RULE NO. 424(b)(5)
REGISTRATION NO. 333-68747
P R O S P E C T U S
Merrill Lynch & Co., Inc.
Technology Market Index Target-Term Securities(R) due August 15, 2001
"MITTS(R) Securities"
$10 principal amount
This prospectus is to be used by Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, our wholly-owned subsidiary, when making
offers and sales related to market-making transactions in the MITTS Securities.
The MITTS Securities:
o 100% principal protection at maturity.
o No payments before the maturity date.
o Senior unsecured debt securities of Merrill Lynch & Co., Inc.
o Linked to the value of the Chicago Board of Options Exchange Technology
Index, as further described in this prospectus.
o The MITTS Securities are listed on the Chicago Board of Options Exchange
and the New York Stock Exchange under the symbol "TKM".
Payment at Maturity:
o On the maturity date, for each unit of the MITTS Securities you own, we
will pay you an amount equal to the sum of the principal amount of each
unit and an additional amount based on the percentage increase, if any, in
the value of the index, adjusted as described in this prospectus.
o At maturity you will receive no less than the principal amount of your
MITTS Securities and no more than $20.
Investing in the MITTS Securities involves risks.
See "Risk Factors" beginning on page 3.
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.
The sale price of the MITTS Securities will be the prevailing market
price at the time of sale.
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Merrill Lynch & Co.
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The date of this prospectus is June 24, 1999.
"MITTS" and "Market Index Target-Term Securities" are service marks of Merrill
Lynch & Co., Inc.
* The use and reference of the term "CBOE Technology Index" in this
prospectus has been consented to by the CBOE.
The "CBOE Technology Index" is a service mark of the CBOE.
Table of Contents
Page
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RISK FACTORS........................................................3
MERRILL LYNCH & CO., INC............................................6
RATIO OF EARNINGS TO FIXED CHARGES..................................7
DESCRIPTION OF SECURITIES...........................................8
THE INDEX..........................................................14
OTHER TERMS........................................................17
INCORPORATION OF INFORMATION WE FILE WITH THE SEC..................21
PLAN OF DISTRIBUTION...............................................22
EXPERTS............................................................22
RISK FACTORS
Your investment in the MITTS Securities will involve risks. You should
carefully consider the following discussion of risks before investing in the
MITTS Securities. In addition, you should reach an investment decision with
regard to the MITTS Securities only after consulting with your legal and tax
advisers and considering the suitability of the MITTS Securities in the light of
your particular circumstances.
You may not earn a return on your investment
You should be aware that at maturity we will pay you no more than $10
for each unit of the MITTS Securities you own if the average value of the index
over five trading days shortly before the maturity date is less than 189.48.
Your yield may be lower than the yield on a standard debt security of
comparable maturity
The amount we pay you at maturity may be less than the return you could
earn on other investments. Your yield may be less than the yield you would earn
if you bought a standard senior non-callable debt security of Merrill Lynch &
Co., Inc. with the same maturity date. Your investment may not reflect the full
opportunity cost to you when you take into account factors that affect the time
value of money.
Yield on the MITTS Securities is subject to a maximum amount
Because the amount, in addition to the principal amount of the MITTS
Securities, if any, we will pay you at maturity, will not exceed $10 per unit of
MITTS Securities, you will not benefit from index increases in excess of
approximately 125% of the closing index value on the date the MITTS Securities
were priced for initial sale to the public.
Your return will not reflect the return of owning the stocks included in the
index
The index does not reflect the payment of dividends on the stocks
underlying it and therefore the yield based on the index to the maturity of the
MITTS Securities will not produce the same yield as if you purchased the
underlying stocks and held them for a similar period.
There may be an uncertain trading market for the MITTS Securities
ML&Co. has listed the MITTS Securities on the Chicago Board of Options
Exchange and the NYSE under the trading symbol "TKM". You cannot assume that a
trading market will continue to exist for the MITTS Securities. If a trading
market in the MITTS Securities continues to exist, there can be no assurance
that there will be liquidity in the trading market. The continued existence of a
trading market for the MITTS Securities will depend on our financial
performance, and other factors such as the increase, if any, in the value of the
index.
If a limited trading market for the MITTS Securities exists, and you do
not wish to hold your investment until maturity, fewer buyers may want to
purchase your MITTS Securities. This may affect the price you receive if you
sell before maturity.
Many factors affect the trading value of the MITTS Securities; these factors
interrelate in complex ways and the effect of any one factor may offset or
magnify the effect of another factor
The trading value of the MITTS Securities is expected to depend
substantially on the extent of the appreciation, if any, of the index over
189.48. If, however, you sell your MITTS Securities prior to the maturity date
at a time when the index exceeds 189.48, the price you receive may be at a
substantial discount from the amount expected to be payable if the excess of the
index over 189.48 were to prevail until maturity of the MITTS Securities because
of the possible fluctuation of the index between the time of the sale and the
time that the MITTS Securities mature. Furthermore, the price at which you will
be able to sell the MITTS Securities prior to maturity may be at a discount,
which could be substantial, from the principal amount thereof, if, at that time,
the index is below, equal to, or not sufficiently above 189.48. The $20
limitation on payment at maturity of the MITTS Securities may adversely affect
the secondary market value of the MITTS Securities. A discount could also result
from rising interest rates.
The trading value of the MITTS Securities will be affected by factors
that interrelate in complex ways. It is important for you to understand that the
effect of one factor may offset the increase in the trading value of the MITTS
Securities caused by another factor and that the effect of one factor may
magnify the decrease in the trading value of the MITTS Securities caused by
another factor. For example, an increase in U.S. interest rates may offset some
or all of any increase in the trading value of the MITTS Securities attributable
to another factor, such as an increase in the value of the index. The following
paragraphs describe the expected impact on the trading value of the MITTS
Securities given a change in a specific factor, assuming all other conditions
remain constant.
