-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qfhr2OmLsilGsvorFm97VWdwK7i5B95p43KJzq49A7S5p9TSz/qhIViSodtRHmGl ZiUf9U8X5AaS+EFX5SD0OA== /in/edgar/work/20001101/0000950130-00-005747/0000950130-00-005747.txt : 20001106 0000950130-00-005747.hdr.sgml : 20001106 ACCESSION NUMBER: 0000950130-00-005747 CONFORMED SUBMISSION TYPE: 424B4 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20001101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH PIERCE FENNER & SMITH INC CENTRAL INDEX KEY: 0000728612 STANDARD INDUSTRIAL CLASSIFICATION: [6189 ] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B4 SEC ACT: SEC FILE NUMBER: 333-43142 FILM NUMBER: 751089 BUSINESS ADDRESS: STREET 1: NORTH TOWER WORLD FINANCIAL CENTER STREET 2: NORTH TOWER WORLD FINANCIAL CENTER 5TH F CITY: NEW YORK STATE: NY ZIP: 10281-1323 BUSINESS PHONE: 2124496202 MAIL ADDRESS: STREET 1: WORLD FINANCIAL CENTER STREET 2: NORTH TOWER 23RD FL CITY: NEW YORK STATE: NY ZIP: 10281-1323 424B4 1 0001.txt FINAL PROSPECTUS RULE NO. 424(b)(4) REGISTRATION NO. 333-43142 PROSPECTUS - ---------------- [LOGO OF HOLDRS] 1,000,000,000 Depositary Receipts Wireless HOLDRS SM Trust The Wireless HOLDRSSM Trust will issue Depositary Receipts called Wireless HOLDRSSM representing your undivided beneficial ownership in the common stock or American depositary shares of a group of specified companies that are involved in various segments of the wireless telecommunications industry. The Bank of New York will be the trustee. You only may acquire, hold or transfer Wireless HOLDRS in a round-lot amount of 100 Wireless HOLDRS or round-lot multiples. Wireless HOLDRS are separate from the underlying deposited common stocks or American depositary shares that are represented by the Wireless HOLDRS. For a list of the names and the number of shares of the companies that make up a Wireless HOLDR, see "Highlights of Wireless HOLDRS-- The Wireless HOLDRS" starting on page 10. Merrill Lynch, Pierce, Fenner & Smith Incorporated has sold 1,700,000 Wireless HOLDRS in the initial distribution. The trust will issue the additional Wireless HOLDRS on a continuous basis. Investing in Wireless HOLDRS involves significant risks. See "Risk factors" starting on page 4. The initial public offering price for a round-lot of 100 Wireless HOLDRS will equal the sum of the closing market price on the primary U.S. trading market on October 31, 2000, the pricing date, for each deposited share multiplied by the share amount specified in this prospectus, plus an underwriting fee. Wireless HOLDRS are neither interests in nor obligations of either the initial depositor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or The Bank of New York, as trustee. Before this issuance, there has been no public market for Wireless HOLDRS. The Wireless HOLDRS have been approved for listing on the American Stock Exchange under the symbol "WMH", subject to official notice of issuance. -------------- 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.
Initial Price Underwriting to Public* Fee ------------- ------------ Per Wireless HOLDR.............................. $103.10 2%
------- * Includes underwriting fee. For purchases of Wireless HOLDRS in excess of 50,000 Wireless HOLDRS, the underwriting fee will be 1%. -------------- Merrill Lynch & Co. Robert W. Baird & Co. A.G. Edwards & Sons, Inc. First Union Securities, Inc. Legg Mason Wood Walker Morgan Keegan & Company, Inc. Incorporated
Raymond James & Associates, Inc. Sutro & Co. Incorporated Tucker Anthony Capital Markets The date of this prospectus is October 31, 2000. "HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill Lynch & Co., Inc. TABLE OF CONTENTS
Page ---- Summary.................................................................... 3 Risk Factors............................................................... 4 Highlights of Wireless HOLDRS.............................................. 10 The Trust.................................................................. 16 Description of Wireless HOLDRS............................................. 16 Description of the Underlying Securities................................... 17 Description of the Depositary Trust Agreement.............................. 19 Federal Income Tax Consequences............................................ 22 ERISA Considerations....................................................... 25 Plan of Distribution....................................................... 25 Legal Matters.............................................................. 26 Where You Can Find More Information........................................ 26
--------------- This prospectus contains information you should consider when making your investment decision. With respect to information about Wireless HOLDRS, you should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell Wireless HOLDRS in any jurisdiction where the offer or sale is not permitted. The Wireless HOLDRS are not registered for public sale outside of the United States. Non-U.S. receipt holders should refer to "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 Wireless HOLDRS or of the underlying securities through an investment in the Wireless HOLDRS. 2 SUMMARY The Wireless HOLDRS Trust will be formed under the depositary trust agreement, dated as of October 25, 2000 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Wireless HOLDRS. The trust is not a registered investment company under the Investment Company Act of 1940. The trust will hold shares of common stock or American depositary shares issued by 20 specified companies generally considered to be involved in various segments of the wireless telecommunications industry. The number of shares of each company's common stock or American depositary shares held by the trust with respect to each round-lot of Wireless HOLDRS is specified under "Highlights of Wireless HOLDRS--The Wireless HOLDRS." This group of common stocks or American depositary shares are collectively referred to in this prospectus as the securities or the underlying securities. Except when a reconstitution event occurs, the underlying securities will not change. Under no circumstances will a new company be added to the group of issuers of underlying securities. The trust will issue Wireless HOLDRS that represent your undivided beneficial ownership interest in the securities held by the trust on your behalf. The Wireless HOLDRS are separate from the underlying securities that are represented by the Wireless HOLDRS. 3 RISK FACTORS An investment in Wireless HOLDRS involves risks similar to investing in each of the underlying securities outside of the Wireless HOLDRS, including the risks associated with concentrated investments in wireless telecommunications companies. General Risk Factors . Loss of investment. Because the value of Wireless HOLDRS directly relates to the value of the underlying securities, you may lose a substantial portion of your investment in the Wireless HOLDRS if the underlying securities decline in value. . Discount trading price. Wireless HOLDRS may trade at a discount to the aggregate value of the underlying securities. . Not necessarily representative of the wireless telecommunications industry. While the underlying securities are securities of companies generally considered to be involved in various aspects of the wireless telecommunications industry, the underlying securities and the Wireless HOLDRS may not necessarily follow the price movements of the entire wireless telecommunications industry generally. If the underlying securities decline in value, your investment in the Wireless HOLDRS will decline in value even if the securities prices of companies in the wireless telecommunications industry generally increase in value. Furthermore, after the initial deposit, one or more of the issuers of the underlying securities may no longer be involved in the wireless telecommunications industry. In this case, the Wireless HOLDRS may no longer consist of securities issued only by companies involved in the wireless telecommunications industry. . No investigation of underlying securities. The underlying securities included in the Wireless HOLDRS were selected by Merrill Lynch, Pierce, Fenner & Smith Incorporated based on the market capitalization of issuers and the market liquidity of securities in the wireless telecommunications industry, without regard for the value, price performance, volatility or investment merit of the underlying securities. Consequently, the Wireless HOLDRS Trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and their affiliates, have not performed any investigation or review of the selected companies, including the public filings by the companies. Investors and market participants should not conclude that the inclusion of a company is any form of investment recommendation by the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or their affiliates. . Loss of diversification. As a result of industry developments, reorganizations, or market fluctuations affecting issuers of the underlying securities, Wireless HOLDRS may not necessarily continue to be a diversified investment in the wireless telecommunications industry. As a result of market fluctuation and/or reconstitution events, Wireless 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 or to participate in a tender offer relating to one or more of the underlying securities, you will be required to cancel your Wireless HOLDRS and receive delivery of each of the underlying securities. The cancellation of your Wireless HOLDRS will allow you to sell individual underlying securities or to deliver individual underlying securities in a tender offer. The cancellation of Wireless HOLDRS will involve payment of a cancellation fee to the trustee. 4 . Trading halts. Trading in Wireless HOLDRS on the American Stock Exchange may be halted if trading in one or more of the underlying securities is halted. Trading in Wireless HOLDRS may be halted even if trading continues in some or all of the underlying securities. If trading is halted in the Wireless HOLDRS, you will not be able to trade Wireless HOLDRS and you will only be able to trade the underlying securities if you cancel your Wireless HOLDRS and receive each of the underlying securities. . Delisting from the American Stock Exchange. If the number of companies whose securities are held in the trust falls below nine, the American Stock Exchange may consider delisting the Wireless HOLDRS. If the Wireless HOLDRS are delisted by the American Stock Exchange, a termination event will result unless the Wireless HOLDRS are listed for trading on another U.S. national securities exchange or through Nasdaq NMS within five business days from the date the Wireless HOLDRS are delisted. . Possible conflicts of interest. Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, has selected the underlying securities and may face possible conflicts of interest in connection with its activities. For example, Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates, collectively referred to as Merrill Lynch, may engage in investment banking and other activities, may provide services to issuers of the underlying securities in connection with its business, or may make purchases or sales, including establishing long or short positions, in the underlying securities for its own account. In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, will purchase, in the secondary market, the underlying securities that will be deposited into the trust. Merrill Lynch may make these purchases before the deposit into the trust, or it may borrow securities for the deposit and subsequently purchase the securities to repay to the lenders the securities previously borrowed. In either event, the purchases of the underlying securities will be made at various prices. As the initial offering price for the Wireless HOLDRS will be based on the closing market price of each of the underlying securities on the pricing date, Merrill Lynch may recognize a gain on its purchases of the underlying securities. Specifically, if the closing market price for the underlying securities on the pricing date is higher than the price at which Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, purchases the underlying securities then it will recognize a gain in connection with such purchases. Merrill Lynch may recognize this gain on any of the underlying securities that comprise the Wireless HOLDRS or on all of the underlying securities in the aggregate. The potential profit of Merrill Lynch also is affected by any hedging activities that it may engage in while it purchases the underlying securities in the secondary market for deposit into the trust. All of these activities may result in conflicts of interest with respect to the financial interest of Merrill Lynch, on the one hand, and, on the other hand, the initial selection of the underlying securities included in the Wireless HOLDRS, the selection of the wireless telecommunications industry, Merrill Lynch's activity in the secondary market in the underlying securities, and the creation and cancellation of Wireless HOLDRS by Merrill Lynch. . Temporary price increases in the underlying securities. Purchasing activity in the secondary trading market associated with acquiring the underlying securities for deposit into the trust may temporarily increase the market price of the deposited shares, which will result in a higher initial offering price for the Wireless HOLDRS. Large volumes of purchasing activity, which may occur in connection with the issuance of Wireless HOLDRS, particularly in connection with the initial issuance of Wireless HOLDRS, could temporarily increase the market price of the underlying securities, resulting in a higher price on that date. This purchasing activity could create a temporary imbalance between the supply and demand of the underlying securities, thereby limiting the liquidity of the underlying securities due to a temporary increased demand for underlying securities. Temporary increases in the market price of the underlying securities may also occur as a result of the purchasing activity of other market participants. Other market participants may attempt to benefit from increases in 5 the market price of the underlying securities that may occur as a result of the increased purchasing activity in the underlying securities resulting from the issuance of the Wireless HOLDRS. Consequently, prices for the underlying securities may decline immediately after the pricing date. If the trading prices for the underlying securities decline, the trading price of Wireless HOLDRS will also decline. Risk Factors Specific to Companies Involved in the Wireless Telecommunications Industry . The stock prices of companies involved in wireless telecommunications have been and are likely to continue to be volatile, which will directly affect the price volatility of the Wireless HOLDRS, and you could lose all or part of your investment. The trading prices of the securities of wireless telecommunications companies have been and are likely to be volatile and may be subject to wide fluctuations in response to a variety of factors, including the following: . actual or anticipated fluctuations in the company's quarterly or annual operating results; . announcements of technological innovations or new services by wireless telecommunications companies or their competitors; . announcements by wireless telecommunications companies or their competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; . failure to integrate or realize projected benefits from acquisitions; and . changes in government regulations. Other broad market and industry factors may decrease the stock price of wireless telecommunications companies' stocks, regardless of their operating results. Market fluctuations, as well as general political and economic conditions, such as recession or interest rate or currency rate fluctuations, also may decrease the market price of wireless telecommunications companies' stocks. . The wireless telecommunications industry is extremely competitive, and a wireless telecommunications company's failure to establish its wireless network and its customer base will adversely affect its operating results. The competition among wireless telecommunications companies to build and develop wireless telecommunications networks, form alliances with telecommunications