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RULE NO. 424(b)(3)
REGISTRATION NO. 33-49947
PROSPECTUS SUPPLEMENT
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(TO PROSPECTUS SUPPLEMENT DATED OCTOBER 4, 1993 AND PROSPECTUS DATED AUGUST 27,
1993)
MERRILL LYNCH & CO., INC.
MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
CONSTANT MATURITY TREASURY RATE INDEXED NOTES
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Principal Amount: $25 million Interest Reset Dates: Each Interest Payment
Original Issue Date: March 31, 1994 Date up to and including
Maturity Date: March 31, 2004 September 30, 2003
Redemption Date: Not Applicable Interest Rate Basis: Constant Maturity
Optional Repayment Treasury Rate
Dates: Not Applicable Index Maturity: Ten-year
Interest Payment Dates: Each March 31 and Spread Multiplier: 90%
September 30, Minimum Interest Rate: 5.00%
commencing September 30, 1994 Maximum Interest Rate: 8.00%
Initial Interest Rate: 5.50%
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DESCRIPTION OF THE NOTES
GENERAL
The Medium-Term Notes, Series B of Merrill Lynch & Co., Inc. (the
"Company"), offered hereby are "Constant Maturity Treasury Rate Indexed Notes"
and are referred to in this Prospectus Supplement as the "Notes". The Notes are
Regular Floating Rate Notes and certain provisions of the Notes are more fully
described in the accompanying Prospectus and Prospectus Supplement.
On February 10, 1994, the Company increased to $3,650,000,000 the aggregate
principal amount of Medium-Term Notes, Series B authorized to be issued pursuant
to the attached Prospectus Supplement and supplements related thereto. (Such
amount represents an increased authorization of $650,000,000).
This Prospectus Supplement relates to $25,000,000 aggregate principal
amount of Notes which the Company has agreed to sell to Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Underwriter"), and which the Underwriter has
agreed to purchase from the Company, at a price of 99.125% of the principal
amount thereof. The Underwriter has advised the Company that it proposes
initially to offer the Notes to the public at a public offering price equal to
100% of the principal amount thereof. After the initial public offering, such
public offering price may be changed.
The Notes will not be subject to redemption by the Company in whole or in
part prior to the Maturity Date.
INTEREST
The Notes will bear interest from and including March 31, 1994 to but
excluding the Maturity Date. Interest will be payable on the Interest Payment
Dates specified above. The interest rate will be reset on each Interest Reset
Date specified above to a per annum rate equal to the Constant Maturity Treasury
Rate multiplied by the Spread Multiplier (90%), as determined by Merrill Lynch
Capital Services, Inc. (the "Calculation Agent"), a subsidiary of the Company;
provided, however, that in no event will the per annum rate of interest be less
than 5.00% or greater than 8.00% for any interest period; and provided further,
however, that the per annum rate of interest payable prior to the initial
Interest Reset Date will equal 5.50% per annum. The "Interest Determination
Date" pertaining to an Interest Reset Date will be the second Business Day
preceding such Interest Reset Date.
Accrued interest on the Notes will be calculated by multiplying the face
amount of each Note by an accrued interest factor. Such accrued interest factor
will be computed by adding the interest factor calculated for each day
The date of this Prospectus Supplement is March 8, 1994.
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for which interest is being calculated. The interest factor for each such day
will be computed by dividing the interest rate applicable to such day by the
actual number of days during the applicable year.
"Constant Maturity Treasury Rate" means for any Interest Determination
Date:
(i) The Constant Maturity Treasury Rate will equal the rate which
appears on Telerate Page 7052, "WEEKLY AVG YIELDS ON TREASURY CONSTANT
MATURITIES", under the column corresponding to the Index Maturity specified
above and in the row opposite the date of the last Business Day of the week
prior to the Interest Determination Date appearing in the column entitled
"WEEK END", which appears as of 5:00 P.M., New York City time, on the
applicable Interest Determination Date. "Telerate Page 7052" means the
display designated as page 7052 on the Dow Jones Telerate Service (or such
page as may replace page 7052 on that service). The rate which appears on
Telerate Page 7052 under the column corresponding to the Index Maturity is
the rate described in paragraph (ii) below published in the most recent
H.15(519) (as defined below).
(ii) If the Constant Maturity Treasury Rate as described in clause
(i) is not available by 5:00 P.M., New York City time, on the applicable
Interest Determination Date, the Constant Maturity Treasury Rate will equal
the one-week average yield on United States Treasury securities at
"constant maturity", as published in the most recent H.15(519) in the
column entitled "Week Ending" for the date of the last Business Day of the
week prior to the Interest Determination Date and opposite the heading
"Treasury constant maturities" for the Index Maturity specified above.
