POS AM 1 posam_101904-utilities.txt POST EFFECTIVE AMENDMENT NO. 5 TO S-1 As filed with the Securities and Exchange Commission on October 25, 2004 Registration No. 333-36490 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ POST-EFFECTIVE AMENDMENT NO. 5 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) Utilities HOLDRS(SM) Trust [Issuer with respect to the receipts] Delaware 6211 13-5674085 (State or other jurisdiction (Primary Standard (I.R.S. Employer of incorporation or Industrial Classification Identification organization) 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 Incorporated 599 Lexington Avenue 250 Vesey Street New York, New York 10022 New York, New York 10281 (212) 848-4000 (212) 449-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. |X| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(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 1,000,000,000 Depositary Receipts Utilities HOLDRS(SM) Trust The Utilities HOLDRS(SM) Trust issues Depositary Receipts called Utilities HOLDRS(SM) representing your undivided beneficial ownership in the U.S.-traded common stock of a group of specified companies that, among other things, are involved in various segments of the utilities industry. The Bank of New York is the trustee. You only may acquire, hold or transfer Utilities HOLDRS in a round-lot amount of 100 Utilities HOLDRS or round-lot multiples. Utilities HOLDRS are separate from the underlying deposited common stocks that are represented by the Utilities HOLDRS. For a list of the names and the number of shares of the companies that make up a Utilities HOLDR, see "Highlights of Utilities HOLDRS--The Utilities HOLDRS" starting on page 9. The Utilities HOLDRS(SM) trust will issue Utilities HOLDRS on a continuous basis. Investing in Utilities HOLDRS involves significant risks. See "Risk factors" starting on page 4. Utilities HOLDRS are neither interests in nor obligations of Merrill Lynch, Pierce, Fenner & Smith Incorporated. Utilities 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 Utilities HOLDRS are listed on the American Stock Exchange under the symbol "UTH." On October 20, 2004, the last reported sale price of the Utilities HOLDRS on the American Stock Exchange was $88.00. ----------------- 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 October 25, 2004. "HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill Lynch & Co., Inc. TABLE OF CONTENTS Page SUMMARY.......................................................................3 RISK FACTORS..................................................................4 HIGHLIGHTS OF UTILITIES HOLDRS................................................9 THE TRUST....................................................................15 DESCRIPTION OF UTILITIES HOLDRS..............................................15 DESCRIPTION OF THE UNDERLYING SECURITIES.....................................16 DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT................................18 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES................................23 ERISA CONSIDERATIONS.........................................................27 PLAN OF DISTRIBUTION.........................................................27 LEGAL MATTERS................................................................27 WHERE YOU CAN FIND MORE INFORMATION..........................................27 ------------------------- This prospectus contains information you should consider when making your investment decision. With respect to information about Utilities 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 Utilities HOLDRS in any jurisdiction where the offer or sale is not permitted. The Utilities 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 Utilities HOLDRS or of the underlying securities through an investment in the Utilities HOLDRS. 2 SUMMARY The Utilities HOLDRS trust was formed under the depositary trust agreement, dated as of May 18, 2000 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Utilities HOLDRS and was amended on November 22, 2000. The trust is not a registered investment company under the Investment Company Act of 1940. The trust currently holds shares of common stock issued by a group of specified companies that were, at the time of the initial offering, generally considered to be involved in various segments of the utilities industry. The number of shares of each company's common stock currently held by the trust with respect to each round-lot of Utilities HOLDRS is specified under "Highlights of Utilities HOLDRS--The Utilities HOLDRS." This group of common stocks, and the securities of any company that may be added to Utilities HOLDRS, are collectively referred to in this prospectus as the underlying securities. There are currently 20 companies included in Utilities HOLDRS, which may change as a result of reconstruction events, distributions of securities by underlying issuers, or other events. The Utilities HOLDRS are separate from the underlying common stocks that are represented by the Utilities HOLDRS. On October 20, 2004, there were 2,438,000 Utilities HOLDRS outstanding. 3 RISK FACTORS An investment in Utilities HOLDRS involves risks similar to investing directly in each of the underlying securities outside of the Utilities HOLDRS, including the risks associated with a concentrated investment in utilities companies. General Risk Factors o Loss of investment. Because the value of Utilities HOLDRS directly relates to the value of the underlying securities, you may lose a substantial portion of your investment in the Utilities HOLDRS if the underlying securities decline in value. o Discount trading price. Utilities 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 Utilities HOLDRS or other corporate events, such as mergers, a Utilities 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 Utilities 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 utilities industry. At the time of the initial offering, the companies included in the Utilities HOLDRS were generally considered to be involved in various segments of the utilities industry. However, the market price of the underlying securities and the Utilities HOLDRS may not necessarily follow the price movements of the entire utilities industry generally. If the underlying securities decline in value, your investment in the Utilities HOLDRS will decline in value even if common stock prices of companies involved in the utilities industry generally increase in value. In addition, since the time of the initial offering, the companies included in the Utilities HOLDRS may not be involved in the utilities industry. In this case, the Utilities HOLDRS may not consist of securities issued only by companies involved in the utilities industry. o Not necessarily comprised of solely utilities companies. As a result of distributions of securities by companies included in the Utilities HOLDRS or other corporate events, such as mergers, securities of companies that are not currently included in the Utilities HOLDRS and that are not involved in the utilities industry may be included in the Utilities HOLDRS. The securities of a new company will only be distributed from the Utilities HOLDRS if the securities have a different Standard & Poor's Corporation sector classification than any of the underlying issuers included in the Utilities 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 through the Nasdaq National Market System. As of January 2, 2002, Standard & Poor's Corporation GICS sector classifications are based upon the Standard & Poor's Global Industry Classification Standard ("GICS") sectors. As there are only 10 broadly defined GICS sector classifications, the use of Standard & Poor's GICS sector classifications to determine whether a new company will be included in the Utilities HOLDRS provides no assurance that each new company included in the Utilities HOLDRS will be involved in the utilities industry. Currently, the underlying securities in the Utilities HOLDRS are represented in the Utilities and Energy GICS sector. Since each GICS sector classification is defined so broadly, the securities of a new company could have the same GICS sector classification as a company currently included in the Utilities HOLDRS yet not be involved in the utilities industry. In addition, the GICS sector classifications of securities included in the Utilities 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 sector classifications, or both. Therefore, additional GICS sector classifications may be represented in the Utilities HOLDRS which may also result in the inclusion in the Utilities HOLDRS of the securities of a new company that is not involved in the utilities industry. 4 o No investigation of underlying securities. The underlying securities initially included in the Utilities HOLDRS were selected by Merrill Lynch, Pierce, Fenner & Smith Incorporated based on the market capitalization of issuers and the market liquidity of common stocks in the utilities industry, without regard for the value, price performance, volatility or investment merit of the underlying securities. Consequently, the Utilities HOLDRS trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and their affiliates, have not performed any investigation or review of the selected companies, including the public filings by the companies. Investors and market participants should not conclude that the inclusion of a company is any form of investment recommendation by the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or their affiliates. o Loss of diversification. As a result of industry developments, reorganizations, or market fluctuations affecting issuers of the underlying securities, Utilities HOLDRS may not necessarily continue to be a diversified investment in the utilities 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, Utilities HOLDRS may also reduce diversification. Utilities HOLDRS may represent a concentrated investment in one or more of the underlying securities which would reduce investment diversification and increase your exposure to the risks of concentrated investments. o Conflicting investment choices. In order to sell one or more of the underlying securities individually, participate in a tender offer relating to one or more of the underlying securities, or participate in any form of stock repurchase program by an issuer of an underlying security, you will be required to cancel your Utilities HOLDRS and receive delivery of each of the underlying securities. The cancellation of your Utilities HOLDRS will allow you to sell individual underlying securities or to deliver individual underlying securities in a tender offer or any form of stock repurchase program. The cancellation of Utilities HOLDRS will involve payment of a cancellation fee to the trustee. o Trading halts. Trading in Utilities HOLDRS on the American Stock Exchange may be halted if trading in one or more of the underlying securities is halted. Trading in Utilities HOLDRS may be halted even if trading continues in some or all of the underlying securities. If trading is halted in Utilities HOLDRS, you will not be able to trade Utilities HOLDRS and you will only be able to trade the underlying securities if you cancel your Utilities 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 Utilities HOLDRS. If the Utilities HOLDRS are delisted by the American Stock Exchange, a termination event will result unless the Utilities 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 Utilities HOLDRS are delisted. There are currently 20 companies whose securities are included in Utilities HOLDRS. o Possible conflicts of interest. Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, selected the underlying securities that were originally included in the Utilities 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 issues of the underlying securities in connection with its business. o Delays in distributions. The depositary trust agreement provides that the trustee will use its reasonable efforts to distribute any cash or other distributions paid in respect of the underlying securities to you as soon as practicable after receipt of such distribution. However, you may receive such cash or other distributions later than you would if you owned the underlying securities outside of the Utilities 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 Utilities Industry o The stock prices of companies involved in the utilities industry have been and will likely continue to be extremely volatile, which will directly affect the price volatility of the Utilities HOLDRS, and you could lose a substantial part of your investment. The trading prices of the common stocks of utilities 5 companies have been extremely volatile. These stock prices could be subject to wide fluctuations in response to a variety of factors, including the following: o general market fluctuations; o actual or anticipated variations in companies' quarterly operating results; o announcements by utilities companies or their competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; o failure to integrate or realize projected benefits from acquisitions; o unscheduled system downtime; o changes in government regulations; o fluctuations in quarterly and annual operating results; and o difficulty in obtaining additional financing. In addition, the trading prices of utilities stocks in general have experienced extreme price and volume fluctuations in recent months. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. The valuations of many utilities stocks are high when measured by conventional valuation standards such as price to earnings and price to sales ratios. Some of the companies do not, or in the future might not, have earnings. As a result, these trading prices may decline substantially and valuations may not be sustained. Any negative change in the public's perception of the prospects of utilities companies, generally, could depress the stock prices of a utilities company regardless of utilities companies' results. Other broad market and industry factors may decrease the stock price of the utilities' stocks, regardless of their operating results. Market fluctuations, as well as general political and economic conditions such as recession, war or interest rate or currency rate fluctuations, also may decrease the market price of utilities stocks. As a result of fluctuations in the trading prices of the companies included in the Utilities HOLDRS, the trading price of Utilities HOLDRS has fluctuated significantly. The initial offering price of Utilities HOLDRS, on June 22, 2000, was $94.18, and during 2003, the price of a Utilities HOLDR reached a high of $78.68 and a low of $56.51. o Utilities companies whose securities are included in the Utilities HOLDRS may need additional financing, which may be difficult to obtain. Failure to obtain necessary financing or doing so on unattractive terms could adversely affect development and marketing efforts and other operations of companies whose securities are included in Utilities HOLDRS. Companies whose securities are included in the Utilities HOLDRS may need to raise additional capital in order to fund the continued development and marketing of their products or to fund strategic acquisitions or investments. Their ability to obtain additional financing will depend on a number of factors, including market conditions, operating performance and investor interest. These factors may make the timing, amount, terms and conditions of any financing unattractive. If adequate funds are not available or are not available on acceptable terms, companies whose securities are included in the Utilities HOLDRS may have to forego strategic acquisitions or investments, reduce or defer their development activities, or delay their introduction of new products and services. Any of these actions may reduce the market price of stocks in the utilities industry. o The utilities industry is extremely competitive and failure of a utilities company to maintain a customer base will adversely affect its operating results. The operations of many utilities companies, which have traditionally been subject to limited competitive pressures, are now subject to increased pressures with others in the industry in supplying the energy needs of consumers. Many utilities companies may not successfully develop and maintain a loyal customer base and failure to do so could have a material adverse effect on their business. o Utilities companies are subject to extensive regulation by various federal, state and local governmental agencies in the conduct of their business. The sale, marketing and distribution of a utilities companies 6 services are subject to regulation by all levels of governmental agencies including regulations on rate and marketing practices, environmental and development restrictions and regulations with respect to securities offerings. Competitive pressures by new market participants and changing consumer demands have resulted in additional changes in the regulatory environment, such as new regulations allowing consumers a broader choice to select their utility provider. The failure to obtain necessary government approvals, the restrictions contained in existing approvals, loss of or changes to previously obtained approvals or the failure to comply with regulatory requirements could result in fines, unanticipated expenditures, interruption of service and even criminal prosecution. The success of a utilities company will depend, in part, upon obtaining and maintaining regulatory approval to offer its products and services and, once approved, complying with the continued review by regulatory agencies. o Many utilities companies are subject to laws relating to the protection of the environment. The operations of many utilities companies are subject to extensive federal, state and local laws and regulations relating to the protection of the environment. Many utilities companies are exposed to significant environmental costs and liabilities inherent in the industry of a utility company and there can be no assurance that significant costs and liabilities will not be incurred, including those relating to claims for damages to property and persons resulting from operations. In addition, increasingly stringent federal, state or local environmental laws and regulations and enforcement policies will result in increased costs and liabilities. o The international operations of some utilities companies expose them to risks associated with instability and changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations and other risks inherent to international business. Many utilities companies have international development and exploration operations necessary to their businesses. The risks of international business that the companies are exposed to include the following: o general economic, social and political conditions; o the difficulty of enforcing intellectual property rights, agreements and collecting receivables through certain foreign legal systems; o differing tax rates, tariffs, exchange controls or other similar restrictions; o currency fluctuations; o changes in, and compliance with, domestic and foreign laws and regulations which impose a range of restrictions on operations, trade practices, foreign trade and international investment decisions; and o reduction in the number or capacity of personnel in international markets. o Many utilities companies are holding companies that rely on dividends from their subsidiaries as a substantial portion of their income and the right to receive dividends may be subordinate to the interests of third parties. Many utilities companies are separate and distinct entities from their subsidiaries that operate utilities and they receive a large portion of their revenue in dividends from these subsidiaries. The payment of dividends by these subsidiaries is subject to federal law restrictions as well as the laws of the respective state of incorporation. In addition, the right of a parent utility company to participate in any distribution of assets upon a subsidiary's liquidation or reorganization is subject to the prior claims of the subsidiary's creditors. The ability of a utility company to receive dividends or other distributions may be unpredictable, and fluctuations in income may adversely affect your investment in the Utilities HOLDRS. o Some of the companies involved in the utilities industry are also engaged in other lines of business unrelated to the utilities industry, and they may experience problems with these lines of business which could adversely affect their operating results. Some of the companies which comprise the Utilities HOLDRS have lines of business that do not relate to utilities activities and which may present additional risks not mentioned in this prospectus. There can be no assurance that other companies whose common stock is included in the Utilities HOLDRS will not experience similar catastrophic losses as a result of energy trading losses or losses in connection with other non-utilities businesses. The operating results of these utilities companies may fluctuate as a result of these additional risks and events in the other lines of business which may cause unusual volatility in the stock prices of these companies as compared to other 7 utilities companies. Despite a company's possible success in the utilities business, there can be no assurance that the other lines of business in which these companies are engaged will not have an adverse effect on a company's business or financial condition. o Failure to integrate acquisitions could disrupt operations and prevent the realization of intended benefits. Many utilities companies are active acquirers of other companies as part of their business plans. There can be no assurance that many utilities companies will be able to integrate these acquired companies, which may result in failure to realize expected cost savings, increases in revenue and other projected benefits from such integration. There can also be no assurance that these companies will be able to attract and retain qualified personnel from acquired businesses or be successful in integrating such personnel. Furthermore, utilities companies may suffer material adverse short and long-term effects on operating results and financial condition as a result of such acquisitions. 8 HIGHLIGHTS OF UTILITIES HOLDRS This discussion highlights information regarding Utilities HOLDRS. We present certain information more fully in the rest of this prospectus. You should read the entire prospectus carefully before you purchase Utilities HOLDRS. Issuer............................... Utilities HOLDRS Trust. The trust............................ The Utilities HOLDRS Trust was formed under the depositary trust agreement, dated as of May 18, 2000 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Utilities HOLDRS and was amended on November 22, 2000. The trust is not a registered investment company under the Investment Company Act of 1940. Initial depositor.................... Merrill Lynch, Pierce, Fenner & Smith Incorporated. Trustee.............................. The Bank of New York, a New York state-chartered banking organization, is the trustee and receives compensation as set forth in the depositary trust agreement. The trustee is responsible for receiving deposits of underlying securities and delivering Utilities HOLDRS representing the underlying securities issued by the trust. The trustee holds the underlying securities on behalf of the holders of Utilities HOLDRS. Purpose of Utilities HOLDRS.......... Utilities HOLDRS are designed to achieve the following: Diversification. Utilities HOLDRS are designed to allow you to diversify your investment in the utilities industry through a single, exchange- listed instrument representing your undivided beneficial ownership of the underlying securities. Flexibility. The beneficial owners of Utilities HOLDRS have undivided beneficial ownership interests in each of the underlying securities represented by the Utilities HOLDRS, and can cancel their Utilities HOLDRS to receive each of the underlying securities represented by the Utilities HOLDRS. Transaction costs. The expenses associated with buying and selling Utilities 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 utilities industry. Except when a reconstitution event, distribution of securities by an underlying issuer or other event occurs, the group of companies will not change. Reconstitution events are described in this prospectus under the heading "Description of the Depositary Trust Agreement--Distributions" and "Reconstitution events." There are currently 20 companies included in the Utilities 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 Utilities HOLDRS................. The trust has issued, and may continue to issue, Utilities HOLDRS that represent an undivided beneficial ownership interest in the shares of common stock that are held by the trust. The Utilities HOLDRS themselves are separate from the underlying securities that are represented by the Utilities HOLDRS. 9 The following chart provides the: o names of the 20 issuers of underlying securities currently represented by a Utilities HOLDR, o stock ticker symbols, o share amounts currently represented by a round-lot of 100 Utilities HOLDRS, and o principal U.S. market on which the shares of common stock of the selected companies are traded.
