AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 20, 2002
REGISTRATION NO. 333-63516
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SALOMON SMITH BARNEY INC.
INITIAL DEPOSITOR
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HEALTHCARE SECTORS(SM) TRUST
YET-TO-BE FORMED
[ISSUER WITH RESPECT TO THE RECEIPTS]
<Table>
NEW YORK 6211 11-2418191
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</Table>
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(212) 816-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
COPIES TO:
<Table>
JOAN GUGGENHEIMER, ESQ. ALLAN G. SPERLING, ESQ.
SALOMON SMITH BARNEY INC. CLEARY, GOTTLIEB, STEEN & HAMILTON
388 GREENWICH STREET ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10013 NEW YORK, NEW YORK 10006
(212) 816-6000 (212) 225-2000
</Table>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
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, 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(2) PER RECEIPT(1) OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
Healthcare SECTORS.................... 11,200,000 receipts $83.60 $101,320,000 $17,379.44
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
(1)Estimated solely for purposes of calculating the registration fee pursuant to
Rule 457 under the Securities Act. 1,200,000 receipts are estimated to be
offered in the initial offering at $83.60 per receipt and 10,000,000 receipts
are estimated to be offered continuously after the initial offering at $0.10.
(2)Includes an indeterminate number of securities that may be offered or sold by
affiliates of the registrant in market making transactions.
(3)$12,750.00 was previously paid on June 19, 2001.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 20, 2002
PRELIMINARY PROSPECTUS
HEALTHCARE SECTORS(SM)
DEPOSITARY RECEIPTS
HEALTHCARE SECTORS(SM) TRUST
------------------
The Healthcare SECTORS(SM) Trust will issue Healthcare SECTORS(SM)
representing your undivided beneficial ownership in the common stocks or
American depositary shares of a group of 38 specified companies in the
healthcare industry. U.S. Bank Trust National Association will be the trustee.
You may only acquire, hold or transfer Healthcare SECTORS in round lots of 100
Healthcare SECTORS. Healthcare SECTORS are separate from the underlying
deposited securities held by the trust. For a list of the names and the number
of shares of the companies underlying a round lot of 100 Healthcare SECTORS, see
"Summary -- The Healthcare SECTORS and the Underlying Securities" starting on
page 4. The Healthcare SECTORS Trust will offer to issue the Healthcare SECTORS
on a continuous basis after the initial distribution.
The initial public offering price for a round lot of 100 Healthcare SECTORS
equals the sum of the closing market price on , 2002 for each
deposited share multiplied by the share amount specified in this prospectus,
plus an underwriting fee.
The term of the Healthcare SECTORS is two years and the trust will
terminate on , 2004, or earlier if a termination event occurs. See
"Description of the Healthcare SECTORS -- Termination of the Healthcare SECTORS
Trust" on page 24 of this prospectus. Upon termination of the trust, the
underlying securities of the Healthcare SECTORS Trust will be distributed to the
beneficial owners of the Healthcare SECTORS, subject to payment of applicable
fees, charges or taxes.
Healthcare SECTORS are neither interests in nor obligations of either the
initial depositor, Salomon Smith Barney Inc., or the trustee, U.S. Bank Trust
National Association.
Before this issuance, there has been no public market for the Healthcare
SECTORS. We will apply to list the Healthcare SECTORS on the American Stock
Exchange under the symbol " ".
------------------
INVESTING IN THE HEALTHCARE SECTORS INVOLVES A NUMBER OF RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 12.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------
<Table>
<Caption>
PER HEALTHCARE
SECTORS TOTAL
-------------- -----
Public Offering Price....................................... $ $
Underwriting Fee............................................ $ $
Proceeds to Healthcare SECTORS Trust........................ $ $
</Table>
------------------
SALOMON SMITH BARNEY
, 2002
"SECTORS" and "Selected Equity Comprised Trust Originated ReceiptS"
are service marks of Salomon Smith Barney Inc.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
SUMMARY..................................................... 2
RISK FACTORS................................................ 12
AVAILABLE INFORMATION....................................... 18
HEALTHCARE SECTORS TRUST.................................... 18
DESCRIPTION OF THE HEALTHCARE SECTORS....................... 19
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT............... 26
DESCRIPTION OF THE UNDERLYING SECURITIES.................... 27
HISTORICAL DATA ON THE UNDERLYING SECURITIES................ 31
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES............... 51
ERISA CONSIDERATIONS........................................ 53
UNDERWRITING................................................ 54
LEGAL MATTERS............................................... 55
</Table>
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted.
UNTIL , 2002, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO UNSOLD ALLOTMENTS
AND SUBSCRIPTIONS.
1
SUMMARY
This summary highlights selected information from this prospectus to help
you understand the Healthcare SECTORS. You should carefully read the entire
prospectus to fully understand the terms of the Healthcare SECTORS, as well as
the principal tax and other considerations that are important to you in making a
decision about whether to invest in the Healthcare SECTORS. You should, in
particular, carefully review the section entitled "Risk Factors," which
highlights a number of risks to determine whether an investment in the
Healthcare SECTORS is appropriate for you. All of the information set forth
below is qualified in its entirety by a more detailed explanation set forth
elsewhere in this prospectus.
The address of the Healthcare SECTORS Trust is: Healthcare SECTORS Trust,
c/o Salomon Smith Barney Inc., 388 Greenwich Street, New York, New York 10013
and its telephone number is (212) 816-6000.
GENERAL
Healthcare SECTORS will represent your undivided beneficial ownership
interest in the shares of common stock or American depositary shares held by the
Healthcare SECTORS Trust on your behalf. The Healthcare SECTORS are separate
from the underlying securities held by the trust.
The Healthcare SECTORS Trust will hold shares of common stock or American
depositary shares issued by 38 specified companies in the healthcare industry.
We specify below under "-- The Healthcare SECTORS and the Underlying Securities"
the number of shares of each common stock or American depositary shares held by
the Healthcare SECTORS Trust with respect to each round lot of 100 Healthcare
SECTORS. We refer to this group of common stocks and American depositary shares
as the underlying securities. Except when a reconstitution event or a
distribution of securities occurs, the underlying securities will not change and
the securities of a new company will not be added to the underlying securities
of the Healthcare SECTORS Trust.
The term of the Healthcare SECTORS is two years and the trust will
terminate on , 2004, or earlier if a termination event occurs. You
should refer to the description of termination events described under
"Description of the Healthcare SECTORS -- Termination of the Healthcare SECTORS
Trust" on page 24 of this prospectus. Upon termination of the trust, the trustee
will distribute the underlying securities of the Healthcare SECTORS Trust to the
beneficial owners of the Healthcare SECTORS, subject to payment of applicable
fees, charges or taxes.
SELECTED PURCHASE CONSIDERATIONS
- DIVERSIFICATION -- Healthcare SECTORS are designed to allow you to
diversify your investment in the healthcare industry through a single,
exchange-listed instrument representing your undivided beneficial
ownership of the underlying securities.
- FLEXIBILITY -- Healthcare SECTORS allow you to hold undivided beneficial
ownership interests in each of the underlying securities represented by
the Healthcare SECTORS. At any time, you can cancel your Healthcare
SECTORS to receive each of the underlying securities represented by the
Healthcare SECTORS.
- TRANSACTION COSTS -- The expenses associated with trading Healthcare
SECTORS are expected to be less than trading each of the underlying
securities separately.
SELECTED RISK CONSIDERATIONS
An investment in the Healthcare SECTORS involves significant risks. These
risks are explained in more detail in the "Risk Factors" section of this
prospectus beginning on page 12. Some are summarized here.
- YOUR INVESTMENT IN THE HEALTHCARE SECTORS WILL RESULT IN A LOSS IF THE
PRICES OF THE UNDERLYING SECURITIES DECLINE -- Since the value of the
Healthcare SECTORS will depend on the prices of the
2
underlying securities, you may lose all or a substantial portion of your
investment in the Healthcare SECTORS if the underlying securities decline
in price.
- THE PRICE AT WHICH YOU MAY BE ABLE TO SELL YOUR HEALTHCARE SECTORS MAY BE
LESS THAN THE PRICE OF THE UNDERLYING SECURITIES -- Healthcare SECTORS
may trade at a discount to the aggregate value of the underlying
securities.
- YOUR INVESTMENT IN THE HEALTHCARE SECTORS WILL BE SUBJECT TO RISKS
INHERENT IN THE HEALTHCARE INDUSTRY -- Since the value of the Healthcare
SECTORS will depend on the prices of the underlying securities, your
investment may be affected by general conditions of the healthcare
industry, including the pharmaceutical and biotechnology industries.
- YOUR INVESTMENT IN THE HEALTHCARE SECTORS MAY NOT CONTINUE TO BE A
DIVERSIFIED INVESTMENT IN THE HEALTHCARE INDUSTRY -- As a result of
business developments, mergers, consolidations or other corporate
combinations, reorganizations or market fluctuations affecting issuers of
the underlying securities, Healthcare SECTORS may not necessarily
continue to be a diversified investment in the healthcare industry.
- YOUR DECISION TO INVEST IN HEALTHCARE SECTORS MUST BE BASED ON YOUR
EVALUATION OF THE UNDERLYING SECURITIES -- The selection criteria for the
underlying securities are subjective. Therefore, while these criteria may
provide useful guidelines for evaluating the selection process, they are
not a substitute for your need to evaluate the underlying securities in
making your investment decision.
- YOU WILL HAVE TO CANCEL YOUR HEALTHCARE SECTORS AND RECEIVE ALL OF THE
UNDERLYING SECURITIES IN ORDER TO MAKE AN INVESTMENT DECISION WITH
RESPECT TO ANY ONE OR MORE OF THE INDIVIDUAL UNDERLYING SECURITIES -- In
order to sell one or more underlying securities or to participate in a
tender offer or certain reconstitution events for one or more of the
underlying securities, you will be required to cancel your Healthcare
SECTORS and receive delivery of all the underlying securities.
Cancellation of any Healthcare SECTORS will require you to pay a
cancellation fee to the trustee.
- THE MARKET PRICE OF THE HEALTHCARE SECTORS MAY DECLINE FOLLOWING
TEMPORARY PRICE INCREASES IN THE UNDERLYING SECURITIES -- Activity in the
secondary trading market, including purchasing activity associated with
Salomon Smith Barney Inc.'s acquisition of the underlying securities for
deposit into the Healthcare SECTORS Trust, may temporarily increase the
market price of the underlying securities, resulting in a higher price
for the Healthcare SECTORS, including at the time of their issuance.
Prices for the underlying securities and the Healthcare SECTORS may
decline subsequent to these purchases as the volume of purchases
subsides.
THE HEALTHCARE SECTORS TRUST
The Healthcare SECTORS Trust will be formed under the depositary trust
agreement, dated as of , 2002, among U.S. Bank Trust National
Association, as trustee, Salomon Smith Barney Inc., as initial depositor, other
future depositors who receive Healthcare SECTORS in exchange for depositing the
underlying securities and the owners of the Healthcare SECTORS. The Healthcare
SECTORS Trust is not a registered investment company under the Investment
Company Act of 1940.
The Healthcare SECTORS Trust will hold shares of common stock or American
depositary shares issued by 38 specified companies in the healthcare industry.
Except when a reconstitution event or distribution of securities occurs, the
group of companies will not change and the securities of a new company will not
be added to the securities underlying the Healthcare SECTORS.
The Healthcare SECTORS Trust's assets may increase or decrease as a result
of deposits and withdrawals of the underlying securities during the life of the
Healthcare SECTORS Trust.
The Healthcare SECTORS Trust will terminate on , 2004, or
earlier if a termination event occurs.
3
THE HEALTHCARE SECTORS AND THE UNDERLYING SECURITIES
The Healthcare SECTORS represent undivided beneficial ownership interest in
the shares of the underlying securities held by the Healthcare SECTORS Trust on
your behalf. The Healthcare SECTORS themselves are separate from the underlying
securities that are held by the trust.
The specific share amounts represented by each round lot of 100 Healthcare
SECTORS are set forth in the chart below and were determined on ,
2002. The underlying securities of the Healthcare SECTORS were selected by
Salomon Smith Barney Inc., based on its investment research from the following
subsectors of the healthcare industry: United States pharmaceuticals, European
pharmaceuticals, generic and specialty pharmaceuticals, medical devices,
biotechnology and healthcare services (health maintenance organizations,
hospitals and distributors).
These subsectors of the healthcare industry were selected by Salomon Smith
Barney Inc. based upon the subsectors represented by healthcare companies in the
Standard & Poor's 500, or the S&P 500. Standard & Poor's is an independent
source of market information that, among other things, classifies the securities
of public companies into various Economic Sector Classifications based on its
own criteria. There are 10 Standard & Poor's Economic Sector Classifications and
each class of publicly traded securities of a company are given only one Sector
Classification. The securities included in the Healthcare SECTORS are currently
represented in the Healthcare Economic Sector. The Standard & Poor's Sector
Classifications of the securities included in the Healthcare SECTORS 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
Economic Sector Classifications, or both.
The weightings of each subsector within the S&P 500 were adjusted for
certain factors or trends that in the opinion of Salomon Smith Barney Inc. are
present or anticipated in the healthcare industry as described below:
- Weighting of the United States pharmaceutical subsector was reduced from
the S&P 500 because this subsector has had slowing growth, increased
pricing pressure and reduced margins due to high levels of patent
expirations, weak product pipelines in near term, increased competition
from generic pharmaceutical and legislative reform (particularly Medicare
reform).
- The European pharmaceutical subsector (which is not represented in the
S&P 500) was added because the growth rates of this subsector have the
potential to rise in the years ahead as a result of efficiencies
resulting from mergers, generally lower risk of generic competition,
stronger product pipelines and less exposure to legislative reforms of
the United States.
- Weighting of the generic pharmaceutical subsector was increased from the
S&P 500 because this subsector has been gaining more popularity due to
high levels of patent expirations, shifts in distribution mechanics, the
impact of managed care and pending legislation.
- Weighting of the specialty pharmaceutical subsector was increased because
this subsector has increased appeal resulting from a need for new ways to
deliver drugs (such as patches or coatings for longer acting formulas) to
revitalize product portfolios and to protect against generic erosion, the
availability of small market niche opportunities that have been
overlooked by larger pharmaceutical companies, strong potential product
pipelines and potential for future merger and acquisition activity.
- Weighting of the biotechnology subsector was increased to reflect the
emergence of this subsector as a viable industry with companies that
operate at a profit, possess high-margin products that meet previously
unmet medical needs, have funding to sustain internal research and
development efforts, have strong product pipelines, may be attractive as
potential sources for marketing deals and for future merger and
acquisition activity and have minimal risk from generic competitors.
- Weighting of the medical devices subsector was increased slightly from
the S&P 500 because aging demographics of the United States support
increased demand for medical devices resulting from medical devices being
used instead of drugs, integration of internet technology to improve
patient monitoring capabilities and miniaturization allowing for new uses
(such as portable defibrillators or
4
cerebral pacemakers), and because this subsector has a potential for
future merger and acquisition activity.
- The weighting of the healthcare services subsector was not changed from
S&P 500 because of an anticipated recovery of this subsector due to the
reversal of prior budget cuts by state and Federal governments and the
need for healthcare infrastructure (such as hospitals and distribution
and health care information technology) and managed care.
The following chart compares the weightings of the subsectors of the
healthcare industry within the S&P 500 with the weightings of the subsectors
represented by the securities underlying the Healthcare SECTORS Trust. For
purposes of this chart, the European and United States pharmaceutical companies
were combined.
WEIGHTINGS S&P 500 VS. HEALTHCARE SECTORS
[WEIGHTINGS BAR GRAPH]
<Table>
<Caption>
HEALTHCARE SECTORS S&P 500 HEALTHCARE
------------------ ------------------
U.S. and European Pharmaceuticals 38.00 61.80
Generic and Specialty 11.00 2.90
Medica Devices 24.00 23.10
Biotechnology 20.00 5.60
Healthcare Services 7.00 6.60
</Table>
The underlying securities within each subsector of the healthcare industry
were selected primarily based on the opinion of Salomon Smith Barney Inc.
regarding the quality of the companies and their exposure to high growth and
high margin areas. Selection was also based on the application in the opinion of
Salomon Smith Barney Inc. of the following criteria specific to each subsector
of healthcare industry:
- Within the United States pharmaceutical subsector, selection of
underlying securities was also based on companies with lower patent
expiration risk and higher growth rates.
- Within the European pharmaceutical subsector, selection of underlying
securities was also based on companies with strong product pipelines and
distribution capabilities.
- Within the generic pharmaceutical subsector, selection of underlying
securities was also based on companies with strong distribution
capabilities due to importance of volume in this subsector, exposure to
branded products as well as generics and potential for competitive
advantage either through legal maneuvering or manufacturing advantages.
- Within the specialty pharmaceutical subsector, selection of underlying
securities was also based on companies with strong product pipelines and
niche markets with potential for growth opportunities.
- Within the biotechnology subsector, selection of underlying securities
was also based on companies that currently have revenues and earnings,
with strong product pipelines and that participate in certain growth
areas (such as monoclonal antibody production and genomics).
5
- Within the medical devices subsector, selection of underlying securities
was also based on companies with large capitalization and selective
companies with innovative technology.
- Within the healthcare services subsector, selection of underlying
securities was also based on companies that provide exposure to each of
the significant areas of this subsector: information technology,
distribution, hospital services and managed care.
The determination and application of the criteria described above are
subjective and the criteria were determined and applied in the sole discretion
of Salomon Smith Barney Inc. The ultimate determination of the inclusion of the
underlying securities in Healthcare SECTORS rested solely in the discretion of
Salomon Smith Barney Inc. Salomon Smith Barney Inc. has not made any
investigation or review of the issuers of the underlying securities except in
connection with its investment research on the issuers, which provided
information used in applying the selection criteria. Their investment research
and all determinations made by Salomon Smith Barney Inc. were based solely on
publicly available information, which Salomon Smith Barney Inc. did not
independently verify and for the accuracy of which it takes no responsibility.
The development and application of these selection criteria are not a prediction
or assurance by Salomon Smith Barney Inc. of investment results. A decision by
you to invest in Healthcare SECTORS must be made by you on the basis of your
evaluation of the underlying securities and not on the basis of the selection
criteria or the application by Salomon Smith Barney Inc. of these criteria.
Because these weightings are a function of market prices, it is expected that
these weightings will change substantially over time, including during the
period between , 2002 and the date the Healthcare SECTORS are first
issued to the public.
The share amounts set forth below will not change, except for changes due
to corporate events such as stock splits or reverse stock splits, stock
distributions and reconstitution events. The chart set forth below provides the
names of the 38 issuers of the underlying securities represented by the
Healthcare SECTORS by subsector of healthcare industry, stock ticker symbols,
share amounts represented by each round lot of 100 Healthcare SECTORS, initial
weightings as of , 2002, and the principal market on which the
underlying securities are traded.
<Table>
<Caption>
PRIMARY
SHARE INITIAL TRADING
NAME OF COMPANY SYMBOL AMOUNTS WEIGHTING MARKET
- --------------- ------ ------- --------- -------
United States Pharmaceuticals
Bristol-Myers Squibb Company ........... BMY 5 2.88% NYSE
Eli Lilly and Company .................. LLY 4 3.71% NYSE
Merck & Co., Inc. ...................... MRK 4 3.01% NYSE
Pfizer Inc. ............................ PFE 8 4.02% NYSE
Pharmacia Corporation .................. PHA 6 3.02% NYSE
Wyeth .................................. WYE 4 3.11% NYSE
European Pharmaceuticals
Aventis S.A.*........................... AVE 3 2.73% NYSE
AstraZeneca PLC*........................ AZN 7 4.37% NYSE
GlaxoSmithKline PLC*.................... GSK 6 3.60% NYSE
Novartis AG*............................ NVS 5 2.33% NYSE
Schering Aktiengesellschaft*............ SHR 5 3.66% NYSE
Specialty and Generic Pharmaceuticals
Barr Laboratories, Inc. ................ BRL 4 3.35% NYSE
Elan Corporation, PLC*.................. ELN 11 1.90% NYSE
Forest Laboratories, Inc. .............. FRX 1 0.97% NYSE
King Pharmaceuticals, Inc............... KG 5 1.90% NYSE
</Table>
6
<Table>
<Caption>
PRIMARY
SHARE INITIAL TRADING
NAME OF COMPANY SYMBOL AMOUNTS WEIGHTING MARKET
- --------------- ------ ------- --------- -------
Shire Pharmaceuticals Group PLC*........ SHPGY 7 2.04% NASDAQ
Teva Pharmaceutical Industries Ltd.*.... TEVA 3 2.10% NASDAQ
Medical Devices
Abbott Laboratories..................... ABT 4 2.77% NYSE
Baxter International Inc. .............. BAX 6 4.08% NYSE
Beckman Coulter, Inc. .................. BEC 5 2.92% NYSE
Guidant Corporation .................... GDT 4 2.03% NYSE
Johnson & Johnson....................... JNJ 5 3.73% NYSE
Medtronic, Inc. ........................ MDT 7 3.82% NYSE
Stryker Corporation .................... SYK 3 2.26% NYSE
Biotechnology
Amgen Inc. ............................. AMGN 6 4.26% NASDAQ
Biogen, Inc. ........................... BGEN 3 1.95% NASDAQ
Genentech, Inc. ........................ DNA 7 4.05% NYSE
Genzyme Corporation .................... GENZ 4 2.18% NASDAQ
Gilead Sciences, Inc. .................. GILD 5 2.16% NASDAQ
Idec Pharmaceuticals Corporation ....... IDPH 5 3.85% NASDAQ
MedImmune, Inc. ........................ MEDI 2 1.01% NASDAQ
Protein Design Labs, Inc. .............. PDLI 5 0.97% NASDAQ
Healthcare Services
AmerisourceBergen Corporation .......... ABC 2 1.66% NYSE
Caremark Rx, Inc. ...................... CMX 9 1.92% NYSE
Cardinal Health, Inc. .................. CAH 1 0.81% NYSE
Patterson Dental Company................ PDCO 2 0.99% NASDAQ
Tenet Healthcare Corporation ........... THC 3 2.12% NYSE
Trigon Healthcare, Inc. ................ TGH 2 1.76% NYSE
</Table>
- ---------------
* The securities of these non-U.S. companies trade in the United States as
American depository receipts.
The Healthcare SECTORS Trust will only issue and cancel, and you may only
obtain, hold, trade or surrender, Healthcare SECTORS in round lots of 100
Healthcare SECTORS. The Healthcare SECTORS Trust will only issue Healthcare
SECTORS upon the deposit of the whole shares represented by a round lot of 100
Healthcare SECTORS. 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 Healthcare SECTORS, the
Healthcare SECTORS Trust may require a minimum of more than one round lot of 100
Healthcare SECTORS for an issuance so that only whole share amounts of the
underlying securities are deposited with the Healthcare SECTORS Trust.
The number of outstanding Healthcare SECTORS will increase and decrease as
a result of deposits and withdrawals of the underlying securities. The
Healthcare SECTORS Trust will stand ready to issue additional Healthcare SECTORS
on a continuous basis when an investor deposits the required shares of the
underlying securities with the trustee.
7
HISTORICAL PERFORMANCE OF UNDERLYING STOCKS
The following table sets forth the composite performance of all of the
underlying securities represented by a single Healthcare SECTORS, measured at
the close of each month from October 2000, the first month when all of the
underlying securities were publicly traded, to present. The performance table is
adjusted to reflect any stock splits and stock dividends that occurred over the
measurement period. Past movements of the prices of the underlying securities
are not necessarily indicative of future prices. The table also sets forth the
composite amount of dividends which would have been received by the Healthcare
SECTORS Trust with respect to a single Healthcare SECTORS and the amount of such
dividends which would have been distributed to a holder of a single Healthcare
SECTORS.
