-----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, IgNv2vAiAVSpuX2O5zXVF1DL/e1xkRXjEDuWNPgQewayd+pL2x3WihNTgntqU+nn 6+AZnazs74LUjAaLfLRfIQ== 0000950130-01-000935.txt : 20010224 0000950130-01-000935.hdr.sgml : 20010224 ACCESSION NUMBER: 0000950130-01-000935 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20010220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH PIERCE FENNER & SMITH INC CENTRAL INDEX KEY: 0000728612 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: SEC FILE NUMBER: 333-31226 FILM NUMBER: 1549534 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 POS AM 1 0001.txt POST-EFFECTIVE AMENDMENT # 2 TO FORM S-1 As filed with the Securities and Exchange Commission on February 16, 2001 Registration No. 333-31226 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated Initial Depositor (Exact name of registrant as specified in charter) -------------- Broadband HOLDRS SM Trust [Issuer with respect to the receipts] Delaware 6211 13-5674085 (Primary Standard Industrial (I.R.S. Employer (State or other Classification Code Number) Identification Number) jurisdiction of incorporation or organization) -------------- 250 Vesey Street New York, New York 10281 (212) 449-1000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) -------------- Copies to: Andrea L. Dulberg, Esq. Andrew B. Janszky Corporate Secretary Shearman & Sterling Merrill Lynch, Pierce, Fenner & Smith 599 Lexington Avenue Incorporated New York, New York 10022 250 Vesey Street (212) 848-4000 New York, New York 10281 (212) 449-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. [_] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROSPECTUS - ----------------- [Logo of BROADBAND HOLDRS](SM) 1,000,000,000 Depositary Receipts Broadband HOLDRS SM Trust The Broadband HOLDRS SM Trust issues Depositary Receipts called Broadband HOLDRS SM representing your undivided beneficial ownership in the U.S.-traded common stock of a group of specified companies that, among other things, develop, manufacture and market products and services which facilitate the transmission of data, video and voice more quickly and more efficiently than traditional telephone line communications. The Bank of New York is the trustee. You only may acquire, hold or transfer Broadband HOLDRS in a round-lot amount of 100 Broadband HOLDRS or round-lot multiples. Broadband HOLDRS are separate from the underlying deposited common stocks that are represented by the Broadband HOLDRS. For a list of the names and the number of shares of the companies that make up a Broadband HOLDR, see "Highlights of Broadband HOLDRS-- The Broadband HOLDRS" starting on page 9. Investing in Broadband HOLDRS involves significant risks. See "Risk Factors" starting on page 4. Broadband 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. The Broadband HOLDRS are listed on the American Stock Exchange under the symbol "BDH." On February 15, 2001, the last reported sale price of the Broadband HOLDRS on the American Stock Exchange was $44.25. ---------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ---------------- The date of this prospectus is February 16, 2001. "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 Broadband HOLDRS............................................. 9 The Trust.................................................................. 15 Description of Broadband HOLDRS............................................ 15 Description of the Underlying Securities................................... 16 Description of the Depositary Trust Agreement.............................. 18 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 Broadband 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 Broadband HOLDRS in any jurisdiction where the offer or sale is not permitted. The Broadband 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 Broadband HOLDRS or of the underlying securities through an investment in the Broadband HOLDRS. 2 SUMMARY The Broadband HOLDRS trust was formed under the depositary trust agreement, dated as of March 22, 2000 among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Broadband HOLDRS. The trust is not a registered investment company under the Investment Company Act of 1940. The trust currently holds shares of common stock issued by a group of specified companies that were, at the time of the initial offering, generally considered to be involved in various aspects of the broadband business. Companies involved in the broadband business develop, manufacture and market products and services which, among other things, facilitate the transmission of data, video and voice more quickly and more efficiently than traditional telephone line communications. The number of shares of each company's common stock currently held by the trust with respect to each round-lot of Broadband HOLDRS is specified under "Highlights of Broadband HOLDRS--The Broadband HOLDRS." This group of common stocks, and the securities of any company that may be added to the Broadband HOLDRS, are collectively referred to in this prospectus as the underlying securities. There are currently 19 companies included in the Broadband HOLDRS, which may change as a result of reconstitution events, distributions of securities by underlying issuers or other events. The Broadband HOLDRS are separate from the underlying common stocks that are represented by the Broadband HOLDRS. On February 15, 2001, there were 7,283,100 Broadband HOLDRS outstanding. 3 RISK FACTORS An investment in Broadband HOLDRS involves risks similar to investing directly in each of the underlying securities outside of the Broadband HOLDRS, including the risks associated with a concentrated investment in broadband companies. General Risk Factors . Loss of investment. Because the value of Broadband HOLDRS directly relates to the value of the underlying securities, you may lose a substantial portion of your investment in the Broadband HOLDRS if the underlying securities decline in value. . Discount trading price. Broadband HOLDRS may trade at a discount to the aggregate value of the underlying securities. . Not necessarily representative of the broadband business. At the time of the initial offering, the companies included in the Broadband HOLDRS were generally considered to be involved in various aspects of the broadband business. However, the market price of the underlying securities and the Broadband HOLDRS may not necessarily follow the price movements of the entire broadband business. If the underlying securities decline in value, your investment in the Broadband HOLDRS will decline in value, even if common stock prices of companies involved in the broadband business generally increase in value. In addition, since the time of the initial offering, the companies included in the Broadband HOLDRS may not be involved in the broadband business. In this case, the Broadband HOLDRS may not consist of securities issued only by companies involved in the broadband business. . Not necessarily comprised of solely broadband companies. As a result of distributions of securities by companies included in the Broadband HOLDRS or other corporate events, such as mergers, securities of companies that are not currently included in the Broadband HOLDRS and that are not involved in the broadband industry may be included in the Broadband HOLDRS. Pursuant to an amendment to the depositary trust agreement, the securities of a new company will only be distributed from the Broadband HOLDRS if the securities have a different Standard & Poor's Corporation sector classification than any of the underlying issuers included in Broadband HOLDRS at the time of the distribution or the corporate event or if the securities are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS. As there are only 11, broadly defined sector classifications, the use of Standard and Poor's sector classifications to determine whether a new company will be included in the Broadband HOLDRS provides no assurance that each new company included in the Broadband HOLDRS will be involved in the broadband industry. Currently, the underlying securities included in the Broadband HOLDRS are represented in the Technology sector. Since each sector classification is defined so broadly, the securities of a new company could have the same sector classification as a company currently included in the Broadband HOLDRS yet not be involved in the broadband industry. In addition, the sector classifications of securities included in the Broadband HOLDRS may change over time if the companies that issued these securities change their focus of operations or if Standard & Poor's alters the criteria it uses to determine sector classifications, or both. Therefore, additional sector classifications may be represented in the Broadband HOLDRS which may also result in the inclusion in the Broadband HOLDRS of the securities of a new company that is not involved in the broadband industry. . No investigation of underlying securities. The underlying securities initially included in the Broadband HOLDRS were selected by Merrill Lynch, Pierce, Fenner & Smith Incorporated based on the market capitalization of issuers and the market liquidity of common stocks in the broadband business, without regard for the value, price performance, volatility or 4 investment merit of the underlying securities. Consequently, the Broadband 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, Broadband HOLDRS may not necessarily be a diversified investment in the broadband business. In addition, reconstitution events, distributions of securities by an underlying issuer or other events, which may result in the distribution of securities from, or the inclusion of additional securities in, the Broadband HOLDRS, may also reduce diversification. Broadband HOLDRS may represent a concentrated investment in one or more of the underlying securities which would reduce investment diversification and increase your exposure to the risks of concentrated investments. . Conflicting investment choices. In order to sell one or more of the underlying securities individually, participate in a tender offer relating to one or more of the underlying securities or participate in any form of stock repurchase program by an issuer of an underlying security, you will be required to cancel your Broadband HOLDRS and receive delivery of each of the underlying securities. The cancellation of your Broadband HOLDRS will allow you to sell individual underlying securities or to deliver individual underlying securities in a tender offer or any form of stock repurchase program. The cancellation of Broadband HOLDRS will involve payment of a cancellation fee to the trustee. . Trading halts. Trading in Broadband HOLDRS on the American Stock Exchange may be halted if trading in one or more of the underlying securities is halted. Trading in Broadband HOLDRS may be halted even if trading continues in some or all of the underlying securities. If trading is halted in Broadband HOLDRS, you will not be able to trade Broadband HOLDRS and you will only be able to trade the underlying securities if you cancel your Broadband 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 Broadband HOLDRS. If the Broadband HOLDRS are delisted by the American Stock Exchange, a termination event will result unless the Broadband HOLDRS are listed for trading on another U.S. national securities exchange or through Nasdaq NMS within five business days from the date the Broadband HOLDRS are delisted. There are currently 19 companies whose securities are included in the Broadband HOLDRS. . Possible conflicts of interest. Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, selected the underlying securities that were originally included in the Broadband HOLDRS and may face possible conflicts of interest as Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates may engage in investment banking or may provide other services for issuers of the underlying securities in connection with its business. 5 Risk Factors Specific to Companies Involved in the Broadband Business . The stock prices of companies involved in the broadband industry have been and will likely continue to be extremely volatile, which will directly affect the price volatility of the Broadband HOLDRS, and you could lose a substantial part of your investment. The trading prices of the common stocks of broadband companies have been extremely volatile. These stock prices could be subject to wide fluctuations in response to a variety of factors, including the following: . general market fluctuations; . actual or anticipated variations in companies' quarterly operating results; . announcements of technological innovations or new services by competitors of the companies included in the Broadband HOLDRS; . announcements by broadband companies or their competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; . failure to integrate or realize projected benefits from acquisitions; . unscheduled system downtime; . changes in government regulations; and . fluctuations in quarterly and annual operating results. In addition, the trading prices of broadband stocks in general have experienced extreme price and volume fluctuations in recent months. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. The valuations of many broadband stocks are high when measured by conventional valuation standards such as price to earnings and price to sales ratios. Some of the companies do not or in the future might not have earnings. As a result, these trading prices may decline substantially and valuations may not be sustained. Any negative change in the public's perception of the prospects of broadband companies, generally, could depress the stock prices of a broadband company regardless of broadband companies' results. Other broad market and industry factors may decrease the stock price of broadband 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 broadband stocks. As a result of fluctuations in the trading prices of the companies included in the Broadband HOLDRS, the trading price of Broadband HOLDRS has fluctuated significantly. The initial offering price of a Broadband HOLDR, on April 5, 2000, was $94.32 and over the last year it has reached a high of $104.11 and a low of $41.13. . The ability to maintain or increase market share depends on timely introduction and market acceptance of new products offered by broadband companies. The Internet, cable and telecommunications markets which broadband companies serve are characterized by rapidly changing technology, evolving industry standards and practices, frequent new product and service introductions and enhancements, and changing customer demands. The success of many broadband companies will depend on their ability to adapt to rapidly changing technologies, to adapt their services to evolving industry standards and to continually improve the performance, features and reliability of their products. They must quickly develop, introduce and deliver their products, or incur the risk that their competitors will introduce the same or similar products, or products which could make their products obsolete. In addition, the widespread adoption of new technologies could require substantial expenditures to modify or adapt the existing products offered by many broadband companies. New product research and development may be costly and time-consuming. Many broadband 6 companies may not successfully introduce new products, develop and maintain a loyal customer base or achieve general market acceptance for their products, and failure to do so could have a material adverse effect on their business, results of operations and financial condition. . Some of the companies involved in the broadband business are also engaged in other lines of business unrelated to the broadband 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 Broadband HOLDRS have lines of business that do not relate to the broadband business and which may present additional risks not mentioned in this prospectus. The operating results of these broadband companies may fluctuate as a result of these additional risks and events in the industries of these other lines of business. Despite a company's possible success in the broadband business, there can be no assurance that the other lines of business in which these companies are engaged will not have an adverse effect on a company's business or financial condition. . Many broadband companies have developed new technologies and created new standards for the broadband business and currently rely on a limited number of customers as purchasers of their products. Several broadband companies currently rely on a limited number of customers for their broadband products and services. If new customers do not adopt these technologies for their own systems, the operating results and financial condition of these broadband companies may be adversely affected. In addition, many broadband technologies are marketed to cable operators. The cable industry is undergoing significant consolidation, and a limited number of cable operators control a large percentage of the cable industry. Therefore, the number of new customers may be limited, and if the leading cable operators do not adopt a broadband company's products and services, its operating results and financial conditions may be adversely affected. . Many broadband companies rely on a single supplier or a limited number of suppliers for the components used in their products, and if quality components are not delivered by the suppliers on a timely basis, these companies will not be able to deliver their products on a timely schedule which could adversely affect their financial condition. Reliance on a single supplier or limited number of suppliers subjects many broadband companies to risks of delivery delays, price increases, receipt of non-conforming or poor quality components and inability to obtain long-term supplies of components. Any reduction or interruption in these third parties supply or manufacturing could adversely affect many broadband companies ability to deliver their products and meet customer needs. There can be no assurance that broadband companies will not encounter problems with suppliers which may result in harm to their reputation and adversely affect their operations and financial condition. . The broadband business is very competitive, and a broadband company's failure to establish a customer base which uses its technologies would adversely affect its operating results. Broadband access services can be based on several different technologies, and the competition among broadband companies to convince a provider to select its technology can be intense. The broadband market is new and rapidly evolving and it is likely that competitors will expand their business to produce existing technologies as well as continue to develop new technologies which compete with, or make obsolete, the existing technologies. Many broadband companies face significant competition from other companies which have greater market share and financial resources. These companies may be better positioned to finance research and development activities, and they may have greater resources with which to acquire other companies in the industry. . Failure to integrate acquisitions could disrupt operations and prevent the realization of intended benefits. Many broadband companies are active acquirers of other companies as part of their business plans. There can be no assurance that many broadband companies will 7 be able to integrate these acquired companies, which may result in failure to realize expected cost savings, increases in revenue and other projected benefits from such integration. There can also no be no assurance that many broadband companies will be able to attract and retain qualified personnel from acquired businesses or be successful in integrating such personnel. Furthermore, broadband companies may suffer material adverse short and long- term effects on operating results and financial condition as a result of such acquisitions. . Many broadband companies are subject to telecommunications industry regulations, which could adversely affect the nature and extent of the services offered. Many aspects of the telecommunications industry are subject to regulation at the federal, state and local levels. The regulatory entities that have jurisdiction over many broadband companies business may adopt new or modified regulations or take other actions as a result of their own regulatory processes or as directed by other governmental bodies. There can be no assurances that changes in the regulatory environment will not adversely affect the nature and extent of the services offered. . The international operations of many broadband companies expose them to risks associated with instability and changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations and other risks inherent to international business. Many broadband companies have international operations and derive substantial revenue from international sales. The risks of international business that the companies are exposed to include the following: . general economic, social and political conditions; . the difficulty of enforcing intellectual property rights, agreements and collecting receivables through certain 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 which impose a range of restrictions on operations, trade practices, foreign trade and international investment decisions. . Many broadband companies are dependent on their ability to continue to attract and retain highly-skilled technical and managerial personnel to develop and generate their business. The success of many broadband companies is highly dependent of 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 broadband companies will be able to continue to attract and retain qualified personnel. . Inability to adequately protect proprietary rights may harm the competitive positions of many broadband companies. Many broadband companies rely on a combination of copyrights, trademarks, service marks and trade secret law and contractual restrictions to establish and protect proprietary rights in their products and services. There can be no assurance that these companies will be able to protect their intellectual property if they are unable to enforce their rights or if they do not detect unauthorized use of their intellectual property. Furthermore, any steps taken to protect intellectual property may be inadequate, time consuming and expensive. In addition, broadband companies may be subject to claims that their products and services infringe the intellectual property rights of others. Any claim, whether meritorious or not, could be time consuming, result in costly litigation, delay product or service introduction or require broadband companies to enter into royalty or licensing agreements. 8 HIGHLIGHTS OF BROADBAND HOLDRS This discussion highlights information regarding Broadband HOLDRS. We present certain information more fully in the rest of this prospectus. You should read the entire prospectus carefully before you purchase Broadband HOLDRS. Issuer...................... Broadband HOLDRS Trust. The trust................... The Broadband HOLDRS Trust was formed under the depositary trust agreement, dated as of March 22, 2000, among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Broadband HOLDRS and was amended on November 22, 2000. The trust is not a registered investment company under the Investment Company Act of 1940. Initial depositor........... Merrill Lynch, Pierce, Fenner & Smith Incorporated. Trustee..................... The Bank of New York, a New York state-chartered banking organization, is the trustee and receives compensation as set forth in the depositary trust agreement. Purpose of Broadband Broadband HOLDRS are designed to achieve the HOLDRS...................... following: Diversification. Broadband HOLDRS are designed to allow you to diversify your investment in the broadband business through a single, exchange- listed instrument representing your undivided beneficial ownership of the underlying securities. Flexibility. The beneficial owners of Broadband HOLDRS have undivided beneficial ownership interests in each of the underlying securities represented by the Broadband HOLDRS, and can cancel their Broadband HOLDRS to receive each of the underlying securities represented by the Broadband HOLDRS. Transaction costs. The expenses associated with buying and selling Broadband HOLDRS in the secondary market are expected to be less than separately buying and selling each of the underlying securities in a traditional brokerage account with transaction-based charges. Trust assets................ The trust holds shares of common stock issued by specified companies that, when initially selected, were involved in the broadband business. Except when a reconstitution event, distribution of securities by an underlying issuer or other event occurs, the group of companies will not change. Reconstitution events are described in this prospectus under the heading "Description of the Depositary Trust Agreement--Distributions" and "--Reconstitution events." There are currently 19 companies included in the Broadband 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. 9 The Broadband HOLDRS........ The trust has issued, and may continue to issue, Broadband HOLDRS that represent an undivided beneficial ownership interest in the shares of common stock that are held by the trust. The Broadband HOLDRS themselves are separate from the underlying securities that are represented by the Broadband HOLDRS. The following chart provides the . names of the 19 issuers of the underlying securities currently represented by a Broadband HOLDR, . stock ticker symbols, . share amounts currently represented by a round-lot of 100 Broadband HOLDRS and, . principal U.S. market on which the shares of common stock of the selected companies are traded.
