<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1994
REGISTRATION NOS. 2-89536, 2-94915, 33-02813, 33-13386, 33-21320, 33-28038,
33-34403, 33-39606, 33-47078
AND 33-49519
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 10
TO
FORM S-6
------------------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------------------------
A. EXACT NAME OF TRUST:
THE MERRILL LYNCH FUND OF
STRIPPED ('ZERO') U.S. TREASURY SECURITIES,
SERIES A, B, C, D, E, F, G, H, I AND J
(A UNIT INVESTMENT TRUST)
B. NAMES OF DEPOSITOR:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
UNIT INVESTMENT TRUSTS
POST OFFICE BOX 9051
PRINCETON, N.J. 08543-9051
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
COPIES TO:
TERESA KONCICK, ESQ.
P.O. BOX 9051
PRINCETON, N.J.
08543-9051
PIERRE DE SAINT PHALLE,
ESQ.
450 LEXINGTON AVENUE
NEW YORK, N.Y. 10017
The issuers have registered an indefinite number of Units under the Securities
Act of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice for the most
recent fiscal year on February 17, 1994.
Check box if it is proposed that this filing will become effective on May 2,
1994 pursuant to paragraph (b) of Rule 485. / x /
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ('ZERO')
U.S. TREASURY SECURITIES, SERIES A THROUGH K
- --------------------------------------------------------------------------------
Each Series (a 'Fund') was formed to provide safety of capital and a high yield
to maturity through investment in fixed portfolios consisting primarily of
stripped debt obligations of the United States of America and receipts and
certificates for such stripped debt obligations ('Stripped Treasury
Securities'). See Risk Factors--Special Characteristics of Stripped Treasury
Securities for a brief description of the characteristics of the various types
of these Securities. Each Trust also contains an interest-bearing Treasury
Security (the 'Treasury Note') to provide income to pay the expenses of the
Trust. There is no assurance that these objectives will be realized if Units are
sold before the underlying Securities mature, because market prices of the
Securities before maturity and therefore the value of the Units will vary with
changes in interest rates and other factors. Each Series consists of a number of
separate unit investment trusts ('Trusts'), each designated by the year in which
its Stripped Treasury Securities mature. Series A consists of the 1994 and 2003
Trusts; Series B, of the 1995, 2001 and 2005 Trusts; Series C, of the 1996 and
2006 Trusts; Series D, of the 1997 and 2007 Trusts; Series E, of the 1998 and
2008 Trusts; Series F, of the 1999 and 2009 Trusts, Series G; of the 2000 and
2010 Trusts; Series H, of the 2011 Trust; Series I, of the 2002 Trust; Series J
of the 2013 Trust; and Series K, of the 2004 and 2014 Trusts. Stripped Treasury
Securities do not make any periodic payments of interest prior to maturity;
accordingly, each Trust's portfolio as a whole is priced at a deep discount from
face amount and Unit prices may be subject to greater fluctuations in response
to changing interest rates than in a fund consisting of debt obligations of
comparable maturities that pay interest currently. This risk is greater when the
period to maturity is longer. See Risk Factors. The Sponsor may deposit
additional Securities, with maturities identical to those of the Securities
initially deposited, in any or all of the Trusts in connection with the creation
and sale of additional Units (see Fund Structure).
Units of interest ('Units') in the Trusts are sold only to certain separate
accounts (the 'Accounts') to fund the benefits under Variable Life Insurance
Policies (the 'Policies') issued by Monarch Life Insurance Company ('Monarch'),
Merrill Lynch Life Insurance Company and ML Life Insurance Company of New York
(collectively, the 'Insurers'). The Accounts invest in Units of the Trusts in
accordance with allocation instructions received from Policyowners. Accordingly,
the interest of a Policyowner in the Units is subject to the terms of the Policy
and is described in the accompanying Prospectus for the Policies, which should
be reviewed carefully by a person considering the purchase of a Policy. That
Prospectus describes the relationship between increases or decreases in the net
asset value of, and any distributions on, Units, and the benefits provided under
a Policy. The rights of the Accounts as Holders of Units should be distinguished
from the rights of a Policyowner which are described in the Policies. As long as
Units are sold only to the Accounts, the term 'Holder' in this Prospectus shall
refer to the Accounts (or the Sponsor if it holds Units acquired in the
secondary market--see Market for Units).
- --------------------------------------------------------------------------------
SPONSOR:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS
DATED MAY 2, 1994
INQUIRIES SHOULD BE DIRECTED READ AND RETAIN THIS PROSPECTUS
TO THE TRUSTEE 1-800-323-1508. FOR FUTURE REFERENCE
<PAGE>
INVESTMENT SUMMARY AS OF DECEMBER 31, 1993+
The following Trusts, each designated for the maturity of its underlying
Stripped Treasury Securities, are offered in Series A-J (see Portfolios).
1994
TRUST
--------------
FACE AMOUNT OF SECURITIES...............$ 92,694,357
NUMBER OF UNITS......................... 92,692,779
FACE AMOUNT OF SECURITIES PER UNIT......$ 1.00
FRACTIONAL UNDIVIDED INTEREST IN TRUST
REPRESENTED BY EACH UNIT................ 1/92,692,779th
OFFERING PRICE PER 1,000 UNITS***
Aggregate offering side evaluation
of Securities in Trust*.................$ 90,756,622
--------------
Net asset value (divided by number
of Units, times 1,000)..................$ 979.11
Plus the applicable transaction
charge**............................$ 2.46
--------------
Offering Price per 1,000
Units***++..........................$ 981.57
--------------
--------------
SPONSOR'S REPURCHASE PRICE PER 1,000
UNITS
(based on offering side evaluation of
underlying Securities)++..............$ 979.11
REDEMPTION PRICE PER 1,000 UNITS (based
on bid side evaluation of underlying
Securities)****++ $ 978.89
CALCULATION OF ESTIMATED NET ANNUAL CASH
INTEREST INCOME PER $1,000 FACE AMOUNT
Gross annual cash income............$ .35
Less estimated annual expenses......$ .35
--------------
Estimated net annual cash income....$ 0.00
--------------
--------------
TRUSTEE'S ANNUAL FEE AND EXPENSES
Per $1,000 face amount of underlying
Securities (see Expenses and
Charges)..............................$ .35
EVALUATOR'S FEE FOR EACH EVALUATION
Minimum of $5.00 plus 25 cents for
each issue of underlying Securities
in excess of 50 issues, treating
separate maturities as separate
issues (see Expenses and Charges).
EVALUATION TIME
3:30 P.M. New York Time
- ------------------
+ The Indentures were signed and the initial deposits were made as of
April 30, 1984 (Series A: 1994 and 2003 Trusts), December 27, 1984 (Series B:
1995, 2001 and 2005 Trusts), April 23, 1986 (Series C: 1996 and 2006 Trusts),
April 28, 1987 (Series D: 1997 and 2007 Trusts), April 27, 1988 (Series E: 1998
and 2008 Trusts), April 25, 1989 (Series F: 1999 and 2009 Trusts), April 27,
1990 (Series G: 2000 and 2010 Trusts), April 30, 1991 (Series H: 2011 Trust),
April 28, 1992 (Series I: 2002 Trust) and April 20, 1993 (Series J: 2013 Trust).
++ Plus any net cash.
+++ During the last three months of the 1997 Trust, the Trustee's Fee
and therefore estimated expenses will be eliminated, and the estimated net
annual income per Units will remain the same (see Selection and Acquisition of
Securities).
* Includes amortization of discount, calculated using the 'interest'
method, to expected date of settlement (the business day after purchase) for
Units purchased on the Investment Summary date.
**The transaction charges applicable as of the date above are .25% of the
Offering Price of the 1994 and 1995 Trusts (.251% of the net amount invested in
Securities), .50% of the Offering Price of the 1996 Trust (.503% of the net
amount invested), .75% of the Offering Price of the 1997 and 1998 Trusts (.756%
of the net amount invested) and 1.0% of the Offering Price of the 1999 Trust
(1.01% of the net amount invested). Transaction charges will decrease as the
Trusts approach maturity, as described under Sale of Units.
*** These figures are computed by dividing the aggregate offering side
evaluation of the underlying Securities in the Trust (the price at which they
could be purchased directly by the public if they were available) by the number
of Units of the Trust outstanding, multiplying the result times 1,000 and adding
the applicable transaction charge as described in the preceding footnote. These
figures assume a purchase of 1,000 Units. The price of a single Unit, or any
multiple thereof, is calculated simply by dividing the Offering Price per 1,000
Units above by 1,000, and multiplying by the number of Units. As explained under
Sale of Units--Offering Price, as it is assumed that income on the Treasury Note
will equal Trust expenses, no accrued interest is added to the Offering,
Sponsor's Repurchase or Redemption Prices.
**** Figures shown are $2.68, $2.90, $5.25, $7.36, $7.14 and $8.87 less
than the Offering Price and $.22, $.57, $.65, $.80, $.98 and $1.13 less than the
Sponsor's Repurchase Price per 1,000 units, with respect to the 1994 through
1999 Trusts, respectively.
A-2
<PAGE>
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
TRUST TRUST TRUST TRUST TRUST
- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
$ 86,386,072 $ 54,225,938 $ 63,403,936 $ 65,138,817 $ 13,878,716
86,269,097 54,228,810 63,285,271 65,092,391 13,878,316
$ 1.00 $ .99 $ 1.00 $ 1.00 $ 1.00
1/86,269,097th 1/54,228,810th 1/63,285,271st 1/65,092,391st 1/13,878,316th
$ 80,071,548 $ 49,533,335 $ 54,863,979 $ 53,034,800 $ 10,626,043
- -------------- -------------- -------------- -------------- --------------
$ 928.16 $ 913.41 $ 866.93 $ 814.76 $ 765.65
$ 2.33 $ 4.60 $ 6.56 $ 6.16 $ 7.74
- -------------- -------------- -------------- -------------- --------------
$ 930.49 $ 918.01 $ 873.49 $ 820.92 $ 773.38
- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- --------------
$ 928.16 $ 913.41 $ 866.93 $ 814.76 $ 765.65
$ 927.59 $ 912.76 $ 866.13 $ 813.78 $ 764.52
$ .35 $ .35 $ .35 $ .35 $ .35
$ .35 $ .35 $ .35 $ .35 $ .35
- -------------- -------------- -------------- -------------- --------------
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- --------------
$ .35 $ .35 $ .35+++ $ .35 $ .35
</TABLE>
A-3
<PAGE>
INVESTMENT SUMMARY AS OF DECEMBER 31, 1993 (CONTINUED)
2000
TRUST
--------------
FACE AMOUNT OF SECURITIES................................$ 18,779,389
NUMBER OF UNITS.......................................... 18,753,153
FACE AMOUNT OF SECURITIES PER UNIT.......................$ 1.00
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY
EACH UNIT................................................ 1/18,753,153rd
OFFERING PRICE PER 1,000 UNITS***
Aggregate offering side evaluation of Securities in
Trust*...............................................$ 13,516,854
--------------
Net asset value (divided by number of Units, times
1,000)...............................................$ 720.77
Plus the applicable transaction charge**.............$ 7.29
--------------
Offering Price per 1,000 Units***+...................$ 728.06
--------------
--------------
SPONSOR'S REPURCHASE PRICE PER 1,000 UNITS
(based on offering side evaluation of underlying
Securities)+.........................................$ 720.77
REDEMPTION PRICE PER 1,000 UNITS (based on bid side
evaluation of underlying
Securities)****+.......................................$ 719.49
CALCULATION OF ESTIMATED NET ANNUAL CASH INTEREST INCOME
PER $1,000 FACE AMOUNT
Gross annual cash income.............................$ .35
Less estimated annual expenses.......................$ .35
--------------
Estimated net annual cash income.....................$ 0.00
--------------
--------------
TRUSTEE'S ANNUAL FEE AND EXPENSES
Per $1,000 face amount of underlying Securities (see
Expenses and Charges)..................................$ .35
- ------------------
+ Plus any net cash.
