, New York. Shearman & Sterling LLP, as special U.S. tax counsel to the trust, also rendered an opinion regarding the material U.S. federal income tax consequences relating to the Oil Service HOLDRS. 31 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 Oil Service 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. However, some of the issuers of the underlying securities may be considered foreign issuers. The requirements for filing periodic financial and other information for foreign issuers differ from that of domestic issuers. In particular, foreign issuers are not required to file quarterly reports with the SEC and are not required to file periodic financial and other information on EDGAR. Therefore, this information may not be accessible through the SEC's Web site. Information regarding the issuers of the underlying securities may also be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated information. The trust and the selling group 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 Oil Service HOLDRS. This prospectus relates only to Oil Service HOLDRS and does not relate to the 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 Oil Service 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 Oil Service HOLDRS have been publicly disclosed. 32 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. 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. BAKER HUGHES INCORPORATED (BHI) Baker Hughes Incorporated is a supplier of wellbore-related products, technology services and systems to the oil and gas industry on a worldwide basis and provides equipment, products and services for drilling, formation evaluation, completion and production of oil and gas wells. Baker Hughes also offers downhole well logging services, including advanced formation evaluation, production and reservoir engineering, petrophysical and geophysical data acquisition services. Through its BIRD Machine division, Baker Hughes manufactures a broad range of continuous and batch centrifuges and specialty filters, which are used in the municipal, industrial, chemical, minerals and pharmaceutical markets to separate, dewater or classify process and waste streams. Baker Hughes' principal markets include all major oil and gas producing regions in the world.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 38.50 January 16.88 January 24.69 January 41.35 January 35.20 January 30.26 February 40.94 February 18.00 February 25.88 February 39.20 February 35.31 February 31.02 March 40.25 March 24.31 March 30.25 March 36.31 March 38.25 March 29.93 April 40.50 April 29.88 April 31.81 April 39.29 April 37.68 April 28.00 May 36.00 May 31.19 May 36.25 May 39.40 May 36.65 May 33.05 June 34.56 June 33.50 June 32.00 June 33.50 June 33.29 June 33.57 July 25.00 July 34.81 July 34.63 July 35.58 July 26.80 August 18.25 August 34.13 August 36.56 August 32.94 August 27.50 September 21.00 September 29.00 September 37.13 September 28.95 September 29.03 October 22.06 October 27.94 October 34.38 October 35.83 October 29.05 November 18.31 November 25.25 November 33.06 November 32.97 November 32.74 December 17.63 December 21.06 December 41.56 December 36.47 December 32.19
The closing price on July 1, 2003 was $33.48. A-1 BJ SERVICES COMPANY (BJS) BJ Services Company provides pressure pumping and other oilfield services to the petroleum industry. BJ Services' pressure pumping services facilitate the completion of onshore and offshore oil and natural gas wells and the remedial work on existing wells. These services are designed to improve the strength and enhance the performance of oil and natural gas wells. BJ Services also provides other oilfield services and products including, specialty chemicals, tubular services, process and pipeline services, and completion tools and completion fluids services in the United States and internationally.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 15.14 January 7.38 January 21.44 January 39.14 January 31.00 January 30.57 February 17.19 February 7.03 February 28.53 February 38.00 February 33.15 February 34.37 March 18.22 March 11.63 March 36.94 March 35.60 March 34.47 March 34.39 April 18.75 April 13.38 April 35.19 April 41.12 April 36.74 April 36.51 May 16.35 May 13.78 May 35.82 May 37.50 May 37.52 May 40.71 June 14.53 June 14.72 June 31.25 June 29.00 June 33.88 June 37.36 July 10.53 July 15.28 July 29.19 July 25.22 July 31.89 August 6.32 August 17.13 August 33.50 August 22.43 August 30.50 September 8.13 September 15.91 September 30.56 September 17.79 September 26.00 October 10.22 October 17.16 October 26.22 October 25.59 October 30.33 November 6.91 November 17.44 November 26.62 November 27.86 November 33.45 December 7.82 December 20.91 December 34.44 December 32.45 December 32.31