and Internet service providers and establish and maintain a customer base is significant. Customer loyalty can be easily influenced by a competitor's new offerings, especially those offerings which provide cost savings or expanded network geographic coverage areas. Many wireless telecommunications companies face significant competition from other companies in the telecommunications and technology industries, including traditional telecommunications companies, some of which have greater market share and financial resources. These companies may be better positioned to finance research and development activities, provide a wider range of products and services over a greater geographic area and may have greater resources with which to purchase additional licenses and radio frequency, acquire other companies in the industry and reduce prices to gain market share. . Changes in the regulatory environments in which wireless telecommunications companies operate could affect their ability to offer products and services. The licensing, construction, ownership and operation of wireless communications systems, the grant, maintenance and renewal of applicable licenses and radio frequency allocations and the rates charged to customers are all subject to significant regulation. Delays in receiving required regulatory approvals and licenses or the enactment of new and adverse regulatory requirements may adversely affect the ability of wireless telecommunications companies to continue to offer 6 existing and new products and services. In addition, legislative, judicial and regulatory agency actions could negatively affect the ability of many wireless telecommunications companies to maintain required licenses or renew licenses upon their expiration. . If wireless telecommunications companies do not anticipate and respond to the rapid technological changes in the industry, they could lose customer or market share. The wireless telecommunications industry is experiencing significant technological change, as evidenced by the introduction of new products and services and increased availability of transmission capacity, changes in consumer requirements and preferences and the utilization of Internet-based technologies for voice and data transmission. Wireless telecommunications companies must be able to successfully predict which of the many possible networks, products and services will be important to finance, establish and maintain. The cost of establishing networks and implementing new technologies is significant, and there can be no assurance that a telecommunications company will select appropriate technology and equipment or that it will obtain appropriate new technology on a timely basis or on satisfactory terms. The failure to obtain effective technology and equipment may adversely affect a wireless telecommunications company's ability to offer competitive products and services and the viability of its operations. . Inability to manage rapid growth could adversely affect financial reporting, customer service and revenues. Many wireless telecommunications companies are rapidly expanding their networks and operations. This expansion has placed and will continue to place significant demands on their operating, financial control and billing systems, customer support, sales and marketing and administrative resources and network infrastructure. This growth will require many telecommunications companies to enhance management, financial and information systems and to effectively develop and train their employee base. . Some of the companies involved in the wireless telecommunications industry are also engaged in other lines of business unrelated to the wireless business, and they may experience problems with these lines of business which could adversely affect their operating results. Some of the companies which comprise the Wireless HOLDRS are engaged in multiple lines of business, including operating as local and long-distance telephone providers, Internet service providers and manufacturing new technologies. These additional lines of business may present additional risks not mentioned in this prospectus. The operating results of these wireless telecommunications companies may fluctuate as a result of these additional risks and events in the other lines of business. In addition, changes in technology and telecommunications regulation may expose wireless telecommunications companies to business risks with which it has less experience than it has with the business risks associated with its traditional businesses. Despite a company's possible success in wireless telecommunications industry, there can be no assurance that the other lines of business in which these companies are engaged will not have an adverse effect on a company's business or financial condition. . The international operations of some domestic and foreign wireless telecommunications companies expose them to risks associated with instability and changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations and other risks inherent to international business. Some domestic and foreign companies included in the Wireless HOLDRS have international operations or investments which are essential parts of their business. The risks of international business that the companies are exposed to include the following: . general economic, social and political conditions; 7 . the difficulty of enforcing intellectual property rights, agreements and collecting receivables through foreign legal systems; . differing tax rates, tariffs, exchange controls or other similar restrictions; . currency fluctuations; and . changes in, and compliance with, domestic and foreign laws and regulations, particularly those which affect telecommunications carriers and service providers, which impose a range of restrictions on operations, trade practices, foreign trade and international investment decisions. . Many wireless telecommunications companies are dependent on their ability to continue to attract and retain highly-skilled technical and managerial personnel to develop and generate their business. Many wireless telecommunications companies are highly dependent on the experience, abilities and continued services of key executive officers and key technical personnel. If these companies lose the services of any of these officers or key technical personnel, their future success could be undermined. Competition for personnel is intense. There is no certainty that any of these wireless telecommunications companies will be able to continue to attract and retain qualified personnel. . It may be impossible to initiate legal proceedings or enforce judgments against some of the companies included in the Wireless HOLDRS. Some of the companies included in the Wireless HOLDRS were incorporated under the laws of a jurisdiction other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be impossible to effect service of process within the United States on some of the companies included in the Wireless HOLDRS or enforce judgments made against them in courts in the United States based on civil liability provisions of the securities laws of the United States. In addition, judgments obtained in the United States, especially those awarding punitive damages, may not be enforceable in foreign countries. . Potential voting impediments may exist with respect to the ownership of some of the underlying securities included in the Wireless HOLDRS. Holders of American depositary shares, including those included in the Wireless HOLDRS, may only exercise voting rights with respect to the securities represented by American depositary shares in accordance with the provisions of deposit agreements entered into in connection with the issuance of the American depositary shares. These deposit agreements may not permit holders of American depositary shares to exercise voting rights that attach to the securities underlying the American depositary shares without the issuer first instructing the depositary to send voting information to the holder of the American depositary share. Also, holders of American depositary shares may not exercise voting rights unless they take a variety of steps, which include registration in the share registry of the company that has issued the securities underlying the American depositary shares. The cumulative effect of these steps may make it impractical for holders of American depositary shares to exercise the voting rights attached to the underlying securities. . Two companies currently included in the Wireless HOLDRS, AT&T Corp.--AT&T Wireless Group and Sprint Corporation--PCS Group, are tracking stocks and are therefore subject to additional risks relating to an investment in tracking stocks. The risks associated with tracking stocks include the following: . Stockholders of a tracking stock remain invested in the entire company issuing the tracking stock, even though the tracking stock is intended to reflect the operating 8 performance of specific operations of a company's business. As a result, the performance and financial results of the non- wireless operations of AT&T and Sprint could negatively affect the market price of the AT&T Wireless Group and the PCS Group tracking stocks and the Wireless HOLDRS and the market price of the tracking stocks may not reflect the performance of the wireless operations of AT&T and Sprint. . A holder of tracking stock does not have any direct voting rights to elect the management of the operations represented by the tracking stock or to make fundamental decisions affecting the tracked operations. The holders of tracking stock have voting rights that are similar to that of common shareholders of the company that issued the tracking stock, and would, along with the other shareholders, be limited to electing the management of the entire company rather than the management of the tracked operations. In addition, all of the shareholders of the company may be entitled to vote on fundamental decisions affecting the tracked operations. Consequently, management may make operational, financial and other decisions that may not be in the best interests of the holders of tracking stock or that favor another class of stock to the detriment of the tracking stock class. For example, management may decide to sell assets or discontinue operations relating to the operations represented by the tracking stock without the consent of the holders of the tracking stock and the consideration received on any sale of assets may be less than what would be received if the tracked operations were a separate company. In addition, management could adversely change the terms of the tracking stock without seeking the approval of a majority of the holders of the tracking stock affected by the change. . AT&T has the option to convert AT&T Wireless Group tracking stock into AT&T common stock and Sprint has the option to convert PCS Group tracking stock into FON Group tracking stock. It is possible that the consideration received as a result of any conversion may be lower than the market price at the time of the deposit into the Wireless HOLDRS and that the security received in exchange may not reflect the economic performance of a wireless business. . In the event of a dissolution of either AT&T or Sprint, the holders of tracking stock will not have preferential rights to the assets of the wireless operations of the respective companies and these assets may become subject to the respective liabilities of the non-wireless operations of AT&T and Sprint. In addition, any payments made to holders of tracking stock as a result of a dissolution may be allocated to the holders of the tracking stock through a specified formula regardless of the wireless operations' relative contribution to the company as a whole. . On each additional issuance of any class of stock by AT&T or Sprint, the voting rights, the rights on dissolution and the rights to dividends of the holders of the AT&T Wireless Group and the PCS Group tracking stacks, respectively, will be diluted. In addition, any additional issuances of AT&T Wireless Group or PCS Group tracking stock by AT&T or Sprint, respectively, could dilute the value of each of the tracking stocks and the proceeds received on any additional issuance may not be allocated to the operations represented by the tracking stock. Generally, the terms of a tracking stock differ from those of the common stock of the same company. Please see the public filings of AT&T Corp. and Sprint Corporation for more information on their respective tracking stocks. For information on where you can access AT&T's and Sprint's public filings, please see "Where you can find more information." 9 HIGHLIGHTS OF WIRELESS HOLDRS This discussion highlights information regarding Wireless HOLDRS. We present certain information more fully in the rest of this prospectus. You should read the entire prospectus carefully before you purchase Wireless HOLDRS. Issuer....................... Wireless HOLDRS Trust. The trust.................... The Wireless HOLDRS Trust will be formed under the depositary trust agreement, dated as of October 25, 2000 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Wireless HOLDRS. The trust is not a registered investment company under the Investment Company Act of 1940. Initial depositor............ Merrill Lynch, Pierce, Fenner & Smith Incorporated. Trustee...................... The Bank of New York, a New York state- chartered banking organization, will be the trustee and receive compensation as set forth in the depositary trust agreement. Purpose of Wireless HOLDRS... Wireless HOLDRS are designed to achieve the following: Diversification. Wireless HOLDRS are designed to allow you to diversify your investment in the wireless telecommunications industry through a single, exchange-listed instrument representing your undivided beneficial ownership of the underlying securities. Flexibility. The beneficial owners of Wireless HOLDRS have undivided beneficial ownership interests in each of the underlying securities represented by the Wireless HOLDRS, and can cancel their Wireless HOLDRS to receive each of the underlying securities represented by the Wireless HOLDRS. Transaction costs. The expenses associated with trading Wireless HOLDRS are expected to be less than trading each of the underlying securities separately. Trust assets................. The trust will hold securities issued by specified companies in the wireless telecommunications industry. Except when a reconstitution event occurs, the group of companies will not change. Reconstitution events are described in this prospectus under the heading "Description of the depositary trust agreement--Reconstitution events." Under no circumstances will the securities of a new company be added to the securities underlying the Wireless HOLDRS. The trust's assets may increase or decrease as a result of in-kind deposits and withdrawals of the underlying securities during the life of the trust. The Wireless HOLDRS.......... The trust will issue Wireless HOLDRS that represent your undivided beneficial ownership interest in the shares of U.S.-traded securities held by the trust on your behalf. The Wireless HOLDRS themselves are separate from the underlying securities that are represented by the Wireless HOLDRS. 10 The specific share amounts for each round-lot of 100 Wireless HOLDRS are set forth in the table below and were determined so that the initial weightings of each underlying security included in the Wireless HOLDRS approximates the relative market capitalizations of the specified companies (based on the market capitalizations of the underlying securities on the trading day immediately preceding the pricing date), subject to a maximum weight of 10%. The share amounts set forth below will not change, except for changes due to corporate events, such as stock splits or reverse stock splits on the underlying securities, or reconstitution events. However, the weightings are expected to change substantially over time because of price fluctuations. The following chart provides the . names of the 20 issuers of the underlying securities represented by the Wireless HOLDRS, . stock ticker symbols, . share amounts represented by a round-lot of 100 Wireless HOLDRS as of October 30, 2000, . initial weightings as of October 30, 2000, and . principal U.S. market on which the underlying securities are traded.