Changes in the levels of U.S. interest rates are expected to affect the
trading value of the MITTS Securities. Because we will pay, at a minimum, the
principal amount per unit of MITTS Securities at maturity, we expect the trading
value of the MITTS Securities will likely be affected by changes in interest
rates. In general, we anticipate that if U.S. interest rates increase, the
trading value of the MITTS Securities is expected to decrease. Conversely, if
U.S. interest rates decrease, the trading value of the MITTS Securities is
expected to increase. Interest rates may also affect the U.S. economy, and, in
turn, the value of the Index. Rising interest rates may lower the value of the
index and, thus, may decrease the trading value of the MITTS Securities. Falling
interest rates may increase the value of the index and, thus, may increase the
trading value of the MITTS Securities.
Changes in the volatility of the index are expected to affect the
trading value of the MITTS Securities. If the volatility of the index increases,
we expect that the trading value of the MITTS Securities will increase. If the
volatility of the index decreases, we expect that the trading value of the MITTS
Securities will decrease.
As the time remaining to maturity of the MITTS Securities decreases,
the "time premium" associated with the MITTS Securities will decrease. We
believe that before maturity the MITTS Securities may trade at a value above
that which you may expect from the level of interest rates and the index. This
difference will reflect a "time premium" due to expectations concerning the
value of the index during the period prior to maturity of the MITTS Securities.
As the time remaining to maturity of the MITTS Securities decreases, however, we
expect this time premium to decrease, thus decreasing the trading value of the
MITTS Securities. In addition, the price at which you may be able to sell your
MITTS Securities prior to maturity may be at a discount, which may be
substantial, from the principal amount of the MITTS Securities if the value of
the index is below, equal to, or not sufficiently above 189.48.
Changes in dividend yields of the stocks included in the portfolio are
expected to affect the trading value of the MITTS Securities. If dividend rates
on the stocks included in the index increase, we expect the trading value of the
MITTS Securities to decrease. Conversely, if dividend rates on the stocks
included in the index decrease, we expect the value of the MITTS Securities to
increase. However, in general, rising U.S. corporate dividend rates may increase
the value of the index and, in turn, increase the trading value of the MITTS
Securities. Conversely, falling U.S. corporate dividend rates may decrease the
value of the index and, in turn, decrease the trading value of the MITTS
Securities.
The impact of the factors specified above, excluding the value of the
index, may offset, partially or in whole, any increase in the trading value of
the MITTS Securities that is attributable to an increase in the value of the
index. For example, an increase in U.S. interest rates may cause the MITTS
Securities to trade at a discount from their initial offering price, even if the
index has appreciated significantly. In addition, the impact of a given factor
may change depending on the prevailing value of the index relative to 189.48 and
on the time remaining to maturity. In general, assuming all relevant factors are
held constant, the effect on the trading value of the MITTS Securities of a
given change in interest rates, index volatility and/or dividend rates of stocks
comprising the index is expected to be less if it occurs later in the term of
the MITTS Securities than if it occurs earlier in the term of the MITTS
Securities. We expect that the effect on the trading value of the MITTS
Securities of a given appreciation of the index in excess of value of the MITTS
Securities to be greater if it occurs later in the term of the MITTS Securities
than if it occurs earlier in the term of the MITTS Securities, assuming all
other relevant factors are held constant.
Many factors affect the value of the index
Political, economic and other developments that affect the stocks
included in the index may adversely affect the value of the index and the value
of the MITTS Securities. Since the stocks included in the index are of companies
involved in various aspects of the high technology industry segment, factors
affecting this industry segment may affect the value of the index and therefore
the trading value of the MITTS Securities.
Amounts payable on the MITTS Securities may be limited by state law
New York State laws govern the indenture under which the MITTS
Securities are issued. New York has usury laws that limit the amount of interest
that can be charged and paid on loans, which includes debt securities like the
MITTS Securities. Under present New York law, the maximum rate of interest is
25% per annum on a simple interest basis. This limit may not apply to debt
securities in which $2,500,000 or more has been invested.
While we believe that New York law would be given effect by a state or
Federal court sitting outside of New York, many other states also have laws that
regulate the amount of interest chargeable to and payable by a borrower. We will
promise, for the benefit of the MITTS Securities holders, to the extent
permitted by law, not to voluntarily claim the benefits of any laws concerning
usurious rates of interest.
Potential Conflicts
Our wholly-owned subsidiary, Merrill Lynch, Pierce, Fenner and Smith,
or MLPF&S, or its affiliates may from time to time engage in transactions
involving the stocks underlying the index for their proprietary accounts and for
other accounts under their management, which may influence the value of the
stocks and therefore the value of the MITTS Securities. MLPF&S and its
affiliates will also be the counterparties to the hedge of ML&Co.'s obligations
under the MITTS Securities. Accordingly, in some circumstances, conflicts of
interest may arise between MLPF&S's responsibilities as calculation agent with
respect to the MITTS Securities and its obligations under its hedge and its
status as a subsidiary of ML&Co. In some circumstances, the duties of MLPF&S as
calculation agent could conflict with the interests of MLPF&S as an affiliate of
the issuer of the MITTS Securities, Merrill Lynch & Co., Inc., and with the
interests of the holders of the MITTS Securities.
MERRILL LYNCH & CO., INC.
We are a holding company that, through our U.S. and non-U.S.
subsidiaries and affiliates such as Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Merrill Lynch Government Securities Inc., Merrill Lynch Capital
Services, Inc., Merrill Lynch International, Merrill Lynch Capital Markets Bank
Ltd., Merrill Lynch Asset Management L.P. and Merrill Lynch Mercury Asset
Management, provides investment, financing, advisory, insurance, and related
products on a global basis, including:
o securities brokerage, trading and underwriting;
o investment banking, strategic services, including mergers and
acquisitions and other corporate finance advisory activities;
o asset management and other investment advisory and recordkeeping
services;
o trading and brokerage of swaps, options, forwards, futures and other
derivatives;
o securities clearance services;
o equity, debt and economic research;
o banking, trust and lending services, including mortgage lending and
related services; and
o insurance sales and underwriting services.
We provide these products and services to a wide array of clients,
including individual investors, small businesses, corporations, governments,
governmental agencies and financial institutions.
