0000947871-11-000265.txt : 20110315 0000947871-11-000265.hdr.sgml : 20110315 20110315171912 ACCESSION NUMBER: 0000947871-11-000265 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20110315 DATE AS OF CHANGE: 20110315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH, PIERCE, FENNER & SMITH INC. CENTRAL INDEX KEY: 0000728612 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 333-96069 FILM NUMBER: 11689444 BUSINESS ADDRESS: STREET 1: 4 WORLD FINANCIAL CENTER STREET 2: NORTH TOWER CITY: NEW YORK STATE: NY ZIP: 10080 BUSINESS PHONE: 980-383-5633 MAIL ADDRESS: STREET 1: 4 WORLD FINANCIAL CENTER STREET 2: NORTH TOWER CITY: NEW YORK STATE: NY ZIP: 10080 FORMER COMPANY: FORMER CONFORMED NAME: MERRILL LYNCH PIERCE FENNER & SMITH INC DATE OF NAME CHANGE: 19920929 POS AM 1 ss113514_posam-intinfra.htm POST-EFFECTIVE AMENDMENT NO. 11 TO FORM S-1


As filed with the Securities and Exchange Commission on March 15, 2011
Registration No. 333-96069


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
____________
 
POST-EFFECTIVE AMENDMENT NO. 11
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)
____________
 
Internet Infrastructure HOLDRSSM Trust
[Issuer with respect to the receipts]
 
Delaware
(State or other jurisdiction
of incorporation or organization)
6211
(Primary Standard Industrial
Classification Code Number)
13-5674085
(I.R.S. Employer
Identification Number)

____________
 
One Bryant Park
New York, New York  10036
(212) 449-1000
(Address, including zip code, and telephone number, including area code, of
registrant’s principal executive offices)
____________
 
Copies to:
 
Merrill Lynch, Pierce, Fenner & Smith Incorporated
One Bryant Park
New York, New York  10036
(212) 449-1000
Attn:  Corporate Secretary
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Abigail Arms, Esq.
Shearman & Sterling LLP
801 Pennsylvania Avenue, NW, Suite 900
Washington, D.C. 20004
(202) 508-8000

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.  o
 
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.  o
 
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.  o

 


 
 
 
 
 
 
PROSPECTUS
 
 
 
 
 
1,000,000,000 Depositary Receipts
Internet Infrastructure HOLDRSSM Trust
 
The Internet Infrastructure HOLDRSSM Trust issues Depositary Receipts called Internet Infrastructure HOLDRSSM representing your undivided beneficial ownership in the common stock of a group of specified companies that, among other things, provide software and related services, which allow Internet companies to better manage their Web sites and improve online communications.  The Bank of New York Mellon is the trustee.  You only may acquire, hold or transfer Internet Infrastructure HOLDRSSM in a round-lot amount of 100 Internet Infrastructure HOLDRSSM or round-lot multiples.  Internet Infrastructure HOLDRSSM are separate from the underlying deposited common stock that are represented by the Internet Infrastructure HOLDRSSM.  For a list of the names and the number of shares of the companies that make up an Internet Infrastructure HOLDRSM, see “Highlights of Internet Infrastructure HOLDRS—The Internet Infrastructure HOLDRS” in this prospectus.  The Internet Infrastructure HOLDRSSM Trust will issue Internet Infrastructure HOLDRSSM on a continuous basis.
 
Investing in Internet Infrastructure HOLDRSSM involves significant risks.  See “Risk Factors” starting on page 4.
 
Internet Infrastructure HOLDRSSM are neither interests in nor obligations of Merrill Lynch, Pierce, Fenner & Smith Incorporated or any of its affiliates.  Internet Infrastructure HOLDRSSM are not interests in The Bank of New York Mellon, 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 Internet Infrastructure HOLDRSSM are listed on the NYSE Arca under the symbol “IIH.”  On March 11, 2011, the last reported sale price of the Internet Infrastructure HOLDRSSM on the NYSE Arca was $3.62.
______________
 
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 March 15, 2011.
 
“HOLDRS” and “HOLding Company Depositary ReceiptS” are service marks of Bank of America Corporation.
 


 
 

 
 
 
Page
 
 
 
______________
 
This prospectus contains information you should consider when making your investment decision.  We have not authorized any person to provide you with any information or to make any representations not contained in this prospectus.  We do not take any responsibility for, and can provide no assurances as to, the reliability of any information that others may provide you.  We are not making an offer to sell Internet Infrastructure HOLDRS in any jurisdiction where the offer or sale is not permitted.  For information on where you may find more information about the issuers of the underlying securities, see “Where You Can Find More Information.”
 
The Internet Infrastructure HOLDRS are not registered for public sale outside of the United States.  Non-U.S. receipt holders should refer to “U.S. 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 Internet Infrastructure HOLDRS or of the underlying securities through an investment in the Internet Infrastructure HOLDRS.
 
 
 
 
The Internet Infrastructure HOLding Company Depositary ReceiptS or HOLDRS Trust was formed under the depositary trust agreement, dated as of February 18, 2000, among The Bank of New York Mellon, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Internet Infrastructure HOLDRS.  The depositary trust agreement was amended on November 22, 2000.  The trust is not a registered investment company under the Investment Company Act of 1940.
 
The number of shares of each company’s common stock currently held by the trust with respect to each round-lot of Internet Infrastructure HOLDRS is specified under “Highlights of Internet Infrastructure HOLDRS—The Internet Infrastructure HOLDRS.”  This group of common stock, and the securities of any company that may be added to the Internet Infrastructure HOLDRS, are collectively referred to in this prospectus as the common stock, the securities or the underlying securities.  The companies included in the Internet Infrastructure HOLDRS may change as a result of reconstitution events, distributions of securities by underlying issuers or other events.  See “Description of the Depositary Trust Agreement—Reconstitution events” for an explanation of these events.  The Internet Infrastructure HOLDRS are separate from the deposited underlying common stock that are represented by the Internet Infrastructure HOLDRS.  On March 11, 2011, there were 3,408,800 Internet Infrastructure HOLDRS outstanding.
 
 
 
 
 
An investment in Internet Infrastructure HOLDRS involves risks similar to investing directly in each of the underlying securities outside of the Internet Infrastructure HOLDRS, including the risks associated with a concentrated investment in Internet infrastructure companies.
 
General Risk Factors
 
 
·
Loss of investment.  Because the value of Internet Infrastructure HOLDRS directly relates to the value of the underlying securities, you may lose all or a substantial portion of your investment in the Internet Infrastructure HOLDRS if the underlying securities decline in value.
 
 
·
Discount trading price.  Internet Infrastructure HOLDRS may trade at a discount to the aggregate value of the underlying securities.
 
 
·
Ownership of only fractional shares in the underlying securities.  As a result of distributions of securities by companies included in the Internet Infrastructure HOLDRS or other corporate events, such as mergers, an Internet Infrastructure 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 fractional shares of such underlying securities included in the Internet Infrastructure HOLDRS 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 Internet Infrastructure 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.
 
 
·
Not necessarily representative of the Internet infrastructure segment of the Internet industry.  At the time of the initial offering, on February 24, 2000, the companies included in the Internet Infrastructure HOLDRS were generally considered to be involved in various aspects of the Internet infrastructure segment of the Internet industry; however, since the time of the initial offering, the companies included in the Internet Infrastructure HOLDRS may not be involved in the Internet infrastructure segment of the Internet industry.  In this case, the Internet Infrastructure HOLDRS may not consist of securities issued only by companies involved in the Internet infrastructure segment of the Internet industry.  In addition, the market price of the underlying securities and the Internet Infrastructure HOLDRS may not necessarily follow the price movements of the entire Internet infrastructure segment generally.  If the underlying securities decline in value, your investment in the Internet Infrastructure HOLDRS will decline in value, even if common stock prices of companies in the Internet infrastructure segment of the Internet industry generally increase in value.
 
 
·
Not necessarily comprised of solely Internet infrastructure companies.  As a result of distributions of securities by companies included in the Internet Infrastructure HOLDRS or other corporate events, such as mergers, securities of companies that are not currently included in the Internet Infrastructure HOLDRS and that are not involved in the Internet infrastructure segment of the Internet industry may be included in the Internet Infrastructure HOLDRS.  The securities of a new company will only be distributed from the Internet Infrastructure HOLDRS if the securities have a different Standard & Poor’s Corporation (“Standard & Poor’s”) sector classification than any of the underlying issuers included in Internet Infrastructure 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.  As of January 2, 2002, Standard & Poor’s Corporation sector classifications are based upon the Standard & Poor’s Global Industry Classification Standard (“GICS”) sectors.  As there are only 10 broadly defined GICS sector classifications, the use of GICS sectors to determine whether a new company will be included in, or whether the securities of a new company are distributed from, the Internet Infrastructure HOLDRS provides no assurance that each new
 
 
 
 
company included in the Internet Infrastructure HOLDRS will be involved in the Internet infrastructure segment of the Internet industry.  Currently, the underlying securities included in the Internet Infrastructure HOLDRS are represented in the Information Technology GICS sector.  As each Standard & Poor’s GICS sector is defined very broadly, the securities of a new company could have the same GICS sector classification as a company currently included in the Internet Infrastructure HOLDRS yet not be involved in the Internet infrastructure segment of the Internet industry.  In addition, the GICS sector classifications of securities included in the Internet Infrastructure HOLDRS may change over time if the companies that issued these securities change their focus of operations resulting in a change to a GICS sector classification or if Standard & Poor’s alters the criteria it uses to determine GICS sectors, or both.  Therefore, additional GICS sectors may be represented in the Internet Infrastructure HOLDRS, which may also result in the inclusion in the Internet Infrastructure HOLDRS of the securities of a new company that is not involved in the Internet infrastructure segment of the Internet industry.
 
 
·
No investigation of underlying securities.  The underlying securities initially included in the Internet Infrastructure HOLDRS were selected by Merrill Lynch, Pierce, Fenner & Smith Incorporated based on the market capitalization of the issuers and the market liquidity of common stock in the Internet infrastructure segment of the Internet industry, without regard for the value, price performance, volatility or investment merit of the underlying securities.  The Internet Infrastructure HOLDRS Trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and each of their respective affiliates, have not performed, and will not in the future perform,  any investigation or review of the selected companies, including the public filings by the companies.  Investors and market participants should not conclude that the inclusion of a company is any form of investment recommendation by the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or their respective affiliates.
 