<Table>
<Caption>
DIVIDENDS DIVIDENDS
DATE CLOSING PRICE RECEIVED DISTRIBUTED
- ---- ------------- --------- -----------
October 2000............................ $93.05 $0.0594 $0.0594
November 2000........................... 92.08 0.0313 0.0313
December 2000........................... 95.67 0.0360 0.0160
January 2001............................ 88.54 0.0546 0.0546
February 2001........................... 89.41 0.0286 0.0286
March 2001.............................. 82.33 0.0415 0.0215
April 2001.............................. 85.67 0.0911 0.0911
May 2001................................ 88.77 0.0874 0.0874
June 2001............................... 89.83 0.0397 0.0197
July 2001............................... 89.95 0.0431 0.0431
August 2001............................. 87.94 0.0303 0.0303
September 2001.......................... 85.79 0.0439 0.0239
October 2001............................ 85.86 0.0496 0.0496
November 2001........................... 89.15 0.0345 0.0345
December 2001........................... 88.82 0.0403 0.0203
January 2002............................ 84.19 0.0715 0.0715
February 2002 (through February 28,
2002)................................. 81.61 0.0305 0.0305
</Table>
PUBLIC OFFERING PRICE
The initial public offering price for each round lot of 100 Healthcare
SECTORS will equal the sum of the closing market price of each underlying stock
on the date the Healthcare SECTORS are priced for initial sale to the public
multiplied by the share amount appearing in the above table, plus an
underwriting fee. We expect the price range per Healthcare SECTORS to be between
$76.00 and $83.60.
After the initial offering, you may acquire Healthcare SECTORS in two ways:
- through a deposit of the required number of shares of underlying
securities with the trustee or
- through a cash purchase in the secondary trading market.
RECONSTITUTION EVENTS
The occurrence of any of the following reconstitution events will result in
the consequences described below:
- If an issuer of underlying securities no longer has a class of securities
registered under section 12 of the Securities Exchange Act of 1934, as
amended, then its securities will no longer be an underlying security and
the trustee will distribute the shares of that company to the beneficial
owners of the Healthcare SECTORS.
- If the Securities and Exchange Commission, or the SEC, finds that an
issuer of an underlying security should be registered as an investment
company under the Investment Company Act, and
8
the trustee has actual knowledge of the SEC finding, then its securities
will no longer be an underlying security and the trustee will distribute
the shares of that company to the beneficial owners of the Healthcare
SECTORS.
- If the underlying securities of an issuer cease to be outstanding as a
result of a merger, consolidation or other corporate combination, its
securities will no longer be an underlying security and 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 the Healthcare SECTORS only if the distributed
securities have a different Standard & Poor's Economic Sector
Classification than Healthcare Economic Sector at the time of the
distribution or exchange or if the securities received are not listed for
trading on a U.S. national securities exchange or through the NASDAQ
National Market System. In any other case, the additional securities
received will be deposited into the Healthcare SECTORS Trust. In the
event of a merger, consolidation or other corporate combination in which
the holder of the underlying security is provided an option of receiving
either cash or securities, the trustee will not respond and, thus, the
Healthcare SECTORS Trust will receive the default option which may be
either cash or securities. If you want to receive the alternative option,
you must obtain that security by surrendering your Healthcare SECTORS and
receiving all of your underlying securities.
- If an issuer's underlying securities are delisted from trading on a
national securities exchange in the United States or through the NASDAQ
National Market System and are not listed for trading on another national
securities exchange in the United States or through the NASDAQ National
Market System within five business days from the date such securities are
delisted, then its securities will no longer be an underlying security
and the trustee will distribute the shares of that company to the
beneficial owners of the Healthcare SECTORS.
If a reconstitution event occurs, the trustee will take the actions set
forth above as promptly as practicable after the date that the trustee has
knowledge of the occurrence of the reconstitution event.
TERMINATION OF THE HEALTHCARE SECTORS TRUST
The term of the Healthcare SECTORS is two years and the trust will
terminate on , 2004, or earlier if a termination event occurs.
Any of the following will constitute a termination event:
- The Healthcare SECTORS are delisted from the American Stock Exchange and
are not listed for trading on another national securities exchange in the
United States or through the NASDAQ National Market System within five
business days from the date the Healthcare SECTORS are delisted.
- The trustee resigns and no successor trustee is appointed within 60 days
from the date the trustee provides notice to the initial depositor of its
intent to resign.
- 75% of beneficial owners of outstanding Healthcare SECTORS vote to
dissolve and liquidate the Healthcare SECTORS Trust.
Upon termination of the trust or if a termination event occurs, the trustee
will distribute the underlying securities to you as promptly as practicable
after termination or after the trustee has knowledge of the occurrence of the
termination event. The beneficial owners of the Healthcare SECTORS will
surrender their Healthcare SECTORS 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 security. You should read the discussion under the section
"Description of the Healthcare SECTORS -- Surrender and Cancellation of the
Healthcare SECTORS" in this prospectus.
RIGHTS RELATING TO HEALTHCARE SECTORS
You have the right to withdraw the underlying securities upon request by
delivering a round lot or integral multiple of a round lot of Healthcare SECTORS
to the trustee, during the trustee's business
9
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 Healthcare SECTORS would otherwise require the delivery of a fractional share
of underlying securities, the trustee will sell the share in the market and the
Healthcare SECTORS Trust will deliver cash in lieu of such share. Except with
respect to the right to vote for dissolution of the Healthcare SECTORS Trust,
the Healthcare SECTORS themselves will not have voting rights.
RIGHTS RELATING TO THE UNDERLYING SECURITIES
You will have the same rights as you would have if you beneficially owned
the underlying securities outside of the Healthcare SECTORS Trust. You have the
right to:
- receive all shareholder disclosure materials distributed by the issuers
of the underlying securities, including annual and quarterly reports;
- receive all proxy materials distributed by the issuers of the underlying
securities, instruct the trustee to vote the underlying securities and
attend shareholder meetings yourself; and
- 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.
The Healthcare SECTORS are not intended to change your beneficial ownership
obligations under federal securities laws, including sections 13(d) and 16(a) of
the Securities Exchange Act. If you wish to participate in a tender offer for
any of the underlying securities, you must obtain that security by surrendering
your Healthcare SECTORS and receiving all of your underlying securities. For
specific information about obtaining your underlying securities, you should read
the discussion under "Description of the Healthcare SECTORS" in this prospectus.
LISTING
We will apply to list the Healthcare SECTORS on the American Stock Exchange
under the symbol " ". Trading will take place only in round lots of 100
Healthcare SECTORS. A minimum of 150,000 Healthcare SECTORS will be required to
be outstanding when trading begins. Bid and ask prices will be quoted per single
Healthcare SECTORS, even though investors will only be able to acquire, hold,
transfer and surrender in round lots of 100 Healthcare SECTORS.
THE ROLE OF SALOMON SMITH BARNEY INC.
Salomon Smith Barney Inc. is the initial depositor and is also the
underwriter for the offering and sale of the Healthcare SECTORS. After the
initial offering, Salomon Smith Barney Inc. and/or its other broker-dealer
affiliates intend to buy and sell Healthcare SECTORS to create a secondary
market for holders of the Healthcare SECTORS. However, neither Salomon Smith
Barney Inc. nor any of its affiliates will be obligated to engage in any
market-making activities, or continue them once it has started.
UNDERWRITING FEES AND OTHER FEES
If you purchase Healthcare SECTORS in the initial public offering, you will
pay Salomon Smith Barney Inc., in its role as underwriter, an underwriting fee
of 2%. You will not be charged any issuance fee or other sales commission in
connection with purchases of Healthcare SECTORS made in the initial public
offering.
After the initial offering, if you wish to create Healthcare SECTORS by
delivering to the Healthcare SECTORS Trust the requisite shares of the
underlying securities represented by a round lot of 100 Healthcare SECTORS, U.S.
Bank Trust National Association, as trustee, will charge you an issuance fee of
up to $10.00 for each round lot of 100 Healthcare SECTORS. If you wish to cancel
your Healthcare SECTORS and withdraw your underlying securities, U.S. Bank Trust
National Association, as trustee, will charge you a cancellation fee of up to
$10.00 for each round lot of 100 Healthcare SECTORS.
10
If you choose to deposit underlying securities in order to receive
Healthcare SECTORS after the conclusion of the initial public offering, you will
not be charged the underwriting fee. However, in addition to the issuance fee
charged by the trustee described above, you will be responsible for paying any
sales commission associated with your purchase of the underlying securities that
is charged by your broker, whether it be Salomon Smith Barney Inc. or another
broker.
U.S. Bank Trust National Association, as trustee and as custodian, will
charge you a quarterly custody fee of $2.00 for each round lot of 100 Healthcare
SECTORS to be deducted from any cash dividend or other cash distributions on
underlying securities received by the Healthcare SECTORS Trust. With respect to
the aggregate custody fee payable in any calendar year for each Healthcare
SECTORS, 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.
U.S. FEDERAL INCOME TAXES
The federal income tax laws will treat a U.S. holder of Healthcare SECTORS
as directly owning the underlying securities. The Healthcare SECTORS themselves
will not result in any federal tax consequences separate from the tax
consequences associated with ownership of the underlying securities. You should
refer to the section "United States Federal Income Tax Consequences" in this
prospectus.
ERISA
It is our view that employee benefit plans subject to ERISA and individual
retirement accounts, Keogh plans and other similar plans can, generally,
purchase Healthcare SECTORS. However, each plan and account should consider
whether the purchase of Healthcare SECTORS is prudent and consistent with the
documents governing the plan or account. The fiduciary rules governing plans and
accounts are complex and individual considerations may apply to a particular
plan or account. Accordingly, any fiduciary of any plan or account should
consult with its legal advisers to determine whether the purchase of Healthcare
SECTORS is permissible under the fiduciary rules. Each employee benefit plan
subject to the fiduciary responsibility provisions of ERISA and each individual
retirement account, Keogh plan and other similar plan will be deemed to have
made certain representations concerning its purchase or other acquisition of
Healthcare SECTORS. You should refer to the section "ERISA Considerations" in
this prospectus.
11
RISK FACTORS
You should carefully consider the following risk factors in addition to the
other information in this prospectus before investing in the Healthcare SECTORS.
GENERAL RISK FACTORS
- Your investment in the Healthcare SECTORS will result in a loss if the
prices of the underlying securities decline. Since the value of the
Healthcare SECTORS will depend on the prices of the underlying
securities, you may lose all or a substantial portion of your investment
in the Healthcare SECTORS if the underlying securities decline in price.
- The price at which you may be able to sell your Healthcare SECTORS may be
less than the price of the underlying securities. We expect that the
market value of the Healthcare SECTORS will depend substantially on the
amount by which the prices of the underlying securities change from the
prices at the time the Healthcare SECTORS are issued. The Healthcare
SECTORS may, however, trade at a discount to the aggregate value of the
underlying securities.
- Your investment in the Healthcare SECTORS may not necessarily continue to
be a diversified investment in the healthcare industry. As a result of
business developments, reorganizations or market fluctuations affecting
issuers of the underlying securities, Healthcare SECTORS may not
necessarily continue to be a diversified investment in the healthcare
industry. As a result of market fluctuation and/or reconstitution events,
Healthcare SECTORS may become a more 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.
As a result of distributions of securities by companies included in the
Healthcare SECTORS or other corporate events, such as mergers, securities
of companies that are not currently included in the Healthcare SECTORS
and that are not directly or exclusively involved in the healthcare
industry may be included in the Healthcare SECTORS. The securities of a
new company will only be distributed from the Healthcare SECTORS if the
securities have a different Standard & Poor's Economic Sector
Classification than the Healthcare Economic Sector 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 the NASDAQ
National Market System. As there are only 10 broadly defined Standard &
Poor's Economic Sector Classifications, the use of Standard & Poor's
Economic Sector Classifications to determine whether a new company will
be included in the Healthcare SECTORS provides no assurance that each new
company included in the Healthcare SECTORS will actually be involved in
the healthcare industry. Currently, all of the underlying securities
included in the Healthcare SECTORS are represented in the Healthcare
Economic Sector. As each Standard & Poor's Economic Sector Classification
is defined so broadly, the securities of a new company could have the
same Sector Classification yet not be directly or exclusively involved in
the healthcare industry. In addition, the Economic Sector Classifications
of securities included in the Healthcare SECTORS 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 Economic Sector Classifications, or both. It is anticipated, as
a result of the broadly defined Standard & Poor's Economic Sector
Classifications, that most distributions or exchanges of securities will
result in the inclusion of new securities in the Healthcare SECTORS. You
should refer to the description of the reconstitution events described
under "Description of the Healthcare SECTORS -- Reconstitution Events" on
page 23 of this prospectus.
- You may receive the shares of one or more of the underlying securities of
the Healthcare SECTORS Trust or the shares of additional underlying
securities may be added to the Healthcare SECTORS Trust if a
reconstitution event occurs. If a reconstitution event with respect to
one or more of the underlying securities occurs, then in certain
circumstances the securities will no longer be an underlying security in
the Healthcare SECTORS Trust and the trustee will distribute the shares
of that company to you. As discussed in the risk factor above, this could
also result in a more concentrated investment in the remaining underlying
securities. In certain other circumstances, a reconstitution event could
result in the shares of another company being added to the
12
underlying securities of the Healthcare SECTORS Trust. You should refer
to the description of the reconstitution events described under
"Description of the Healthcare SECTORS -- Reconstitution Events" on page
23 of this prospectus.
- Your decision to invest in Healthcare SECTORS must be based on your
evaluation of the underlying securities. Both the determination and the
application of the selection criteria for the underlying securities were
subjective. Therefore, while these criteria may provide useful guidelines
for evaluating the selection process, they are not a substitute for your
need to evaluate the underlying securities in making your investment
decision. The factors or trends used to determine the weightings of the
subsectors of the healthcare industry and the criteria used to select the
underlying securities are based solely on the opinion of Salomon Smith
Barney Inc. and may not occur. Whether or not these factors or trends
occur, the development and application of the selection criteria are not
a prediction or assurance by Salomon Smith Barney Inc. of investment
results. Therefore, even if these factors or trends occur, there can be
no assurance that the prices of the underlying securities will increase
as a result.
- Your investment in Healthcare SECTORS may result in conflicting
investment choices. In order to sell one or more of the underlying
securities or to participate in a tender offer or certain reconstitution
events relating to one or more of the underlying securities, you will be
required to cancel your Healthcare SECTORS and receive delivery of all
the underlying securities. Cancellation of your Healthcare SECTORS will
require you to pay a cancellation fee to the trustee.
- You may not be able to sell your Healthcare SECTORS because trading in
the Healthcare SECTORS may be halted or the Healthcare SECTORS may be
delisted. Trading in Healthcare SECTORS may be halted in the event
trading in one or more of the underlying securities is halted. If so, you
will not be able to trade your Healthcare SECTORS even though there is
trading in some of the underlying securities. You will, however, be able
to cancel your Healthcare SECTORS to receive the underlying securities.
If the number of companies whose common stock is held in the Healthcare
SECTORS Trust falls below nine, the American Stock Exchange may consider
delisting the Healthcare SECTORS. If the Healthcare SECTORS are delisted
by the American Stock Exchange, a termination event will result if the
Healthcare SECTORS are not listed for trading on another national
securities exchange in the United States or through the NASDAQ National
Market System within five business days from the date the Healthcare
SECTORS are delisted.
- Salomon Smith Barney Inc. and its affiliates may have a conflict with the
Healthcare SECTORS Trust. Salomon Smith Barney Inc., as initial
depositor, has selected the underlying securities and may face possible
conflicts of interest in connection with its activities. For example,
Salomon Smith Barney Inc. and its affiliates, collectively referred to as
Salomon Smith Barney, have from time to time provided, are currently
providing, or may in the future provide, investment banking, general
financing and banking services, and other financial services to the
issuers of the underlying securities. Salomon Smith Barney currently
holds shares of some of the issuers of the underlying securities and may
in the future engage in purchases or sales, including establishing long
or short positions, of the underlying securities, other securities of the
issuers of the underlying securities or derivative instruments relating
to the underlying securities for its own account or for accounts under
its management. Salomon Smith Barney currently provides research coverage
on all of the issuers of the underlying securities except for Stryker
Corporation and may in the future continue, initiate or terminate
coverage of any of the issuers of the underlying securities.
In addition, Salomon Smith Barney Inc., as initial depositor, will
purchase, in the secondary market, the underlying securities that will be
deposited in the Healthcare SECTORS Trust. Salomon Smith Barney may make
these purchases before the deposit into the Healthcare SECTORS Trust, or
it may borrow securities for the deposit and subsequently purchase the
securities to repay the lenders for the securities previously borrowed.
In either event, the purchases of the underlying securities will be made
at various prices. As the initial offering price for the Healthcare
SECTORS will be based on the closing market price for the underlying
securities on the pricing date, Salomon Smith Barney may recognize a gain
on its purchases of the underlying
13
securities. Specifically, if the closing market price for the underlying
securities on the pricing date is higher than the price at which Salomon
Smith Barney Inc., as initial depositor, purchases the underlying
securities then it will recognize a gain in connection with such
purchases. Salomon Smith Barney may recognize a gain on any of the
underlying securities of the Healthcare SECTORS Trust or on all of the
underlying securities in the aggregate. The potential profit of Salomon
Smith Barney also is affected by any hedging activities that it may
engage in while it purchases the underlying securities in the secondary
market for deposit into the Healthcare SECTORS Trust. All of these
activities may result in conflicts of interest with respect to the
financial interest of Salomon Smith Barney, on the one hand, and, on the
other hand, the initial selection of the underlying securities included
in the Healthcare SECTORS Trust, Salomon Smith Barney's activity in the
secondary market in the underlying securities and the creation and
cancellation of Healthcare SECTORS by Salomon Smith Barney.
- The market price of the Healthcare SECTORS may decline following early
temporary price increases in the underlying securities. Activity in the
secondary trading market, including purchasing activity associated with
Salomon Smith Barney Inc.'s acquisition of underlying securities for
deposit into the Healthcare SECTORS Trust, particularly in connection
with the initial issuance of Healthcare SECTORS, may temporarily increase
the market price of the underlying securities, resulting in a higher
price for the Healthcare SECTORS, including at the time of their
issuance. This purchasing activity could create a temporary imbalance
between the supply and demand of the underlying securities, thereby
limiting the liquidity of the underlying securities due to a temporary
increased demand for underlying securities. Prices for the underlying
securities may subsequently decline as the volume of purchases subsides,
which would in turn be likely to reduce the trading price of Healthcare
SECTORS.
- You will have limited rights with respect to the Healthcare SECTORS
Trust. Your voting rights will be limited to the right to dissolve and
liquidate the Healthcare SECTORS Trust.
- The depositary trust agreement may be amended without your consent. The
trustee and Salomon Smith Barney Inc., as initial depositor, may amend
any terms of the depositary trust agreement without your consent. You
will receive notice of the substance of the amendment only after the
agreement has been amended.
RISK FACTORS SPECIFIC TO THE HEALTHCARE INDUSTRY
In evaluating the underlying securities, you should consider, among other
things, the following risk factors specific to the healthcare industry.
- Healthcare companies stock prices have been and will likely continue to
be extremely volatile. The trading prices of the stocks of healthcare
companies have been and are likely to be extremely volatile. Healthcare
companies' stock prices could be subject to wide fluctuations in response
to a variety of factors, including:
- announcements of technological innovations or new commercial
products;
- developments in patent or proprietary rights;
- government regulatory initiatives;
- public concern as to the safety or other implications of products;
- fluctuations in quarterly and annual financial results; and
- market conditions.
- Healthcare companies face uncertainty with respect to pricing and third
party reimbursement. Certain healthcare companies will continue to be
affected by the efforts of governments and third party payors, such as
government health organizations, private health insurers and health
maintenance organizations, to contain or reduce healthcare costs. For
example, in certain foreign markets pricing or profitability of certain
healthcare products and technologies is subject to control. In the United
States, there has been, and there will likely to continue to be, a number
of federal and state proposals to implement similar government control.
Also, an increasing emphasis on managed healthcare in the United States
will continue to put pressure on the pricing of the
14
products and technologies of healthcare companies. The announcement or
adoption of such proposals could have a material adverse affect on a
healthcare companies' business and financial condition. Further, the
sales of the products of many healthcare companies are often dependent,
in part, on the availability of reimbursement from third party payors.
Third party payors are increasingly challenging the prices charged for
healthcare products and technologies and denying or limiting coverage for
new products. Even if a healthcare company can bring a product or
technology to market, there can be no assurance that these products or
technologies will be considered cost-effective by third party payors and
that sufficient reimbursement will be available to consumers to allow for
the sale of the products and services on a profitable basis.
- Protection of patent and proprietary rights of certain healthcare
companies is difficult and costly. The success of many healthcare
companies is highly dependent on company's ability to obtain patents on
current and future products and technologies, to defend its existing
patents and trade secrets and operate in a manner that does not infringe
on the proprietary rights of other companies. Patent disputes are
frequent and can preclude the successful commercial introduction of
products and technologies. As a result, there is significant litigation
in the healthcare industry regarding patent and other intellectual
property rights. Litigation is costly and could subject a healthcare
company to significant liabilities to third parties. In addition, a
healthcare company could be forced to obtain costly third-party licenses
or cease using the technology or product in dispute.
- Healthcare companies are subject to extensive government
regulation. Products and technologies offered by healthcare companies
are subject to strict regulation by the Food and Drug Administration in
the United States and similar agencies in other countries. Many of the
products will require extensive pre-clinical testing, clinical trials,
other testing, government review and final approval before any marketing
of the product will be permitted. This procedure could take a number of
years and involves the expenditure of substantial resources. The success
of a healthcare company's current or future product will depend, in part,
upon obtaining and maintaining regulatory approval to market products
and, once approved, complying with the continued review by regulatory
agencies. The failure to obtain necessary government approvals, the
restriction of existing approvals, loss of or changes to previously
obtained approvals or the failure to comply with regulatory requirements
could result in fines, unanticipated expenditures, product delays,
non-approval or recall, interruption of production and even criminal
prosecution.
- Healthcare companies must keep pace with rapid technological change to
remain competitive. The healthcare industry is highly competitive and is
subject to rapid and significant technological change. Healthcare
companies will face continued competition as new products enter the
market and advanced technologies become available. The success of a
healthcare company will depend on its ability to develop products and
technologies that are at least as clinically effective or cost-effective
than its competitor's products and technologies or that would render its
competitors' products and technologies obsolete or uncompetitive.
- Results of research and development of new products and technologies are
unpredictable. Successful product or technology development in the
healthcare industry is very uncertain and only a small number of research
and development programs will result in the marketing and sale of a new
product or technology. Many products and technologies that appear
promising may fail to reach the market for many reasons, including
results indicating lack of effectiveness or harmful side effects in
clinical or pre-clinical testing, failure to receive necessary regulatory
approvals, uneconomical manufacturing costs or competing proprietary
rights. In addition, there is no certainty that any product or technology
in development will achieve market acceptance from the medical community,
third party payors or individual users.
- Healthcare companies may be exposed to extensive product liability
costs. The testing, manufacturing, marketing and sale of many of the
products and technologies developed by healthcare companies inherently
expose these companies to potential product liability risks. Many
healthcare companies obtain limited products liability insurance;
further, there can be no assurance that a healthcare company will be able
to maintain its product liability insurance, that it will
15
continue to be able to obtain adequate product liability insurance on
reasonable terms or that any product liability insurance obtained will
provide adequate coverage against potential liabilities.
- Many healthcare companies are dependent on key personnel for
success. The success of many healthcare companies is highly dependent on
the experience, abilities and continued services of key executive
officers and key scientific personnel. If these companies lose the
services of any of these officers or key scientific personnel, their
future success could be undermined. The success of many healthcare
companies also depends upon their ability to attract and retain other
highly qualified scientific, managerial sales and manufacturing personnel
and their ability to develop and maintain relationships with qualified
clinical researchers. Competition for such personnel and relationships is
intense and many of these companies compete with each other and with
universities and non-profit research organizations. There is no certainty
that any of these healthcare companies will be able to continue to
attract and retain qualified personnel or develop and maintain
relationships with clinical researchers.
- Healthcare companies in the biotechnology industry face challenges
gaining governmental and consumer acceptance of genetically altered
products. Biotechnology companies may be involved in the development of
genetically engineered agricultural and food products. The commercial
success of these products will depend, in part, on governmental and
public acceptance of their cultivation, distribution and consumption.
Public attitudes may be influenced by the media and by opponents who
claim that genetically engineered products are unsafe for consumption,
pose unknown health risks, risks to the environment or to social or
economic practices. Biotechnology companies may continue to have to
expend significant resources to foster governmental and consumer
acceptance of genetically engineered agricultural and food products,
particularly in Europe where securing governmental approvals for, and
achieving consumer confidence in, these products continues to pose
numerous challenges. The success of any genetically engineered
agricultural and food products may be delayed or impaired in certain
geographical areas due to the existing or future regulatory, legislative
or public acceptance issuers. Companies representing the underlying
securities of the Healthcare SECTORS may become involved in the
development of genetically engineered agricultural and food products.
