RULE NO. 424(b)(5)
REGISTRATION NO. 333-68747
P R O S P E C T U S
Merrill Lynch & Co., Inc.
Medium-Term Notes
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, our wholly-owned subsidiary, will use this prospectus when
making offers and sales related to market-making transactions in the following
securities.
o The final terms and conditions of each issue of o The notes bear interest at fixed or floating rates
notes are specified in the applicable pricing or may not bear any interest. If the notes bear
supplement. interest at a floating rate, the floating rate is
based on one or more indices or formulas plus or
o The notes are senior unsecured debt securities of minus a fixed amount or multiplied by a factor.
ML&Co.
o Whether the notes are redeemable or repayable
o The notes have stated maturities of nine months or before their maturity and whether they are
more from the date they were originally issued. subject to mandatory redemption, redemption at
the option of ML&Co. or repayment at the option
o We will pay amounts due on the notes in U.S. of the holder of the notes is specified in the
dollars or any other consideration described in the applicable pricing supplement.
applicable pricing supplement.
Investing in the notes involves certain risks.
See "Risk Factors" 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 notes 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.
TABLE OF CONTENTS
RISK FACTORS.......................................................... 3
MERRILL LYNCH & CO., INC.............................................. 4
RATIO OF EARNINGS TO FIXED CHARGES.................................... 5
DESCRIPTION OF NOTES.................................................. 6
OTHER TERMS........................................................... 13
WHERE YOU CAN FIND MORE INFORMATION................................... 17
INCORPORATION OF INFORMATION WE FILE WITH THE SEC..................... 17
PLAN OF DISTRIBUTION.................................................. 18
EXPERTS............................................................... 18
RISK FACTORS
Your investment in the notes will include certain risks. In
consultation with your own financial and legal advisers, you should carefully
consider, among other matters, the following discussion of risks before
deciding whether an investment in the notes is suitable for you. The notes are
not an appropriate investment for you if you are unsophisticated with respect
to the significant components of their relationship.
Structure Risks of Notes Indexed to Interest Rate, Currency or
Other Indices or Formulas
If you invest in notes indexed to one or more interest rate, currency
or other indices or formulas, there will be significant risks not associated
with a conventional fixed rate or floating rate debt security. These risks
include fluctuation of the indices or formulas and the possibility that you
will receive a lower, or no, amount of principal, premium or interest and at
different times than you expected. We have no control over a number of
matters, including economic, financial and political events, that are
important in determining the existence, magnitude and longevity of these risks
and their results. In addition, if an index or formula used to determine any
amounts payable in respect of the notes contains a multiplier or leverage
factor, the effect of any change in that index or formula will be magnified.
In recent years, values of certain indices and formulas have been volatile and
volatility in those and other indices and formulas may be expected in the
future. However, past experience is not necessarily indicative of what may
occur in the future.
Redemption May Adversely Affect Your Return on the Notes
If your notes are redeemable at our option or are otherwise subject
to mandatory redemption, we may, in the case of optional redemption, or must,
in the case of mandatory redemption, choose to redeem your notes at times when
prevailing interest rates may be relatively low. Accordingly, you generally
will not be able to reinvest the redemption proceeds in a comparable security
at an effective interest rate as high as that of the notes.
There May Be an Uncertain Trading Market for Your Notes; Many Factors
Affect the Trading Value of Your Notes
We cannot assure you a trading market for your notes will continue to
exist. Many factors independent of our creditworthiness may affect the trading
market of your notes. These factors include:
o the complexity and volatility of the index or formula applicable to
the notes,
o the method of calculating the principal, premium and interest in
respect of the notes,
o the time remaining to the maturity of the notes,
o the outstanding amount of the notes,
o the redemption features of the notes,
o the amount of other securities linked to the index or formula
applicable to the notes, and
o the level, direction and volatility of market interest rates
generally.
In addition, because some notes were designed for specific investment
objectives or strategies, these notes will have a more limited trading market
and experience more price volatility. There may be a limited number of buyers
for these notes. This may affect the price you receive for these notes or your
ability to sell these notes at all. You should not purchase notes unless you
understand and know you can bear the related investment risks.