 
·
Loss of diversification.  As a result of industry developments, reorganizations or market fluctuations affecting issuers of the underlying securities, Internet Infrastructure HOLDRS may not necessarily be a diversified investment in the Internet infrastructure segment of the Internet industry.  In addition, reconstitution events, distributions of securities by an underlying issuer or other events, which may result in distributions of securities from, or the inclusion of additional securities in, the Internet Infrastructure HOLDRS may also reduce diversification.  As a result, Internet Infrastructure 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.
 
 
·
Conflicting investment choices.  In order to sell one or more of the underlying securities individually, participate in any form of stock repurchase program by an issuer of an underlying security or participate in a tender offer relating to one or more of the underlying securities, you will be required to cancel your Internet Infrastructure HOLDRS and receive delivery of each of the underlying securities, including those underlying securities that you may not want to sell or are not subject to a tender offer or repurchase offer.  The cancellation of your Internet Infrastructure HOLDRS will allow you to sell the individual underlying securities or to deliver the individual underlying securities in a tender offer or any form of stock repurchase program.  The cancellation of Internet Infrastructure HOLDRS will involve payment of a cancellation fee to the trustee.
 
 
·
Trading halts.  Trading in Internet Infrastructure HOLDRS on the NYSE Arca may be halted if (i) the Internet Infrastructure HOLDRS has fewer than the required number of record and/or beneficial holders for 30 or more consecutive trading days; (ii) the number of Internet Infrastructure HOLDRS issued and outstanding falls below levels prescribed by the NYSE Arca; (iii) the market value of all Internet Infrastructure HOLDRS issued and outstanding falls below levels prescribed by the NYSE Arca; or (iv) any other event shall occur or conditions exists which, in the opinion of the NYSE Arca, makes further dealings on the NYSE Arca inadvisable.  If trading is halted in Internet Infrastructure HOLDRS, you will not be able to trade Internet Infrastructure HOLDRS and you will only be able to trade the underlying securities if you cancel your Internet Infrastructure HOLDRS and receive each of the underlying securities.
 
 
 
 
 
·
Delisting from the NYSE Arca.  The NYSE Arca may consider delisting the Internet Infrastructure HOLDRS if (i) the Internet Infrastructure HOLDRS has fewer than the required number of record and/or beneficial holders for 30 or more consecutive trading days; (ii) the number of Internet Infrastructure HOLDRS issued and outstanding falls below levels prescribed by the NYSE Arca; (iii) the market value of all Internet Infrastructure HOLDRS issued and outstanding falls below levels prescribed by the NYSE Arca; or (iv) any other event shall occur or conditions exists which, in the opinion of the NYSE Arca, makes further listing of the Internet Infrastructure HOLDRS on the NYSE Arca inadvisable.  If the Internet Infrastructure HOLDRS are delisted by the NYSE Arca, a termination event will result unless the Internet Infrastructure HOLDRS are listed for trading on another U.S. national securities exchange within five business days from the date the Internet Infrastructure HOLDRS are delisted.
 
 
·
Possible conflicts of interest.  Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, selected the underlying securities that were originally included in the Internet Infrastructure HOLDRS and may face possible conflicts of interest as Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates, may engage in investment banking or may provide other services for issuers of the underlying securities in connection with its business.
 
 
·
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.  You may, however, receive such cash or other distributions later than you would if you owned the underlying securities outside of the Internet Infrastructure 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 the Internet Infrastructure Segment of the Internet Industry
 
 
·
The stock prices of companies involved in the Internet infrastructure segment of the Internet industry have been and will likely continue to be volatile, which will directly affect the price volatility of the Internet Infrastructure HOLDRS, and you could lose all or a substantial part of your investment.  The trading prices of the stocks of Internet infrastructure companies included in the Internet Infrastructure HOLDRS have been volatile.  These stock prices could be subject to wide fluctuations in response to a variety of factors, including the following:
 
 
§
general market fluctuations;
 
 
§
actual or anticipated variations in companies’ quarterly operating results;
 
 
§
announcements of technological innovations or new services offered by competitors of the companies included in the Internet Infrastructure HOLDRS;
 
 
§
changes in financial estimates by securities analysts;
 
 
§
conditions or trends in the Internet and online commerce industries;
 
 
§
conditions or trends in online securities trading;
 
 
§
changes in the market valuations of Internet infrastructure companies;
 
 
§
developments in Internet regulations;
 
 
§
legal or regulatory developments affecting companies included in the Internet Infrastructure HOLDRS or in the Internet infrastructure segment of the Internet industry;
 
 
§
announcements by Internet infrastructure companies or their competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
 
 
§
unscheduled system downtime;
 
 
 
 
 
§
additions or departures of key personnel;
 
 
§
sales of Internet infrastructure companies’ common stock or other securities in the open market; and
 
 
§
difficulty in obtaining additional financing.
 
In addition, the trading prices of Internet infrastructure stocks in general have experienced price and volume fluctuations.  These fluctuations often have been and may in the future be unrelated or disproportionate to the operating performance of these companies.  The valuations of many Internet infrastructure 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 Internet infrastructure companies, generally, could depress the stock prices of an Internet infrastructure company regardless of Internet infrastructure companies’ results.  The sharp decline in the market price of many Internet-related companies since early 2000 is an example of this effect.  Other broad market and industry factors may decrease the stock price of Internet infrastructure 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 Internet infrastructure stocks.  Current economic conditions have adversely affected employment and other significant elements of the economy that drive productivity and the financial strength of businesses.  These economic conditions could have a material adverse effect on the financial condition and results of operations of companies whose common stock are included in Internet Infrastructure HOLDRS.  The results of operations and financial condition of companies whose common stock are included in Internet Infrastructure HOLDRS could be adversely impacted if those events and other related events cause further disruptions in the economy.
 
As a result of fluctuations in the trading prices of the companies included in the Internet Infrastructure HOLDRS, the trading price of an Internet Infrastructure HOLDR has fluctuated significantly.  The initial offering price of an Internet Infrastructure HOLDR, on February 24, 2000, was $96.67 and during 2010, the price of an Internet Infrastructure HOLDR reached a high of $4.17 and a low of $2.36.
 
 
·
Internet infrastructure companies must keep pace with rapid technological change to remain competitive.  The Internet market is characterized by rapidly changing technology, evolving industry standards and practices, frequent new product and service introductions and enhancements and changing customer demands.  Internet infrastructure companies’ success therefore will depend on their ability to adapt to rapidly changing technologies, to adapt their services to evolving industry standards and to continually improve the performance, features and reliability of their products.  Failure to adapt to such changes would harm their business.  In addition, the widespread adoption of new Internet, networking or telecommunications technologies or other technological changes could require substantial expenditures to modify or adapt their services or infrastructure.
 
 
·
New laws and regulations with respect to the Internet could impede its commercial development and adversely affect the business of many Internet infrastructure companies.  Due to the popularity and widespread use of the Internet and other online services, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, pricing, content, copyrights, distribution and characteristics and quality of products and services that may adversely affect the business of Internet infrastructure companies.  Furthermore, the growth and development of the market for online interaction and commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies conducting business online.  The adoption of any additional laws or regulations may impede the growth of the Internet or other online services
 
 
 
which could have a material adverse effect on the business, results of operations and financial condition of Internet infrastructure companies.
 
 
·
If Internet infrastructure companies fail to increase market awareness of their brands they will lose revenue opportunities and their sales will suffer.  Failure of many Internet infrastructure companies to promote their respective brand names or the incurrence of significant expenses promoting and maintaining brand names could have a material adverse effect on the business, results of operations and financial condition of many Internet infrastructure companies.  There may be a time-limited opportunity to achieve and maintain a significant market share.  Therefore, market awareness of the brand names of many of these companies is critical to achieving widespread acceptance of their products and services.  There can be no assurance that Internet infrastructure companies will be successful in increasing market awareness of their brands.
 
 
·
The ability of many Internet infrastructure companies to offer their products and services depends on their ability to manage rapid growth, which if inefficiently managed, could adversely affect their revenues.  Many Internet infrastructure companies may rapidly expand their operations.  Success of the marketing strategies of many of these companies will place extraordinary demands on their network infrastructure and technical support.  Expansion has placed and will continue to place a significant strain on the management, financial controls, operations systems, personnel and other resources of many Internet infrastructure companies.  There can be no assurance that these companies will complete the necessary improvements to their systems, procedures and controls necessary to support their future operations in a timely manner or that management will be able to hire, train, retain and manage required personnel to manage such rapid growth.
 
 
·
Inability to adequately protect proprietary rights may harm the competitive positions of many Internet infrastructure companies.  Many Internet infrastructure companies rely on a combination of copyrights, trademarks, service marks and trade secret laws and contractual restrictions to establish and protect proprietary rights in their products and services.  There can be no assurance that these companies will be able to protect their intellectual property if they are unable to enforce their rights or if they do not detect unauthorized use of their intellectual property.  Furthermore, any steps taken to protect intellectual property may be inadequate, time consuming and expensive.  In addition, Internet infrastructure companies may be subject to claims that their products and services infringe the intellectual property rights of others.  Any claim, whether meritorious or not, could be time consuming, result in costly litigation, delay product or service introduction or require Internet infrastructure companies to enter into royalty or licensing agreements.  Legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in Internet-related industries are uncertain and still evolving, and the future viability or value of any of the intellectual property rights of Internet infrastructure companies is uncertain.
 
 
·
Many Internet infrastructure companies are developing strategies to generate additional revenues for their products and services internationally and if these strategies fail it could result in slower revenue growth and losses.  Many Internet infrastructure companies believe that they must expand their international sales activities to be successful as usage of the Internet increases globally.  The expansion to international markets will require significant management attention and financial resources to develop and expand international sales and marketing activities; however, many Internet infrastructure companies cannot be certain that investments in establishing facilities in other countries will produce anticipated revenues as they have limited experience developing localized versions of their products and services and marketing products and services internationally.
 