Primary U.S. Share Initial Trading Name of Company Ticker Amounts Weightings Market ----------------------- ------ ------- ---------- ------------ Verizon Communications VZ 17 9.96% NYSE AT&T Corp.--AT&T Wireless Group** AWE 40 9.76% NYSE Motorola, Inc. MOT 41 9.76% NYSE LM Ericsson Telephone Company* ERICY 74 9.74% Nasdaq NMS Nokia Corp.* NOK 23 9.66% NYSE Qualcomm Incorporated QCOM 13 9.37% Nasdaq NMS Vodafone Group p.l.c.* VOD 21 9.29% NYSE Sprint Corporation--PCS Group** PCS 21 7.81% NYSE VoiceStream Wireless Corporation VSTR 5 6.75% Nasdaq NMS Nextel Communications, Inc. NXTL 16 5.83% Nasdaq NMS SK Telecom Co., Ltd.* SKM 17 3.95% NYSE Research In Motion Limited RIMM 2 1.76% Nasdaq NMS Crown Castle International Corp. TWRS 4 1.19% Nasdaq NMS Nextel Partners, Inc. NXTP 4 0.96% Nasdaq NMS Telesp Cellular Holding Company* TCP 3 0.93% NYSE Aether Systems, Inc. AETH 1 0.89% Nasdaq NMS Western Wireless Corporation WWCA 2 0.82% Nasdaq NMS RF Micro Devices, Inc. RFMD 4 0.69% Nasdaq NMS United States Cellular Corporation USM 1 0.65% AMEX Netro Corporation, Inc. NTRO 1 0.20% Nasdaq NMS
---------------- * The securities of this non-U.S. company trade in the United States as American depositary receipts. Please see "Risk Factors" and "Federal Income Tax Consequences--Special considerations with respect to underlying securities of foreign issuers" for additional information relating to an investment in a non-U.S. company. ** The securities of this company trade as a tracking stock. Please see "Risk Factors" and the respective business descriptions in Annex A for additional information relating to an investment in tracking stock. As of October 30, 2000, the combined initial weightings of the tracking stocks included in the Wireless HOLDRS are 17.57%. 11 These companies generally are considered to be 20 of the largest and most liquid companies with U.S.-traded securities involved in the wireless telecommunications industry, as measured by market capitalization and trading volume on September 15, 2000. The market capitalization of a company is determined by multiplying the market price of its securities by the number of its outstanding securities. The trust only will issue and cancel, and you only may obtain, hold, trade or surrender Wireless HOLDRS in a round-lot of 100 Wireless HOLDRS and round-lot multiples. The trust will only issue Wireless HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Wireless HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Wireless HOLDRS, the trust may require a minimum of more than one round-lot of 100 Wireless HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Wireless HOLDRS. The number of outstanding Wireless 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 Wireless HOLDRS on a continuous basis when an investor deposits the required securities with the trustee. Public offering price........ The initial public offering price for 100 Wireless HOLDRS will equal the sum of the closing market price on the primary U.S. trading market on October 31, 2000, the pricing date, for each underlying security multiplied by the share amount to be determined on the pricing date, plus an underwriting fee. Purchases.................... After the initial offering, you may acquire Wireless HOLDRS in two ways: . through an in-kind deposit of the required number of securities of the underlying issuers with the trustee, or . through a cash purchase in the secondary trading market. Underwriting fees ........... If you purchase Wireless HOLDRS in the initial public offering, you will pay an underwriting fee equal to: . For purchases of 50,000 Wireless HOLDRS or fewer, 2%. . For purchases in excess of 50,000 Wireless HOLDRS, 1%. You will not be charged any issuance fee or other sales commission in connection with purchases of Wireless HOLDRS made in the initial public offering. Issuance and cancellation After the initial offering, if you wish to fees........................ create Wireless HOLDRS by delivering to the trust the requisite securities represented by a round-lot of 100 Wireless HOLDRS, The Bank of New York as trustee will charge you an issuance fee of up to $10.00 for each round-lot of 100 Wireless HOLDRS. If you wish to cancel your Wireless HOLDRS and withdraw your underlying securities, The Bank of New York as trustee will charge you a cancellation fee of up to $10.00 for each round-lot of 100 Wireless HOLDRS. 12 Commissions.................. If you choose to deposit underlying securities in order to receive Wireless HOLDRS after the conclusion of the initial public offering, you will not be charged the underwriting fee. However, in addition to the issuance fee charged by the trustee described above, you will be responsible for paying any sales commission associated with your purchase of the underlying securities that is charged by your broker. Custody fees................. The Bank of New York, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Wireless HOLDRS, to be deducted from any cash dividend or other cash distributions on underlying securities received by the trust. With respect to the aggregate custody fee payable in any calendar year for each Wireless 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 Wireless You have the right to withdraw the underlying HOLDRS...................... securities upon request by delivering a round- lot or integral multiple of a round-lot of Wireless 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 Wireless HOLDRS would otherwise require the delivery of a fractional share, the trustee will sell such share in the market and the trust, in turn, will deliver cash in lieu of such share. Except with respect to the right to vote for dissolution of the trust, the Wireless HOLDRS themselves will not have voting rights. Rights relating to the underlying securities..... You have the right to: . Receive all shareholder disclosure materials, including annual and quarterly reports, distributed by the issuers of the underlying securities. . Receive all proxy materials distributed by the issuers of the underlying securities and will have the right to instruct the trustee to vote the underlying securities or may attend shareholder meetings yourself. . Receive dividends and other distributions on the underlying securities, if any are declared and paid to the trustee by an issuer of the underlying securities, net of any applicable taxes or fees. If you wish to participate in a tender offer for underlying securities, you must obtain the underlying securities by surrendering your Wireless HOLDRS and receiving all of your underlying securities. For specific information about obtaining your underlying securities, you should read the discussion under the caption "Description of the depositary trust agreement." 13 Reconstitution events........ The depositary trust agreement provides for the automatic distribution of underlying securities to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of securities registered under section 12 of the Securities Exchange Act of 1934, then its securities will no longer be an underlying security and the trustee will distribute the shares of that company to the owners of the Wireless 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 Wireless HOLDRS. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation or other corporate combination, the trustee will distribute the consideration paid by and received from the acquiring company to the beneficial owners of Wireless HOLDRS, unless the merger, consolidation or other corporate combination is between companies that are already included in the Wireless HOLDRS and the consideration received is additional underlying securities. In this case, the additional underlying securities will be deposited into the trust. D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through Nasdaq NMS and are not listed for trading on another U.S. national securities exchange or through Nasdaq NMS within five business days from the date the securities are delisted. If a reconstitution event occurs, 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. However, if either AT&T Corp. or Sprint Corporation convert the AT&T Wireless Group or PCS Group tracking stock, respectively, into another class of securities of AT&T or Sprint, or their respective subsidiaries, the securities received will be deposited into the trust and will become part of the Wireless HOLDRS. For more information on the conversion rights of the AT&T Wireless Group and PCS Group tracking stocks, please see Annex A. Termination events........... A. The Wireless HOLDRS are delisted from the American Stock Exchange and are not listed for trading on another U.S. national securities exchange or through Nasdaq NMS within five business days from the date the Wireless 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. 14 C. 75% of beneficial owners of outstanding Wireless HOLDRS vote to dissolve and liquidate the trust. If a termination event occurs, the trustee will distribute the underlying securities to you as promptly as practicable after the termination event. Federal income tax The federal income tax laws will treat a U.S. consequences................ holder of Wireless HOLDRS as directly owning the underlying securities. The Wireless HOLDRS themselves will not result in any federal tax consequences separate from the tax consequences associated with ownership of the underlying securities. Listing...................... The Wireless HOLDRS have been approved for listing on the American Stock Exchange under the symbol "WMH", subject to official notice of issuance. Trading will take place only in round-lots of 100 Wireless HOLDRS and round-lot multiples. A minimum of 150,000 Wireless HOLDRS will be required to be outstanding when trading begins. Trading...................... Investors only will be able to acquire, hold, transfer and surrender a round-lot of 100 Wireless HOLDRS. Bid and ask prices, however, will be quoted per single Wireless HOLDR. Clearance and settlement..... The trust will issue Wireless HOLDRS in book- entry form. Wireless HOLDRS will be evidenced by one or more global certificates that the trustee will deposit 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 Wireless HOLDRS." 15 THE TRUST General. This discussion highlights information about the Wireless HOLDRS Trust. You should read this information, information about the depositary trust agreement as well as the depositary trust agreement before you purchase Wireless HOLDRS. The material terms of the depositary trust agreement are described in this prospectus under the heading "Description of the depositary trust agreement." The Wireless HOLDRS Trust. The trust will be formed pursuant to the depositary trust agreement, dated as of October 25, 2000. The Bank of New York will be the trustee. The Wireless HOLDRS Trust is not a registered investment company under the Investment Company Act of 1940. The Wireless HOLDRS Trust is intended to hold deposited shares for the benefit of owners of Wireless HOLDRS. The trustee will perform only administrative and ministerial acts. The property of the trust will consist of the underlying securities and all monies or other property, if any, received by the trustee. The trust will terminate on December 31, 2040, or earlier if a termination event occurs. DESCRIPTION OF WIRELESS HOLDRS The trust will issue Wireless HOLDRS under the depositary trust agreement described in this prospectus under the heading "Description of the depositary trust agreement." After the initial offering, the trust may issue additional Wireless HOLDRS on a continuous basis when an investor deposits the requisite underlying securities with the trustee. You may only acquire, hold, trade and surrender Wireless HOLDRS in a round-lot of 100 Wireless HOLDRS and round-lot multiples. The trust will only issue Wireless HOLDRS upon the deposit of the whole shares of underlying securities that are represented by a round-lot of 100 Wireless 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 Wireless HOLDRS, the trust may require a minimum of more than one round-lot of 100 Wireless HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Wireless HOLDRS. Wireless HOLDRS will represent your individual and undivided beneficial ownership interest in the specified underlying securities. The 20 companies selected as part of this receipt program are listed above in the section entitled "Highlights of Wireless HOLDRS--The Wireless HOLDRS." Beneficial owners of Wireless HOLDRS will have the same rights and privileges as they would have if they beneficially owned the underlying securities outside of the trust. These include the right of investors to instruct the trustee to vote the securities, and to receive dividends and other distributions on the underlying securities, if any are declared and paid to the trustee by an issuer of an underlying security, as well as the right to cancel Wireless HOLDRS to receive the underlying securities. See "Description of the depositary trust agreement." Wireless HOLDRS are not intended to change your beneficial ownership in the underlying securities under federal securities laws, including sections 13(d) and 16(a) of the Securities Exchange Act of 1934. The trust will not publish or otherwise calculate the aggregate value of the underlying securities represented by a receipt. Wireless 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 Wireless HOLDRS wishes to realize the dollar value of the underlying securities, that owner will have to cancel the Wireless HOLDRS. Such cancellation will require payment of fees and expenses as described in "Description of the depositary trust agreement--Withdrawal of underlying securities." Wireless HOLDRS will be evidenced by one or more global certificates that the trustee will deposit with DTC and register in the name of Cede & Co., as nominee for DTC. Wireless HOLDRS will be available only in book-entry form. Owners of Wireless HOLDRS may hold their Wireless HOLDRS through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. 16 DESCRIPTION OF THE UNDERLYING SECURITIES Selection criteria. The underlying securities are the common stock or American depositary shares of a group of 20 specified companies involved in various aspects of the wireless telecommunications industry and whose securities are registered under section 12 of the Exchange Act. The issuers of the underlying securities are considered to be 20 of the largest capitalized, most liquid companies involved in the wireless telecommunications industry as measured by market capitalization and trading volume. The following additional criteria were used in selecting the underlying securities on September 15, 2000: . market capitalization equal to or greater than $500 million; . average daily trading volume of at least 100,000 shares over the 60 trading days before September 15, 2000; . average daily dollar volume (that is, the average daily trading volume multiplied by the average closing price over the 60 day period prior to September 15, 2000) of at least $5 million over the 60 trading days before September 15, 2000; and . a trading history of at least 90 calendar days. The market capitalization of a company is determined by multiplying the market price of its securities by the number of its outstanding securities. In determining whether a company was to be considered for inclusion in the Wireless HOLDRS, Merrill Lynch, Pierce, Fenner & Smith Incorporated examined available public information about the company, including analysts' reports and other independent market sources. The ultimate determination of the inclusion of the 20 specified companies, however, rested solely within the discretion of Merrill Lynch, Pierce, Fenner & Smith Incorporated. After the initial deposit, one or more of the issuers of the underlying securities may no longer be substantially involved in the wireless telecommunications industry. In this case, the Wireless HOLDRS may no longer consist of securities issued by companies involved in the wireless telecommunications industry. Merrill Lynch, Pierce, Fenner & Smith Incorporated will determine, in its sole discretion, whether the issuer of a particular underlying security remains in the wireless telecommunications industry and will undertake to make adequate disclosure when necessary. Underlying securities. For a list of the underlying securities represented by Wireless HOLDRS, please refer to "Highlights of Wireless HOLDRS--The Wireless HOLDRS." If the underlying securities change because of a reconstitution event, a revised list of underlying securities will be set forth in a prospectus supplement and will be available from the American Stock Exchange and through a widely used electronic information dissemination system such as Bloomberg or Reuters. No investigation. In selecting the underlying securities, 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, other than to the extent required to determine whether the companies satisfied the program's stated selection criteria. Accordingly, before you acquire Wireless HOLDRS, you should consider publicly available financial and other information about the issuers of the underlying securities. See "Risk factors" and "Where you can find more information." Investors and market participants should not conclude that the inclusion of a company in the list is any form of investment recommendation of that company by the trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, the selling group or any of their affiliates. General background and historical information. For a brief description of the business of each of the issuers of the underlying securities and monthly pricing information showing the historical performance of each underlying issuer's securities see "Annex A." 17 The following table and graph set forth the composite performance of all of the underlying securities represented by a single Wireless HOLDR based upon the share amounts set forth in the table on page 11 of this prospectus, measured at the close of each business day from April 27, 2000, the first date when all of the underlying securities were publicly traded, to October 31, 2000. The performance table and graph data are adjusted for any splits that may have occurred over the measurement period. Past movements of the underlying securities are not necessarily indicative of future values.