The closing price on July 1, 2003 was $36.55. COOPER CAMERON CORPORATION (CAM) Cooper Cameron Corporation is an international manufacturer and provider of pressure control systems and equipment and related services, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling and production. Cooper Cameron's products are used in a wide variety of operating environments, including basic onshore fields, highly complex onshore and offshore environments, deepwater subsea applications and ultra-high temperature geothermal operations. Cooper Cameron also manufactures integral engine-compressors, reciprocating compressors, turbochargers and centrifugal air compressors.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 51.44 January 23.38 January 49.50 January 64.23 January 42.53 January 48.47 February 53.63 February 23.50 February 55.25 February 59.78 February 44.90 February 52.00 March 60.38 March 33.88 March 66.88 March 54.00 March 51.11 March 49.51 April 66.44 April 38.50 April 75.00 April 63.06 April 54.84 April 47.86 May 59.50 May 36.19 May 69.75 May 69.28 May 56.27 May 54.59 June 51.00 June 37.06 June 66.00 June 55.80 June 48.42 June 50.38 July 35.06 July 36.25 July 64.63 July 50.91 July 42.99 August 21.75 August 41.63 August 77.81 August 43.25 August 44.84 September 28.50 September 37.75 September 73.69 September 32.80 September 41.76 October 34.75 October 38.69 October 54.50 October 39.00 October 46.62 November 24.38 November 42.88 November 54.25 November 36.64 November 51.26 December 24.50 December 48.94 December 66.06 December 40.36 December 49.82
The closing price on July 1, 2003 was $49.90. A-2 DIAMOND OFFSHORE DRILLING, INC. (DO) Diamond Offshore Drilling, Inc. is principally engaged in the contract drilling of offshore oil and gas wells. Diamond provides offshore drilling services to both independent and government-owned oil and gas companies. Diamond also offers project management, extended well tests and drilling and completion operations. Diamond's diverse fleet enables it to offer a broad range of services worldwide in various markets, including the deepwater market, the harsh environment market, the conventional semisubmersible market and the jack-up market.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 44.63 January 23.00 January 27.81 January 40.49 January 28.78 January 21.32 February 46.06 February 20.69 February 31.75 February 41.90 February 28.97 February 21.95 March 45.38 March 31.63 March 39.94 March 39.35 March 31.26 March 19.41 April 50.63 April 33.06 April 40.31 April 43.92 April 31.12 April 18.64 May 47.81 May 27.25 May 40.88 May 39.61 May 33.73 May 22.74 June 40.31 June 28.38 June 35.13 June 33.05 June 28.50 June 20.99 July 32.81 July 32.00 July 37.56 July 29.34 July 23.40 August 20.88 August 38.25 August 44.81 August 27.90 August 22.34 September 26.06 September 33.38 September 41.00 September 25.22 September 19.95 October 30.69 October 32.00 October 34.56 October 27.60 October 20.90 November 22.25 November 30.25 November 30.19 November 27.70 November 22.44 December 23.69 December 30.56 December 40.00 December 30.40 December 21.85