- Certain healthcare companies in the pharmaceutical industry face intense
competition from new products and less costly generic products. The
pharmaceutical industry is highly competitive and rapidly changing. Many
pharmaceutical companies are major international corporations with
substantial resources for research and development, production and
marketing. Proprietary pharmaceutical products, which are products under
patent protection, face intense competition from other competitors'
similar proprietary products and many pharmaceutical companies also face
increasing competition from similar generic products. Generic
pharmaceutical competitors generally are able to obtain regulatory
approval for drugs no longer covered by patents without investing in
costly and time-consuming clinical trials, and need only demonstrate that
their product is equivalent to the drug they wish to copy. As a result of
their substantially reduced development costs, generic pharmaceutical
products are sold at lower prices than the original proprietary product.
The introduction of a generic product can significantly reduce revenues
received from a patented pharmaceutical product.
RISK FACTORS SPECIFIC TO FOREIGN ISSUERS OF UNDERLYING SECURITIES
- The international operations of certain companies included in the
Healthcare SECTORS expose them to risks associated with instability and
changes in economic and political conditions, foreign currency
fluctuations, changes in foreign regulations and other risks inherent to
international business. Some of the companies included in the Healthcare
SECTORS have international operations which are essential parts of their
businesses. The risks of international business that these 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;
16
- differing tax rates, tariffs, exchange controls or other similar
restrictions;
- currency fluctuations;
- changes in, and compliance with, domestic and foreign laws and
regulations which impose a range of restrictions on operations,
trade practices, foreign trade and international investment
decisions; and
- reduction in the number or capacity of personnel in international
markets.
- It may be impossible for you to initiate legal proceedings or to enforce
judgments against certain companies included in the Healthcare
SECTORS. Some of the companies included in the Healthcare SECTORS were
incorporated under the laws of a jurisdiction other than the United
States, and a substantial portion of their assets are located outside the
United States. As a result, it may be impossible to effect service of
process within the United States on these companies included in the
Healthcare SECTORS or to enforce judgments made against them in courts in
the United States based on civil liability provisions of the United
States securities laws. In addition, judgments obtained in the United
States, especially those awarding punitive damages, may not be
enforceable in foreign countries.
- Potential voting impediments may exist with respect to the ownership of
some of the underlying securities included in the Healthcare
SECTORS. Holders of American depositary shares, including those
underlying the Healthcare SECTORS, may only exercise voting rights with
respect to the securities represented by the American depositary shares
in accordance with the provisions of deposit agreements entered into in
connection with the issuance of the American depositary shares. These
deposit agreements may not permit holders of American depositary shares
to exercise voting rights that attach to the securities underlying the
American depositary shares without the issuer first instructing the
depositary to send voting information to the holders of the American
depositary shares. Even then, holders of American depository shares may
not exercise voting rights unless they take a variety of steps, which
include registration in the share registry of the issuer of the
securities underlying the American depositary shares. These required
steps may make it impractical for holders of American depositary shares
to exercise the voting rights attached to the underlying securities.
- The low trading volume of certain underlying securities on a United
States stock exchange may result in a decline in the market price of the
Healthcare SECTORS. The primary trading market of some of the underlying
securities of the Healthcare SECTORS are not United States stock
exchanges; accordingly, the trading volume of some of the underlying
securities may be very low, which could adversely affect the Healthcare
SECTORS. In some cases, the trading volume of certain underlying
securities on a United States stock exchange is or may become limited. A
low trading volume or liquidity of any of the underlying securities on
United States stock exchange may result in a decline of the market price
of that underlying security and of the Healthcare SECTORS.
- Exchange rate fluctuations could result in a decline of the market price
of some of the underlying securities included in the Healthcare SECTORS
and the value of the dividends paid by those companies. The result of
operations and the financial position of some of the companies underlying
the Healthcare SECTORS are reported in local currencies. Exchange rate
fluctuations between these currencies and the United States dollar may
result in a decline in the market price of the corresponding United
States exchange listed security and the Healthcare SECTORS. In addition,
any dividends that are declared by foreign issuers of underlying
securities will probably not be in United States dollars. As a result,
exchange rate fluctuations may also negatively affect the value of
dividends declared by certain companies included in the Healthcare
SECTORS.
17
AVAILABLE INFORMATION
Salomon Smith Barney Inc., as initial depositor, and the Healthcare SECTORS
Trust, which has yet to be formed but which will exist as of the effective date,
have filed a registration statement, of which this prospectus forms a part,
which contains additional information not included in the prospectus with the
SEC.
You may read and copy the registration statement at the SEC's public
reference room in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room and their copy charges. The
registration statement is also available to the public from the SEC's web site
at http://www.sec.gov. Salomon Smith Barney Inc. will not file any reports on
its own behalf pursuant to the Securities Exchange Act. Healthcare SECTORS Trust
will file modified reports pursuant to the Securities Exchange Act.
Because the securities of the issuers of the underlying securities are
registered under the Securities 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 room or accessed through the SEC's web
site set forth above. However, some of the issuers of the underlying securities
are considered foreign issuers. The requirements for filing periodic financial
and other information by foreign issuers differ from those of domestic issuers.
In particular, foreign issuers are not required to file quarterly reports with
the SEC and are not required to file periodic financial and other information
through the SEC's electronic filing system. Therefore, information regarding
foreign issuers may not be accessible through the SEC's web site. Information
regarding the issuers of the underlying securities may also be obtained from
other sources including, but not limited to, press releases, newspaper articles
and other publicly disseminated information.
Salomon Smith Barney Inc. and its respective affiliates and the Healthcare
SECTORS Trust are not affiliated with the issuers of the underlying securities,
and the issuers of the underlying securities have no obligations with respect to
Healthcare SECTORS. This prospectus relates only to Healthcare SECTORS and does
not relate to the other securities of the issuers of the underlying securities.
The information in this prospectus regarding the issuers of the underlying
securities has been derived from the publicly available documents described in
the preceding paragraph. We have not participated in the preparation of these
documents or made any due diligence inquiries with respect to the issuers of the
underlying securities in connection with the Healthcare SECTORS. We make no
representation that these publicly available documents or any other publicly
available information regarding the issuers of the underlying securities are
accurate or complete. Furthermore, we cannot assure you that all events
occurring prior to the date of this prospectus, including events that would
affect the accuracy or completeness of the publicly available documents
described in the preceding paragraph, that would affect the trading price of the
securities of the issuers of the underlying securities, and therefore the
offering and trading prices of the Healthcare SECTORS have been publicly
disclosed. You should rely only on the information incorporated by reference or
provided in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted.
HEALTHCARE SECTORS TRUST
The Healthcare SECTORS Trust will be formed pursuant to the depositary
trust agreement, dated as of , 2002. U.S. Bank Trust National
Association will be the trustee. The Healthcare SECTORS Trust is not a
registered investment company under the Investment Company Act.
The Healthcare SECTORS Trust is intended to hold deposited shares of the
underlying securities for the benefit of owners of the Healthcare SECTORS. The
trustee will perform only administrative and ministerial acts. The property of
the Healthcare SECTORS Trust will consist of the underlying securities and all
monies or other property, if any, received by the trustee. The Healthcare
SECTORS Trust will not
18
have the power to vary the investment of the holders of Healthcare SECTORS. The
Healthcare SECTORS Trust will terminate on , 2004, or earlier if a
termination event occurs. You should refer to the description of termination
events described under "Description of the Healthcare SECTORS -- Termination of
the Healthcare SECTORS Trust" on page 24 of this prospectus. Upon termination of
the trust, the trustee will distribute the underlying securities of the
Healthcare SECTORS Trust to you upon your surrender of your Healthcare SECTORS,
subject to payment of applicable fees, charges or taxes.
DESCRIPTION OF THE HEALTHCARE SECTORS
The Healthcare SECTORS Trust will issue the Healthcare SECTORS under the
depositary trust agreement described in this prospectus under the heading
"Description of the Depositary Trust Agreement." After the initial offering, the
Healthcare SECTORS Trust may issue additional Healthcare SECTORS on a continuous
basis when an investor deposits the requisite underlying securities with the
trustee.
GENERAL
You may only acquire, hold, trade and surrender the Healthcare SECTORS in
round lots of 100 Healthcare SECTORS. The Healthcare SECTORS Trust will only
issue the Healthcare SECTORS upon the deposit of the whole shares of underlying
securities that are represented by a round lot of 100 Healthcare SECTORS. 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 the Healthcare SECTORS, the Healthcare SECTORS
Trust may require a minimum of more than one round lot of 100 Healthcare SECTORS
for an issuance so that the Healthcare SECTORS Trust will always receive whole
share amounts of underlying securities in exchange for issuance of the
Healthcare SECTORS. Similarly, you must surrender the Healthcare SECTORS in
integral multiples of 100 Healthcare SECTORS to withdraw deposited shares from
the trust. The trustee will not deliver fractional shares of the underlying
securities.
The Healthcare SECTORS will represent your individual and undivided
beneficial ownership interest in the underlying securities held by the trust.
The specific share amounts for each round lot of 100 Healthcare SECTORS are set
forth in the chart below and were determined on , 2002.
The share amounts set forth below will not change, except for changes due
to corporate events such as stock splits or reverse stock splits on the
underlying securities, stock distributions and reconstitution events. Because
the initial weightings are a function of market price, it is expected that
weightings will change substantially over time, including during the period
between , 2002 and the date the Healthcare SECTORS are first issued to
the public.
The initial public offering price for each round lot of 100 Healthcare
SECTORS will equal the sum of the closing market price of each underlying
security on the date the Healthcare SECTORS are priced for initial sale to the
public multiplied by the share amount appearing in the table below, plus an
underwriting fee.
After the initial offering, you may acquire the Healthcare SECTORS in two
ways:
- through a deposit of the required number of shares of underlying
securities with the trustee or
- through a cash purchase in the secondary trading market.
19
The chart set forth below provides the names of the 38 issuers of the
underlying securities represented by the Healthcare SECTORS, stock ticker
symbols, share amounts represented by each round lot of 100 Healthcare SECTORS,
initial weightings as of , 2002, and the principal market on
which the underlying securities are traded.
<Table>
<Caption>
PRIMARY
SHARE INITIAL TRADING
NAME OF COMPANY SYMBOL AMOUNTS WEIGHTING MARKET
- --------------- ------ ------- --------- -------
United States Pharmaceuticals
Bristol-Myers Squibb Company ........... BMY 5 2.88% NYSE
Eli Lilly and Company .................. LLY 4 3.71% NYSE
Merck & Co., Inc. ...................... MRK 4 3.01% NYSE
Pfizer Inc. ............................ PFE 8 4.02% NYSE
Pharmacia Corporation .................. PHA 6 3.02% NYSE
Wyeth .................................. WYE 4 3.11% NYSE
European Pharmaceuticals
Aventis S.A.*........................... AVE 3 2.73% NYSE
AstraZeneca PLC*........................ AZN 7 4.37% NYSE
GlaxoSmithKline PLC*.................... GSK 6 3.60% NYSE
Novartis AG*............................ NVS 5 2.33% NYSE
Schering Aktiengesellschaft*............ SHR 5 3.66% NYSE
Specialty and Generic Pharmaceuticals
Barr Laboratories, Inc. ................ BRL 4 3.35% NYSE
Elan Corporation, PLC*.................. ELN 11 1.90% NYSE
Forest Laboratories, Inc. .............. FRX 1 0.97% NYSE
King Pharmaceuticals, Inc............... KG 5 1.90% NYSE
Shire Pharmaceuticals Group PLC*........ SHPGY 7 2.04% NASDAQ
Teva Pharmaceutical Industries Ltd.*.... TEVA 3 2.10% NASDAQ
Medical Devices
Abbott Laboratories..................... ABT 4 2.77% NYSE
Baxter International Inc. .............. BAX 6 4.08% NYSE
Beckman Coulter, Inc. .................. BEC 5 2.92% NYSE
Guidant Corporation .................... GDT 4 2.03% NYSE
Johnson & Johnson....................... JNJ 5 3.73% NYSE
Medtronic, Inc. ........................ MDT 7 3.82% NYSE
Stryker Corporation .................... SYK 3 2.26% NYSE
Biotechnology
Amgen Inc. ............................. AMGN 6 4.26% NASDAQ
Biogen, Inc. ........................... BGEN 3 1.95% NASDAQ
Genentech, Inc.......................... DNA 7 4.05% NYSE
Genzyme Corporation .................... GENZ 4 2.18% NASDAQ
Gilead Sciences, Inc. .................. GILD 5 2.16% NASDAQ
Idec Pharmaceuticals Corporation ....... IDPH 5 3.85% NASDAQ
</Table>
20
<Table>
<Caption>
PRIMARY
SHARE INITIAL TRADING
NAME OF COMPANY SYMBOL AMOUNTS WEIGHTING MARKET
- --------------- ------ ------- --------- -------
MedImmune, Inc. ........................ MEDI 2 1.01% NASDAQ
Protein Design Labs, Inc. .............. PDLI 5 0.97% NASDAQ
Healthcare Services
AmerisourceBergen Corporation .......... ABC 2 1.66% NYSE
Caremark Rx, Inc. ...................... CMX 9 1.92% NYSE
Cardinal Health, Inc. .................. CAH 1 0.81% NYSE
Patterson Dental Company................ PDCO 2 0.99% NASDAQ
Tenet Healthcare Corporation ........... THC 3 2.12% NYSE
Trigon Healthcare, Inc. ................ TGH 2 1.76% NYSE
</Table>
- ---------------
* The securities of these non-U.S. companies trade in the United States as
American depository receipts.
Beneficial owners of the Healthcare SECTORS will have the same rights and
privileges as they would have if they beneficially owned the underlying
securities outside of the Healthcare SECTORS Trust. These include the right of
investors to instruct the trustee to vote the underlying securities, and to
receive dividends and other distributions on the underlying securities, if any
are declared and paid to the trustee, as well as the right to cancel the
Healthcare SECTORS to receive the underlying securities. The Healthcare SECTORS
are not intended to change your beneficial ownership obligations under federal
securities laws, including Sections 13(d) and 16(a) of the Securities Exchange
Act, with respect to the underlying securities from that which would apply if
you owned the underlying securities directly.
The Healthcare SECTORS Trust will not publish or otherwise calculate net
asset value per receipt. The Healthcare SECTORS 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 the Healthcare SECTORS
wishes to realize the dollar value of the underlying securities, that owner will
have to cancel the Healthcare SECTORS and receive all of the underlying
securities. Such cancellation will require payment of fees and expenses as
described in "-- Surrender and Cancellation of the Healthcare SECTORS."
We will apply to list the Healthcare SECTORS on the American Stock Exchange
under the symbol " ". Trading will take place only in round lots of 100
Healthcare SECTORS. A minimum of 150,000 Healthcare SECTORS will be required to
be outstanding when trading begins. Bid and ask prices will be quoted per single
Healthcare SECTORS, even though investors will only be able to acquire, hold,
transfer and surrender in round lots of 100 Healthcare SECTORS.
CREATION OF THE HEALTHCARE SECTORS
You may only create Healthcare SECTORS in round lots of 100 Healthcare
SECTORS. You may create Healthcare SECTORS by delivering to the trustee the
requisite underlying securities. The Healthcare SECTORS Trust will only issue
the Healthcare SECTORS upon the deposit of the whole shares represented by a
round lot of 100 Healthcare SECTORS. 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 in a round lot of Healthcare
SECTORS, the Healthcare SECTORS Trust may require a minimum of more than one
round lot of 100 Healthcare SECTORS for an issuance so that only whole share
amounts of the underlying securities are deposited with the Healthcare SECTORS
Trust.
If you choose to deposit underlying securities in order to receive
Healthcare SECTORS after the conclusion of the initial public offering, you will
not be charged the underwriting fee. However, in addition to the issuance fee
charged by the trustee described below, you will be responsible for paying any
sales commission associated with your purchase of the underlying securities that
is charged by your broker, whether it be Salomon Smith Barney Inc. or another
broker.
21
The depositary trust agreement provides for further issuances of the
Healthcare SECTORS on a continuous basis without your consent.
SURRENDER AND CANCELLATION OF THE HEALTHCARE SECTORS
You may only cancel Healthcare SECTORS in round lots of 100 Healthcare
SECTORS. You must surrender Healthcare SECTORS in integral multiples of 100
Healthcare SECTORS to withdraw deposited shares from the Healthcare SECTORS
Trust. The trustee will not deliver fractional shares of underlying securities.
To the extent that any cancellation of Healthcare SECTORS would otherwise
require the delivery of fractional shares, the Healthcare SECTORS 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.
You may surrender your Healthcare SECTORS 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 your Healthcare SECTORS 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 Healthcare SECTORS.
RIGHTS RELATING TO VOTING
Under the depositary trust agreement, the beneficial owners of the
Healthcare SECTORS, other than Salomon Smith Barney Inc. owning Healthcare
SECTORS for its own proprietary account as principal, will have the right to
vote to dissolve and liquidate the Healthcare SECTORS Trust. You will have no
other voting rights in the Healthcare SECTORS Trust.
Beneficial owners of the Healthcare SECTORS will have the same voting
rights as they would have if they beneficially owned the underlying securities
outside of the Healthcare SECTORS Trust. The trustee will deliver proxy
soliciting materials and any other shareholder communications provided by
issuers of the underlying securities to enable you to give the trustee voting
instructions on matters under consideration at any annual or special meetings
held by issuers of the underlying securities. If you wish to participate in a
tender offer for any of the underlying securities, you must obtain that security
by surrendering your Healthcare SECTORS and receiving all of your underlying
securities. With respect to these voting instructions, the trustee will fix the
record dates of the Healthcare SECTORS as close as possible to the record date
fixed by the issuer of the underlying security.
RIGHTS RELATING TO DISTRIBUTIONS
Beneficial owners of the Healthcare SECTORS will have the same rights
relating to distributions as they would have if they beneficially owned the
underlying securities outside of the Healthcare SECTORS Trust. 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 makes
these distributions as promptly as practicable after the date which it receives
the distribution. However, 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 Healthcare SECTORS Trust and will become part of the
Healthcare SECTORS if such securities are from an issuer in the same industry
classification and are listed for trading on a national securities exchange in
the United States or through the NASDAQ National Market System. In addition, if
the issuer of the 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 from 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.
You will be obligated to pay any tax or other charge that may become due
with respect to the Healthcare SECTORS. 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
22
of $2.00 for each round lot of 100 Healthcare SECTORS 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
Healthcare SECTORS, 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.
With respect to dividend payments, the trustee will fix the record dates of
the Healthcare SECTORS Trust as close as possible to the record date fixed by
the issuer of the underlying securities.
OTHER RIGHTS
You will have no other rights with respect to the Healthcare SECTORS.
RECONSTITUTION EVENTS
The depositary trust agreement provides for the consequences described
below upon the occurrence of any of the following reconstitution events:
- If an issuer of underlying securities no longer has a class of securities
registered under section 12 of the Securities Exchange Act, then its
securities will no longer be an underlying security and the trustee will
distribute the shares of that company to the beneficial owners of the
Healthcare SECTORS.
- If the SEC finds that an issuer of an underlying security should be
registered as an investment company under the Investment Company Act of
1940, and the trustee has actual knowledge of the SEC finding, then its
securities will no longer be an underlying security and the trustee will
distribute the shares of that company to the beneficial owners of the
Healthcare SECTORS.
- If the underlying securities of an issuer cease to be outstanding as a
result of a merger, consolidation or other corporate combination, its
securities will no longer be an underlying security and 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 the Healthcare SECTORS only if the distributed
securities have a different Standard & Poor's Economic Sector
Classification other than the Healthcare Economic Sector at the time of
the distribution or exchange or if the securities received are not listed
for trading on a U.S. national securities exchange or through the NASDAQ
National Market System. In any other case, the additional securities
received will be deposited into the Healthcare SECTORS Trust. In the
event of a merger, consolidation or other corporate combination in which
the holder of the underlying security is provided an option of receiving
either cash or securities, the trustee will not respond and, thus, the
Healthcare SECTORS Trust will receive the default option, which may be
either cash or securities. If you want to receive the alternative option,
you must obtain that security by surrendering your Healthcare SECTORS and
receiving all of your underlying securities.
- If an issuer's underlying securities are delisted from trading on a
national securities exchange in the United States or through the NASDAQ
National Market System and are not listed for trading on another national
securities exchange in the United States or through the NASDAQ National
Market System within five business days from the date such securities are
delisted, then its securities will no longer be an underlying security
and the trustee will distribute the shares of that company to the
beneficial owners of the Healthcare SECTORS.
If a reconstitution event occurs, the trustee will take the actions set
forth above as promptly as practicable after the date that the trustee has
knowledge of the occurrence of the reconstitution event.
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 the Healthcare SECTORS. The trustee
will review the publicly available information that identifies the Standard &
Poor's Economic Sector Classifications of securities to determine whether
securities received as a result of a
23
distribution by an underlying issuer or as consideration for securities included
in the Healthcare SECTORS will be distributed from the Healthcare SECTORS to
you.
Standard & Poor's is an independent source of market information that,
among other things, classifies the securities of public companies into various
Economic Sector Classifications based on its own criteria. There are 10 Standard
& Poor's Economic Sector Classifications and each class of publicly traded
securities of a company are given only one Sector Classification. The securities
included in the Healthcare SECTORS are currently represented in the Healthcare
Economic Sector. The Standard & Poor's Sector Classifications of the securities
included in the Healthcare SECTORS 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 OF THE HEALTHCARE SECTORS TRUST
The term of the Healthcare SECTORS is two years and the trust will
terminate on , 2004, or earlier if a termination event occurs.
Any of the following will constitute a termination event:
- The Healthcare SECTORS are delisted from the American Stock Exchange and
are not listed for trading on another national securities exchange in the
United States or through the NASDAQ National Market System within five
business days from the date the Healthcare SECTORS are delisted.
- The trustee resigns and no successor trustee is appointed within 60 days
from the date the trustee provides notice to the initial depositor of its
intent to resign.
- 75% of beneficial owners of outstanding Healthcare SECTORS vote to
dissolve and liquidate the Healthcare SECTORS Trust.
Upon termination of the trust or if a termination event occurs, the trustee
will distribute the underlying securities to you as promptly as practicable
after the termination of the trust or after the trustee has knowledge of the
occurrence of the termination event, and the beneficial owners of the Healthcare
SECTORS will surrender their Healthcare SECTORS as provided in the depositary
trust agreement, including payment of any fees of the trustee of up to $10.00
per round lot of 100 Healthcare SECTORS or applicable taxes or governmental
charges due in connection with delivery to the owners of the underlying
securities. You should read the section "-- Surrender and Cancellation of the
Healthcare SECTORS" of this prospectus.
FEES
After the initial public offering, the Healthcare SECTORS Trust expects to
issue additional Healthcare SECTORS. If you wish to create Healthcare SECTORS by
delivering to the Healthcare SECTORS Trust the requisite underlying securities,
the trustee will charge you an issuance fee of up to $10.00 for each round lot
of 100 Healthcare SECTORS. If you wish to cancel your Healthcare SECTORS and
withdraw your underlying securities or upon termination of the Healthcare
SECTORS Trust, the trustee will charge you a cancellation fee of up to $10.00
for each round lot of 100 Healthcare SECTORS cancelled. The trustee may
negotiate either of these fees depending on the volume, frequency and size of
the issuance or cancellation transactions.
If you choose to create Healthcare SECTORS after the conclusion of the
initial public offering, you will not be charged the underwriting fee. However,
in addition to the issuance and cancellation fees described above, you will be
responsible for paying any sales commissions associated with your purchase of
the underlying securities that is charged by your broker, whether it be Salomon
Smith Barney Inc. or another broker.
U.S. Bank Trust National Association, as trustee and as custodian, will
charge you a quarterly custody fee of $2.00 for each round lot of 100 Healthcare
SECTORS. This fee will be deducted from any dividend
24
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 Healthcare SECTORS, the trustee will waive that portion of the fee that
exceeds the total cash dividends and other cash distributions received, or to be
received, payable with respect to such calendar year. The trustee cannot recover
unpaid custody fees from prior years.
GOVERNING LAW
The Healthcare SECTORS will be governed by the laws of the state of New
York.
BOOK-ENTRY ONLY ISSUANCE
The Depository Trust Company, or DTC, will act as securities depositary for
the Healthcare SECTORS. The Healthcare SECTORS will be issued only as
fully-registered securities registered in the name of DTC's nominee, Cede & Co.