Primary Share Trading Name of Company Ticker Amounts Market ---------------------------- ------ ------- ------- Applied Micro Circuits Corporation AMCC 2 NASDAQ Broadcom Corporation BRCM 2 NASDAQ Ciena Corporation CIEN 2 NASDAQ Comverse Technology, Inc. CMVT 2 NASDAQ Conexant Systems, Inc. CNXT 2 NASDAQ Copper Mountain Networks, Inc. CMTN 1 NASDAQ Corning, Inc. GLW 9 NYSE JDS Uniphase Corporation(/1/) JDSU 11.8* NASDAQ Lucent Technologies, Inc. LU 29 NYSE Motorola, Inc. MOT 18* NYSE Next Level Communications, Inc. NXTV 1 NASDAQ Nortel Networks Corporation NT 28 NYSE PMC-Sierra, Inc. PMCS 1 NASDAQ Qualcomm Incorporated QCOM 8 NASDAQ RF Micro Devices, Inc. RFMD 2 NASDAQ Scientific-Atlanta, Inc. SFA 2 NYSE Sycamore Networks, Inc. SCMR 3 NASDAQ Tellabs, Inc. TLAB 4 NASDAQ Terayon Communications Systems, Inc. TERN 2 NASDAQ
-------- * Reflects previous stock split or business combination. (/1/)On February 13, 2001, JDS Uniphase Corporation completed its acquisition of SDL, Inc. As a result of the merger, one share of SDL previously represented in each round-lot of 100 Broadband HOLDRS has been exchanged for 3.8 shares of JDS Uniphase. The share amount of JDS Uniphase represented by a round-lot of 100 Broadband HOLDRS is 11.8. Please see the description of JDS Uniphase in Annex A. 10 These companies generally were considered to be among the 20 largest and most liquid companies with U.S.-traded common stock involved in the broadband business, as measured by market capitalization and trading volume on March 14, 2000. The market capitalization of a company was determined by multiplying the market price of its common stock by the number of outstanding shares of its common stock. The trust only will issue and cancel, and you only may obtain, hold, trade or surrender, Broadband HOLDRS in a round-lot of 100 Broadband HOLDRS and round-lot multiples. The trust will only issue Broadband HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Broadband HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Broadband HOLDRS, the trust may require a minimum of more than one round-lot of 100 Broadband HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Broadband HOLDRS. The number of outstanding Broadband 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 Broadband HOLDRS on a continuous basis when an investor deposits the required shares of common stock with the trustee. Purchases................... You may acquire Broadband HOLDRS in two ways: . through an in-kind deposit of the required number of shares of common stock of the underlying issuers with the trustee, or . through a cash purchase in the secondary trading market. Issuance and cancellation fees........................ If you wish to create Broadband HOLDRS by delivering to the trust the requisite shares of common stock represented by a round-lot of 100 Broadband 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 Broadband HOLDRS. If you wish to cancel your Broadband 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 Broadband HOLDRS. Commissions................. If you choose to deposit underlying securities in order to receive Broadband HOLDRS, you will be responsible for paying any sales commission associated with your purchase of the underlying securities that is charged by your broker in addition to the issuance fee, charged by the trustee, described above. Custody fees................ The Bank of New York, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Broadband 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 Broadband 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. 11 Rights relating to Broadband HOLDRS............ You have the right to withdraw the underlying securities upon request by delivering a round- lot or integral multiple of a round-lot of Broadband 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 Broadband HOLDRS would otherwise require the delivery of a fractional share, the trustee will sell the fractional share in the market and the trust, in turn, will deliver cash in lieu of the fractional share. Except with respect to the right to vote for dissolution of the trust, the Broadband HOLDRS themselves will not have voting rights. Rights relating to the underlying securities....... As an owner of a Broadband HOLDR, 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; any distributions of securities by an issuer of underlying securities will be deposited into the trust and become part of the Broadband HOLDRS unless the distributed securities are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS or the distributed securities have a Standard & Poor's sector classification that is different from the sector classifications represented in the Broadband HOLDRS at the time of the distribution. In addition, if the issuer of underlying securities offers rights to acquire additional underlying securities or other securities, the rights may be made available to you, may be disposed of or may lapse. If you wish to participate in a tender offer for underlying securities, or any form of stock repurchase program by an issuer of an underlying security, you must obtain the underlying securities by surrendering your Broadband 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." Reconstitution events....... The depositary trust agreement provides for the automatic distribution of underlying securities from the Broadband HOLDRS to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of common stock registered under section 12 of the Securities 12 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 Broadband 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 Broadband HOLDRS. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation, corporate combination or other event, the trustee will distribute the consideration paid by and received from the acquiring company or the securities received in exchange for the securities of the underlying issuer whose securities cease to be outstanding to the beneficial owners of Broadband HOLDRS, only if the Standard & Poor's sector classification of the securities received as consideration is different from the sector classifications represented in the Broadband HOLDRS at the time of the distribution or exchange or if the securities received are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS. In any other case, the additional securities received will be deposited into the trust. D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through 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. To the extent a distribution of underlying securities from the Broadband HOLDRS is required as a result of a reconstitution event, the trustee will deliver the underlying security to you as promptly as practicable after the date that the trustee has knowledge of the occurrence of a reconstitution event. In addition, securities of a new company will be added to the Broadband HOLDRS, as a result of a distribution of securities by an underlying issuer, where a corporate event occurs, or where the securities of an underlying issuer are exchanged for the securities of another company, unless the securities received (1) have a Standard & Poor's sector classification that is different from the sector classification of any other security then included in the Broadband HOLDRS or (2) are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS. It is anticipated, as a result of the broadly defined Standard & Poor's sector classifications, that most distributions or exchanges of securities will result in the inclusion of new securities in Broadband HOLDRS. The trustee will review the publicly available information that identifies the Standard & Poor's sector classifications of securities to determine whether securities received as a result of a distribution by an underlying issuer or as consideration for securities 13 included in the Broadband HOLDRS will be distributed from the Broadband HOLDRS to you. Standard & Poor's sector classifications........ Standard & Poor's Corporation is an independent source of market information that, among other things, classifies the securities of public companies into various sector classifications based on its own criteria. There are 11 Standard & Poor's sector classifications and each class of publicly traded securities of a company are each given only one sector classification. The securities included in the Broadband HOLDRS are currently represented in the Technology sector. The Standard & Poor's sector classifications of the securities included in the Broadband HOLDRS may change over time if the companies that issued these securities change their focus of operations or if Standard & Poor's alters the criteria it uses to determine sector classifications, or both. Termination events.......... A. The Broadband HOLDRS are delisted from the American Stock Exchange and are not listed for trading on another national securities exchange or through Nasdaq NMS within five business days from the date the Broadband HOLDRS are delisted. B. The trustee resigns and no successor trustee is appointed within 60 days from the date the trustee provides notice to Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, of its intent to resign. C. 75% of beneficial owners of outstanding Broadband HOLDRS vote to dissolve and liquidate the trust. If a termination event occurs, the trustee will distribute the underlying securities as promptly as practicable after the termination event. Federal income tax The federal income tax laws will treat a U.S. consequences................ holder of Broadband HOLDRS as directly owning the underlying securities. The Broadband HOLDRS themselves will not result in any federal tax consequences separate from the tax consequences associated with ownership of the underlying securities. Listing..................... The Broadband HOLDRS are listed on the American Stock Exchange under the symbol "BDH." On February 15, 2001, the last reported sale price of the Broadband HOLDRS on the American Stock Exchange was $44.25. Trading .................... Investors are only able to acquire, hold, transfer and surrender a round-lot of 100 Broadband HOLDRS. Bid and ask prices, however, are quoted per single Broadband HOLDR. Clearance and settlement.... Broadband HOLDRS have been issued in book-entry form. Broadband HOLDRS are evidenced by one or more global certificates that the trustee has deposited with The Depository Trust Company, referred to as DTC. Transfers within DTC will be in accordance with DTC's usual rules and operating procedures. For further information see "Description of Broadband HOLDRS." 14 THE TRUST General. This discussion highlights information about the Broadband HOLDRS Trust. You should read this information, information about the depositary trust agreement as well as the depositary trust agreement and the amendment to the depositary trust agreement, before you purchase Broadband HOLDRS. The material terms of the depositary trust agreement are described in this prospectus under the heading "Description of the Depositary Trust Agreement." The Broadband HOLDRS Trust. The trust was formed pursuant to the depositary trust agreement, dated as of March 22, 2000. The depositary trust agreement was amended on November 22, 2000. The Bank of New York is the trustee. The Broadband HOLDRS Trust is not a registered investment company under the Investment Company Act of 1940. The Broadband HOLDRS Trust is intended to hold deposited shares for the benefit of owners of Broadband HOLDRS. The trustee will perform only administrative and ministerial acts. The property of the trust consists of the underlying securities and all monies or other property, if any, received by the trustee. The trust will terminate on December 31, 2040, or earlier if a termination event occurs. DESCRIPTION OF BROADBAND HOLDRS The trust has issued Broadband HOLDRS under the depositary trust agreement described in this prospectus under the heading "Description of the Depositary Trust Agreement." The trust may issue additional Broadband HOLDRS on a continuous basis when an investor deposits the requisite underlying securities with the trustee. You may only acquire, hold, trade and surrender Broadband HOLDRS in a round-lot of 100 Broadband HOLDRS and round-lot multiples. The trust will only issue Broadband HOLDRS upon the deposit of the whole shares of underlying securities that are represented by a round-lot of 100 Broadband 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 Broadband HOLDRS, the trust may require a minimum of more than one round-lot of 100 Broadband HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Broadband HOLDRS. Broadband HOLDRS will represent your individual and undivided beneficial ownership interest in the common stock of the specified underlying securities. The companies selected as part of this receipt program are listed above in the section entitled "Highlights of Broadband HOLDRS--The Broadband HOLDRS." Beneficial owners of Broadband 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 common stock, and to receive dividends and other distributions on the underlying securities, if any are declared and paid to the trustee by an issuer of an underlying security, as well as the right to cancel Broadband HOLDRS to receive the underlying securities. See "Description of the Depositary Trust Agreement." Broadband 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. Broadband 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 Broadband HOLDRS wishes to realize the dollar value of the underlying securities, that owner will have to cancel the Broadband HOLDRS. Such cancellation will require payment of fees and expenses as described in "Description of the Depositary Trust Agreement--Withdrawal of underlying securities." 15 Broadband HOLDRS are evidenced by one or more global certificates that the trustee has deposited with DTC and registered in the name of Cede & Co., as nominee for DTC. Broadband HOLDRS are available only in book-entry form. Owners of Broadband HOLDRS hold their Broadband HOLDRS through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. DESCRIPTION OF THE UNDERLYING SECURITIES Selection criteria. The underlying securities are the common stocks of a group of specified companies that, at the time of selection, were involved in various aspects of the broadband business and whose common stock is registered under section 12 of the Exchange Act. The issuers of the underlying securities were, as of March 14, 2000, among the largest capitalized and most liquid companies involved in the broadband business as measured by market capitalization and trading volume. The Broadband HOLDRS may no longer consist of securities issued by companies involved in the broadband business. Merrill Lynch, Pierce, Fenner & Smith Incorporated will determine, in its sole discretion, whether the issuer of a particular underlying security remains in the broadband business and will undertake to make adequate disclosure when necessary. Underlying securities. For a list of the underlying securities represented by Broadband HOLDRS, please refer to "Highlights of Broadband HOLDRS--The Broadband HOLDRS." If the underlying securities change because of a reconstitution event, a distribution of securities by an underlying issuer or other event, a revised list of underlying securities will be set forth in a prospectus supplement and will be available from the American Stock Exchange and through a widely-used electronic information dissemination system such as Bloomberg or Reuters. No investigation. The trust, the trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and any affiliate of these entities, have not performed any investigation or review of the selected companies, including the public filings by the companies. Accordingly, before you acquire Broadband 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, and any of their affiliates. General background and historical information. For a brief description of the business of each of the issuers of the underlying securities and monthly pricing information showing the historical performance of each underlying issuer's securities see "Annex A." 16 The following table and graph set forth the composite performance of all of the 19 underlying securities currently represented by a single Broadband HOLDR, measured at the close of the business day on November 10, 1999, the first date when all of the underlying securities were publicly traded and thereafter as of the end of each month to February 15, 2001. 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.