 
·
System failures, interruptions or shutdowns may cause loss of customers.  The success of many Internet infrastructure companies depends upon the efficient and uninterrupted operation of their computer and communications systems and the Internet.  If outages or delays on the Internet increase, overall Internet usage could grow more slowly or decline.  Due to capacity limits on technology, transaction processing systems and network hardware and software, some Internet infrastructure companies will be required to expand and upgrade their systems and technology.  It
     
    
may be difficult for these companies to project the increased usage and upgrade systems in a timely manner.  Any prolonged failure, interruption, or period of decreased performance could seriously damage the reputation of these Internet infrastructure companies, result in a loss of customers and negatively affect results of operations.
    
 
·
Many Internet infrastructure companies are dependent on their ability to continue to retain and attract highly skilled technical and managerial personnel to develop and operate their business.  The success of many Internet infrastructure companies is highly dependent on the experience, abilities and continued services of key executive officers and key technical personnel.  If these companies lose the services of any of these key officers or key technical personnel, their future success could be undermined.  Competition for personnel has been and may continue to be intense.  There is no certainty that any of these Internet infrastructure companies will be able to continue to attract and retain qualified personnel.
 
 
·
Many Internet infrastructure companies have a history of incurring losses which may make it difficult for these companies to fund their future operations.  Many Internet infrastructure companies have incurred significant losses since their inception and they may continue to incur losses for the foreseeable future.  Many of these Internet infrastructure companies will also continue to incur losses as additional costs are incurred to develop new technology, products and services, expand marketing and sales operations in existing and new markets and develop administrative facilities.  If Internet infrastructure companies do not achieve and sustain profitability, their ability to respond effectively to market conditions, to make capital expenditures and to take advantage of business opportunities could be adversely affected.
 
 
·
Companies whose securities are included in the Internet Infrastructure 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 the Internet Infrastructure HOLDRS.  Companies whose securities are included in the Internet Infrastructure 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 Internet Infrastructure HOLDRS may have to forego strategic acquisitions or investments, reduce or defer their development activities, delay their introduction of new products and services or terminate operations completely.  Any of these actions may reduce the market price of stocks in the Internet infrastructure segment of the Internet industry.
 
 
 
 
 
This discussion highlights information regarding Internet Infrastructure HOLDRS.  We present certain information more fully in the rest of this prospectus.  You should read the entire prospectus carefully before you purchase Internet Infrastructure HOLDRS.
 
Issuer
Internet Infrastructure HOLDRS Trust.
   
The trust
The Internet Infrastructure HOLDRS Trust was formed under the depositary trust agreement, dated as of February 18, 2000, among The Bank of New York Mellon, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Internet Infrastructure HOLDRS.  The depositary trust agreement 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 Mellon, 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 Internet Infrastructure HOLDRS representing the underlying securities issued by the trust.  The trustee holds the underlying securities on behalf of the holders of Internet Infrastructure HOLDRS.
   
Purpose of Internet Infrastructure HOLDRS
Internet Infrastructure HOLDRS were designed to achieve the following:
   
 
Diversification.  Internet Infrastructure HOLDRS were initially designed to allow you to diversify your investments in the Internet infrastructure segment of the Internet industry through a single, exchange-listed instrument representing your undivided beneficial ownership of the underlying securities.  See “Risk Factors—General Risk Factors.”
   
 
Flexibility.  The beneficial owners of Internet Infrastructure HOLDRS have undivided beneficial ownership interests in each of the underlying securities represented by the Internet Infrastructure HOLDRS, and can cancel their Internet Infrastructure HOLDRS to receive each of the underlying securities represented by the Internet Infrastructure HOLDRS.
   
 
Transaction costs.  The expenses associated with buying and selling Internet Infrastructure 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 Internet infrastructure segment of the Internet industry.  Except when a reconstitution event, distribution of securities by an underlying issuer or other event occurs, the underlying securities will not change and the securities of a new company will not be added to the securities underlying the Internet Infrastructure HOLDRS.  Reconstitution events are described in this prospectus under the heading “Description
 
 
 
   
   of the Depositary Trust Agreement—Distributions” and “—Reconstitution events.”
   
 
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 Internet Infrastructure HOLDRS
The trust has issued, and may continue to issue, Internet Infrastructure HOLDRS that represent an undivided beneficial ownership interest in the shares of U.S.-traded common stock that are held by the trust on your behalf.  The Internet Infrastructure HOLDRS themselves are separate from the underlying securities that are represented by the Internet Infrastructure HOLDRS.
   
 
The following table provides:
 
 
·
the names of the issuers of the underlying securities currently represented by an Internet Infrastructure HOLDRS;
     
 
·
the stock ticker symbols;
     
 
·
the share amounts currently represented by a round-lot of 100 Internet Infrastructure HOLDRS; and
     
 
·
the primary U.S. market on which the common stock of the selected companies are traded.
 

Name of Company
 
Ticker
 
Share Amounts
 
Primary Trading Market
Akamai Technologies Inc.
 
AKAM
  3.0000  
NASDAQ GS
Infospace, Inc.
 
INSP
  0.8000  
NASDAQ GS
Internap Network Services Corporation
 
INAP
  0.5000  
NASDAQ GS
NaviSite, Inc.
 
NAVI
  0.1333  
NASDAQ CM
Openwave Systems Inc.
 
OPWV
  1.0737  
NASDAQ GS
Open Text Corporation
 
OTEX
  0.0868  
NASDAQ GS
RealNetworks, Inc.
 
RNWK
  6.0000  
NASDAQ GS
VeriSign, Inc.
 
VRSN
  6.1500  
NASDAQ GS


 
The companies whose common stock were initially included in the Internet Infrastructure HOLDRS at the time Internet Infrastructure HOLDRS were originally issued on February 24, 2000 were generally considered to be among the largest and most liquid companies involved in the Internet infrastructure segment of the Internet industry, as measured by market capitalization and trading volume on February 7, 2000.  The market capitalization of a company was determined by multiplying the market price of its common stock by the number of outstanding shares of its common stock.
   
  The trust will only issue and cancel, and you may only obtain, hold, trade or surrender, Internet Infrastructure HOLDRS in a round-lot of 100 Internet Infrastructure HOLDRS and round-lot multiples.  The
 
 
 
   
  trust will only issue Internet Infrastructure HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Internet Infrastructure HOLDRS.  In the event that a fractional share comes to be represented by a round-lot of Internet Infrastructure HOLDRS, the trust may require a minimum of more than one round-lot of 100 Internet Infrastructure HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Internet Infrastructure HOLDRS.
   
 
The number of outstanding Internet Infrastructure 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 Internet Infrastructure HOLDRS on a continuous basis when an investor deposits the required number of shares of common stock with the trustee.
   
Purchases
You may acquire Internet Infrastructure HOLDRS in two ways:
 
 
·
through an in-kind deposit of the required number of shares of common stock of the underlying issuers with the trustee; or
     
 
·
through a cash purchase in the secondary trading market.
 
Issuance and cancellation fees
If you wish to create Internet Infrastructure HOLDRS by delivering to the trust the requisite shares of common stock represented by a round-lot of 100 Internet Infrastructure HOLDRS, The Bank of New York Mellon, as trustee, will charge you an issuance fee of up to $10.00 for each round-lot of 100 Internet Infrastructure HOLDRS.  If you wish to cancel your Internet Infrastructure HOLDRS and withdraw your underlying securities, The Bank of New York Mellon, as trustee, will charge you a cancellation fee of up to $10.00 for each round-lot of 100 Internet Infrastructure HOLDRS.
   
Commissions
If you choose to deposit underlying securities in order to receive Internet Infrastructure 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 that is described above.
   
Custody fees
The Bank of New York Mellon, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Internet Infrastructure HOLDRS, to be deducted from any cash dividend 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 Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure HOLDRS themselves will not have voting rights.
   
Rights relating to the underlying securities
Internet Infrastructure HOLDRS represents your beneficial ownership of the underlying securities.  Owners of Internet Infrastructure HOLDRS have the same rights and privileges as if they beneficially owned the underlying securities in “street name” outside of Internet Infrastructure HOLDRS.  These include the right to instruct the trustee to vote the underlying securities or attend shareholder meetings yourself, the right to receive any dividends and other distributions on the underlying securities that are declared and paid to the trustee by an issuer of an underlying security, the right to pledge Internet Infrastructure HOLDRS and the right to surrender Internet Infrastructure HOLDRS to receive the underlying securities.  See “Description of the Depositary Trust Agreement.”  Internet Infrastructure HOLDRS does not change your beneficial ownership in the underlying securities under United States federal securities laws, including sections 13(d) and 16(a) of the Securities Exchange Act of 1934, as amended (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 Internet Infrastructure HOLDRS.  However, due to the nature of Internet Infrastructure HOLDRS, you will not be able to participate in any dividend reinvestment program of an issuer of underlying securities unless you cancel your Internet Infrastructure HOLDRS (and pay the applicable fees) and receive all of the underlying securities.
   
 
A holder of Internet Infrastructure HOLDRS is not a registered owner of the underlying securities.  In order to become a registered owner, a holder of Internet Infrastructure HOLDRS would need to surrender their Internet Infrastructure 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 Internet Infrastructure HOLDRS in the same manner as if you beneficially owned your underlying securities outside of Internet Infrastructure 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 the distributed securities have a Standard & Poor’s GICS sector classification that is different from the GICS sector classifications represented by the companies included in the Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure HOLDRS (and pay the applicable fees and expenses) and receive all of your underlying securities in exchange for your Internet Infrastructure HOLDRS, including those underlying securities not subject to a tender offer or repurchase offer.  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 Internet Infrastructure HOLDRS or other corporate events, such as mergers, an Internet Infrastructure HOLDR may represent an interest in a fractional share of an underlying security.  You are entitled to receive distributions proportionate to your fractional shares.
   
 
In addition, you are entitled to receive proxy materials and other shareholder communications and you are entitled to exercise voting rights proportionate to your fractional shares.  The trustee will aggregate the votes of all of the share fractions represented by Internet Infrastructure 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 Internet Infrastructure HOLDRS are outstanding and each round-lot of 100 Internet Infrastructure HOLDRS represents 1.75 shares of an underlying security, there will be 175,001.75 votes of the underlying security represented by Internet Infrastructure HOLDRS.  If holders of 50,000 round-lots of 100 Internet Infrastructure HOLDRS vote their underlying securities “yes” and holders of 50,001 round-lots of 100 Internet Infrastructure 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 Internet Infrastructure HOLDRS to you in the following four circumstances:
 
 
 
 
A.
If an issuer of underlying securities no longer has a class of securities registered under section 12 of the Exchange Act, then its securities will no longer be an underlying security and the trustee will distribute the shares of that company to the owners of the Internet Infrastructure HOLDRS.
     