The closing price on July 1, 2003 was $20.76. ENSCO INTERNATIONAL INCORPORATED (ESV) ENSCO International Incorporated is an international offshore contract drilling company that drills and completes oil and gas wells throughout the world. ENSCO also provides marine transportation services in the Gulf of Mexico, including rig towing and other towing services and supply vessels to support general drilling and production activity by ferrying supplies from land to offshore drilling sites. ENSCO's customer base includes major international, government-owned and independent oil and gas companies.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 27.13 January 9.50 January 22.88 January 36.05 January 23.80 January 26.94 February 29.00 February 8.88 February 30.06 February 38.11 February 25.47 February 27.98 March 27.88 March 3.31 March 36.13 March 35.00 March 30.14 March 25.51 April 28.38 April 8.56 April 33.00 April 38.90 April 33.76 April 25.40 May 25.25 May 7.75 May 34.94 May 32.21 May 32.75 May 30.00 June 17.50 June 9.94 June 35.81 June 23.40 June 27.26 June 26.90 July 13.56 July 0.44 July 33.75 July 20.69 July 25.85 August 10.50 August 1.31 August 39.88 August 18.24 August 26.67 September 10.88 September 8.06 September 38.25 September 14.62 September 25.04 October 13.19 October 9.38 October 33.25 October 19.80 October 27.04 November 9.69 November 0.06 November 24.31 November 20.12 November 27.98 December 10.69 December 2.88 December 34.06 December 24.85 December 29.45
The closing price on July 1, 2003 was $26.70. A-3 GLOBALSANTAFE CORPORATION (GSF) GlobalSantaFe Corporation operates in the contract drilling business, the drilling management services business and the oil and gas business. GlobalSantaFe's drilling business provides fully manned, mobile offshore drilling rigs to oil and gas operators on a daily-rate basis. The drilling management services business designs, develops and executes specific offshore drilling programs. GlobalSantaFe also acquires interests in oil and gas properties principally in order to facilitate the acquisition of turnkey contracts for its drilling management services operations.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 36.63 January 13.75 January 26.75 January 33.90 January 28.37 January 21.73 February 35.31 February 13.38 February 28.69 February 37.45 February 27.65 February 22.25 March 37.94 March 18.69 March 37.00 March 32.50 March 32.70 March 20.65 April 39.19 April 21.75 April 34.38 April 38.00 April 35.09 April 21.16 May 35.00 May 20.25 May 38.81 May 36.88 May 33.75 May 24.88 June 30.25 June 23.00 June 34.94 June 29.86 June 27.35 June 23.34 July 23.00 July 20.88 July 35.13 July 29.90 July 22.54 August 13.50 August 26.38 August 39.31 August 25.30 August 22.00 September 15.38 September 21.56 September 45.06 September 21.25 September 22.35 October 18.44 October 21.06 October 36.50 October 24.34 October 23.90 November 12.25 November 22.81 November 24.69 November 24.20 November 25.62 December 14.50 December 25.88 December 32.06 December 28.52 December 24.32
The closing price on July 1, 2003 was $23.15. GRANT PRIDECO, INC. (GRP) Grant Prideco, Inc. is a manufacturer and supplier of products used for the exploration and production of oil and gas. Grant Prideco provides drill stem products, such as drill pipe, tubes and engineered connections, used for casing and subsea structures. Grant Prideco's drill stem products are used to drill oil and gas wells, while its premium connections and tubular products are used to complete oil and gas wells once they have been successfully drilled. Grant Prideco has manufacturing facilities located in the United States, Mexico, Canada, Europe and Asia and has sales, service and repair locations throughout the world.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January * January * January * January 21.13 January 9.45 January 10.65 February * February * February * February 18.27 February 12.51 February 12.12 March * March * March 18.88 March 17.20 March 13.68 March 12.06 April * April * April 19.25 April 20.00 April 16.00 April 11.41 May * May * May 23.25 May 22.52 May 15.00 May 13.95 June * June * June 25.00 June 17.49 June 13.60 June 11.75 July * July * July 20.13 July 13.57 July 9.99 August * August * August 23.50 August 10.46 August 9.81 September * September * September 21.94 September 6.09 September 8.54 October * October * October 18.56 October 9.09 October 9.66 November * November * November 14.13 November 8.85 November 10.23 December * December * December 21.94 December 11.50 December 11.64