Our principal executive office is located at World Financial Center,
North Tower, 250 Vesey Street, New York, New York 10281; our telephone number is
(212) 449-1000.
If you want to find more information about us, please see the sections
entitled "Where You Can Find More Information" and "Incorporation of Information
We File with the SEC" in this prospectus.
In this prospectus, "ML&Co.", "we", "us" and "our" refer specifically
to Merrill Lynch & Co., Inc., the holding company. ML&Co. is the issuer of the
MITTS Securities described in this prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
In 1998, we acquired the outstanding shares of Midland Walwyn Inc., in
a transaction accounted for as a pooling-of-interests. The following information
for the fiscal years 1994 through 1997 has been restated as if the two entities
had always been combined.
The following table sets forth our historical ratios of earnings to
fixed charges for the periods indicated:
For the Three
Year Ended Last Friday in December Months Ended
1994 1995 1996 1997 1998 March 26, 1999
---- ---- ---- ---- ---- --------------
Ratio of earnings to fixed charges(a)......... 1.2 1.2 1.2 1.2 1.1 1.3
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(a) The effect of combining Midland Walwyn did not change the ratios
reported for the fiscal years 1994 through 1997.
For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income taxes
and fixed charges, excluding capitalized interest and preferred security
dividend requirements of subsidiaries. "Fixed charges" consist of interest
costs, the interest factor in rentals, amortization of debt issuance costs,
preferred security dividend requirements of subsidiaries, and capitalized
interest.
DESCRIPTION OF SECURITIES
On August 12, 1996, ML&Co. issued $25,000,000 aggregate principal
amount of Technology MITTS Securities due August 15, 2001. The MITTS Securities
were issued as a series of senior debt securities under the 1983 Indenture which
is more fully described in this prospectus.
The MITTS Securities will mature on August 15, 2001.
While at maturity a beneficial owner of a MITTS Security will receive
the principal amount of that MITTS Security plus the Supplemental Redemption
Amount described below, if any, there will be no other payment of interest,
periodic or otherwise. See "- Payment at Maturity" below.
The MITTS Securities are not subject to redemption by ML&Co. or at the
option of any beneficial owner before maturity. Upon the occurrence of an Event
of Default with respect to the MITTS Securities, beneficial owners of the MITTS
Securities may accelerate the maturity of the MITTS Securities, as described
under "- Events of Default and Acceleration" and "Other Terms - Events of
Default" in this prospectus.
The MITTS Securities were issued in denominations of whole units.
Payment at Maturity
At the maturity date, a beneficial owner of a MITTS Security will be
entitled to receive the principal amount of each unit plus the Supplemental
Redemption Amount, if any, all as provided below. If the Ending Index Value does
not exceed the Benchmark Index Value, a beneficial owner of a MITTS Security
will be entitled to receive only the principal amount of its MITTS Securities.
The "Supplemental Redemption Amount" for a MITTS Security will be
determined by the calculation agent and will equal:
Principal Amount X Ending Index Value--Benchmark Index Value
-----------------------------------------
Benchmark Index Value
provided, however, that in no event will the Supplemental Redemption Amount be
less than zero or more than $10 per $10 principal amount of MITTS Securities.
The "Benchmark Index Value" equals 189.48. The Benchmark Index Value
was determined on the date the MITTS Securities were priced for initial sale to
the public (the "Pricing Date") by multiplying the closing value of the CBOE
Technology Index (the "Index") on the Pricing Date by a factor equal to 112.5%.
The "Ending Index Value" will be determined by calculation agent and
will equal the average or arithmetic mean of the closing values of the Index
determined on each of the first five Calculation Days during the Calculation
Period. If there are fewer than five Calculation Days, then the Ending Index
Value will equal the average or arithmetic mean of the closing values of the
Index on those Calculation Days. If there is only one Calculation Day, then the
Ending Index Value will equal the closing value of the Index on that Calculation
Day. If no Calculation Days occur during the Calculation Period because of
Market Disruption Events, then the Ending Index Value will equal the closing
value of the Index determined on the last scheduled Index Business Day in the
Calculation Period, regardless of the occurrence of a Market Disruption Event on
that day.
The "Calculation Period" means the period from and including the
seventh scheduled Index Business Day before the maturity date to and including
the second scheduled Index Business Day before the maturity date.
"Calculation Day" means any Index Business Day during the Calculation
Period on which a Market Disruption Event has not occurred.
For purposes of determining the Ending Index Value, an "Index Business
Day" is a day on which the NYSE is open for trading and trading generally occurs
in the over-the-counter market for equity securities and the Index or any
Successor Index, as defined on page 10 below, is calculated and published.
All determinations made by the calculation agent shall be at the sole
discretion of the calculation agent and, absent a determination by the
calculation agent of a manifest error, shall be conclusive for all purposes and
binding on ML&Co. and beneficial owners of the MITTS Securities.
Hypothetical Returns
The following table illustrates, for a range of hypothetical Ending
Index Values,
o the total amount payable at maturity for each $10 principal amount of
MITTS Securities,
o the pretax annualized rate of return to beneficial owners of MITTS
Securities, and
o the pretax annualized rate of return of an investment in the
stocks underlying the Index, which includes an assumed aggregate
dividend yield of 0.20% per annum, as more fully described below.