  B. 
If the Securities and Exchange Commission (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 Internet Infrastructure 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 Internet Infrastructure HOLDRS; provided that any securities received as consideration will be distributed only if the distributed securities have a different Standard & Poor’s GICS sector classification than any of the underlying securities represented in the Internet Infrastructure 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.  In any other case, the additional securities received as consideration will be deposited into the trust.
     
  D. If an issuer’s underlying securities are delisted from trading on a U.S. national securities exchange and are not listed for trading on another U.S. national securities exchange within five business days from the date the securities are delisted.
 
 
To the extent a distribution of underlying securities from the Internet Infrastructure 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 Internet Infrastructure 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 have a Standard & Poor’s GICS sector classification that is different from the GICS sector classification of any other security then included in the Internet Infrastructure HOLDRS or if the securities received are not listed for trading on a U.S. national securities exchange.
   
 
It is anticipated that, as a result of the broadly defined Standard & Poor’s GICS sectors, most distributions or exchanges of securities will result in the inclusion of new securities in the Internet Infrastructure 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 will be included in the Internet Infrastructure HOLDRS
   
 
 
 
  or distributed from the Internet Infrastructure HOLDRS to you.
   
Standard & Poor’s sector classifications
Standard & Poor’s Corporation is an independent source of market information that, among other things, maintains the Global Industry Classification Standard, which classifies the securities of public companies into various sector classifications based upon GICS sectors, which are derived from its own criteria.  The GICS classification standards were 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 is given only one GICS sector classification.  The securities included in the Internet Infrastructure HOLDRS are currently represented in the Information Technology GICS sector.  The Standard & Poor’s GICS sector classifications of the securities included in the Internet Infrastructure 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 Internet Infrastructure HOLDRS are delisted from the NYSE Arca and are not listed for trading on another U.S. national securities exchange within five business days from the date the Internet Infrastructure 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 Internet Infrastructure 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 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 Internet Infrastructure HOLDRS surrendered, along with any taxes or other governmental charges, if any.
 
U.S. federal income tax consequences
The U.S. federal income tax laws will treat a U.S. receipt holder of Internet Infrastructure HOLDRS as directly owning the underlying securities.  The Internet Infrastructure HOLDRS themselves will not result in any U.S. federal income tax consequences separate from the tax consequences associated with ownership of the underlying securities.  See “U.S. Federal Income Tax Consequences.”
   
Listing
The Internet Infrastructure HOLDRS are listed on the NYSE Arca under the symbol “IIH.”
   
Trading
Investors are only able to acquire, hold, transfer and surrender a round-lot of 100 Internet Infrastructure HOLDRS.  Bid and ask prices, however, are quoted per single Internet Infrastructure HOLDR.
 
 
 
   
Clearance and settlement
Internet Infrastructure HOLDRS have been issued only in book-entry form.  Internet Infrastructure 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 Internet Infrastructure HOLDRS.”

 
 
 
 
General.  This discussion highlights information about the Internet Infrastructure HOLDRS Trust.  You should read this information, information about the depositary trust agreement, the depositary trust agreement and the amendment to the depositary trust agreement, in addition to other information included in this prospectus and the publicly available information about the issuers of the underlying securities, before you purchase Internet Infrastructure HOLDRS.  The material terms of the depositary trust agreement are described in this prospectus under the heading “Description of the Depositary Trust Agreement.”
 
The Internet Infrastructure HOLDRS Trust.  The trust was formed pursuant to the depositary trust agreement, dated as of February 18, 2000.  The depositary trust agreement was amended on November 22, 2000.  The Bank of New York Mellon is the trustee.  The Internet Infrastructure HOLDRS Trust is not a registered investment company under the Investment Company Act of 1940.
 
The Internet Infrastructure HOLDRS Trust is intended to hold deposited shares for the benefit of owners of Internet Infrastructure 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.
 
 
The trust has issued Internet Infrastructure HOLDRS under the depositary trust agreement described in this prospectus under the heading “Description of the Depositary Trust Agreement.”  The trust may issue additional Internet Infrastructure HOLDRS on a continuous basis when an investor deposits the requisite underlying securities with the trustee.
 
You may only acquire, hold, trade and surrender Internet Infrastructure HOLDRS in a round-lot of 100 Internet Infrastructure HOLDRS and round-lot multiples.  The trust will only issue Internet Infrastructure HOLDRS upon the deposit of the whole shares of underlying securities that are represented by a round-lot of 100 Internet Infrastructure 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 Internet Infrastructure HOLDRS, the trust may require a minimum of more than one round-lot of 100 Internet Infrastructure HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Internet Infrastructure HOLDRS.
 
Internet Infrastructure HOLDRS will represent your individual and undivided beneficial ownership interest in the specified underlying securities.  The companies selected as part of this receipt program are listed above in the section entitled “Highlights of Internet Infrastructure HOLDRS—The Internet Infrastructure HOLDRS.”
 
Beneficial owners of Internet Infrastructure 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 underlying common stock, to attend shareholder’s meetings 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 pledge Internet Infrastructure HOLDRS or cancel Internet Infrastructure HOLDRS to receive the underlying securities.  See “Description of the Depositary Trust Agreement.”  Internet Infrastructure HOLDRS are not intended to change your beneficial ownership in the underlying securities under U.S. federal securities laws, including sections 13(d) and 16(a) of the Exchange Act.
 
The trust will not publish or otherwise calculate the aggregate value of the underlying securities represented by a receipt.  Internet Infrastructure 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 Internet Infrastructure HOLDRS wishes to realize the dollar value of the underlying securities, that owner will have to cancel the Internet Infrastructure HOLDRS.  Such cancellation will require payment of fees and expenses as described in “Description of the Depositary Trust Agreement—Withdrawal of underlying securities.”
 
Internet Infrastructure 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.  Internet Infrastructure
 
 
 
HOLDRS are available only in book-entry form.  Owners of Internet Infrastructure HOLDRS may hold their Internet Infrastructure HOLDRS through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC.
 
 
 
 
 
Selection criteria.  The underlying securities initially included in the Internet Infrastructure HOLDRS were the shares of common stock of a group of specified companies that, at the time of initial selection, were involved in various segments of the Internet infrastructure segment of the Internet industry and whose common stock was registered under section 12 of the Exchange Act.  The issuers of the underlying securities were, at the time of initial selection, among the largest capitalized and most liquid companies involved in the Internet infrastructure segment of the Internet industry as measured by market capitalization and trading volume.  As a result of a reconstitution event, a distribution of securities by an underlying issuer or other event, the companies whose common stock is included in the Internet Infrastructure HOLDRS may no longer meet the initial selection criteria and may no longer consist exclusively of securities issued by companies involved in the Internet infrastructure segment.
 
Underlying securities.  For a list of the underlying securities represented by Internet Infrastructure HOLDRS, please refer to “Highlights of Internet Infrastructure HOLDRS—The Internet Infrastructure HOLDRS.”  The underlying securities may change as a result of a reconstitution event, a distribution of securities by an underlying issuer or other event.
 
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 Internet Infrastructure HOLDRS, you should consider publicly available financial and other information about the issuers of the underlying securities.  See “Risk Factors” and “Where You Can Find More Information.”  Investors and market participants should not conclude that the inclusion of a company in the list is any form of investment recommendation of that company by the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated or any of their respective affiliates.
 
General background and historical information.  For a brief description of the business of each of the issuers of the underlying securities and monthly pricing information showing the historical performance of each underlying issuer’s securities, see “Annex A.”
 
The following table and graph set forth the composite performance of all of the underlying securities currently represented by a single Internet Infrastructure HOLDR, measured at the close of the business day as of the end of each month from November 30, 1999 to February 28, 2011.  The performance table and graph data are adjusted for any splits that may have occurred over the measurement period.  Past performance of the underlying securities are not necessarily indicative of future values.
 
1999
 
Closing
Price
 
2000
 
Closing
Price
 
2001
 
Closing
Price
 
2002
 
Closing
Price
 
2003
 
Closing
Price
 
November 30
    28.67  
January 31
    39.32  
January 31
    9.63  
January 31
    3.08  
January 31
    1.01  
December 31
    41.78  
February 29
    52.14  
February 28
    5.96  
February 28
    2.39  
February 28
    1.02  
         
March 31
    35.23  
March 30
    4.19  
March 28
    2.78  
March 31
    1.07  
         
April 28
    28.59  
April 30
    6.03  
April 30
    1.53  
April 30
    1.45  
         
May 31
    22.18  
May 31
    6.66  
May 31
    1.58  
May 30
    1.89  
         
June 30
    30.00  
June 29
    6.82  
June 28
    1.07  
June 30
    1.74  
         
July 31
    24.49  
July 31
    5.59  
July 31
    0.84  
July 31
    1.75  
         
August 31
    28.57  
August 31
    4.16  
August 30
    0.89  
August 29
    1.91  
         
September 29
    26.44  
September 28
    3.75  
September 30
    0.67  
September 30
    1.85  
         
October 31
    18.27  
October 31
    3.52  
October 31
    0.91  
October 31
    2.17  
         
November 30
    10.82  
November 30
    3.77  
November 29
    1.27  
November 28
    2.36  
         
December 29
    9.46  
December 31
    3.74  
December 31
    1.00  
December 31
    2.24  



2004
 
Closing
Price
 
2005
 
Closing
Price
 
2006
 
Closing
Price
 
2007
 
Closing
Price
 
2008
 
Closing
Price
 
January 30
    2.50  
January 31
    2.99  
January 31
    3.15  
January 31
    4.28  
January 31
    3.57  
February 27
    2.55  
February 28
    2.96  
February 28
    3.25  
February 28
    4.07  
February 29
    3.77  
March 31
    2.45  
March 31
    3.06  
March 31
    3.55  
March 30
    4.00  
March 31
    3.46  
April 30
    2.24  
April 29
    2.84  
April 28
    3.63  
April 30
    3.94  
April 30
    3.88  
May 28
    2.51  
May 31
    3.24  
May 31
    3.37  
May 31
    4.17  
May 30
    4.28  
June 30
    2.78  
June 30
    2.99  
June 30
    3.60  
June 29
    4.35  
June 30
    3.95  
July 30
    2.42  
July 29
    2.89  
July 31
    3.28  
July 31
    3.71  
July 31
    3.30  
August 31
    2.27  
August 31
    2.58  
August 31
    3.50  
August 31
    3.68  
August 29
    3.26  
September 30
    2.51  
September 30
    2.64  
September 29
    3.79  
September 28
    3.73  
September 30
    2.62  
October 29
    3.01  
October 31
    2.96  
October 31
    3.78  
October 31
    4.11  
October 31
    2.13  
November 30
    3.40  
November 30
    3.00  
November 30
    4.21  
November 30
    4.35  
November 28
    2.06  
December 31
    3.53  
December 30
    2.93  
December 29
    4.20  
December 31
    4.03  
December 31
    1.97  
      