The closing price on July 1, 2003 was $12.02. A-4 HALLIBURTON COMPANY (HAL) Halliburton Company offers engineering and construction services and equipment to the oil and gas industry throughout the world. Halliburton's Energy Services Group provides discrete products and services and integrated solutions ranging from the initial evaluation of producing formations to drilling, completion, production and well maintenance. The Energy Services Group is also a supplier of integrated exploration and production software information systems as well as professional and data management services for the upstream oil and gas industry. Haliburton's Engineering and Construction Group provides a wide range of services to energy and industrial customers and government entities worldwide, including onshore, offshore, government and maintenance operations.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 44.94 January 29.69 January 36.13 January 41.19 January 13.75 January 18.76 February 46.56 February 28.50 February 38.19 February 39.82 February 16.50 February 20.26 March 50.13 March 38.50 March 41.13 March 36.75 March 17.07 March 20.73 April 54.75 April 42.63 April 44.19 April 43.21 April 16.99 April 21.41 May 47.50 May 41.38 May 50.94 May 46.74 May 18.55 May 23.87 June 44.44 June 45.25 June 47.19 June 35.60 June 15.94 June 23.00 July 36.25 July 46.13 July 46.13 July 35.01 July 13.20 August 26.56 August 46.38 August 53.00 August 27.86 August 15.20 September 28.75 September 41.00 September 48.94 September 22.55 September 12.91 October 36.00 October 37.69 October 37.06 October 24.69 October 16.18 November 29.38 November 38.63 November 33.38 November 21.43 November 21.37 December 29.63 December 40.25 December 36.25 December 13.10 December 18.71
The closing price on July 1, 2003 was $22.72. HANOVER COMPRESSOR COMPANY (HC) Hanover Compressor Company offers comprehensive natural gas compression and handling services and provides fabrication services and related equipment. In addition, Hanover Compressor designs, fabricates, and sells or rents equipment designed to heat, separate, dehydrate and measure crude oil and natural gas. Hanover also purchases and reconditions used gas compression units, power generation and treating facilities and production equipment, and often provides contract operations and related services for customers that prefer to own their production, gas treating, power generation or compression equipment.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 8.84 January 11.97 January 19.81 January 38.37 January 15.60 January 9.33 February 9.69 February 10.94 February 23.47 February 37.50 February 17.55 February 8.09 March 12.50 March 13.25 March 28.44 March 31.70 March 17.99 March 6.50 April 12.94 April 14.34 April 29.13 April 36.40 April 18.85 April 8.41 May 12.97 May 13.88 May 29.34 May 36.99 May 13.08 May 11.24 June 13.53 June 16.06 June 38.00 June 33.09 June 13.50 June 11.30 July 11.50 July 18.31 July 34.13 July 33.47 July 8.81 August 9.28 August 17.97 August 31.75 August 25.26 August 11.30 September 12.09 September 15.91 September 32.94 September 21.64 September 8.30 October 12.63 October 18.50 October 32.63 October 27.58 October 10.49 November 11.31 November 17.13 November 30.69 November 25.87 November 11.48 December 12.84 December 18.88 December 44.56 December 25.26 December 9.18
The closing price on July 1, 2003 was $11.67. A-5 NABORS INDUSTRIES, INC. (NBR) Nabors Industries, Inc. conducts oil, gas and geothermal land drilling operations in the United States, Canada, South and Central America and the Middle East. Nabors provides drilling, well overhaul, well servicing, and related services. Nabors provides ancillary well-site services, including oilfield management, engineering, transportation, maintenance, drilling instrumentation systems, rig-reporting software and other support services.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 23.94 January 12.50 January 29.63 January 59.01 January 31.31 January 36.85 February 22.88 February 11.50 February 35.88 February 56.70 February 35.47 February 39.65 March 23.75 March 18.19 March 38.81 March 51.84 March 42.25 March 39.87 April 25.19 April 20.50 April 39.44 April 59.62 April 45.55 April 39.20 May 23.56 May 20.00 May 43.00 May 50.85 May 43.90 May 45.08 June 20.00 June 24.38 June 41.56 June 37.20 June 35.30 June 39.53 July 17.06 July 23.31 July 41.63 July 29.30 July 30.52 August 11.81 August 27.00 August 47.56 August 24.52 August 33.02 September 15.19 September 25.00 September 52.40 September 20.97 September 32.75 October 18.50 October 22.69 October 50.90 October 30.74 October 34.97 November 13.25 November 26.56 November 43.94 November 31.50 November 35.40 December 13.50 December 30.94 December 59.15 December 34.33 December 35.27