1999 Price - ---- ------ November 10............. 66.45 November 30............. 68.53 December 31............. 88.47 2000 - ---- January 31.............. 82.15 February 29............. 102.05 March 31................ 102.09 April 28................ 88.01 May 31.................. 77.51 June 30................. 91.65
2000 Price - ---- ----- July 31................. 88.65 August 31............... 95.93 September 29............ 79.74 October 31.............. 64.92 November 30............. 48.74 December 29............. 45.69 2001 - ---- January 31.............. 52.97 February 15............. 44.23
[Line Graph] 17 DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT General. The depositary trust agreement, dated as of March 22, 2000, among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York, as trustee, other depositors and the owners of the Broadband HOLDRS, provides that Broadband HOLDRS will represent an owner's undivided beneficial ownership interest in the common stock of the underlying companies. The depositary trust agreement was amended on November 22, 2000 to modify the reconstitution events, described below. The trustee. The Bank of New York serves as trustee for the Broadband HOLDRS. The Bank of New York, which was founded in 1784, was New York's first bank and is the oldest bank in the country still operating under its original name. The Bank is a state-chartered New York banking corporation and a member of the Federal Reserve System. The Bank conducts a national and international wholesale banking business and a retail banking business in the New York City, New Jersey and Connecticut areas, and provides a comprehensive range of corporate and personal trust, securities processing and investment services. Issuance, transfer and surrender of Broadband HOLDRS. You may create and cancel Broadband HOLDRS only in round-lots of 100 Broadband HOLDRS. You may create Broadband HOLDRS by delivering to the trustee the requisite underlying securities. The trust will only issue Broadband HOLDRS upon the deposit of the whole shares represented by a round-lot of 100 Broadband HOLDRS. In the event that a fractional share comes to be represented by a round-lot of Broadband HOLDRS, the trust may require a minimum of more than one round-lot of 100 Broadband HOLDRS for an issuance so that the trust will always receive whole share amounts for issuance of Broadband HOLDRS. Similarly, you must surrender Broadband HOLDRS in integral multiples of 100 Broadband 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 Broadband 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 to 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 Broadband HOLDRS, other than Merrill Lynch, Pierce, Fenner & Smith Incorporated owning Broadband HOLDRS for its own proprietary account as principal, will have the right to vote to dissolve and liquidate the trust. Distributions. You will be entitled to receive, net of trustee fees, distributions of cash, including dividends, securities or property, if any, made with respect to the underlying securities. The trustee will use its reasonable efforts to ensure that it distributes these distributions as promptly as practicable after the date on which it receives the distribution. Therefore, you may receive your distributions substantially later than you would have had you held the underlying securities directly. Any distributions of securities by an issuer of underlying securities will be deposited into the trust and will become part of the Broadband HOLDRS unless the distributed securities are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS or the distributed securities are of a company with a Standard & Poor's sector classification that is different from the sector classifications of any other company represented in the Broadband HOLDRS at the time of the distribution. In addition, if the issuer of underlying securities offers rights to acquire additional underlying securities or other securities, the rights will be made available to you through the trustee, if practicable, and if the rights and the securities that those rights relate to are exempt form registration or are registered under the Securities Act. Otherwise, if practicable, the rights will be disposed of and the proceeds provided to you by the trustee. In all other cases, the rights will lapse. 18 You will be obligated to pay any tax or other charge that may become due with respect to Broadband 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 Broadband 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 Broadband 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. Reconstitution events. The depositary trust agreement provides for the automatic distribution of underlying securities from the Broadband HOLDRS to you in the following four circumstances: A. If an issuer of underlying securities no longer has a class of common stock registered under section 12 of the Securities Exchange Act of 1934, then its securities will no longer be an underlying security and the trustee will distribute the shares of that company to the owners of the Broadband 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 Broadband HOLDRS. C. If the underlying securities of an issuer cease to be outstanding as a result of a merger, consolidation, corporate combination or other event, the trustee will distribute the consideration paid by and received from the acquiring company to the beneficial owners of Broadband HOLDRS only if, as provided in the amendment to the depositary trust agreement, the Standard & Poor's sector classification of the securities received as consideration is different from the sector classifications represented in the Broadband HOLDRS at the time of the distribution or exchange or if the securities received are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS. In any other case, the additional securities received as consideration will be deposited into the trust. D. If an issuer's underlying securities are delisted from trading on a U.S. national securities exchange or through 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 such securities are delisted. To the extent a distribution of underlying securities is required as a result of a reconstitution event, the trustee will deliver the underlying security to you as promptly as practicable after the date that the trustee has knowledge of the occurrence of a reconstitution event. As provided in the amendment to the depositary trust agreement, securities of a new company will be added to the Broadband HOLDRS, as a result of a distribution of securities by an underlying issuer or where an event occurs, such as a merger, where the securities of an underlying issuer are exchanged for the securities of another company, unless the securities received (1) have a Standard & Poor's sector classification that is different from the sector classification of any other security then included in the Broadband HOLDRS or (2) are not listed for trading on a U.S. national securities exchange or through Nasdaq NMS. It is anticipated, as a result of the broadly defined sector classifications, that most distributions or exchanges of securities will result in the inclusion of new securities in the Broadband HOLDRS. The trustee will review the publicly available information that identifies the Standard & Poor's sector classifications of securities to determine whether securities received as a result of a distribution by an underlying issuer or as consideration for securities included in the Broadband HOLDRS will be distributed from the Broadband HOLDRS to you. 19 Standard & Poor's sector classifications. Standard & Poor's Corporation is an independent source of market information that, among other things, classifies the securities of public companies into various sector classifications based on its own criteria. There are 11 Standard & Poor's sector classifications and each class of publicly traded securities of a company are given only one sector classification. The securities included in the Broadband HOLDRS are currently represented in the Technology sector. The Standard & Poor's sector classifications of the securities included in the Broadband HOLDRS may change over time if the companies that issued these securities change their focus of operations or if Standard & Poor's alters the criteria it uses to determine sector classifications, or both. Record dates. With respect to dividend payments and voting instructions, the trustee expects to fix the trust's record dates as close as possible to the record date fixed by the issuer of the underlying securities. Shareholder communications. The trustee promptly will forward to you all shareholder communications that it receives from issuers of the underlying securities. Withdrawal of underlying securities. You may surrender your Broadband 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 Broadband 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 Broadband HOLDRS. Further issuances of Broadband HOLDRS. The depositary trust agreement provides for further issuances of Broadband HOLDRS on a continuous basis without your consent. Termination of the trust. The trust will terminate if the trustee resigns and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, within 60 days from the date the trustee provides notice to the initial depositor of its intent to resign. Upon termination, the beneficial owners of Broadband HOLDRS will surrender their Broadband 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 Broadband 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 Broadband HOLDRS are delisted. Finally, the trust will terminate if 75% of the owners of outstanding Broadband HOLDRS other than Merrill Lynch, Pierce, Fenner & Smith Incorporated vote to dissolve and liquidate the trust. If a termination event occurs, the trustee will distribute the underlying securities to you as promptly as practicable after the termination event occurs. Amendment of the depositary trust agreement. The trustee and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, may amend any provisions of the depositary trust agreement without the consent of any other depositor or any of the owners of the Broadband 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 Broadband 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 Broadband HOLDRS will not become effective until 30 days after notice of the amendment is given to the owners of Broadband HOLDRS. Issuance and cancellation fees. If you wish to create Broadband 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 Broadband HOLDRS. If you wish to cancel your Broadband 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 20 Broadband 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 Broadband HOLDRS you will be responsible for paying any sales commissions associated with your purchase of the underlying securities that is charged by your broker, whether it be Merrill Lynch, Pierce, Fenner & Smith Incorporated or another broker, in addition to the issuance fee described above. Custody fees. The Bank of New York, as trustee and as custodian, will charge you a quarterly custody fee of $2.00 for each round-lot of 100 Broadband 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 Broadband HOLDR, the Trustee will waive that portion of the fee which exceeds the total cash dividends and other cash distributions received, or to be received, and payable with respect to such calendar year. The trustee cannot recapture unpaid custody fees from prior years. Address of the trustee. The Bank of New York, ADR Department, 101 Barclay Street, New York, New York 10286. Governing law. The depositary trust agreement and the Broadband HOLDRS are governed by the laws of the State of New York. The trustee will provide the depositary trust agreement to any owner of the underlying securities free of charge upon written request. Duties and immunities of the trustee. The trustee assumes no responsibility or liability for, and makes no representations as to, the validity or sufficiency, or as to the accuracy of the recitals, if any, set forth in the Broadband HOLDRS. The trustee has undertaken to perform only those duties as are specifically set forth in the depositary trust agreement. Subject to the preceding sentence, the trustee is liable for its own negligence or misconduct except for good faith errors in judgment so long as the trustee is not negligent in ascertaining the relevant facts. 