Date Price - ---- ------ April 27........ 130.74 April 28........ 133.69 May 1........... 137.54 May 2........... 132.89 May 3........... 130.69 May 4........... 131.06 May 5........... 133.06 May 8........... 128.55 May 9........... 125.85 May 10.......... 117.86 May 11.......... 119.94 May 12.......... 120.52 May 15.......... 123.95 May 16.......... 127.83 May 17.......... 124.84 May 18.......... 122.84 May 19.......... 115.19 May 22.......... 112.01 May 23.......... 107.71 May 24.......... 110.82 May 25.......... 110.69 May 26.......... 111.05
Date Price - ---- ------ May 30.......... 120.73 May 31.......... 118.99 June 1.......... 124.32 June 2.......... 131.30 June 5.......... 130.42 June 6.......... 129.16 June 7.......... 131.84 June 8.......... 130.06 June 9.......... 131.17 June 12......... 131.07 June 13......... 132.99 June 14......... 130.19 June 15......... 129.22 June 16......... 130.71 June 19......... 132.25 June 20......... 131.60 June 21......... 131.70 June 22......... 126.94 June 23......... 121.64 June 26......... 121.18 June 27......... 121.00 June 28......... 120.21
Date Price - ---- ------ June 29......... 116.50 June 30......... 119.87 July 3.......... 122.12 July 5.......... 119.78 July 6.......... 123.85 July 7.......... 124.97 July 10......... 123.86 July 11......... 124.12 July 12......... 128.06 July 13......... 131.82 July 14......... 133.86 July 17......... 134.99 July 18......... 130.88 July 19......... 128.85 July 20......... 131.90 July 21......... 128.56 July 24......... 125.60 July 25......... 128.16 July 26......... 126.51 July 27......... 117.17 July 28......... 114.79 July 31......... 117.24
Date Price - ---- ------ August 1........ 117.01 August 2........ 115.78 August 3........ 116.49 August 4........ 114.31 August 7........ 114.24 August 8........ 112.28 August 9........ 112.32 August 10....... 111.98 August 11....... 112.12 August 14....... 113.75 August 15....... 113.60 August 16....... 113.02 August 17....... 114.80 August 18....... 114.09 August 21....... 112.11 August 22....... 111.07 August 23....... 110.44 August 24....... 111.65 August 25....... 111.61 August 28....... 112.26 August 29....... 111.25 August 30....... 111.58
Date Price - ---- ------ August 31....... 114.92 September 1..... 116.80 September 5..... 114.05 September 6..... 111.62 September 7..... 112.62 September 8..... 110.27 September 11.... 107.35 September 12.... 107.99 September 13.... 109.51 September 14.... 110.07 September 15.... 108.94 September 18.... 106.12 September 19.... 109.15 September 20.... 103.20 September 21.... 100.10 September 22.... 99.98 September 25.... 99.43 September 26.... 98.52 September 27.... 98.53 September 28.... 101.58 September 29.... 100.03 October 2....... 99.34
Date Price - ---- ------ October 3....... 98.21 October 4....... 102.69 October 5....... 101.90 October 6....... 98.24 October 9....... 97.52 October 10...... 95.20 October 11...... 89.45 October 12...... 85.79 October 13...... 92.80 October 16...... 91.93 October 17...... 88.73 October 18...... 88.30 October 19...... 96.08 October 20...... 95.87 October 23...... 96.06 October 24...... 96.28 October 25...... 92.81 October 26...... 92.11 October 27...... 95.52 October 30...... 94.47 October 31...... 101.07
[LINE GRAPH] 18 DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT General. The depositary trust agreement, dated as of October 25, 2000, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as trustee, other depositors and the owners of the Wireless HOLDRS, provides that Wireless HOLDRS will represent an owner's undivided beneficial ownership interest in the securities of the underlying companies. The trustee. The Bank of New York will serve as trustee. The Bank of New York, which was founded in 1784, was New York's first bank and is the oldest bank in the country still operating under its original name. The Bank is a state-chartered New York banking corporation and a member of the Federal Reserve System. The Bank conducts a national and international wholesale banking business and a retail banking business in the New York City, New Jersey and Connecticut areas, and provides a comprehensive range of corporate and personal trust, securities processing and investment services. Issuance, transfer and surrender of Wireless HOLDRS. You may create and cancel Wireless HOLDRS only in round-lots of 100 Wireless HOLDRS. You may create Wireless HOLDRS by delivering to the trustee the requisite underlying securities. The trust will only issue Wireless HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Wireless HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Wireless HOLDRS, the trust may require a minimum of more than one round-lot of 100 Wireless HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Wireless HOLDRS. Similarly, you must surrender Wireless HOLDRS in integral multiples of 100 Wireless 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 Wireless 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. The trustee will deliver you 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 Wireless HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning Wireless 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. You will be obligated to pay any tax or other charge that may become due with respect to Wireless 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 Wireless 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 Wireless 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. 19 Withdrawal of underlying securities. You may surrender your Wireless 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 Wireless 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 Wireless HOLDRS. Further issuances of Wireless HOLDRS. The depositary trust agreement provides for further issuances of Wireless HOLDRS on a continuous basis without your consent. Reconstitution events. The depositary trust agreement provides for the automatic distribution of underlying securities to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of securities registered under section 12 of the Securities Exchange Act of 1934, then its securities will no longer be an underlying security and the trustee will distribute the shares of that company to the owners of the Wireless 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 Wireless HOLDRS. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation or other corporate combination, the trustee will distribute the consideration paid by and received from the acquiring company to the beneficial owners of Wireless HOLDRS, unless the merger, consolidation or other corporate combination is between companies that are already included in the Wireless HOLDRS and the consideration received is additional underlying securities. In this case, the additional underlying securities will be deposited into the trust. D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through Nasdaq NMS and are not listed for trading on another U.S. national securities exchange or through Nasdaq NMS within 5 business days from the date the securities are delisted. If a reconstitution event occurs, 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. However, if either AT&T Corp. or Sprint Corporation convert the AT&T Wireless Group or PCS Group tracking stock, respectively, into another class of securities of AT&T or Sprint, or their respective subsidiaries, the securities received will be deposited into the trust and will become part of the Wireless HOLDRS. For more information on the conversion rights of the AT&T Wireless Group and PCS Group tracking stocks, please see Annex A. Termination of the trust. The trust will terminate if the trustee resigns and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, within 60 days from the date the trustee provides notice to Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, of its intent to resign. Upon termination, the beneficial owners of Wireless HOLDRS will surrender their Wireless 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 Wireless HOLDRS are delisted from the American Stock Exchange and are not listed for trading on another U.S. national securities exchange or through Nasdaq NMS within 5 business days from the date the Wireless HOLDRS are delisted. Finally, the trust will terminate if 75% of the owners of outstanding Wireless HOLDRS other than Merrill Lynch, Pierce, Fenner & Smith Incorporated vote to dissolve and liquidate the trust. 20 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 Wireless 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 Wireless 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 Wireless HOLDRS will not become effective until 30 days after notice of the amendment is given to the owners of Wireless HOLDRS. Issuance and cancellation fees. After the initial public offering, the trust expects to issue more Wireless HOLDRS. If you wish to create Wireless HOLDRS by delivering to the trust the requisite underlying securities, the trustee will charge you an issuance fee of up to $10.00 for each round-lot of 100 Wireless HOLDRS. If you wish to cancel your Wireless 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 Wireless 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 Wireless HOLDRS after the conclusion of the initial public offering, you will not be charged the underwriting fee. However, in addition to the issuance and cancellation fees described above, you will be responsible for paying any sales commissions associated with your purchase of the underlying securities that are charged by your broker, whether it be any of the members of the selling group or another broker. Custody fees. The Bank of New York, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Wireless HOLDRS to be deducted from any dividend payments or other cash distributions on underlying securities received by the trustee. With respect to the aggregate custody fee payable in any calendar year for each Wireless HOLDR, the Trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions received, or to be received, and payable with respect to such calendar year. The trustee cannot recapture unpaid custody fees from prior years. Address of the trustee. The Bank of New York, ADR Department, 101 Barclay Street, New York, New York 10286. Governing law. The depositary trust agreement and Wireless HOLDRS will be 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 will assume 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 Wireless HOLDRS. The trustee undertakes 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. 21 FEDERAL INCOME TAX CONSEQUENCES General The following is a summary of the U.S. federal income tax consequences relating to the Wireless HOLDRS for: . a citizen or resident of the United States; . a corporation or partnership created or organized in the United States or under the laws of the United States; . an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; . a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust (each of the above, a "U.S. receipt holder"); and . any person other than a U.S. receipt holder (a "non-U.S. receipt holder"). This summary is based upon laws, regulations, rulings and decisions currently in effect, all of which are subject to change, possibly on a retroactive basis. The discussion does not deal with all U.S. federal income tax consequences applicable to all categories of investors, some of which may be subject to special rules. In addition, this summary generally is limited to investors who will hold the Wireless HOLDRS as "capital assets" (generally, property held for investment) within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended. We recommend that you consult with your own tax advisor. Taxation of the trust The trust will provide for flow through tax consequences as it will be treated as a grantor trust or custodial arrangement for U.S. federal income tax purposes. Taxation of Wireless HOLDRS A receipt holder purchasing and owning Wireless HOLDRS will be treated, for U.S. federal income tax purposes, as directly owning a proportionate share of the underlying securities represented by Wireless HOLDRS. Consequently, if there is a taxable cash distribution on an underlying security, a holder will recognize income with respect to the distribution at the time the distribution is received by the trustee, not at the time that the holder receives the cash distribution from the trustee. A receipt holder will determine its initial tax basis in each of the underlying securities by allocating the purchase price for the Wireless HOLDRS among the underlying securities based on their relative fair market values at the time of purchase. Similarly, when a holder sells a receipt, it will determine the amount realized with respect to each security by allocating the sales price among the underlying securities based on their relative fair market values at the time of sale. A holder's gain or loss with respect to each security will be computed by subtracting its adjusted basis in the security from the amount realized on the security. With respect to purchases of Wireless HOLDRS for cash in the secondary market, a receipt holder's aggregate tax basis in each of the underlying securities will be equal to the purchase price of the Wireless HOLDRS. Similarly, with respect to sales of Wireless HOLDRS for cash in the secondary market, the amount realized with respect to a sale of Wireless 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 Wireless HOLDRS, the occurrence of a reconstitution event, or a termination event will not be a taxable event, except to the extent that cash is distributed in lieu of fractional shares. The receipt holder's holding period with respect to the distributed securities will include the period that the holder held the securities through the trust. 