Our Credit Ratings May Not Reflect All Risks of an Investment in the Notes
Our credit ratings are an assessment of our ability to pay our
obligations. Consequently, real or anticipated changes in our credit ratings
will generally affect the market value of your notes. Our credit ratings,
however, may not reflect the potential impact of risks related to structure,
market or other factors discussed above on the value of your notes.
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
notes 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:
Year Ended Last Friday in December For the Three
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 NOTES
Terms of the Notes
"Pricing supplement", as used herein, means a prospectus supplement
relating to an individual issue of the notes, as filed with the SEC
The terms and conditions described below apply to each note unless
otherwise specified in the applicable pricing supplement.
Except as provided in the applicable pricing supplement, the notes
are denominated in U.S. dollars. If provided in the applicable pricing
supplement, notes may be denominated in a foreign currency or in units of two
or more currencies ("Multi-Currency Notes").
Except as provided in the applicable pricing supplement:
o the notes were issued only in fully registered form without
coupons;
o floating rate notes and Zero Coupon Notes, as defined, were
issued in denominations of $25,000 or any amount in excess of
$25,000 which is an integral multiple of $1,000; and
o fixed rate notes were issued in denominations of $1,000 or any
integral multiple in excess of $1,000.
Unless otherwise specified in the applicable pricing supplement:
o principal and interest, if any, is payable;
o the transfer of the notes is registrable, and
o the notes are exchangeable for notes bearing identical terms
and provisions,
at the office of the trustee in The City of New York designated for such
purpose, provided that ML&Co., at its option, may pay interest, other than
interest payable at maturity or on any date of redemption or repayment, by
check mailed to the address of the person entitled to receive payment as shown
on the security register. ML&Co. will pay the principal and interest payable
at maturity or the date of redemption or repayment on each note upon maturity,
redemption or repayment, as the case may be, in immediately available funds
against presentation of the note at the office of the trustee maintained for
that purpose.
Notwithstanding the preceding two sentences, ML&Co. may pay interest
on a note which bears interest at a floating rate at maturity or earlier
redemption or repayment by wire transfer of immediately available funds to a
designated account maintained in the United States upon:
(1) receipt of written notice by the trustee from the holder of the
applicable note not less than one Business Day before the due
date of the relevant principal payment; and
(2) presentation of the note at the corporate trust office of the
trustee in the Borough of Manhattan, The City of New York, or
at any other place as ML&Co. may designate.
A holder of not less than $1,000,000 aggregate principal amount of floating
rate notes may by written notice to the trustee at the corporate trust office
or at such other address as ML&Co. will give notice in writing not less than
15 days before an interest payment date, arrange to have the interest payable
on all notes held by that holder on the relevant interest payment date, and
all subsequent interest payment dates until written notice to the contrary is
given to the trustee, made by wire transfer of immediately available funds to
a designated account maintained in the United States.
Except as provided in the applicable pricing supplement, "Business
Day" means any day that is not a Saturday or Sunday and that, in The City of
New York, is neither a legal holiday nor a day on which banking institutions
are authorized or obligated by law or regulation to close.
Repayment at Option of Holder
If so indicated in an applicable pricing supplement, notes are
repayable by ML&Co. in whole or in part at the option of the holders of the
notes on their respective optional repayment dates specified in the applicable
pricing supplement. If no optional repayment date is indicated with respect to
a note, that note is not repayable at the option of the holder before
maturity. Any repayment in part will be in increments of $1,000 provided that
any remaining principal amount of the applicable note will be an authorized
denomination of the applicable note. The repurchase price for any note
repurchased is 100% of the principal amount to be repaid, together with
interest payable to the date of repayment.
Notwithstanding anything to the contrary in this prospectus, if
repayable at the option of the holder, a note is repayable only on an interest
payment date. If any optional repayment date specified with respect to a note
is not an interest payment date, whether because the payment date is not a
Business Day or otherwise, the applicable repayment date will, instead of
being the date specified, be the interest payment date nearest the specified
optional repayment date whether the applicable interest payment date precedes
or succeeds the specified optional repayment date. In the event that an equal
number of days separates a specified optional repayment date and the preceding
interest payment date, on the one hand, and the succeeding interest payment
date, on the other hand, the optional repayment date will be the succeeding
interest payment date.