The closing price on July 1, 2003 was $39.30. NATIONAL-OILWELL, INC. (NOI) National-Oilwell, Inc. designs, manufactures and sells comprehensive systems and components used in oil and gas drilling and production and offers supply chain integration services to the oil and gas industry. National-Oilwell's manufactures and sells drilling systems and components for both land and offshore drilling rigs, as well as complete land drilling and well servicing rigs. National-Oilwell also designs and produces control and data acquisition systems for drilling-related operations and automated and remotely controlled machinery for drilling rigs, and manufactures drilling motors, drilling jars and specialized drilling tools for rent and sale. National-Oilwell offers its services through its network of distribution centers that provide procurement, inventory management and logistics services.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 26.50 January 9.75 January 18.75 January 36.49 January 19.05 January 20.43 February 28.00 February 8.88 February 24.25 February 36.20 February 20.91 February 22.50 March 32.94 March 11.56 March 30.88 March 34.63 March 25.33 March 22.39 April 37.94 April 13.00 April 23.94 April 39.55 April 26.57 April 20.99 May 34.94 May 12.06 May 26.00 May 34.50 May 25.54 May 24.32 June 26.81 June 14.00 June 32.88 June 26.80 June 21.05 June 22.00 July 21.06 July 15.94 July 33.00 July 19.00 July 17.28 August 7.75 August 17.00 August 34.69 August 15.54 August 18.92 September 12.38 September 16.44 September 31.25 September 14.50 September 19.38 October 15.88 October 13.56 October 29.25 October 18.52 October 20.85 November 9.88 November 14.25 November 31.88 November 16.74 November 21.75 December 11.19 December 15.69 December 38.68 December 20.61 December 21.84
The closing price on July 1, 2003 was $21.33. A-6 NOBLE CORPORATION (NE) Noble Corporation is a provider of diversified services for the oil and gas industry. Noble performs contract drilling services through its offshore drilling units located in various markets throughout the world. Noble also provides labor contract drilling services, well site and project management services and engineering services.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 26.75 January 13.40 January 29.31 January 45.12 January 31.97 January 34.28 February 28.38 February 12.13 February 36.00 February 46.55 February 35.23 February 36.30 March 30.56 March 17.38 March 41.38 March 46.16 March 41.39 March 31.42 April 32.31 April 19.63 April 39.94 April 48.50 April 43.35 April 30.95 May 29.50 May 18.13 May 43.38 May 42.70 May 42.82 May 35.66 June 24.06 June 19.69 June 41.19 June 32.75 June 38.60 June 34.30 July 18.88 July 22.69 July 43.56 July 30.69 July 32.40 August 11.00 August 24.63 August 48.50 August 27.20 August 31.07 September 14.75 September 21.88 September 50.25 September 24.00 September 31.00 October 17.19 October 22.19 October 41.56 October 30.55 October 32.32 November 11.56 November 27.88 November 28.81 November 29.50 November 33.95 December 12.94 December 32.75 December 43.44 December 34.04 December 35.15
The closing price on July 1, 2003 was $33.96. ROWAN COMPANIES, INC. (RDC) Rowan Companies, Inc. provides international and domestic contract drilling and aviation services and operates a mini-steel mill, a manufacturing facility that produces heavy equipment and a drilling products group that designs and builds mobile offshore jack-up drilling rigs. Rowan provides its contract drilling services primarily in the Gulf of Mexico, the North Sea, eastern Canada, Texas and Louisiana. Rowan's mini-steel mill recycles scrap and produces steel plate, and it's manufacturing operation produces heavy equipment for the mining, timber and transportation industries. Rowan's aviation operations provide contract and charter aviation services principally in Alaska, Louisiana, Texas and the western United States.