++ During the last three months of the 2005 Trust, the Trustee's fee and
expenses will be eliminated, and the estimated net annual income per Unit will
remain the same (see Selection and Acquisition of Securities).
* Includes amortization of discount, calculated using the 'interest'
method, to expected date of settlement (the business day after purchase) for
Units purchased on the Investment Summary date.
**The transaction charges applicable as of the date above are 1.00% of
the Offering price of the 2000 and 2001 Trusts (1.010% of the net amount
invested in Securities) and 1.50% of the Offering Price of the 2002, 2003, 2005
and 2006 Trusts (1.523% of the net amount invested).
*** These figures are computed by dividing the aggregate offering side
evaluation of the underlying Securities in the particular Trust (the price at
which they could be purchased directly by the public if they were available) by
the number of Units of the Trust outstanding, multiplying the result times 1,000
and adding the applicable transaction charge as described in the preceding
footnote. These figures assume a purchase of 1,000 Units. The price of a single
Unit, or any multiple thereof, is calculated simply by dividing the Offering
Price per 1,000 Units above by 1,000, and multiplying by the number of Units. As
explained under Sale of Units--Offering Price, as it is assumed that income on
the Treasury Note will equal Trust expenses, no accrued interest is added to the
Offering, Soponsor's Repurchase or Redemption Prices.
**** Figures shown are $8.57, $8.27, $11.04, $10.18, $9.40 and $9.03 less
than the Offering Price per 1,000 Units and $1.28, $1.44, $1.48, $1.58, $1.65
and $1.73 less than the Sponsor's Repurchase Price per 1,000 Units, with respect
to the 2000, 2001, 2002, 2003, 2005 and 2006 Trusts, respectively.
A-4
<PAGE>
2001 2002 2003 2005 2006
TRUST TRUST TRUST TRUST TRUST
- ------------ ------------ ------------ ------------ ------------
$ 82,096,037 $ 4,987,923 $ 93,922,284 $ 38,753,713 $ 10,455,201
81,801,200 4,988,332 93,832,418 38,419,137 10,207,360
$ 1.00 $ .99 $ 1.00 $ 1.00 $ 1.02
1/81,801,200th 1/4,988,332nd 1/93,832,418th 1/38,419,137th 1/10,207,360th
$ 55,218,064 $ 3,129,986 $ 52,971,859 $ 19,537,483 $ 4,893,747
- ------------ ------------ ------------ ------------ ------------
$ 675.02 $ 627.46 $ 564.53 $ 508.53 $ 479.43
$ 6.83 $ 9.56 $ 8.60 $ 7.75 $ 7.30
- ------------ ------------ ------------ ------------ ------------
$ 681.85 $ 637.02 $ 573.13 $ 516.28 $ 486.73
- ------------ ------------ ------------ ------------ ------------
- ------------ ------------ ------------ ------------ ------------
$ 675.02 $ 627.46 $ 564.53 $ 508.53 $ 479.43
$ 673.58 $ 625.98 $ 562.95 $ 506.88 $ 477.70
$ .35 $ .35 $ .35 $ .35 $ .35
$ .35 $ .35 $ .35 $ .35 $ .35
- ------------ ------------ ------------ ------------ ------------
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
- ------------ ------------ ------------ ------------ ------------
- ------------ ------------ ------------ ------------ ------------
$ .35 $ .35 $ .35 $ .35++ $ .35
A-5
<PAGE>
INVESTMENT SUMMARY AS OF DECEMBER 31, 1993 (CONTINUED)
2007
TRUST
--------------
FACE AMOUNT OF SECURITIES................................$ 25,940,683
NUMBER OF UNITS.......................................... 25,348,458
FACE AMOUNT OF SECURITIES PER UNIT.......................$ 1.02
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY
EACH UNIT................................................ 1/25,348,458th
OFFERING PRICE PER 1,000 UNITS***
Aggregate offering side evaluation of Securities in
Trust*...............................................$ 11,280,453
--------------
Net asset value (divided by number of Units, times
1,000)...............................................$ 445.01
Plus the applicable transaction charge**.............$ 7.93
--------------
Offering Price per 1,000 Units***+...................$ 452.94
--------------
--------------
SPONSOR'S REPURCHASE PRICE PER 1,000 UNITS
(based on offering side evaluation of underlying
Securities)+.........................................$ 445.01
REDEMPTION PRICE PER 1,000 UNITS (based on bid side
evaluation of underlying
Securities)****+.......................................$ 443.33
CALCULATION OF ESTIMATED NET ANNUAL CASH INTEREST INCOME
PER $1,000 FACE AMOUNT
Gross annual cash income.............................$ .35
Less estimated annual expenses.......................$ .35
--------------
Estimated net annual cash income.....................$ 0.00
--------------
--------------
TRUSTEE'S ANNUAL FEE AND EXPENSES
Per $1,000 face amount of underlying Securities (see
Expenses and Charges)..................................$ .35++
- ------------------
+ Plus any net cash.
++ During the last twelve months of the 2007 Trust, the last 24 months
of the 2008 Trust, the last 36 months of the 2009 Trust, the last 48 months of
the 2010 Trust, the last 60 months of the 2011 Trust and the last 3 months
(potentially up to 63 months in the Treasury Note is called when it first
becomes callable), of the 2013 Trust, the Trustee's fee and expenses will be
eliminated, and the estimated net annual income per Unit will remain the same
(see Selection and Acquisition of Securities).
* Includes amortization of discount, calculated using the 'interest'
method, to expected date of settlement (the business day after purchase) for
Units purchased on the Investment Summary Date.
**The transaction charges applicable as of the date above are 1.75% of
the Offering Price of the 2007, 2008, 2009, 2010 and 2011 Trusts (1.781% of the
net amount invested in Securities) and 2.0% of the Offering Price of the 2013
Trust (2.041% of the net amount invested in Securities).
*** These figures are computed by dividing the aggregate offering side
evaluation of the underlying Securities in the particular Trust (the price at
which they could be purchased directly by the public if they were available) by
the number of Units of the Trust outstanding, multiplying the result times 1,000
and adding the applicable transaction charge as described in the preceding
footnote. These figures assume a purchase of 1,000 Units. The price of a single
Unit, or any multiple thereof, is calculated simply by dividing the Offering
Price per 1,000 Units above by 1,000, and multiplying by the number of Units. As
explained under Sale of Units--Offering Price, as it is assumed that income on
the Treasury Note will equal Trust expenses, no accrued interest is added to the
Offering, Soponsor's Repurchase or Redemption Prices.
**** Figures shown are $9.61, $8.84, $8.30, $7.75, $7.32 and $7.12 less
than the Offering Price per 1,000 Units and $1.68, $1.64, $1.63, $1.59, $1.58
and $1.50 less than the Sponsor's Repurchase Price per 1,000 Units, with respect
to the 2007, 2008, 2009, 2010, 2011 and 2013 Trusts, respectively.
A-6
<PAGE>
<TABLE>
<CAPTION>
2008 2009 2010 2011 2013
TRUST TRUST TRUST TRUST TRUST
- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
$ 64,974,428 $ 28,503,016 $ 19,964,223 $ 12,098,275 $ 3,200,906
64,750,242 28,350,975 19,979,135 12,023,998 3,201,118
$ 1.00 $ 1.00 $ .99 $ 1.00 $ .99
1/64,750,242nd 1/28,350,975th 1/19,979,135th 1/12,023,998th 1/3,201,118th
$ 26,181,171 $ 10,617,801 $ 6,906,145 $ 3,873,941 $ 881,407
- -------------- -------------- -------------- -------------- --------------
$ 404.34 $ 374.51 $ 345.66 $ 322.18 $ 275.34
$ 7.20 $ 6.67 $ 6.16 $ 5.74 $ 5.62
- -------------- -------------- -------------- -------------- --------------
$ 411.54 $ 381.18 $ 351.82 $ 327.92 $ 280.96
- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- --------------
$ 404.34 $ 374.51 $ 345.66 $ 322.18 $ 275.34
$ 402.70 $ 372.88 $ 344.07 $ 320.60 $ 273.84
$ .35 $ .35 $ .35 $ .35 $ .35
$ .35 $ .35 $ .35 $ .35 $ .35
- -------------- -------------- -------------- -------------- --------------
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- --------------
$ .35++ $ .35++ $ .35++ $ .35++ $ .35++
</TABLE>
A-7
<PAGE>
INVESTMENT SUMMARY (CONTINUED)
TRUST PORTFOLIOS (see Portfolios)
SECURITIES--Each Trust consists primarily of issues of Stripped Treasury
Securities purchased at a deep discount. It is intended that Securities selected
for inclusion in the Trusts will comply with any investment limitations required
to assure favorable Federal income tax treatment for the Policies issued by the
Insurers. The Securities are not rated but, in the opinion of the Sponsor, have
credit characteristics comparable to those of Securities rated 'AAA' by
nationally recognized rating agencies. Each Trust also contains one
interest-bearing Treasury Security (the 'Treasury Note') deposited in order to
provide cash income with which to pay the expenses of the Trust.