2009
 
Closing
Price
 
2010
 
Closing
Price
 
2011
 
Closing
Price
                     
January 30
    1.89  
January 29
    2.61  
January 31
    3.95                      
February 27
    1.98  
February 26
    2.82  
February 28
    3.74                      
March 31
    1.99  
March 31
    3.06                                
April 30
    2.20  
April 30
    3.31                                
May 29
    2.43  
May 28
    3.32                                
June 30
    2.07  
June 30
    3.23                                
July 31
    2.11  
July 30
    3.27                                
August 31
    2.24  
August 31
    3.51                                
September 30
    2.46  
September 30
    3.85                                
October 30
    2.47  
October 29
    4.07                                
November 30
    2.49  
November 30
    4.08                                
December 31
    2.67  
December 31
    3.88                                



 
 

 
      
 
General.  The depositary trust agreement, dated as of February 18, 2000, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York Mellon, as trustee, other depositors and the owners of the Internet Infrastructure HOLDRS, provides that Internet Infrastructure 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 reconstitution events, as described below.
 
The trustee.  The Bank of New York Mellon serves as trustee for Internet Infrastructure HOLDRS.  On July 1, 2007, the Bank of New York Company, Inc. and Mellon Financial Corporation merged into The Bank of New York Mellon Corporation or The Bank of New York Mellon.  The Bank of New York Mellon, a New York state-chartered banking organization, is a provider of financial services for institutions, corporations and high net-worth individuals, providing asset and wealth management, asset servicing, issuer services, clearing and execution services and treasury services.
 
Issuance, transfer and surrender of Internet Infrastructure HOLDRS.  You may create and cancel Internet Infrastructure HOLDRS only in round-lots of 100 Internet Infrastructure HOLDRS.  You may create Internet Infrastructure HOLDRS by delivering to the trustee the requisite underlying securities.  The trust will only issue Internet Infrastructure HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Internet Infrastructure HOLDRS.  In the event that a fractional share comes to be represented by a round-lot of Internet Infrastructure HOLDRS, the trust may require a minimum of more than one round-lot of 100 Internet Infrastructure HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Internet Infrastructure HOLDRS.  Similarly, you must surrender Internet Infrastructure HOLDRS in integral multiples of 100 Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated, owning Internet Infrastructure 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 Internet Infrastructure HOLDRS unless such securities are not listed for trading on a U.S. national securities exchange or such securities have a different Standard & Poor’s GICS sector classification than any of the underlying securities in the Internet Infrastructure 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, as amended (the “Securities Act”).  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 Internet Infrastructure 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 Internet Infrastructure 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
 
 
 
Internet Infrastructure 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.
 
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 Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure HOLDRS.
 
Further issuances of Internet Infrastructure HOLDRS.  The depositary trust agreement provides for further issuances of Internet Infrastructure HOLDRS on a continuous basis without your consent.
 
Reconstitution events.  The depositary trust agreement provides for the automatic distribution of underlying securities from Internet Infrastructure HOLDRS to you in the following four circumstances:
 
 
A.
If an issuer of underlying securities no longer has a class of securities registered under section 12 of the Exchange Act, then its securities will no longer be an underlying security and the trustee will distribute the shares of that company to the owners of the Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure HOLDRS; provided that any securities received as consideration will be distributed only if the distributed securities have a different Standard & Poor’s GICS sector classification than any of the underlying securities represented in the Internet Infrastructure 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.  In any other case, the additional securities received as consideration will be deposited into the trust.
 
 
D.
If an issuer’s underlying securities are delisted from trading on a U.S. national securities exchange and are not listed for trading on another U.S. national securities exchange within five business days from the date such securities are delisted.
 
To the extent a distribution of underlying securities from the Internet Infrastructure 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.
 
As provided in the depositary trust agreement, securities of a new company will be added to the Internet Infrastructure HOLDRS, as a result of a distribution of securities by an underlying issuer, where a corporate event occurs, such as a merger, or 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 the Internet Infrastructure HOLDRS or if the securities received are not listed for trading on a U.S. national securities exchange.
 
 
 
It is anticipated that, as a result of the broadly defined Standard & Poor’s GICS sectors, most distributions or exchanges of securities will result in the inclusion of new securities in the Internet Infrastructure 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 will be included in the Internet Infrastructure HOLDRS or distributed from the Internet Infrastructure HOLDRS to you.
 
Standard & Poor’s sector classifications.  Standard & Poor’s Corporation is an independent source of market information that, among other things, maintains the Global Industry Classification Standard, which classifies the securities of public companies into various sector classifications based upon GICS sectors, which are derived from its own criteria.  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 Internet Infrastructure HOLDRS are currently represented in the Information Technology GICS sector.  The Standard & Poor’s GICS sector classifications of the securities included in the Internet Infrastructure 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 Internet Infrastructure HOLDRS will surrender their Internet Infrastructure 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 Internet Infrastructure HOLDRS are delisted from the NYSE Arca and are not listed for trading on another U.S. national securities exchange within five business days from the date the Internet Infrastructure HOLDRS are delisted.  Finally, the trust will terminate if 75% of the owners of outstanding Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure HOLDRS will not become effective until 30 days after notice of the amendment is given to the owners of Internet Infrastructure HOLDRS.
 
Issuance and cancellation fees.  If you wish to create Internet Infrastructure HOLDRS by delivering to the trust the requisite underlying securities represented by a round-lot of 100 Internet Infrastructure HOLDRS, the trustee will charge you an issuance fee of up to $10.00 for each round-lot of 100 Internet Infrastructure HOLDRS.  If you wish to cancel your Internet Infrastructure 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 Internet Infrastructure 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 Internet Infrastructure 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 Mellon, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Internet Infrastructure HOLDRS to be deducted from any cash 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 Internet Infrastructure 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 Mellon, ADR Division, 101 Barclay Street, New York, New York 10286.
 
Governing law.  The depositary trust agreement and the Internet Infrastructure HOLDRS are governed by the laws of the State of New York.  The trustee will provide the depositary trust agreement to any owner of the underlying securities free of charge upon written request.
 
Duties and immunities of the trustee.  The trustee assumes no responsibility or liability for, and makes no representations as to, the validity or sufficiency, or as to the accuracy of the recitals, if any, set forth in the Internet Infrastructure 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 will be liable for its own negligence or misconduct except for good faith errors in judgment so long as the trustee was not negligent in ascertaining the relevant facts.
 
 
 
 
 
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 Internet Infrastructure HOLDRS for receipt holders.  A “U.S. receipt holder” is a receipt holder that is:
 
 
·
an individual who is a citizen or resident of the United States;
 
 
·
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, any state thereof or the District of Columbia;
 
 
·
an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
 
 
·
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 “non-U.S. receipt holder” is a receipt holder that is an individual, a corporation, an estate or a trust that is neither a U.S. receipt holder nor a partnership (or entity treated as a partnership) for U.S. federal income tax purposes.
 
If a partnership (or an entity treated as a partnership for U.S. federal income tax purposes) holds Internet Infrastructure 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 Internet Infrastructure 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, U.S. receipt holders that directly or indirectly own 10% or more of the voting stock of an issuer of the underlying securities, dealers in securities, U.S. receipt holders whose functional currency is not the U.S. dollar, investors who acquire or hold any Internet Infrastructure HOLDRS as part of a conversion transaction, straddle, hedging or other integrated transaction, certain former citizens and residents of the United States and persons subject to U.S. estate, gift or alternative minimum tax.  In addition, this discussion generally is limited to investors who will hold the Internet Infrastructure 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 Internet Infrastructure HOLDRS held by a partnership or other flow through entity for U.S. federal income tax purposes.  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 Internet Infrastructure HOLDRS
 
A U.S. receipt holder purchasing and owning Internet Infrastructure HOLDRS will be treated, for U.S. federal income tax purposes, as directly owning a proportionate share of the underlying securities represented by Internet Infrastructure HOLDRS.  Consequently, if there is a taxable cash distribution on an underlying security, a U.S. receipt 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 U.S. receipt holder receives the cash distribution from the trustee.
 
 
 
Qualified dividend income received in respect of Internet Infrastructure HOLDRS by U.S. receipt holders who are individuals, trusts and estates will be eligible for U.S. federal income taxation at preferential rates, which are currently scheduled to expire for taxable years beginning after December 31, 2012.  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 U.S. receipt holder has diminished its risk of loss in respect of such security by, for example, entering into a hedging transaction.  Special rules apply to a U.S. receipt holder who leverages its investment in Internet Infrastructure HOLDRS.  U.S. receipt holders that are corporations may be eligible for a dividends-received deduction in respect of dividends received from domestic corporations.
 
A U.S. receipt holder will determine its initial tax basis in each of the underlying securities by allocating the purchase price for the Internet Infrastructure HOLDRS among the underlying securities based on their relative fair market values at the time of purchase.  Similarly, when a U.S. receipt holder sells Internet Infrastructure HOLDRS, 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 U.S. receipt 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 Internet Infrastructure HOLDRS for cash in the secondary market, a U.S. receipt holder’s aggregate tax basis in each of the underlying securities will be equal to the purchase price of the Internet Infrastructure HOLDRS.  Similarly, with respect to sales of Internet Infrastructure HOLDRS for cash in the secondary market, the amount realized with respect to a sale of Internet Infrastructure 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 Internet Infrastructure 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 U.S. 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 U.S. receipt holder’s holding period with respect to the distributed securities will include the period that the U.S. receipt 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 U.S. receipt holder includes this fee in its tax basis in the underlying securities.  A U.S. receipt 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 Internet Infrastructure HOLDRS will reduce the amount realized with respect to the underlying securities.
 