22 Brokerage fees and custodian fees The brokerage fee incurred in purchasing a receipt will be treated as part of the cost of the underlying securities. Accordingly, a holder includes this fee in its tax basis in the underlying securities. A holder will allocate the brokerage fee among the underlying securities using either a fair market value allocation or pro rata based on the number of shares of each underlying security. Similarly, the brokerage fee incurred in selling Wireless HOLDRS will reduce the amount realized with respect to the underlying securities. A holder will be required to include in its income the full amount of dividends paid on the underlying securities, even though the depositary trust agreement provides that the custodian fees will be deducted directly from any dividends paid. These custodian fees will be treated as an expense incurred in connection with a holder's investment in the underlying securities and may be deductible. If a holder is an individual, estate or trust, however, the deduction of its share of custodian fees will be a miscellaneous itemized deduction that may be disallowed in whole or in part. Special considerations with respect to underlying securities of foreign issuers With respect to underlying securities of foreign issuers, the gross amount of any taxable cash distribution will not be eligible for the dividends received deduction generally allowed to corporate U.S. receipt holders. If a foreign issuer pays a dividend in a currency other than in U.S. dollars, the amount of the dividend for U.S. federal income tax purposes will be the U.S. dollar value determined at the spot rate on the date of the payment regardless of whether the payment is later converted into U.S. dollars. In this case, the U.S. receipt holder may recognize ordinary income or loss as a result of currency fluctuations between the date on which the dividend is paid and the date the dividend amount is converted into U.S. dollars. Subject to certain conditions and limitations, any foreign tax withheld on dividends may be deducted from taxable income or credited against a U.S. receipt holder's U.S. federal income tax liability. The limitation on foreign taxes eligible for the U.S. foreign tax credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by a foreign issuer generally will constitute passive income or, in the case of some U.S. holders, financial services income. For purposes of the U.S. foreign tax credit limitation, dividends received by a U.S. receipt holder with respect to an underlying security of a foreign issuer generally will be treated as foreign source income while any gain or loss recognized from the sale of such security generally will be treated as from sources within the United States. The rules relating to the determination of the foreign tax credit are complex and we recommend that U.S. receipt holders consult their own tax advisors to determine whether and to what extent a credit would be available. Dividends and distributions made by a foreign issuer may be subject to a withholding tax. Some foreign issuers have made arrangements through which holders of their American depositary shares can apply for a refund of withheld taxes. It is expected that holders of Wireless HOLDRS will be able to use these arrangements to apply for a refund of withheld taxes. Additionally, special U.S. federal income tax rules apply to U.S. persons owning shares of a passive foreign investment company (a "PFIC"). We do not believe that any of the foreign issuers of the underlying securities is currently a PFIC and do not anticipate that any issuer will become a PFIC in the future, although no assurances can be made that the applicable tax law or other relevant circumstances will not change in a manner which affects the PFIC determination. 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. 23 Passive income for this purpose generally includes dividends, interest, royalties, rents, and gains from commodities and securities transactions. If a corporation were classified as a PFIC, a U.S. receipt holder could be subject to increased tax liability, possibly including an interest charge, upon the sale or other disposition of the Wireless HOLDRS or of the underlying securities or upon the receipt of "excess distributions," unless the U.S. receipt holder elected to be taxed currently on its pro rata portion of the corporation's income, whether or not the income was distributed in the form of dividends or otherwise. Non-U.S. receipt holders A non-U.S. receipt holder generally will be subject to U.S. withholding tax at a rate of 30% or a lower rate as may be specified by an applicable tax treaty with respect to dividends received on underlying securities of U.S. issuers, unless that income is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the holder, in which case, those dividends will be exempt from withholding tax, provided the holder complies with applicable certification and disclosure requirements. A non-U.S. receipt holder generally will not be subject to U.S. federal income or withholding tax with respect to dividends received on underlying securities of foreign issuers, unless that income is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the holder. With respect to dividends of both U.S. and foreign issuers, a non-U.S. receipt holder's dividends that are effectively connected with a U.S. trade or business or dividends attributable to a permanent establishment, net of certain deductions and credits, will be subject to U.S. federal income taxation at the same graduated rates applicable to U.S. persons. In addition to this graduated tax, effectively connected dividends or dividends attributable to a permanent establishment received by a corporate non-U.S. receipt holder may also be subject to a branch profits tax at a rate of 30% or a lower rate as may be specified by an applicable tax treaty. Under some circumstances, a non-U.S. receipt holder whose dividends are so effectively connected or attributable shall be entitled to a dividends received deduction equal to 70% or 80% of the amount of the dividend. A non-U.S. receipt holder that is eligible for a reduced rate of withholding tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service. A non-U.S. receipt holder generally will not be subject to U.S. federal income or withholding tax with respect to gain recognized upon the sale or other disposition of Wireless HOLDRS or of the underlying securities unless: . that gain is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, is attributable to a permanent establishment maintained in the United States by the holder, . in the case of any gain realized by an individual non-U.S. receipt holder, the holder is present in the United States for 183 days or more in the taxable year of the sale or other disposition and certain other conditions are met, or . the underlying securities issuer is or has been a U.S. real property holding corporation for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the disposition or the period during which the non-U.S. receipt holder held the common stock of such issuer and (a) the common stock is not considered to be "regularly traded on an established securities market" or (b) the non-U.S. receipt holder owned, actually or constructively, at any time during the shorter of the periods described above, more than 5% of the common stock of such issuer. 24 Effectively connected or attributable gains generally will be subject to U.S. federal income taxation at the same graduated rates applicable to U.S. persons, and may, in the case of a corporate non-U.S. receipt holder, also be subject to the branch profits tax. We recommend that non-U.S. receipt holders should consult their own tax advisors to determine whether any applicable tax treaties provide for different rules. The preceding discussion does not address all aspects of U.S. federal income taxation that may be relevant in light of a non-U.S. receipt holder's or an issuer's particular facts and circumstances. We recommend that investors should consult their own tax advisors. Backup withholding tax, withholding tax and information reporting requirements Final U.S. Treasury Regulations relating to backup withholding, withholding and information reporting have been issued that modify certain rules with respect to payments made after December 31, 2000. Investors are urged to consult their own tax advisors regarding the application of the backup withholding, withholding and information reporting requirements, including the new regulations, with respect to their particular circumstances. ERISA CONSIDERATIONS Any plan fiduciary which proposes to have a plan acquire Wireless HOLDRS should consult with its counsel with respect to the potential applicability of ERISA and the Internal Revenue Code to this investment and whether any exemption would be applicable and determine on its own whether all conditions have been satisfied. Moreover, each plan fiduciary should determine whether, under the general fiduciary standards of investment prudence and diversification, an acquisition of Wireless HOLDRS is appropriate for the plan, taking into account the overall investment policy of the plan and the composition of the plan's investment portfolio. PLAN OF DISTRIBUTION In accordance with the depositary trust agreement, the trust will issue to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce, Fenner & Smith Incorporated will deposit the underlying securities to receive Wireless HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Robert W. Baird & Co. Incorporated, A.G. Edwards & Sons, Inc., First Union Securities, Inc., Legg Mason Wood Walker, Incorporated, Morgan Keegan & Company, Inc., Raymond James & Associates, Inc., Sutro & Co. Incorporated and Tucker Anthony Incorporated, the selling group, propose to offer the Wireless HOLDRS to the public at the offering price set forth on the cover page of this prospectus, which includes an underwriting fee of 2%. Merrill Lynch, Pierce, Fenner & Smith Incorporated will provide Wireless HOLDRS to the other members of the selling group at the public offering price, as set forth on the cover page of this prospectus, less a concession that is not in excess of 1.5%. The selling group may allow to certain dealers, and the dealers may reallow, a discount on sales of Wireless HOLDRS not in excess of 0.25% of the public offering price as set forth on the cover page of this prospectus. We expect the trust to deliver the initial distribution of Wireless HOLDRS against deposit of the underlying securities in New York, New York on November 3, 2000. After the initial offering, the public offering price, concession and discount may be changed. The trust will continue to issue Wireless HOLDRS, in connection with deposits of underlying securities. This offering is being made in compliance with Conduct Rule 2810 of the National Association of Securities Dealers, Inc. Accordingly, sales will not be made to a discretionary account without the prior written approval of a purchaser of Wireless HOLDRS. Members of the selling group and their affiliates have from time to time provided investment banking and other financial services to some of the issuers of the underlying securities and expect in the future to provide these services, for which they have received and will receive customary fees and commissions. They also may have served as counterparties in other transactions with some of the issuers of the underlying securities. 25 Merrill Lynch, Pierce, Fenner & Smith Incorporated may use this prospectus, as updated from time to time, in connection with offers and sales related to market-making transactions in the Wireless 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 Wireless HOLDRS. Should a court determine not to enforce the indemnification provision, Merrill Lynch, Pierce, Fenner & Smith Incorporated also has agreed to contribute to payments the trustee may be required to make with respect to these liabilities. LEGAL MATTERS Legal matters, including the validity of the Wireless HOLDRS, will be passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor and the underwriters, by Shearman & Sterling, New York, New York. Shearman & Sterling, as special U.S. tax counsel to the trust, also will render an opinion regarding the material federal income tax consequences relating to the Wireless HOLDRS. WHERE YOU CAN FIND MORE INFORMATION Merrill Lynch, Pierce, Fenner & Smith Incorporated has filed a registration statement on Form S-1 with the SEC covering the Wireless HOLDRS. While this prospectus is a part of the registration statement, it does not contain all the exhibits filed as part of the registration statement. You should consider reviewing the full text of those exhibits. The registration statement is available over the Internet at the SEC's Web site at http://www.sec.gov. You also may read and copy the registration statement at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more information on the public reference rooms and their copy charges. Merrill Lynch, Pierce, Fenner & Smith Incorporated will not file any reports pursuant to the Exchange Act. The trust will file modified reports pursuant to the Exchange Act. Because 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 are 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 an are not required to file periodic financial and other information on EDGAR. Therefore, the information may not be accessible through the SEC's Web site. Information regarding the issuers of the underlying securities may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated information. The trust and the selling group and their affiliates are not affiliated with the issuers of the underlying securities, and the issuers of the underlying securities have no obligations with respect to Wireless HOLDRS. This prospectus relates only to Wireless 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 26 issuers of the underlying securities in connection with Wireless 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 Wireless HOLDRS have been publicly disclosed. 27 ANNEX A This annex forms an integral part of the prospectus. The following tables provide a brief description of the business of each of the issuers of the underlying securities and set forth the split-adjusted closing market prices, as reported on the applicable primary U.S. trading market, of each of the underlying securities in each month during 1995, 1996, 1997, 1998, 1999 and 2000 through October 2000. All market prices in excess of one dollar are rounded to the nearest one sixty-fourth of a dollar. A table outlining the primary U.S. stock market on which the securities of the issuers are listed can be found on page 11. The primary foreign stock market on which the securities of the foreign issuers included in the Wireless HOLDRS are listed is described below. An asterisk (*) denotes that no shares of the issuer were trading on a U.S. stock market during that month. The historical prices of the underlying securities should not be taken as an indication of future performance. AETHER SYSTEMS, INC. (AETH) Aether Systems, Inc. provides wireless data services, systems and software which enable consumers to use handheld devices for wireless data communications. Aether designs, develops and supports wireless systems for companies seeking to make data and information available to its workers or customers. Aether's products and services include wireless integration and data management software and wireless data engineering and development.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- January * January * January * January * January * January 123 February * February * February * February * February * February 258 3/8 March * March * March * March * March * March 181 1/2 April * April * April * April * April * April 166 1/2 May * May * May * May * May * May 137 7/16 June * June * June * June * June * June 205 July * July * July * July * July * July 152 1/16 August * August * August * August * August * August 138 1/2 September * September * September * September * September * September 105 1/2 October * October * October * October * October 69 9/16 October 80 5/8 November * November * November * November * November 76 December * December * December * December * December 71 5/8