RISK FACTORS--An investment in Units of a Trust should be made with an
understanding of the risks which an investment in debt obligations, most of
which were purchased at a deep discount, may entail, including the risk that the
value of a Trust and hence of the Units will decline with increases in interest
rates. The market value of Stripped Treasury Securities, and therefore the value
of the Units, may be subject to greater fluctuations in response to changing
interest rates than debt obligations of comparable maturities which pay interest
currently. The risk is greater when the period to maturity is longer. (See p.1.)
For each 1,000 Units of a Trust purchased, a Holder will receive total
distributions of approximately $1,000 for Units held until maturity of the
underlying Securities of that Trust. Furthermore, the Offering Price will vary
in accordance with fluctuations in the values of the Securities and the
distributions could change if the Securities are paid or sold, or if the
expenses of the Trust change. For a discussion of the economic differences
between the Trusts and a fund consisting of customary securities, see
Description of the Fund--Income and Yield.
MARKET FOR UNITS--The Sponsor has committed to maintain a market for Units
based on the aggregate offer side evaluation of the underlying Securities in
each Trust. See p.7. If that market is not maintained, a Holder will be able to
dispose of Units through redemption at prices based on the lower, aggregate bid
side evaluation of the underlying Securities in the Trust. See Redemption.
Market conditions may cause the prices available in the market maintained by the
Sponsor or upon exercise of redemption rights to be more or less than the amount
paid for Units. The market prices of Stripped Treasury Securities, and hence of
the Units, are subject to greater fluctuations than the prices of securities
making current payments of interest.
DISTRIBUTIONS--Distributions normally will be made only on the first
business day following the maturity of the Stripped Treasury Securities in a
Trust to holders of record on the business day immediately preceding the date of
the distribution, and may include any amount received upon the sale of
Securities in order to meet redemptions of the Units which exceeds the amount
necessary to pay those redemptions and any accumulated net interest income.
Principal from maturity of the Treasury Note will not be distributed until
disposition of the Stripped Treasury Security in the Trust. There will be no
payments of interest on the Securities other than on the Treasury Note in each
Trust, which will be used to pay the expenses of the Trust. Consequently, no
distributions of interest income should be expected. However, the Sponsor may
direct the Trustee to distribute to Holders of a Trust as of the last Business
Day in any year any cash balance in the Income and Capital Accounts not
otherwise allocated. See Administration of the Fund--Accounts and Distributions.
Nevertheless, the gross interest income on all securities in the Trust is
taxable to Holders. Each Stripped Treasury Security will be treated for Federal
income tax purposes as having 'original issue discount,' which must be amortized
over the term of the Stripped Treasury Security and included in a Holder's
ordinary gross income before the Holder receives the cash attributable to that
income. See Taxes.
MINIMUM FACE AMOUNT OF FUND--A Trust may be terminated if the face amount is
less than 40% of the face amount of Securities deposited (of the face amount of
Securities on the Initial Date of Deposit for the 1994, 1995, 2001, 2003 and
2005 Trusts).
A-8
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series A
We have audited the accompanying statements of condition of the 1994
Trust and the 2003 Trust of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series A, including the portfolios, as of
December 31, 1993 and the related statements of operations and of changes
in net assets for the years ended December 31, 1991, 1992 and 1993.
These financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Securities owned at December 31, 1993, as shown in such
portfolios, were confirmed to us by The Chase Manhattan Bank (National
Association), the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the above-
mentioned Trusts of The Merrill Lynch Fund of Stripped ("Zero") U.S.
Treasury Securities, Series A at December 31, 1993 and the results of
their operations and changes in their net assets for the above-stated
years in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 1
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1993
1994 TRUST 2003 TRUST
__________ __________
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1)............ $90,736,081 $52,823,692
Receivable from securities sold......... 244,855 728,682
Other................................... 48,162 51,136
___________ ___________
Total trust property.......... 91,029,098 53,603,510
___________ ___________
LESS LIABILITIES:
Redemptions payable..................... 245,869 734,272
Other................................... 6,217 6,370
___________ ___________
Total liabilities............. 252,086 740,642
___________ ___________
NET ASSETS (Note 2)....................... $90,777,012 $52,862,868
___________ ___________
UNITS OUTSTANDING......................... 92,692,779 93,832,418
__________ __________
UNIT VALUE................................ $0.97933 $0.56338
________ ________
See Notes to Financial Statements.
D - 2
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
............1994 TRUST............ ...........2003 TRUST............
......Years Ended December 31..... .....Years Ended December 31.....
1991 1992 1993 1991 1992 1993
____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.... $ 46,724 $ 37,549 $ 35,119 $ 47,889 $ 33,039 $ 35,982
Accretion of
original issue
discount......... 8,744,456 7,566,407 10,067,382 4,297,051 3,916,566 3,767,614
Trustee's fees and
expenses......... (19,745) (27,345) (21,426) (21,827) (27,310) (21,329)
_________________________________________________________________________
Net investment
income........... 8,771,435 7,576,611 10,081,075 4,323,113 3,922,295 3,782,267
_________________________________________________________________________
REALIZED AND UNREAL-
IZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain
on securities
sold............. 402,849 1,486,330 4,001,328 766,567 1,398,733 2,757,943
Unrealized appre-
ciation (depre-
ciation) of
investments...... 6,098,636 (2,803,452) (9,200,823) 4,269,616 (1,003,127) 3,465,550
_________________________________________________________________________
Net realized and
unrealized gain
(loss) on
investments...... 6,501,485 (1,317,122) (5,199,495) 5,036,183 395,606 6,223,493
_________________________________________________________________________
NET INCREASE
IN NET ASSETS
RESULTING
FROM OPERATIONS.... $15,272,920 $6,259,489 $4,881,580 $9,359,296 $4,317,901 $10,005,760
_________________________________________________________________________
</TABLE>
See Notes to Financial Statements.
D - 3
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
............1994 TRUST............ ...........2003 TRUST............
......Years Ended December 31..... .....Years Ended December 31.....
1991 1992 1993 1991 1992 1993
____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income...... $ 8,771,435 $ 7,576,611 $ 10,081,075 $ 4,323,113 $ 3,922,295 $ 3,782,267
Realized gain
on securities
sold........ 402,849 1,486,330 4,001,328 766,567 1,398,733 2,757,943
Unrealized
appreciation
(deprecia-
tion) of
investments. 6,098,636 (2,803,452) (9,200,823) 4,269,616 (1,003,127) 3,465,550
_____________________________________________________________________________
Net increase
in net
assets
resulting
from opera-
tions....... 15,272,920 6,259,489 4,881,580 9,359,296 4,317,901 10,005,760
______________________________________________________________________________
CAPITAL SHARE
TRANSACTIONS
(Note 3):
Issuance of
additional
units...... 3,505,425 1,667,844 808,079 295,347 1,917,003 1,509,919
Redemptions
of units.... (11,758,963) (19,493,684) (15,945,792)(10,655,755) (7,940,468) (9,728,606)
______________________________________________________________________________
Net capital
share trans-
actions..... (8,253,538) (17,825,840) (15,137,713)(10,360,408) (6,023,465) (8,218,687)
_____________________________________________________________________________
NET INCREASE
(DECREASE)
IN NET ASSETS. 7,019,382 (11,566,351) (10,256,133) (1,001,112) (1,705,564) 1,787,073
NET ASSETS,
BEGINNING OF
YEAR.......... 105,580,114 112,599,496 101,033,145 53,782,471 52,781,359 51,075,795
______________________________________________________________________________
NET ASSETS, END
OF YEAR...... $112,599,496 $101,033,145 $ 90,777,012 $52,781,359 $51,075,795 $52,862,868
______________________________________________________________________________
UNIT VALUE, END
OF YEAR....... $.87758 $.93152 $.97933 $.42857 $.46829 $.56338
_________________________________________________________________________
UNITS OUTSTAND-
ING, END OF
YEAR.......... 128,307,515 108,460,670 92,692,779 123,157,675 109,068,799 93,832,418
_____________________________________________________________________________
</TABLE>
See Notes to Financial Statements.
D - 4
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
The policies are in conformity with generally accepted accounting principles.
(a) Securities are stated at value as determined by an independent evaluator
based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evaluations for the
securities at Dates of Deposit. Cost of securities subsequent to dates of
purchase has been adjusted to include the accretion of original issue discount
on the Stripped Treasury Securities. Realized gain and loss on sales of
securities are determined using the first-in, first-out cost basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
1994 Trust
__________
Cost of 92,692,779 units at Dates of Deposit................... $43,162,788
Less sales charge.............................................. 431,585
___________
Net amount applicable to Holders............................... 42,731,203
Realized gain on securities sold............................... 12,071,883
Unrealized appreciation of investments......................... 3,016,587
Redemption of units - net cost of units redeemed less
redemption amounts........................................... 2,974,771
Undistributed net investment income ........................... 29,982,568
___________
Net assets..................................................... $90,777,012
___________
2003 Trust
__________
Cost of 93,832,418 units at Dates of Deposit................... $22,382,805
Less sales charge.............................................. 391,699
___________
Net amount applicable to Holders............................... 21,991,106
Realized gain on securities sold............................... 9,104,794
Unrealized depreciation of investments......................... 12,537,223
Redemption of units - net cost of units redeemed less
redemption amounts........................................... (3,808,871)
Undistributed net investment income............................ 13,038,616
___________
Net assets..................................................... $52,862,868
___________
D - 5
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
NOTES TO FINANCIAL STATEMEMTS
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
1994 4,302,538 1,865,637 828,313
2003 804,956 4,446,747 2,866,682
Units were redeemed as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
1994 14,637,742 21,712,482 16,596,204
2003 28,721,923 18,535,623 18,103,063
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day, or in the case of uncertificated units upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
holder as specified in writing to the Trustee.
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code. At December 31, 1993, the cost of investment securities
for Federal income tax purposes was approximately equivalent to the adjusted
cost as shown in each Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that each Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 6
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
PORTF0LI0S
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
1994 TRUST
__________
1 Stripped Treasury 0% 8/15/94 $92,321,690 $87,351,984
Securities (Note B)
2 U.S. Treasury Bonds 8.75 8/15/94 372,667 367,510
___________________________
Total $92,694,357 $87,719,494
___________________________
2003 TRUST
__________
1 Stripped Treasury 0% 8/15/03 $93,624,625 $39,940,518
Securities (Note B)
2 U.S. Treasury Bonds 11.125 8/15/03 297,659 345,951
___________________________
Total $93,922,284 $40,286,469
___________________________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of the
following types of securities: (a) U.S. Treasury debt
obligations which have been stripped of their remaining
interest coupons, (b) interest coupons which have been
stripped from U.S. Treasury debt obligations and (c)
receipts or certificates for underlying stripped U.S.