21 FEDERAL INCOME TAX CONSEQUENCES General The following is a summary of the U.S. federal income tax consequences relating to the Broadband HOLDRS for: . citizen or resident of the United States; . 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 (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 Broadband HOLDRS as "capital assets" (generally, property held for investment) within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended. Moreover, this summary does not address Broadband HOLDRS held by a foreign partnership or other foreign flow through entities. We recommend that you consult with your own tax advisor. Taxation of the trust The trust will provide for flow through tax consequences as it will be treated as a grantor trust or custodial arrangement for U.S. federal income tax purposes. Taxation of Broadband HOLDRS A receipt holder purchasing and owning Broadband HOLDRS will be treated, for U.S. federal income tax purposes, as directly owning a proportionate share of the underlying securities represented by Broadband 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 Broadband 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 Broadband 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 Broadband HOLDRS. Similarly, with respect to sales of Broadband HOLDRS for cash in the secondary market, the amount realized with respect to a sale of Broadband 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 Broadband 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 Broadband 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 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 Broadband 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 Broadband 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. However, if that income is effectively connected with a U.S. trade or business conducted by the holder or, where a tax treaty applies, it is attributable to a permanent establishment maintained in the United States by the holder, then those dividends will be exempt from withholding tax, provided the holder complies with applicable certification and disclosure requirements. 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 relevant deductions and credits, will be subject to U.S. federal income taxation at the same graduated rates applicable to U.S. persons. In addition to this graduated tax, effectively connected dividends or dividends attributable to a permanent establishment received by a corporate non-U.S. receipt holder may also be subject to a branch profits tax at a rate of 30% or a lower rate as may be specified by an applicable tax treaty. Under some circumstances, a non- U.S. receipt holder whose dividends are so effectively connected or attributable shall be entitled to a dividends received deduction equal to 70% or 80% of the amount of the dividend. A non-U.S. receipt holder that is eligible for a reduced rate of withholding tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service. A non-U.S. receipt holder generally will not be subject to U.S. federal income or withholding tax with respect to gain recognized upon the sale or other disposition of Broadband 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 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 consult their own tax advisors. ERISA CONSIDERATIONS Any plan fiduciary which proposes to have a plan acquire Broadband 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 Broadband HOLDRS is appropriate for the plan, taking into account the overall investment policy of the plan and the composition of the plan's investment portfolio. PLAN OF DISTRIBUTION In accordance with the depositary trust agreement, the trust issued Broadband HOLDRS to Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce, Fenner & Smith Incorporated has deposited the underlying securities to receive Broadband HOLDRS. The trust delivered the initial distribution of Broadband HOLDRS against deposit of the underlying securities in New York, New York on approximately April 10, 2000. Investors who purchase Broadband HOLDRS through a fee-based brokerage account will pay fees charged by the brokerage account. We recommend that investors review the terms of their brokerage accounts for details on applicable charges. Merrill Lynch has from time to time provided investment banking and other financial services to certain of the issuers of the underlying securities and expects in the future to provide these services, for which it has received and will receive customary fees and commissions. It also may have served as counterparty in other transactions with certain of the issuers of the underlying securities. Merrill Lynch, Pierce, Fenner & Smith Incorporated has used, and may continue to use this prospectus, as updated from time to time, in connection with offers and sales related to market-making transactions in the Broadband HOLDRS. Merrill Lynch, Pierce, Fenner & Smith Incorporated may act as principal or agent in such transactions. Market-making sales will be made at prices related to prevailing market prices at the time of sale. Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to indemnify the trustee against certain civil liabilities related to acts performed or not performed by the trustee in accordance with the depositary trust agreement or periodic reports filed or not filed with the SEC with respect to the Broadband HOLDRS. Should a court determine not to enforce the indemnification provision, Merrill Lynch, Pierce, Fenner & Smith Incorporated also has agreed to contribute to payments the trustee may be required to make with respect to such liabilities. 25 LEGAL MATTERS Legal matters, including the validity of the Broadband HOLDRS will be passed upon for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor and the underwriter, 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 Broadband 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 Broadband 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 common stock of the issuers of the underlying securities is 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. In addition, information regarding the issuers of the underlying securities may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated information. The trust and Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates are not affiliated with the issuers of the underlying securities, and the issuers of the underlying securities have no obligations with respect to Broadband HOLDRS. This prospectus relates only to Broadband HOLDRS and does not relate to the common stock or other securities of the issuers of the underlying securities. The information in this prospectus regarding the issuers of the underlying securities has been derived from the publicly available documents described in the preceding paragraph. We have not participated in the preparation of these documents or made any due diligence inquiries with respect to the issuers of the underlying securities in connection with Broadband HOLDRS. We make no representation that these publicly available documents or any other publicly available information regarding the issuers of the underlying securities are accurate or complete. Furthermore, we cannot assure you that all events occurring prior to the date of this prospectus, including events that would affect the accuracy or completeness of the publicly available documents described in the preceding paragraph, that would affect the trading price of the common stock of the issuers of the underlying securities, and therefore the offering and trading prices of the Broadband HOLDRS, have been publicly disclosed. 26 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 trading market, of each of the underlying securities in each month during 1996, 1997, 1998, 1999, 2000 and 2001, through January 2001. As a result of the conversion to decimal reporting of trading prices by some of the markets on which the underlying securities trade, all market prices beginning from January 2001 provided in the following tables are given in decimal form. As some markets have not converted to decimal reporting of trading prices, the conversion of trading prices from fraction to decimal form may result in rounding. All historical market prices provided in fractions in excess of one dollar are rounded to the nearest one sixty-fourth of a dollar. An asterisk (*) denotes that no shares of the issuer were outstanding during that month. The historical prices of the underlying securities should not be taken as an indication of future performance. APPLIED MICRO CIRCUITS CORPORATION (AMCC) Applied Micro Circuits Corporation designs, develops, manufacturers and markets components that are used in communications products and in the infrastructure for network communications products which provide greater bandwidth to allow for larger information carrying capacity. Applied Micro Circuits focuses on developing technology for the high speed network applications which are used to connect companies' networks to each other and to the Internet. Applied Micro Circuits markets its products primarily through a direct sales organization that consists of a network of independent manufacturers' representatives in different geographic areas that work under the direction of its direct sales force.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- -------- --------- -------- --------- --------- ------- ------- January * January * January 2 25/64 January 5 1/4 January 36 15/16 January 73.50 February * February * February 2 11/32 February 4 29/32 February 68 49/64 March * March * March 2 13/16 March 5 11/32 March 75 1/32 April * April * April 3 29/64 April 6 43/64 April 64 7/16 May * May * May 2 13/16 May 7 25/64 May 49 5/8 June * June * June 3 15/64 June 10 9/32 June 49 3/8 July * July * July 2 27/32 July 11 3/4 July 74 5/8 August * August * August 2 3/8 August 11 17/32 August 101 15/32 September * September * September 1 55/64 September 14 1/4 September 103 17/32 October * October * October 3 October 19 29/64 October 76 7/16 November * November 1 3/8 November 4 3/16 November 20 25/32 November 48 7/16 December * December 1 35/64 December 4 1/4 December 31 13/16 December 75 3/64