A U.S. receipt 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 U.S. receipt holder’s investment in the underlying securities and may be deductible.  If a U.S. receipt 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 generally will not be eligible for the dividends-received deduction provided to corporations.
 
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 the preferential rates for dividends mentioned above.  A qualified foreign corporation includes:
 
 
 
 
 
·
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;
 
 
·
a foreign corporation if the stock to which the dividend is paid is readily tradable on an established market in the United States; and
 
 
·
a corporation that is incorporated in a possession of the United States;
 
but will not include a passive foreign investment company (a “PFIC”).
 
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 of the dividend (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 income tax withheld on dividends may be deducted from taxable income (provided the U.S. receipt holder does not elect to claim a credit for any foreign income taxes paid or accrued during that taxable year) or credited against a U.S. receipt holder’s U.S. federal income tax liability.  Dividends distributed by a foreign issuer generally will constitute “passive category 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.  Accordingly, if any foreign income taxes are withheld upon the sale of an underlying security of a foreign issuer, the availability of foreign tax credits with respect to such taxes may be limited unless the U.S. receipt holder has other foreign-source income.  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, U.S. receipt holders of Internet Infrastructure HOLDRS may be able to use these arrangements to apply for a refund of withheld taxes.  In some cases, however, the U.S. receipt holders of Internet Infrastructure HOLDRS may have to apply independently to a foreign tax authority for a refund of withheld taxes.
 
Furthermore, special U.S. federal income tax rules apply to U.S. persons owning shares of a PFIC.  The initial depositor and the trustee do not undertake to review, periodically or otherwise, or make inquiries regarding the PFIC status of the underlying issuers or to notify the U.S. receipt holders of such status, and no assurances can be made that the applicable tax law or other relevant circumstances will not change in a manner that affects the PFIC determination.  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:
 
 
·
at least 75% of its gross income is “passive income;” or
 
 
·
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, among other things, 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 Internet Infrastructure HOLDRS or of the underlying securities or upon the receipt of “excess distributions.”  To avoid the interest charge provisions described in the preceding sentence, a U.S. receipt holder may be able to make one of certain elections (to the extent available under specific rules and, if applicable, the underlying issuer provides certain requisite information)
 
 
 
including an election to be taxed currently on its pro rata portion of the corporation’s income.  If such an election were made, a U.S. receipt holder would be required to include its pro rata share of the corporation’s income whether or not the income was distributed in the form of dividends or otherwise.
 
U.S. receipt holders also generally would be required to file Internal Revenue Service (“IRS”) Form 8621 in any year in which at least one of the underlying issuers is classified as a PFIC.
 
U.S. receipt holders should also be aware that recently enacted legislation may broaden the current IRS Form 8621 filing requirements or impose an additional annual filing requirement for U.S. persons owning shares of a PFIC.  The legislation does not describe what information would be required to be included in either situation, but grants the Secretary of the Treasury Department power to make this determination.  U.S. receipt holders should consult their independent tax advisors regarding the application of the PFIC rules to their purchase, ownership and disposition of the Internet Infrastructure HOLDRS, including the availability and advisability of making any elections thereunder and the application of the recently enacted legislation to their particular situations.

 
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 a 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 non-U.S. receipt holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the non-U.S. receipt holder, then those dividends will be exempt from withholding tax, provided the non-U.S. receipt holder complies with applicable certification 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 non-U.S. receipt holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the non-U.S. receipt 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, where a tax treaty applies, dividends attributable to a U.S. permanent establishment generally will be subject to U.S. federal income taxation on a net income basis at the same graduated rates applicable to U.S. persons.  In addition to this graduated tax, effectively connected dividends or, where a tax treaty applies, dividends attributable to a U.S. 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 corporate non-U.S. receipt holder whose dividends are effectively connected or attributable to a U.S. permanent establishment may 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 IRS.
 
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 Internet Infrastructure HOLDRS or of the underlying securities unless:
 
 
·
in the case of any gain realized by an individual non-U.S. receipt holder, the non-U.S. receipt 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;
 
 
·
that gain is effectively connected with a U.S. trade or business conducted by the non-U.S. receipt holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the non-U.S. receipt holder; or
 
 
 
 
·
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 five percent of the common stock of such issuer.  It is expected that the underlying securities are currently “regularly traded on an established securities market” although no assurances can be made that the securities will continue to be so traded.
 
A non-U.S. receipt holder described in the first bullet point above will be subject to U.S. federal income tax with respect to such gain at a rate of 30% (or lower applicable treaty rate), which gain may be offset by certain losses.  A non-U.S. receipt holder described in the second or third bullet points above will be subject to U.S. federal income tax with respect to such gain on a net income basis at the applicable graduated individual or corporate rates (and, in the case of a corporate non-U.S. receipt holder, may also be subject to a 30% branch profits tax, subject to reduction by an applicable income tax treaty).
 
Backup withholding and information reporting
 
Information returns will be filed with the IRS in connection with dividend payments made with respect to the underlying securities, or the proceeds of the sale or other disposition of the Internet Infrastructure HOLDRS (or the underlying securities).  If you are a U.S. receipt holder, you will be subject to U.S. backup withholding tax at the applicable rate on these payments unless you are an exempt holder or 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 to the IRS even if such payments are not otherwise subject to the information reporting requirements.
 
The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is furnished to the IRS on a timely basis.
 
In addition, U.S. receipt holders should be aware that recently enacted legislation imposes new reporting requirements with respect to the holding of certain foreign financial assets, including stock of foreign issuers which is not held in an account maintained by certain financial institutions, if the aggregate value of all of such assets exceeds U.S. $50,000.  Similarly, non-U.S. receipt holders should be aware of recent legislation that, beginning on January 1, 2013, would impose a 30% withholding tax on certain payments (which could include dividends on and gross proceeds from the sale or other disposition of shares of stock of a U.S. issuer) made to a non-U.S. entity that fails to disclose the identity of its direct or indirect “substantial United States owners’’ or to certify that it has no such owners.  Various exceptions are provided under the legislation and additional exceptions may be provided by subsequent guidance.  Receipt holders should consult their independent tax advisors regarding the potential application and impact of these new requirements to their purchase, ownership and disposition of the Internet Infrastructure HOLDRS based upon their particular situations.

The preceding discussion does not address all aspects of U.S. federal income taxation that may be relevant in light of a receipt holder’s or an issuer’s particular facts and circumstances.  We recommend that investors consult their own tax advisors.
 

 
    
 
Any plan fiduciary which proposes to have a plan acquire Internet Infrastructure HOLDRS should consult with its counsel with respect to the potential applicability of the prohibited transaction provisions of Section 406 of the Employee Retirement Income Security Act of 1974, as amended, and Section 4975 of the 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 Internet Infrastructure 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.
 
 
In accordance with the depositary trust agreement, the trust issued Internet Infrastructure HOLDRS to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce, Fenner & Smith Incorporated has deposited the underlying securities to receive Internet Infrastructure HOLDRS.  The trust delivered the initial distribution of Internet Infrastructure HOLDRS against deposit of the underlying securities in New York, New York on approximately January 17, 2001.
 
Investors who purchase Internet Infrastucture HOLDRS through a fee-based brokerage account will pay fees charged by the brokerage account.  We recommend that investors review the terms of their brokerage accounts for details on applicable charges.
 
Merrill Lynch, Pierce, Fenner & Smith Incorporated has from time to time provided investment banking and other financial services to some of the issuers of the underlying securities and expects in the future to provide these services, for which they have received and will receive customary fees and commissions.  Merrill Lynch, Pierce, Fenner & Smith Incorporated also may have served as counterparty in other transactions with 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 Internet Infrastucture 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 Internet Infrastucture 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, including the validity of the Internet Infrastucture HOLDRS, were passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor and the underwriter in connection with the initial offering of Internet Infrastucture 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 Internet Infrastucture HOLDRS.
 
 
Merrill Lynch, Pierce, Fenner & Smith Incorporated has filed a registration statement on Form S-1 with the SEC covering the Internet Infrastucture HOLDRS.  While this prospectus is a part of the registration statement, it does not contain all the exhibits filed as part of the registration statement.  You should review 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 at 100 F Street, N.E.
 
 
Washington, D.C. 20549.  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 Exchange Act.
 
Since the securities of the issuers of the underlying securities are registered under the Exchange Act, 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates are not affiliated with the issuers of the underlying securities, and the issuers of the underlying securities have no obligations with respect to Internet Infrastucture HOLDRS.  This prospectus relates only to Internet Infrastucture 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 Internet Infrastucture 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 Internet Infrastucture HOLDRS have been publicly disclosed.
 

 
ANNEX A
 
This annex forms an integral part of the prospectus.  The following information regarding the underlying securities was derived from publicly available information released by third-party sources.  None of this information was prepared by us or our affiliates or on our or our affiliates’ behalf and none of Merrill, Lynch, Pierce, Fenner & Smith Incorporated, the Bank of New York Mellon or any of their respective affiliates assumes any responsibility for the accuracy or completeness of such information.
 
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 trading market, of each of the underlying securities in each month during 2006, 2007, 2008, 2009 and 2010, through February 28, 2011.  The historical prices of the underlying securities should not be taken as an indication of future performance.
 
AKAMAI TECHNOLOGIES INC. (AKAM)
 
Akamai Technologies, Inc. provides services for accelerating and improving the delivery of content and applications over the Internet.  The company’s Application Performance solutions improve the performance of dynamic applications used by enterprises to connect with their employees, suppliers, and customers.  Its Application Performance solutions include Web Application Accelerator, which is used by enterprise customers to run various applications; and IP Application Accelerator that is designed to address core Internet weaknesses to optimize the performance and real-time sensitivity associated with IP-enabled applications delivered over Internet-related protocols.  The company’s Digital Asset Solutions are designed to enable enterprises to execute their large file management and distribution strategies.  Its solutions include Akamai Media Delivery solution that delivers media content on behalf of its customers; Electronic Software Delivery solution, which handles the distribution of software for its customers; and Akamai Stream OS, a Web-based suite of configurable tools that enables publishing of media to the Web.  The company’s Dynamic Site solutions accelerate business-to-consumer Web sites that integrate collaborative content and applications into their online architecture.  Its also offers other solutions, such as EdgeControl tools that provide reporting and management capabilities; network data feeds and Website analytics, which provide customers with real time data about the performance of their content and applications over the Internet; and performance management services that help customers better understand their Web operations with tools that measure various aspects of an application’s performance.
 