One or more fully-registered global Healthcare SECTORS certificates,
representing the total aggregate number of Healthcare SECTORS, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer beneficial interests in the global Healthcare
SECTORS as represented by a global certificate.
DTC has advised Salomon Smith Barney Inc. as follows: DTC is a
limited-purpose trust company organized under the laws of the State of New York,
a "banking organization" within the meaning of the New York banking law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under section 17A of the Securities Exchange Act of 1934. The rules
applicable to DTC and its participants are on file with the SEC. DTC holds
securities that its participants deposit with DTC. DTC also facilitates the
settlement among participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants in DTC include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others, such as securities brokers and dealers,
banks and trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly.
Purchases of the Healthcare SECTORS within the DTC system must be made by
or through direct participants, which will receive a credit for the Healthcare
SECTORS on DTC's records. The ownership interest of each beneficial owner
actually purchasing the Healthcare SECTORS will be recorded on the direct
participants' and indirect participants' records. Beneficial owners will not
receive written confirmation from DTC of their purchases, but beneficial owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which the beneficial owners purchased the
Healthcare SECTORS. Transfers of ownership interests in the Healthcare SECTORS
are to be accomplished by entries made on the books of participants and indirect
participants acting on behalf of beneficial owners. Beneficial owners will not
receive certificates representing their ownership interests in the Healthcare
SECTORS, except in the event that use of the book-entry system for the
Healthcare SECTORS is discontinued. Account holders in the Euroclear or
Clearstream Banking clearance systems may hold beneficial interests in the
Healthcare SECTORS through the accounts each such system maintains as a
participant in DTC.
To facilitate subsequent transfers, all the Healthcare SECTORS deposited by
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Healthcare SECTORS with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership, and DTC has no knowledge of
the actual beneficial owners of the Healthcare SECTORS. DTC's records reflect
only
25
the identity of the direct participants to whose accounts such Healthcare
SECTORS are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Although voting with respect to the Healthcare SECTORS is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to the Healthcare SECTORS. Under its usual procedures, DTC
would mail an Omnibus Proxy to the Healthcare SECTORS Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co. consenting or voting
rights for those direct participants to whose accounts the Healthcare SECTORS
are credited on the record date, identified in a listing attached to the Omnibus
Proxy. Salomon Smith Barney Inc. and the Healthcare SECTORS Trust believe that
the arrangements among DTC, direct and indirect participants, and beneficial
owners will enable the beneficial owners to exercise rights equivalent in
substance to the rights that can be directly exercised by a holder of a
beneficial interest in the Healthcare SECTORS Trust.
Payments on the Healthcare SECTORS will be made to DTC. DTC's practice is
to credit direct participants' accounts on the relevant payment date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payments on such payment date.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in "street name," and such
payments will be the responsibility of such participant and not of DTC, the
Healthcare SECTORS Trust or Salomon Smith Barney Inc., subject to any statutory
or regulatory requirements to the contrary that may be in effect from time to
time. Payment of distributions to DTC is the responsibility of the Healthcare
SECTORS Trust, disbursement of such payments to direct participants is the
responsibility of DTC, and disbursement of such payments to the beneficial
owners is the responsibility of direct and indirect participants.
Except as provided in the next paragraph, a beneficial owner in a global
Healthcare SECTORS will not be entitled to receive physical delivery of
Healthcare SECTORS. Accordingly, each beneficial owner must rely on the
procedures of DTC to exercise any rights under the Healthcare SECTORS.
DTC may discontinue providing its services as securities depositary with
respect to the Healthcare SECTORS at any time by giving reasonable notice to
Healthcare SECTORS Trust. Under such circumstances, in the event that a
successor securities depositary is not obtained, Healthcare SECTORS certificates
are required to be printed and delivered. Additionally, the trustee with the
consent of Salomon Smith Barney Inc., may decide to discontinue use of the
system of book-entry transfers through DTC or any successor depositary with
respect to the Healthcare SECTORS. In that event, certificates for the
Healthcare SECTORS will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Salomon Smith Barney Inc. and the Healthcare
SECTORS Trust believe to be reliable, but neither Salomon Smith Barney Inc. nor
the Healthcare SECTORS Trust takes responsibility for the accuracy thereof.
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
The Healthcare SECTORS will be issued pursuant to a depositary trust
agreement, dated as of , 2002, among Salomon Smith Barney Inc., as
initial depositor, U.S. Bank Trust National Association, as trustee, other
future depositors who receive Healthcare SECTORS in exchange for depositing the
underlying securities and the owners of the Healthcare SECTORS. The depositary
trust agreement provides that the Healthcare SECTORS will represent undivided
beneficial ownership interests in the common stock of the underlying companies.
26
U.S. Bank Trust National Association will serve as trustee. The address of
the trustee is 100 Wall Street, Suite 1600, New York, New York 10005 and its
telephone number is (212) 361-2519.
The trustee and the 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 Healthcare SECTORS, provided that the trustee or initial
depositor is provided with an opinion of counsel to the effect that such
amendment will not affect the trust's status as a grantor trust or custodial
arrangement for U.S. federal income tax purposes. 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 the Healthcare SECTORS. 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 the Healthcare SECTORS will not become effective
until 30 days after notice of the amendment is given to the owners of Healthcare
SECTORS.
The depositary trust agreement will be governed by the laws of the state of
New York. The trustee will provide the depositary trust agreement to any owner
of the underlying securities free of charge upon written request.
The trustee undertakes to perform only those duties as are specifically set
forth in the depositary trust agreement. Subject to the preceding sentence, the
trustee will be liable for its own negligence or misconduct except for good
faith errors in judgment so long as the trustee was not negligent in
ascertaining the relevant facts.
DESCRIPTION OF THE UNDERLYING SECURITIES
The underlying securities are the common stocks or American depository
shares of a group of 38 specified companies in the healthcare industry. The
underlying securities have been selected by Salomon Smith Barney Inc. based on
information provided by the Salomon Smith Barney Inc. research department. In
addition, all of the underlying securities met the following criteria on
, 2002:
- each underlying security is registered under the Securities Exchange Act;
- each underlying security has a minimum public float of at least $150
million;
- each underlying security is listed on a national securities exchange or
through the NASDAQ National Market System;
- each underlying security has had an average daily trading volume of at
least 100,000 shares during the preceding sixty-day trading period;
- each underlying security has had an average daily dollar value of shares
traded during the preceding sixty-day trading period of at least $1
million; and
- no underlying security may initially represent more than 20% of the
overall value of the Healthcare SECTORS Trust.
In determining whether a company was to be considered for inclusion in the
Healthcare SECTORS, Salomon Smith Barney Inc. examined available public
information about the company, including analysts' reports and other independent
market sources.
The underlying securities of the Healthcare SECTORS were selected by
Salomon Smith Barney Inc. based on the investment research of Salomon Smith
Barney Inc., from the following subsectors of the healthcare industry: United
States pharmaceuticals, European pharmaceuticals, generic and specialty
pharmaceuticals, medical devices, biotechnology and healthcare services (health
maintenance organizations, hospitals and distributors).
These subsectors of the healthcare industry were selected by Salomon Smith
Barney Inc. based upon the subsectors represented by healthcare companies in the
S&P 500. The S&P 500 is published by Standard & Poor's and is intended to
provide an indication of the pattern of common stock price
27
movement. The calculation of the value of the S&P 500 is based on the relative
value of the aggregate market value of the common stocks of 500 companies as of
a particular time compared to the aggregate average market value of the common
stocks of 500 similar companies during the base period of the years 1941 through
1943. As of January 31, 2001, the aggregate market value of the 500 companies
included in the S&P 500 represented approximately 78% of the aggregate market
value of United States domestic, public companies. S&P chooses companies for
inclusion in the S&P 500 with the aim of achieving a distribution by broad
industry groupings that approximates the distribution of these groupings in the
common stock population of the New York Stock Exchange, which Standard & Poor's
uses as an assumed model for the composition of the total market.
The weightings of each subsector within the S&P 500 were adjusted for
certain factors or trends that in the opinion of Salomon Smith Barney Inc. are
present or anticipated in the healthcare industry as described below:
- Weighting of the United States pharmaceutical subsector was reduced from
the S&P 500 because this subsector has had slowing growth, increased
pricing pressure and reduced margins due to high levels of patent
expirations, weak product pipelines in near term, increased competition
from generic pharmaceutical and legislative reform (particularly Medicare
reform).
- The European pharmaceutical subsector (which is not represented in the
S&P 500) was added because the growth rates of this subsector have the
potential to rise in the years ahead as a result of efficiencies
resulting from mergers, generally lower risk of generic competition,
stronger product pipelines and less exposure to legislative reforms of
the United States.
- Weighting of the generic pharmaceutical subsector was increased from the
S&P 500 because this subsector has been gaining more popularity due to
high levels of patent expirations, shifts in distribution mechanics,
impact of managed care and pending legislation.
- Weighting of the specialty pharmaceutical subsector was increased because
this subsector has increased appeal resulting from a need for new ways to
deliver drugs (such as patches or coatings for longer acting formulas) to
revitalize product portfolios and to protect against generic erosion,
availability of small market niche opportunities that have been
overlooked by larger pharmaceutical companies, strong potential product
pipelines and potential for future merger and acquisition activity.
- Weighting of the biotechnology subsector was increased to reflect the
emergence of this subsector as a viable industry with companies that
operate at a profit, possess high-margin products that meet previously
unmet medical needs, have funding to sustain internal research and
development efforts, have strong product pipelines, may be attractive as
potential sources for marketing deals and for future merger and
acquisition activity and have minimal risk from generic competitors.
- Weighting of the medical devices subsector was increased slightly from
the S&P 500 because aging demographics of the United States support
increased demand for medical devices resulting from medical devices being
used instead of drugs, integration of internet technology to improve
patient monitoring capabilities and miniaturization allowing for new uses
(such as portable defibrillators or cerebral pacemakers), and because
this subsector has a potential for future merger and acquisition
activity.
- The weighting of the healthcare services subsector was not changed from
S&P 500 because of an anticipated recovery of this subsector due to the
reversal of prior budget cuts by state and Federal governments and the
need for healthcare infrastructure (such as hospitals and distribution
and health care information technology) and managed care.
28
The following chart compares the weightings of the subsectors of the
healthcare industry within the S&P 500 with the weightings of the subsectors
represented by the securities underlying the Healthcare SECTORS Trust. For
purposes of this chart, the European and United States pharmaceutical companies
were combined.
WEIGHTINGS S&P 500 VS. HEALTHCARE SECTORS
[WEIGHTINGS BAR GRAPH]
<Table>
<Caption>
HEALTHCARE SECTORS S&P 500 HEALTHCARE
------------------ ------------------
U.S. and European Pharmaceuticals 38.00 61.80
Generic and Specialty 11.00 2.90
Medica Devices 24.00 23.10
Biotechnology 20.00 5.60
Healthcare Services 7.00 6.60
</Table>
The underlying securities within each subsector of the healthcare industry
were selected primarily based on the opinion of Salomon Smith Barney Inc.
regarding the quality of the companies and their exposure to high growth and
high margin areas. Selection was also based on the application in the opinion of
Salomon Smith Barney Inc. of the following criteria specific to each subsector
of healthcare industry:
- Within the United States pharmaceutical subsector, selection of
underlying securities was also based on companies with lower patent
expiration risk and higher growth rates.
- Within the European pharmaceutical subsector, selection of underlying
securities was also based on companies with strong product pipelines and
distribution capabilities.
- Within the generic pharmaceutical subsector, selection of underlying
securities was also based on companies with strong distribution
capabilities due to importance of volume in this subsector, exposure to
branded products as well as generics and potential for competitive
advantage either through legal maneuvering or manufacturing advantages.
- Within the specialty pharmaceutical subsector, selection of underlying
securities was also based on companies with strong product pipelines and
niche markets with potential for growth opportunities.
- Within the biotechnology subsector, selection of underlying securities
was also based on companies that currently have revenues and earnings,
with strong product pipelines and that participate in certain growth
areas (such as monoclonal antibody production and genomics).
- Within the medical devices subsector, selection of underlying securities
was also based on companies with large capitalization and selective
companies with innovative technology.
- Within the healthcare services subsector, selection of underlying
securities was also based on companies that provide exposure to each of
the significant areas of this subsector: information technology,
distribution, hospital services and managed care.
29
The determination and application of the criteria described above are
subjective and the criteria were determined and applied in the sole discretion
of Salomon Smith Barney Inc. The ultimate determination of the inclusion of the
underlying securities in Healthcare SECTORS rested solely in the discretion of
Salomon Smith Barney Inc. Salomon Smith Barney Inc. has not made any
investigation or review of the issuers of the underlying securities except in
connection with its investment research on the issuers, which provided
information used in applying the selection criteria. Their investment research
and all determinations made by Salomon Smith Barney Inc. were based solely on
publicly available information, which Salomon Smith Barney Inc. did not
independently verify and for the accuracy of which it takes no responsibility.
The development and application of these selection criteria are not a prediction
or assurance by Salomon Smith Barney Inc. of investment results. A decision by
you to invest in Healthcare SECTORS must be made by you on the basis of your
evaluation of the underlying securities and not on the basis of the selection
criteria or the application by Salomon Smith Barney Inc. of these criteria.
Because these weightings are a function of market prices, it is expected that
these weightings will change substantially over time, including during the
period between , 2002 and the date the Healthcare SECTORS are first
issued to the public.
The research department of Salomon Smith Barney Inc. is staffed by over 100
investment analysts, who currently follow equities issued by more than 1,600
companies (both domestic and foreign) in 85 industry groups or stock areas of
the market including all of the issuers of the underlying securities except
Stryker Corporation. Pursuant to existing policies of Salomon Smith Barney Inc.,
employees of the Salomon Smith Barney Inc. research department are prohibited
from engaging in transactions in securities or derivatives on securities of any
companies their group covers or intends to cover. There is, of course, no
assurance that any of the underlying stocks in the Healthcare SECTORS Trust will
appreciate in value, and indeed any or all of these underlying securities (and,
therefore, the Healthcare SECTORS) may depreciate in value at any time in the
future.
For a list of the underlying securities with the share amounts represented
by each round lot of 100 Healthcare SECTORS represented by the Healthcare
SECTORS, please refer to "Description of the Healthcare SECTORS" in this
prospectus. If the underlying securities change because of a reconstitution
event, a revised list of underlying securities will be provided to you from the
American Stock Exchange and through a widely used electronic information
dissemination system such as Bloomberg or Reuters and the Healthcare SECTORS
Trust will file a current report on Form 8-K with the SEC, which will be
publicly available.
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 Healthcare SECTORS Trust, the trustee, Salomon Smith Barney Inc. or any
of their affiliates.
30
HISTORICAL DATA ON THE UNDERLYING SECURITIES
The following table and graph set forth the composite performance of all of
the underlying securities represented by a single Healthcare SECTORS, measured
at the close of each month from October 2000, the first month when all of the
underlying securities were publicly traded, to present. The performance table
and graph data are adjusted to reflect any stock splits and stock dividends that
may have occurred over the measurement period. Past movements of the prices of
the underlying securities are not necessarily indicative of future prices. The
table also sets forth the composite amount of dividends, which would have been
received by the Healthcare SECTORS Trust with respect to a single Healthcare
SECTORS and the amount of such dividends which would have been distributed to a
holder of a single Healthcare SECTORS.
<Table>
<Caption>
DIVIDENDS DIVIDENDS
DATE CLOSING PRICE RECEIVED DISTRIBUTED
- ---- ------------- --------- -----------
October 2000.............................. $93.05 $0.0594 $0.0594
November 2000............................. 92.08 0.0313 0.0313
December 2000............................. 95.67 0.0360 0.0160
January 2001.............................. 88.54 0.0546 0.0546
February 2001............................. 89.41 0.0286 0.0286
March 2001................................ 82.33 0.0415 0.0215
April 2001................................ 85.67 0.0911 0.0911
May 2001.................................. 88.77 0.0874 0.0874
June 2001................................. 89.83 0.0397 0.0197
July 2001................................. 89.95 0.0431 0.0431
August 2001............................... 87.94 0.0303 0.0303
September 2001............................ 85.79 0.0439 0.0239
October 2001.............................. 85.86 0.0496 0.0496
November 2001............................. 89.15 0.0345 0.0345
December 2001............................. 88.82 0.0403 0.0203
January 2002.............................. 84.19 0.0715 0.0715
February 2002 (through February 28,
2002)................................... 81.61 0.0305 0.0305
</Table>
[GRAPH] HISTORICAL PERFORMANCE OF THE UNDERLYING SECURITIES
<Table>
<Caption>
HISTORICAL PERFORMANCE OF THE UNDERLYING
SECURITIES
----------------------------------------
Oct-00 93.05
92.08
95.67
Jan-01 88.54
89.41
82.33
Apr-01 85.67
88.77
89.83
Jul-01 89.95
87.94
85.79
Oct-01 85.86
89.15
88.82
Jan-02 84.19
81.61
</Table>
The following tables provide a brief description of the business of each of
the issuers of the underlying securities and set forth the securities' monthly
closing prices as of the last day of each month, as reported by the applicable
securities exchange and as adjusted to reflect stock splits and stock dividends.
An asterisk (*) denotes that no shares of the issuer were trading on a United
States stock market during that month. The historical prices of the underlying
securities should not be taken as an indication of future performance.
31
ABBOTT LABORATORIES
Abbott Laboratories' principal business is the discovery, development,
manufacture and sale of a broad and diversified line of health care products and
services.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 27.2500 0.000 35.4063 0.000 46.4375 0.000 32.5625 0.000 44.8600 0.000 57.7000
February...................... 28.1250 0.120 37.4063 0.135 46.3125 0.150 33.0000 0.170 48.9900 0.190 56.5500
March......................... 28.0625 0.000 37.6563 0.000 46.8125 0.000 35.1875 0.000 47.1900 0.000
April......................... 30.5000 0.000 36.5625 0.000 48.3750 0.000 38.4375 0.000 46.3800 0.000
May........................... 31.5000 0.135 37.0938 0.150 45.1875 0.170 40.6875 0.190 51.9800 0.210
June.......................... 33.3750 0.000 41.0000 0.000 45.3750 0.000 44.5625 0.000 48.0000 0.000
July.......................... 32.7188 0.000 41.6250 0.000 42.9375 0.000 41.5000 0.000 53.5900 0.000
August........................ 29.9688 0.135 38.5000 0.150 43.3750 0.170 43.7696 0.190 49.7000 0.210
September..................... 31.9688 0.000 43.4375 0.000 36.6875 0.000 47.5625 0.000 51.8500 0.000
October....................... 30.6563 0.000 47.0000 0.000 40.3750 0.000 52.8125 0.000 52.9800 0.000
November...................... 32.5625 0.135 48.0000 0.150 38.0000 0.170 55.0625 0.190 55.0000 0.210
December...................... 32.7500 0.000 49.0000 0.000 36.3125 0.000 48.4375 0.000 55.7500 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.210
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Abbott Laboratories on , 2002
was $ . During the period reflected in the above table, Abbott Laboratories
split its common stock 2-for-1 on June 1, 1998. The data appearing in the above
table has been adjusted to reflect this split.
AMERISOURCEBERGEN CORPORATION
AmerisourceBergen Corporation is a pharmaceutical services company in the
United States dedicated solely to the pharmaceutical supply chain. It is a major
wholesale distributor of pharmaceutical products and services to the hospital
systems and acute care market, alternative care facilities, independent
community pharmacies and regional drugstore chains. AmerisourceBergen is also in
the institutional pharmacy marketplace, providing outsourced pharmacies to
long-term care and workers' compensation programs.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 24.5000 0.000 28.3125 0.000 38.7500 0.000 18.1250 0.000 47.8300 0.000 64.7300
February...................... 25.1875 0.000 29.2500 0.000 37.3125 0.000 14.5625 0.000 53.7200 0.000 67.7000
March......................... 21.8750 0.000 30.0625 0.000 34.1875 0.000 15.0000 0.000 49.0500 0.000
April......................... 22.3125 0.000 27.2500 0.000 27.6875 0.000 20.0000 0.000 54.0000 0.000
May........................... 21.3125 0.000 27.1875 0.000 29.5625 0.000 24.2500 0.000 57.7100 0.000
June.......................... 24.9375 0.000 32.8438 0.000 25.5000 0.000 31.0156 0.000 55.3500 0.000
July.......................... 23.5000 0.000 38.0625 0.000 28.0000 0.000 34.9375 0.000 58.1400 0.000
August........................ 25.0313 0.000 23.5313 0.000 25.8125 0.000 35.1250 0.000 64.4400 0.000
September..................... 29.2188 0.000 27.2188 0.000 23.6875 0.000 47.0000 0.000 70.9500 0.000
October....................... 29.7500 0.000 26.2188 0.000 15.0000 0.000 43.4375 0.000 63.5600 0.000
November...................... 32.3750 0.000 32.0000 0.000 12.3750 0.000 49.2500 0.000 59.5000 0.000
December...................... 29.1250 0.000 32.5000 0.000 15.1875 0.000 50.5000 0.000 63.5500 0.025
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of AmerisourceBergen on ,
2002 was $ . During the period reflected in the above table,
AmerisourceBergen split its common stock 2-for-1 on March 24, 1999. The data
appearing in the above table have been adjusted to reflect this split.
32
AMGEN INC.
Amgen Inc. is a global biotechnology company that discovers, develops,
manufactures and markets human therapeutics based on advances in cellular and
molecular biology. Amgen manufactures and markets four human therapeutic
products and uses wholesale distributors of pharmaceutical products as the
principal means of distributing its products to clinics, hospitals and
pharmacies.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 14.0938 0.000 12.5000 0.000 31.9531 0.000 63.6875 0.000 70.3125 0.000 55.5000
February...................... 15.2813 0.000 13.2813 0.000 31.2188 0.000 68.1875 0.000 72.0625 0.000 57.9800
March......................... 13.9688 0.000 15.2188 0.000 37.4375 0.000 61.3750 0.000 60.1875 0.000
April......................... 14.7188 0.000 14.9063 0.000 30.7188 0.000 56.0000 0.000 61.1400 0.000
May........................... 16.7188 0.000 15.1250 0.000 31.6250 0.000 63.6250 0.000 66.3800 0.000
June.......................... 14.5313 0.000 16.3438 0.000 30.4375 0.000 70.2500 0.000 60.6800 0.000
July.......................... 14.7031 0.000 18.3594 0.000 38.4375 0.000 64.9375 0.000 62.7100 0.000
August........................ 12.3906 0.000 15.2188 0.000 41.5938 0.000 75.8125 0.000 64.3000 0.000
September..................... 11.9844 0.000 18.8906 0.000 40.7500 0.000 69.8281 0.000 58.7700 0.000
October....................... 12.3125 0.000 19.6406 0.000 39.8750 0.000 57.9375 0.000 56.8200 0.000
November...................... 12.7813 0.000 18.8125 0.000 45.5625 0.000 63.6250 0.000 66.4300 0.000
December...................... 13.5313 0.000 26.1406 0.000 60.0625 0.000 63.9375 0.000 56.4400 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Amgen on , 2002 was
$ . During the period reflected in the above table, Amgen split its
common stock 2-for-1 on each of March 1, 1999 and November 22, 1999. The data
appearing in the above table have been adjusted to reflect each of these splits.
Amgen has never paid dividends on its common stock.
ASTRAZENECA PLC
AstraZeneca PLC is a major international Healthcare business engaged in the
research, development, manufacture and marketing of ethical (prescription)
pharmaceuticals and the supply of Healthcare services. It is one of the top five
pharmaceutical companies in the world with leading positions in sales of
gastrointestinal, oncology, anaesthesia (including pain management),
cardiovascular, central nervous system (CNS) and respiratory products. Shares of
AstraZeneca also trade on the London International Stock Exchange.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 28.0991 0.000 38.7889 0.000 45.9359 0.000 37.1396 0.000 44.4100 0.000 46.9900
February...................... 28.6692 0.000 43.3092 0.000 40.1328 0.000 32.3750 0.000 46.2500 0.000 50.9800
March......................... 27.6918 0.000 42.8409 0.000 45.9969 0.000 39.5830 0.000 48.2500 0.000
April......................... 29.4429 0.000 42.8816 0.000 38.3613 0.446 41.1712 0.470 47.5200 0.470
May........................... 29.8502 0.387 40.4382 0.441 38.4835 0.000 41.1101 0.000 47.8200 0.000
June.......................... 32.3343 0.000 42.8816 0.000 38.3002 0.000 45.4472 0.000 46.7500 0.000
July.......................... 32.5379 0.000 37.9337 0.000 35.9179 0.000 41.7821 0.000 50.4500 0.000
August........................ 31.1126 0.000 35.6736 0.000 38.4835 0.000 44.5309 0.000 48.5000 0.000
September..................... 31.8049 0.000 34.2075 0.000 41.2934 0.000 51.3724 0.000 46.7000 0.000
October....................... 31.0719 0.000 38.2392 0.000 44.7142 0.230 46.6078 0.230 45.1100 0.230
November...................... 31.3366 0.239 41.0491 0.247 43.4925 0.000 51.4375 0.000 45.4500 0.000
December...................... 35.1849 0.000 43.8590 0.000 40.8047 0.000 51.5000 0.000 46.6000 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the American depository shares of AstraZeneca on
, 2002 was $ . During the period reflected in the above table,
AstraZeneca split its American depository shares 3-for-1 on April 8, 1998. The
data appearing in the above table have been adjusted to reflect this split.