Name of Company Ticker Share Amounts Primary Trading Market ------------------------------------- ------------ ------------- ---------------------- American Electric Power Company, Inc. AEP 14 NYSE CenterPoint Energy, Inc. CNP 13 NYSE Consolidated Edison, Inc. ED 9 NYSE Dominion Resources, Inc. D 11 NYSE Duke Energy Corporation DUK 30 NYSE Dynegy, Inc. DYN 12 NYSE Edison International EIX 15 NYSE El Paso Corporation EP 10 NYSE Entergy Corporation ETR 10 NYSE Exelon Corporation EXC 30 NYSE FirstEnergy Corporation FE 10 NYSE FPL Group, Inc. FPL 8 NYSE PG&E Corporation PCG 17 NYSE Progress Energy PGN 7 NYSE Public Service Enterprise Group Incorporated PEG 10 NYSE Reliant Energy, Inc. RRI 10.2518 NYSE The Southern Company SO 29 NYSE Texas Genco Holdings, Inc. TGN 0.65 NYSE Texas Utilities Company TXU 12 NYSE The Williams Companies, Inc. WMB 20 NYSE
The companies whose securities were included in the Utilities HOLDRS at the time Utilities 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 utilities industry as measured by market capitalization and trading volume on May 2, 2000. The market capitalization of a company is determined by multiplying the market price of its common stock by the number of its outstanding securities. The trust only will issue and cancel, and you only may obtain, hold, trade or surrender, Utilities HOLDRS in a round-lot of 100 Utilities HOLDRS and round-lot multiples. The trust will only issue Utilities HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Utilities HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Utilities HOLDRS, the trust may require a minimum of more than one round-lot of 100 Utilities HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Utilities HOLDRS. The number of outstanding Utilities 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 Utilities HOLDRS on a continuous basis when an investor deposits the required shares of common stock with the trustee. 10 Purchases............................ You may acquire Utilities 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 Utilities HOLDRS by delivering to the trust the requisite shares of common stock represented by a round-lot of 100 Utilities 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 Utilities HOLDRS. If you wish to cancel your Utilities 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 Utilities HOLDRS. Commissions.......................... If you choose to deposit underlying securities in order to receive Utilities 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 Utilities 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 Utilities HOLDR, the trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions received, or to be received, and payable with respect to such calendar year. Rights relating to Utilities 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 Utilities 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 Utilities 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 Utilities HOLDRS themselves will not have voting rights. Rights relating to the underlying securities................ Utilities HOLDRS represents your beneficial ownership of the underlying securities. Owners of Utilities HOLDRS have the same rights and privileges as if they owned the underlying securities beneficially outside of Utilities HOLDRS. These include the right to instruct the trustee to vote the underlying securities, 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 Utilities HOLDRS and the right to surrender Utilities HOLDRS to receive the underlying securities. Utilities 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 Exchange Act. 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 Utilities HOLDRS. However, due to the nature of Utilities HOLDRS, you will not be able to participate in any dividend reinvestment program of an issuer of 11 underlying securities unless you cancel your Utilities HOLDRS (and pay the applicable fees) and receive all of the underlying securities. A holder of Utilities HOLDRS is not a registered owner of the underlying securities. In order to become a registered owner, a holder of Utilities HOLDRS would need to surrender their Utilities 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 communications that the issuers of underlying securities are required to send to beneficial owners of their securities. As such, you will receive such reports and communications from the broker through which you hold your Utilities HOLDRS in the same manner as if you beneficially owned your underlying securities outside of Utilities 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 underlying securities other than in accordance with your instructions. The depositary trust agreement entitles you to receive, subject to certain limitations and net of any fees and expenses of the trustee, any distributions of cash (including dividends), securities or property made with respect to the underlying securities. However, any distribution of securities by an issuer of underlying securities will be deposited into the trust and will become part of the underlying securities unless the distributed securities are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System or the distributed securities have a Standard & Poor's GICS sector classification that is different from the GICS sector classifications represented in the Utilities 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 Utilities 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 Utilities HOLDRS (and pay the applicable fees and expenses) and receive all of your underlying securities in exchange for your Utilities 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." Ownership rights in fractional shares in the underlying securities.. As a result of distributions of securities by companies included in the Utilities HOLDRS or other corporate events, such as mergers, a Utilities 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 12 fractions represented by Utilities 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 Utilities HOLDRS are outstanding and each round-lot of 100 Utilities HOLDRS represents 1.75 shares of an underlying security, there will be 175,001.75 votes of the underlying security represented by Utilities HOLDRS. If holders of 50,000 round-lots of 100 Utilities HOLDRS vote their underlying securities "yes" and holders of 50,001 round-lots of 100 Utilities 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 Utilities HOLDRS to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of common stock registered under section 12 of the Securities Exchange Act of 1934, then the trustee will distribute the shares of that company to the owners of the Utilities 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 Utilities 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 or the securities received in exchange for the securities of the underlying issuer whose securities cease to be outstanding to the beneficial owners of Utilities HOLDRS, only if the distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Utilities 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 Utilities 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 Utilities 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 Utilities HOLDRS or are not listed for trading on a U.S. national securities 13 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 Utilities HOLDRS. The trustee will review the publicly available information that identifies 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 Utilities HOLDRS will be included in Utilities HOLDRS or distributed to you. Standard & Poor's sector classifications...................... Standard & Poor's Corporation is an independent source of market information that, among other things, maintains the Global Industry Classification Standard, 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 sector classifications and each class of publicly traded securities of a company are each given only one GICS sector classification. The securities included in the Utilities HOLDRS are currently represented in the Utilities GICS sector. The Standard & Poor's GICS sector classifications of the securities included in the Utilities 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 Utilities 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 Utilities 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 Utilities HOLDRS vote to dissolve and liquidate the trust. If a termination event occurs, the trustee will distribute the underlying securities 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 Utilities 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 Utilities HOLDRS as directly owning the underlying securities. The Utilities HOLDRS themselves will not result in any United States federal income tax consequences separate from the tax consequences associated with ownership of the underlying securities. Listing.............................. The Utilities HOLDRS are listed on the American Stock Exchange under the symbol "UTH." On October 20, 2004, the last reported sale price of Utilities 14 HOLDRS on the American Stock Exchange was $88.00. Trading.............................. Investors are only able to acquire, hold, transfer and surrender a round-lot of 100 Utilities HOLDRS. Bid and ask prices, however, are quoted per single Utilities HOLDR. Clearance and settlement............. Utilities HOLDRS have been issued only in book- entry form. Utilities 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 Utilities HOLDRS." THE TRUST General. This discussion highlights information about the Utilities HOLDRS Trust. You should read this information, information about the depositary trust agreement as well as the depositary trust agreement and the amendment to the depositary trust agreement, before you purchase Utilities HOLDRS. The material terms of the depositary trust agreement are described in this prospectus under the heading "Description of the Depositary Trust Agreement." The Utilities HOLDRS Trust. The trust was formed pursuant to the depositary trust agreement, dated as of May 18, 2000. The depositary trust agreement was amended on November 22, 2000. The Bank of New York is the trustee. The Utilities HOLDRS Trust is not a registered investment company under the Investment Company Act of 1940. The Utilities HOLDRS Trust is intended to hold deposited shares for the benefit of owners of Utilities HOLDRS. The trustee will perform only administrative and ministerial acts. The property of the trust consists of the underlying securities and all monies or other property, if any, received by the trustee. The trust will terminate on December 31, 2040, or earlier if a termination event occurs. DESCRIPTION OF UTILITIES HOLDRS The trust has issued Utilities HOLDRS under the depositary trust agreement described in this prospectus under the heading "Description of the Depositary Trust Agreement." The trust may issue additional Utilities HOLDRS on a continuous basis when an investor deposits the requisite underlying securities with the trustee. You may only acquire, hold, trade and surrender Utilities HOLDRS in a round-lot of 100 Utilities HOLDRS and round-lot multiples. The trust will only issue Utilities HOLDRS upon the deposit of the whole shares of underlying securities that are represented by a round-lot of 100 Utilities 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 Utilities HOLDRS, the trust may require a minimum of more than one round-lot of 100 Utilities HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Utilities HOLDRS. Utilities 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 Utilities HOLDRS--The Utilities HOLDRS." Beneficial owners of Utilities HOLDRS will have the same rights and privileges as they would have if they beneficially owned the underlying securities in "street name" outside of the trust. These include the right of investors to instruct the trustee to vote the common stock, and to receive dividends and other distributions on the underlying securities, if any are declared and paid to the trustee by an issuer of an underlying security, as well as the right to cancel Utilities HOLDRS to receive the underlying securities. See "Description of the Depositary Trust Agreement." Utilities 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. 15 The trust will not publish or otherwise calculate the aggregate value of the underlying securities represented by a receipt. Utilities 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 Utilities HOLDRS wishes to realize the dollar value of the underlying securities, that owner will have to cancel the Utilities HOLDRS. Such cancellation will require payment of fees and expenses as described in "Description of the Depositary Trust Agreement--Withdrawal of underlying securities." Utilities 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. Utilities HOLDRS are available only in book-entry form. Owners of Utilities HOLDRS may hold their Utilities HOLDRS through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. DESCRIPTION OF THE UNDERLYING SECURITIES Selection criteria. The underlying securities are the common stocks of a group of specified companies that, at the time of selection, were involved in various aspects of the utilities industry on a regional level and whose common stock is registered under section 12 of the Securities Exchange Act of 1934. The issuers of the underlying securities were, at the time of selection, among the largest capitalized and most liquid companies involved in the utilities industry as measured by market capitalization and trading volume. The Utilities HOLDRS may no longer consist exclusively of securities issued by companies involved in the utilities industry. Merrill Lynch, Pierce, Fenner & Smith Incorporated will determine, in its sole discretion, whether the issuer of a particular underlying security remains in the utilities industry and will undertake to make adequate disclosure when necessary. Underlying securities. For a list of the underlying securities represented by Utilities HOLDRS, please refer to "Highlights of Utilities HOLDRS--The Utilities HOLDRS." If the underlying securities change because of a reconstitution event, a distribution of securities by an underlying issuer or other event, a revised list of underlying securities will be set forth in a prospectus supplement and filed with the SEC on a periodic basis. No investigation. The trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated 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 Utilities 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, the selling group or any of their affiliates. General background and historical information. For a brief description of the business of each of the issuers of the underlying securities and monthly pricing information showing the historical performance of each underlying issuer's securities see "Annex A." 16 The following table and graph set forth the composite performance of all of the 20 underlying securities currently represented by a single Utilities HOLDR, measured at the close of each month from January 30, 1998 to August 2004. The performance table and graph data are adjusted for any splits that may have occurred over the measurement period. Past movements of the underlying securities are not necessarily indicative of future values.