In order for a note which is by its terms repayable at the option of
the holder to be repaid before maturity, ML&Co. must receive at the corporate
trust office of the trustee, or at any other address of which ML&Co. will from
time to time notify the holders of the notes, during the period from and
including the 20th Business Day preceding the applicable optional repayment
date up to and including the close of business on the 16th Business Day
preceding the applicable optional repayment date:
(1) the applicable note with the information under the caption
"option to elect repayment" duly completed, or
(2) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or
a trust company in the United States of America dated no later
than the 16th Business Day preceding the applicable optional
repayment date and setting forth the name of the holder of the
note, the principal amount of the note, the amount of the note
to be repaid, a statement that the option to elect repayment is
being exercised and a guarantee that the note with the
information required under the caption "option to elect
repayment" duly completed will be received at the
above-mentioned office of the trustee, not later than the 5th
Business Day after the date of the telegram, telex, facsimile
transmission or letter and note, duly completed, is received at
the office of the trustee by the 5th Business Day.
A holder's effective exercise of the repayment option will be
irrevocable. A holder of a note will not be permitted to transfer or exchange
that note or, in the event that a note is to be repaid in part, that portion
of the note to be repaid, after exercise of the repayment option. ML&Co. will
make all determinations with respect to all questions as to the validity,
eligibility, including time of receipt and acceptance of any note for
repayment. All such determinations will be final, binding and non-appealable.
ML&Co. has the right to offer for resale any note acquired by it pursuant to
the foregoing arrangements. Accordingly, ML&Co. may not satisfy the
indebtedness evidenced by any note repurchased by it by such repurchase.
Redemption at Option of ML&Co.
The notes do not have a sinking fund but are redeemable at the option
of ML&Co. if a redemption date is specified in the applicable notes and in the
applicable pricing supplement. If indicated in an applicable pricing
supplement, the notes are subject to redemption by ML&Co. on and after their
respective redemption dates specified in the applicable pricing supplement. On
and after the redemption date, if any, the related note is redeemable in whole
or in part at the option of ML&Co. on notice given not more than 60 nor less
than 30 days before the date of redemption in the case of fixed rate notes, or
on notice given not more than 30 nor less than 15 days before the date of
redemption in the case of floating rate notes. Any redemption in part will be
in increments of $1,000 provided that any remaining principal amount of the
applicable note will be an authorized denomination of the applicable note. The
redemption price is equal to 100% of the principal amount to be redeemed,
together with interest payable to the date of redemption. Notwithstanding the
above, however, floating rate notes, if redeemable at the option of ML&Co.,
are redeemable only on interest payment dates occurring on or after the
applicable redemption dates.
Interest Rate
Each note bears interest at the rate per annum, or pursuant to the
interest rate formula, stated in the applicable note and in the applicable
pricing supplement until the principal of the note is paid or made available
for payment. Interest is payable on each interest payment date and at maturity
or, if applicable, upon redemption or repayment. Interest is payable to the
person in whose name a note is registered at the close of business on the
regular record date next preceding each interest payment date; provided,
however, interest payable at maturity or, if applicable, upon redemption or
repayment will be payable to the person to whom principal will be payable.
Except as provided in the applicable pricing supplement, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, referred to in this prospectus as MLPF&S,
is the calculation agent with respect to floating rate notes.
Each floating rate note bears interest at rates determined by
reference to an interest rate formula, which may be adjusted by a Spread or
Spread Multiplier , each as defined below, unless otherwise specified in the
applicable note. A floating rate note may also have either or both of the
following:
o a maximum limitation, or ceiling, on the rate at which interest
which may accrue during any interest period; and
o a minimum limitation, or floor, on the rate at which interest
which may accrue during any interest period.
The applicable pricing supplement designates either a fixed rate of
interest per annum payable on the applicable note, in which case the note is a
fixed rate note, or one of the following base rates, as applicable to the
relevant floating rate note:
o the commercial paper index rate, in which case the note is
a Commercial Paper Index Rate Note,
o the federal funds rate, in which case the note is a
Federal Funds Rate Note,
o the prime rate, in which case the note is a Prime Rate
Note,
o the treasury index rate, in which case the note is a
Treasury Index Rate Note,
o LIBOR, in which case the note is a LIBOR Note, or
o such other interest rate formula as is set forth in the
applicable pricing supplement.