Total Pretax Pretax Annualized
Percentage Change Amount Annualized Rate of Rate of Return of
Hypothetical Ending Over the Starting Payable at Return on the Stocks Underlying
Index Value Index Value Maturity MITTS Securities(1) the Index(1)(2)
84.22 -50% $ 10.00 0.00% -13.20%
101.06 -40% $ 10.00 0.00% -9.77%
117.90 -30% $ 10.00 0.00% -6.81%
134.74 -20% $ 10.00 0.00% -4.22%
151.59 -10% $ 10.00 0.00% -1.90%
168.43 (3) 0% $ 10.00 0.00% 0.20%
185.27 10% $ 10.00 0.00% 2.12%
202.12 20% $ 10.67 1.30% 3.88%
218.96 30% $ 11.56 2.92% 5.52%
235.80 40% $ 12.44 4.41% 7.05%
252.65 50% $ 13.33 5.82% 8.49%
269.49 60% $ 14.22 7.15% 9.84%
286.33 70% $ 15.11 8.41% 11.12%
303.17 80% $ 16.00 9.61% 12.33%
320.02 90% $ 16.89 10.74% 13.48%
336.86 100% $ 17.78 11.83% 14.58%
353.70 110% $ 18.67 12.86% 15.63%
370.55 120% $ 19.56 13.85% 16.64%
387.39 130% $ 20.00 14.33% 17.60%
404.23 140% $ 20.00 14.33% 18.53%
421.08 150% $ 20.00 14.33% 19.43%
(1) The annualized rates of return specified in the preceding table are
calculated on a semiannual bond equivalent basis.
(2) This rate of return assumes
(a) an investment of a fixed amount in the stocks underlying the Index with the
allocation of that amount reflecting the relative weights of the stocks in
the Index;
(b) a percentage change in the aggregate price of the stocks that equals the
percentage change in the Index from the closing value of the Index on the
Pricing Date to the relevant hypothetical Ending Index Value;
(c) a constant dividend yield of 0.20% per annum, paid quarterly from the date
of initial delivery of MITTS Securities, applied to the value of the Index
at the end of each quarter assuming the value increases or decreases
linearly from the closing value of the Index on the Pricing Date to the
applicable hypothetical Ending Index Value;
(d) no transaction fees or expenses;
(e) an investment term equal to the term of the MITTS Securities; and
(f) a final Index value equal to the Ending Index Value. The aggregate dividend
yield of the stocks underlying the Index as of August 7, 1996 was
approximately 0.20%.
(3) The closing value of the Index on the Pricing Date.
The above figures are for purposes of illustration only. The actual
Supplemental Redemption Amount received by investors and the resulting pretax
annualized rate of return will depend entirely on the actual Ending Index Value
determined by the calculation agent as provided in this prospectus.
Adjustments to the Index; Market Disruption Events
If at any time the method of calculating its Index, or its value, is
changed in any material respect, or if the Index is in any other way modified so
that the Index does not, in the opinion of the calculation agent, fairly
represent the value of the Index had the changes or modifications not been made,
then, from and after that time, the calculation agent shall, at the close of
business in New York, New York, on each date that the closing value with respect
to the Ending Index Value is to be calculated, make any adjustments as, in the
good faith judgment of the calculation agent, may be necessary in order to
arrive at a calculation of a value of a stock index comparable to the Index as
if the changes or modifications had not been made, and calculate the closing
value with reference to the Index, as adjusted. Accordingly, if the method of
calculating the Index is modified so that the value of the Index is a fraction
or a multiple of what it would have been if it had not been modified for
example, due to a split in the Index, then the calculation agent shall adjust
the Index in order to arrive at a value of the Index as if it had not been
modified for example, as if the split had not occurred.
"Market Disruption Event" means either of the following events, as
determined by the calculation agent:
(a) the suspension or material limitation on trading for more than two
hours of trading in 5 or more of the securities included in the Index, or
(b) the suspension or material limitation, in each case, for more than
two hours of trading, whether by reason of movements in price otherwise
exceeding levels permitted by the relevant exchange or otherwise, in option
contracts on the Index which are traded on the Chicago Board Options Exchange,
Inc.
For the purposes of clause (a) above, any limitations on trading during
significant market fluctuations under New York Stock Exchange Rule 80A, or any
applicable rule or regulation enacted or promulgated by the NYSE or any other
self regulatory organization or the SEC of similar scope as determined by the
calculation agent, will be considered "material".
For the purposes of this definition, a limitation on the hours in a
trading day and/or number of days of trading will not constitute a Market
Disruption Event if it results from an announced change in the regular business
hours of the relevant exchange.
Discontinuance of the Index
If the CBOE discontinues publication of the Index and the CBOE or
another entity publishes a successor or substitute index that the calculation
agent determines, in its sole discretion, to be comparable to the Index (a
"Successor Index"), then, upon the calculation agent's notification of the
determination to the trustee and ML&Co., the calculation agent will substitute
the Successor Index as calculated by the CBOE or any other entity for the Index
and calculate the Ending Index Value as described above under "Payment at
Maturity". Upon any selection by the calculation agent of a Successor Index,
ML&Co. shall cause notice to be given to holders of the MITTS Securities.
If the CBOE discontinues publication of the Index and a Successor Index
is not selected by the calculation agent or is no longer published on any of the
Calculation Days, the value to be substituted for the Index for any Calculation
Day used to calculate the Supplemental Redemption Amount at maturity will be a
value computed by the calculation agent for each Calculation Day in accordance
with the procedures last used to calculate the Index before any discontinuance.
If a Successor Index is selected or the calculation agent calculates a value as
a substitute for the Index as described below, the Successor Index or value
shall be substituted for the Index for all purposes, including for purposes of
determining whether a Market Disruption Event exists.
If the CBOE discontinues publication of the Index before the period
during which the calculation agent is to calculate the Supplemental Redemption
Amount and the calculation agent determines that no Successor Index is available
at that time, then on each Business Day until the earlier to occur of the
determination of the Ending Index Value and a determination by the calculation
agent that a Successor Index is available, the calculation agent shall determine
the value that would be used in computing the Supplemental Redemption Amount as
described in the preceding paragraph as if that day were a Calculation Day. The
calculation agent will cause notice of each value to be published not less often
than once each month in The Wall Street Journal or another newspaper of general
circulation, and arrange for information with respect to these values to be made
available by telephone. Despite these alternative arrangements, discontinuance
of the publication of the Index may adversely affect trading in the MITTS
Securities.