The closing price on October 31, 2000 was 80 5/8. A-1 AT&T CORP.--AT&T WIRELESS GROUP (AWE) AT&T Corp. provides wireless voice and data telecommunications services throughout the United States on its digital wireless network and offers a variety of services to its wireless customers such as voicemail, caller identification and messaging. AT&T's non-wireless businesses consist of domestic and international long distance services, cable television and Internet communications services. In April 2000, AT&T Corp. created the AT&T Wireless Group tracking stock to track the performance of its wireless telecommunications operations. Owning the AT&T Wireless Group tracking stock does not represent a direct legal interest in the assets and liabilities of AT&T's wireless operations. Rather, stockholders remain invested in AT&T Corp. Some of the terms of the AT&T Wireless Group tracking stock include: Voting. Holders of AT&T Wireless Group tracking stock do not have direct voting rights in the AT&T Wireless Group. The AT&T Wireless Group tracking stock vote together with all the other classes of AT&T common stock. AT&T Wireless Group tracking stock has one-half of one vote per share, which is subject to adjustments for stock splits, stock dividends or other events affecting the share capital of AT&T. Conversion. AT&T may convert all the outstanding shares of AT&T Wireless Group tracking stock for AT&T common stock at 10% premium to the market price on the occurrence of specific tax events or any time after April 26, 2002. It may also, at any time, convert all outstanding shares of AT&T Wireless Group tracking stock for specified amounts of the stock of a subsidiary of AT&T that holds the assets of the AT&T Wireless Group. In addition, where AT&T disposes of 80% or more of the assets attributed to the AT&T Wireless Group, AT&T will be required to provide the holders of AT&T Wireless Group tracking stock with compensation in the form of AT&T common stock, cash or other property and securities. Dividends. AT&T is not required to pay dividends on the shares of the AT&T Wireless Group tracking stock. Any dividends that are declared would be limited to an amount that is equivalent to what would legally be available for dividends if the AT&T Wireless Group were a stand-alone corporation. In addition, AT&T may choose to pay dividends to holders of any other class of stock without paying dividends to holders of the tracking stock. Dissolution. In the event of a dissolution of AT&T, the holders of AT&T Wireless Group tracking stock do not have a preferential right to the assets of AT&T's wireless operations. Holders of AT&T Wireless Group tracking stock and any other class of common shares of AT&T will share in any assets of AT&T remaining for distribution to common shareholders in proportion to the aggregate market capitalization of the outstanding shares of each class of stock. Please see the public filings of AT&T Corp. for more information on its tracking stock. For information on where you can access AT&T's filings, please see "Where you can find more information." The historical stock prices listed below reflect the performance of the AT&T Wireless Group tracking stock.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- January * January * January * January * January * January * February * February * February * February * February * February * March * March * March * March * March * March * April * April * April * April * April * April 31 15/16 May * May * May * May * May * May 28 9/16 June * June * June * June * June * June 27 July * July * July * July * July * July 27 7/8 August * August * August * August * August * August 26 5/64 September * September * September * September * September * September 20 7/8 October * October * October * October * October * October 24 15/16 November * November * November * November * November * December * December * December * December * December *
The closing price on October 31, 2000 was 24 15/16. A-2 CROWN CASTLE INTERNATIONAL CORP. (TWRS) Crown Castle International Corp. owns, leases and manages wireless transmission towers and networks for wireless communications and broadcasting companies in the United States, Puerto Rico and the United Kingdom. Crown Castle's primary business is to lease capacity on its towers to wireless telecommunications carriers. Crown Castle also provides related services to its customers, including network design, radio frequency engineering, site acquisition, development and construction, antenna installation and network management and maintenance.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- January * January * January * January * January 21 5/8 January 31 5/8 February * February * February * February * February 17 February 32 1/4 March * March * March * March * March 18 March 37 7/8 April * April * April * April * April 19 1/8 April 38 3/8 May * May * May * May * May 20 1/8 May 26 3/16 June * June * June * June * June 20 13/16 June 36 1/2 July * July * July * July * July 21 1/16 July 33 3/4 August * August * August * August 8 1/8 August 15 1/8 August 34 11/16 September * September * September * September 9 5/8 September 18 23/32 September 31 1/16 October * October * October * October 12 7/8 October 19 1/4 October 30 5/16 November * November * November * November 13 7/16 November 21 1/16 December * December * December * December 23 1/2 December 32 1/8
The closing price on October 31, 2000 was 30 5/16. LM ERICSSON TELEPHONE COMPANY (ERICY) LM Ericsson Telephone Company is an international manufacturer of advanced systems and products for wireline and wireless communications. Ericsson's range of telecommunication and data communication products includes systems and services for handling voice, data, images and text in public and private wireline and wireless communications networks, power equipment, and defense systems electronics and telecommunications. American depositary receipts evidencing American depositary shares of Ericsson are included in the Wireless HOLDRS and are traded through Nasdaq NMS. Shares of Ericsson also trade on the Stockholm Stock Exchange.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- -------- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- January 1 11/16 January 2 37/64 January 4 13/64 January 4 53/64 January 6 31/32 January 18 41/64 February 1 25/32 February 2 3/4 February 3 5/16 February 5 43/64 February 6 1/2 February 24 March 1 15/16 March 2 43/64 March 4 15/64 March 5 61/64 March 5 61/64 March 23 29/64 April 2 3/32 April 2 35/64 April 4 13/64 April 6 7/16 April 6 3/4 April 22 7/64 May 2 19/64 May 2 57/64 May 4 29/64 May 6 31/32 May 6 47/64 May 20 1/2 June 2 1/2 June 2 11/16 June 4 59/64 June 7 5/32 June 8 15/64 June 20 July 2 21/64 July 2 35/64 July 5 21/32 July 6 59/64 July 8 1/64 July 18 1/8 August 2 43/64 August 2 57/64 August 5 7/32 August 5 23/64 August 8 9/64 August 20 1/2 September 3 1/16 September 3 11/64 September 6 September 4 19/32 September 7 13/16 September 14 13/16 October 2 43/64 October 3 29/64 October 5 17/32 October 5 21/32 October 10 11/16 October 13 7/8 November 2 31/32 November 3 55/64 November 5 1/16 November 6 29/32 November 12 3/64 December 2 7/16 December 3 25/32 December 4 43/64 December 5 63/64 December 16 27/64
The closing price on October 31, 2000 was 13 7/8. A-3 MOTOROLA, INC. (MOT) Motorola, Inc. develops, manufactures and markets communications and electronic products and systems. Motorola offers wireless telephones, satellite communications products and systems, network and Internet access products, semiconductors to control and amplify electrical signals in computers, transportation, space vehicles, major home appliances and electronic systems for use in the automotive, communications, manufacturing and computer industries. Motorola markets and sells its products through its own sales force, distributors, retailers and value-added resellers.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- January 19 3/4 January 18 January 22 3/4 January 19 55/64 January 24 5/64 January 45 1/2 February 19 11/64 February 18 5/64 February 18 43/64 February 18 35/64 February 23 27/64 February 56 53/64 March 18 13/64 March 17 43/64 March 20 11/64 March 20 1/4 March 24 27/64 March 48 43/64 April 18 61/64 April 20 27/64 April 19 3/64 April 18 37/64 April 26 43/64 April 39 43/64 May 19 61/64 May 22 1/4 May 22 1/8 May 17 43/64 May 27 39/64 May 31 1/4 June 22 3/8 June 20 59/64 June 25 3/8 June 17 33/64 June 31 37/64 June 30 July 25 1/2 July 18 July 26 51/64 July 17 27/64 July 30 27/64 July 33 1/2 August 24 7/8 August 17 51/64 August 24 29/64 August 14 5/16 August 30 3/4 August 36 1/16 September 25 29/64 September 17 11/64 September 23 61/64 September 14 19/64 September 29 21/64 September 29 1/2 October 21 59/64 October 15 21/64 October 20 43/64 October 17 21/64 October 32 7/16 October 24 15/16 November 20 1/2 November 18 29/64 November 20 61/64 November 20 5/8 November 38 5/64 December 19 December 20 27/64 December 19 1/16 December 20 23/64 December 49 5/64
The closing price on October 31, 2000 was 24 15/16. NETRO CORPORATION, INC. (NTRO) Netro Corporation, Inc. provides wireless networking equipment to telecommunications service providers which provide businesses with high-speed telecommunications connections and Internet access. Netro's wireless telecommunications system provides high-speed voice and data connections delivering data from a single point to multiple destinations.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- January * January * January * January * January * January 43 February * February * February * February * February * February 42 5/8 March * March * March * March * March * March 65 1/64 April * April * April * April * April * April 43 1/8 May * May * May * May * May * May 29 7/8 June * June * June * June * June * June 57 3/8 July * July * July * July * July * July 49 7/8 August * August * August * August * August 31 1/16 August 82 5/8 September * September * September * September * September 27 3/8 September 59 1/4 October * October * October * October * October 22 13/64 October 21 13/16 November * November * November * November * November 26 1/2 December * December * December * December * December 51
The closing price on October 31, 2000 was 21 13/16. A-4 NEXTEL COMMUNICATIONS, INC. (NXTL) Nextel Communications, Inc. provides digital and analog wireless communications services to its customers in the United States. Nextel Communication's network offers an integrated wireless communications system with digital cellular, text and numeric paging capabilities and a digital two- way radio feature that allows users to instantly contact other users. Nextel Communications also has ownership interests in wireless companies in Latin America, Asia and Canada.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- -------- --------- -------- --------- -------- --------- -------- January 4 13/64 January 6 7/8 January 7 11/16 January 13 21/32 January 16 January 53 3/16 February 6 1/16 February 7 9/16 February 7 1/8 February 14 25/32 February 15 1/32 February 68 3/8 March 6 13/16 March 9 7/16 March 6 11/16 March 16 7/8 March 18 5/16 March 74 1/8 April 8 1/16 April 9 1/16 April 6 19/32 April 14 11/32 April 20 15/32 April 54 23/32 May 6 3/4 May 10 3/8 May 7 3/8 May 11 25/32 May 18 7/16 May 46 5/16 June 7 1/16 June 9 17/32 June 9 15/32 June 12 7/16 June 25 3/32 June 61 3/16 July 9 11/16 July 7 9/16 July 12 1/16 July 13 25/64 July 26 25/32 July 55 7/8 August 8 15/16 August 8 3/16 August 12 17/32 August 9 1/32 August 28 29/32 August 55 7/16 September 8 7/16 September 9 1/4 September 14 7/16 September 10 3/32 September 33 29/32 September 46 3/4 October 6 15/16 October 8 October 13 1/8 October 9 1/16 October 43 3/32 October 38 7/16 November 7 11/16 November 7 1/2 November 12 5/8 November 10 3/4 November 49 9/16 December 7 3/8 December 6 17/32 December 13 December 11 13/16 December 51 9/16
The closing price on October 31, 2000 was 38 7/16. NEXTEL PARTNERS, INC. (NXTP) Nextel Partners, Inc. provides digital wireless communications services in mid-sized and smaller markets throughout the United States. Nextel Partners offers integrated services under the Nextel brand name targeted to business users and accessible through a single wireless telephone. These services include paging and the services that allow users to contact co-workers instantly on private one-to-one calls or on group calls. In addition, Nextel Partners has recently launched its Nextel Online service that provides Internet-accessible handsets with wireless Internet services, including Web- based applications and content.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- January * January * January * January * January * January * February * February * February * February * February * February 32 March * March * March * March * March * March 29 April * April * April * April * April * April 21 15/16 May * May * May * May * May * May 17 June * June * June * June * June * June 32 9/16 July * July * July * July * July * July 31 5/8 August * August * August * August * August * August 30 3/16 September * September * September * September * September * September 29 1/8 October * October * October * October * October * October 24 1/2 November * November * November * November * November * December * December * December * December * December *