Except as specified in the applicable pricing supplement, floating
rate notes have daily, weekly, monthly, quarterly, semiannual or annual resets
of the rate of interest.
Fixed Rate Notes
Each fixed rate note bears interest at the rate per annum stated on
the face of the applicable note until the principal of the note is paid or
made available for payment. Except as provided in the applicable pricing
supplement, interest is payable semi-annually on May 15 and November 15 of
each year and at maturity, or on the date of redemption or repayment if a
fixed rate note is redeemed by ML&Co. or repaid at the holder's option prior
to maturity. Interest is computed on the basis of a 360-day year of twelve
30-day months. Interest is payable to the person in whose name a fixed rate
note is registered at the close of business on the May 1 or November 1 regular
record date next preceding the May 15 or November 15 interest payment date.
Interest rates are subject to change by ML&Co. from time to time, but no
change will affect any fixed rate note previously issued or as to which ML&Co.
has accepted an offer to purchase.
Any payment of principal or interest required to be made on an
interest payment date, at maturity or earlier redemption or repayment of a
fixed rate note which is not a Business Day need not be made on that day, but
may be made on the next succeeding Business Day with the same force and effect
as if made on the interest payment date, maturity date or date of redemption
or repayment, as the case may be. No interest will accrue with respect to the
payment for the period from and after the applicable interest payment date,
maturity date or date of redemption or repayment.
Floating Rate Notes
The applicable pricing supplement specifies:
o the base rate or other interest rate formula,
o the Spread, or Spread Multiplier, if any, and
o the maximum or minimum interest rate limitation, if any,
applicable to each floating rate note.
In addition, the pricing supplement specifies for each floating rate note the
following terms, if applicable: the initial interest rate, the interest
payment dates, the Index Maturity, Interest Reset Dates, optional repayment
dates, redemption date and any other variable term applicable to the note.
The interest rate on each floating rate note is calculated by
reference to the specified interest rate formula:
(1) plus or minus the number of basis points specified in the
applicable pricing supplement as being applicable to the
interest rate for the relevant floating rate note (the
"Spread"), if any, or
(2) multiplied by the percentage of the base rate applicable to the
interest rate for the applicable floating rate note (the
"Spread Multiplier"), if any.
"Index Maturity" means, the period to maturity of the instrument or
obligation on which the interest rate formula is based, as specified in the
applicable pricing supplement.
"Regular record date" with respect to floating rate notes means the
15th day, whether or not a Business Day, before the applicable interest
payment date.
The "calculation date", if applicable, with respect to any Interest
Determination Date as specified with respect to each base rate is the earlier
of:
o the tenth calendar day after the Interest Determination
Date or, if the tenth calendar day is not a Business Day,
the next succeeding Business Day, or
o the Business Day before the interest payment date on which
the accrued interest will be payable.
Except as otherwise provided herein with respect to LIBOR Notes or in
the applicable pricing supplement, if any Interest Reset Date for any floating
rate note would otherwise be a day that is not a Business Day, that Interest
Reset Date will be postponed to the next succeeding day that is a Business
Day.
Each floating rate note bears interest from the date of issue at the
rates determined as described below until the principal of the note is paid or
otherwise made available for payment. The rate of interest on a floating rate
note is reset each Interest Reset Date applicable to the note; provided,
however, that except in the case of floating rate notes which reset daily, the
interest rate in effect for the ten days immediately before maturity,
redemption or repayment, as the case may be, will be the interest rate in
effect on the tenth day preceding such maturity, redemption or repayment, as
the case may be. Except as otherwise provided herein or in the applicable
pricing supplement, the rate of interest determined on an Interest Reset Date
with respect to a floating rate note will be applicable on and after the
applicable Interest Reset Date to, but not including, the next succeeding
Interest Reset Date, or until the date of maturity or date of redemption or
repayment, as the case may be.
If an interest payment date with respect to any floating rate note
falls on a day that is not a Business Day with respect to the note, that
interest payment date will be the following day that is a Business Day, except
that in the case of a LIBOR Note, if such day falls in the next calendar
month, the interest payment date will be the preceding day that is a Business
Day. If the maturity date or date of redemption or repayment of any floating
rate note falls on a day that is not a Business Day, the payment of interest
and principal may be made on the next succeeding Business Day, and no interest
on that payment will accrue for the period from and after the maturity date or
the date of redemption or repayment.