Events of Default and Acceleration
In case an Event of Default with respect to any MITTS Securities shall
have occurred and be continuing, the amount payable to a beneficial owner of a
Security upon any acceleration permitted by the MITTS Securities, with respect
to each $10 principal amount thereof, will be equal to the principal amount plus
an additional amount of contingent interest calculated as though the date of
early repayment were the maturity date of the MITTS Securities. See "Description
of Securities--Payment at Maturity" in this prospectus. If a bankruptcy
proceeding is commenced in respect of ML&Co., the claim of the beneficial owner
of a Security may be limited, under Section 502(b)(2) of Title 11 of the United
States Code, to the principal amount of the Security plus an additional amount
of contingent interest calculated as though the date of the commencement of the
proceeding were the maturity date of the MITTS Securities.
In case of default in payment at the maturity date of the MITTS
Securities, whether at their stated maturity or upon acceleration, from and
after the maturity date the MITTS Securities shall bear interest, payable upon
demand of the beneficial owners thereof, at the rate of 7.76%, per annum to the
extent that payment of any interest shall be legally enforceable, on the unpaid
amount due and payable on that date in accordance with the terms of the MITTS
Securities to the date payment of that amount has been made or duly provided
for.
Global Securities
Description of the Global Securities
Beneficial owners of the MITTS Securities may not receive physical
delivery of the MITTS Securities nor may they be entitled to have the MITTS
Securities registered in their names. The MITTS Securities currently are
represented by one or more fully registered global securities. Each global
security was deposited with, or on behalf of, The Depository Trust Company or
DTC (DTC, together with any successor, a "depositary"), as depositary,
registered in the name of Cede & Co. (DTC's partnership nominee). Unless and
until it is exchanged in whole or in part for MITTS Securities in definitive
form, no global security may be transferred except as a whole by the depositary
to a nominee of the depositary or by a nominee of the depositary to the
depositary or another nominee of the depositary or by the depositary or any
nominee to a successor of the depositary or a nominee of that successor.
So long as DTC, or its nominee, is a registered owner of a global
security, DTC or its nominee, as the case may be, will be considered the sole
owner or Holder of the MITTS Securities represented by a global security for all
purposes under the 1983 Indenture. Except as provided below, the beneficial
owners of the MITTS Securities represented by a global security will not be
entitled to have the MITTS Securities represented by the global security
registered in their names, will not receive or be entitled to receive physical
delivery of the MITTS Securities in definitive form and will not be considered
the owners or Holders under the 1983 Indenture, including for purposes of
receiving any reports delivered by ML&Co. or the trustee under the 1983
Indenture. Accordingly, each person owning a beneficial interest in a global
security must rely on the procedures of DTC and, if that person is not a
participant of DTC on the procedures of the participant through which that
person owns its interest, to exercise any rights of a Holder under the 1983
Indenture. ML&Co. understands that under existing industry practices, in the
event that ML&Co. requests any action of Holders or that an owner of a
beneficial interest in a global security desires to give or take any action
which a Holder is entitled to give or take under the 1983 Indenture, DTC would
authorize the participants holding the relevant beneficial interests to give or
take any action, and the participants would authorize beneficial owners owning
through those participants to give or take action or would otherwise act upon
the instructions of beneficial owners. Conveyance of notices and other
communications by DTC to participants, by participants to indirect participants
and by participants and indirect participants to beneficial owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
DTC Procedures
The following is based on information furnished by DTC:
DTC is the securities depositary for the MITTS Securities. The MITTS
Securities were issued as fully registered securities registered in the name of
Cede & Co., DTC's partnership nominee. One or more fully registered global
securities were issued for the MITTS Securities in the aggregate principal
amount of the MITTS Securities, and were deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, 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 to the provisions of Section 17A of the Securities and Exchange
Act of 1934, as amended. 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 of DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations. DTC is owned by a
number of its direct participants and by the NYSE, the AMEX and the National
Association of Securities Dealers, Inc. Access to the DTC's 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. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of MITTS Securities under DTC's system must be made by or
through direct participants, which will receive a credit for the MITTS
Securities on DTC's records. The ownership interest of each beneficial owner is
in turn to be recorded on the records of direct and indirect participants.
Beneficial owners will not receive written confirmation from DTC of their
purchase, but beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the direct participants or indirect participants through which
the beneficial owner entered into the transaction. Transfers of ownership
interests in the MITTS Securities are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners.
To facilitate subsequent transfers, all MITTS Securities deposited with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of MITTS Securities with DTC and their registration in the name of Cede
& Co. effect no change in beneficial ownership. DTC has no knowledge of the
actual beneficial owners of the MITTS Securities; DTC's records reflect only the
identity of the direct participants to whose accounts the MITTS Securities 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, by direct participants to indirect participants, and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
MITTS Securities. Under its usual procedures, DTC mails an omnibus proxy to
ML&Co. as soon as possible after the applicable record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those direct participants
identified in a listing attached to the omnibus proxy to whose accounts the
MITTS Securities are credited on the record date identified in a listing
attached to the omnibus proxy.
Principal, premium, if any, and/or interest, if any, payments on the
MITTS Securities will be made in immediately available funds to DTC. DTC's
practice is to credit direct participants' accounts on the applicable payment
date in accordance with their respective holdings shown on the depositary's
records unless DTC has reason to believe that it will not receive payment on
that 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 accounts of customers in bearer form or registered in "street
name", and will be the responsibility of the participant and not of DTC, the
trustee or ML&Co., subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment of principal, premium, if any, and/or
interest, if any, to DTC is the responsibility of ML&Co. or the trustee,
disbursement of payments to direct participants is the responsibility of DTC,
and disbursement of payments to the beneficial owners is the responsibility of
direct and indirect participants.
Exchange for Certificated Securities
If:
o the depositary is at any time unwilling or unable to continue as
depositary and a successor depositary
is not appointed by ML&Co. within 60 days,
o ML&Co. executes and delivers to the trustee a company order to the
effect that the global securities shall be exchangeable, or
o an Event of Default under the 1983 Indenture has occurred and is
continuing with respect to the MITTS Securities,
the global securities will be exchangeable for MITTS Securities in definitive
form of like tenor and of an equal aggregate principal amount, in denominations
of $10 and integral multiples of $10. The definitive MITTS Securities will be
registered in the name or names as the depositary shall instruct the trustee. It
is expected that instructions may be based upon directions received by the
depositary from participants with respect to ownership of beneficial interests
in the global securities.