33
AVENTIS S.A.
Aventis S.A. is a leader in the global life sciences industry, providing
innovative products and services for health and nutrition. Its core competencies
are in the global fields of prescription drugs, vaccines, therapeutic proteins,
diagnostics and crop sciences, as well as in the fields of animal health and
nutrition. Shares of Aventis also trade on the Paris Stock Exchange and the
Frankfurt Stock Exchange.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 33.3750 0.000 46.1250 0.000 51.6875 0.000 54.0000 0.000 79.3300 0.000 69.9900
February...................... 35.0000 0.000 46.1875 0.000 46.0000 0.000 52.0000 0.000 80.7600 0.000 74.1500
March......................... 33.2500 0.000 50.3750 0.000 44.0000 0.000 54.0000 0.000 76.8500 0.000
April......................... 33.8750 0.000 49.5000 0.000 47.1250 0.000 56.2500 0.000 76.9000 0.000
May........................... 32.2500 0.000 55.0000 0.000 46.8750 0.000 63.9375 0.000 74.5800 0.000
June.......................... 41.6250 0.000 56.1875 0.468 46.3125 0.479 72.5625 0.322 79.8900 0.000
July.......................... 43.1250 0.447 54.0000 0.000 48.3750 0.000 75.5625 0.000 77.0000 0.322
August........................ 37.8750 0.000 46.0000 0.000 48.5625 0.000 74.7500 0.000 73.0000 0.000
September..................... 40.4375 0.000 41.7500 0.000 51.2500 0.000 75.3125 0.000 75.0900 0.000
October....................... 42.2500 0.000 46.6875 0.000 55.5000 0.000 72.0625 0.000 73.1500 0.000
November...................... 44.8750 0.000 50.0000 0.000 61.5625 0.000 78.4375 0.000 69.5100 0.000
December...................... 44.1875 0.000 50.2500 0.000 56.8750 0.000 84.2500 0.000 71.0000 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the American depository shares of Aventis on ,
2002 was $ .
BARR LABORATORIES, INC.
Barr Laboratories, Inc. is an established specialty pharmaceutical company
engaged in the development, manufacture and marketing of generic and proprietary
prescription pharmaceuticals. Barr's product line is principally focused on the
development and marketing of generic and proprietary products in the oncology,
female healthcare (including hormone replacement and oral contraceptives) and
cardiovascular therapeutic categories. In addition, Barr also maintains active
development and marketing efforts in a second tier of therapeutic categories
including anti-infectives, pain management and psychotherapeutic agents.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 15.5556 0.000 22.3333 0.000 26.2917 0.000 26.6250 0.000 73.1500 0.000 73.0000
February...................... 16.1111 0.000 22.6250 0.000 24.6667 0.000 31.7500 0.000 55.6000 0.000 68.2500
March......................... 17.1111 0.000 26.9167 0.000 20.3333 0.000 28.0000 0.000 57.1700 0.000
April......................... 20.1111 0.000 27.0417 0.000 20.0417 0.000 28.7917 0.000 57.9500 0.000
May........................... 17.8333 0.000 27.2083 0.000 21.9583 0.000 35.9167 0.000 71.2700 0.000
June.......................... 29.3333 0.000 26.5000 0.000 26.5833 0.000 44.8125 0.000 69.2000 0.000
July.......................... 30.0000 0.000 21.5417 0.000 23.4167 0.000 54.0000 0.000 85.8800 0.000
August........................ 26.1667 0.000 17.0833 0.000 23.0000 0.000 71.0000 0.000 83.7400 0.000
September..................... 26.0000 0.000 20.2500 0.000 21.1667 0.000 66.3125 0.000 79.0600 0.000
October....................... 25.2917 0.000 22.7917 0.000 20.2083 0.000 63.1250 0.000 72.8000 0.000
November...................... 24.0000 0.000 28.1667 0.000 21.0000 0.000 60.3125 0.000 73.0500 0.000
December...................... 22.7500 0.000 32.0000 0.000 20.9167 0.000 72.9375 0.000 79.3600 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Barr on , 2002 was $ .
During the period reflected in the above table, Barr split its common stock
3-for-2 on each of March 26, 1996, May 8, 1997 and June 29, 2000. The data
appearing in the above table have been adjusted to reflect each of these splits.
Barr has never paid dividends on its common stock.
34
BAXTER INTERNATIONAL INC.
Baxter International Inc. engages in the worldwide development, manufacture
and distribution of a diversified line of products, systems and services used
primarily in the healthcare field. Baxter International manufactures products in
27 countries and sells them in over 100 countries. Its products are used by
hospitals, clinical and medical research laboratories, blood and blood dialysis
centers, rehabilitation centers, nursing homes, doctors' offices and by
patients, at home, under physician supervision.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 21.9910 0.141 26.6223 0.146 33.9128 0.146 30.5365 0.146 43.9400 0.582 55.8300
February...................... 21.9910 0.000 27.0705 0.000 33.6439 0.000 26.0546 0.000 46.0450 0.000 55.4800
March......................... 20.6166 0.000 26.3534 0.000 31.5523 0.000 29.9687 0.000 47.0700 0.000
April......................... 22.8874 0.141 26.5028 0.146 30.1181 0.146 32.5625 0.000 45.5750 0.000
May........................... 25.2180 0.000 27.3394 0.000 30.8651 0.000 33.2500 0.000 49.3800 0.000
June.......................... 25.0088 0.000 25.7259 0.000 28.9827 0.000 35.1563 0.000 50.5000 0.000
July.......................... 27.6083 0.141 28.5644 0.146 32.8371 0.146 38.8750 0.000 49.8000 0.000
August........................ 25.4271 0.000 25.3972 0.000 32.0603 0.000 41.6348 0.000 51.6000 0.000
September..................... 24.9789 0.000 28.5346 0.000 28.8035 0.000 39.9063 0.000 55.0500 0.000
October....................... 22.1703 0.141 28.6541 0.146 31.0743 0.146 41.0938 0.000 48.3700 0.000
November...................... 24.2021 0.000 30.3871 0.000 32.2993 0.000 43.2813 0.000 52.0000 0.000
December...................... 24.1124 0.000 30.7456 0.000 30.0285 0.000 44.1563 0.000 53.6300 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.582
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Baxter International on ,
2002 was $ .
BECKMAN COULTER, INC.
Beckman Coulter, Inc. simplifies and automates laboratory processes used in
all phases of the battle against disease. The company designs, manufactures and
markets systems which consist of instruments, chemistries, software and supplies
that meet a variety of laboratory needs. Its products are used in a range of
applications, from instruments used for pioneering medical research, clinical
trials and drug discovery to diagnostic tools found in hospitals and physicians'
offices. Beckman Coulter's product lines include virtually all blood tests
routinely performed in hospital laboratories and a range of systems for medical
and pharmaceutical research.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 19.7500 0.000 21.5313 0.000 24.9375 0.000 26.1563 0.000 37.5600 0.000 46.5600
February...................... 20.7500 0.000 24.1875 0.000 24.1563 0.000 24.0625 0.000 40.4500 0.000 47.6700
March......................... 21.0000 0.075 28.6563 0.075 22.1250 0.080 32.0938 0.080 39.0900 0.085
April......................... 21.0000 0.000 27.8438 0.000 24.0938 0.000 32.4063 0.000 35.5500 0.000
May........................... 23.3125 0.000 27.8750 0.000 25.3750 0.000 30.0625 0.000 37.7500 0.085
June.......................... 24.1250 0.075 29.1250 0.075 24.3125 0.080 29.2070 0.080 40.8000 0.000
July.......................... 24.2813 0.000 30.0625 0.000 24.0313 0.000 33.3125 0.000 45.9600 0.000
August........................ 23.5313 0.000 27.6875 0.000 23.6875 0.000 38.0625 0.000 45.7200 0.000
September..................... 21.2813 0.075 25.8125 0.075 22.5625 0.080 38.5625 0.080 44.2500 0.085
October....................... 19.6875 0.000 23.5000 0.000 23.0000 0.000 35.0313 0.000 42.4700 0.000
November...................... 19.5625 0.000 24.1250 0.000 23.8750 0.000 38.3125 0.080 41.9000 0.090
December...................... 20.0000 0.075 27.1250 0.080 25.4375 0.080 41.9375 0.000 44.3000 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Beckman Coulter on , 2002
was $ . During the period reflected in the above table, Beckman Coulter
split its common stock 2-for-1 on December 8, 2000. The data appearing in the
above table have been adjusted to reflect this split.
35
BIOGEN, INC.
Biogen, Inc. is a biopharmaceutical company principally engaged in the
business of developing, manufacturing and marketing drugs for human health care.
Biogen currently derives revenues from sales of its product for the treatment of
relapsing forms of multiple sclerosis and from royalties on worldwide sales by
the Biogen's licensees of a number of products covered under patents controlled
by Biogen.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- ---------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- -------- ----- ------- ----- -------
January...................... 23.3750 0.000 20.5625 0.000 49.1250 0.000 86.2500 0.000 64.5000 0.000 54.2200
February..................... 24.6250 0.000 22.0625 0.000 48.0625 0.000 107.9375 0.000 71.5625 0.000 53.1500
March........................ 18.6875 0.000 24.0938 0.000 57.1563 0.000 69.8750 0.000 63.3125 0.000
April........................ 16.0000 0.000 22.1875 0.000 47.5313 0.000 58.8125 0.000 64.6600 0.000
May.......................... 16.5938 0.000 22.0000 0.000 54.5625 0.000 54.5000 0.000 60.3100 0.000
June......................... 16.9375 0.000 24.5000 0.000 64.3125 0.000 64.5000 0.000 54.3600 0.000
July......................... 19.2500 0.000 27.8125 0.000 68.8125 0.000 53.0000 0.000 56.6900 0.000
August....................... 19.6875 0.000 23.1250 0.000 76.7500 0.000 69.1250 0.000 60.3600 0.000
September.................... 16.2188 0.000 32.9063 0.000 78.8125 0.000 61.0000 0.000 55.5800 0.000
October...................... 16.7500 0.000 34.7500 0.000 74.1250 0.000 60.1875 0.000 55.0000 0.000
November..................... 17.5000 0.000 37.9375 0.000 73.0625 0.000 54.7500 0.000 58.9100 0.000
December..................... 18.1875 0.000 41.5000 0.000 84.5000 0.000 60.0625 0.000 57.3500 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January...................... 0.000
February..................... 0.000
March........................
April........................
May..........................
June.........................
July.........................
August.......................
September....................
October......................
November.....................
December.....................
</Table>
The closing price of the common stock of Biogen on , 2002 was
$ . During the period reflected in the above table, Biogen split its common
stock 2-for-1 on each of November 18, 1996 and June 28, 1999. The data appearing
in the above table have been adjusted to reflect each of these splits. Biogen
has never paid dividends on its common stock.
BRISTOL-MYERS SQUIBB COMPANY
Bristol-Myers Squibb Company, through its divisions and subsidiaries, is a
producer and distributor of consumer medicines, pharmaceuticals, nutritionals,
medical devices and beauty care products.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 30.1594 0.000 47.4401 0.000 61.0327 0.000 63.0552 0.000 58.9055 0.000 45.3700
February...................... 31.0517 0.190 47.6781 0.195 59.9322 0.215 54.4892 0.245 60.3522 0.275 47.0000
March......................... 28.0774 0.000 49.6411 0.000 61.0327 0.000 54.3703 0.000 56.5356 0.000
April......................... 31.1707 0.000 50.3847 0.000 60.4973 0.000 49.9088 0.000 53.2995 0.000
May........................... 34.9183 0.190 51.1580 0.195 65.4347 0.215 52.4072 0.245 51.6244 0.275
June.......................... 38.5470 0.000 54.6974 0.000 67.0408 0.000 55.4410 0.000 49.7779 0.000
July.......................... 37.2680 0.000 54.2215 0.000 63.2932 0.000 49.1355 0.000 56.2881 0.000
August........................ 36.1675 0.190 46.5776 0.195 66.9813 0.215 50.4628 0.245 56.1400 0.275
September..................... 39.3798 0.000 49.4329 0.000 64.2449 0.000 54.7272 0.000 55.5600 0.000
October....................... 41.8187 0.000 52.6749 0.000 73.1084 0.000 57.9989 0.000 53.4500 0.000
November...................... 44.5551 0.190 58.0584 0.195 69.4797 0.215 65.9700 0.245 53.7600 0.280
December...................... 45.0309 0.000 63.6798 0.000 61.0922 0.000 70.3720 0.000 51.0000 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.280
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Bristol-Myers Squibb on ,
2002 was $ . During the period reflected in the above table, Bristol-Myers
Squibb split its common stock 2-for-1 on each of March 3, 1997 and March 1,
1999. The data appearing in the above table have been adjusted to reflect each
of these splits.
36
CARDINAL HEALTH, INC.
Cardinal Health, Inc. is structured as a holding company conducting
business through a number of separate operating subsidiaries. Cardinal Health is
a leading provider of products and services to Healthcare providers and
manufacturers to help them improve the efficiency and quality of Healthcare.
These services and products include Pharmaceutical Distribution and Provider
Services, Medical-Surgical Products and Services, Pharmaceutical Technologies
and Services and Automation and Information Services.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 27.8403 0.010 34.4167 0.010 49.2917 0.017 31.7917 0.017 63.5333 0.020 65.9100
February...................... 27.3333 0.000 36.3889 0.000 48.1250 0.000 27.8750 0.000 67.6667 0.000 66.0900
March......................... 24.1667 0.000 39.1944 0.000 44.0000 0.000 30.5833 0.000 64.5000 0.000
April......................... 23.6667 0.010 42.7778 0.013 39.8750 0.017 36.7083 0.017 67.4000 0.020
May........................... 25.8889 0.000 39.6667 0.000 40.2500 0.000 43.2500 0.000 71.9900 0.000
June.......................... 25.4444 0.000 41.6667 0.000 42.7500 0.000 49.3333 0.000 69.0000 0.000
July.......................... 27.6667 0.010 42.6944 0.013 45.5000 0.017 49.0000 0.020 73.6300 0.025
August........................ 29.4444 0.000 38.8889 0.000 42.5000 0.000 54.5547 0.000 72.9400 0.000
September..................... 31.5556 0.000 45.8889 0.000 36.3333 0.000 58.7917 0.000 73.9500 0.000
October....................... 33.0000 0.010 42.0556 0.017 29.0000 0.017 63.1667 0.020 67.1100 0.025
November...................... 33.6667 0.000 45.9167 0.000 34.8750 0.000 66.6250 0.000 68.3200 0.000
December...................... 33.3889 0.000 50.5833 0.000 31.9167 0.000 66.4167 0.000 64.6600 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.025
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Cardinal Health on ,
2002 was $ . During the period reflected in the above table, Cardinal Health
split its common stock 3-for-2 on each of December 17, 1996, November 2, 1998
and April 23, 2001. The data appearing in the above table have been adjusted to
reflect each of these splits.
CAREMARK RX, INC.
Caremark Rx, Inc. is a pharmaceutical services company in the United
States, providing pharmacy benefit management services which design and
administer programs aimed at reducing the costs and improving the safety,
effectiveness and convenience of prescription drug use. Caremark dispenses
prescription drugs to customers through a network of third-party retail
pharmacies and through its own mail service pharmacies.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 18.6250 0.000 9.9375 0.000 5.3750 0.000 4.2500 0.000 12.6000 0.000 16.5000
February...................... 22.0000 0.000 12.0000 0.000 5.9375 0.000 4.6875 0.000 14.0000 0.000 17.4500
March......................... 21.2500 0.000 10.2500 0.000 4.7500 0.000 4.1875 0.000 13.0400 0.000
April......................... 18.2500 0.000 10.2500 0.000 5.2500 0.000 6.3750 0.000 15.8500 0.000
May........................... 18.8750 0.000 8.9375 0.000 5.8125 0.000 6.0625 0.000 16.2800 0.000
June.......................... 21.6250 0.000 8.0000 0.000 7.5000 0.000 6.8125 0.000 16.4500 0.000
July.......................... 23.7500 0.000 5.0625 0.000 8.3750 0.000 8.4375 0.000 17.5800 0.000
August........................ 21.3750 0.000 2.5000 0.000 7.0000 0.000 9.8125 0.000 17.4700 0.000
September..................... 21.4375 0.000 3.2500 0.000 5.7500 0.000 11.2500 0.000 16.6800 0.000
October....................... 25.4375 0.000 3.5625 0.000 4.8750 0.000 12.5000 0.000 13.4000 0.000
November...................... 24.7500 0.000 4.6250 0.000 4.5625 0.000 10.8750 0.000 15.0000 0.000
December...................... 22.3750 0.000 5.2500 0.000 5.0625 0.000 13.5625 0.000 16.3100 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Caremark on , 2002
was $ . Caremark has never paid dividends on its common stock.
37
ELAN CORPORATION, PLC
Elan Corporation, PLC, a public limited company organized under the laws of
Ireland, is a worldwide pharmaceutical and biotechnology company, headquartered
in Dublin, Ireland. Elan's principal research and development, manufacturing and
marketing facilities are located in Ireland, the United States and Israel.
Traditionally, Elan has focused on the development and commercialization of
products for pharmaceutical industry clients utilizing its proprietary drug
delivery systems. Elan continues to focus on drug delivery systems, but has also
embarked on a strategy to expand its therapeutic focus through the development
and commercialization of new pharmaceutical products for selected target
markets, including the areas of neurology, pain management and oncology. Shares
of Elan also trade on the Dublin Stock Exchange.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 19.2500 0.000 25.9688 0.000 33.7500 0.000 30.0625 0.000 50.2000 0.000 28.0900
February...................... 17.3125 0.000 31.0313 0.000 38.3438 0.000 41.5000 0.000 54.9600 0.000 14.1000
March......................... 17.0625 0.000 32.3125 0.000 34.8750 0.000 47.5000 0.000 52.2500 0.000
April......................... 17.0000 0.000 31.0625 0.000 25.8125 0.000 43.5000 0.000 50.1500 0.000
May........................... 20.3750 0.000 30.5938 0.000 27.0313 0.000 39.8125 0.000 57.7100 0.000
June.......................... 22.6250 0.000 32.1563 0.000 27.7500 0.000 48.4375 0.000 61.0000 0.000
July.......................... 23.7500 0.000 36.0000 0.000 29.0625 0.000 53.1875 0.000 57.7500 0.000
August........................ 22.7500 0.000 29.4688 0.000 32.0625 0.000 58.3125 0.000 51.9500 0.000
September..................... 25.0313 0.000 36.0313 0.000 33.5625 0.000 54.7500 0.000 48.4500 0.000
October....................... 24.9375 0.000 35.0313 0.000 25.7500 0.000 51.9375 0.000 45.6500 0.000
November...................... 26.3750 0.000 34.0625 0.000 27.3125 0.000 53.9375 0.000 44.2200 0.000
December...................... 25.5938 0.000 34.9688 0.000 29.5000 0.000 46.8125 0.000 45.0600 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Elan on , 2002 was
$ . During the period reflected in the above table, Elan split its common
stock 2-for-1 on each of August 23, 1996 and June 7, 1999. The data appearing in
the above table have been adjusted to reflect each of these splits. Elan has
never paid dividends on its common stock.
ELI LILLY AND COMPANY
Eli Lilly and Company discovers, develops, manufactures, and sells products
in one significant business segment -- pharmaceutical products. Eli Lilly
directs its research efforts primarily toward the search for products to
diagnose, prevent and treat human diseases. It also conducts research to find
products to treat diseases in animals and increase the efficiency of animal food
production.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- ---------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- -------- ----- ------- ----- -------
January...................... 43.5625 0.000 67.6250 0.000 93.6875 0.000 66.8750 0.000 78.8000 0.000 75.1000
February..................... 43.6875 0.000 65.8125 0.000 94.5000 0.000 59.4375 0.000 79.4600 0.000 75.7300
March........................ 41.1250 0.180 59.6250 0.200 84.8750 0.230 62.6250 0.260 76.6600 0.280
April........................ 43.9375 0.000 69.5625 0.000 73.6250 0.000 77.1250 0.000 85.0000 0.000
May.......................... 46.5000 0.000 61.3750 0.000 71.4375 0.000 76.1250 0.000 84.7000 0.000
June......................... 54.6563 0.180 66.2500 0.200 71.6250 0.230 99.8750 0.260 74.0000 0.280
July......................... 56.5000 0.000 67.2500 0.000 65.6875 0.000 103.8750 0.000 79.2800 0.000
August....................... 52.3125 0.000 65.7500 0.000 74.6250 0.000 73.0196 0.000 77.6300 0.000
September.................... 60.5000 0.180 78.3125 0.200 64.1875 0.230 81.1250 0.260 80.7000 0.280
October...................... 67.0625 0.000 81.0000 0.000 68.8750 0.000 89.3750 0.000 76.5000 0.000
November..................... 63.0000 0.000 89.6875 0.000 72.1719 0.000 93.6875 0.000 82.6700 0.000
December..................... 69.6250 0.200 88.8750 0.200 66.5000 0.230 93.0625 0.260 78.5400 0.280
<Caption>
2002
-----
DIVI-
DENDS
-----
January...................... 0.000
February..................... 0.000
March........................
April........................
May..........................
June.........................
July.........................
August.......................
September....................
October......................
November.....................
December.....................
</Table>
The closing price of the common stock of Eli Lilly on , 2002
was $ . During the period reflected in the above table, Eli Lilly split
its common stock 2-for-1 on October 16, 1997. The data appearing in the above
table have been adjusted to reflect this split.
38
FOREST LABORATORIES, INC.
Forest Laboratories, Inc. and its subsidiaries develop, manufacture and
sell both branded and generic forms of ethical drug products which require a
physician's prescription, as well as non-prescription pharmaceutical products
sold over-the-counter. Forest Laboratories' most important United States
products consist of branded ethical drug specialties marketed directly to
physicians by Forest Pharmaceuticals', Forest Therapeutics' and Forest Specialty
Sales' salesforces.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 9.4375 0.000 14.8438 0.000 23.0938 0.000 33.7500 0.000 66.9600 0.000 82.9000
February...................... 9.5313 0.000 15.6406 0.000 24.7813 0.000 34.1563 0.000 69.5300 0.000 79.5200
March......................... 9.4063 0.000 18.7500 0.000 28.1875 0.000 42.2500 0.000 59.2400 0.000
April......................... 8.5313 0.000 18.0938 0.000 22.2500 0.000 42.0313 0.000 61.1500 0.000
May........................... 10.5625 0.000 16.5000 0.000 23.8125 0.000 44.2500 0.000 74.0600 0.000
June.......................... 10.3594 0.000 17.8750 0.000 23.1250 0.000 50.5195 0.000 71.0000 0.000
July.......................... 11.3750 0.000 18.7500 0.000 25.6250 0.000 53.5000 0.000 78.5500 0.000
August........................ 10.2656 0.000 16.3750 0.000 24.2500 0.000 48.9375 0.000 73.0100 0.000
September..................... 10.5313 0.000 17.1875 0.000 21.0625 0.000 57.3438 0.000 72.1400 0.000
October....................... 11.5625 0.000 20.9063 0.000 22.9375 0.000 66.2500 0.000 74.3800 0.000
November...................... 11.1875 0.000 23.3125 0.000 25.5938 0.000 67.7500 0.000 70.8000 0.000
December...................... 12.3281 0.000 26.5938 0.000 30.7188 0.000 66.4375 0.000 81.9500 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Forest Laboratories on ,
2002 was $ . During the period reflected in the above table, Forest
Laboratories split its common stock 2-for-1 on each of March 26, 1998 and
January 12, 2001. The data appearing in the above table have been adjusted to
reflect each of these splits. Forest Laboratories has never paid dividends on
its common stock.