Except as provided in the applicable pricing supplement, interest
payments on floating rate notes will be the amount of interest accrued from,
and including, the next preceding interest payment date in respect of which
interest has been paid to, but excluding, the interest payment date. With
respect to a floating rate note, accrued interest from the last date to which
interest has been paid is calculated by multiplying the principal amount of
the applicable floating rate note by an accrued interest factor. The accrued
interest factor is computed by adding the interest factors, calculated for
each day, from the last date to which interest has been paid, to the date for
which accrued interest is being calculated. The interest factor for each day
is computed by dividing the interest rate applicable to each day by 360, in
the case of Commercial Paper Index Rate Notes, Federal Funds Rate Notes, Prime
Rate Notes and LIBOR Notes, or by the actual number of days in the year, in
the case of Treasury Index Rate Notes.
All percentages resulting from any calculation on floating rate notes
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one- millionths of a percentage point rounded
upward. For example, 9.876545% or .09876545 would be rounded to 9.87655% or
.0987655. All dollar amounts used in or resulting from calculations on
floating rate notes will be rounded to the nearest cent with one-half cent
being rounded upward.
Upon the request of the holder of any floating rate note, the
calculation agent will provide the interest rate then in effect and, if
determined, the interest rate which will become effective as a result of a
determination made with respect to the most recent Interest Determination Date
with respect to the applicable note.
Commercial Paper Index Rate Notes
Commercial Paper Index Rate Notes bear interest at the interest
rates, calculated with reference to the Commercial Paper Index Rate and the
Spread or Spread Multiplier, if any, specified in the applicable pricing
supplement.
Unless otherwise indicated in the applicable pricing supplement,
"Commercial Paper Index Rate" means, with respect to any Interest
Determination Date relating to a Commercial Paper Index Rate Note, the Money
Market Yield calculated as described below of the rate on that date for
commercial paper having the Index Maturity specified in the applicable pricing
supplement as such rate is published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or
any successor publication of the Board of Governors of the Federal Reserve
System ("H.15(519)"), under the heading "Commercial Paper". In the event that
such rate is not published by 9:00 A.M. New York City time on the calculation
date pertaining to the applicable Interest Determination Date, then the
Commercial Paper Index Rate will be the Money Market Yield of the rate on that
Interest Determination Date for commercial paper having the Index Maturity as
published by the Federal Reserve Bank of New York in its daily statistical
release, "Composite 3:30 P.M. Quotations for U.S. Government Securities"
("Composite Quotations") under the heading "Commercial Paper". If by 3:00
P.M., New York City time, on the applicable calculation date such rate is not
yet published in either H.15(519) or Composite Quotations, the Commercial
Paper Index Rate for that Interest Determination Date will be calculated by
the calculation agent and will be the Money Market Yield of the arithmetic
mean of the offered rates of three leading dealers of commercial paper in The
City of New York selected by the calculation agent as of 11:00 A.M., New York
City time, on that Interest Determination Date for commercial paper having the
specified Index Maturity placed for an industrial issuer whose bond rating is
"AA" or the equivalent from a nationally recognized rating agency. If the
dealers selected by the calculation agent are not quoting as mentioned in the
preceding sentence, the Commercial Paper Index Rate will be the Commercial
Paper Index Rate in effect on such Interest Determination Date.
"Money Market Yield" means the yield calculated in accordance with
the following formula and expressed as a percentage:
( D X 360 )
Money Market Yield = (--------------) X 100
( 360-- (D X M))
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
The Interest Determination Date pertaining to an Interest Reset Date
on a Commercial Paper Index Rate Note is the Business Day before the Interest
Reset Date.
Federal Funds Rate Notes
Federal Funds Rate Notes bear interest at the interest rates,
calculated with reference to the Federal Funds Rate and the Spread, or Spread
Multiplier, if any, specified in the applicable pricing supplement.