In addition, ML&Co. may decide to discontinue use of the system of
book-entry transfers through the depositary. In that event, MITTS Securities in
definitive form will be printed and delivered.
The information in this section concerning DTC and DTC's system has
been obtained from sources that ML&Co. believes to be reliable, but ML&Co. takes
no responsibility for its accuracy.
Same-Day Settlement and Payment
ML&Co. will make all payments of principal and the Supplemental
Redemption Amount, if any, in immediately available funds so long as the MITTS
Securities are maintained in book-entry form.
THE INDEX
Unless otherwise stated, all information in this prospectus on the
Index is derived from the CBOE or other publicly available sources. This
information reflects the policies of the CBOE as stated in those sources and the
policies are subject to change by the CBOE.
The Index is a price-weighted stock index designed, developed,
maintained and operated by, and is a service mark of, the CBOE. The Index is
designed to provide an indication of the composite price performance of the
common stocks of companies involved in the U.S. high technology industry segment
for example, companies involved in the design and manufacture of high technology
components and systems.
The value of the Index is reported on the AMEX and Bloomberg under
the symbol "TXX" and on Reuters under the symbol ".TXX".
The Index consists of the stocks of 30 issuers involved in various
aspects of the high technology industry segment, including:
o computer services,
o telecommunications equipment,
o server software and hardware,
o design software,
o PC software and hardware,
o networking, peripherals, and
o semiconductors.
See the table below for a list of the stocks underlying the Index as of
August 5, 1996. The CBOE selects companies for inclusion in the Index with the
aim of representing the spectrum of companies that develop components and
systems that define high technology. Relevant criteria employed by the CBOE
include
o the viability of the particular company,
o the extent to which that company represents the high technology sector,
o the extent to which the market price of that company's common
stock is generally responsive to changes in the affairs of the
technology sector, and
o the market value and trading activity of the common stock of that
company.
Computation of the Index
The Index is a price-weighted index for example, the weight in the
Index of a stock underlying the Index (an "Underlying Stock") is based on its
price per share rather than the total market capitalization of the issuer of
that stock, and reflects changes in the prices of the Underlying Stocks relative
to the index base date, January 3, 1995, when the Index equaled 100.00.
Specifically, the Index value is calculated by
o totaling the prices of a single share of each of the Underlying Stocks
(the "Market Price Aggregate"), and
o dividing the Market Price Aggregate by the Index Divisor.
The Index Divisor was originally chosen to result in an Index value of 100 on
January 3, 1995, and is subject to periodic adjustments as set forth below. The
stock prices used to calculate the Index are those reported by a primary market
for the Underlying Stocks.
The CBOE adjusts the foregoing Index Divisor to negate the effects of
changes in the price of an Underlying Stock that are determined by the CBOE to
be arbitrary and not due to market fluctuations. These adjustments may result
from stock splits, consolidations and acquisitions, the grant to shareholders of
the right to purchase other securities of the issuer for example, spinoffs and
rights issuances. The CBOE may also adjust the Index Divisor because of the
substitution of an Underlying Security. The CBOE first recalculates the Market
Price Aggregate and then determines a new Index Divisor based on the following
formula:
Old Divisor X New Market Price Aggregate = New Divisor
--------------------------
Old Market Price Aggregate
The Index will be maintained by the CBOE. The Index is reviewed on
approximately a monthly basis by the CBOE staff. The CBOE may change the
composition of the Index at any time to reflect changes affecting the components
of the Index or the technology industry generally. If it becomes necessary to
remove a stock from the Index for example, because of a takeover or merger, the
CBOE will only add a stock having characteristics that will permit the Index to
remain within the maintenance criteria specified in CBOE Rules and within the
applicable rules of the Commission. These maintenance criteria currently
provide, among other things, that each component security must have
o a market capitalization of at least $75 million, except that
securities accounting for the bottom 10% of the weight of the
Index may have market capitalizations of at least $50 million, and
o trading volume of at least 500,000 shares in each of the last six
months, except that securities accounting for the bottom 10% of
the weight of the Index may have trading volumes of at least
400,000 shares in each of the last six months.
Additionally, as of the first trading day of each January and July, no
single security may account for over 25% of the weight of the Index and no five
securities may account for over 50% of the weight of the Index. Furthermore,
each component security must be a reported security as defined in Rule 11Aa3-1
of the Exchange Act. Finally, at least 90% of the weight of the Index and 80% of
the number of components in the Index must be eligible for standardized options
trading pursuant to CBOE Rules or, if currently listed for options trading, must
meet the applicable maintenance standards specified in CBOE Rules. The CBOE will
also take into account the capitalizations, liquidity, volatility, and name
recognition of any proposed replacement stock.
Absent prior approval of the SEC, the CBOE will not increase to more
than 40, or decrease to fewer than 20, the number of stocks in the Index.
Additionally, the CBOE will not make any change in the composition of the Index
that would cause fewer than 90% of the stocks by weight, or fewer than 80% of
the total number of stocks in the index, to qualify as stocks eligible for
equity options trading under CBOE rules.
The CBOE is under no obligation to continue the calculation and
dissemination of the Index and the method by which the Index is calculated and
the name "CBOE Technology Index" may be changed at the discretion of the CBOE.
The MITTS Securities are not sponsored, endorsed, sold or promoted by the CBOE.
No inference should be drawn from the information contained in this prospectus
that the CBOE makes any representation or warranty, implied or express, to
ML&Co., the beneficial owners of MITTS Securities or any member of the public
regarding the advisability of investing in securities generally or in the MITTS
Securities in particular or the ability of the Index to track general stock
market performance. The CBOE has no obligation to take the needs of ML&Co. or
the beneficial owners of MITTS Securities into consideration in determining,
composing or calculating the Index. The CBOE is not responsible for, and has not
participated in the determination of the timing of prices for or quantities of,
the MITTS Securities to be issued or in the determination or calculation of the
equation by which the Supplemental Redemption Amount is determined. The CBOE has
no obligation or liability in connection with the administration, marketing or
trading of the MITTS Securities.