The closing price on February 15, 2001 was 51.69. A-1 BROADCOM CORPORATION (BRCM) Broadcom Corporation designs, develops and markets products which facilitate high-speed broadband, digital voice, video and data transmission to homes and businesses using existing communications infrastructure. Broadcom designs, develops and markets integrated circuits for several communications markets, including television cable set-top boxes, cable modems for Internet access, high-speed networking for businesses private networks, digital broadcast of satellite and free terrestrial television signals and digital subscriber lines. Broadcom markets and sells its products through its own direct sales force as well as third-party distributors and representatives.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- -------- --------- --------- --------- --------- ------- ------- January * January * January * January 33 9/32 January 144 21/32 January 109.94 February * February * February * February 30 3/32 February 197 3/8 March * March * March * March 30 13/16 March 242 7/8 April * April * April 12 April 38 9/16 April 172 3/8 May * May * May 12 25/32 May 47 7/8 May 130 1/16 June * June * June 18 13/32 June 72 9/32 June 218 15/16 July * July * July 15 11/16 July 60 1/4 July 224 1/4 August * August * August 12 13/16 August 64 3/8 August 250 September * September * September 17 3/4 September 54 1/2 September 243 3/4 October * October * October 20 47/64 October 63 29/32 October 222 3/8 November * November * November 22 21/64 November 89 17/32 November 97 1/2 December * December * December 30 3/16 December 136 3/16 December 84
The closing price on February 15, 2001 was 85.00. CIENA CORPORATION (CIEN) Ciena Corporation develops and markets products for the optical networking equipment market. Optical networking equipment uses fiber optic cables, which can transmit larger volumes of data at higher transmission speeds more efficiently, to facilitate the transmission of data and telephone communications. Ciena provides products such as systems based on fiber optic cables, switches to manage network data traffic and other multi-purpose data delivery systems to its customers, who include local and long-distance telephone carriers and Internet service providers, who provide Internet access to individuals and businesses. Ciena markets and sells its products through its own direct sales force, distributors and third-party representatives.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- -------- --------- -------- --------- -------- --------- --------- ------- ------- January * January * January 27 17/32 January 10 3/32 January 32 13/16 January 90.06 February * February 19 5/8 February 20 31/32 February 13 15/16 February 79 29/32 March * March 14 7/32 March 21 5/16 March 11 1/4 March 63 1/16 April * April 15 5/8 April 27 7/8 April 11 3/4 April 61 13/16 May * May 23 3/8 May 26 May 14 3/8 May 59 27/32 June * June 23 9/16 June 34 13/16 June 15 3/32 June 83 11/32 July * July 28 1/16 July 37 1/32 July 16 7/8 July 71 1/16 August * August 23 7/8 August 14 1/16 August 17 9/16 August 110 27/32 September * September 24 49/64 September 7 5/32 September 18 1/4 September 122 13/16 October * October 27 1/2 October 8 19/32 October 17 5/8 October 105 1/8 November * November 27 November 8 1/2 November 21 31/32 November 75 15/16 December * December 30 9/16 December 7 5/16 December 28 3/4 December 81 1/4
The closing price on February 15, 2001 was 89.00. A-2 COMVERSE TECHNOLOGY, INC. (CMVT) Comverse Technology, Inc. designs, develops, manufactures, markets and supports computer and telecommunications systems and software for data processing and multimedia applications, which include video, graphics and animation. Comverse products are designed to allow telecommunications operators to provide services such as messaging, data distribution, call answering, voice and fax mail and Internet services. Comverse's customers include fixed and wireless telephone network operators, government agencies, call centers, financial institutions and businesses. Comverse also manufactures digital monitoring systems which provide monitoring, recording, surveillance and information gathering capabilities for law enforcement and intelligence agencies. Comverse markets and sells its products through its own direct sales force and through vendors of telecommunications infrastructure equipment.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- --------- ------- ------- January 6 29/64 January 15 January 11 15/64 January 28 January 71 11/16 January 113.31 February 8 19/64 February 14 35/64 February 15 37/64 February 23 59/64 February 98 7/16 March 8 3/64 March 13 11/64 March 16 19/64 March 28 21/64 March 94 1/2 April 7 51/64 April 13 5/64 April 15 51/64 April 32 1/16 April 89 3/16 May 9 51/64 May 15 1/4 May 16 21/32 May 33 25/32 May 91 3/8 June 10 11/64 June 17 21/64 June 17 19/64 June 37 3/4 June 93 July 10 19/64 July 16 1/4 July 17 1/64 July 37 25/32 July 87 3/4 August 11 3/4 August 15 5/16 August 12 53/64 August 39 August 91 15/16 September 12 61/64 September 17 37/64 September 13 5/8 September 47 5/32 September 108 October 11 43/64 October 13 3/4 October 15 21/64 October 56 3/4 October 111 3/4 November 11 21/64 November 11 15/64 November 19 11/64 November 60 7/16 November 83 3/16 December 12 39/64 December 13 December 23 43/64 December 72 3/8 December 108 5/8
The closing price on February 15, 2001 was 108.81. CONEXANT SYSTEMS, INC. (CNXT) Conexant Systems, Inc. develops and markets semiconductors for communications electronic systems. Conexant semiconductor products facilitate communications through wireline voice and data networks, cordless and cellular wireless telephony systems, and cable and wireless multi-channel communications networks. Conexant's primary customers are communications equipment manufacturers. Conexant markets and sells its products through its own direct sales force and distributors.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- ------- --------- -------- --------- ------- ------- ------- January * January * January * January 9 3/32 January 84 1/2 January 18.06 February * February * February * February 8 1/2 February 98 1/4 March * March * March * March 13 27/32 March 71 April * April * April * April 20 3/8 April 59 7/8 May * May * May * May 19 3/8 May 37 5/8 June * June * June * June 29 1/32 June 48 5/8 July * July * July * July 31 7/16 July 32 August * August * August * August 35 15/16 August 37 3/16 September * September * September * September 36 21/64 September 41 7/8 October * October * October * October 46 11/16 October 26 5/16 November * November * November * November 59 1/4 November 20 5/16 December * December * December 8 3/8 December 66 3/8 December 15 3/8
The closing price on February 15, 2001 was 18.13. A-3 COPPER MOUNTAIN NETWORKS, INC. (CMTN) Copper Mountain Networks, Inc. supplies high-speed digital communications products enabling telecommunications service providers to provide high-speed connections to businesses and residences over existing copper wire telephone infrastructure. Copper Mountain produces equipment that supports large-scale digital subscriber line services to businesses and their employees, including access from remote locations. Copper Mountain markets and sells its products to telecommunications service providers through its own direct sales force, selected original equipment manufacturers and distributors.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- ------- ------- January * January * January * January * January 55 1/4 January 7.69 February * February * February * February * February 86 15/16 March * March * March * March * March 81 15/16 April * April * April * April * April 83 3/8 May * May * May * May 32 May 83 9/16 June * June * June * June 38 5/8 June 88 1/8 July * July * July * July 60 1/2 July 78 55/64 August * August * August * August 58 1/2 August 59 15/16 September * September * September * September 43 13/16 September 37 1/2 October * October * October * October 36 7/8 October 11 7/16 November * November * November * November 41 23/32 November 6 1/8 December * December * December * December 48 3/4 December 5 29/32
The closing price on February 15, 2001 was 5.19. CORNING, INC. (GLW) Corning, Inc. develops and markets telecommunications and information display products and services. Corning's telecommunications products are designed to increase the capacity and efficiency of communications networks, such as optical fibers, cables and hardware, which are used by utilities, telephone exchanges and cable television. Corning's information display products include projection equipment and glass panels for use in televisions, notebook and desktop computers and automobiles. It also creates components out of advanced materials, which include glass, glass ceramic and polymer technologies, for use in environmental and science applications, semiconductors and optical and lighting products. Corning markets and sells its products primarily through its direct sales force.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- --------- ------- ------- January 10 27/64 January 11 7/8 January 11 25/64 January 16 1/4 January 51 27/64 January 56.71 February 10 53/64 February 12 35/64 February 13 35/64 February 17 53/64 February 62 43/64 March 11 43/64 March 14 51/64 March 14 3/4 March 20 March 64 43/64 April 11 37/64 April 16 5/64 April 13 21/64 April 19 5/64 April 65 53/64 May 12 3/4 May 16 51/64 May 13 9/64 May 18 13/64 May 64 21/64 June 12 51/64 June 18 35/64 June 11 37/64 June 23 3/8 June 89 61/64 July 12 19/64 July 20 5/8 July 10 15/64 July 23 21/64 July 78 5/64 August 12 27/64 August 17 5/8 August 8 13/64 August 22 11/64 August 109 21/64 September 13 September 15 3/4 September 9 13/16 September 22 55/64 September 99 October 12 59/64 October 15 3/64 October 12 3/64 October 26 13/64 October 76 1/2 November 13 1/2 November 14 9/64 November 13 3/8 November 31 15/64 November 58 1/2 December 15 27/64 December 12 3/8 December 15 December 42 63/64 December 52 13/16
The closing price on February 15, 2001 was 42.01. A-4 JDS UNIPHASE CORPORATION (JDSU) JDS Uniphase Corporation designs, develops, manufactures and markets the components which provide the framework for fiber optic networks, which are used for the transmission of data and other information. Fiber optic networks are designed to provide faster and more efficient data and information transmission than traditional copper wiring. These products are sold primarily to telecommunications and cable television system providers. JDS Uniphase also designs, manufactures and markets laser technology products for its customers in the biotechnology, industrial process control, graphics, printing and semiconductor equipment industries and offers related services. JDS Uniphase markets and sells its products primarily through its own direct sales force. On February 13, 2001, JDS Uniphase completed its acquisition of SDL, Inc. Each share of SDL common stock was converted into 3.8 shares of JDS Uniphase common stock.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- ------- --------- -------- --------- --------- ------- ------- January 1 3/32 January 2 47/64 January 4 19/32 January 11 25/64 January 101 31/32 January 54.81 February 1 7/32 February 2 3/64 February 5 1/64 February 11 1/64 February 131 15/16 March 1 7/32 March 2 5/16 March 5 17/64 March 14 25/64 March 120 9/16 April 1 21/32 April 2 31/64 April 6 25/32 April 15 11/64 April 103 3/4 May 2 3/64 May 3 9/32 May 6 3/8 May 16 3/4 May 88 June 2 7/32 June 3 41/64 June 7 27/32 June 20 3/4 June 119 7/8 July 1 5/8 July 4 17/64 July 6 1/4 July 22 19/32 July 118 1/8 August 2 21/64 August 4 17/64 August 5 August 26 33/64 August 124 31/64 September 2 41/64 September 4 31/32 September 5 1/8 September 28 29/64 September 94 11/16 October 3 1/64 October 4 13/64 October 6 11/64 October 41 23/32 October 81 7/16 November 3 23/32 November 5 1/64 November 6 25/32 November 57 3/16 November 50 1/16 December 3 9/32 December 5 11/64 December 8 43/64 December 80 21/32 December 41 11/16