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 26.38 January 8.81 January 22.69 January 27.30 January 18.03 January 20.63 February 28.19 February 8.63 February 24.88 February 28.55 February 18.65 February 19.63 March 29.00 March 12.69 March 29.44 March 27.50 March 23.04 March 19.66 April 29.44 April 16.00 April 27.94 April 33.19 April 25.38 April 20.50 May 25.56 May 16.88 May 31.06 May 29.93 May 25.70 May 23.94 June 19.44 June 18.25 June 30.38 June 22.10 June 21.45 June 22.40 July 14.13 July 18.81 July 25.25 July 19.24 July 19.57 August 9.50 August 18.63 August 31.00 August 15.55 August 20.58 September 11.31 September 16.25 September 29.00 September 12.39 September 18.64 October 14.56 October 15.63 October 25.19 October 16.89 October 20.39 November 9.81 November 17.13 November 19.88 November 16.34 November 21.30 December 9.88 December 21.69 December 27.00 December 19.37 December 22.70
The closing price on July 1, 2003 was $21.82. A-7 SCHLUMBERGER LTD. (SLB) Schlumberger Limited operates two businesses: Schlumberger Oilfield Services and SchlumbergerSema. Schlumberger Oilfield Services is a provider of exploration and production services, solutions and technology to the international petroleum industry, including pressure pumping, integrated project management, and advanced software and information technology infrastructure services. SchlumbergerSema provides information technology solutions to the telecommunications, utility, finance, transport and public sectors, and its capabilities include consulting, systems integration and managed services.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 73.69 January 47.63 January 61.06 January 76.80 January 56.39 January 37.70 February 75.63 February 48.56 February 73.86 February 63.75 February 58.21 February 41.61 March 75.75 March 60.19 March 76.50 March 57.61 March 58.82 March 38.01 April 83.00 April 63.88 April 76.56 April 66.30 April 54.75 April 41.93 May 78.06 May 60.19 May 73.56 May 63.03 May 51.64 May 48.62 June 68.31 June 63.69 June 74.63 June 52.65 June 46.50 June 47.57 July 60.56 July 60.56 July 73.92 July 53.75 July 42.92 August 43.81 August 66.69 August 85.33 August 49.00 August 43.21 September 50.88 September 62.31 September 82.31 September 45.70 September 38.46 October 52.50 October 60.56 October 76.13 October 48.42 October 40.11 November 44.69 November 60.06 November 62.00 November 48.01 November 44.25 December 46.38 December 56.13 December 79.94 December 54.95 December 42.09
The closing price on July 1, 2003 was $47.85. SMITH INTERNATIONAL, INC. (SII) Smith International, Inc. supplies products and services to the oil and gas exploration and production industry, the petrochemical industry, and other industries throughout the world. Smith International's products include drilling and completion fluid systems, solids-control equipment, waste-management services, three-cone and diamond drill bits, fishing services, drilling tools, underreamers, casing exit and multilateral systems, packers and liner hangers. Smith International also offers engineering services designed to optimize drilling operations and the use of its products. Smith International also operates a supply-chain network that provides well maintenance products.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 24.81 January 12.66 January 25.66 January 38.05 January 27.52 January 31.84 February 26.62 February 12.25 February 31.34 February 37.80 February 32.33 February 34.86 March 27.53 March 20.00 March 38.75 March 35.10 March 33.88 March 35.23 April 29.38 April 22.44 April 38.00 April 40.60 April 35.03 April 35.56 May 24.53 May 21.62 May 39.53 May 38.85 May 36.69 May 40.89 June 17.41 June 21.72 June 36.41 June 30.17 June 34.10 June 36.74 July 13.06 July 21.66 July 35.69 July 27.20 July 31.61 August 8.88 August 23.34 August 39.75 August 23.20 August 32.45 September 13.72 September 20.25 September 40.78 September 18.20 September 29.31 October 17.97 October 17.28 October 35.25 October 23.65 October 31.26 November 12.06 November 19.94 November 29.03 November 22.63 November 34.00 December 12.59 December 24.84 December 37.28 December 26.81 December 32.62