Treasury debt obligations. The receipts or certificates
evidence ownership of future interest or principal payments
on U.S. Treasury notes or bonds. The receipts or
certificates are issued in registered form by a major bank
which acts as custodian and nominal holder of the underlying
stripped U.S. Treasury debt obligation. The Stripped
Treasury Securities are payable in full at maturity at their
stated maturity amount, and are not subject to redemption
prior to maturity. The Stripped Treasury Securities do not
make any periodic payments of interest.
D - 7
<PAGE>
Value
(Note A)
________
$90,351,537
384,544
_____________
$90,736,081
_____________
$52,410,785
412,907
_____________
$52,823,692
_____________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series B:
We have audited the accompanying statements of condition of the 1995, 2001 and
2005 Trusts of The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury
Securities, Series B, including the portfolios, as of December 31, 1993 and
the statements of operations and of changes in net assets for the
aforementioned trusts and the 1993 Trust for the years ended December 31,
1991, 1992 and 1993. These financial statements are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Securities owned at December 31, 1993, as shown in such portfolios, were
confirmed to us by The Chase Manhattan Bank (National Association), the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the above-mentioned Trusts of
The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities, Series B
at December 31, 1993 and the results of their operations and changes in their
net assets for the above-stated years in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 8
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
............2005 TRUST............
Years Ended Dec. 31,
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income............................ $ 1,439,200 $ 1,297,158 $ 1,376,916
Realized gain (loss) on securities sold.......... (48,803) 584,241 716,371
Unrealized appreciation (depreciation)
of investments.................................. 1,712,150 (421,547) 1,407,540
___________________________________
Net increase in net assets resulting from
operations...................................... 3,102,547 1,459,852 3,500,827
___________________________________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units..................... 251,084 3,436,629 1,693,122
Redemptions of units............................. (4,769,109) (3,892,154) (3,436,735)
___________________________________
Net capital share transactions................... (4,518,025) (455,525) (1,743,613)
___________________________________
NET INCREASE (DECREASE) IN NET ASSETS.............. (1,415,478) 1,004,327 1,757,214
NET ASSETS, BEGINNING OF PERIOD.................... 18,141,320 16,725,842 17,730,169
___________________________________
NET ASSETS, END OF PERIOD.......................... $16,725,842 $17,730,169 $19,487,383
___________________________________
UNIT VALUE, END OF PERIOD.......................... $.38133 $.41637 $.50723
_______________________________
UNITS OUTSTANDING, END OF PERIOD................... 43,861,866 42,582,267 38,419,137
__________________________________
</TABLE>
See Notes to Financial Statements.
D - 17
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
1995 TRUST 2001 TRUST 2005 TRUST
__________ __________ __________
<S> <C> <C> <C>
TRUST PROPERTY:
Investment in marketable securities (see Portfolio
and Note 1).................................... $80,022,354 $55,099,757 $19,473,911
Other............................................. 40,684 40,988 14,460
___________ ___________ ___________
Total trust property..................... 80,063,038 55,140,745 19,488,371
LESS LIABILITY - Other.............................. 2,075 2,311 988
___________ ___________ ___________
NET ASSETS (Note 2)................................. $80,060,963 $55,138,434 $19,487,383
___________ ___________ ___________
UNITS OUTSTANDING................................... 86,269,097 81,801,200 38,419,137
__________ __________ __________
UNIT VALUE.......................................... $.92804 $.67405 $.50723
_______ _______ _______
</TABLE>
D - 9
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
........... 1993 TRUST...........
Years Ended Dec. 31,
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income....................................... $ 20,826 $ 19,569 $ 14,871
Accretion of original issue discount.................. 4,217,569 4,163,349 3,347,065
Trustee's fees and expenses........................... (14,340) (19,263) (12,414)
_________________________________
Net investment income................................. 4,224,055 4,163,655 3,349,522
_________________________________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold...................... 139,846 274,723 219,335
Unrealized appreciation (depreciation)
of investments...................................... 1,686,043 (1,525,651) (2,085,185)
_________________________________
Realized and unrealized gain (loss) on
investments......................................... 1,825,889 (1,250,928) (1,865,850)
_________________________________
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................................ $6,049,944 $2,912,727 $1,483,672
_________________________________
</TABLE>
See Notes to Financial Statements.
D - 10
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
.............1995 TRUST............
Years Ended Dec. 31,
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income..................................... $ 39,149 $ 32,129 $ 31,807
Accretion of original issue discount................ 6,824,445 6,827,762 5,748,856
Trustee's fees and expenses......................... (22,209) (31,768) (20,271)
___________________________________
Net investment income............................... 6,841,385 6,828,123 5,760,392
___________________________________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold.................... 941,838 1,823,750 1,728,856
Unrealized appreciation (depreciation) of
investments....................................... 4,872,868 (2,498,353) (1,795,919)
___________________________________
Realized and unrealized gain (loss) on investments.. 5,814,706 (674,603) (67,063)
___________________________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $12,656,091 $6,153,520 $5,693,329
___________________________________
</TABLE>
See Notes to Financial Statements.
D - 11
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
............ 2001 TRUST...........
Years Ended Dec. 31,
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income..................................... $ 42,051 $ 34,360 $ 31,082
Accretion of original issue discount................ 4,745,776 4,723,883 1,970,916
Trustee's fees and expenses......................... (18,361) (25,555) (15,676)
___________________________________
Net investment income............................... 4,769,466 4,732,688 1,986,322
____________________________________
REALIZED AND UNREAIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold.................... 719,328 2,288,200 4,726,764
Unrealized appreciation (depreciation) of
investments....................................... 5,563,066 (2,187,343) 2,005,671
___________________________________
Realized and unrealized gain on investments......... 6,282,394 100,857 6,732,435
___________________________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $11,051,860 $4,833,545 $8,718,757
___________________________________
</TABLE>
See Notes to Financial Statements.
D - 12
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
........... 2005 TRUST...........
Years Ended Dec. 31,
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................... $ 17,032 $ 13,549 $ 13,934
Accretion of original issue discount.............. 1,435,441 1,299,844 1,373,844
Trustee's fees and expenses....................... (13,273) (16,235) (10,862)
__________________________________
Net investment income............................. 1,439,200 1,297,158 1,376,916
__________________________________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on securities sold........... (48,803) 584,241 716,371
Unrealized appreciation (depreciation) of
investments..................................... 1,712,150 (421,547) 1,407,540
__________________________________
Realized and unrealized gain on investments....... 1,663,347 162,694 2,123,911
__________________________________
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... $3,102,547 $1,459,852 $3,500,827
__________________________________
</TABLE>
See Notes to Financial Statements.
D - 13
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
............1993 TRUST............
Years Ended Dec. 31,
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income............................ $ 4,224,055 $ 4,163,655 $ 3,349,522
Realized gain on securities sold................. 139,846 274,723 219,335
Unrealized appreciation (depreciation)
of investments.................................. 1,686,043 (1,525,651) (2,085,185)
____________________________________
Net increase in net assets resulting from
operations...................................... 6,049,944 2,912,727 1,483,672
____________________________________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units..................... 5,529,286 2,210,344 295,429
Redemptions of units............................. (7,143,717) (8,093,338) (53,425,485)
____________________________________
Net capital share transactions................... (1,614,431) (5,882,994) (53,130,056)
____________________________________
NET INCREASE (DECREASE) IN NET ASSETS.............. 4,435,513 (2,970,267) (51,646,384)
NET ASSETS BEGINNING OF PERIOD..................... 50,181,138 54,616,651 51,646,384
____________________________________
NET ASSETS, END OF PERIOD.......................... $54,616,651 $51,646,384 $ -0-
____________________________________
UNIT VALUE, END OF PERIOD.......................... $.91886 $.97118 $ -0-
________________________________
UNITS OUTSTANDING, END OF PERIOD................... 59,439,864 53,179,113 -0-
___________________________________
See Notes to Financial Statements.
D - 14
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
............1995 TRUST............
Years Ended Dec. 31,
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income............................ $ 6,841,385 $ 6,828,123 $ 5,760,392
Realized gain on securities sold................. 941,838 1,823,750 1,728,856
Unrealized appreciation (depreciation)
of investments.................................. 4,872,868 (2,498,353) (1,795,919)
___________________________________
Net increase in net assets resulting from
operations..................................... 12,656,091 6,153,520 5,693,329
___________________________________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units..................... 4,106,541 6,208,724 1,817,328
Redemptions of units............................. (9,041,552)(15,549,869)(10,539,500)
___________________________________
Net capital share transactions................... (4,935,011) (9,341,145) (8,722,172)
___________________________________
NET INCREASE (DECREASE) IN NET ASSETS.............. 7,721,080 (3,187,625) (3,028,843)
NET ASSETS BEGINNING OF PERIOD..................... 78,556,351 86,277,431 83,089,806
___________________________________
NET ASSETS, END OF PERIOD.......................... $86,277,431 $83,089,806 $80,060,963
___________________________________
UNIT VALUE, END OF PERIOD.......................... $.80583 $.86621 $.92804
_______________________________
UNITS OUTSTANDING, END OF PERIOD................... 107,066,621 95,923,192 86,269,097
___________________________________
</TABLE>
See Notes to Financial Statements.
D - 15
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
............2001 TRUST............
Years Ended Dec. 31,
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income............................ $ 4,769,466 $ 4,732,688 $ 1,986,322
Realized gain on securities sold................. 719,328 2,288,200 4,726,764
Unrealized appreciation (depreciation)
of investments.................................. 5,563,066 (2,187,343) 2,005,671
___________________________________
Net increase in net assets resulting from
operations...................................... 11,051,860 4,833,545 8,718,757
___________________________________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units..................... 1,222,406 4,949,499 700,963
Redemptions of units............................. (7,967,318)(15,333,426) (9,067,185)
___________________________________
Net capital share transactions................... (6,744,912)(10,383,927) (8,366,222)
___________________________________
NET INCREASE (DECREASE) IN NET ASSETS.............. 4,306,948 (5,550,382) 352,535
NET ASSETS BEGINNING OF PERIOD..................... 56,029,333 60,336,281 54,785,899
___________________________________
NET ASSETS, END OF PERIOD.......................... $60,336,281 $54,785,899 $55,138,434
___________________________________
UNIT VALUE, END OF PERIOD.......................... $.53171 $.57865 $.67405
_______________________________
UNITS OUTSTANDING, END OF PERIOD................... 113,476,954 94,679,067 81,801,200
___________________________________
</TABLE>
See Notes to Financial Statements.