1998 Price 1999 Price 2000 Price 2001 Price ---- ----- ---- ----- ---- ----- ---- ----- January 30.... 77.05 January 29... 85.26 January 31... 77.47 January 31... 96.26 February 27... 78.69 February 26.. 81.73 February 29.. 70.62 February 28.. 103.63 March 31...... 83.94 March 31..... 81.33 March 31..... 73.01 March 30..... 104.65 April 30...... 81.79 April 30..... 87.27 April 28..... 80.66 April 30..... 105.56 May 29........ 81.75 May 28....... 92.86 May 31....... 85.05 May 31....... 107.61 June 30....... 84.21 June 30...... 85.79 June 30...... 79.68 June 29...... 98.01 July 31....... 80.04 July 30...... 84.70 July 31...... 82.76 July 31...... 96.29 August 31..... 82.09 August 31.... 84.86 August 31.... 94.20 August 31.... 95.63 September 30.. 88.39 September 30. 80.02 September 29. 104.62 September 28. 88.92* October 30.... 86.76 October 29... 81.60 October 31... 102.88 October 31... 90.30 November 30... 87.32 November 30.. 73.87 November 30.. 105.03 November 30.. 87.48 December 31... 89.36 December 31.. 72.11 December 29.. 110.31 December 31.. 90.90
2002 Price 2003 Price 2004 Price ---- ----- ---- ----- ---- ----- January 31... 87.11 January 31... 61.91 January 30... 79.87 February 28.. 86.89 February 28.. 58.81 February 27.. 81.29 March 29..... 95.75 March 31..... 61.72 March 31..... 82.47 April 30..... 94.93 April 30..... 66.56 April 30..... 79.44 May 31....... 85.81 May 31....... 73.01 May 28....... 80.19 June 28...... 81.11 June 30...... 74.39 June 30...... 81.09 July 31...... 70.35 July 31...... 69.30 July 30...... 82.51 August 30.... 71.83 August 29.... 70.47 August 31.... 85.37 September 30. 63.21 September 30. 73.70 October 31... 60.60 October 31... 74.09 November 29.. 61.00 November 28.. 73.50 December 31.. 63.89 December 31.. 78.42
[Utilities HOLDRS Graph Omitted] 17 DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT General. The depositary trust agreement, dated as of May 18, 2000, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as trustee, other depositors and the owners of the Utilities HOLDRS, provides that Utilities HOLDRS will represent an owner's undivided beneficial ownership interest in the common stock of the underlying companies. The depositary trust agreement was amended on November 22, 2000 to modify the reconstruction events, described below. The trustee. The Bank of New York serves as trustee for the Utilities 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 Utilities HOLDRS. You may create and cancel Utilities HOLDRS only in round-lots of 100 Utilities HOLDRS. You may create Utilities HOLDRS by delivering to the trustee the requisite underlying securities. The trust will only issue Utilities HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Utilities HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Utilities HOLDRS, the trust may require a minimum of more than one round-lot of 100 Utilities HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Utilities HOLDRS. Similarly, you must surrender Utilities HOLDRS in integral multiples of 100 Utilities 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 Utilities HOLDRS would otherwise require the delivery of fractional shares, the trust will deliver cash in lieu of such shares. You may request withdrawal of your deposited shares during the trustee's normal business hours. The trustee expects that in most cases it will deliver your deposited shares within one business day of your withdrawal request. Voting rights. You will receive proxy soliciting materials provided by issuers of the deposited shares so as to permit you to give the trustee instructions as to how to vote on matters to be considered at any annual or special meetings held by issuers of the underlying securities. Under the depositary trust agreement, any beneficial owner of Utilities HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning Utilities 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 Utilities HOLDRS unless such securities are not listed for trading on U.S. national securities exchange or through the Nasdaq National Market System or such distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Utilities 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 Utilities 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 Utilities 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 Utilities HOLDR, the 18 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 Utilities 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 Utilities 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 Utilities HOLDRS. Further issuances of Utilities HOLDRS. The depositary trust agreement provides for further issuances of Utilities HOLDRS on a continuous basis without your consent. Reconstitution events. The depositary trust agreement provides for the automatic distribution of underlying securities from Utilities HOLDRS to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of common stock registered under section 12 of the Securities Exchange Act of 1934, then its securities will no longer be an underlying security and the trustee will distribute the shares of that company to the owners of the Utilities 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 Utilities 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 Utilities HOLDRS, only if the distributed securities have a different Standard & Poor's GICS sector classification than any of the underlying securities represented in the Utilities 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 underlying 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 amendment to the depositary trust agreement, securities of a new company will be added to the Utilities 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 any of the underlying securities represented in Utilities HOLDRS at the time of distribution or exchange or are not listed for trading on a U.S. national securities exchange or through the Nasdaq National Market System. It is anticipated, as a result of the broadly defined GICS sectors, that most distributions or exchanges of securities will result in the inclusion of new securities in the Utilities 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 Utilities HOLDRS will be distributed from the Utilities HOLDRS to you. 19 Standard & Poor's 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. There are 10 Standard & Poor's GICS sector classifications and each class of publicly traded securities of a company is given only one GICS sector classification. The securities included in the Utilities HOLDRS are currently represented in the Utilities GICS sector. The Standard & Poor's GICS sector classifications of the securities included in the Utilities HOLDRS may change over time if the companies that issued these securities change their focus of operations or if Standard & Poor's alters the criteria it uses to determine GICS sectors, or both. Termination of the trust. The trust will terminate if the trustee resigns and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, within 60 days from the date the trustee provides notice to the initial depositor of its intent to resign. Upon termination, the beneficial owners of Utilities HOLDRS will surrender their Utilities 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 Utilities 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 Utilities HOLDRS are delisted. Finally, the trust will terminate if 75% of the owners of outstanding Utilities 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 Utilities 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 Utilities 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 Utilities HOLDRS will not become effective until 30 days after notice of the amendment is given to the owners of Utilities HOLDRS. Issuance and cancellation fees. If you wish to create Utilities 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 Utilities HOLDRS. If you wish to cancel your Utilities 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 Utilities 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 Utilities HOLDRS you will be responsible for paying any sales commissions associated with your purchase of the underlying securities that is charged by your broker, whether it be Merrill Lynch, Pierce, Fenner & Smith Incorporated or another broker, in addition to the issuance fee described above. Custody fees. The Bank of New York, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Utilities 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 Utilities HOLDR, the Trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions received, or to be received, and payable with respect to such calendar year. The trustee cannot recapture unpaid custody fees from prior years. Address of the trustee. The Bank of New York, ADR Department, 101 Barclay Street, New York, New York 10286. Governing law. The depositary trust agreement and the Utilities 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. 20 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 Utilities 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. 21 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES General The following discussion represents the opinion of Shearman & Sterling LLP, our special U.S. federal income tax counsel, as to the principal U.S. federal income tax consequences relating to the Utilities HOLDRS for: o an individual who is a citizen or resident of the United States; o a corporation (or an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia; o an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; o a trust if either (i) it is subject to the primary supervision of a U.S. court and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person (a "U.S. receipt holder"); and o any person other than a U.S. receipt holder (a "non-U.S. receipt holder"). If a partnership (or an entity treated as a partnership for U.S. federal income tax purposes) holds Utilities HOLDRS, the tax treatment of the partnership and each partner will generally depend on the status of the partner and the activities of the partnership. Partnerships acquiring Utilities HOLDRS, and partners in such partnerships, should consult their tax advisors. This discussion is based upon laws, regulations, rulings and decisions currently in effect, all of which are subject to change or differing interpretations, 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, investors who acquire or hold any Utilities HOLDRS as part of a conversion, straddle or other hedging transaction, certain former citizens and residents of the United States and persons subject to the alternative minimum tax. In addition, this discussion generally is limited to investors who will hold the Utilities 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 discussion does not address Utilities HOLDRS held by a partnership or other flow through entities. We recommend that you consult with your own tax advisor with regard to the application of the U.S. federal income tax laws to your particular situation as well as any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction. 