The closing price on July 1, 2003 was $35.79. A-8 TIDEWATER INC. (TDW) Tidewater Inc. provides services and equipment to the offshore energy industry through its offshore service vessels. Tidewater provides services supporting all phases of offshore exploration, development and production including: towing of and anchor-handling of mobile drilling rigs and equipment, transporting supplies and personnel necessary to sustain drilling, workover and production activities, assisting in offshore construction activities, and a variety of specialized services including pipe laying, cable laying and 3-D seismic work. Tidewater's fleet is deployed in most of the major offshore oil and gas areas of the world.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 40.88 January 21.50 January 28.44 January 47.85 January 34.25 January 29.10 February 44.50 February 18.88 February 28.31 February 48.70 February 38.98 February 30.62 March 43.81 March 25.88 March 31.81 March 45.20 March 42.35 March 28.72 April 39.63 April 26.50 April 29.75 April 46.87 April 43.50 April 26.90 May 38.13 May 25.75 May 38.88 May 46.91 May 40.75 May 33.02 June 33.00 June 30.50 June 36.00 June 37.70 June 32.92 June 29.37 July 29.00 July 33.06 July 32.13 July 35.24 July 26.92 August 21.00 August 32.50 August 40.38 August 31.11 August 28.50 September 20.75 September 25.50 September 45.50 September 26.69 September 26.99 October 28.31 October 30.00 October 46.19 October 30.22 October 28.17 November 23.06 November 31.94 November 40.50 November 28.50 November 30.93 December 23.19 December 36.00 December 44.38 December 33.90 December 31.10
The closing price on July 1, 2003 was $28.66. TRANSOCEAN INC. (RIG) Transocean Inc. is an international provider of offshore and inland marine contract drilling services for oil and gas exploration, development and production. Transocean contracts drilling rigs, related equipment and work crews to drill oil and gas wells. Transocean specializes in technically demanding segments of the offshore drilling business, with a focus on deepwater and harsh environment drilling services. Transocean also provides management of third-party well service activities.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 39.75 January 25.56 January 31.81 January 45.45 January 30.64 January 22.77 February 43.38 February 20.63 February 39.44 February 48.13 February 28.01 February 22.70 March 51.44 March 28.81 March 51.31 March 43.35 March 33.25 March 20.45 April 55.88 April 29.69 April 47.00 April 54.28 April 35.50 April 19.05 May 49.31 May 24.63 May 49.19 May 53.45 May 38.17 May 23.37 June 44.50 June 26.25 June 53.44 June 41.25 June 31.15 June 21.97 July 39.44 July 30.69 July 49.50 July 32.29 July 25.50 August 24.56 August 33.84 August 59.75 August 28.90 August 24.50 September 34.69 September 30.63 September 58.63 September 26.40 September 20.80 October 36.94 October 27.25 October 53.00 October 30.15 October 21.98 November 24.69 November 28.19 November 39.88 November 28.30 November 24.30 December 26.81 December 33.69 December 46.00 December 33.82 December 23.20
The closing price on July 1, 2003 was $21.55. A-9 WEATHERFORD INTERNATIONAL, INC. (WFT) Weatherford International, Inc. provides equipment and services used for the drilling, completion and production of oil and natural gas wells. Weatherford's Drilling and Intervention Services Division provides products and services used by oil and gas companies, drilling contractors and other service companies to explore, drill for and produce oil and natural gas. The principal products and services provided by this division are drilling systems, well installation services, cementing products and underbalanced drilling. Weatherford's Completion Systems Division focuses exclusively on providing its customers with a comprehensive offering of completion products, as well as engineered and integrated completion systems for oil and gas fields. Weatherford International also offers artificial lift systems for raising well reservoir pressure, and it continues to develop its own proprietary electrical submersible pumping units.