GENENTECH, INC.
Genentech, Inc. is a leading biotechnology company using human genetic
information to discover, develop, manufacture and market human pharmaceuticals
that address significant unmet medical needs. Fourteen of the approved products
of biotechnology stem from Genentech's science.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... * * * * * * 69.6875 0.000 59.2500 0.000 49.4500
February...................... * * * * * * 96.4375 0.000 52.5000 0.000 47.2000
March......................... * * * * * * 76.0000 0.000 50.5000 0.000
April......................... * * * * * * 60.0000 0.000 52.5000 0.000
May........................... * * * * * * 53.6875 0.000 50.0500 0.000
June.......................... * * * * * * 85.9492 0.000 55.1000 0.000
July.......................... * * * * 35.5000 0.000 76.0625 0.000 42.3000 0.000
August........................ * * * * 41.0625 0.000 95.2500 0.000 45.9000 0.000
September..................... * * * * 36.5781 0.000 92.8438 0.000 44.0000 0.000
October....................... * * * * 36.4375 0.000 82.5000 0.000 52.2500 0.000
November...................... * * * * 42.9375 0.000 68.0625 0.000 57.4500 0.000
December...................... * * * * 67.2500 0.000 81.5000 0.000 54.2500 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Genentech on , 2002 was
$ . During the period reflected in the above table, Genentech split its
common stock 2-for-1 on each of November 3, 1999 and October 25, 2000. The data
appearing in the above table have been adjusted to reflect each of these splits.
Genetech has never paid dividends on its common stock.
39
GENZYME CORPORATION
Genzyme Corporation is a biotechnology and human healthcare company that
develops innovative products and provides services for major unmet medical
needs. Genzyme currently has three operating divisions: Genzyme General, which
develops and markets therapeutic products and diagnostic products and services
for genetic disorders and other chronic debilitating diseases; Genzyme
Biosurgery, which develops and markets instruments, devices, biomaterials and
biotherapeutic products to improve or replace surgery for the orthopaedics and
cardiothoracic markets; and Genzyme Molecular Oncology, which is utilizing its
functional genomics and antigen discovery technology platforms to develop novel
cancer products.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 13.3414 0.000 12.8684 0.000 26.8078 0.000 26.0000 0.000 43.2813 0.000 45.6100
February...................... 12.2693 0.000 14.2547 0.000 22.1349 0.000 28.7188 0.000 43.9688 0.000 44.3800
March......................... 10.7208 0.000 15.4300 0.000 24.8096 0.000 25.0625 0.000 45.1650 0.000
April......................... 11.0186 0.000 14.9177 0.000 18.5687 0.000 24.4063 0.000 54.4850 0.000
May........................... 11.3759 0.000 13.1999 0.000 19.9522 0.000 28.4063 0.000 53.4700 0.000
June.......................... 13.2223 0.000 12.3259 0.000 24.2500 0.000 29.7188 0.000 61.0000 0.000
July.......................... 13.1396 0.000 15.1738 0.000 28.2813 0.000 34.7188 0.000 56.0000 0.000
August........................ 13.5615 0.000 13.0191 0.000 28.2188 0.000 37.5313 0.000 56.6400 0.000
September..................... 14.3451 0.000 17.4190 0.000 22.5313 0.000 34.0938 0.000 45.4200 0.000
October....................... 13.1999 0.000 20.2820 0.000 19.1250 0.000 35.5000 0.000 53.9500 0.000
November...................... 12.9287 0.000 20.6900 0.000 18.0000 0.000 43.9063 0.000 54.6200 0.000
December...................... 13.3807 0.000 24.4714 0.000 22.5000 0.000 44.9688 0.000 59.8600 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Genzyme on , 2002 was
$ . During the period reflected in the above table, Genzyme split its
common stock 2-for-1 on July 26, 1996. The data appearing in the above table
have been adjusted to reflect this split. Genzyme Corp. has never paid dividends
on its common stock.
GILEAD SCIENCES, INC.
Gilead Sciences, Inc. is an independent bio-pharmaceutical company
dedicated to discovering, developing, manufacturing and commercializing
proprietary therapeutics for antiviral, anti-infective and oncology
applications. Gilead Sciences is continuing to add to its existing portfolio of
compounds through internal discovery (including identification of new molecular
targets, target screening and medicinal chemistry) and an active product
acquisition and in-licensing strategy. Gilead Sciences also has expertise in
liposomal drug delivery technology that is used to develop drugs that are safer,
easier for patients to tolerate and more effective.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 8.1563 0.000 10.1250 0.000 10.7500 0.000 11.7031 0.000 16.9219 0.000 32.7100
February...................... 7.6250 0.000 8.9531 0.000 10.3125 0.000 19.1250 0.000 18.6875 0.000 35.2300
March......................... 5.7188 0.000 9.0000 0.000 11.3750 0.000 15.8438 0.000 16.2500 0.000
April......................... 5.5313 0.000 9.5000 0.000 11.5156 0.000 13.5469 0.000 24.4900 0.000
May........................... 6.7813 0.000 8.0938 0.000 10.9063 0.000 13.6719 0.000 25.8750 0.000
June.......................... 6.9063 0.000 8.0156 0.000 13.0625 0.000 17.7813 0.000 29.0950 0.000
July.......................... 7.0625 0.000 5.8750 0.000 19.3750 0.000 18.5313 0.000 25.6450 0.000
August........................ 8.0938 0.000 4.5625 0.000 19.4844 0.000 27.0000 0.000 30.3550 0.000
September..................... 11.0938 0.000 5.4063 0.000 16.0469 0.000 27.4219 0.000 28.0850 0.000
October....................... 8.5313 0.000 7.0938 0.000 15.7969 0.000 21.5000 0.000 31.4500 0.000
November...................... 8.6250 0.000 7.7813 0.000 12.0000 0.000 20.3594 0.000 36.1050 0.000
December...................... 9.5625 0.000 10.2656 0.000 13.5313 0.000 20.7344 0.000 32.8600 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Gilead Sciences on ,
2002 was $ . During the period reflected in the above table, Gilead Sciences
split its common stock 2-for-1 on February 21, 2001 and March 7, 2002. The data
appearing in the above table have been adjusted to reflect each of these splits.
Gilead Sciences has never paid dividends on its common stock.
40
GLAXOSMITHKLINE PLC
GlaxoSmithKline PLC is a global healthcare group engaged in the creation
and discovery, development, manufacture and marketing of pharmaceutical
products, vaccines, over-the-counter (OTC) medicines and health-related consumer
products. GlaxoSmithKline, which also provides laboratory testing and disease
management services, specializes in treatments for respiratory, central nervous
system, gastro-intestinal and genetic disorders. Shares of GlaxoSmithKline also
trade on the London Stock Exchange.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 31.8750 0.000 53.8125 0.000 67.8750 0.000 52.7500 0.000 52.6200 0.000 48.2200
February...................... 33.8750 0.000 54.3125 0.000 64.0625 0.000 48.7500 0.000 55.3100 0.000 48.9500
March......................... 35.3750 0.000 54.1250 0.000 66.9375 0.000 57.3125 0.000 52.3000 0.000
April......................... 39.3750 0.000 56.5626 0.000 58.0000 0.000 62.8125 0.000 53.5700 0.658
May........................... 40.2500 0.740 53.9375 0.000 56.2500 0.000 56.3125 0.000 54.6900 0.000
June.......................... 41.8125 0.000 59.8125 0.651 56.6250 0.677 57.8125 0.648 56.2000 0.000
July.......................... 42.5000 0.000 60.8125 0.000 52.1875 0.000 57.1250 0.000 57.7600 0.259
August........................ 39.9375 0.000 55.3750 0.000 52.9375 0.000 57.5625 0.000 52.9500 0.000
September..................... 44.9375 0.000 57.1250 0.000 52.0000 0.000 60.4375 0.000 56.1200 0.000
October....................... 42.5781 0.612 62.2500 0.509 59.8750 0.494 58.1875 0.433 53.4000 0.255
November...................... 45.6875 0.000 63.5000 0.000 59.4375 0.000 57.3125 0.000 50.8100 0.000
December...................... 47.8750 0.000 69.5000 0.000 55.8750 0.000 56.0000 0.000 49.8200 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.256
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the American depositary shares of GlaxoSmithKline on
, 2002 was $ .
GUIDANT CORPORATION
Guidant Corporation is a pioneer in emerging therapies for cardiovascular
and vascular disease, and a global company in the medical technology industry.
Guidant provides cost-effective, minimally-invasive products and services
designed to improve clinical outcomes and prolong life with quality. Guidant is
a global company with principal operations in the United States, Western Europe
and Japan.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 13.9375 0.000 32.3125 0.000 58.7500 0.000 52.8125 0.000 49.5000 0.000 48.0500
February...................... 16.7500 0.000 36.4688 0.000 56.7500 0.000 67.3750 0.000 50.9700 0.000 41.5000
March......................... 15.3750 0.006 36.6875 0.006 60.5000 0.000 58.8750 0.000 44.9900 0.000
April......................... 17.0625 0.000 33.4375 0.000 53.6875 0.000 57.3750 0.000 41.0000 0.000
May........................... 19.4063 0.000 32.2188 0.000 50.0000 0.000 50.6250 0.000 37.5500 0.000
June.......................... 21.2500 0.006 35.6563 0.006 51.1250 0.000 49.5000 0.000 36.0000 0.000
July.......................... 22.8125 0.000 37.1563 0.000 58.5625 0.000 56.3750 0.000 31.8800 0.000
August........................ 21.9531 0.000 30.8750 0.000 58.6875 0.000 67.3321 0.000 36.1200 0.000
September..................... 28.0000 0.006 37.1250 0.006 53.6250 0.000 70.6875 0.000 38.5000 0.000
October....................... 28.7500 0.000 38.2500 0.000 49.3750 0.000 52.9375 0.000 41.5100 0.000
November...................... 32.1250 0.000 42.9063 0.000 50.3359 0.000 53.9375 0.000 48.8100 0.000
December...................... 31.1250 0.006 55.0000 0.006 47.0000 0.000 53.9375 0.000 49.8000 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Guidant on , 2002 was
$ . During the period reflected in the above table, Guidant split its
common stock 2-for-1 on each of September 17, 1997 and January 28, 1999. The
data appearing in the above table have been adjusted to reflect each of these
splits.
41
IDEC PHARMACEUTICAL CORPORATION
IDEC Pharmaceuticals Corporation is a biopharmaceutical company engaged
primarily in the research, development and commercialization of targeted
therapies for the treatment of cancer and autoimmune and inflammatory diseases,
such as certain B-cell non-Hodgkin's lymphomas, rheumatoid arthritis and
psoriasis.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January........................ 3.8750 0.000 6.9583 0.000 8.4167 0.000 42.0625 0.000 58.8125 0.000 59.4600
February....................... 4.1458 0.000 7.5625 0.000 7.2188 0.000 46.9583 0.000 56.3750 0.000 62.8200
March.......................... 3.9688 0.000 7.3750 0.000 8.5625 0.000 32.7500 0.000 40.0000 0.000
April.......................... 2.9583 0.000 6.0000 0.000 8.4583 0.000 21.3333 0.000 49.2000 0.000
May............................ 3.7500 0.000 5.2500 0.000 8.4063 0.000 21.2708 0.000 61.6000 0.000
June........................... 4.0417 0.000 3.9271 0.000 12.8438 0.000 39.1042 0.000 67.6900 0.000
July........................... 4.5417 0.000 3.9479 0.000 16.5208 0.000 40.9375 0.000 53.9800 0.000
August......................... 5.0625 0.000 3.0000 0.000 21.1771 0.000 46.5417 0.000 59.2700 0.000
September...................... 6.9792 0.000 3.9583 0.000 15.6719 0.000 58.4531 0.000 49.5700 0.000
October........................ 6.3542 0.000 4.9792 0.000 19.3646 0.000 65.3750 0.000 59.9800 0.000
November....................... 5.8229 0.000 5.6042 0.000 21.1250 0.000 58.0208 0.000 70.3000 0.000
December....................... 5.7292 0.000 7.8333 0.000 32.7500 0.000 63.1875 0.000 68.9300 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January........................ 0.000
February....................... 0.000
March..........................
April..........................
May............................
June...........................
July...........................
August.........................
September......................
October........................
November.......................
December.......................
</Table>
The closing price of the common stock of IDEC Pharmaceuticals on
, 2002 was $ . During the period reflected in the above table,
IDEC Pharmaceuticals split its common stock 2-for-1 on December 21, 1999 and
3-for-1 on January 18, 2001. The data appearing in the above table have been
adjusted to reflect each of these splits. IDEC Pharmaceuticals has never paid
dividends on its common stock.
JOHNSON & JOHNSON
Johnson & Johnson is engaged in the manufacture and sale of a broad range
of products in the health care field. It conducts business in virtually all
countries of the world. Johnson & Johnson's primary interest, both historically
and currently, has been in products related to human health and well-being.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 28.8750 0.000 33.4688 0.000 42.5625 0.000 43.0313 0.000 46.5650 0.000 57.5100
February...................... 28.7500 0.000 37.6875 0.000 42.6875 0.000 36.0000 0.000 48.6650 0.000 60.9000
March......................... 26.4375 0.095 36.7188 0.110 46.7500 0.125 35.1250 0.140 43.7350 0.160
April......................... 30.5625 0.000 35.7500 0.000 48.7500 0.000 41.2500 0.000 48.2400 0.000
May........................... 30.0000 0.000 34.5313 0.000 46.3125 0.000 44.7500 0.000 48.4750 0.000
June.......................... 32.1875 0.110 37.0000 0.125 49.0000 0.140 50.9375 0.160 50.0000 0.180
July.......................... 31.0625 0.000 38.6250 0.000 45.5313 0.000 46.5313 0.000 54.1000 0.000
August........................ 28.3438 0.000 34.5000 0.000 51.1250 0.000 45.9785 0.000 52.7100 0.000
September..................... 28.8438 0.110 39.1250 0.125 45.9375 0.140 46.9688 0.160 55.4000 0.180
October....................... 28.6875 0.000 40.7500 0.000 52.3750 0.000 46.0625 0.000 57.9100 0.000
November...................... 31.4688 0.000 40.6250 0.000 51.8750 0.000 50.0000 0.000 58.2500 0.000
December...................... 32.9375 0.110 41.9375 0.125 46.6250 0.140 52.5313 0.160 59.1000 0.180
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Johnson & Johnson on ,
2002 was $ . During the period reflected in the above table, Johnson &
Johnson split its common stock 2-for-1 on June 12, 1996. The data appearing in
the above table have been adjusted to reflect this split.
42
KING PHARMACEUTICALS, INC.
King Pharmaceuticals, Inc. is a vertically integrated pharmaceutical
company that manufactures, markets and sells primarily branded prescription
pharmaceutical products. Using a national sales force, King Pharmaceuticals
markets its branded pharmaceutical products to general/family practitioners,
internal medicine physicians, cardiologists, endocrinologists, pediatricians,
obstetrician/gynecologists, and hospitals across the United States and in Puerto
Rico.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... * * * * 8.0417 0.000 29.5000 0.000 33.9825 0.000 36.4000
February...................... * * * * 8.0417 0.000 23.8437 0.000 34.4250 0.000 31.0600
March......................... * * * * 9.2500 0.000 15.7500 0.000 30.5625 0.000
April......................... * * * * 9.2083 0.000 24.6875 0.000 31.5975 0.000
May........................... * * * * 7.9167 0.000 27.3750 0.000 37.9350 0.000
June.......................... * * 4.6667 0.000 8.6250 0.000 32.8301 0.000 40.3125 0.000
July.......................... * * 5.3760 0.000 9.0417 0.000 23.2500 0.000 45.2000 0.000
August........................ * * 4.7917 0.000 11.5417 0.000 24.9375 0.000 43.2500 0.000
September..................... * * 4.5833 0.000 11.6667 0.000 25.0781 0.000 41.9500 0.000
October....................... * * 5.1875 0.000 10.0833 0.000 33.6094 0.000 38.9900 0.000
November...................... * * 5.0000 0.000 23.0625 0.000 36.5625 0.000 39.8400 0.000
December...................... * * 8.7917 0.000 28.0312 0.000 38.7656 0.000 42.1300 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of King Pharmaceuticals on
, 2002 was $ . During the period reflected in the above table,
King Pharmaceuticals split its common stock 3-for-2 on November 11, 1999 and
June 21, 2000, and 4-for-3 on July 19, 2001. The data appearing in the above
table have been adjusted to reflect each of these splits. King Pharmaceuticals
has never paid dividends on its common stock.
MEDIMMUNE, INC.
MedImmune, Inc. is a biotechnology company with five products on the market
and a diverse product portfolio. MedImmune is focused on using advances in
immunology and other biological sciences to develop important new products that
address significantly unmet medical needs in areas of infectious disease and
immune regulation. MedImmune also focuses on oncology through its wholly-owned
subsidiary, MedImmune Oncology, Inc.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January........................ 2.6458 0.000 7.6458 0.000 16.5000 0.000 48.6667 0.000 39.7500 0.000 42.3700
February....................... 2.4167 0.000 8.6458 0.000 18.3333 0.000 66.1667 0.000 43.6875 0.000 41.2300
March.......................... 2.2917 0.000 9.1875 0.000 19.7292 0.000 58.0417 0.000 35.8750 0.000
April.......................... 2.1667 0.000 8.7917 0.000 18.3750 0.000 53.3125 0.000 39.1500 0.000
May............................ 2.5833 0.000 8.3125 0.000 21.2083 0.000 51.7917 0.000 39.8700 0.000
June........................... 3.0833 0.000 10.3958 0.000 22.5833 0.000 74.0000 0.000 47.2000 0.000
July........................... 3.9583 0.000 9.7969 0.000 26.6250 0.000 59.5000 0.000 38.5200 0.000
August......................... 4.4167 0.000 8.0417 0.000 34.3958 0.000 84.1250 0.000 40.1500 0.000
September...................... 6.1250 0.000 10.7917 0.000 33.2188 0.000 77.2500 0.000 35.6300 0.000
October........................ 6.6458 0.000 11.2083 0.000 37.3333 0.000 65.3750 0.000 39.2400 0.000
November....................... 6.3750 0.000 11.1458 0.000 40.0625 0.000 53.1875 0.000 44.1000 0.000
December....................... 7.1458 0.000 16.5729 0.000 55.2917 0.000 47.6875 0.000 46.3500 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January........................ 0.000
February....................... 0.000
March..........................
April..........................
May............................
June...........................
July...........................
August.........................
September......................
October........................
November.......................
December.......................
</Table>
The closing price of the common stock of MedImmune on , 2002
was $ . During the period reflected in the above table, MedImmune split its
common stock 2-for-1 on January 4, 1999 and 3-for-1 on June 5, 2000. The data
appearing in the above table have been adjusted to reflect each of these splits.
MedImmune has never paid dividends on its common stock.
43
MEDTRONIC, INC.
Medtronic, Inc. is the world's leading medical technology company,
providing lifelong solutions for people with chronic disease. Primary products
include those for bradycardia pacing, tachyarrhythmia management, atrial
fibrillation management, heart failure management, coronary and peripheral
vascular disease, heart valve replacement, extracorporeal cardiac support,
minimally invasive cardiac surgery, malignant and non-malignant pain, movement
disorders, spinal and neurosurgery, neurodegenerative disorders, and ear, nose
and throat (ENT) surgery. On May 30, 2001, Medtronic announced that it has
agreed to purchase MiniMed Inc. for $48 a share.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 17.1250 0.024 25.5313 0.028 39.8438 0.033 45.7500 0.040 54.0000 0.050 49.2700
February...................... 16.1875 0.000 26.5625 0.000 35.3125 0.000 48.4375 0.000 51.1800 0.000 44.5400
March......................... 15.5625 0.000 25.9375 0.000 35.9375 0.000 51.4375 0.000 45.7400 0.000
April......................... 17.3125 0.024 26.5000 0.028 35.9688 0.033 51.9375 0.040 44.6000 0.050
May........................... 18.5000 0.000 27.8125 0.000 35.5000 0.000 51.6250 0.000 42.9800 0.000
June.......................... 20.6250 0.000 31.8750 0.000 38.9375 0.000 49.8125 0.000 46.0100 0.000
July.......................... 21.8125 0.000 30.9688 0.033 36.0313 0.040 51.0625 0.050 48.0300 0.058
August........................ 22.5938 0.028 25.6875 0.000 39.1094 0.000 51.2696 0.000 45.5400 0.000
September..................... 23.5625 0.000 29.0000 0.000 35.5625 0.000 51.8125 0.000 43.5000 0.000
October....................... 21.7500 0.028 32.5000 0.033 34.3750 0.040 54.3125 0.050 40.3000 0.058
November...................... 23.8750 0.000 33.8125 0.000 38.8125 0.000 53.2500 0.000 47.2800 0.000
December...................... 26.2500 0.000 37.1406 0.000 36.4375 0.000 60.3750 0.000 51.2100 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.058
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Medtronic on , 2002
was $ . During the period reflected in the above table, Medtronic split its
common stock 2-for-1 on each of September 15, 1997 and September 27, 1999. The
data appearing in the above table have been adjusted to reflect each of these
splits.
MERCK & CO., INC.
Merck & Co., Inc. is a global research-driven pharmaceutical company that
discovers, develops, manufactures and markets a broad of human and animal health
products, directly and through its joint ventures, and provides pharmaceutical
benefit services through Merck-Medco Managed Care, L.L.C. Merck's operations are
principally managed on a products and services basis and are comprised of two
segments: Merck Pharmaceutical, which includes products marketed either directly
or through joint ventures with other companies, and Merck-Medco. Merck
Pharmaceutical products consists of therapeutic agents, sold by prescription,
for the treatment of human disorders. Merck-Medco revenues are derived from the
filling and management of prescriptions and health management programs.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 45.3125 0.200 58.6875 0.225 73.3750 0.270 78.6250 0.290 82.1800 0.340 59.1800
February...................... 46.0625 0.000 63.7813 0.000 81.5000 0.000 61.5625 0.000 80.2000 0.000 61.3300
March......................... 42.1250 0.000 64.0938 0.000 80.1250 0.000 62.1250 0.000 75.9000 0.000
April......................... 45.1875 0.210 60.2500 0.225 70.3750 0.270 69.5000 0.290 75.9700 0.340
May........................... 44.9375 0.000 58.5000 0.000 67.6250 0.000 74.6250 0.000 72.9900 0.000
June.......................... 51.1563 0.000 66.8750 0.000 73.6250 0.000 76.6250 0.000 63.9100 0.000
July.......................... 51.9375 0.210 61.7813 0.225 67.6250 0.270 71.6563 0.290 67.9800 0.340
August........................ 45.9063 0.000 57.9688 0.000 67.1875 0.000 69.8946 0.000 65.1000 0.000
September..................... 49.9688 0.000 64.7813 0.000 64.8125 0.000 74.4375 0.000 66.6000 0.000
October....................... 44.6250 0.225 67.5313 0.270 79.5625 0.290 89.9375 0.340 63.8100 0.350
November...................... 47.4141 0.000 77.5625 0.000 78.6875 0.000 92.6875 0.000 67.7500 0.000
December...................... 53.0000 0.000 73.7500 0.000 67.1875 0.000 93.6250 0.000 58.8000 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.350
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Merck & Co. on , 2002
was $ . During the period reflected in the above table, Merck & Co. split
its common stock 2-for-1 on February 17, 1999. The data appearing in the above
table have been adjusted to reflect this split.
44
NOVARTIS AG
Novartis AG, a public company incorporated under the laws of Switzerland,
is engaged in the following continuing core businesses: pharmaceuticals,
generics, consumer health, eyecare products and medicines and animal health.