The use of and reference to the Index in connection with the MITTS
Securities have been consented to by the CBOE.
Except in the limited circumstance described in this prospectus, none
of ML&Co., the trustee, the calculation agent or the underwriter has undertaken
independent diligence of the calculation, maintenance or publication of the
Index or any Successor Index. The CBOE disclaims all responsibility for any
inaccuracies in the data on which the Index is based and any mistakes or errors
or omissions in the calculation or dissemination of the Index and for the manner
in which the Index is used in determining the Supplemental Redemption Amount, if
any.
A potential investor should review the historical performance of the
Index. The historical performance of the Index should not be taken as an
indication of future performance, and no assurance can be given that the Index
will increase sufficiently to cause the beneficial owners of the MITTS
Securities to receive an amount in excess of the principal amount at the
maturity of the MITTS Securities.
OTHER TERMS
ML&Co. issued the MITTS Securities as a series of senior debt
securities under the 1983 Indenture, dated as of April 1, 1983, as amended and
restated, between ML&Co. and The Chase Manhattan Bank, as trustee. A copy of the
1983 Indenture is filed as an exhibit to the registration statement relating to
the MITTS Securities of which this prospectus is a part. The following summaries
of the material provisions of the 1983 Indenture are not complete and are
subject to, and qualified in their entirety by reference to, all provisions of
the 1983 Indenture, including the definitions of terms in the 1983 Indenture.
ML&Co. may issue series of senior debt securities from time to time
under the 1983 Indenture, without limitation as to aggregate principal amount,
in one or more series and upon terms as ML&Co. may establish under the
provisions of the 1983 Indenture.
The 1983 Indenture and the MITTS Securities are governed by and
construed in accordance with the laws of the State of New York.
ML&Co. may issue senior debt securities with terms different from those
of senior debt securities previously issued, and issue additional senior debt
securities of a previously issued series of senior debt securities.
The senior debt securities are unsecured and rank equally with all
other unsecured and unsubordinated indebtedness of ML&Co. However, because
ML&Co. is a holding company, the rights of ML&Co. and its creditors, including
the holders of senior debt securities, to participate in any distribution of the
assets of any subsidiary upon its liquidation or reorganization or otherwise are
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that a bankruptcy court may recognize claims of ML&Co. itself as a
creditor of the subsidiary. In addition, dividends, loans and advances from
certain subsidiaries, including MLPF&S, to ML&Co. are restricted by net capital
requirements under the Exchange Act, and under rules of exchanges and other
regulatory bodies.
Limitations Upon Liens
ML&Co. may not, and may not permit any majority-owned subsidiary to,
create, assume, incur or permit to exist any indebtedness for borrowed money
secured by a pledge, lien or other encumbrance, other than those liens
specifically permitted by the 1983 Indenture, on the Voting Stock owned directly
or indirectly by ML&Co. of any majority-owned subsidiary, other than a
majority-owned subsidiary which, at the time of the incurrence of the secured
indebtedness, has a net worth of less than $3,000,000, unless the outstanding
senior debt securities are secured equally and ratably with the secured
indebtedness.
"Voting Stock" is defined in the 1983 Indenture as the stock of the
class or classes having general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation provided that, for the purposes of the 1983 Indenture, stock that
carries only the right to vote conditionally on the occurrence of an event is
not considered voting stock whether or not the event has happened.
Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by,
MLPF&S
ML&Co. may not sell, transfer or otherwise dispose of any Voting Stock
of MLPF&S or permit MLPF&S to issue, sell or otherwise dispose of any of its
Voting Stock, unless, after giving effect to any such transaction, LPF&S remains
a Controlled Subsidiary.
"Controlled Subsidiary" is defined in the 1983 Indenture to mean a
corporation more than 80% of the outstanding shares of Voting Stock of which are
owned directly or indirectly by ML&Co.
In addition, ML&Co. may not permit MLPF&S to:
o merge or consolidate, unless the surviving company is a Controlled
subsidiary, or
o convey or transfer its properties and assets substantially as an
entirety, except to one or more Controlled Subsidiaries.
Merger and Consolidation
ML&Co. may consolidate or merge with or into any other corporation and
ML&Co. may sell, lease or convey all or substantially all of its assets to any
corporation, provided that:
o the resulting corporation, if other than ML&Co., is a corporation
organized and existing under the laws of the United States of
America or any U.S. state and assumes all of ML&Co.'s obligations
to:
o pay any amounts due and payable or deliverable with respect to all the
senior debt securities; and
o perform and observe all of ML&Co.'s obligations under the 1983
Indenture, and
o ML&Co. or the successor corporation, as the case may be, is not,
immediately after any consolidation or
merger, in default under the 1983 Indenture.
Modification and Waiver
ML&Co. and the trustee may modify and amend the 1983 Indenture with the
consent of holders of at least 66 2/3% in principal amount of each outstanding
series of senior debt securities affected. However, without the consent of each
holder of any outstanding senior debt security affected, no amendment or
modification to the 1983 Indenture may:
o change the stated maturity date of the principal of, or any
installment of interest or Additional Amounts payable on, any
senior debt security or any premium payable on redemption, or
change the redemption price;
o reduce the principal amount of, or the interest or Additional
Amounts payable on, any senior debt security or reduce the amount
of principal which could be declared due and payable before the
stated maturity date;
o change the place or currency of any payment of principal or any
premium, interest or Additional Amounts payable on any senior debt
security;
o impair the right to institute suit for the enforcement of any
payment on or with respect to any senior
debt security;
o reduce the percentage in principal amount of the outstanding
senior debt securities of any series, the consent of whose holders
is required to modify or amend the 1983 Indenture; or
o modify the foregoing requirements or reduce the percentage of
outstanding senior debt securities necessary to waive any past
default to less than a majority.