(iii) If the most recent date appearing on Telerate Page 7052 under
the column entitled "WEEK END" described in clause (i) above is a date
other than the date of the last Business Day of the week prior to the
Interest Determination Date and if the most recent H.15(519) available on
the applicable Interest Determination Date as described in clause (ii)
above does not contain a heading for the date of the last Business Day of
the week prior to the Interest Determination Date under the column entitled
"Week Ending", the Constant Maturity Treasury Rate will be such United
States Treasury constant maturity rate (or other United States Treasury
rate) for the Index Maturity specified above for such Interest
Determination Date (a) as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department of
Treasury, and (b) that the Calculation Agent determines to be comparable to
the rate formerly published in H.15(519).
(iv) If the Constant Maturity Treasury Rate as described in clause
(iii) is not published on the Interest Determination Date, the Constant
Maturity Treasury Rate will be a yield to maturity for direct noncallable
fixed rate obligations of the United States ("Treasury Notes") most
recently issued with an original maturity of approximately the Index
Maturity specified above and an original issue date within the immediately
preceding year based on the yield (which yield is based on asked prices)
for such issue of Treasury Notes for such Interest Determination Date, as
published by the Federal Reserve Bank of New York in its daily statistical
release entitled "Composite 3:30 P.M. Quotations for U.S. Government
Securities" (or any successor or similar publication selected by the
Calculation Agent published by the Board of Governors of the Federal
Reserve System, the Federal Reserve Bank of New York or any other Federal
Reserve Bank or affiliated entity).
(v) If the Constant Maturity Treasury Rate as described in clause (iv) is
not published on the Interest Determination Date, the Constant Maturity
Treasury Rate will be calculated by the Calculation Agent and will be a
yield to a maturity (expressed as a bond equivalent and as a decimal
rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point with five one-millionths of a percentage point rounded up,
on the basis of a year of 365 or 366 days, as applicable, and applied on a
daily basis) based on the arithmetic mean of the secondary market bid
prices as of approximately 3:30 p.m., New York City Time, on such Interest
Determination Date of three primary United States government securities
dealers in The City of New York selected by the Calculation Agent (from
five such dealers and eliminating the
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highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest)) for
Treasury Notes with an original maturity of approximately the Index
Maturity specified above and an original issue date within the immediately
preceding year. If three or four (and not five) of such dealers are
quoting as described in this clause (iv), then the Constant Maturity
Treasury Rate will be based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of such quotations will be
eliminated.
(vi) If fewer than three dealers selected by the Calculation Agent are
quoting as described in clause (v), the Constant Maturity Treasury Rate
will be calculated by the Calculation Agent and will be a yield to maturity
(expressed as a bond equivalent and as a decimal rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point with five one-
millionths of a percentage point rounded up, on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) based on the
arithmetic mean of the secondary market bid prices as of approximately 3:30
p.m., New York City Time, on the applicable Interest Determination Date of
three leading primary United States government securities dealers in The
City of New York selected by the Calculation Agent (from five such dealers
and eliminating the highest quotation (or, in the event of equality, one of
the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)) for Treasury Notes with an original maturity of approximately
ten years and a remaining term to maturity closest to the Index Maturity
specified above. If three or four (and not five) of such dealers are
quoting as described in this clause (v), then the Constant Maturity
Treasury Rate will be based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of such quotations will be
eliminated.
(vii) If fewer than three dealers selected by the Calculation Agent are
quoting as described in clause (vi), the Constant Maturity Treasury Rate
will be the Constant Maturity Treasury Rate in effect on the preceding
Interest Reset Date (or, in the case of the initial Interest Determination
Date, the one-week average yield on United States Treasury securities at
"constant maturity" for the Index Maturity specified above, as published in
the most recent H.15(519)).
In the case of clause (vi), if two Treasury Notes with an original
maturity of approximately ten years have remaining terms to maturity
equally close to the Index Maturity specified above, the quotes for the
Treasury Note with the shorter remaining term to maturity will be used.
"H.15(519)" means the weekly statistical release designated as such,
published by the Board of Governors of the Federal Reserve System.
All other capitalized terms used but not defined herein will have the
meanings assigned to such terms in the accompanying Prospectus and Prospectus
Supplement.