The closing price on October 31, 2000 was 24 1/2. A-5 NOKIA CORP. (NOK) Nokia Corp. is a manufacturer of wireless telephones and a supplier of wireless and wireline network products and services to telecommunications operators and Internet service providers. Nokia telecommunications products include wireless telephones using major digital and analog standards and network access, switching and management systems. Nokia also develops and markets digital satellite, cable and land-based television receivers for broadcast and multimedia applications. American depositary receipts evidencing American depositary shares of Nokia are included in the Wireless HOLDRS and are traded on the New York Stock Exchange. Shares of Nokia also trade on the Helsinki Stock Exchange.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- --------- -------- January 2 9/32 January 2 11/32 January 4 3/16 January 4 3/4 January 18 1/64 January 45 23/32 February 2 23/64 February 2 3/16 February 3 21/32 February 6 19/64 February 16 61/64 February 50 7/8 March 2 19/64 March 2 9/64 March 3 41/64 March 6 3/4 March 19 15/32 March 55 1/2 April 2 9/16 April 2 9/32 April 4 3/64 April 8 23/64 April 18 35/64 April 56 1/2 May 2 29/32 May 2 23/32 May 4 1/8 May 8 1/8 May 17 13/16 May 52 June 3 3/4 June 2 5/16 June 4 39/64 June 9 3/32 June 22 57/64 June 50 1/16 July 4 1/8 July 2 13/64 July 5 23/64 July 10 29/32 July 21 17/64 July 44 August 4 21/64 August 2 41/64 August 4 27/32 August 8 23/64 August 20 29/32 August 44 7/8 September 4 23/64 September 2 49/64 September 5 55/64 September 9 25/32 September 22 15/32 September 40 October 3 31/64 October 2 29/32 October 5 33/64 October 11 41/64 October 28 31/32 October 42 3/4 November 3 25/64 November 3 33/64 November 5 13/64 November 12 1/4 November 34 1/2 December 2 7/16 December 3 39/64 December 4 11/32 December 15 1/16 December 47 49/64
The closing price on October 31, 2000 was 42 3/4. QUALCOMM INCORPORATED (QCOM) Qualcomm Incorporated develops and markets digital wireless communications products, technologies and services for use in wireless networks. Digital wireless communications technology increases system capacity, provides more secure communications channels and improves reliability. Several of Qualcomm's major product lines are based on its own Code Division Multiple Access, or CMDA, technology. CMDA technology is a communications industry standard for digital cellular, personal communications services and wireless services. Qualcomm also licenses CMDA technology to telecommunications equipment suppliers throughout the world. Qualcomm markets and sells its products and CMDA technology through its own direct sales force and through third parties.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- -------- --------- ------- --------- ------- --------- ------- --------- --------- --------- -------- January 3 5/16 January 5 19/32 January 7 January 6 31/64 January 8 15/64 January 127 February 3 37/64 February 4 15/16 February 6 31/32 February 6 3/8 February 9 1/8 February 142 7/16 March 4 3/32 March 5 3/16 March 7 3/64 March 6 11/16 March 15 35/64 March 149 5/16 April 3 9/32 April 4 27/32 April 5 27/32 April 7 1/32 April 25 April 108 7/16 May 3 13/64 May 6 13/16 May 6 1/32 May 6 33/64 May 24 5/16 May 66 3/8 June 4 21/64 June 6 41/64 June 6 23/64 June 7 1/32 June 35 7/8 June 60 July 5 11/32 July 5 27/64 July 5 25/32 July 7 51/64 July 39 July 62 7/16 August 6 3/32 August 5 27/64 August 5 25/32 August 5 1/2 August 48 3/64 August 59 7/8 September 5 47/64 September 5 5/16 September 7 31/32 September 6 September 47 19/64 September 71 1/4 October 4 13/16 October 4 31/32 October 7 3/64 October 6 61/64 October 55 11/16 October 65 7/64 November 5 11/64 November 5 1/4 November 8 15/32 November 6 55/64 November 90 37/64 December 5 3/8 December 4 63/64 December 6 5/16 December 6 31/64 December 176 1/8
The closing price on October 31, 2000 was 65 7/64. A-6 RESEARCH IN MOTION LIMITED (RIMM) Research in Motion Limited designs, manufactures and markets wireless telecommunications products and services. Research in Motion's products are designed to facilitate wireless data transmission and include wireless pagers, e-mail, personal computer cards and modems. Research in Motion integrates its hardware and software products and services to provide wireless access to time- sensitive information including e-mail, messaging, Internet and intranet-based applications. Shares of Research in Motion also trade on the Toronto Stock Exchange.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- January * January * January * January * January * January 65 3/4 February * February * February * February * February 8 7/8 February 135 1/4 March * March * March * March * March 10 1/2 March 106 1/2 April * April * April * April * April 12 3/16 April 42 1/2 May * May * May * May * May 14 1/16 May 32 3/16 June * June * June * June * June 20 1/4 June 45 1/4 July * July * July * July * July 23 3/8 July 50 5/8 August * August * August * August * August 29 3/4 August 75 9/16 September * September * September * September * September 30 15/16 September 98 9/16 October * October * October * October * October 30 3/4 October 100 November * November * November * November * November 51 1/4 December * December * December * December * December 46 3/16
The closing price on October 31, 2000 was 100. RF MICRO DEVICES, INC. (RFMD) RF Micro Devices, Inc. designs, manufactures and markets radio frequency integrated circuits, which are the physical pathways for the transmission of information, for cellular and cordless telephones, wireless networks, industrial radios and wireless security systems. RF Micro Devices' products, which include amplifiers, transmitters and receivers, allow data to be converted so that it can be transmitted across telecommunications lines. RF Micro Devices markets and sells its products through its own direct sales force and through third parties.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- January * January * January * January 1 19/64 January 9 3/64 January 40 1/2 February * February * February * February 1 55/64 February 9 5/8 February 69 5/32 March * March * March * March 1 53/64 March 11 31/32 March 67 3/16 April * April * April * April 2 April 13 31/32 April 52 1/32 May * May * May * May 1 39/64 May 10 21/32 May 52 1/2 June * June * June 2 25/64 June 1 23/64 June 18 21/32 June 43 13/16 July * July * July 2 7/64 July 2 5/32 July 19 7/64 July 37 11/16 August * August * August 2 11/32 August 1 5/8 August 21 31/32 August 44 5/8 September * September * September 2 21/64 September 2 17/64 September 22 7/8 September 32 October * October * October 1 7/8 October 2 31/32 October 25 13/16 October 19 15/16 November * November * November 1 49/64 November 3 45/64 November 33 31/32 December * December * December 1 35/64 December 5 51/64 December 34 7/32
The closing price on October 31, 2000 was 19 15/16. A-7 SK TELECOM CO., LTD. (SKM) SK Telecom Co., Ltd. is a leading wireless telecommunications service providers in Korea. SK Telecom offers digital wireless telecommunications and paging services over its wireless network in Korea. It also offers wireless data and wireless networking services, including news and information, stock trading, e-mail and banking services. American depositary receipts evidencing American depositary shares of SK Telecom are included in the Wireless HOLDRS and are traded on the New York Stock Exchange. Shares of SK Telecom also trade on the Korea Stock Exchange.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- -------- --------- -------- --------- -------- --------- ------- --------- -------- January * January * January 14 7/16 January 8 3/4 January 10 3/16 January 36 11/16 February * February * February 12 1/64 February 8 5/8 February 10 1/8 February 44 15/16 March * March * March 9 61/64 March 7 15/16 March 12 3/16 March 39 April * April * April 9 7/32 April 7 7/16 April 13 7/8 April 32 1/16 May * May * May 8 63/64 May 6 3/8 May 14 1/4 May 40 1/16 June * June 16 9/64 June 9 49/64 June 5 9/16 June 17 June 36 5/16 July * July 15 25/32 July 11 11/64 July 7 3/4 July 14 3/16 July 29 13/16 August * August 15 5/64 August 8 47/64 August 6 August 11 5/16 August 25 5/8 September * September 14 1/4 September 8 47/64 September 7 1/16 September 10 5/16 September 25 5/8 October * October 11 25/32 October 5 11/32 October 10 5/16 October 13 1/16 October 25 1/16 November * November 12 1/4 November 5 49/64 November 10 5/16 November 23 9/16 December * December 12 1/2 December 6 1/2 December 10 3/16 December 38 3/8
The closing price on October 31, 2000 was 25 1/16. A-8 SPRINT CORPORATION--PCS GROUP (PCS) Sprint Corporation's PCS Group operates a fully digital wireless telecommunications network in the United States with licenses to provide nationwide service using a single frequency and technology. The PCS Group currently serves many of the largest metropolitan markets in the United States and Puerto Rico and the United States Virgin Islands. In November 1998, Sprint Corporation reclassified its publicly traded common shares into PCS Group tracking stock, which tracks the performance of Sprint's wireless telecommunications operations and FON Group tracking stock, which tracks the performance of all of Sprint's other operations including its long distance and local telecommunications divisions, its product distribution and directory publishing businesses and its interests in other telecommunications investments and alliances. Owning either stock does not represent a direct legal interest in the assets and liabilities of the PCS Group or the FON Group. Rather, shareholders remain invested in Sprint Corporation. Some of the terms of the PCS Group tracking stock include: Voting. Holders of PCS Group tracking stock do not have direct voting rights in the PCS Group. The PCS Group tracking stock votes with all the other classes of Sprint stock. The number of votes attributed to each share of the PCS Group tracking stock is equal to the ratio of the average trading prices of one share of PCS Group tracking stock to one share of FON Group tracking stock and will, therefore, vary depending on the relative market values of the tracking stock. Conversion. Beginning November 23, 2001, Sprint may convert each share of PCS Group tracking stock into FON Group tracking common stock at 10% premium to the market price. After November 22, 2002, the conversion ratio will be determined by the board of directors of Sprint and is not required to be at a premium to the market price. Sprint may also convert all outstanding shares of PCS Group tracking stock for specified amounts of the stock of a subsidiary of Sprint that holds the assets of the PCS Group. In addition, where Sprint disposes of 80% or more of the assets attributed to the PCS Group, Sprint may be required to distribute to the holders of PCS Group tracking stock the attributable proceeds of the disposition in the form of cash or securities or convert the outstanding PCS Group tracking stock into FON Group tracking stock at a 10% premium to the market price. Dividends. Sprint is not required to pay dividends on the shares of the PCS Group tracking stock. Any dividends that are declared would be limited to an amount that is equivalent to what would legally be available for dividends if the PCS Group were a stand-alone corporation. In addition, Sprint may choose to pay dividends to holders of any other class of stock without paying dividends to holders of the tracking stock. Dissolution. In the event of a dissolution of Sprint, the holders of PCS Group tracking stock do not have a preferential right to the assets of Sprint's wireless operations. Each share of PCS Group will be attributed a portion of any remaining assets of Sprint. It is expected that the holders of FON Group tracking stock will be attributed the majority of any of Sprint's remaining assets. Please see Sprint's public filings for more information on its tracking stock. For information on where you can access Sprint's filings, please see "Where you can find more information." The historical stock prices listed below reflect the performance of the PCS Group tracking stock.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- --------- ------- January * January * January * January * January 15 7/8 January 55 1/32 February * February * February * February * February 16 February 51 3/4 March * March * March * March * March 22 5/32 March 65 1/2 April * April * April * April * April 21 1/8 April 55 May * May * May * May * May 22 1/2 May 55 1/2 June * June * June * June * June 28 1/2 June 59 1/2 July * July * July * July * July 30 5/16 July 54 1/4 August * August * August * August * August 29 7/8 August 50 3/16 September * September * September * September * September 37 9/32 September 35 1/8 October * October * October * October * October 41 15/32 October 38 1/8 November * November * November * November 7 31/32 November 45 7/8 December * December * December * December 11 9/16 December 51 1/4
The closing price on October 31, 2000 was 38 1/8. A-9 TELESP CELLULAR HOLDING COMPANY (TCP) Telesp Cellular Holding Company is a leading provider of wireless telecommunications services in the state of Sao Paulo, Brazil. Telesp offers both digital and analog wireless telephone services and also offers related wireless services such as voicemail, caller identification, messaging and Internet access. Telesp also provides roaming services to other local wireless service providers in Latin America. American depositary receipts evidencing American depositary shares of Telesp are included in the Wireless HOLDRS and are traded on the New York Stock Exchange. Shares of Telesp also trade on the Sao Paulo Stock Exchange.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- January * January * January * January * January 17 9/16 January 39 7/8 February * February * February * February * February 21 February 53 7/8 March * March * March * March * March 20 15/16 March 56 11/16 April * April * April * April * April 25 April 44 1/8 May * May * May * May * May 23 5/16 May 37 1/8 June * June * June * June * June 26 3/4 June 44 7/8 July * July * July * July * July 26 July 37 1/8 August * August * August * August * August 23 1/8 August 36 3/4 September * September * September * September * September 26 1/8 September 32 15/16 October * October * October * October * October 24 5/8 October 31 5/8 November * November * November * November 26 1/4 November 28 11/16 December * December * December * December 17 1/2 December 42 3/8
The closing price on October 31, 2000 was 31 5/8. VERIZON COMMUNICATIONS (VZ) (Bell Atlantic Corporation doing business as Verizon Communications) Verizon Communications is a telecommunications company that provides local telephone, wireless communications, long-distance and Internet services. On June 30, 2000, GTE Corporation merged into a subsidiary of Bell Atlantic Corporation and the combined company now operates under the name Verizon Communications. Verizon provides domestic wireline services, including local telephone service and voice and data transport, wireless telecommunications services in the United States and has investments in wireless operations in Latin America, Europe and the Asia-Pacific region. It also operates domestic and international publishing businesses, including print directories, Web site creation and Web hosting. The historical stock prices below are the historical stock prices of Bell Atlantic Corporation whose shares continue to trade on the New York Stock Exchange under the new symbol "VZ."