Unless otherwise indicated in the applicable pricing supplement,
"Federal Funds Rate" means, with respect to any Interest Determination Date
relating to a Federal Funds Rate Note, the rate on that date for Federal Funds
as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates" ("H.15(519)") or any
successor publication under the heading "Federal Funds (Effective)" or, if not
so published by 9:00 A.M., New York City time, on the calculation date
pertaining to the applicable Interest Determination Date, the Federal Funds
Rate will be the interest rate on the Interest Determination Date as published
by the Federal Reserve Bank of New York in its daily statistical release,
"Composite 3:30 P.M. Quotations for U.S. Government Securities" ("Composite
Quotations") under the heading "Federal Funds/Effective Rate". If such rate is
not yet published by 9:00 A.M. on the calculation date pertaining to the
applicable Interest Determination Date, the Federal Funds Rate for the
applicable Interest Determination Date will be the rate on the applicable
Interest Determination Date made publicly available by the Federal Reserve
Bank of New York which is equivalent to the rate which appears in H.15(519)
under the heading "Federal Funds (Effective)". If the rate described in the
preceding sentence is not made publicly available by the Federal Reserve Bank
of New York by 9:00 A.M. on the calculation date, the Federal Funds Rate will
be the last Federal Funds Rate in effect before the applicable Interest
Determination Date.
The rate of interest on a Federal Funds Rate Note is reset on each
Interest Reset Date applicable to the note. Unless otherwise specified in the
applicable pricing supplement, with respect to Federal Funds Rate Notes, each
Business Day is an Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date on a Federal Funds Rate Note is the
Business Day before the applicable Interest Reset Date.
Prime Rate Notes
Prime Rate Notes bear interest at the interest rates, calculated with
reference to the Prime Rate and the Spread, or Spread Multiplier, if any,
specified in the applicable pricing supplement.
Unless otherwise indicated in the applicable pricing supplement,
"Prime Rate" means, with respect to any Interest Determination Date relating
to a Prime Rate Note, the arithmetic mean of the prime rates quoted on the
basis of the actual number of days in the year divided by a 360-day year as of
the close of business on the Interest Determination Date by three major money
center banks in The City of New York selected by the calculation agent. If
fewer than three quotations are provided, the Prime Rate will be calculated by
the calculation agent and will be determined as the arithmetic mean on the
basis of the prime rates quoted in The City of New York on the calculation
date by three substitute banks or trust companies organized and doing business
under the laws of the United States, or any State thereof, and unaffiliated
with ML&Co., having total equity capital of at least $500 million and being
subject to supervision or examination by a Federal or State authority,
selected by the calculation agent. If the substitute banks or trust companies
selected by the calculation agent are not quoting as mentioned in the
preceding sentence, the Prime Rate will be the Prime Rate in effect on such
Interest Determination Date relating to a Prime Rate Note.
The Interest Determination Date pertaining to an Interest Reset Date
on a Prime Rate Note is the Business Day before the applicable Interest Reset
Date.
LIBOR Notes
LIBOR Notes bear interest at the interest rates calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any, specified in
the applicable pricing supplement.
Unless otherwise indicated in the applicable pricing supplement,
LIBOR, with respect to any Interest Determination Date relating to a LIBOR
Note will equal the arithmetic mean as determined by the calculation agent of
the offered rates which appear as of 11:00 A.M., London time, on the Reuters
Screen LIBOR Page on the Reuter Monitor Money Rates Service for deposits in
United States dollars for the period of the Index Maturity specified in the
applicable pricing supplement commencing on the second day on which dealings
in deposits in United States dollars are transacted in the London interbank
market (a "London Banking Day") immediately following the applicable Interest
Determination Date; provided, however, that if fewer than two quotations
appear, the calculation agent will request the principal London office of four
major banks in the London interbank market selected by the calculation agent
to provide the calculation agent with a quotation of their offered rates at
approximately 11:00 A.M., London time, on the applicable Interest
Determination Date for deposits in United States dollars for the period of the
applicable Index Maturity and in a principal amount equal to an amount that is
representative for a single transaction in such market at such time commencing
on the second London Banking Day immediately following the applicable Interest
Determination Date. If at least two quotations are provided, LIBOR for the
applicable Interest Determination Date will equal the arithmetic mean of the
quotations. If fewer than two quotations are provided, LIBOR for the
applicable Interest Determination Date will equal the arithmetic mean of the
rates quoted by three major banks in The City of New York, as selected by the
calculation agent, at approximately 11:00 A.M., New York City time, on the
applicable Interest Determination Date for loans to leading European banks in
United States dollars for the period of the applicable Index Maturity and in a
principal amount equal to an amount that is representative for a single
transaction in such market at such time commencing on the second London
Banking Day following the Interest Determination Date. If the banks selected
by the calculation agent are not quoting as mentioned in the preceding
sentence, LIBOR for the applicable Interest Determination Date will be LIBOR
in effect on such Interest Determination Date.