No modification or amendment of ML&Co.'s Subordinated Indenture or any
Subsequent Indenture for subordinated debt securities may adversely affect the
rights of any holder of ML&Co.'s senior indebtedness without the consent of each
holder affected. The holders of at least a majority in principal amount of
outstanding senior debt securities of any series may, with respect to that
series, waive past defaults under the 1983 Indenture and waive compliance by
ML&Co. with provisions in the 1983 Indenture, except as described under
"--Events of Default".
Events of Default
Each of the following will be Events of Default with respect to senior
debt securities of any series:
o default in the payment of any interest or Additional Amounts payable
when due and continuing for 30 days;
o default in the payment of any principal or premium when due;
o default in the deposit of any sinking fund payment, when due;
o default in the performance of any other obligation of ML&Co.
contained in the 1983 Indenture for the benefit of that series or
in the senior debt securities of that series, continuing for 60
days after written notice as provided in the 1983 Indenture;
o specified events in bankruptcy, insolvency or reorganization of
ML&Co.; and
o any other Event of Default provided with respect to senior debt
securities of that series which are not inconsistent with the 1983
Indenture.
If an Event of Default occurs and is continuing for any series of
senior debt securities, other than as a result of the bankruptcy, insolvency or
reorganization of ML&Co., the trustee or the holders of at least 25% in
principal amount of the outstanding senior debt securities of that series may
declare all amounts, or any lesser amount provided for in the senior debt
securities, due and payable or deliverable immediately. At any time after a
declaration of acceleration has been made with respect to senior debt securities
of any series but before the trustee has obtained a judgment or decree for
payment of money, the holders of a majority in principal amount of the
outstanding senior debt securities of that series may rescind any declaration of
acceleration and its consequences, if all payments due, other than those due as
a result of acceleration, have been made and all Events of Default have been
remedied or waived.
The holders of a majority in principal amount or aggregate issue price
of the outstanding senior debt securities of that series may waive any Event of
Default with respect to that series, except a default:
o in the payment of any amounts due and payable or deliverable under the
debt securities of that series; or
o in respect of an obligation or provision of the 1983 Indenture
which cannot be modified under the terms of that Indenture without
the consent of each holder of each outstanding security of each
series of senior debt securities affected.
The holders of a majority in principal amount of the outstanding senior
debt securities of a series may direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or exercising any trust
or power conferred on the trustee with respect to those senior debt securities,
provided that any direction shall not be in conflict with any rule of law or the
1983 Indenture. Before proceeding to exercise any right or power under the 1983
Indenture at the direction of the holders, the trustee shall be entitled to
receive from the holders reasonable security or indemnification against the
costs, expenses and liabilities which might be incurred by it in complying with
any direction.
The MITTS Securities and other series of senior debt securities issued
under the 1983 Indenture do not have the benefit of any cross-default provisions
with other indebtedness of ML&Co.
ML&Co. is required to furnish to the trustee annually a statement as
to the fulfillment by ML&Co. of all of its obligations under the 1983 Indenture.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC.
Our SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms. You may also inspect our SEC reports and other
information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement on Form S-3 with the SEC
covering the MITTS Securities and other securities. For further information on
ML&Co. and the MITTS Securities, you should refer to our registration statement
and its exhibits. This prospectus summarizes material provisions of contracts
and other documents that we refer you to. Because the prospectus may not contain
all the information that you may find important, you should review the full text
of these documents. We have included copies of these documents as exhibits to
our registration statement of which this prospectus is a part.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file
with them, which means:
o incorporated documents are considered part of the prospectus;
o we can disclose important information to you by referring you to
those documents; and
o information that we file with the SEC will automatically update
and supersede this incorporated information.
We incorporate by reference the documents listed below which were filed
with the SEC under the Exchange Act:
o annual report on Form 10-K for the year ended December 25, 1998;
o quarterly report on Form 10-Q for the period ended March 26, 1999; and
o current reports on Form 8-K dated December 28, 1998, January 19,
1999, February 17, 1999, February 18, 1999, February 22, 1999,
February 23, 1999, March 26, 1999, April 13, 1999, April 19, 1999,
May 26, 1999, May 28, 1999 and June 1, 1999.
We also incorporate by reference each of the following documents that
we will file with the SEC after the date of this prospectus until this offering
is completed:
o reports filed under Sections 13(a) and (c) of the Exchange Act;
o definitive proxy or information statements filed under Section 14
of the Exchange Act in connection with any subsequent
stockholders' meeting; and
o any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by
reference in this prospectus. We have not, and MLPF&S has not, authorized any
other person to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We are
not, and MLPF&S is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Mr. Lawrence
M. Egan, Jr., Corporate Secretary's Office, Merrill Lynch & Co., Inc., 100
Church Street, New York, New York 10080-6512, Telephone: (212) 602-8435.
PLAN OF DISTRIBUTION
This prospectus has been prepared in connection with secondary sales of
the MITTS Securities and is to be used by MLPF&S when making offers and sales
related to market-making transactions in the MITTS Securities.
MLPF&S may act as principal or agent in these market-making
transactions.
The MITTS Securities may be offered on the CBOE or NYSE or off the
exchanges in negotiated transactions or otherwise.
The distribution of the MITTS Securities will conform to the
requirements set forth in the applicable sections of Rule 2720 of the Conduct
Rules of the NASD.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference from the Annual
Report on Form 10-K of Merrill Lynch & Co., Inc. and subsidiaries have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports (which express an unqualified opinion and which report on the
consolidated financial statements includes an explanatory paragraph for the
change in accounting method for certain internal-use software development
costs), which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
With respect to unaudited interim financial information for the periods
included in the Quarterly Reports on Form 10-Q which are incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as stated
in their reports included in such Quarterly Reports on Form 10-Q and
incorporated by reference herein, they did not audit and they do not express an
opinion on such interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP is
not subject to the liability provisions of Section 11 of the Securities Act for
any such report on unaudited interim financial information because any such
report is not a "report" or a "part" of the Registration Statement prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the
Securities Act.