The closing price on February 15, 2001 was 45.13. LUCENT TECHNOLOGIES, INC. (LU) Lucent Technologies, Inc. develops, manufactures and markets public and private communications systems, software and products. Lucent's primary customer base includes communications network operators and service providers. Lucent provides wireless networks services, local and long distance voice, data, video and cable services, optical networking for the transmission of data, switches to route and control network traffic and software products that manage voice and data communications networks. Lucent markets and sells its products through its own direct sales force and through arrangements with third-party dealers and distributors.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- ------- ------- ------- January * January 13 9/16 January 22 1/8 January 56 9/32 January 55 1/2 January 18.60 February * February 13 15/32 February 27 3/32 February 50 25/32 February 59 1/2 March * March 13 1/8 March 31 31/32 March 54 March 62 April 8 25/32 April 14 3/4 April 38 1/8 April 60 April 62 9/16 May 9 1/2 May 15 7/8 May 35 15/32 May 56 7/8 May 57 1/4 June 9 15/32 June 18 1/64 June 41 19/32 June 67 7/16 June 58 3/4 July 9 1/4 July 21 7/32 July 46 3/16 July 65 1/16 July 43 3/4 August 9 7/32 August 19 15/32 August 35 7/16 August 64 1/16 August 42 September 11 15/32 September 20 11/32 September 34 5/8 September 64 7/8 September 30 1/2 October 11 13/16 October 20 19/32 October 40 3/32 October 64 1/4 October 23 5/16 November 12 13/16 November 20 1/32 November 43 1/32 November 74 1/2 November 15 9/16 December 11 9/16 December 19 31/32 December 54 31/32 December 75 December 13 1/2
The closing price on February 15, 2001 was 13.62. A-5 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 as well as through distributors, retailers and value-added resellers.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- --------- ------- ------- January 18 January 22 3/4 January 19 55/64 January 24 5/64 January 45 1/2 January 22.81 February 18 5/64 February 18 43/64 February 18 35/64 February 23 27/64 February 56 53/64 March 17 43/64 March 20 11/64 March 20 1/4 March 24 27/64 March 48 43/64 April 20 27/64 April 19 3/64 April 18 37/64 April 26 43/64 April 39 43/64 May 22 1/4 May 22 1/8 May 17 43/64 May 27 39/64 May 31 1/4 June 20 59/64 June 25 3/8 June 17 33/64 June 31 37/64 June 30 July 18 July 26 51/64 July 17 27/64 July 30 27/64 July 33 1/4 August 17 51/64 August 24 29/64 August 14 5/16 August 30 3/4 August 36 1/16 September 17 11/64 September 23 61/64 September 14 19/64 September 29 21/64 September 29 1/2 October 15 21/64 October 20 43/64 October 17 21/64 October 32 7/16 October 24 15/16 November 18 29/64 November 20 61/64 November 20 5/8 November 38 5/64 November 20 1/16 December 20 27/64 December 19 1/16 December 20 23/64 December 49 5/64 December 20 1/4 The closing price on February 15, 2001 was 19.13. NEXT LEVEL COMMUNICATIONS, INC. (NXTV) Next Level Communications, Inc. develops and markets high-speed, high- volume communications equipment that enables telephone companies and other communications service providers to deliver a full range of voice, data and video services over the existing copper telephone wire infrastructure. Next Level's equipment and technology has the capability to offer voice, data and video services in a single product offering or offer each service separately depending on subscriber demand and the objectives of the service provider. Next Level markets and sells its products through its own direct sales force. Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- --------- ------- ------- January * January * January * January * January 80 5/8 January 13.00 February * February * February * February * February 134 1/2 March * March * March * March * March 108 3/4 April * April * April * April * April 79 5/8 May * May * May * May * May 51 1/8 June * June * June * June * June 85 3/4 July * July * July * July * July 89 47/64 August * August * August * August * August 44 1/8 September * September * September * September * September 66 1/8 October * October * October * October * October 46 13/16 November * November * November * November 64 9/16 November 10 3/4 December * December * December * December 74 7/8 December 11 3/8
The closing price on February 15, 2001 was 11.75. A-6 NORTEL NETWORKS CORPORATION (NT) Nortel Networks Corporation designs, develops, manufactures and markets data and telephony networks for telecommunications systems and for the Internet. Nortel products include systems and services which connect users to telecommunications networks and the Internet, wireless and wireline applications for the Internet, optical technology for the transmission of data on the Internet, Internet access solutions and Internet voice telecommunications services. Nortel also develops switches and routers which control and connect network traffic, and it also manufactures telephones and telecommunications equipment. Nortel's customers include public institutions, private businesses, local and long-distance telephone carriers, personal communications services, cellular mobile communications companies, cable television companies and Internet service providers. Nortel markets and sells its products through its own direct sales force, distributors and value-added resellers.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- ------- ------- ------- January 5 5/8 January 9 13/64 January 11 9/32 January 15 25/32 January 47 3/4 January 38.23 February 5 15/16 February 8 63/64 February 13 5/16 February 14 33/64 February 55 7/8 March 5 31/32 March 8 11/64 March 16 5/32 March 15 17/32 March 63 April 6 7/16 April 9 5/64 April 15 7/32 April 17 3/64 April 56 May 6 25/32 May 10 1/2 May 16 May 18 3/4 May 54 1/8 June 6 51/64 June 11 3/8 June 14 3/16 June 21 45/64 June 68 7/8 July 5 7/8 July 13 5/64 July 14 23/32 July 22 5/32 July 74 August 6 15/64 August 12 25/64 August 11 7/8 August 20 17/32 August 81 1/2 September 7 7/32 September 13 September 8 1/64 September 25 1/2 September 59 1/2 October 8 9/64 October 11 7/32 October 10 45/64 October 30 31/32 October 45 1/2 November 8 7/32 November 11 15/64 November 11 43/64 November 36 15/16 November 37 3/4 December 7 47/64 December 11 3/32 December 12 1/2 December 50 1/2 December 32 1/16
The closing price on February 15, 2001 was 29.75. PMC-SIERRA, INC. (PMCS) PMC-Sierra, Inc. develops and markets Internet and network semiconductor systems designed to assist in the high speed transmission of information. PMC- Sierra's products and services are used in developing and maintaining the private networks of a company, connecting these private networks to other private networks and to the Internet and providing remote Internet access. PMC- Sierra markets its products and services directly through its own sales staff and through third-party distributors.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- -------- --------- -------- --------- --------- ------- ------- January 4 3/16 January 3 27/32 January 8 1/2 January 18 37/64 January 90 1/4 January 75.56 February 5 3/4 February 4 February 9 February 17 23/32 February 193 1/16 March 4 3/4 March 4 1/32 March 9 1/2 March 17 51/64 March 203 11/16 April 4 3/32 April 4 7/32 April 11 3/8 April 23 31/32 April 191 7/8 May 3 11/16 May 6 1/32 May 9 47/64 May 24 9/32 May 153 1/4 June 2 29/32 June 6 9/16 June 11 23/32 June 29 15/32 June 177 11/16 July 2 15/32 July 8 3/16 July 10 7/32 July 39 1/8 July 193 13/16 August 2 29/32 August 7 11/64 August 7 41/64 August 46 1/2 August 236 September 3 September 6 3/8 September 7 31/32 September 46 1/4 September 215 1/4 October 3 17/64 October 6 19/32 October 11 7/32 October 47 1/8 October 169 1/2 November 3 19/32 November 6 7/8 November 13 15/32 November 51 17/32 November 92 3/16 December 3 3/4 December 7 3/4 December 15 25/32 December 80 5/32 December 78 5/8
The closing price on February 15, 2001 was 57.88. A-7 QUALCOMM INCORPORATED (QCOM) Qualcomm Incorporated develops and markets digital wireless communications products, technologies and services for use in wireless networks. Digital wireless communication provides technology that increases system capacity, provides more secure communication 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. In addition to developing, manufacturing and marketing CMDA products and services, Qualcomm also licenses this technology to telecommunications equipment suppliers and develops and manufactures products based on this technology for use in satellite systems. Qualcomm markets and sells its technology and products through its own direct sales force and through licensing arrangements and joint ventures with third parties.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- ------- --------- --------- --------- --------- ------- ------- January 5 19/32 January 7 January 6 31/64 January 8 15/64 January 127 January 84.06 February 4 15/16 February 6 31/32 February 6 3/8 February 9 1/8 February 142 7/16 March 5 3/16 March 7 3/64 March 6 11/16 March 15 35/64 March 149 5/16 April 4 27/32 April 5 27/32 April 7 1/32 April 25 April 108 7/16 May 6 13/16 May 6 1/32 May 6 33/64 May 24 5/16 May 66 3/8 June 6 41/64 June 6 23/64 June 7 1/32 June 35 7/8 June 60 July 5 27/64 July 5 25/32 July 7 51/64 July 39 July 64 15/16 August 5 27/64 August 5 25/32 August 5 1/2 August 48 3/64 August 59 7/8 September 5 5/16 September 7 31/32 September 6 September 47 19/64 September 71 1/4 October 4 31/32 October 7 3/64 October 6 61/64 October 55 11/16 October 65 7/64 November 5 1/4 November 8 15/32 November 6 55/64 November 90 37/64 November 80 1/4 December 4 63/64 December 6 5/16 December 6 31/64 December 176 1/8 December 82 3/16
The closing price on February 15, 2001 was 85.63. 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 include amplifiers, transmitters and receivers, which 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-party representatives.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- ------- --------- -------- --------- -------- ------- ------- January * January * January 1 19/64 January 9 3/64 January 40 1/2 January 21.63 February * February * February 1 55/64 February 9 5/8 February 69 5/32 March * March * March 1 53/64 March 11 31/32 March 67 3/16 April * April * April 2 April 13 31/32 April 52 1/32 May * May * May 1 39/64 May 10 21/32 May 52 1/2 June * June 2 25/64 June 1 23/64 June 18 21/32 June 43 13/16 July * July 2 7/64 July 2 5/32 July 19 7/64 July 37 11/16 August * August 2 11/32 August 1 5/8 August 21 31/32 August 44 5/8 September * September 2 21/64 September 2 17/64 September 22 7/8 September 32 October * October 1 7/8 October 2 31/32 October 25 13/16 October 19 15/16 November * November 1 49/64 November 3 45/64 November 33 31/32 November 19 December * December 1 35/64 December 5 51/64 December 34 7/32 December 27 7/16