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 Utilities HOLDRS A receipt holder purchasing and owning Utilities HOLDRS will be treated, for U.S. federal income tax purposes, as directly owning a proportionate share of the underlying securities represented by Utilities 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. Qualified dividend income received in respect of Utilities 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) 22 entering into a hedging transaction. Special rules apply to a U.S. receipt holder who leverages its investment in Utilities HOLDRS. U.S. receipt holders that are corporations may be eligible for a dividend-received deduction in respect of dividends received from domestic corporations. A receipt holder will determine its initial tax basis in each of the underlying securities by allocating the purchase price for the Utilities 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 Utilities 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 Utilities HOLDRS. Similarly, with respect to sales of Utilities HOLDRS for cash in the secondary market, the amount realized with respect to a sale of Utilities 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 Utilities 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. Gain or loss with respect to fractional shares shall be computed by allocating a portion of the aggregate tax basis of the distributed securities to such fractional shares. The receipt holder's aggregate tax basis with respect to the distributed securities will be the same as when held through the trust, less any tax basis allocated to 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 Utilities 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. A qualified foreign corporation includes: o a foreign corporation that is eligible for the benefits of a comprehensive U.S. income tax treaty, which the Secretary of the Treasury determines to be satisfactory and that includes an exchange of information program, o a foreign corporation if the stock to which the dividend is paid is readily tradable on an established market in the United States, and o a corporation that is incorporated in a possession of the United States but will not include: 23 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). 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 or global shares can apply for a refund of withheld taxes. With respect to these issuers, holders of Utilities HOLDRS may be able to use these arrangements to apply for a refund of withheld taxes. In some cases, however, the holders of Utilities HOLDRS may have to independently apply to a foreign tax authority 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"). The Initial Depositor is not aware that any of the foreign issuers of the underlying securities is currently a PFIC, although no assurances can be made that the applicable tax law or other relevant circumstances will not change in a manner which affects the PFIC determination. The Initial Depositor will notify the trustee, who in turn will notify the receipt holders, if it becomes aware that any of the foreign issuers is 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 Utilities HOLDRS or of the underlying securities or upon the receipt of "excess distributions," unless the U.S. receipt holder has made 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. A non-U.S. receipt holder who wishes to claim an exemption from, or reduction in, withholding under the benefit of an applicable tax treaty must comply with certification requirements. 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 24 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. 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 timely 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 Utilities 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. 25 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 on a timely basis. 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. ERISA CONSIDERATIONS Any plan fiduciary which proposes to have a plan acquire Utilities HOLDRS should consult with its counsel with respect to the potential applicability of the prohibited transaction provisions 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 Utilities 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 Utilities HOLDRS to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce, Fenner & Smith Incorporated has deposited the underlying securities to receive Utilities HOLDRS. The trust delivered the initial distribution of Utilities HOLDRS against deposit of the underlying securities in New York, New York on approximately January 17, 2001. Investors who purchase Utilities HOLDRS through a fee-based brokerage account will pay fees charged by the brokerage account. We recommend that investors review the terms of their brokerage accounts for details on applicable charges. Members of the selling group have from time to time provided investment banking and other financial services to some of the issuers of the underlying securities and expect in the future to provide these services, for which they have received and will receive customary fees and commissions. They also may have served as counterparties in other transactions with some 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 Utilities 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 some 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 Utilities 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 Utilities HOLDRS, were passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor and the underwriter in connection with the initial offering of Utilities 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 Utilities HOLDRS. WHERE YOU CAN FIND MORE INFORMATION Merrill Lynch, Pierce, Fenner & Smith Incorporated has filed a registration statement on Form S-1 with the SEC covering the Utilities HOLDRS. While this prospectus is a part of the registration statement, it does not 26 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.. 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 Exchange Act. The trust will file modified reports pursuant to the Securities Exchange Act of 1934. Since the securities of the issuers of the underlying securities are 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 Utilities HOLDRS. This prospectus relates only to Utilities 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 Utilities 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 securities of the issuers of the underlying securities, and therefore the offering and trading prices of the Utilities HOLDRS have been publicly disclosed. 27 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 1999, 2000, 2001, 2002 and 2003, through September 2004. As a result of the conversion to decimal reporting of trading prices by the markets on which the underlying securities trade, all market prices beginning from January 2001 provided in the following tables are given in decimal form. All historical market prices provided in fractions in excess of one dollar are rounded to the nearest one sixty-fourth of a dollar. A table outlining the primary U.S. stock market on which the securities of the issuers are listed can be found on page 10. 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. AMERICAN ELECTRIC POWER COMPANY, INC. (AEP) American Electric Power Company, Inc. is a public utility holding company engaged in the generation, purchase, transmission and distribution of electric power. American Electric's service areas cover portions of the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. American Electric also provides engineering and technical services. American Electric Power conducts its wholesale business operations through its public utility subsidiaries, AEP Energy Services, Inc., AEP Resources, Inc. and AEP Pro Serv, Inc.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 43 13/16 January 33 1/12 January 43.25 January 41.74 January 23.62 January 32.65 February 41 5/8 February 28 1/8 February 47.54 February 43.85 February 21.78 February 34.50 March 39 11/16 March 29 13/16 March 47.00 March 46.09 March 22.85 March 32.92 April 41 7/16 April 36 5/18 April 49.34 April 45.80 April 26.38 April 30.44 May 43 3/8 May 35 9/16 May 50.20 May 42.73 May 29.04 May 31.77 June 37 9/16 June 29 5/8 June 46.17 June 40.02 June 29.83 June 32.00 July 35 3/8 July 32 13/16 July 45.00 July 32.91 July 28.06 July 31.11 August 36 5/16 August 35 9/64 August 45.77 August 34.10 August 28.31 August 32.73 September 34 1/8 September 39 9/64 September 43.23 September 28.51 September 30.00 September 31.96 October 34 1/2 October 41 1/2 October 41.90 October 25.64 October 28.19 November 31 3/8 November 46 November 41.25 November 28.42 November 27.69 December 32 1/8 December 46 1/2 December 43.53 December 27.33 December 30.51
The closing price on October 20, 2004 was $31.37. A-1 CENTERPOINT ENERGY INC. (CNP) CenterPoint Energy, Inc. (formerly Reliant Energy, Incorporated) is a public utility holding company. CenterPoint's subsidiaries own and operate electric transmission and distribution facilities, natural gas distribution facilities and natural gas pipelines. CenterPoint subsidiaries are CenterPoint Energy Houston Electric, LLC, which owns and operates an electric transmission and distribution business in the Texas Gulf Coast area, and CenterPoint Energy Resources Corp. (CERC), which owns and operates local gas distribution companies, gas gathering systems and interstate pipelines. CenterPoint also holds a majority ownership interest in Texas Genco Holdings, Inc., which operates electric generation plants. In 2003, CenterPoint Energy sold its interest in Argener, a cogeneration facility in Argentina.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 30 1/4 January 22 13/16 January 37.70 January 25.08 January 6.97 January 10.50 February 26 13/16 February 20 9/16 February 42.01 February 20.80 February 4.65 February 10.46 March 26 1/16 March 23 9/16 March 45.25 March 25.79 March 7.05 March 11.43 April 28 5/16 April 26 5/8 April 49.55 April 25.38 April 7.90 April 10.79 May 30 1/2 May 28 9/16 May 46.08 May 17.01 May 9.55 May 10.84 June 27 5/8 June 29 9/16 June 32.21 June 16.90 June 8.15 June 11.50 July 27 5/16 July 33 1/2 July 31.50 July 10.06 July 8.07 July 11.61 August 27 11/16 August 37 1/64 August 30.06 August 11.85 August 8.49 August 10.94 September 27 1/16 September 46 1/2 September 26.32 September 10.01 September 9.17 September 10.36 October 27 1/4 October 41 5/16 October 27.95 October 7.08 October 9.81 November 24 13/16 November 39 1/4 November 25.55 November 7.65 November 9.70 December 22 7/8 December 43 5/16 December 26.52 December 8.50 December 9.69
The closing price on October 20, 2004 was $10.47. CONSOLIDATED EDISON, INC. (ED) Consolidated Edison, Inc. is a public utility holding company that provides electric, gas and steam transmission and distribution services in portions of New York and northern New Jersey and in northeastern Pennsylvania. The Company's principal business segments are the regulated electric, gas and steam businesses of its utility subsidiaries and the unregulated businesses of its other subsidiaries. Consolidated Edison's subsidiaries are Consolidated Edison Solutions, Inc., Consolidated Edison Energy, Inc., Consolidated Edison Development, Inc. and Con Edison Communications, LLC, which builds and operates fiber-optic networks for telecommunications services.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 49 7/16 January 32 11/16 January 34.94 January 40.99 January 39.92 January 43.83 February 46 3/4 February 27 9/16 February 36.87 February 40.80 February 39.00 February 44.17 March 45 5/16 March 29 1/8 March 37.10 March 41.91 March 38.47 March 44.10 April 45 7/16 April 35 3/16 April 37.41 April 43.59 April 38.87 April 41.21 May 48 9/16 May 32 5/8 May 39.15 May 43.77 May 42.99 May 39.26 June 45 1/4 June 29 5/8 June 39.80 June 41.75 June 43.28 June 39.76 July 43 1/2 July 30 5/16 July 39.74 July 42.85 July 39.71 July 40.97 August 44 August 31 5/16 August 40.90 August 40.69 August 39.53 August 42.20 September 41 1/2 September 34 9/64 September 40.72 September 40.22 September 40.76 September 42.04 October 38 3/16 October 35 3/16 October 39.49 October 42.57 October 40.47 November 34 1/2 November 37 1/4 November 38.62 November 39.75 November 40.30 December 34 1/2 December 38 1/2 December 40.36 December 42.82 December 43.01