2006
 
Closing Price
 
2007
 
Closing Price
 
2008
 
Closing Price
 
2009
 
Closing Price
 
2010
 
Closing Price
 
2011
 
Closing Price
 
January
    21.88  
January
    56.18  
January
    30.20  
January
    13.48  
January
    24.70  
January
    48.32  
February
    26.50  
February
    51.57  
February
    35.16  
February
    18.09  
February
    26.30  
February
    37.53  
March
    32.89  
March
    49.92  
March
    28.16  
March
    19.40  
March
    31.42            
April
    33.69  
April
    44.08  
April
    35.77  
April
    22.02  
April
    38.83            
May
    31.29  
May
    44.21  
May
    39.05  
May
    22.27  
May
    39.72            
June
    36.19  
June
    48.64  
June
    34.79  
June
    19.18  
June
    40.57            
July
    39.63  
July
    33.96  
July
    23.34  
July
    16.44  
July
    38.36            
August
    39.20  
August
    32.22  
August
    22.90  
August
    17.64  
August
    46.07            
September
    49.99  
September
    28.73  
September
    17.44  
September
    19.68  
September
    50.18            
October
    46.86  
October
    39.19  
October
    14.38  
October
    22.00  
October
    51.67            
November
    48.87  
November
    38.06  
November
    12.27  
November
    24.00  
November
    52.19            
December
    53.12  
December
    34.60  
December
    15.09  
December
    25.34  
December
    47.05            

 
 
INFOSPACE, INC. (INSP)
 
InfoSpace, Inc. develops search tools and technologies that assist consumers with finding content and information on the Internet.  It offers search services that enable Internet users to locate and view content, information, merchants, individuals, and products online.  The company provides search services through its Web sites as well as through the Web sites of distribution partners.
 
2006
 
Closing Price
 
2007
 
Closing Price
 
2008
 
Closing Price
 
2009
 
Closing Price
 
2010
 
Closing Price
 
2011
 
Closing Price
 
January
    23.61  
January
    23.24  
January
    9.51  
January
    8.01  
January
    9.27  
January
    8.18  
February
    24.11  
February
    22.80  
February
    10.19  
February
    5.29  
February
    10.08  
February
    8.06  
March
    27.95  
March
    25.67  
March
    11.57  
March
    5.20  
March
    11.05            
April
    25.52  
April
    25.66  
April
    12.06  
April
    6.63  
April
    10.47            
May
    22.67  
May
    24.48  
May
    9.13  
May
    7.00  
May
    8.23            
June
    22.67  
June
    23.21  
June
    8.33  
June
    6.63  
June
    7.52            
July
    22.06  
July
    20.82  
July
    9.44  
July
    7.32  
July
    7.83            
August
    22.23  
August
    14.01  
August
    11.70  
August
    8.10  
August
    6.99            
September
    18.44  
September
    17.56  
September
    10.85  
September
    7.72  
September
    8.66            
October
    20.21  
October
    19.33  
October
    8.57  
October
    8.57  
October
    8.44            
November
    19.61  
November
    17.81  
November
    7.81  
November
    8.18  
November
    7.72            
December
    20.51  
December
    18.80  
December
    7.55  
December
    8.57  
December
    8.30            

INTERNAP NETWORK SERVICES CORPORATION (INAP)
 
Internap Network Services Corporation delivers Internet solutions that enable companies to migrate business-critical applications to the Internet through a suite of network optimization and delivery products and services.  The company’s IP Services segment offers managed intelligent routing services that provide connectivity and identify the path for customers’ traffic, as well as provides flow control platform, a premise-based routing hardware product.  This segment also provides content delivery network (CDN) services, which enables customers to stream and distribute video, audio, and software to audiences through data centers, and to monetize their digital media assets via subscription and advertising-based business models, and capacity-on-demand services, which handle events and unanticipated traffic spikes.  Its Data Center Services segment offers physical space for hosting customers’ network and other equipment; and associated services, such as redundant power and network connectivity, environmental controls, and security.  It offers MediaConsole content management tool that provides a system featuring media asset management, digital rights management, and support and detailed reporting tools enabling customers using one application to manage and control access to their digital assets and view network conditions.
 
2006
 
Closing Price
 
2007
 
Closing Price
 
2008
 
Closing Price
 
2009
 
Closing Price
 
2010
 
Closing Price
 
2011
 
Closing Price
 
January
    5.10  
January
    18.22  
January
    8.82  
January
    2.69  
January
    4.45  
January
    7.29  
February
    5.30  
February
    18.82  
February
    7.00  
February
    3.05  
February
    5.03  
February
    6.80  
March
    9.40  
March
    15.75  
March
    4.96  
March
    2.69  
March
    5.60            
April
    13.10  
April
    15.36  
April
    4.81  
April
    2.78  
April
    5.79            
May
    11.60  
May
    14.81  
May
    5.27  
May
    2.81  
May
    5.12            
June
    10.50  
June
    14.42  
June
    4.68  
June
    3.49  
June
    4.17            
July
    12.15  
July
    14.74  
July
    4.60  
July
    3.04  
July
    4.68            
August
    11.95  
August
    14.03  
August
    3.09  
August
    3.02  
August
    4.11            
September
    15.22  
September
    14.17  
September
    3.48  
September
    3.21  
September
    4.91            
October
    16.48  
October
    16.66  
October
    2.86  
October
    3.20  
October
    5.00            
November
    19.45  
November
    9.95  
November
    2.74  
November
    3.72  
November
    5.23            
December
    19.87  
December
    8.33  
December
    2.50  
December
    4.70  
December
    6.08            
 

 
 
NAVISITE, INC. (NAVI)
 
NaviSite, Inc. provides information technology hosting, outsourcing, and professional services for mid-market organizations.  It offers NaviCloud Managed Cloud services, a utility platform that enterprise-level cloud computing, memory, storage, network, security and bandwidth.  Its enterprise hosting services, including infrastructure as a service consisting of hosting, business continuity and disaster recovery, connectivity, content distribution, database administration and performance tuning, hardware management, monitoring, network management, security management, server and operating system management, and storage management; software as a service comprising starter kits and services specific to the needs of independent software vendors who offer their software in an on-demand or subscription model; and co-location services.  The company provides application services consisting of enterprise resource planning application and messaging management services, including implementation, upgrade support, monitoring, diagnostics, problem resolution, and functional end-user support; enterprise resource planning professional services, such as planning, implementation, optimization, enhancement, and upgrade support for third party enterprise resource planning applications; and custom development services.  Further, it offers a proprietary platform, NaviView, that helps in ensuring transparency to the customer and seamless operation of outsourced applications and infrastructure, including hardware, operating system, database, and application monitoring; event management; problem resolution management; and integrated change and configuration management tools.
 
2006
 
Closing Price
 
2007
 
Closing Price
 
2008
 
Closing Price
 
2009
 
Closing Price
 
2010
 
Closing Price
 
2011
 
Closing Price
 
January
    1.51  
January
    5.40  
January
    4.50  
January
    0.45  
January
    2.94  
January
    4.00  
February
    1.83  
February
    6.49  
February
    4.06  
February
    0.39  
February
    3.06  
February
    5.46  
March
    3.92  
March
    6.02  
March
    2.21  
March
    0.40  
March
    2.57            
April
    4.00  
April
    6.40  
April
    3.89  
April
    0.38  
April
    2.95            
May
    3.90  
May
    6.70  
May
    3.79  
May
    0.62  
May
    2.65            
June
    4.50  
June
    7.60  
June
    3.80  
June
    1.37  
June
    2.63            
July
    3.91  
July
    8.41  
July
    3.26  
July
    1.36  
July
    2.86            
August
    3.89  
August
    7.92  
August
    3.25  
August
    2.03  
August
    2.98            
September
    3.63  
September
    8.79  
September
    1.99  
September
    2.19  
September
    3.34            
October
    3.59  
October
    10.87  
October
    0.50  
October
    1.83  
October
    3.83            
November
    3.81  
November
    9.31  
November
    0.54  
November
    1.95  
November
    3.54            
December
    6.97  
December
    5.06  
December
    0.40  
December
    2.00  
December
    3.71            

OPENWAVE SYSTEMS INC. (OPWV)
 
Openwave Systems Inc. provides software solutions for the communication and media industries in the United States, the Asia Pacific region, Europe, the Middle East, and Africa. It offers products in the areas of server software, which includes service mediation, messaging, and location application products for mobile operators.  The companys service mediation products enable communication service providers to operate through an open, all-IP platform that includes policy management, operational analytics, and in-line charging and notification.  Its messaging products comprise mobile, email, and voice solutions that use IP-based, bandwidth-optimized technologies to simplify various modes of messaging moving across an operator’s network.  The companys location products enable location-based services through infrastructure and applications for emergency and commercial location services.  It also offers professional services, and maintenance and support services.
 
2006
 
Closing Price
 
2007
 
Closing Price
 
2008
 
Closing Price
 
2009
 
Closing Price
 
2010
 
Closing Price
 
2011
 
Closing Price
 
January
    21.55  
January
    8.82  
January
    2.07  
January
    0.73  
January
    2.23  
January
    2.03  
February
    19.85  
February
    8.16  
February
    2.06  
February
    0.82  
February
    2.59  
February
    2.22  
March
    21.58  
March
    8.15  
March
    2.45  
March
    0.97  
March
    2.30            
April
    18.61  
April
    7.35  
April
    2.14  
April
    1.20  
April
    2.23            
May
    14.14  
May
    10.30  
May
    1.98  
May
    1.76  
May
    2.15            
June
    11.54  
June
    6.26  
June
    1.49  
June
    2.24  
June
    2.03            
July
    6.58  
July
    5.26  
July
    1.43  
July
    2.63  
July
    2.03            
August
    8.09  
August
    4.52  
August
    1.44  
August
    2.77  
August
    1.62            
September
    9.36  
September
    4.38  
September
    1.24  
September
    2.60  
September
    1.70            
October
    8.63  
October
    3.96  
October
    0.75  
October
    2.27  
October
    2.06            
November
    8.40  
November
    2.75  
November
    0.54  
November
    2.36  
November
    2.39            
December
    9.23  
December
    2.60  
December
    0.65  
December
    2.28  
December
    2.12            
 

 
 
OPEN TEXT CORPORATION (OTEX)
 
Open Text Corporation develops, markets, sells, licenses, and supports Enterprise Content Management Enterprise Content Management solutions primarily in North America and Europe.  The company’s Enterprise Content Management software and solutions help customers manage their critical business content, including version revisions and compliance with regulatory requirements.  Its Open Text Enterprise Content Management Suite enables corporations to manage traditional forms of content, such as images, office documents, graphics, and drawings, as well as to manage electronic content, including Web pages, email, and video.  The company’s Open Text Enterprise Content Management Suite comprises document management, collaboration, social media, Web content management, digital asset management, records management, email management, archiving, capture and delivery, business process management, and content reporting components.  In addition, it offers industry-specific solutions based on the foundation of the Open Text Enterprise Content Management Suite for the government, high-technology/manufacturing, energy, financial services, pharmaceutical and life sciences, legal, and media sectors.  Further, Open Text Corporation provides training, consulting, hosting services, and customer support programs.
 