CONSTANT MATURITY TREASURY RATE
GENERAL
U.S. Treasury securities, including those used to calculate the Constant
Maturity Treasury Rate, are direct obligations of the United States government
and carry the full faith and credit of the United States of America. The Notes,
however, are solely the obligation of the Company and are not backed by the full
faith and credit of the United States. If the Constant Maturity Treasury Rate
is determined using yields published in H.15(519) or as reported by the Federal
Reserve Bank of New York, the Constant Maturity Treasury Rate will be a one-week
average yield on 10-year United States Treasury securities at "constant
maturity" (the "Weekly Constant Maturity Treasury Rate"). Yields on Treasury
securities at "constant maturity" used to calculate the Weekly Constant Maturity
Treasury Rate are interpolated from the daily yield curve. This curve, which
relates the yield on a security to its time to maturity, is based upon the
market yields on actively traded Treasury securities in the over-the-counter
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market. The constant maturity yield values are derived from the yield curve at
fixed maturities. This method permits estimation of the yield for a ten year
maturity, even if no outstanding security has exactly ten years remaining to
maturity. If the Weekly Constant Maturity Treasury Rate cannot be calculated,
the Constant Maturity Treasury Rate will be determined based on the yield to
maturity of certain Treasury securities on the Interest Determination Date based
on secondary market offer prices of certain dealers as more fully described
above. The value of the Constant Maturity Treasury Rate during the term of the
Notes will likely not be calculated based on one specific Treasury security.
HISTORICAL INFORMATION ON THE CONSTANT MATURITY TREASURY RATE
The following table sets forth the monthly averages of the daily 10-year
Constant Maturity Treasury Rate from 1989 through January 1994, and the weekly
average for the week ending February 25, 1994. The Constant Maturity Treasury
Rate used to calculate the Cash Settlement Value will be the one-week average
yield on 10-year United States Treasury securities at "constant maturity"
available on the Interest Determination Date, or if such yield is not available
as described above, the yield to maturity on specified United States Treasury
securities on the Interest Determination Date. The historical experience of the
Constant Maturity Treasury Rate should not be taken as an indication of future
performance.
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CONSTANT MATURITY
TREASURY RATE
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1989:
January........................................................................................ 9.09
February....................................................................................... 9.17
March.......................................................................................... 9.36
April.......................................................................................... 9.18
May............................................................................................ 8.86
June........................................................................................... 8.28
July........................................................................................... 8.02
August......................................................................................... 8.11
September...................................................................................... 8.19
October........................................................................................ 8.01
November....................................................................................... 7.87
December....................................................................................... 7.84
1990:
January........................................................................................ 8.21
February....................................................................................... 8.47
March.......................................................................................... 8.59
April.......................................................................................... 8.79
May............................................................................................ 8.76
June........................................................................................... 8.48
July........................................................................................... 8.47
August......................................................................................... 8.75
September...................................................................................... 8.89
October........................................................................................ 8.72
November....................................................................................... 8.39
December....................................................................................... 8.08
1991:
January........................................................................................ 8.09
February....................................................................................... 7.85
March.......................................................................................... 8.11
April.......................................................................................... 8.04
May............................................................................................ 8.07
June........................................................................................... 8.28
July........................................................................................... 8.27
August......................................................................................... 7.90
September...................................................................................... 7.65
October........................................................................................ 7.53
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CONSTANT MATURITY
TREASURY RATE
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1991:
November....................................................................................... 7.42
December....................................................................................... 7.09
1992:
January........................................................................................ 7.03
February....................................................................................... 7.34
March.......................................................................................... 7.54
April.......................................................................................... 7.48
May............................................................................................ 7.39
June........................................................................................... 7.26
July........................................................................................... 6.84
August......................................................................................... 6.59
September...................................................................................... 6.42
October........................................................................................ 6.59
November....................................................................................... 6.87
December....................................................................................... 6.77
1993:
January........................................................................................ 6.60
February....................................................................................... 6.26
March.......................................................................................... 5.98
April.......................................................................................... 5.97
May............................................................................................ 6.04
June........................................................................................... 5.96
July........................................................................................... 5.81
August......................................................................................... 5.68
September...................................................................................... 5.36
October........................................................................................ 5.33
November....................................................................................... 5.72
December....................................................................................... 5.77
1994:
January........................................................................................ 5.75
February....................................................................................... 5.97
March (Week ending March 4, 1994).............................................................. 6.29
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Source: Federal Reserve Board Statistical Release H.15(519) under "Selected Interest Rates".
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion supplements the discussion contained in the
accompanying Prospectus Supplement under the heading "Certain United States
Federal Income Tax Considerations".
On January 27, 1994, the Treasury Department issued final regulations (the
"Final OID Regulations") under the original issue discount provisions of the
Code which replaced the Proposed OID Regulations. The Final OID Regulations
generally apply to debt instruments issued on or after April 4, 1994; therefore
by their terms they would not apply to the Notes. Nevertheless, taxpayers may
rely on the Final OID Regulations for debt instruments issued after December 21,
1992.
Under the Final OID Regulations, the Notes would qualify as "variable rate
debt instruments" and the amounts payable with respect to a Note on the Interest
Payment Dates (other than the Principal Amount payable on the Maturity Date)(the
"Interest Payments") would constitute "qualified stated interest". Accordingly,
under the Final OID Regulations, the Interest Payments would be taxable to a
U.S. Holder as ordinary interest income at the time such payments are accrued or
are received (in accordance with the U.S. Holder's regular method of tax
accounting).
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