Closing Closing Closing Closing Closing Closing 1998 Price 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----- January 40.38 January 17.69 January 37.56 January 48.88 January 38.49 January 37.16 February 49.06 February 17.00 February 45.00 February 52.03 February 46.10 February 40.04 March 46.31 March 26.13 March 58.50 March 49.35 March 47.63 March 37.77 April 53.25 April 33.88 April 40.63 April 58.23 April 49.87 April 40.23 May 50.56 May 33.00 May 43.06 May 56.37 May 50.35 May 45.35 June 37.00 June 36.63 June 39.81 June 48.00 June 43.20 June 41.90 July 25.75 July 39.19 July 40.06 July 42.15 July 40.56 August 15.25 August 35.63 August 46.94 August 33.27 August 40.84 September 21.63 September 32.00 September 43.00 September 25.51 September 37.14 October 27.19 October 33.88 October 36.50 October 34.23 October 40.04 November 18.25 November 34.94 November 33.31 November 33.47 November 40.34 December 19.38 December 39.94 December 47.25 December 37.26 December 39.93
The closing price on July 1, 2003 was $40.98. A-10 [HOLDRS OIL SERVICE logo] 1,000,000,000 Depositary Receipts Oil Service HOLDRS(SM) Trust ----------------------------------- PROSPECTUS ---------------------------------- 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 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. 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. 2 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. 2 to the Registration Statement has been signed by the following persons in the capacities indicated below on July 3, 2003. Signature Title --------- ----- * Co. Chief Executive Officer, ---------------------------- Co. Chairman of the Board and Director James P. Gorman * Co. Chief Executive Officer, ---------------------------- Co. Chairman of the Board and Director Arshad R. Zakaria * 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 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 Amendment No. 2 to the Standard Terms for Depositary Trust Agreements, dated as of November 22, 2000, filed on January 5, 2001 as an exhibit to amendment no. 1 to the registration statement filed on Form S-1 for Oil Service HOLDRS. *5.1 Opinion of Shearman & Sterling regarding the validity of the Oil Service HOLDRS Receipts, filed on January 5, 2001 as an exhibit to amendment no. 1 to the registration statement filed on Form S-1 for Oil Service HOLDRS. *8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel, regarding the material federal income tax consequences, filed on January 5, 2001 as an exhibit to amendment no. 1 to the registration statement filed on Form S-1 for Oil Service HOLDRS. *24.1 Power of Attorney (included in Part II of Registration Statement), filed on December 15, 2000 as an exhibit to the registration statement filed on Form S-1 for Oil Service HOLDRS. *24.2 Power of Attorney of John J. Fosina, E. Stanley O'Neal, George A. Schieren, Thomas H. Patrick and Dominic A. Carone. 24.3 Power of Attorney of James P. Gorman, Arshad R. Zakaria and Carlos M. Morales - ------------------ * Previously filed. EX-24.3 3 ex24-3_070303oilservice.txt POWER OF ATTORNEY EXHIBIT 24.3 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 HOLDRSSM Trust, B2B Internet HOLDRSSM Trust, Broadband HOLDRSSM Trust, Europe 2001 HOLDRSSM Trust, Internet HOLDRSSM Trust, Internet Architecture HOLDRSSM Trust, Internet Infrastructure HOLDRSSM Trust, Market 2000+ HOLDRSSM Trust, Oil Service HOLDRSSM Trust, Pharmaceutical HOLDRSSM Trust, Regional Bank HOLDRSSM Trust, Semiconductor HOLDRSSM Trust, Software HOLDRSSM Trust, Telecom HOLDRSSM Trust, Wireless HOLDRSSM Trust, Utilities HOLDRSSM Trust and Retail HOLDRSSM 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 Board James P. Gorman and Director /s/ Arshad R. Zakaria Co-Chief Executive Officer, - ------------------------------ Co-Chairman of the Board Arshad R. Zakaria and Director /s/ Carlos M. Morales Director - ------------------------------ Carlos M. Morales -----END PRIVACY-ENHANCED MESSAGE-----