D - 16
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
(a) Securities are stated at value as determined by an independent evaluator
based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evaluations for the
securities at Dates of Deposit. Cost of securities subsequent to dates of
purchase has been adjusted to include the accretion of original issue discount
on the Stripped Treasury Securities. Realized gain and loss on sales of
securities are determined using the first-in, first-out cost basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
Securities held by the 1993 Trust matured on November 15, 1993. Distributions
of the proceeds received therefor were made in cash to the Holders in
accordance with the terms of the Trust Indenture. Upon final distribution of
such proceeds in 1993, all of the outstanding units were cancelled.
1993 Trust
__________
Realized gain on securities sold............................... $1,393,449
Redemption of units - net cost of units redeemed less
redemption amounts........................................... (1,409,423)
Undistributed net investment income............................ 15,974
__________
Net assets..................................................... $ -0-
__________
D - 18
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
NOTES TO FINANCIAL STATEMENTS
2. NET ASSETS, DECEMBER 31, 1993
1995 Trust
__________
Cost of 86,269,097 units at Dates of Deposit................... $39,191,071
Less sales charge.............................................. 391,911
___________
Net amount applicable to Holders............................... 38,799,160
Realized gain on securities sold............................... 7,723,595
Unrealized appreciation of investments......................... 5,262,574
Redemption of units - net cost of units
redeemed less redemption amounts............................. 1,835,419
Undistributed net investment income............................ 26,440,215
___________
Net assets..................................................... $80,060,963
___________
2001 Trust
__________
Cost of 81,801,200 units at Dates of Deposit................... $24,616,797
Less sales charge.............................................. 369,252
___________
Net amount applicable to Holders............................... 24,247,545
Realized gain on securities sold............................... 11,191,958
Unrealized appreciation of investments......................... 10,238,365
Redemption of units - net cost of units redeemed less
redemption amounts........................................... (3,112,095)
Undistributed net investment income............................ 12,572,661
___________
Net assets..................................................... $55,138,434
___________
2005 Trust
__________
Cost of 38,419,137 units at Dates of Deposit................... $ 8,409,395
Less sales charge.............................................. 147,164
___________
Net amount applicable to Holders............................... 8,262,231
Realized gain on securities sold............................... 4,739,362
Unrealized appreciation of investments......................... 3,766,013
Redemption of units - redemption amounts less net cost
of units redeemed............................................ (661,376)
Undistributed net investment income............................ 3,381,153
___________
Net assets..................................................... $19,487,383
___________
D - 19
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
1993 6,306,771 2,344,523 300,569
1995 5,554,851 7,640,577 1,998,365
2001 2,589,485 9,508,268 1,129,643
2005 770,399 9,045,440 3,480,932
Units were redeemed as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
1993 8,435,583 8,605,274 53,479,682
1995 12,190,137 18,784,006 11,652,460
2001 17,130,498 28,306,155 14,007,510
2005 14,601,275 10,325,039 7,644,062
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day, or, in the case of uncertificated units, upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
holder as specified in writing to the Trustee.
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code. At December 31, 1993, the cost of investment securities
for Federal income tax purposes was approximately equivalent to the adjusted
cost as shown in each Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that each Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 20
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
PORTFOLIOS
AS OF DECEMBER 31, 1993
Adjusted
Portfolio No. and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
1995 TRUST
__________
1 Stripped Treasury 0% 11/15/95 $86,122,230 $74,460,308
Securities (Note B)
2 U.S. Treasury Bonds 11.50 11/15/95 263,842 299,472
________________________
Total $86,386,072 $74,759,78
_______________________
2001 TRUST
__________
1 Stripped Treasury 0% 2/15/01 $81,852,325 $44,564,075
Securities (Note B)
2 U.S. Treasury Bonds 11.75 2/15/01 243,712 297,317
________________________
Total $82,096,037 $44,861,392
________________________
2005 TRUST
__________
1 Stripped Treasury 0% 2/15/05 $38,637,940 $15,559,198
Securities (Note B)
2 U.S. Treasury Bonds 11.625 11/15/04 115,773 148,700
________________________
Total $38,753,713 $15,707,898
________________________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of the
following types of securities: (a) U.S. Treasury debt obligations
which have been stripped of their remaining interest coupons, (b)
interest coupons which have been stripped from U.S. Treasury debt
obligations and (c) receipts or certificates for underlying
stripped U.S. Treasury debt obligations. The receipts or
certificates evidence ownership of future interest or principal
payments on U.S. Treasury notes or bonds. The receipts or
certificates are issued in registered form by a major bank which
acts as custodian and nominal holder of the underlying stripped
U.S. Treasury debt obligation. The Stripped Treasury Securities
are payable in full at maturity at their stated maturity amount,
and are not subject to redemption prior to maturity. The Stripped
Treasury Securities do not make any periodic payments of interest.
D - 21
<PAGE>
Value
(Note A)
________
$79,723,801
298,553
_____________
0 $80,022,354
______________
$54,767,473
332,284
_____________
$55,099,757
_____________
$19,305,824
168,087
_____________
$19,473,911
_____________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series C:
We have audited the accompanying statements of condition of the 1996
Trust and the 2006 Trust of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series C, including the portfolios, as of
December 31, 1993 and the related statements of operations and of changes
in net assets for the years ended December 31, 1991, 1992 and 1993.
These financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Securities owned at December 31, 1993, as shown in such
portfolios, were confirmed to us by The Chase Manhattan Bank (National
Association), the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the above-
mentioned Trusts of The Merrill Lynch Fund of Stripped ("Zero") U.S.
Treasury Securities, Series C at December 31, 1993 and the results of
their operations and changes in their net assets for the above-stated
years in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 22
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
1996 TRUST 2006 TRUST
__________ __________
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities (see Portfolio
and Note 1)........................................... $49,498,402 $4,876,092
Receivable from securities sold......................... 233,930
Other................................................... 12,524 8,080
___________ __________
Total trust property......................... 49,744,856 4,884,172
___________ __________
LESS LIABILITIES:
Redemptions payable..................................... 235,023
Other................................................... 3,748 6,450
___________ __________
Total liabilities............................ 238,771 6,450
___________ __________
NET ASSETS (Note 2)....................................... $49,506,085 $4,877,722
___________ __________
UNITS OUTSTANDING......................................... 54,228,810 10,207,360
__________ __________
UNIT VALUE................................................ $.91291 $.47786
_______ _______
</TABLE>
See Notes to Financial Statements.
D - 23
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
............1996 TRUST............ ...........2006 TRUST..........
Years Ended Dec. 31, Years Ended Dec. 31,
1991 1992 1993 1991 1992 1993
____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 25,055 $ 23,325 $20,566 $ 4,971 $ 4,105 $ 3,441
Accretion of
original
issue
discount..... 4,243,792 4,281,471 4,108,748 406,587 363,678 338,288
Trustee's fees
and expenses. (13,415) (17,286) (13,637) (4,282) (5,602) (1,879)
__________________________________ _______________________________
Net investment
income....... 4,255,432 4,287,510 4,115,677 407,276 362,181 339,850
__________________________________ _______________________________
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Realized gain
on securities
sold......... 272,056 569,618 720,145 288,706 270,119 237,823
Unrealized
appreciation
(depreciation)
of investments 3,812,606 (1,096,102) (740,581) 182,374 (238,685) 446,085
__________________________________ _______________________________
Realized and
unrealized
gain (loss) on
investments.. 4,084,662 (526,484) (20,436) 471,080 31,434 683,908
__________________________________ _______________________________
NET INCREASE
IN NET ASSETS
RESULTING FROM
OPERATIONS $8,340,094 $3,761,026 $4,095,241 $878,356 $393,615 $1,023,758
__________________________________ _______________________________
</TABLE>
See Notes to Financial Statements.
D - 24
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
.............1996 TRUST.............. ............2006 TRUST............
Years Ended Dec. 31, Years Ended Dec. 31,
1991 1992 1993 1991 1992 1993
____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income....... $ 4,255,432 $ 4,287,510 $4,115,677 $ 407,276 $ 362,181 $ 339,850
Realized gain
on securities
sold......... 272,056 569,618 720,145 288,706 270,119 237,823
Unrealized
appreciation
(depreciation)
of investments 3,812,606 (1,096,102) (740,581) 182,374 (238,685) 446,085
_______________________________________ __________________________________
Net increase
in net assets
resulting from
operations.... 8,340,094 3,761,026 4,095,241 878,356 393,615 1,023,758
_______________________________________ __________________________________
CAPITAL SHARE
TRANSACTIONS
(Note 3):
Issuance of
additional
units......... 3,574,413 777,347 487,644 380,619 640,119 455,062
Redemptions of
units......... (4,932,159) (7,658,064) (7,791,180) (1,738,737) (1,534,016) (868,372)
_______________________________________ __________________________________
Net capital share
transactions.. (1,357,746) (6,880,717) (7,303,536) (1,358,118) (893,897) (413,310)
_______________________________________ __________________________________
NET INCREASE
(DECREASE) IN
NET ASSETS...... 6,982,348 (3,119,691) (3,208,295) (479,762) (500,282) 610,448
NET ASSETS,
BEGINNING
OF YEAR......... 48,851,723 55,834,071 52,714,380 5,247,318 4,767,556 4,267,274
_____________________________________ __________________________________
NET ASSETS, END OF
YEAR............ $55,834,071 $52,714,380 $49,506,085 $4,767,556 $4,267,274 $4,877,722
_____________________________________ __________________________________
UNIT VALUE, END OF
YEAR............ $.78708 $.84510 $.91291 $.35298 $.38733 $.47786
_________________________________ _______________________________
UNITS OUTSTANDING,
END OF YEAR..... 70,937,951 62,376,749 54,228,810 13,506,471 11,017,265 10,207,360
____________________________________ __________________________________
</TABLE>
See Notes to Financial Statements.
D - 25
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment
Trust. The following is a summary of significant accounting policies
consistently
followed by the Fund in the preparation of its financial statements. The
policies
are in conformity with generally accepted accounting principles.