Novartis is committed to improving health and well-being through innovative
products and services. Prior to listing on the New York Stock Exchange on May
11, 2000, Novartis' American depositary shares were traded in the United States
in the over-the-counter market. Shares of Novartis also trade on the Swiss Stock
Exchange.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January..................... 28.1372 0.000 41.9922 0.000 45.7764 0.000 30.2124 0.000 42.8300 0.000 34.6300
February.................... 28.1372 0.000 44.6777 0.000 42.5415 0.000 31.3721 0.000 42.6700 0.000 37.9600
March....................... 29.9683 0.000 43.4570 0.000 39.4287 0.000 33.3862 0.000 39.3300 0.000
April....................... 32.2266 0.000 40.2832 0.000 35.4004 0.000 34.2407 0.000 39.1500 0.000
May......................... 33.4473 0.289 41.4124 0.355 35.2783 0.405 36.0107 0.410 38.3800 0.421
June........................ 39.2456 0.000 40.7104 0.000 36.1328 0.000 39.0625 0.000 36.1500 0.000
July........................ 39.1235 0.000 40.7715 0.000 35.0342 0.000 37.6587 0.000 35.0200 0.000
August...................... 34.8206 0.000 36.1328 0.000 35.0342 0.000 36.9263 0.000 36.4700 0.000
September................... 37.6587 0.000 39.1846 0.000 36.0107 0.000 37.7808 0.000 38.9200 0.000
October..................... 38.4521 0.000 43.8232 0.000 36.2549 0.000 37.4756 0.000 37.6300 0.000
November.................... 39.1235 0.000 45.5933 0.000 37.5977 0.000 40.5625 0.000 35.7600 0.000
December.................... 39.7339 0.000 47.8516 0.000 35.7666 0.000 44.7500 0.000 36.5000 0.000
<Caption>
2002
-------
DIVI-
DENDS
-------
January..................... 0.000
February.................... 0.000
March.......................
April.......................
May.........................
June........................
July........................
August......................
September...................
October.....................
November....................
December....................
</Table>
The closing price of the American depository shares of Novartis on
, 2002 was $ . During the period reflected in the above table,
Novartis split its American depository shares 2-for-1 on May 11, 2000. The data
appearing in the above table have been adjusted to reflect this split.
PATTERSON DENTAL COMPANY
Patterson Dental Company is a full-service, value-added supplier to
dentists, dental laboratories, institutions, physicians and other healthcare
professionals, and provides consumable products, advanced technology dental
equipment, practice management software and office forms and stationery.
Patterson also offers customers a full range of related services including
dental equipment installation, maintenance and repair, dental office design and
equipment financing.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January..................... 9.7083 0.000 15.6458 0.000 21.1875 0.000 21.7813 0.000 30.2500 0.000 40.1900
February.................... 11.3333 0.000 15.1260 0.000 20.2500 0.000 18.0156 0.000 31.6250 0.000 40.5700
March....................... 11.3333 0.000 15.5000 0.000 21.6250 0.000 19.1250 0.000 30.7500 0.000
April....................... 11.1667 0.000 14.7188 0.000 18.0313 0.000 24.0625 0.000 30.5600 0.000
May......................... 11.5000 0.000 16.2500 0.000 18.3125 0.000 25.4688 0.000 34.1200 0.000
June........................ 11.4375 0.000 18.3125 0.000 17.3750 0.000 25.5000 0.000 33.0000 0.000
July........................ 11.5833 0.000 18.1250 0.000 19.6563 0.000 25.5000 0.000 34.7000 0.000
August...................... 11.7917 0.000 14.9063 0.000 20.5000 0.000 23.7500 0.000 34.2900 0.000
September................... 13.5000 0.000 18.5000 0.000 24.7813 0.000 22.5000 0.000 36.8600 0.000
October..................... 13.3333 0.000 20.6250 0.000 22.5313 0.000 31.3125 0.000 38.0000 0.000
November.................... 13.6875 0.000 20.8125 0.000 22.9376 0.000 29.7500 0.000 38.3300 0.000
December.................... 15.0833 0.000 21.7500 0.000 21.3125 0.000 33.8750 0.000 40.9300 0.000
<Caption>
2002
-------
DIVI-
DENDS
-------
January..................... 0.000
February.................... 0.000
March.......................
April.......................
May.........................
June........................
July........................
August......................
September...................
October.....................
November....................
December....................
</Table>
The closing price of the common stock of Patterson on , 2002 was
$ . During the period reflected in the above table, Patterson split its
common stock 3-for-2 on February 17, 1998 and 2-for-1 on July 21, 2000. The data
appearing in the above table have been adjusted to reflect each of these splits.
Patterson has never paid dividends on its common stock.
45
PFIZER INC.
Pfizer Inc. is a research-based, global pharmaceutical company. Pfizer
discovers, develops, manufacturers and markets medicines for humans and animals
and consumer products.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- ---------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ------ ------- ----- -------
January...................... 15.4167 0.000 27.2500 0.000 42.8750 0.000 36.1875 0.000 45.1500 0.000 41.6700
February..................... 15.2708 0.000 29.5000 0.000 43.9792 0.000 32.1250 0.000 45.0000 0.000 40.9600
March........................ 14.0208 0.057 33.2292 0.063 46.2500 0.073 36.5625 0.090 40.9500 0.110
April........................ 16.0000 0.000 37.9375 0.000 38.3542 0.000 42.1250 0.000 43.3000 0.000
May.......................... 17.1667 0.000 34.9375 0.000 35.6667 0.000 44.5000 0.000 42.8900 0.000
June......................... 19.9167 0.057 36.2292 0.063 36.3333 0.073 48.0000 0.090 40.0500 0.110
July......................... 19.8750 0.000 36.6042 0.000 33.8750 0.000 43.3750 0.000 41.2200 0.000
August....................... 18.4792 0.000 31.0000 0.000 37.7500 0.000 43.1406 0.000 38.3100 0.000
September.................... 20.0417 0.057 35.2500 0.063 35.8750 0.080 44.9180 0.090 40.1000 0.110
October...................... 23.6667 0.000 35.7708 0.000 39.6875 0.000 43.1875 0.000 41.9000 0.000
November..................... 24.2500 0.000 37.3125 0.000 36.6250 0.000 44.3125 0.000 43.3100 0.000
December..................... 24.8542 0.057 41.6667 0.063 32.4375 0.080 46.0000 0.090 39.8500 0.110
<Caption>
2002
-----
DIVI-
DENDS
-----
January...................... 0.000
February..................... 0.000
March........................
April........................
May..........................
June.........................
July.........................
August.......................
September....................
October......................
November.....................
December.....................
</Table>
The closing price of the common stock of Pfizer on , 2002 was
$ . During the period reflected in the above table, Pfizer split its common
stock 2-for-1 on July 1, 1997 and 3-for-1 on July 1, 1999. The data appearing in
the above table have been adjusted to reflect each of these splits.
PHARMACIA CORPORATION
Pharmacia Corporation was created through the merger of Monsanto Company
and Pharmacia & Upjohn, Inc. Pharmacia's business is divided into three business
segments: Prescription Pharmaceuticals, which involves the business and
activities engaged in, supporting or related to the research, development,
registration, manufacture and sale of prescription pharmaceutical products,
including general therapeutics, opthalmology, and hospital products;
Agricultural Productivity, which consists of crop protection products, animal
agriculture and environmental technologies; and Seeds and Genomics, which is
comprised of global seeds and related trait businesses and genetic technology.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 37.7500 0.000 47.4375 0.000 47.5625 0.000 35.2500 0.000 56.0200 0.000 40.5000
February...................... 36.3750 0.000 51.1250 0.000 45.5625 0.000 38.8125 0.000 51.7000 0.120 41.0500
March......................... 38.2500 0.150 52.0000 0.030 45.9375 0.030 51.5000 0.030 50.3700 0.000
April......................... 42.6250 0.000 52.8750 0.000 45.2500 0.000 49.9375 0.000 52.2600 0.000
May........................... 44.0000 0.000 55.3750 0.000 41.5000 0.000 51.9375 0.015 48.5600 0.120
June.......................... 43.0625 0.160 55.8750 0.030 39.5625 0.030 51.6875 0.000 45.9500 0.000
July.......................... 49.7500 0.000 56.6250 0.000 39.2500 0.000 54.7500 0.000 44.6200 0.000
August........................ 43.9375 0.000 55.0000 0.000 41.1250 0.000 58.5821 0.120 39.6000 0.135
September..................... 39.0000 0.160 56.2500 0.030 35.6875 0.030 60.1875 0.000 40.5600 0.000
October....................... 42.7500 0.000 40.6250 0.000 38.5000 0.000 55.0000 0.000 40.5200 0.000
November...................... 43.6875 0.000 45.3125 0.000 42.1875 0.000 61.0000 0.120 44.4000 0.140
December...................... 42.0000 0.030 47.5000 0.030 35.4375 0.030 61.0000 0.000 42.6500 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.135
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Pharmacia on , 2002 was
$ . During the period reflected in the above table, Pharmacia split its
common stock 2-for-1 on June 6, 1996. The data appearing in the above table have
been adjusted to reflect this split.
46
PROTEIN DESIGN LABS, INC.
Protein Design Labs, Inc. engages in the development of humanized
monoclonal antibodies for the prevention and treatment of disease. Protein
Design Labs has licensed certain rights to its first humanized antibody product
to Hoffmann-LaRoche Inc. and its affiliates (Roche), which markets it for the
prevention of kidney transplant rejection, and is testing a product for the
treatment of autoimmune disease. In addition, Protein Design Labs has several
other humanized antibodies in clinical development for autoimmune and
inflammatory conditions, asthma and cancer.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
---------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ------ ------- ----- ------- ----- ------- ----- ------- ----- -------
January...................... 8.7500 0.000 9.3438 0.000 5.4688 0.000 20.4063 0.000 36.9688 0.000 22.2600
February..................... 9.3750 0.000 10.7500 0.000 4.1250 0.000 62.5469 0.000 31.3125 0.000 15.8700
March........................ 7.5000 0.000 9.8125 0.000 3.7656 0.000 19.8750 0.000 22.2500 0.000
April........................ 6.2813 0.000 8.0000 0.000 3.8594 0.000 25.3750 0.000 32.1250 0.000
May.......................... 7.9063 0.000 6.2813 0.000 4.9063 0.000 26.6563 0.000 37.1050 0.000
June......................... 7.1250 0.000 6.0234 0.000 5.5469 0.000 41.2383 0.000 43.3800 0.000
July......................... 7.0313 0.000 4.7188 0.000 6.6406 0.000 30.2969 0.000 27.8500 0.000
August....................... 8.9063 0.000 4.2500 0.000 6.6563 0.000 38.0000 0.000 29.3950 0.000
September.................... 9.6875 0.000 6.0000 0.000 9.0313 0.000 60.2500 0.000 23.6150 0.000
October...................... 12.4688 0.000 6.0000 0.000 10.0156 0.000 67.5391 0.000 33.0100 0.000
November..................... 10.5000 0.000 5.5000 0.000 10.0000 0.000 38.6250 0.000 37.6900 0.000
December..................... 10.0000 0.000 5.7813 0.000 17.5000 0.000 43.4375 0.000 32.8000 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January...................... 0.000
February..................... 0.000
March........................
April........................
May..........................
June.........................
July.........................
August.......................
September....................
October......................
November.....................
December.....................
</Table>
The closing price of the common stock of Protein Design Labs on ,
2002 was $ . During the period reflected in the above table, Protein
Design Labs split its common stock 2-for-1 on August 22, 2000 and October 9,
2001. The data appearing in the above table have been adjusted to reflect each
of these splits. Protein Design Labs has never paid dividends on its common
stock.
SCHERING AKTIENGESELLSCHAFT
Schering Aktiengesellschaft is a global research-based company engaged in
the discovery, development, manufacture, marketing and sale of pharmaceutical
products. Schering operates nine research and development centers in Europe, the
United States and Japan, produces products in over 20 facilities located in
Europe, the United States, Latin America and Asia, and markets and sells its
products in over 100 countries worldwide. Schering's product portfolio is
comprised of products in fertility control and
hormone therapy, therapeutics for selected disabling and life-threatening
conditions, diagnostic and
radiopharmaceuticals, and dermatology for the treatment of severe skin
disorders. Shares of Schering
also trade on the Frankfurt Stock Exchange.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January * * * * * * * * 52.6000 0.000 55.7800
February * * * * * * * * 51.3500 0.000 59.7000
March * * * * * * * * 48.5000 0.000
April * * * * * * * * 50.2000 0.000
May * * * * * * * * 52.1800 0.655
June * * * * * * * * 52.1500 0.000
July * * * * * * * * 54.1100 0.000
August * * * * * * * * 52.1500 0.000
September * * * * * * * * 49.5000 0.000
October * * * * * * 55.9375 0.000 51.2500 0.000
November * * * * * * 55.0625 0.000 53.7500 0.000
December * * * * * * 56.9375 0.000 52.9900 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January 0.000
February 0.000
March
April
May
June
July
August
September
October
November
December
</Table>
The closing price of the American depositary shares of Schering on
, 2002 was $ .
47
SHIRE PHARMACEUTICALS GROUP PLC
Shire Pharmaceuticals Group PLC is an international specialty
pharmaceutical company with a strategic focus on four therapeutic areas: central
nervous system disorders, metabolic diseases, oncology and gastroenterology.
Shire operates and manages its business in three geographic areas -- the United
States, Europe and the rest of the world. On December 11, 2000, Shire announced
that it had entered into an agreement to merge with BioChem Pharma Inc. Shares
of Shire Pharmaceuticals also trade on the London International Stock Exchange.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January......................... * * * * 21.1250 0.000 40.6875 0.000 56.6875 0.000 34.9000
February........................ * * * * 20.5000 0.000 48.0000 0.000 53.4375 0.000 23.7800
March........................... * * 21.4375 0.000 22.8125 0.000 51.2500 0.000 43.7500 0.000
April........................... * * 22.5000 0.000 21.6250 0.000 40.2500 0.000 49.9000 0.000
May............................. * * 19.5000 0.000 23.7500 0.000 43.6250 0.000 49.5900 0.000
June............................ * * 21.3750 0.000 26.0000 0.000 51.8750 0.000 55.5000 0.000
July............................ * * 24.0000 0.000 25.3750 0.000 54.7500 0.000 50.1400 0.000
August.......................... * * 18.7500 0.000 25.0000 0.000 56.5000 0.000 43.4200 0.000
September....................... * * 21.8750 0.000 28.8125 0.000 51.6250 0.000 40.3000 0.000
October......................... * * 21.7500 0.000 31.7500 0.000 62.8750 0.000 44.7000 0.000
November........................ * * 22.0000 0.000 30.6875 0.000 45.6250 0.000 35.900 0.000
December........................ * * 20.2500 0.000 29.1250 0.000 46.0625 0.000 36.6000 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January......................... 0.000
February........................ 0.000
March...........................
April...........................
May.............................
June............................
July............................
August..........................
September.......................
October.........................
November........................
December........................
</Table>
The closing price of the common stock of Shire Pharmaceuticals on ,
2002 was $ . Shire Pharmaceuticals has never paid dividends on its common
stock.
STRYKER CORPORATION
Stryker Corporation and its subsidiaries develop, manufacture and market
specialty surgical and medical products, including orthopaedic implants, bone
cement, trauma systems used in bone repair, powered surgical instruments,
endoscopic systems, craniomaxillofacial fixation devices, specialty surgical
equipment used in neurosurgery and patient care and handling equipment for the
global market and provide outpatient physical and occupational rehabilitative
services in the United States. Stryker has developed the bone growth factor
osteogenic protein-1 ("OP-1"), which is in the final state of the marketing
authorization process in Europe and Australia for the use of OP-1 for the
treatment of specific nonunion fractures of long bones.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 14.5000 0.050 18.4688 0.055 23.1875 0.060 31.6250 0.065 45.2000 0.080 58.7400
February...................... 14.5000 0.000 20.4688 0.000 23.5625 0.000 29.2500 0.000 56.1500 0.000 61.5000
March......................... 12.4375 0.000 23.4375 0.000 25.2188 0.000 34.8750 0.000 52.2500 0.000
April......................... 16.4375 0.000 22.5000 0.000 30.5938 0.000 35.9688 0.000 59.2900 0.000
May........................... 17.4375 0.000 20.3750 0.000 29.7500 0.000 37.8125 0.000 57.4500 0.000
June.......................... 17.4375 0.000 19.1875 0.000 30.0625 0.000 43.7500 0.000 54.8500 0.000
July.......................... 19.5000 0.000 21.7188 0.000 30.5000 0.000 42.9375 0.000 59.9800 0.000
August........................ 19.9688 0.000 16.0625 0.000 28.8125 0.000 44.8125 0.000 54.8300 0.000
September..................... 21.8438 0.000 17.2500 0.000 25.5625 0.000 42.9375 0.000 52.9000 0.000
October....................... 18.5938 0.000 20.9688 0.000 30.8750 0.000 47.1250 0.000 56.2400 0.000
November...................... 19.6875 0.000 21.1250 0.000 28.4688 0.000 53.3125 0.000 54.9100 0.000
December...................... 18.6250 0.000 27.5313 0.000 34.8125 0.000 50.5900 0.000 58.3700 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.100
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Stryker on , 2002 was
$ . During the period reflected in the above table, Stryker split its common
stock 2-for-1 on each of June 11, 1996 and May 15, 2000. The data appearing in
the above table have been adjusted to reflect each of these splits.
48
TENET HEALTHCARE CORPORATION
Tenet Healthcare Corporation is an investor-owned health care services
company in the United States, owning or operating 111 general hospitals with
27,277 licensed beds and related healthcare facilities serving urban and rural
communities in 17 states, and holding investments in other healthcare companies.
The related health care facilities included a small number of rehabilitation
hospitals, specialty hospitals, long-term care facilities, a psychiatric
facility and many medical office buildings located on the same campus as, or
nearby, its general hospitals, physician practices and various ancillary health
care businesses, including outpatient surgery centers, home health care
agencies, occupational and rural health care clinics and health maintenance
organizations.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 26.7500 0.000 34.5000 0.000 20.9375 0.000 22.7500 0.000 43.6200 0.000 63.7900
February...................... 27.1250 0.000 37.3125 0.000 19.6875 0.000 17.5000 0.000 46.1300 0.000 57.7500
March......................... 24.5000 0.000 36.3125 0.000 18.9375 0.000 23.0000 0.010 44.0000 0.000
April......................... 26.0000 0.000 37.4375 0.000 23.6250 0.000 25.5000 0.000 44.6400 0.000
May........................... 27.5000 0.000 35.0000 0.000 24.5000 0.000 25.6250 0.000 45.4900 0.000
June.......................... 29.5000 0.000 31.2500 0.000 18.5625 0.000 27.0000 0.000 51.6000 0.000
July.......................... 29.9375 0.000 29.9375 0.000 17.9375 0.000 30.4375 0.000 55.5100 0.000
August........................ 27.2500 0.000 25.6250 0.000 17.4375 0.000 30.8906 0.000 55.4200 0.000
September..................... 29.1250 0.000 28.7500 0.000 17.5625 0.000 36.4375 0.000 59.6500 0.000
October....................... 30.5625 0.000 27.9375 0.000 19.4375 0.000 39.3125 0.000 57.5200 0.000
November...................... 31.6875 0.000 29.5625 0.000 21.5938 0.000 42.5625 0.000 60.0000 0.000
December...................... 33.1250 0.000 26.2500 0.000 23.5000 0.000 44.4375 0.000 58.7200 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Tenet on , 2002 was
$ .
TEVA PHARMACEUTICAL INDUSTRIES LTD.
Teva Pharmaceutical Industries Ltd. is a global pharmaceutical company
producing drugs in all major treatment categories. Teva is a generic drug
company and is in the U.S. generic market. Teva has successfully utilized its
production and research capabilities to establish a global pharmaceutical
business focused on the growing demand for generic drugs and on the
opportunities for proprietary branded products for specific niche categories.
Teva's active pharmaceutical ingredients business facilitates Teva's entry into
new drug markets and offers a cost effective source of raw materials for its own
pharmaceutical production. Shares of Teva also trade on the Tel-Aviv Stock
Exchange.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 27.3750 0.000 22.9688 0.000 21.7188 0.000 32.7188 0.000 53.8750 0.000 62.0000
February...................... 30.9063 0.000 21.0000 0.000 20.2188 0.000 43.1250 0.000 63.7500 0.000 57.0300
March......................... 27.7500 0.044 21.3750 0.032 23.7188 0.028 37.3125 0.084 54.6250 0.000
April......................... 25.3750 0.000 21.3750 0.000 22.8750 0.000 44.0000 0.000 54.4500 0.048
May........................... 30.0000 0.000 20.5000 0.000 24.5625 0.000 53.8750 0.000 57.7600 0.000
June.......................... 32.3750 0.044 17.5938 0.032 24.5000 0.027 55.4375 0.041 62.3000 0.049
July.......................... 28.0313 0.000 17.3125 0.000 23.1875 0.000 60.7500 0.000 71.9500 0.000
August........................ 26.1875 0.000 17.9063 0.000 23.5313 0.000 60.6250 0.000 71.1000 0.000
September..................... 27.8750 0.042 18.9375 0.029 25.1563 0.026 73.1875 0.042 60.4500 0.050
October....................... 23.3750 0.000 19.7188 0.000 24.1875 0.000 69.1250 0.000 61.8000 0.000
November...................... 24.7500 0.000 21.7500 0.000 27.4375 0.026 65.7500 0.000 58.5000 0.000
December...................... 23.6563 0.042 20.3438 0.027 35.8438 0.000 73.2500 0.041 61.6300 0.053
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the American depositary shares of Teva Pharmaceutical
Industries on , 2002 was $ . During the period reflected in the
above table, Teva split its common stock 2-for-1 on March 2, 2000. The data
appearing in the above table have been adjusted to reflect this split.
49
TRIGON HEALTHCARE, INC.
Trigon Healthcare, Inc. is a managed health care company in Virginia,
serving over 2.0 million members primarily through statewide and regional
provider networks. Trigon's membership represents approximately 28% of the
Virginia population and 34% of the Virginia population in those areas where
Trigon has the exclusive right to use the Blue Cross and Blue Shield service
marks and tradenames. Trigon divides its business into four segments -- health
insurance, government programs, investments and other health-related business
(including disease management programs, third-party administration for medical
and workers compensation, health promotions and similar products).
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 17.7500 0.000 24.8125 0.000 31.9375 0.000 30.4375 0.000 57.2900 0.000 73.5300
February...................... 17.8750 0.000 31.0000 0.000 35.0000 0.000 31.9375 0.000 60.1900 0.000 71.7000
March......................... 17.6250 0.000 30.0625 0.000 34.2500 0.000 35.7500 0.000 51.5000 0.000
April......................... 19.0000 0.000 30.3750 0.000 31.7500 0.000 35.9375 0.000 60.2100 0.000
May........................... 19.5000 0.000 34.0000 0.000 38.1250 0.000 49.9688 0.000 56.9900 0.000
June.......................... 24.2500 0.000 36.1875 0.000 36.3750 0.000 51.5625 0.000 64.8500 0.000
July.......................... 23.8125 0.000 31.3125 0.000 34.8760 0.000 53.0000 0.000 68.4800 0.000
August........................ 23.8750 0.000 27.6250 0.000 36.3125 0.000 51.6260 0.000 64.7500 0.000
September..................... 24.8125 0.000 31.0000 0.000 29.2500 0.000 52.5625 0.000 65.5000 0.000
October....................... 24.5000 0.000 37.5000 0.000 28.3750 0.000 71.6875 0.000 61.3900 0.000
November...................... 25.6250 0.000 37.0625 0.000 29.4375 0.000 71.6875 0.000 64.6500 0.000
December...................... 26.1250 0.000 37.3125 0.000 29.5000 0.000 77.8125 0.000 69.4500 0.000
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Trigon on , 2002 was
$ . Trigon has never paid dividends on its common stock.
WYETH
Wyeth is currently engaged in the discovery, development, manufacture,
distribution and sale of a diversified line of products in two primary
businesses: Pharmaceuticals and Consumer Health Care. Pharmaceuticals include
branded and generic human ethical pharmaceuticals, biologicals, nutritionals,
and animal biologicals and pharmaceuticals. Consumer Health Care products
include analgesics, cough, cold and allergy remedies, nutritional supplements,
herbal products, and hemorrhoidal, antacid, asthma and other relief items sold
over-the-counter.