The closing price on October 20, 2004 was $42.64. A-2 DOMINION RESOURCES, INC. (D) Dominion Resources, Inc. is a fully integrated gas and electric holding company serving the Midwest, Northeast and Mid-Atlantic United States. Dominion is managed in four segments: Dominion Delivery, which manages electric and gas distribution systems and customer service and marketing operations; Dominion Energy, which manages electric and gas transmission operations, gas production and storage operations, as well as energy trading, marketing, hedging and arbitrage activities; Dominion Exploration and Production, which manages gas and oil exploration and development; and Dominion Generation, which manages generation operations of the Company's electric utility and merchant fleet. Dominion subsidiaries include Virginia Electric and Power Company, Consolidated Natural Gas Company and Dominion Energy, Inc.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 44 3/4 January 41 3/4 January 61.80 January 58.87 January 54.19 January 64.16 February 38 5/8 February 36 11/16 February 65.56 February 48.67 February 53.90 February 62.83 March 36 15/16 March 38 7/16 March 64.47 March 65.16 March 55.37 March 64.30 April 41 1/8 April 45 April 68.49 April 66.42 April 59.18 April 63.81 May 43 3/16 May 45 3/4 May 66.30 May 64.78 May 63.00 May 62.97 June 43 5/16 June 42 7/8 June 60.13 June 66.20 June 64.27 June 63.08 July 44 1/16 July 45 7/16 July 60.49 July 59.44 July 60.10 July 63.46 August 46 1/4 August 52 57/64 August 62.95 August 62.71 August 60.58 August 64.89 September 45 1/8 September 58 5/64 September 59.35 September 50.73 September 61.90 September 65.25 October 48 1/8 October 59 9/16 October 61.12 October 48.00 October 61.60 November 45 3/8 November 60 November 58.45 November 50.95 November 60.27 December 39 1/4 December 67 December 60.10 December 54.90 December 63.83
The closing price on October 20, 2004 was $65.08. DUKE ENERGY CORPORATION (DUK) Duke Energy Corporation offers physical delivery and management of both electricity and natural gas throughout the United States and abroad. Duke Energy provides these and other services through seven business segments: Franchised Electric, Natural Gas Transmission, Field Services, Duke Energy North America, International Energy, Duke Ventures and Other Operations (Other Operations is composed of diverse businesses operating through Crescent Resources, LLC, DukeNet Communications, LLC, Duke Energy Merchants, LLC and Duke/Fluor Daniel). Through these business segments Duke Energy generates, transmits, distributes and sells electricity and also provides transportation and storage of natural gas for its customers. Duke Energy also provides services related to natural gas liquids, the operation and management of merchant generation facilities, commodity sales and services related to natural gas and electric power, the operation of power generation facilities and engineering, consulting, construction and integrated energy services.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 30 29/32 January 28 7/8 January 36.57 January 34.87 January 16.91 January 21.73 February 28 7/16 February 24 1/4 February 40.75 February 35.30 February 13.51 February 21.96 March 27 13/32 March 26 1/4 March 42.74 March 37.80 March 14.54 March 22.60 April 28 April 28 3/4 April 46.76 April 38.33 April 17.59 April 21.06 May 30 5/32 May 29 1/8 May 45.72 May 32.01 May 19.38 May 19.94 June 27 7/32 June 28 3/8 June 39.01 June 31.10 June 19.95 June 20.29 July 26 15/32 July 30 27/32 July 38.61 July 25.49 July 17.55 July 21.50 August 28 3/4 August 37 27/64 August 39.31 August 26.83 August 17.08 August 22.14 September 27 9/16 September 42 57/64 September 37.85 September 19.55 September 17.81 September 22.89 October 28 9/32 October 43 7/32 October 38.41 October 20.49 October 18.15 November 25 11/32 November 44 31/32 November 36.15 November 19.74 November 18.04 December 25 1/16 December 42 5/8 December 39.26 December 19.54 December 20.45
The closing price on October 20, 2004 was $23.59. A-3 DYNEGY, INC. (DYN) Dynegy, Inc. is a holding company whose subsidiaries provide energy products and services in North America through four business segments: Wholesale Energy Network, Dynegy Midstream Services, Transmission and Distribution, and Dynegy Global Communications. Dynegy markets products through its wholesale, direct commercial and industrial marketing and trading of natural gas, electricity, coal, emissions allowances and weather derivatives. These operations are supported by subsidiaries that provide power generation, gas and liquids storage capacity and transportation. Dynegy operates an electric and natural gas utility engaged in the transmission, distribution and sale of electricity and natural gas. In 2004, the Company made an announcement that it planned to exit the marketing and trading of natural gas. Dynegy also owns integrated downstream assets used to fractionate, store, transport, distribute and market natural gas liquids.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 7 45/64 January 22 15/32 January 48.70 January 23.85 January 1.87 January 4.47 February 8 45/64 February 23 7/16 February 47.00 February 25.57 February 1.95 February 4.09 March 10 3/16 March 31 3/8 March 51.01 March 29.00 March 2.61 March 3.96 April 12 19/32 April 32 23/32 April 57.85 April 18.00 April 4.40 April 3.96 May 12 13/32 May 38 9/16 May 49.30 May 8.89 May 4.98 May 4.39 June 14 49/64 June 34 5/32 June 46.50 June 7.20 June 4.20 June 4.26 July 17 25/64 July 35 3/16 July 46.38 July 2.40 July 3.17 July 4.20 August 17 1/32 August 45 August 42.17 August 2.08 August 3.09 August 4.36 September 14 63/64 September 57 1/64 September 34.65 September 0.73 September 3.60 September 4.99 October 16 37/64 October 46 3/8 October 35.90 October 0.68 October 4.01 November 16 19/64 November 44 1/4 November 30.35 November 1.17 November 4.00 December 17 5/8 December 56 1/16 December 25.50 December 1.18 December 4.28
The closing price on October 20, 2004 was $4.75. EDISON INTERNATIONAL (EIX) International is a holding company that operates through three business segments: Southern California Edison, a public utility company which primarily supplies electric energy to central, coastal and southern California; Edison Mission Energy, a non-utility power generation company engaged in developing, acquiring, owning or leasing, and operating electric power generation facilities worldwide and energy trading and price risk management activities; and Edison Capital, a capital and financial services provider for energy and infrastructure projects.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 27 13/16 January 29 1/8 January 13.34 January 11.44 January 12.33 January 22.00 February 25 1/2 February 26 1/4 February 14.90 February 15.80 February 12.36 February 23.09 March 22 1/4 March 16 9/16 March 12.64 March 16.75 March 13.57 March 24.29 April 24 1/2 April 19 1/16 April 9.85 April 18.15 April 14.59 April 23.40 May 27 1/2 May 21 3/8 May 10.83 May 18.66 May 16.28 May 24.14 June 26 3/4 June 20 1/2 June 11.15 June 17.00 June 16.43 June 25.57 July 25 5/16 July 19 11/16 July 14.04 July 13.10 July 16.41 July 26.80 August 25 3/8 August 20 45/64 August 13.61 August 11.98 August 18.86 August 26.88 September 24 5/16 September 19 21/64 September 13.16 September 10.00 September 19.10 September 26.51 October 29 5/8 October 23 7/8 October 14.21 October 10.05 October 19.71 November 26 1/2 November 22 15/16 November 15.10 November 11.09 November 20.42 December 26 3/16 December 15 5/8 December 15.10 December 11.85 December 21.93
The closing price on October 20, 2004 was $29.78. A-4 EL PASO ENERGY CORPORATION (EP) El Paso Corporation is an international energy company whose operations range from natural gas production and extraction to power generation. The Company has core businesses in natural gas production, gathering, processing, and transmission, as well as liquefied natural gas transport and receiving, petroleum logistics, power generation and merchant energy services. El Paso Energy also assists in the development and operation of energy infrastructure facilities worldwide and the domestic exploration and production of natural gas and oil. In 2003, the Company sold its Coastal Unilube assets. In 2004, the Company sold its 315,000-barrel-per-day refinery in Aruba and divested of its subsidiary, El Paso Oil and Gas Canada, Inc.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 33 January 32 1/4 January 62.90 January 37.95 January 8.44 January 8.50 February 36 7/16 February 37 1/16 February 70.30 February 39.08 February 4.86 February 7.44 March 32 11/16 March 40 3/8 March 65.30 March 44.03 March 6.05 March 7.11 April 36 3/4 April 42 3/8 April 68.80 April 40.00 April 7.50 April 7.01 May 36 1/16 May 51 1/2 May 60.90 May 25.65 May 8.70 May 7.21 June 35 3/16 June 50 15/16 June 52.54 June 20.61 June 8.08 June 7.88 July 36 July 48 23/64 July 51.75 July 14.45 July 7.04 July 7.89 August 36 9/16 August 58 9/64 August 48.59 August 16.91 August 7.34 August 8.18 September 40 1/4 September 61 5/8 September 41.55 September 8.27 September 7.30 September 9.19 October 41 October 62 11/16 October 49.06 October 7.75 October 7.34 November 38 1/2 November 60 1/16 November 44.50 November 8.52 November 7.10 December 38 13/16 December 71 5/8 December 44.61 December 6.96 December 8.19
The closing price on October 20, 2004 was $8.70. ENTERGY CORPORATION (ETR) Entergy Corporation is a public utility holding company which, through its subsidiaries, engages primarily in domestic utility operations, power marketing and trading, global power development and domestic non-utility nuclear operations. Entergy's utility services are primarily provided in Arkansas, Louisiana, Mississippi and Texas. Entergy also owns 50% of Entergy-Koch, through which it engages in two major businesses: energy commodity marketing and trading, which includes power, gas, weather derivatives, emissions and cross-commodities through Entergy-Koch Trading, and gas transportation and storage through Gulf South Pipeline. The trading activities of Entergy-Koch extend to various parts of the United States, as well as to the United Kingdom, Western Europe and Canada.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 29 7/16 January 24 47/50 January 35.42 January 41.18 January 44.45 January 58.48 February 28 1/4 February 20 1/4 February 38.83 February 41.28 February 45.55 February 59.29 March 27 1/2 March 20 3/16 March 38.00 March 43.41 March 48.15 March 59.50 April 31 1/4 April 25 7/16 April 40.50 April 46.40 April 46.61 April 54.60 May 32 7/16 May 29 1/4 May 43.20 May 43.98 May 51.69 May 54.61 June 31 1/4 June 27 3/16 June 38.39 June 42.44 June 52.78 June 56.01 July 30 5/16 July 27 1/8 July 37.50 July 40.53 July 51.51 July 57.50 August 29 13/16 August 30 29/64 August 38.52 August 42.19 August 52.45 August 60.30 September 28 15/16 September 37 17/64 September 35.56 September 41.60 September 54.15 September 60.61 October 29 15/16 October 38 5/16 October 38.85 October 44.09 October 53.90 November 27 9/16 November 41 1/8 November 36.90 November 43.73 November 52.86 December 25 3/4 December 42 5/16 December 39.11 December 45.59 December 57.13