(a) Securities are stated at value as determined by an independent evaluator
based
on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evaluations for the
securities at Dates of Deposit. Cost of securities subsequent to dates of
purchase has been adjusted to include the accretion of original issue discount
on the Stripped Treasury Securities. Realized gain and loss on sales of
securities are determined using the first-in, first-out cost basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
1996 Trust
__________
<TABLE>
<S> <C>
Cost of 54,228,810 units at Dates of Deposit......................... $28,455,697
Less sales charge.................................................... 284,557
___________
Net amount applicable to Holders..................................... 28,171,140
Realized gain on securities sold..................................... 531,434
Unrealized appreciation of investments............................... 4,420,816
Redemption of units - net cost of units redeemed less redemption
amounts............................................................ 1,216,514
Undistributed net investment income.................................. 15,166,181
___________
Net assets........................................................... $49,506,085
___________
2006 Trust
__________
Cost of 10,207,360 units at Dates of Deposit......................... $ 2,287,930
Less sales charge.................................................... 40,038
___________
Net amount applicable to Holders..................................... 2,247,892
Realized gain on securities sold..................................... 673,444
Unrealized appreciation of investments............................... 1,010,539
Redemption of units - net cost of units redeemed less redemption
amounts............................................................ 102,306
Undistributed net investment income.................................. 843,541
___________
Net assets........................................................... $ 4,877,722
___________
</TABLE>
D - 26
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
1996 4,977,454 959,020 542,180
2006 1,224,831 1,782,774 1,054,074
Units were redeemed as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
1996 6,973,195 9,520,222 8,690,119
2006 5,596,145 4,271,980 1,863,979
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day, or in the case of uncertificated units, upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
holder as specified in writing to the Trustee.
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At December 31, 1993, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the adjusted cost as shown in each
Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that each Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 27
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
PORTFOLIOS
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
1996 TRUST
__________
1 Stripped Treasury 0% 2/15/96 $54,010,853 $44,859,240
Securities (Note B)
2 U.S. Treasury Notes 8.875 2/15/96 215,085 218,346
___________ ___________
Total $54,225,938 $45,077,586
___________ ___________
2006 TRUST
__________
1 Stripped Treasury 0% 2/15/06 $10,421,000 $ 3,827,434
Securities (Note B)
2 U.S. Treasury Bonds 9.375 2/15/06 34,201 38,119
___________ ___________
Total $10,455,201 $ 3,865,553
___________ ___________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of the
following types of securities: (a) U.S. Treasury debt
obligations which have been stripped of their remaining
interest coupons, (b) interest coupons which have been
stripped from U.S. Treasury debt obligations and (c)
receipts or certificates for underlying stripped U.S.
Treasury debt obligations. The receipts or certificates
evidence ownership of future interest or principal payments
on U.S. Treasury notes or bonds. The receipts or
certificates are issued in registered form by a major bank
which acts as custodian and nominal holder of the underlying
stripped U.S. Treasury debt obligation. The Stripped
Treasury Securities are payable in full at maturity at their
stated maturity amount, and are not subject to redemption
prior to maturity. The Stripped Treasury Securities do not
make any periodic payments of interest.
D - 28
<PAGE>
Value
(Note A)
________
$49,263,557
234,845
___________
$49,498,402
___________
$ 4,831,973
44,119
___________
$ 4,876,092
___________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series D
We have audited the accompanying statements of condition of the 1997
Trust and the 2007 Trust of The Merrill Lynch Fund of Stripped
("Zero") U.S. Treasury Securities, Series D, including the
portfolios, as of December 31, 1993 and the related statements of
operations and of changes in net assets for the years ended
December 31, 1991, 1992 and 1993. These financial statements are
the responsibility of the Trustee. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Securities owned at
December 31, 1993, as shown in such portfolios, were confirmed to us
by The Chase Manhattan Bank (National Association), the Trustee. An
audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
above-mentioned Trusts of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series D at December 31, 1993 and the
results of their operations and changes in their net assets for the
above-stated years in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 29
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1993
1997 TRUST 2007 TRUST
__________ __________
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1)............... $54,813,820 $11,237,844
Other...................................... 11,989 3,834
____________ ___________
Total trust property............. 54,825,809 11,241,678
LESS LIABILITY - Other....................... 988 2,212
___________ ___________
NET ASSETS (Note 2).......................... $54,824,821 $11,239,466
___________ ___________
UNITS OUTSTANDING............................ 63,285,271 25,348,458
__________ __________
UNIT VALUE................................... $.86631 $.44340
_______ _______
See Notes to Financial Statements.
D - 30
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
.............1997 TRUST............ .............2007 TRUST...........
...Years Ended December 31.... ....Years Ended December 31.....
1991 1992 1993 1991 1992 1993
____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income...... $ 29,345 $ 23,067 $ 23,900 $ 17,875 $ 9,931 $ 10,681
Accretion of original
issue discount..... 4,647,617 4,700,500 4,238,667 1,347,680 939,041 840,251
Trustee's fees and
expenses........... (17,649) (25,960) (16,265) (10,100) (13,150) (7,218)
_________________________________ __________________________________
Net investment
income............. 4,659,313 4,697,607 4,246,302 1,355,455 935,822 843,714
_________________________________ __________________________________
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Realized gain on
securities sold.... 591,159 1,236,248 1,069,363 1,100,421 557,225 1,054,077
Unrealized apprecia-
tion (depreciation)
of investments..... 4,333,472 (1,708,402) 188,278 131,029 (569,283) 978,063
_________________________________ __________________________________
Net in realized and
unrealized gain
(loss) on
investments........ 4,924,631 (472,154) 1,257,641 1,231,450 (12,058) 2,032,140
_________________________________ __________________________________
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS........... $9,583,944 $4,225,453 $5,503,943 $2,586,905 $ 923,764 $2,875,854
____________________________________________________________________
</TABLE>
See Notes to Financial Statements.
D - 31
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
.............1997 TRUST............. ............2007 TRUST.............
......Years Ended December 31....... .......Years Ended December 31.....
1991 1992 1993 1991 1992 1993
____ ____ ____ ____ ____ ___
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income......... $ 4,659,313 $ 4,697,607 $4,246,302 $ 1,355,455 $ 935,822 $ 843,714
Realized gain
on securites
sold 591,159 1,236,248 1,069,363 1,100,421 557,225 1,054,077
Unrealized
appreciation
(depreciation)
of investments. 4,333,472 (1,708,402) 188,278 131,029 (569,283) 978,063
_____________________________________ ___________________________ _______
Net increase in
net assets
resulting from
operations..... 9,583,944 4,225,453 5,503,943 2,586,905 923,764 2,875,854
_____________________________________ ___________________________________
CAPITAL SHARE
TRANSACTIONS
(Note 3):
Issuance of
additional
units.......... 1,395,597 5,949,721 642,033 117,514 213,762
Redemptions of
units.......... (7,105,457)(11,517,017) (8,848,290) (8,297,427) (2,870,648) (3,238,370)
_____________________________________ __________________________________
Net capital share
transactions... (5,709,860) (5,567,296) (8,206,237) (8,297,427) (2,753,134) (3,024,608)
______________________________________ __________________________________
NET INCREASE (DE-
CREASE) IN NET
ASSETS.......... 3,874,084 (1,341,843) (2,702,304) (5,710,522) (1,829,370) (148,754)
NET ASSETS,
BEGINNING OF
PERIOD........... 54,994,884 58,868,968 57,527,125 18,928,112 13,217,590 11,388,220
____________________________________ ___________________________________
NET ASSETS, END OF
PERIOD.......... $58,868,968 $57,527,125 $54,824,821 $13,217,590 $11,388,220 $11,239,466
____________________________________ ___________________________________
UNIT VALUE, END OF
PERIOD........... $.73264 $.78771 $.86631 $.32719 $.35615 $.44340
________________________________ _______________________________
UNITS OUTSTANDING,
END OF PERIOD.... 80,351,873 73,030,656 63,285,271 40,397,640 31,976,321 25,348,458
__________________________________ __________________________________
</TABLE>
See Notes to Financial Statements.
D - 32
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
(a) Securities are stated at value as determined by an independent evaluator
based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evaluations for the
securities at Dates of Deposit. Cost of securities subsequent to dates of
purchase has been adjusted to include the accretion of original issue discount
on the Stripped Treasury Securities. Realized gain and loss on sales of
securities are determined using the first-in, first-out cost basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
1997 Trust
__________
<TABLE>
<S> <C>
Cost of 63,285,271 units at Dates of Deposit................... $29,968,761
Less sales charge.............................................. 449,531
___________
Net amount applicable to Holders............................... 29,519,230
Realized gain on securities sold............................... 3,245,180
Unrealized appreciation of investments......................... 6,218,562
Redemption of units - net cost of units redeemed less
redemption amounts........................................... (349,351)
Undistributed net investment income............................ 16,191,200
___________
Net assets..................................................... $54,824,821
___________
2007 Trust
__________
Cost of 25,348,458 units at Dates of Deposit................... $ 4,718,238
Less sales charge.............................................. 94,365
___________
Net amount applicable to Holders............................... 4,623,873
Realized gain on securities sold............................... 3,490,251
Unrealized appreciation of investments......................... 3,084,333
Redemption of units - net cost of units redeemed less
redemption amounts........................................... (2,586,672)
Undistributed net investment income............................ 2,627,681
___________
Net assets..................................................... $11,239,466
___________
</TABLE>
D - 33
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued as follows:
<TABLE>
<CAPTION>
1991 1992 1993
____ ____ ____
Trust
_____
<S> <C> <C> <C> <C>
1997 2,131,705 8,014,253 742,180
2007 NONE 343,368 524,545
Units were redeemed as follows:
1991 1992 1993
____ ____ ____
1997 10,951,692 15,335,470 10,487,565
2007 29,437,867 8,764,687 7,152,408
</TABLE>
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day or in the case of uncertificated units upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
Holder as specified in writing to the Trustee.
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At December 31, 1993, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the adjusted cost as shown in each
Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that each Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 34
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
PORTFOLIOS
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rate Maturities Amount (Note A)
__________ ____ __________ ______ ________
1997 TRUST
__________
1 Stripped Treasury 0% 2/15/97 $63,096,423 $48,309,803
Securities (Note B)
2 U.S. Treasury Notes 7.25 11/15/96 307,513 285,455
___________ ___________
Total $63,403,936 $48,595,258
___________ ___________
2007 TRUST
__________
1 Stripped Treasury 0% 2/15/07 $25,848,000 $ 8,056,358
Securities (Note B)
2 U.S. Treasury Bonds 9.375 2/15/06 92,683 97,153
___________ ___________
Total $25,940,683 $ 8,153,511
___________ ___________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of the
following types of securities: (a) U.S. Treasury debt
obligations which have been stripped of their remaining interest
coupons, (b) interest coupons which have been stripped from U.S.
Treasury debt obligations and (c) receipts or certificates for
underlying stripped U.S. Treasury debt obligations. The receipts
or certificates evidence ownership of future interest or
principal payments on U.S. Treasury notes or bonds. The receipts
or certificates are issued in registered form by a major bank
which acts as custodian and nominal holder of the underlying
stripped U.S. Treasury debt obligation. The Stripped Treasury
Securities are payable in full at maturity at their stated
maturity amount, and are not subject to redemption prior to
maturity. The Stripped Treasury Securities do not make any
periodic payments of interest.