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
--------------- --------------- --------------- --------------- --------------- -------
CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING DIVI- CLOSING
PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE DENDS PRICE
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- -------
January....................... 31.6875 0.000 47.7188 0.000 58.6875 0.000 47.0625 0.000 59.1000 0.000 64.6600
February...................... 32.0000 0.000 46.8750 0.000 59.5000 0.000 43.5000 0.000 61.7700 0.000 63.5500
March......................... 30.0000 0.205 47.6875 0.215 65.2500 0.225 53.7500 0.230 58.7500 0.230
April......................... 33.0625 0.000 46.5625 0.000 61.0000 0.000 56.2500 0.000 57.7500 0.000
May........................... 38.0000 0.000 48.3125 0.000 57.6250 0.000 53.8750 0.000 63.3000 0.000
June.......................... 38.2500 0.205 51.7500 0.215 57.3750 0.225 58.7500 0.230 58.7500 0.230
July.......................... 41.2188 0.000 51.5000 0.000 51.0000 0.000 53.0625 0.000 60.3100 0.000
August........................ 36.0000 0.000 50.1250 0.000 41.5000 0.000 54.2071 0.000 56.0000 0.000
September..................... 36.5000 0.205 52.6250 0.215 41.5000 0.225 56.4375 0.230 58.2500 0.230
October....................... 37.0625 0.000 48.9375 0.000 52.2500 0.000 63.5000 0.000 55.8300 0.000
November...................... 34.9063 0.000 53.3750 0.000 52.0000 0.000 60.1250 0.000 60.1000 0.000
December...................... 38.2500 0.215 56.3750 0.225 39.2500 0.230 63.5500 0.230 61.3600 0.230
<Caption>
2002
-----
DIVI-
DENDS
-----
January....................... 0.000
February...................... 0.000
March.........................
April.........................
May...........................
June..........................
July..........................
August........................
September.....................
October.......................
November......................
December......................
</Table>
The closing price of the common stock of Wyeth on , 2002 was
$ . During the period reflected in the above table, Wyeth split its
common stock 2-for-1 on each of May 7, 1996 and May 6, 1998. The data appearing
in the above table has been adjusted to reflect each of these splits.
50
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of U.S. federal income tax consequences material
to the purchase, ownership and disposition of Healthcare SECTORS. This summary
does not purport to be a comprehensive description of all of the tax
consequences that may be relevant to the decision to purchase Healthcare SECTORS
by any particular investor, including tax consequences that arise from rules of
general application to all taxpayers or to certain classes of taxpayers or that
are generally assumed to be known by investors. This summary addresses the tax
consequences only to a person that is (i) an individual citizen or resident of
the United States, (ii) a corporation organized in or under the laws of the
United States or any state thereof or the District of Columbia or (iii)
otherwise subject to U.S. federal income taxation on a net income basis in
respect of the Healthcare SECTORS (a "U.S. Holder"). This summary also does not
address the tax consequences to (i) persons that are not U.S. Holders, (ii)
persons that may be subject to special treatment under U.S. federal income tax
law, such as banks, insurance companies, thrift institutions, regulated
investment companies, real estate investment trusts, tax-exempt organizations,
traders in securities that elect to mark to market and dealers in securities or
currencies, (iii) persons that will hold Healthcare SECTORS as part of a
position in a "straddle" or as part of a "hedging", "conversion" or other
integrated investment transaction for federal income tax purposes, (iv) persons
whose functional currency is not the U.S. dollar or (v) persons that do not hold
Healthcare SECTORS as capital assets.
This summary does not address tax consequences specific to the underlying
securities except where otherwise stated. Before acquiring Healthcare SECTORS,
prospective investors should consult other publicly available sources of
information concerning the tax treatment of the underlying securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations promulgated thereunder, and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis.
The U.S. federal income tax discussion set forth herein may not be
applicable depending upon a person's particular situation. Potential investors
should consult their tax advisors with respect to the tax consequences to them
of the purchase, ownership and disposition of the Healthcare SECTORS, including
the tax consequences under state, local, foreign, and other tax laws and the
possible effects of changes in U.S. federal or other tax laws.
CLASSIFICATION OF THE TRUST
In the opinion of Cleary, Gottlieb, Steen & Hamilton, special tax counsel
to the Healthcare SECTORS Trust, assuming full compliance with the terms of the
Trust Agreement (including the Standard Terms for Depositary Trust Agreements)
and the Depositary Trust Receipts, the Trust will be classified as a grantor
trust or as a custodial arrangement for U.S. federal income tax purposes and not
as an association taxable as a corporation.
Accordingly, for U.S. federal income tax purposes, each U.S. Holder of
Healthcare SECTORS generally will be considered the owner of an undivided
interest in the underlying securities held by the Healthcare SECTORS Trust. Each
U.S. Holder will be treated as directly owning its proportionate share of the
underlying stock and consequently will take into account income and expenses
(including fees) with respect to its proportionate share of that stock.
TAXATION OF DISTRIBUTIONS ON THE UNDERLYING STOCKS
In general, the gross amount of any distribution by a corporation of cash
or property (other than certain distributions, if any, of shares distributed pro
rata to all shareholders) to its shareholders with respect to stock is
includable in income as dividend income to the extent such distribution is paid
out of the current or accumulated earnings and profits of the issuer as
determined under U.S. federal income tax
51
principles. To the extent, if any, that the amount of any distribution exceeds
current and accumulated earnings and profits, it will be treated first as a
tax-free return of the shareholder's adjusted tax basis in the stock and
thereafter as capital gain.
If there is a taxable distribution on an underlying security, a U.S. Holder
will recognize income with respect to the distribution at the time that the
distribution is received by the trustee, not at the time that the U.S. Holder
receives the cash distribution from the trustee. A U.S. Holder must recognize
income with respect to the entire amount of the distribution even if all or part
of the distribution is retained by the trustee to pay its quarterly custodian
fee.
U.S. Holders of Healthcare SECTORS will be eligible for dividends received
deductions (in the case of corporate U.S. Holders) or foreign tax credits (in
the case of distributions on American Depositary Shares) with respect to taxable
cash distributions on the underlying securities to the extent otherwise
permitted under applicable law (see also -- "Special Considerations With Respect
To Underlying American Depositary Shares", below).
TAXATION OF SALE OR OTHER DISPOSITION OF HEALTHCARE SECTORS
A U.S. Holder generally will recognize gain or loss on the sale or other
taxable disposition of Healthcare SECTORS equal to the difference between the
amount realized on each of the underlying securities on such sale or other
taxable disposition and the U.S. Holder's adjusted tax basis in each of the
underlying securities. Gain or loss recognized by a U.S. Holder on the sale or
other taxable disposition of Healthcare SECTORS will be capital gain or loss and
generally will be long-term capital gain or loss if the Healthcare SECTORS have
been held more than one year. Under the "wash sale" rules, a deduction for a
loss on the sale of Healthcare SECTORS may be disallowed in part or in whole if
the U.S. Holder purchases shares of the underlying securities or enters into
certain other transactions with respect to such underlying securities within 30
days of the sale.
A U.S. Holder's gain or loss will be computed separately with respect to
each underlying security by subtracting its basis in that underlying security
from the amount realized with respect to that underlying security. When a U.S.
Holder sells or makes any other taxable disposition of Healthcare SECTORS, it
will determine the amount realized with respect to each underlying security by
allocating the sales price among the underlying securities based on the relative
fair market values of the underlying securities at the moment of sale.
A U.S. Holder's initial tax basis in each of the underlying securities will
be determined by allocating the purchase price for the Healthcare SECTORS among
all of the shares of the underlying securities based on the relative fair market
values of the underlying securities at the time of purchase. The American Stock
Exchange has indicated that it intends to dedicate space on its web site
(www.amex.com) to provide quotes for the Healthcare SECTORS, including a
day-by-day breakdown of the daily closing values of the underlying securities.
If the U.S. Holder acquired the Healthcare SECTORS in the initial offering, its
initial tax basis in each of the underlying securities will be determined by
allocating the purchase price for the Healthcare SECTORS among all of the shares
of the underlying securities based on the relative fair market values of the
underlying securities at the closing market price on , 2002.
DEPOSIT AND WITHDRAWAL OR DISTRIBUTION OF STOCKS
The deposit of underlying securities in the Healthcare SECTORS Trust in
exchange for Healthcare SECTORS will not be a taxable event. The holding period
with respect to the deposited underlying security will include the period that
the U.S. Holder held the underlying security before deposit. The basis of the
underlying security deposited will be equal such U.S. Holder's tax basis in the
underlying security immediately before the underlying security was deposited.
Similarly, the withdrawal of any underlying securities from the Healthcare
SECTORS Trust upon the surrender of Healthcare SECTORS, or their distribution by
the Healthcare SECTORS Trust upon the occurrence of a reconstitution event or a
termination event, will not be a taxable event. A U.S. Holder
52
will, however, recognize gain upon the receipt of cash in lieu of a fractional
share of underlying security equal to the amount of cash so received less such
U.S. Holder's tax basis in such fractional share. The holding period with
respect to the withdrawn or distributed underlying security will include the
period that the U.S. Holder held the underlying security through the Healthcare
SECTORS Trust. The basis of the withdrawn or distributed underlying security in
the hands of the U.S. Holder will be equal to such U.S. Holder's tax basis in
the underlying security immediately before withdrawal or distribution, less the
basis allocated to any fractional share for which cash is received.
SPECIAL CONSIDERATIONS WITH RESPECT TO UNDERLYING AMERICAN DEPOSITARY SHARES
Certain special considerations may apply to a U.S. Holder if the Healthcare
SECTORS Trust holds American Depositary Shares. For example, if a foreign issuer
pays a dividend in a currency other than U.S. dollars, a U.S. Holder may be
required to recognize ordinary income or loss as a result of currency
fluctuations between the date on which the dividend is paid and the date on
which the dividend amount is converted into U.S. dollars. In addition, subject
to conditions and limitations, a U.S. Holder may be entitled to a foreign tax
credit or a deduction with regards to any foreign withholding tax on dividends.
Special U.S. federal income tax rules apply to U.S. persons owning shares of a
"passive foreign investment company" (a "PFIC"). Prospective investors should
consult publicly available sources of information and their own tax advisers as
to the consequences of owning stock of foreign issuers through American
Depositary Shares.
TAX TREATMENT OF FEES
The underwriting fee will be included in the initial public offering price
on , 2002 and consequently will be treated as part of the cost of the
underlying securities. Similarly, the brokerage fee incurred in purchasing
Healthcare SECTORS also will be treated as part of the cost of the underlying
securities. Accordingly, a U.S. Holder includes these fees in its tax basis in
the underlying securities. A U.S. Holder will allocate the underwriting fee and
brokerage fee among the underlying securities either using a fair market value
allocation or pro rata based on the number of shares of each underlying security
represented by each Healthcare SECTOR. The brokerage fee incurred in selling
Healthcare SECTORS will reduce the amount realized with respect to the
underlying securities.
A U.S. Holder will be required to include in its income the full amount of
dividends paid on the underlying securities, even though the depositary trust
agreement provides that the custodian fees will be deducted directly from any
dividends paid. These custodian fees will be treated as an expense incurred in
connection with a U.S. Holder's investment in the underlying securities and may
be deductible. If a U.S. 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.
INFORMATION REPORTING
Generally, income on the Healthcare SECTORS will be reported to U.S.
Holders on Forms 1099, which forms should be mailed to U.S. Holders of
Healthcare SECTORS by January 31 following each calendar year.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended, imposes
certain requirements on "employee benefit plans", as defined in Section 3(3) of
ERISA, subject to ERISA, including entities such as collective investment funds
and separate accounts whose underlying assets include the assets of such plans
(collectively, "ERISA Plans") and on those persons who are fiduciaries with
respect to ERISA Plans. Section 406 of ERISA and Section 4975 of the Internal
Revenue Code of 1986 prohibit certain transactions involving the assets of an
ERISA Plan or a plan, such as a Keogh plan or an individual retirement account,
that are not subject to ERISA but which are subject to Section 4975 of the
Internal Revenue Code (together with ERISA Plans, "Plans") and certain persons,
referred to as "parties in
53
interest" under ERISA or "disqualified persons" under the Internal Revenue Code,
having certain relationships to such Plans, unless a statutory or administrative
exception or exemption is applicable to the transaction.
The U.S. Department of Labor has promulgated a regulation, 29 C.F.R.
Section 2510.3-101, describing what constitutes the assets of a Plan with
respect to the Plan's investment in an entity for purposes of certain provisions
of ERISA, including the fiduciary responsibility provisions of Title I of ERISA
and Section 4975 of the Internal Revenue Code. Under this regulation, if a Plan
invests in a beneficial interest in a trust or a profits interest in a
partnership, the Plan's assets include both the equity interest and an undivided
interest in each of the entity's underlying assets, unless the interest is a
"publicly-offered security" or certain other conditions are satisfied. It is
anticipated that the Healthcare SECTORS should constitute "publicly-offered
securities" within the meaning of the regulation, and that, consequently,
transactions engaged in by the Healthcare SECTORS Trust, including the forward
contract, should not be subject to the provisions of ERISA or Section 4975 of
the Internal Revenue Code.
Any Plan fiduciary which proposes to cause a Plan to purchase the
Healthcare SECTORS should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and Section 4975 of the Internal Revenue Code to such an investment, and to
confirm that such investment will not constitute or result in a prohibited
transaction or any other violation of an applicable requirement of ERISA or the
Internal Revenue Code for which an exemption is not available. Governmental
plans and certain church plans not subject to the fiduciary responsibility
provisions of ERISA or the provisions of Section 4975 of the Internal Revenue
Code but subject to state or other federal laws that are substantially similar
to the foregoing provisions of ERISA and the Internal Revenue Code should also
consult with their counsel before purchasing any Healthcare SECTORS.
By its purchase of any Healthcare SECTORS, each initial purchaser and
subsequent transferee will be deemed to have represented and warranted on each
day from the date on which the purchaser or transferee acquires the Healthcare
SECTORS through and including the date on which the purchaser or transferee
disposes of its interest in the Healthcare SECTORS, either that (A) it is not an
ERISA Plan, or other Plan, or a governmental plan which is subject to any
federal, state, or local law that is substantially similar to the provisions of
Section 406 of ERISA or Section 4975 of the Internal Revenue Code or (B) its
purchase, holding and disposition of such Healthcare SECTORS will not result in
a prohibited transaction under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code or any other violation of an applicable requirement of
ERISA or the Internal Revenue Code (or in the case of a governmental plan, any
substantially similar federal, state or local law) for which exemption is not
available, all of the conditions of which have been satisfied.
UNDERWRITING
In accordance with the depositary trust agreement, the Healthcare SECTORS
Trust will issue Healthcare SECTORS to Salomon Smith Barney Inc. and Salomon
Smith Barney Inc. will deposit the underlying securities to receive Healthcare
SECTORS. Salomon Smith Barney Inc. proposes to offer the Healthcare SECTORS to
the public at the offering price set forth on the cover of this prospectus. We
expect the trust to deliver the initial distribution of Healthcare SECTORS
against deposit of the underlying securities in New York, New York on
, 2002.
Salomon Smith Barney Inc. proposes to offer the Healthcare SECTORS directly
to the public at the public offering price set forth on the cover page of this
prospectus which includes an underwriting fee of 2% and some of the Healthcare
SECTORS to certain dealers at the public offering price less a concession not in
excess of $ per Healthcare SECTORS. Salomon Smith Barney Inc. may allow,
and such dealers may allow, a concession not in excess of $ per Healthcare
SECTORS on sales to certain other dealers. After the initial offering, the
public offering price and the other selling terms may be changed. The Healthcare
SECTORS Trust will continue to issue Healthcare SECTORS, in connection with
deposits of underlying securities. You will be responsible for an issuance fee
of up to $10.00 for each
54
round lot of 100 Healthcare SECTORS and any sales commissions associated with
your purchase of the underlying securities that is charged by your broker,
whether it be Salomon Smith Barney Inc. or another broker.
The depositary trust agreement provides that Salomon Smith Barney Inc. will
indemnify the trustee against certain civil liabilities.
Prior to this offering, there has been no public market for the Healthcare
SECTORS. Consequently, the initial public offering price for the Healthcare
SECTORS will equal the sum of the closing market price of each underlying stock
on the date the Healthcare SECTORS are priced for initial sale to the public
multiplied by the share amount appearing in the table beginning on page 20 of
this prospectus, plus an underwriting fee. There can be no assurance, however,
that the prices at which the Healthcare SECTORS will sell in the public market
after this offering will not be lower than the price at which they are sold by
Salomon Smith Barney Inc. or that an active trading market in the Healthcare
SECTORS will develop and continue after this offering.
Salomon Smith Barney Inc. and the Healthcare SECTORS Trust will apply to
list the Healthcare SECTORS on the American Stock Exchange under the symbol
" ".
Salomon Smith Barney Inc. and its affiliates have from time to time
provided investment banking, general financing and business services, and other
financial services to certain of the issuers of the underlying securities and
expect in the future to provide these services, for which they have received and
will receive customary fees and commissions. They also may have served as
counterparty in other transactions with certain of the issuers of the underlying
securities.
The offer and sale of the Healthcare SECTORS will comply with the
requirements of Rule 2810 of the Conduct Rules of the National Association of
Securities Dealers, Inc. regarding direct participation programs. Accordingly,
sales will not be made to a discretionary account without the prior written
approval of a purchaser of Healthcare SECTORS.
This prospectus, as updated from time to time, may be used by Salomon Smith
Barney Inc. or its affiliates in connection with offers and sales of the
Healthcare SECTORS (subject to obtaining any necessary approval of the American
Stock Exchange for any such offers and sales) in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale. Any
such entity may act as principal or agent in such transactions. No such entity
is obligated to make a market in the Healthcare SECTORS and any such entity may
discontinue any market-making at any time without notice, at its sole
discretion. There can be no assurance of the liquidity or existence of a
secondary market for any Healthcare SECTORS.
LEGAL MATTERS
The validity of the Healthcare SECTORS, will be passed upon for Salomon
Smith Barney Inc., the initial depositor and the underwriter, by Cleary,
Gottlieb, Steen & Hamilton, New York, New York. Certain matters with respect to
U.S. federal income tax law will be passed upon for the Healthcare SECTORS Trust
by Cleary, Gottlieb, Steen & Hamilton as special U.S. tax counsel to the
Healthcare SECTORS Trust.
55
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SALOMON SMITH BARNEY INC.,
AS INITIAL DEPOSITOR
HEALTHCARE SECTORS(SM)
DEPOSITARY RECEIPTS
HEALTHCARE SECTORS(SM) TRUST
------------------------
PROSPECTUS
------------------------
SALOMON SMITH BARNEY
, 2002
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<Table>
SEC Registration Fee........................................ $17,379.44
NASD Filing Fee............................................. 30,500
Printing and Engraving Fees................................. 150,000
Legal Fees and Expenses..................................... 500,000
Miscellaneous............................................... 2,120.56
----------
Total............................................. $ 700,000
</Table>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 721 of the New York Business Corporation Law (the "B.C.L.")
provides that, in addition to the indemnification provided in Article 7 of the
B.C.L., a corporation may indemnify a director or officer by a provision
contained in its certificate of incorporation or by-laws or by a duly authorized
resolution of its shareholders or directors or by agreement provided that no
indemnification may be made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and material to the cause of action, or that
such director or officer personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
Section 722(a) of the B.C.L. provides that a corporation may indemnify a
director or officer made, or threatened to be made, a party to any action other
than a derivative action, whether civil or criminal, against judgments, fines,
amounts paid in settlement and reasonable expenses actually and necessarily
incurred as a result of such action, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, in criminal actions or proceedings,
in addition, has no reasonable cause to believe that his conduct was unlawful.
Section 722(c) of the B.C.L. provides that a corporation may indemnify a
director or officer, made or threatened to be made a party in a derivative
action, against amounts paid in settlement and reasonable expenses actually and
necessarily incurred by him in connection with the defense or settlement of such
action or in connection with an appeal therein if such director or officer
acted, in good faith, for a purpose which he reasonably believed to be in, or
not opposed to, the best interests of the corporation, except that no
indemnification will be available under Section 722(c) of the B.C.L. in respect
of a threatened or pending action which is settled or otherwise disposed of or
any claims as to which such director or officer shall have been adjudged liable
to the corporation, unless and only to the extent that the court in which the
action was brought, or, if no action was brought, any court of competent
jurisdiction, determines, upon application, that, in view of all the
circumstances of the case, the director or officer is fairly and reasonably
entitled to indemnity for such portion of the settlement amount and expenses as
the court deems proper.
Section 723 of the B.C.L. specifies the manner in which payment of
indemnification under Section 722 of the B.C.L. or indemnification permitted
under Section 721 of the B.C.L. may be authorized by the corporation. It
provides that indemnification by a corporation is mandatory in any case in which
the director or officer has been successful, whether on the merits or otherwise,
in defending an action. In the event that the director or officer has not been
successful or the action is settled, indemnification must be authorized by the
appropriate corporate action as set forth in Section 723. Section 724 of the
B.C.L. provides that, upon application by a director or officer, indemnification
may be awarded by a court to the extent authorized under Sections 722 and 723.
Section 725 of the B.C.L. contains certain other miscellaneous provisions
affecting the indemnification of directors and officers.
Section 726 of the B.C.L. authorizes the purchase and maintenance of
insurance to indemnify (1) a corporation for any obligation which it incurs as a
result of the indemnification of directors and officers under the above
sections, (2) directors and officers in instances in which they may be
indemnified by a
II-1
corporation under such sections, and (3) directors and officers in instances in
which they may not otherwise be indemnified by a corporation under such
sections, provided the contract of insurance covering such directors and
officers provides, in a manner acceptable to the New York State Superintendent
of Insurance, for a retention amount and for co-insurance.
Article Eleventh of the Restated Certificate of Incorporation of the
Company provides as follows:
To the fullest extent permitted under Section 402 of the BCL, no
director of the corporation shall be personally liable to the corporation
or its shareholders for damages for any breach of duty in such capacity,
provided that this provision shall not limit
- the liability of any director if a judgment or other final
adjudication adverse to him or her establishes that his or her acts
or omissions were in bad faith or involved intentional misconduct or
a knowing violation of law or that he or she personally gained in
fact a financial profit or other advantage to which he or she was
not legally entitled or that his or her acts violated Section 719 of
the BCL or
- the liability of any director for any act or omission prior to
adoption of a provision authorized by this paragraph.
Article Ten of the By-laws of the Company provides as follows:
The Corporation shall indemnify to the full extent authorized by law any
person made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer or employee of the
Corporation or any predecessor of the Corporation or serves or served any other
enterprise as a director, officer or employee at the request of the Corporation
or any predecessor of the Corporation, provided that this provision shall not
provide for indemnification to be made to or on behalf of any director or
officer if a judgment or other final adjudication adverse to the director or
officer establishes that his acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
ITEM 16. EXHIBITS.
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1 Form of Underwriting Agreement (included in Exhibit 4.1)
4.1 Form of Standard Terms for Depositary Trust Agreements
between Salomon Smith Barney Inc. and U.S. Bank Trust
National Association, as trustee, and included as exhibits
thereto, form of Depositary Trust Agreement and form of
SECTORS*
4.2 Form of Healthcare SECTORS (included in Exhibit 4.1)
5 Opinion of counsel as to certain corporate law matters**
8 Opinion of counsel as to certain federal income tax
matters***
</Table>
- ---------------
* Replaces Exhibit 4.1 previously filed.
**Previously filed.
***Replaces Exhibit 8 previously filed.
II-2
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of the prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to Item 14 of this registration statement, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement or amendment thereto to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of New
York, state of New York, on March 20, 2002.
SALOMON SMITH BARNEY INC.,
as initial depositor
By: /s/ MARK I. KLEINMAN
------------------------------------
Mark I. Kleinman
Executive Vice President and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons in the capacities with Salomon Smith Barney Inc. indicated below on
March 20, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ MICHAEL A. CARPENTER President (Principal Executive Officer)
- ---------------------------------------------------
Michael A. Carpenter
/s/ MARK I. KLEINMAN Executive Vice President and Treasurer (Principal
- --------------------------------------------------- Financial Officer)
Mark I. Kleinman
/s/ MICHAEL J. DAY Executive Vice President and Chief Accounting
- --------------------------------------------------- Officer
Michael J. Day
/s/ DERYCK C. MAUGHAN Director
- ---------------------------------------------------
Deryck C. Maughan
</Table>
II-4
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1 Form of Underwriting Agreement (included in Exhibit 4.1)
4.1 Form of Standard Terms for Depositary Trust Agreements
between Salomon Smith Barney Inc. and U.S. Bank Trust
National Association, as trustee, and included as exhibits
thereto, form of Depositary Trust Agreement and form of
SECTORS*
4.2 Form of Healthcare SECTORS (included in Exhibit 4.1)
5 Opinion of counsel as to certain corporate law matters**
8 Opinion of counsel as to certain federal income tax
matters***
</Table>
- ---------------
* Replaces Exhibit 4.1 previously filed.
**Previously filed.
***Replaces Exhibit 8 previously filed.