The closing price on October 20, 2004 was $63.12. A-5 EXELON CORPORATION (EXC) Exelon Corporation is a public utility holding company that conducts its business through two major electric utility subsidiaries: Commonwealth Edison Company (ComEd) and PECO Energy Company (PECO). Exelon operates in three business segments: Energy Delivery, which consists of the retail electricity distribution and transmission businesses of ComEd in northern Illinois and PECO in southeastern Pennsylvania as well as the natural gas distribution business of PECO in the Pennsylvania counties surrounding the City of Philadelphia; Generation, which consists of electric generating facilities, energy marketing operations, the retail sales business of Exelon Energy Company and equity interests in Sithe Energies, Inc. and AmerGen Energy Company, LLC; and Enterprises, which consists of competitive retail energy sales, energy and infrastructure services, communications and other investments weighted towards the communications, energy services and retail services industries.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 38 3/16 January 41 3/4 January 60.51 January 49.24 January 50.93 January 33.49 February 35 5/8 February 37 5/16 February 65.37 February 49.28 February 49.15 February 33.57 March 46 1/4 March 36 7/8 March 65.60 March 52.97 March 50.41 March 34.44 April 47 7/16 April 41 11/16 April 69.05 April 54.30 April 53.04 April 33.47 May 48 15/16 May 43 15/16 May 67.82 May 53.49 May 57.30 May 33.30 June 41 7/8 June 40 5/16 June 64.12 June 52.30 June 59.81 June 33.29 July 42 3/8 July 42 11/16 July 56.50 July 49.05 July 28.74 July 34.90 August 40 5/8 August 48 13/64 August 54.60 August 46.82 August 29.45 August 36.85 September 37 1/2 September 60 37/64 September 44.60 September 47.50 September 31.75 September 36.69 October 38 3/16 October 60 1/8 October 42.07 October 50.40 October 31.73 November 32 15/16 November 66 1/4 November 44.61 November 50.19 November 30.91 December 34 3/4 December 70 13/64 December 47.88 December 52.77 December 33.18
The closing price on October 20, 2004 was $38.06. FIRSTENERGY CORPORATION (FE) FirstEnergy Corporation serves as a holding company of its principal electric utility operating subsidiaries: Ohio Edison Company, The Cleveland Electric Illuminating Company, Pennsylvania Power Company, The Toledo Edison Company, American Transmission Systems, Incorporated, Jersey Central Power & Light Company, Metropolitan Edison Company and Pennsylvania Electric Company. FirstEnergy's subsidiaries furnish electric service and provide transmission services and electric energy to municipalities primarily in New Jersey, Pennsylvania and Ohio. In addition to its principal electric utilities, the Company operates other principal subsidiaries, including: FirstEnergy Solutions Corp., Facilities Services Group, LLC, MYR Group Inc., MARBEL Energy Corporation, GPU Capital, Inc. and GPU Power, Inc. FirstEnergy holds other direct subsidiaries, including FirstEnergy Properties, Inc., FirstEnergy Ventures Corp., FirstEnergy Nuclear Operating Company, FirstEnergy Securities Transfer Company, GPU Diversified Holdings, LLC, GPU Telecom Services, Inc., GPU Nuclear, Inc., FirstEnergy Service Company, GPU Service, Inc., and GPU Advanced Resources, Inc. FirstEnergy Corp. also engages in the purchase, sale and interchange of electric energy with other electric companies.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 31 1/16 January 22 3/4 January 27.85 January 37.20 January 31.20 January 37.52 February 29 1/4 February 18 1/2 February 28.17 February 36.60 February 29.50 February 38.63 March 28 March 20 5/8 March 27.92 March 34.58 March 31.50 March 39.08 April 29 11/16 April 25 7/16 April 30.30 April 33.30 April 33.73 April 39.10 May 31 13/16 May 25 1/8 May 30.65 May 34.51 May 36.81 May 39.00 June 31 June 23 3/8 June 32.16 June 33.38 June 38.45 June 37.41 July 28 9/16 July 25 1/2 July 30.34 July 30.75 July 34.49 July 39.10 August 28 9/16 August 24 49/64 August 32.89 August 33.00 August 29.26 August 40.24 September 25 5/16 September 26 61/64 September 35.95 September 29.89 September 31.90 September 41.08 October 26 1/16 October 25 7/8 October 34.46 October 32.45 October 34.39 November 23 5/16 November 29 1/2 November 33.78 November 31.68 November 34.65 December 22 11/16 December 31 9/16 December 34.98 December 32.97 December 35.20
The closing price on October 20, 2004 was $41.05. A-6 FPL GROUP, INC. (FPL) FPL Group, Inc. is a public utility holding company engaged in the generation, transmission, distribution and sale of electric energy throughout most of the east and southwestern coasts of Florida. FPL buys and sells wholesale energy commodities such as natural gas, oil and electric power. FPL is also involved in non-utilities related businesses, such as the sale and marketing of fiber-optic network capacity through one of its subsidiaries, FPL FiberNet, LLC.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 54 7/8 January 42 13/16 January 58.00 January 53.61 January 58.39 January 65.75 February 51 7/16 February 38 5/8 February 65.05 February 53.11 February 56.01 February 65.65 March 53 1/4 March 46 1/16 March 61.30 March 59.55 March 58.93 March 66.85 April 56 3/8 April 45 1/4 April 59.90 April 63.49 April 60.87 April 63.62 May 58 3/16 May 49 11/16 May 58.25 May 62.99 May 66.47 May 63.75 June 54 5/8 June 49 1/2 June 60.21 June 59.99 June 66.85 June 63.95 July 53 15/16 July 48 1/4 July 54.00 July 56.65 July 61.67 July 67.33 August 54 August 53 3/8 August 54.35 August 57.08 August 61.86 August 69.20 September 50 3/8 September 65 49/64 September 53.55 September 53.80 September 63.20 September 68.32 October 50 5/16 October 66 October 53.10 October 58.98 October 63.74 November 43 3/4 November 66 1/4 November 55.40 November 58.80 November 63.55 December 42 13/16 December 71 3/4 December 56.40 December 60.13 December 65.42
The closing price on October 20, 2004 was $67.72. PG&E CORPORATION (PCG) PG&E Corporation is an energy-based holding that conducts its business through two principal subsidiaries: Pacific Gas and Electric Company (the Utility) and PG&E National Energy Group, Inc. (PG&E NEG). The Utility is engaged principally in the business of providing electricity and natural gas distribution and transmission services in northern and central California. PG&E NEG is engaged in power generation, wholesale energy marketing and trading, risk management and natural gas transmission. In July 2003, the Utility and NEGT filed a voluntary petition for relief under the provisions of Chapter 11 of the United States Bankruptcy Code. The following PG&E subsidiaries also filed voluntary petitions for relief under the provisions of Chapter 11: PG&E Energy Trading Holdings Corporation (now NEGT Energy Trading Holdings Corporation), PG&E Energy Trading-Power, L.P. (now NEGT Energy Trading - Power, L.P.), PG&E Energy Trading - Gas Corporation (now NEGT Energy Trading - Gas Corporation) and PG&E ET Investments Corporation (now NEGT ET Investments Corporation) and, separately, USGen New England, Inc., Quantum Ventures and PG&E Energy Services Ventures, Inc. (now Energy Services Ventures, Inc.).
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 31 15/16 January 21 15/16 January 14.25 January 21.50 January 13.80 January 26.85 February 31 1/2 February 20 5/8 February 13.96 February 21.21 February 12.75 February 28.17 March 31 1/16 March 21 March 11.84 March 23.56 March 13.45 March 28.97 April 31 1/16 April 25 15/16 April 8.97 April 23.50 April 14.98 April 27.52 May 33 3/4 May 25 15/16 May 11.40 May 21.50 May 17.00 May 28.50 June 32 7/16 June 24 5/8 June 11.20 June 17.89 June 21.15 June 27.94 July 31 5/8 July 25 7/8 July 14.87 July 13.90 July 21.45 July 28.54 August 30 5/16 August 28 61/64 August 16.40 August 11.35 August 22.17 August 29.19 September 25 7/8 September 24 13/64 September 15.20 September 11.26 September 23.90 September 30.40 October 22 15/16 October 26 15/16 October 18.06 October 10.85 October 24.45 November 22 3/8 November 27 7/16 November 18.30 November 13.81 November 25.12 December 20 1/2 December 20 December 19.24 December 13.90 December 27.77
The closing price on October 20, 2004 was $31.06. A-7 PROGRESS ENERGY, INC. (PGN) Progress Energy, Inc. (formerly CP&L Energy, Inc.) is a public utility holding company engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina, South Carolina and Florida through its wholly owned regulated subsidiaries, Progress Energy Carolinas, Inc. and Progress Energy Florida, Inc.. Progress Energy is also engaged in the transport, distribution and sale of natural gas in portions of North Carolina. Progress Energy is involved in merchant energy generation, coal and synthetic fuel operations and energy marketing and trading. Through other business units, Progress Energy engages in other non-regulated business areas including energy management and related services, rail services and telecommunications.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 41 5/8 January 32 1/4 January 41.20 January 43.70 January 40.41 January 44.78 February 39 7/8 February 29 3/4 February 43.26 February 44.74 February 38.90 February 46.16 March 37 13/16 March 32 7/16 March 43.07 March 50.04 March 39.15 March 47.08 April 40 3/8 April 36 9/16 April 44.24 April 51.89 April 41.78 April 42.77 May 43 3/4 May 34 3/8 May 42.55 May 51.85 May 47.05 May 42.61 June 42 13/16 June 31 15/16 June 44.92 June 52.01 June 43.90 June 44.05 July 41 1/8 July 33 7/16 July 42.77 July 46.75 July 40.74 July 42.14 August 36 3/8 August 37 1/64 August 41.69 August 46.52 August 40.49 August 43.89 September 35 3/8 September 41 45/64 September 42.99 September 40.87 September 44.46 September 41.77 October 34 1/2 October 40 5/16 October 42.17 October 41.72 October 43.10 November 30 1/8 November 43 3/16 November 41.45 November 42.00 November 43.82 December 30 7/16 December 49 3/16 December 45.03 December 43.35 December 45.26
The closing price on October 20, 2004 was $41.33. PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED (PEG) Public Service Enterprise Group Incorporated (PSEG) is an exempt public utility holding company with four direct wholly owned subsidiaries: Public Service Electric and Gas Company (PSE&G), PSEG Power LLC, PSEG Energy Holdings LLC, and PSEG Services Corporation. PSEG's Public Service Electric and Gas Company is an operating public utility company engaged principally in the transmission, distribution and sale of electric energy and gas service in New Jersey. One of PSEG Power LLC's operating subsidiaries, PSEG Nuclear LLC, engages in the production of electricity through nuclear fission. PSEG's other subsidiaries own and operate the electric generation related assets, participate in energy-related businesses and provide management and administrative services to PSEG entities.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 39 9/16 January 34 3/8 January 40.91 January 42.08 January 35.28 January 45.44 February 38 February 29 February 44.81 February 42.17 February 34.63 February 47.14 March 38 3/16 March 29 5/8 March 43.16 March 45.80 March 36.69 March 46.98 April 40 April 35 7/8 April 46.44 April 46.35 April 38.47 April 42.90 May 41 15/16 May 37 1/4 May 51.41 May 45.28 May 42.73 May 42.16 June 40 13/16 June 34 5/8 June 48.90 June 43.30 June 42.25 June 40.03 July 40 5/16 July 33 5/8 July 46.80 July 34.55 July 40.75 July 39.00 August 41 August 36 17/64 August 46.30 August 35.20 August 42.34 August 42.34 September 38 5/8 September 44 45/64 September 42.55 September 30.50 September 42.00 September 42.60 October 39 9/16 October 41 1/2 October 39.36 October 28.65 October 40.87 November 35 November 42 3/4 November 40.55 November 29.94 November 41.02 December 34 13/16 December 48 5/8 December 42.19 December 32.10 December 43.80