D - 35
<PAGE>
Value
(Note A)
________
$54,484,397
329,423
___________
$54,813,820
___________
$11,118,283
119,561
___________
$11,237,844
___________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series E:
We have audited the accompanying statements of condition of the 1998
Trust and the 2008 Trust of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series E, including the portfolios, as of
December 31, 1993 and the related statements of operations and of
changes in net assets for the years ended December 31, 1991, 1992 and
1993. These financial statements are the responsibility of the
Trustee. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Securities owned at December 31, 1993, as shown
in such portfolios, were confirmed to us by The Chase Manhattan Bank
(National Association), the Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the
Trustee, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
abovementioned Trusts of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series E at December 31, 1993 and the results
of their operations and changes in their net assets for the
above-stated years in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 36
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
..............1998 TRUST.............
........Years Ended December 31......
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income.......................... $ 4,533,920 $ 4,752,996 $3,816,375
Realized gain on securities sold............... 405,462 1,084,050 1,660,333
Unrealized appreciation (deprecia-
tion) of investments......................... 4,848,001 (1,398,847) 648,235
_____________________________________
Net increase in net assets resulting
from operations.............................. 9,787,383 4,438,199 6,124,943
_____________________________________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units................... 2,610,669 3,439,828 638,357
Redemptions of units........................... (6,543,320) (11,046,624) (9,971,447)
______________________________________
Net capital share transactions................. (3,932,651) (7,606,796) (9,333,090)
_____________________________________
NET INCREASE (DECREASE) IN NET ASSETS............ 5,854,732 (3,168,597) (3,208,147)
NET ASSETS, BEGINNING OF YEAR.................... 53,517,192 59,371,924 56,203,327
_____________________________________
NET ASSETS, END OF YEAR.......................... $59,371,924 $56,203,327 $52,995,180
_____________________________________
UNIT VALUE, END OF YEAR.......................... $.67596 $.73079 $.81415
_________________________________
UNITS OUTSTANDING, END OF YEAR................... 87,833,040 76,907,638 65,092,391
____________________________________
</TABLE>
See Notes to Financial Statements.
D - 40
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
..............2008 TRUST.............
........Years Ended December 31......
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income........................... $ 3,229,672 $ 2,499,253 $ 2,066,128
Realized gain on securities sold................ 1,256,564 1,504,803 5,337,058
Unrealized appreciation (deprecia-
tion) of investments.......................... 1,876,816 (1,708,936) (835,824)
_____________________________________
Net increase in net assets resulting
from operations............................... 6,363,052 2,295,120 6,567,362
_____________________________________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units.................... 4,866,069 1,473,279 845,437
Redemptions of units............................ (17,660,331) (11,252,614) (9,768,905)
_____________________________________
Net capital share transactions.................. (12,794,262) (9,779,335) (8,923,468)
_____________________________________
NET DECREASE IN NET ASSETS........................ (6,431,210) (7,484,215) (2,356,106)
NET ASSETS, BEGINNING OF YEAR..................... 42,351,538 35,920,328 28,436,113
_____________________________________
NET ASSETS, END OF YEAR........................... $35,920,328 $28,436,113 $26,080,007
_____________________________________
UNIT VALUE, END OF YEAR........................... $.29567 $.32250 $.40278
_________________________________
UNITS OUTSTANDING, END OF YEAR.................... 121,487,227 88,174,129 64,750,242
_____________________________________
</TABLE>
See Notes to Financial Statements.
D - 41
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1993
1998 TRUST 2008 TRUST
__________ __________
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1)............. $52,971,063 $26,075,508
Receivable from securities sold.......... 189,368 328,787
Other.................................... 29,579 19,514
___________ ___________
Total trust property........... 53,190,010 26,423,809
___________ ___________
LESS LIABILITIES:
Redemptions payable...................... 190,458 332,657
Other.................................... 4,372 11,145
___________ ___________
Total liabilities........................ 194,830 343,802
___________ ___________
NET ASSETS (Note 2)........................ $52,995,180 $26,080,007
___________ ___________
UNITS OUTSTANDING.......................... 65,092,391 64,750,242
__________ __________
UNIT VALUE................................. $.81415 $.40278
_______ _______
See Notes to Financial Statements.
D - 37
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
............1998 TRUST............
......Years Ended December 31.....
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................... $ 31,531 $ 27,711 $ 25,125
Accretion of original issue
discount........................................ 4,517,066 4,745,830 3,806,941
Trustee's fees and expenses....................... (14,677) (20,545) (15,691)
__________________________________
Net investment income............................. 4,533,920 4,752,996 3,816,375
__________________________________
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold.................. 405,462 1,084,050 1,660,333
Unrealized appreciation (deprecia-
tion) of investments............................ 4,848,001 (1,398,847) 648,235
__________________________________
Realized and unrealized gain (loss)
on investments.................................. 5,253,463 (314,797) 2,308,568
__________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................................... $9,787,383 $4,438,199 $6,124,943
__________________________________
</TABLE>
See Notes to Financial Statements.
D - 38
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
............2008 TRUST............
......Years Ended December 31.....
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income.................................. $ 48,034 $ 35,572 $ 27,805
Accretion of original issue
discount....................................... 3,203,170 2,488,488 2,055,569
Trustee's fees and expenses...................... (21,532) (24,807) (17,246)
__________________________________
Net investment income............................ 3,229,672 2,499,253 2,066,128
__________________________________
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold................. 1,256,564 1,504,803 5,337,058
Unrealized appreciation (deprecia-
tion) of investments........................... 1,876,816 (1,708,936) (835,824)
__________________________________
Realized and unrealized gain (loss)
on investments................................. 3,133,380 (204,133) 4,501,234
___________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................................. $6,363,052 $2,295,120 $6,567,362
__________________________________
</TABLE>
See Notes to Financial Statements.
D - 39
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
(a) Securities are stated at value as determined by an independent
evaluator based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evaluations for the
securities at Dates of Deposit. Cost of securities subsequent to
dates of purchase has been adjusted to include the accretion of
original issue discount on the Stripped Treasury Securities.
Realized gain and loss on sales of securities are determined using
the first-in, first-out cost basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision
for such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
1998 Trust
__________
Cost of 65,092,391 units at Dates of Deposit..................... $29,796,478
Less sales charge................................................ 446,948
___________
Net amount applicable to Holders................................. 29,349,530
Realized gain on securities sold................................. 4,420,541
Unrealized appreciation of investments........................... 7,178,113
Redemptions of units - net cost of units redeemed less redemption
amounts....................................................... (2,085,159)
Undistributed net investment income.............................. 14,132,155
___________
Net assets....................................................... $52,995,180
___________
2008 Trust
__________
Cost of 64,750,242 units at Dates of Deposit..................... $12,668,836
Less sales charge................................................ 253,377
___________
Net amount applicable to Holders................................. 12,415,459
Realized gain on securities sold................................. 7,985,943
Unrealized appreciation of investments........................... 5,741,053
Redemptions of units - net cost of units redeemed less redemption
amounts........................................................ (4,704,012)
Undistributed net investment income.............................. 4,641,564
___________
Net assets....................................................... $26,080,007
___________
D - 42
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued as follows:
1991 1992 1993
____ ____ ____
Trust
_____
1998 4,245,120 5,068,763 782,851
2008 18,404,518 5,207,624 2,449,524
Units were redeemed as follows:
1991 1992 1993
____ ____ ____
Trust
_____
1998 10,955,497 15,994,165 12,598,098
2008 69,692,914 38,520,722 25,873,411
Units may be redeemed at the office of the Trustee upon tender thereof,
generally on
any business day or, in the case of uncertificated units, upon delivery of a
request
for redemption and payment of any relevant tax. The Trustee will redeem units
either in cash or in kind at the option of the Holder as specified in writing
to the
Trustee.
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At December 31, 1993, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the adjusted cost as shown in each
Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that each Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 43
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
PORTFOLIOS
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
1998 TRUST
__________
1 Stripped Treasury 0% 2/15/98 $64,857,000 $45,522,498
Securities (Note B)
2 U.S. Treasury Notes 8.125 2/15/98 281,817 270,452
__________________________
Total $65,138,817 $45,792,950
__________________________
2008 TRUST
__________
1 Stripped Treasury 0% 2/15/08 $64,729,000 $20,075,977
Securities (Note B)
2 U.S. Treasury Bonds 9.375 2/15/06 245,428 258,478
__________________________
Total $64,974,428 $20,334,455
__________________________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of
the following types of securities: (a) U.S. Treasury debt
obligations which have been stripped of their remaining
interest coupons, (b) interest coupons which have been
stripped from U.S. Treasury debt obligations and (c)
receipts or certificates for underlying stripped U.S.
Treasury debt obligations. The receipts or certificates
evidence ownership of future interest or principal
payments on U.S. Treasury notes or bonds. The receipts
or certificates are issued in registered form by a major
bank which acts as custodian and nominal holder of the
underlying stripped U.S. Treasury debt obligation. The
Stripped Treasury Securities are payable in full at
maturity at their stated maturity amount, and are not
subject to redemption prior to maturity. The Stripped
Treasury Securities do not make any periodic payments of
interest.
D - 44
<PAGE>
Value
(Note A)
________
$52,656,750
314,313
____________
$52,971,063
____________
$25,758,906
316,602
____________
$26,075,508
____________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series F:
We have audited the accompanying statements of condition of the 1999
Trust and the 2009 Trust of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series F, including the portfolios, as of
December 31, 1993 and the related statements of operations and of changes
in net assets for the years ended December 31, 1991, 1992, and 1993.
These financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Securities owned at December 31, 1993, as shown in such
portfolios, were confirmed to us by The Chase Manhattan Bank (National
Association), the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the above-
mentioned Trusts of The Merrill Lynch Fund of Stripped ("Zero") U.S.
Treasury Securities, Series F at December 31, 1993 and the results of
their operations and changes in their net assets for the above-stated
years in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 45
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
...............2009 TRUST.............
.......Years Ended December 31........