The Interest Determination Date pertaining to an Interest Reset Date
on a LIBOR Note is the second London Banking Day next preceding the applicable
Interest Reset Date.
Treasury Index Rate Notes
Treasury Index Rate Notes bear interest at the interest rates,
calculated with reference to the Treasury Index Rate and the Spread or Spread
Multiplier, if any, specified in the applicable pricing supplement.
Unless otherwise indicated in the pricing supplement, "Treasury Index
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Index Rate Note, the per annum discount rate for direct obligations
of the United States with a maturity of thirteen weeks ("91-day Treasury
bills"), expressed as a bond equivalent on the basis of a year of 365 or 366
days, at the 91-day Treasury bill auction occurring on the applicable Interest
Determination Date as published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest Rates", or
any successor publication, under the heading "Treasury bills--auction average
(investment)" or if not published by 9:00 A.M. New York City time on the
calculation date as reported by the United States Department of the Treasury.
Treasury bills are usually sold at auction on Monday of each week unless that
day is a legal holiday in which case the auction is usually held on the
following Tuesday, except that the auction may be held on the preceding
Friday.
The day of each auction of 91-day Treasury bills, unless otherwise
specified in the pricing supplement, is an Interest Determination Date
provided that the results of the auction are published or reported, and each
Business Day following such an Interest Determination Date is a Treasury Index
Rate Note Interest Reset Date. The rate of interest applicable to Treasury
Index Rate Notes will therefore not be reset during any period in which
auctions are not held or the results of auctions are not so published or
reported.
Zero Coupon Notes
Notes which do not bear interest ("Zero Coupon Notes") were initially
offered at a substantial discount from their principal amount at maturity.
There are no periodic payments of interest. The calculation of the accrual of
Original Issue Discount, as defined below, in the period during which a Zero
Coupon Note remains outstanding, is on a semiannual bond equivalent basis
using a year composed of twelve 30-day months. Upon maturity, Original Issue
Discount will cease to accrue on a Zero Coupon Note.
Limitation of Claims in Bankruptcy: If a bankruptcy proceeding is
commenced in respect of ML&Co., the claim of the holder of a Zero Coupon Note
with respect to the principal amount thereof may, under Section 502(b)(2) of
Title 11 of the United States Code, be limited to the issue price of the Zero
Coupon Note plus that portion of the Original Issue Discount that is amortized
from the date of issue to the commencement of the proceeding.
OTHER TERMS
ML&Co. issued the notes as a series of securities under an Indenture,
dated as of April 1, 1983, as amended and restated (the "1983 Indenture"),
between ML&Co. and The Chase Manhattan Bank, as trustee. All of the securities
issued under the 1983 Indenture are referred to in this prospectus as the
"senior debt securities". A copy of the 1983 Indenture is filed as an exhibit
to the registration statement relating to the notes 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
definition 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 such terms as ML&Co. may establish under to the
provisions of the 1983 Indenture.
The 1983 Indenture and the notes 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 reopen a previously
issued series of senior debt securities 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, since
ML&Co. is a holding company, the right 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 Securities Exchange Act of
1934, as amended, and under rules of certain 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, MLPF&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 of 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 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 the 1983 Indenture
without the consent of each holder of each outstanding security
of each series of 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 notes 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 more
information on the public reference rooms and their copy charges. You may also
inspect our SEC reports and other information at the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
We have filed a registration statement on Form S-3 with the SEC
covering the notes. For further information on ML&Co. and the notes, 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; and
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 notes 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 notes and is to be used by MLPF&S when making offers and sales related
to market-making transactions in the notes.
MLPF&S may act as principal or agent in these market-making
transactions.
The distribution of the notes 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.