The closing price on October 20, 2004 was $41.01. A-8 RELIANT ENERGY INC. (RRI) Reliant Energy, Inc. (formerly Reliant Resources, Inc.) provides electricity and energy services, with a focus on the wholesale and retail segments of the electric power industry in the United States. The Company has two principal business segments: Retail Energy and Wholesale Energy. Its Retail Energy business involves the provision of electricity and related services to retail customers, primarily in Texas, and acquires and manages the electric energy, capacity and ancillary services associated with supplying these customers. Its Wholesale Energy business involves the provision of electric energy, capacity and ancillary services to the United States' wholesale energy markets. During 2003, the Company sold its non-core business operations and assets, including its European energy operations. Reliant began operating a new electric power generation facility in February 2004.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January * January * January * January 14.05 January 4.08 January 7.76 February * February * February * February 10.56 February 4.05 February 7.60 March * March * March * March 16.91 March 3.56 March 8.21 April * April * April * April 15.43 April 5.62 April 8.31 May * May * May 34.40 May 9.45 May 6.70 May 9.91 June * June * June 24.70 June 8.75 June 6.13 June 10.83 July * July * July 23.03 July 4.62 July 4.96 July 9.88 August * August * August 19.68 August 5.00 August 4.62 August 9.96 September * September * September 16.20 September 1.75 September 5.12 September 9.33 October * October * October 15.65 October 1.88 October 4.95 November * November * November 16.27 November 2.35 November 6.56 December * December * December 16.51 December 3.20 December 7.36
The closing price on October 20, 2004 was $9.86. THE SOUTHERN COMPANY (SO) The Southern Company (Southern) is the holding company for Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Savannah Electric, and Southern Power, each of which is an operating public utility company. The Southern Company acquires, develops, builds and operates power production and delivery facilities primarily in the southeastern United States. Southern also provides a range of energy-related services to utilities and industrial companies in countries throughout the world. Its businesses include independent power projects, integrated utilities, a distribution company, and energy trading and marketing businesses. Southern's subsidiaries also market and provide digital wireless communications services to the public and to utilities companies within the southeastern United States.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 26 15/16 January 25 11/16 January 29.18 January 24.65 January 28.17 January 29.80 February 25 1/16 February 22 3/16 February 30.95 February 25.40 February 28.21 February 30.32 March 23 5/16 March 21 3/4 March 35.09 March 26.49 March 28.44 March 30.50 April 27 1/16 April 24 15/16 April 23.39 April 28.35 April 29.09 April 28.76 May 28 3/8 May 25 15/16 May 23.54 May 27.00 May 31.48 May 28.92 June 26 1/2 June 23 5/16 June 23.25 June 27.40 June 31.16 June 29.15 July 26 3/8 July 24 7/16 July 23.50 July 28.78 July 28.44 July 29.28 August 27 1/16 August 29 61/64 August 23.17 August 28.96 August 28.38 August 30.35 September 5 3/4 September 32 29/64 September 23.98 September 28.78 September 29.35 September 29.98 October 26 9/16 October 29 3/8 October 23.90 October 29.70 October 29.80 November 23 3/8 November 31 9/16 November 22.75 November 26.16 November 29.27 December 23 1/2 December 33 1/4 December 25.35 December 28.39 December 30.25
The closing price on October 20, 2004 was $30.62. A-9 TEXAS GENCO HOLDINGS, INC. (TGN) Texas Genco Holdings, Inc., is a wholesale electric power generating company operating in the United States. The Company owns 60 generating units at 11 electric power generation facilities located in Texas and sells electric generation capacity, energy and ancillary services within the Electric Reliability Council of Texas, Inc. (ERCOT). Texas Genco is an indirect majority owned subsidiary of CenterPoint Energy.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January * January * January * January * January 15.06 January 35.00 February * February * February * February * February 16.40 February 36.84 March * March * March * March * March 17.39 March 35.75 April * April * April * April * April 17.40 April 35.38 May * May * May * May * May 20.85 May 40.00 June * June * June * June * June 23.25 June 45.09 July * July * July * July * July 24.00 July 46.39 August * August * August * August * August 24.50 August 46.30 September * September * September * September * September 23.80 September 46.65 October * October * October * October * October 29.90 November * November * November * November * November 29.95 December * December * December * December * December 32.50
The closing price on October 20, 2004 was $46.58. TEXAS UTILITIES COMPANY (TXU) TXU Corp. is a holding company that through its subsidiaries engages in power production, and wholesales sales of electricity and natural gas, and the transmission and distribution of electricity and natural gas in the United States and Australia. The Company's principal United States operations are conducted through its subsidiaries TXU US Holdings Company and TXU Gas Company. TXU US Holdings' operations are conducted through TXU Energy Company LLC and Oncor Electric Delivery Company. TXU Corp.'s principal international operations are conducted through TXU Australia Group Pty. Ltd. In 2004, TXU Corp. entered into an agreement to sell its telecommunications subsidiary, which provided local, long distance, dial-up Internet, digital subscriber line and network and data services.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 43 15/16 January 35 3/8 January 37.73 January 48.72 January 15.06 January 24.00 February 42 7/16 February 32 5/8 February 41.24 February 50.87 February 16.40 February 28.13 March 42 March 29 11/16 March 41.32 March 54.51 March 17.39 March 28.66 April 39 7/8 April 33 11/16 April 43.96 April 54.42 April 19.92 April 34.14 May 45 1/4 May 35 3/4 May 49.34 May 51.33 May 20.24 May 37.37 June 41 7/16 June 29 1/2 June 48.19 June 51.55 June 22.45 June 40.51 July 42 1/2 July 31 1/4 July 46.50 July 43.13 July 20.17 July 39.66 August 40 7/16 August 34 61/64 August 47.48 August 48.36 August 22.00 August 41.63 September 37 5/16 September 39 41/64 September 46.32 September 41.71 September 23.56 September 47.92 October 38 3/4 October 37 1/16 October 45.84 October 14.35 October 22.82 November 35 13/16 November 39 15/16 November 45.10 November 15.42 November 22.14 December 35 9/16 December 44 5/16 December 45.15 December 18.68 December 23.72
The closing price on October 20, 2004 was $50.20. A-10 THE WILLIAMS COMPANIES, INC. (WMB) The Williams Companies, Inc. is an energy company that primarily finds, produces, gathers, processes and transports natural gas. The Company's operations serve the northwestern United States, California, the Rocky Mountain region, the Gulf Coast and Eastern Seaboard markets. The Williams Companies' primary business segments include Gas Pipeline, Exploration and Production, Midstream Gas and Liquids and Energy Marketing and Trading. In April 2004, the Company completed the sale of its Alaska business interests, including a 220,000-barrel-per-day refinery at North Pole, two petroleum terminals in Anchorage and Fairbanks and crude oil and refined products inventories, a 3.0845% interest in the Trans Alaska Pipeline System and 26 convenience stores and sold the assets within the Petroleum Services business segment.
Closing Closing Closing Closing Closing Closing 1999 Price 2000 Price 2001 Price 2002 Price 2003 Price 2004 Price -------- -------- -------- -------- -------- ------- -------- ------- -------- ------- -------- ------- January 33 January 38 1/16 January 39.13 January 17.68 January 3.24 January 10.14 February 37 February 41 13/16 February 41.70 February 15.45 February 3.81 February 9.47 March 39 1/2 March 43 15/16 March 42.85 March 23.56 March 4.58 March 9.57 April 47 1/4 April 37 1/2 April 42.17 April 19.10 April 6.95 April 10.30 May 51 13/16 May 41 9/16 May 39.40 May 14.20 May 7.91 May 11.91 June 42 9/16 June 41 11/16 June 32.95 June 5.99 June 7.90 June 11.90 July 42 1/16 July 41 15/16 July 33.50 July 2.95 July 6.35 July 12.15 August 41 1/4 August 46 5/64 August 32.55 August 3.22 August 9.13 August 11.89 September 37 5/8 September 42 1/4 September 27.30 September 2.66 September 9.42 September 12.10 October 37 1/2 October 41 13/16 October 28.87 October 1.88 October 10.20 November 33 3/4 November 35 3/8 November 26.72 November 2.69 November 9.38 December 30 9/16 December 39 15/16 December 25.52 December 2.70 December 9.82
The closing price on October 20, 2004 was $12.89. A-11 ================================================================================ [HOLDRS(SM) UTILITIES LOGO] 1,000,000,000 Depositary Receipts Utilities HOLDRS(SM) Trust ----------------------------- P R O S P E C T U S ----------------------------- October 25, 2004 ================================================================================ 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. II-1 (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (5) For purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to Item 14 of this registration statement, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant hereby certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Post-Effective Amendment No. 5 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, on October 25, 2004. 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. 5 to the Registration Statement has been signed by the following persons in the capacities indicated on October 25, 2004. Signature Title --------- ----- * ---------------------------------- Chief Executive Officer, James P. Gorman Chairman of the Board * Director ---------------------------------- Do Woo Kim * Director ---------------------------------- Carlos M. Morales * Director ---------------------------------- Candace E. Browning * Chief Financial Officer ---------------------------------- John J. Fosina * Controller ---------------------------------- Joseph F. Regan *By: /s/ Mitchell M. Cox Attorney-in-Fact ------------------------------ Mitchell M. Cox II-3 INDEX TO EXHIBITS Exhibits -------- *4.1 Standard Terms for Depositary Trust Agreements between Merrill Lynch, Pierce, Fenner & Smith Incorporated and The Bank of New York, as Trustee dated as of September 2, 1999, and included as exhibits thereto, form of Depositary Trust Agreement and form of HOLDRS, filed on May 8, 2000 as an exhibit to the registration statement filed on Form S-1 for Utilities HOLDRS. *4.2 Amendment No. 2 to the Standard Terms for Depositary Trust Agreements, dated as of November 22, 2000, filed on November 28, 2000 as an exhibit to post-effective Amendment No. 1 to the registration statement on Form S-1 for Utilities HOLDRS. *5.1 Opinion of Shearman & Sterling LLP regarding the validity of the Utilities HOLDRS Receipts, filed on May 8, 2000 as an exhibit to the registration statement filed on Form S-1 for Utilities HOLDRS. *8.1 Opinion of Shearman & Sterling LLP, as special U.S. tax counsel, regarding the material federal income tax consequences, filed on May 8, 2000 as an exhibit to the registration statement filed on Form S-1 for Utilities HOLDRS. *24.1 Power of Attorney (included in Part II of Registration Statement), filed on May 8, 2000 as an exhibit to the registration statement filed on Form S-1 for Utilities HOLDRS. *24.2 Power of Attorney of Dominic A. Carone, filed on November 28, 2000 as an exhibit to post-effective Amendment No. 1 to the registration statement on Form S-1 for Utilities HOLDRS. *24.3 Power of Attorney of John J. Fosina, E. Stanley O'Neal, George A. Schieren, Thomas H. Patrick and Dominic A. Carone. *24.4 Power of Attorney of James P. Gorman, Arshad R. Zakaria and Carlos M. Morales. 24.5 Power of Attorney of Candace E. Browning, Gregory J. Fleming, Do Woo Kim and John F. Regan. --------------------- * Previously filed. II-4