2006
 
Closing Price
 
2007
 
Closing Price
 
2008
 
Closing Price
 
2009
 
Closing Price
 
2010
 
Closing Price
 
2011
 
Closing Price
 
January
    16.57  
January
    18.78  
January
    30.88  
January
    35.03  
January
    39.42  
January
    49.39  
February
    17.50  
February
    21.85  
February
    32.20  
February
    31.61  
February
    48.64  
February
    58.92  
March
    16.43  
March
    21.96  
March
    31.31  
March
    34.44  
March
    47.47            
April
    17.99  
April
    23.02  
April
    37.22  
April
    32.83  
April
    42.14            
May
    14.02  
May
    22.90  
May
    35.91  
May
    35.23  
May
    42.60            
June
    14.44  
June
    21.76  
June
    32.10  
June
    36.42  
June
    37.54            
July
    13.61  
July
    18.78  
July
    31.11  
July
    37.74  
July
    39.50            
August
    16.33  
August
    24.87  
August
    35.07  
August
    35.17  
August
    44.00            
September
    17.90  
September
    25.97  
September
    34.58  
September
    37.33  
September
    47.04            
October
    18.08  
October
    31.20  
October
    25.95  
October
    37.04  
October
    44.23            
November
    18.93  
November
    32.88  
November
    26.61  
November
    38.07  
November
    42.59            
December
    20.30  
December
    31.45  
December
    30.13  
December
    40.65  
December
    46.06            
 
 

 
REALNETWORKS, INC. (RNWK)
 
RealNetworks, Inc. provides network-delivered digital media products and services worldwide.  It develops and markets software products and services that enable the creation, distribution, and consumption of digital media, including audio and video.  The company operates in four segments: Technology Products and Solutions (TPS), Media Software and Services (MSS), Games, and Music.  The TPS segment primarily offers software-as-a-service offerings, which include ringback tones, music-on-demand, video-on-demand, and messaging services, as well as system software license sales and intellectual property licensing.  This segment also licenses Helix server software that allows companies to broadcast live and on-demand audio, video, and other multimedia programming to users over the Internet.  The MSS segment offers RealPlayer, a media player software, which includes features and services that enable consumers to discover, play, download, manage, and edit digital video.  The Games segment offers various casual games available through digital downloads or online portals, social networks, and mobile devices.  This segment also involves in game development, publishing, licensing, and distribution.  It distributes games principally in North America, Europe, and Latin America through the companys own Web sites, which are operated under the GameHouse, RealArcade, Zylom, and Atrativa brands, and through Web sites owned or managed by third parties.  In addition, this segment develops and distributes games for other platforms, including mobile phones, other handheld devices, and videogame consoles.  The Music segment offers Rhapsody, a subscription and advertising-supported music service; Rhapsody.com, a free Web-based limited version digital music service; and Rhapsody MP3 music store, where consumers purchase and download individual digital music tracks.
 
2006
 
Closing Price
 
2007
 
Closing Price
 
2008
 
Closing Price
 
2009
 
Closing Price
 
2010
 
Closing Price
 
2011
 
Closing Price
 
January
    8.05  
January
    10.67  
January
    5.83  
January
    2.82  
January
    4.22  
January
    3.76  
February
    7.86  
February
    8.16  
February
    5.85  
February
    2.30  
February
    4.60  
February
    3.84  
March
    8.25  
March
    7.85  
March
    5.73  
March
    2.33  
March
    4.83            
April
    10.02  
April
    7.55  
April
    6.16  
April
    2.46  
April
    4.15            
May
    9.46  
May
    8.47  
May
    7.30  
May
    2.56  
May
    3.60            
June
    10.70  
June
    8.17  
June
    6.60  
June
    2.99  
June
    3.30            
July
    10.00  
July
    7.12  
July
    6.87  
July
    2.90  
July
    3.32            
August
    11.03  
August
    6.23  
August
    6.63  
August
    3.54  
August
    2.71            
September
    10.61  
September
    6.78  
September
    5.08  
September
    3.72  
September
    3.26            
October
    10.98  
October
    7.26  
October
    4.28  
October
    3.57  
October
    3.00            
November
    11.51  
November
    6.17  
November
    3.80  
November
    3.27  
November
    3.42            
December
    10.94  
December
    6.09  
December
    3.53  
December
    3.71  
December
    4.20            

 
 
VERISIGN, INC. (VRSN)
 
VeriSign, Inc. provides infrastructure services to various networks worldwide.  It operates in two segments, Internet Infrastructure and Identity Services, and Other Services.  The Internet Infrastructure and Identity Services segment consists of naming services, which is the authoritative directory provider of various .com, .net, .cc, .tv, .name and .jobs domain names.  It also consists of authentication services, including business authentication services , which enables enterprises and Internet merchants to implement and operate secure networks and Web sites that utilize secure socket layer protocol, as well as provide customers the means to authenticate themselves and to encrypt transactions and communications between client browsers and Web servers; and user authentication services that include identity protection services, fraud detection services, and managed public key infrastructure services.  The Other Services segment comprises pre-pay billing and payment services.
 
2006
 
Closing Price
 
2007
 
Closing Price
 
2008
 
Closing Price
 
2009
 
Closing Price
 
2010
 
Closing Price
 
2011
 
Closing Price
 
January
    23.75  
January
    23.90  
January
    33.92  
January
    19.31  
January
    22.91  
January
    33.65  
February
    23.66  
February
    25.30  
February
    34.80  
February
    19.33  
February
    24.92  
February
    35.29  
March
    23.99  
March
    25.12  
March
    33.24  
March
    18.87  
March
    26.02            
April
    23.52  
April
    27.35  
April
    36.05  
April
    20.58  
April
    27.28            
May
    22.45  
May
    29.83  
May
    40.04  
May
    23.41  
May
    27.91            
June
    23.17  
June
    31.73  
June
    37.80  
June
    18.52  
June
    26.55            
July
    17.93  
July
    29.69  
July
    32.54  
July
    20.44  
July
    28.15            
August
    20.24  
August
    32.20  
August
    31.97  
August
    21.19  
August
    29.09            
September
    20.20  
September
    33.74  
September
    26.08  
September
    23.69  
September
    31.74            
October
    20.68  
October
    34.09  
October
    21.20  
October
    22.81  
October
    34.75            
November
    26.09  
November
    40.90  
November
    21.59  
November
    22.44  
November
    34.31            
December
    24.05  
December
    37.61  
December
    19.08  
December
    24.24  
December
    32.67            


 
 


 
 

 
1,000,000,000 Depositary Receipts
 
Internet Infrastructure HOLDRSSM Trust
 
 

 
PROSPECTUS
 

 


 

March 15, 2011
 
 
 



 
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 Index to Exhibits.
 
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.
 
(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 SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
 
(iii)           To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
 
 
 
(2)      That, for the purpose of determining any liability under the Securities Act, 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, 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, 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 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 SEC such indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final adjudication of such issue.
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Post-Effective Amendment No. 11 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, on March 15, 2011.
 
  Merrill Lynch, Pierce, Fenner & Smith Incorporated  
       
       
  By:
*
 
  Name:  Sallie L. Krawcheck  
  Title:  Co-Chief Executive Officer  
    Executive Vice President and Director  
 
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 11 to the Registration Statement has been signed by the following persons in the capacities indicated below on March 15, 2011.
 
 
Signature
 
Title
*
 
 
Co-Chief Executive Officer, Executive Vice
President and Director
Sallie L. Krawcheck
 
(Principal Executive Officer)
     
*
 
Co-Chief Executive Officer, Executive Vice
President and Director
Thomas K. Montag
 
(Principal Executive Officer)
     
*
 
Chief Financial Officer and Senior Vice President
Robert Qutub
 
 
(Principal Financial Officer and Principal
Accounting Officer)
     
*
 
Executive Vice President and Director
Bruce R. Thompson
   
     
*By:
/s/ Liam B. O’Neil
 
 
Attorney-in-Fact
Liam B. O’Neil
   

 


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 Mellon (formerly known as 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 February 10, 2000 as an exhibit to Amendment No. 1 to the registration statement filed on Form S-1 for Internet Infrastructure 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 Internet Infrastructure HOLDRS.
   
*5.1
Opinion of Shearman & Sterling LLP regarding the validity of the Internet Infrastructure HOLDRS Receipts, filed on February 10, 2000 as an exhibit to Amendment No. 1 to the registration statement filed on Form S-1 for Internet Infrastructure HOLDRS.
   
*8.1
Opinion of Shearman & Sterling LLP, as special U.S. tax counsel, regarding the material federal income tax consequences, filed on February 10, 2000 as an exhibit to Amendment No. 1 to the registration statement filed on Form S-1 for Internet Infrastructure HOLDRS.
   
*8.2
Opinion of Shearman & Sterling LLP, as special U.S. tax counsel, regarding the material federal income tax consequences, filed on July 9, 2003 as an exhibit to Amendment No. 5 to the registration statement filed on Form S-1 for Internet Infrastructure HOLDRS.
   
*24.1
Power of Attorney of Sallie L. Krawcheck, Thomas K. Montag, Robert Qutub, and Bruce R. Thompson.

_______________________
* Previously filed.
 


II-4

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