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- January 27 1/8 January 34 7/16 January 33 5/8 January 46 9/32 January 60 January 61 15/16 February 26 13/16 February 33 1/16 February 34 9/16 February 44 7/8 February 57 5/8 February 48 15/16 March 26 7/16 March 30 15/16 March 30 3/8 March 51 1/8 March 51 11/16 March 61 1/8 April 27 5/16 April 32 1/2 April 33 7/8 April 46 25/32 April 57 5/8 April 60 May 27 3/4 May 31 3/16 May 35 May 45 13/16 May 54 3/4 May 52 7/8 June 28 June 31 7/8 June 37 15/16 June 45 5/8 June 65 3/8 June 50 15/16 July 28 5/8 July 29 9/16 July 36 9/32 July 45 11/32 July 64 July 46 3/4 August 29 3/4 August 28 1/8 August 36 3/16 August 44 1/8 August 61 5/16 August 43 33/64 September 30 11/16 September 29 15/16 September 40 7/32 September 48 7/16 September 67 5/16 September 48 7/16 October 31 3/4 October 30 1/8 October 40 October 53 3/16 October 64 15/16 October 57 13/16 November 31 1/2 November 31 7/16 November 44 5/8 November 55 5/8 November 63 5/16 December 33 7/16 December 32 3/8 December 45 1/2 December 54 December 61 9/16
The closing price on October 31, 2000 was 57 13/16. A-10 UNITED STATES CELLULAR CORPORATION (USM) United States Cellular Corporation owns, manages and invests in wireless systems throughout the United States. The company operates controlling interests in wireless market licensees in small and mid-sized markets in areas close to its other markets, thereby building clusters of operating markets which allows United States Cellular to provide its users with larger service areas without special roaming arrangements.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- -------- --------- --------- --------- -------- January 29 3/4 January 33 7/8 January 27 January 28 13/16 January 44 15/16 January 67 February 33 3/8 February 36 February 26 1/4 February 30 1/8 February 42 1/8 February 66 15/16 March 30 1/4 March 34 1/2 March 24 7/8 March 33 15/16 March 44 March 71 April 29 April 33 1/8 April 25 April 32 3/4 April 47 7/16 April 60 1/16 May 28 3/4 May 31 5/8 May 27 1/2 May 30 11/16 May 48 1/4 May 62 1/4 June 30 1/4 June 31 June 29 5/8 June 30 3/4 June 53 1/2 June 63 July 33 5/8 July 30 1/8 July 31 July 32 1/2 July 55 1/2 July 67 1/16 August 35 August 30 1/4 August 30 1/4 August 28 7/16 August 56 5/16 August 73 9/16 September 36 1/2 September 30 1/4 September 36 7/8 September 29 13/16 September 68 September 70 October 34 1/2 October 29 3/8 October 32 1/2 October 36 5/8 October 88 1/2 October 64 November 35 November 28 November 32 3/4 November 37 11/16 November 118 7/8 December 33 3/4 December 27 7/8 December 31 December 38 December 100 15/16
The closing price on October 31, 2000 was 64. VODAFONE AIRTOUCH P.L.C. (VOD) Vodafone Airtouch p.l.c. provides international wireless telecommunications services which include selling and renting cellular telephone equipment, providing messaging and data transmission facilities and access to information services. Vodafone's principal business is the operation of digital and analog wireless telephone networks in the United Kingdom. Vodafone also has investments in several international telecommunications operations. Services on Vodafone networks is generally sold by third-party service providers or retailers who also sell or rent cellular telephone equipment. American depositary receipts evidencing American depositary shares of Vodafone are included in the Wireless HOLDRS and are traded on the New York Stock Exchange. Shares of Vodafone also trade on the London International Stock Exchange.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- -------- --------- -------- --------- -------- --------- -------- January 6 1/8 January 7 5/32 January 8 19/32 January 15 3/64 January 39 3/64 January 56 February 6 1/8 February 7 5/64 February 9 1/2 February 17 45/64 February 36 7/16 February 57 11/16 March 6 5/8 March 7 1/2 March 8 53/64 March 20 25/32 March 37 35/64 March 55 9/16 April 6 3/8 April 8 1/32 April 8 27/32 April 21 63/64 April 35 29/32 April 47 May 6 3/4 May 7 59/64 May 8 59/64 May 21 31/32 May 38 9/32 May 45 7/8 June 7 37/64 June 7 3/8 June 9 11/16 June 25 7/32 June 39 13/32 June 41 3/4 July 7 7/8 July 7 5/32 July 10 3/32 July 27 19/64 July 42 3/32 July 42 1/2 August 8 3/8 August 7 37/64 August 10 3/16 August 25 1/8 August 40 7/64 August 41 1/8 September 8 13/64 September 6 53/64 September 10 3/4 September 22 43/64 September 47 35/64 September 37 October 8 11/64 October 7 23/32 October 10 31/32 October 26 59/64 October 47 5/8 October 42 9/16 November 7 13/64 November 8 21/32 November 13 13/64 November 29 17/32 November 47 3/16 December 7 3/64 December 8 9/32 December 14 17/32 December 32 7/32 December 49 1/2
The closing price on October 31, 2000 was 42 9/16. A-11 VOICESTREAM WIRELESS CORPORATION (VSTR) VoiceStream Wireless Corporation provides wireless communications services in urban markets in the United States through the ownership and operation of personal communication systems, or PCS, licenses. VoiceStream has commenced commercial operations in several markets under the VoiceStream brand name using Global System for Mobile Communications, or GSM, technology. VoiceStream also offers paging, dispatch services and wireline telephone services. On July 23, 2000, VoiceStream announced that it entered into a merger agreement with Deutsche Telekom AG. This transaction is subject to regulatory and stockholder approval and customary closing conditions.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- ------- --------- --------- --------- --------- January * January * January * January * January * January 117 3/8 February * February * February * February * February * February 133 1/16 March * March * March * March * March * March 128 13/16 April * April * April * April * April * April 99 May * May * May * May * May 27 5/16 May 114 1/2 June * June * June * June * June 28 7/16 June 116 19/64 July * July * July * July * July 45 1/8 July 125 3/8 August * August * August * August * August 41 1/4 August 112 9/16 September * September * September * September * September 61 23/32 September 116 1/16 October * October * October * October * October 98 3/4 October 131 1/2 November * November * November * November * November 92 1/4 December * December * December * December * December 142 5/16
The closing price on October 31, 2000 was 131 1/2. WESTERN WIRELESS CORPORATION (WWCA) Western Wireless Corporation provides wireless communications services primarily in rural markets in the United States. Western Wireless builds, owns and operates wireless network systems both in the United States and internationally. It provides services in some of its markets under the Cellular One brand name.
Closing Closing Closing Closing Closing Closing 1995 Price 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price - --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- --------- -------- January * January * January 15 January 20 1/16 January 26 1/4 January 54 1/2 February * February * February 14 1/8 February 18 7/8 February 27 1/16 February 48 1/2 March * March * March 12 1/2 March 23 March 36 1/4 March 45 13/16 April * April * April 10 1/4 April 19 1/2 April 41 1/16 April 49 11/16 May * May 24 1/2 May 13 3/8 May 18 1/2 May 24 1/2 May 47 13/16 June * June 21 3/8 June 15 7/8 June 19 15/16 June 27 June 54 1/2 July * July 15 5/8 July 15 1/16 July 20 13/16 July 35 July 55 August * August 17 1/2 August 15 1/16 August 15 5/8 August 38 11/16 August 51 1/8 September * September 17 September 18 3/4 September 17 7/8 September 44 27/32 September 35 5/8 October * October 16 1/2 October 17 7/8 October 20 1/4 October 52 7/8 October 47 1/2 November * November 14 November 18 5/8 November 18 1/8 November 58 9/16 December * December 13 7/8 December 17 3/8 December 22 December 66 3/4
The closing price on October 31, 2000 was 47 1/2. A-12 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [LOGO OF HOLDRS] 1,000,000,000 Depositary Receipts Wireless HOLDRS SM Trust --------------------- PROSPECTUS --------------------- Merrill Lynch & Co. Robert W. Baird & Co. A.G. Edwards & Sons, Inc. First Union Securities, Inc. Legg Mason Wood Walker Incorporated Morgan Keegan & Company, Inc. Raymond James & Associates, Inc. Sutro & Co. Incorporated Tucker Anthony Capital Markets October 31, 2000 Until November 26, 2000 (25 days after the date of this prospectus), all dealers effecting transactions in the offered Wireless HOLDRS, whether or not participating in this distribution, may be required to deliver a prospectus. This requirement is in addition to the obligations of dealers to deliver a prospectus when acting as underwriters and with respect to unsold allotments or subscriptions. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----