The closing price on February 15, 2001 was 18.44. A-8 SCIENTIFIC-ATLANTA, INC. (SFA) Scientific-Atlanta, Inc. develops and markets products and services for communications networks which deliver voice, data and video that connect information providers with users through free terrestrial television and satellite broadband networks. Scientific-Atlanta also provides applications for integrating cable, telephone and data networks into one system. Scientific- Atlanta, Inc. markets and sells its products to operators of transmission systems, satellite network and satellite television network systems primarily through its own direct force and distributors.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- -------- --------- -------- --------- -------- --------- -------- ------- ------- January 7 7/8 January 9 1/2 January 7 25/32 January 15 9/16 January 38 17/32 January 60.00 February 8 7/16 February 8 3/8 February 8 3/4 February 16 7/32 February 51 11/32 March 8 7/8 March 7 5/8 March 9 25/32 March 13 5/8 March 63 1/4 April 9 1/4 April 7 15/16 April 11 15/16 April 15 7/8 April 65 1/16 May 9 7/16 May 9 1/16 May 11 1/32 May 17 21/32 May 56 3/8 June 7 3/4 June 10 15/16 June 12 11/16 June 18 June 74 1/2 July 6 11/16 July 10 1/2 July 12 1/32 July 18 1/4 July 76 3/4 August 6 3/4 August 10 7/8 August 8 27/32 August 25 5/8 August 77 9/16 September 7 15/16 September 11 5/16 September 10 9/16 September 24 25/32 September 63 5/8 October 7 1/4 October 9 9/32 October 7 15/32 October 28 5/8 October 68 7/16 November 7 3/4 November 10 November 9 11/16 November 29 7/32 November 40 3/8 December 7 1/2 December 8 3/8 December 11 13/32 December 27 15/16 December 32 9/16
The closing price on February 15, 2001 was 54.59. SYCAMORE NETWORKS, INC. (SCMR) Sycamore Networks, Inc. creates optical networking products which facilitate the transmission of voice and data on fiber optic networks. Fiber optic networks allow for the transmission of larger volumes of data at faster transmission speeds and more efficiently. Sycamore's products use existing fiber optic systems to provide enhanced high-speed data services such as access to the Internet, video conferencing and remote access to corporate databases. Sycamore also collaborates with its customers to identify new high-speed data services. Sycamore markets its products through its own direct sales force.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- ------- --------- --------- --------- --------- ------- ------- January * January * January * January * January 106 21/64 January 35.25 February * February * February * February * February 148 March * March * March * March * March 129 April * April * April * April * April 78 1/2 May * May * May * May * May 83 5/8 June * June * June * June * June 110 3/8 July * July * July * July * July 123 5/16 August * August * August * August * August 137 1/2 September * September * September * September * September 108 October * October * October * October 71 43/64 October 63 1/4 November * November * November * November 74 November 41 7/16 December * December * December * December 102 43/64 December 37 1/4
The closing price on February 15, 2001 was 26.81. A-9 TELLABS, INC. (TLAB) Tellabs, Inc. develops, manufactures and markets network systems and voice, data and video transmission systems. Tellabs products include digital networks, fiber optic systems and products which connect and access network systems. These products build and control transmission infrastructure for telecommunications providers, transport data digitally and provide other digital services such as paging and messaging. Tellabs' customers are local and long-distance telephone carriers, cellular and wireless service providers, cable operators, utilities, government agencies and businesses. Tellabs markets and sells its products through its own direct sales force and through distributors.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- ------- ------- January 11 January 20 19/32 January 25 19/32 January 42 7/8 January 54 January 64.81 February 11 13/16 February 19 15/16 February 30 3/16 February 40 1/32 February 48 March 12 3/32 March 18 1/16 March 33 9/16 March 48 7/8 March 62 63/64 April 13 13/16 April 19 15/16 April 35 7/16 April 54 45/64 April 54 13/16 May 16 1/8 May 25 1/8 May 34 23/64 May 58 1/2 May 64 15/16 June 16 23/32 June 27 15/16 June 35 13/16 June 67 9/16 June 68 7/16 July 14 15/16 July 29 15/16 July 37 41/64 July 61 9/16 July 65 August 15 27/32 August 29 27/32 August 21 1/8 August 59 9/16 August 56 3/16 September 17 21/32 September 25 3/4 September 19 29/32 September 56 15/16 September 47 3/4 October 21 9/32 October 27 October 27 1/2 October 63 1/4 October 49 15/16 November 19 7/8 November 26 November 27 1/32 November 64 7/8 November 53 December 18 13/16 December 26 7/16 December 34 9/32 December 64 3/16 December 56 1/2
The closing price on February 15, 2001 was 58.50. TERAYON COMMUNICATIONS SYSTEMS, INC. (TERN) Terayon Communications Systems, Inc. develops and markets broadband access services, which include services that allow cable operators to have two- way traffic on their cable systems. Terayon's systems allow cable operators to maximize broadband capacity using existing cable network infrastructure, thereby minimizing the need for infrastructure upgrades. Terayon markets and sells its products through its own direct sales force, distributors and system integrators.
Closing Closing Closing Closing Closing Closing 1996 Price 1997 Price 1998 Price 1999 Price 2000 Price 2001 Price - --------- ------- --------- ------- --------- -------- --------- -------- --------- --------- ------- ------- January * January * January * January 20 1/4 January 53 1/2 January 6.50 February * February * February * February 15 17/32 February 128 9/16 March * March * March * March 20 March 102 1/2 April * April * April * April 20 3/16 April 46 1/2 May * May * May * May 16 1/16 May 55 1/2 June * June * June * June 27 15/16 June 64 1/4 July * July * July * July 19 9/16 July 51 August * August * August 4 13/16 August 18 August 55 1/2 September * September * September 6 5/16 September 24 7/16 September 33 15/16 October * October * October 6 October 21 7/8 October 22 3/8 November * November * November 15 5/16 November 31 1/32 November 12 3/8 December * December * December 18 1/2 December 31 13/32 December 4 1/16
The closing price on February 15, 2001 was 7.19. A-10 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [Logo of BROADBAND HOLDRS] (SM) 1,000,000,000 Depositary Receipts Broadband HOLDRS (SM) Trust --------------------- P R O S P E C T U S --------------------- February 16, 2001 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The expenses expected to be incurred in connection with the issuance and distribution of the securities being registered, other than underwriting compensation, are as set forth below. Except for the registration fee payable to the Securities and Exchange Commission, all such expenses are estimated: Securities and Exchange Commission registration fee............. $290,136 Printing and engraving expenses................................. 150,000 Legal fees and expenses......................................... 200,000 Miscellaneous................................................... 9,864 -------- Total......................................................... $650,000
Item 15. Indemnification of Directors and Officers. Section 145 of the General Corporation Law of the State of Delaware, as amended, provides that under certain circumstances a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation or is or was serving at its request in such capacity in another corporation or business association, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. Article XIV, Section 2 of the Restated Certificate of Incorporation of Merrill Lynch, Pierce, Fenner & Smith Incorporated provides in effect that, subject to certain limited exceptions, Merrill Lynch, Pierce, Fenner & Smith Incorporated shall indemnify its directors and officers to the full extent authorized or permitted by law. The directors and officers of Merrill Lynch, Pierce, Fenner & Smith Incorporated are insured under policies of insurance maintained by Merrill Lynch, Pierce, Fenner & Smith Incorporated, subject to the limits of the policies, against certain losses arising from any claim made against them by reason of being or having been such directors or officers. In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated has entered into contracts with all of its directors providing for indemnification of such persons by Merrill Lynch, Pierce, Fenner & Smith Incorporated to the full extent authorized or permitted by law, subject to certain limited exceptions. Item 16. Exhibits. See Exhibit Index. Item 17. Undertakings. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: II-1 (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of the prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (5) For purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to Item 15 of this registration statement, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant hereby certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Post-Effective Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, on February 16, 2001. Merrill Lynch, Pierce, Fenner & Smith Incorporated * By: _________________________________ Name:Ahmass L. Fakahany Title:Senior Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Post- Effective Amendment No. 2 to the Registration Statement has been signed by the following persons in the capacities indicated on February 16, 2001.
Signature Title --------- ----- * Chief Executive Officer, ___________________________________________ Chairman of the Board and Director John L. Steffens * Director ___________________________________________ E. Stanley O'Neal * Director ___________________________________________ George A. Schieren Director ___________________________________________ Thomas H. Patrick * Senior Vice President and ___________________________________________ Chief Financial Officer Ahmass L. Fakahany * First Vice President and Controller ___________________________________________ Dominic A. Carone /s/ Stephen G. Bodurtha Attorney-in-Fact *By: ______________________________________ Stephen G. Bodurtha
II-3 INDEX TO EXHIBITS
Exhibits - -------- *4.1 Standard Terms for Depositary Trust Agreements between Merrill Lynch, Pierce, Fenner & Smith Incorporated and The Bank of New York, as Trustee dated as of September 2, 1999, and included as exhibits thereto, form of Depositary Trust Agreement and form of HOLDRS and Form of Amendment No. 2 to the Standard Terms for Depositary Trust Agreements *5.1 Opinion of Shearman & Sterling regarding the validity of the Broadband HOLDRS Receipts *8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel regarding the material federal income tax consequences *24.1 Power of Attorney (included in Part II of Registration Statement) *24.2 Power of Attorney of Dominic Carone
- ---------------- *Previously filed. -----END PRIVACY-ENHANCED MESSAGE-----