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income........................ $ 1,853,712 $ 1,031,885 $ 828,324
Realized gain (loss) on securities sold...... (1,262,302) 622,693 604,618
Unrealized appreciation (depreciation) of
investments................................ 2,201,899 (672,654) 1,184,559
_______________________________________
Net increase in net assets resulting from
operations................................. 2,793,309 981,924 2,617,501
_______________________________________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units................. 5,855,066 1,470,486
Redemptions of units......................... (19,188,168) (5,693,204) (2,888,682)
_______________________________________
Net capital share transactions............... (13,333,102) (4,222,718) (2,888,682)
_______________________________________
NET DECREASE IN NET ASSETS..................... (10,539,793) (3,240,794) (271,181)
NET ASSETS, BEGINNING OF YEAR.................. 24,627,920 14,088,127 10,847,333
_______________________________________
NET ASSETS, END OF YEAR........................ $14,088,127 $10,847,333 $10,576,152
_______________________________________
UNIT VALUE, END OF YEAR........................ $.27258 $.29755 $.37304
___________________________________
UNITS OUTSTANDING, END OF YEAR................. 51,684,833 36,455,263 28,350,975
______________________________________
</TABLE>
See Notes to Financial Statements.
D - 49
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1993
1999 TRUST 2009 TRUST
__________ __________
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1)............. $10,610,387 $10,571,734
Other.................................... 1,958 12,627
___________ ___________
Total trust property........... 10,612,345 10,584,361
LESS LIABILITY - Other..................... 1,965 8,209
___________ ___________
NET ASSETS (Note 2)........................ $10,610,380 $10,576,152
___________ ___________
UNITS OUTSTANDING.......................... 13,878,316 28,350,975
__________ __________
UNIT VALUE................................. $.76453 $.37304
_______ _______
See Notes to Financial Statements.
D - 46
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
.............1999 TRUST...........
.....Years Ended December 31......
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income................................... $ 5,142 $ 5,526 $ 5,242
Accretion of original issue discount.............. 637,510 714,468 1,002,409
Trustee's fees and expenses....................... (4,375) (6,810) (3,771)
____________________________________
Net investment income............................. 638,277 713,184 1,003,880
____________________________________
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on securities sold.................. 14,354 3,553 109,193
Unrealized appreciation of investments............ 920,769 86,135 265,039
____________________________________
Realized and unrealized gain on investments....... 935,123 89,688 374,232
____________________________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,573,400 $802,872 $1,378,112
____________________________________
.............2009 TRUST...........
.....Years Ended December 31......
1991 1992 1993
____ ____ ____
INVESTMENT INCOME
Interest income................................... $ 25,198 $ 16,320 $ 11,694
Accretion of original issue discount.............. 1,840,877 1,030,679 825,730
Trustee's fees and expenses....................... (12,363) (15,114) (9,100)
____________________________________
Net investment income............................. 1,853,712 1,031,885 828,324
____________________________________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on securities sold........... (1,262,302) 622,693 604,618
Unrealized appreciation (depreciation) of
investments..................................... 2,201,899 (672,654) 1,184,559
____________________________________
Realized and unrealized gain (loss) on investments 939,597 (49,961) 1,789,177
____________________________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,793,309 $981,924 $2,617,501
____________________________________
</TABLE>
See Notes to Financial Statements.
D - 47
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
...............1999 TRUST.............
.......Years Ended December 31........
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income......................... $ 638,277 $ 713,184 $1,003,880
Realized gain on securities sold.............. 14,354 3,553 109,193
Unrealized appreciation of investments........ 920,769 86,135 265,039
______________________________________
Net increase in net assets resulting from
operations.................................. 1,573,400 802,872 1,378,112
______________________________________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units.................. 1,751,174 1,810,751 150,449
Redemptions of units.......................... (701,035) (1,951,684) (1,546,344)
______________________________________
Net capital share transactions................ 1,050,139 (140,933) (1,395,895)
______________________________________
NET INCREASE (DECREASE) IN NET ASSETS........... 2,623,539 661,939 (17,783)
NET ASSETS, BEGINNING OF YEAR................... 7,342,685 9,966,224 10,628,163
______________________________________
NET ASSETS, END OF YEAR......................... $9,966,224 $10,628,163 $10,610,380
______________________________________
UNIT VALUE, END OF YEAR......................... $.62481 $.67538 $.76453
___________________________________
UNITS OUTSTANDING, END OF YEAR.................. 15,950,766 15,736,540 13,878,316
______________________________________
</TABLE>
D - 48
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
(a) Securities are stated at value as determined by an independent
evaluator based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evaluations for the
securities at Dates of Deposit. Cost of securities subsequent to dates
of purchase has been adjusted to include the accretion of original issue
discount on the Stripped Treasury Securities. Realized gain and loss on
sales of securities are determined using the first-in, first-out cost
basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision
for such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
1999 Trust
__________
Cost of 13,878,316 units at Dates of Deposit................... $ 7,184,310
Less sales charge.............................................. 106,172
___________
Net amount applicable to Holders............................... 7,078,138
Realized gain on securities sold............................... 149,063
Unrealized appreciation of investments......................... 1,301,724
Redemption of units - net cost of units redeemed less redemp-
tion amounts................................................. 121,058
Undistributed net investment income............................ 1,960,397
___________
Net assets..................................................... $10,610,380
___________
2009 Trust
__________
Cost of 28,350,975 units at Dates of Deposit................... $ 6,173,545
Less sales charge.............................................. 121,051
___________
Net amount applicable to Holders............................... 6,052,494
Realized loss on securities sold............................... (1,149,759)
Unrealized appreciation of investments......................... 2,365,753
Redemption of units - net cost of units redeemed less
redemption amounts........................................... 1,805,327
Undistributed net investment income............................ 1,502,337
___________
Net assets..................................................... $10,576,152
___________
D - 50
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued as follows:
.......Years Ended December 31.......
Trust 1991 1992 1993
_____ ____ ____ ___
1999 3,121,894 2,870,632 195,741
2009 25,490,311 5,582,733
Units were redeemed as follows:
.......Years Ended December 31.......
Trust 1991 1992 1993
_____ ____ ____ ____
1999 1,287,344 3,084,858 2,053,965
2009 82,697,655 20,812,303 8,104,288
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day, or in the case of uncertificated units upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
Holder as specified in writing to the Trustee.
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At December 31, 1993, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the adjusted cost as shown in each
Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that each Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 51
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
PORTFOLIOS
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
1999 TRUST
__________
1 Stripped Treasury 0% 2/15/99 $13,824,000 $ 9,250,869
Securities (Note B)
2 U.S. Treasury Notes 8.875 2/15/99 54,716 57,794
___________ ___________
Total $13,878,716 $ 9,308,663
___________ ___________
2009 TRUST
__________
1 Stripped Treasury 0% 2/15/09 $28,394,000 $ 8,084,763
Securities (Note B)
2 U.S. Treasury 9.375 2/15/06 109,016 121,218
Bonds
___________ ___________
Total $28,503,016 $ 8,205,981
___________ ___________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of
the following types of securities: (a) U.S. Treasury debt
obligations which have been stripped of their remaining
interest coupons, (b) interest coupons which have been
stripped from U.S. Treasury debt obligations and (c)
receipts or certificates for underlying stripped U.S.
Treasury debt obligations. The receipts or certificates
evidence ownership of future interest or principal
payments on U.S. Treasury notes or bonds. The receipts
or certificates are issued in registered form by a major
bank which acts as custodian and nominal holder of the
underlying stripped U.S. Treasury debt obligation. The
Stripped Treasury Securities are payable in full at
maturity at their stated maturity amount, and are not
subject to redemption prior to maturity. The Stripped
Treasury Securities do not make any periodic payments of
interest.
D - 52
<PAGE>
Value
(Note A)
________
$10,546,883
63,504
___________
$10,610,387
___________
$10,431,103
140,631
___________
$10,571,734
___________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series G:
We have audited the accompanying statements of condition of the 2000
Trust and the 2010 Trust of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series G, including the portfolios, as of
December 31, 1993 and the related statements of operations and of changes
in net assets for the years ended December 31, 1991, 1992 and 1993.
These financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Securities owned at December 31, 1993, as shown in such
portfolios, were confirmed to us by The Chase Manhattan Bank (National
Association), the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
above-mentioned Trusts of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series G at December 31, 1993 and the results
of their operations and changes in their net assets for the above-stated
years in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 53
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
...............2000 TRUST..............
........Years Ended December 31,........
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income..................... $ 675,613 $ 862,555 $ 884,697
Realized gain on securities sold.......... 37,213 156,766 293,367
Unrealized appreciation (depreciation) of
investments............................. 857,612 (37,928) 672,178
________________________________________
Net increase in net assets resulting from
operations.............................. 1,570,438 981,393 1,850,242
________________________________________
CAPITAL SHARE TRANSACTIONS
(Note 3):
Issuance of additional units.............. 1,166,037 4,313,764 679,422
Redemptions of units...................... (1,330,041) (1,400,080) (1,985,206)
________________________________________
Net capital share transactions............ (164,004) 2,913,684 (1,305,784)
________________________________________
NET INCREASE IN NET
ASSETS.................................... 1,406,434 3,895,077 544,458
NET ASSETS, BEGINNING OF YEAR............... 7,647,283 9,053,717 12,948,794
________________________________________
NET ASSETS, END OF YEAR..................... $9,053,717 $12,948,794 $13,493,252
________________________________________
UNIT VALUE, END OF YEAR..................... $.57624 $.62704 $.71952
_____________________________________
UNITS OUTSTANDING, END OF YEAR.............. 15,711,754 20,650,544 18,753,153
________________________________________
</TABLE>
See Notes to Financial Statements.
D - 57
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
................2010 TRUST..............
........Years Ended December 31,........
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income..................... $ 1,230,522 $ 842,625 $ 601,021
Realized gain on securities sold.......... 712,687 315,775 1,206,832
Unrealized appreciation (depreciation)
of investments.......................... 37,771 (541,986) (26,233)
_________________________________________
Net increase in net assets resulting from
operations.............................. 1,980,980 616,414 1,781,620
_________________________________________
CAPITAL SHARE TRANSACTIONS
(Note 3):
Issuance of additional units.............. 8,519,959 3,093,258 3,975,770
Redemptions of units...................... (12,787,590) (7,349,853) (6,429,139)
_________________________________________
Net capital share transactions............ (4,267,631) (4,256,595) (2,453,369)
_________________________________________
NET DECREASE IN NET ASSETS.................. (2,286,651) (3,640,181) (671,749)
NET ASSETS, BEGINNING OF PERIOD............. 13,478,632 11,191,981 7,551,800
__________________________________________
NET ASSETS, END OF PERIOD................... $11,191,981 $ 7,551,800 $ 6,880,051
_________________________________________
UNIT VALUE, END OF PERIOD................... $.25006 $.27266 $.34436
_____________________________________
UNITS OUTSTANDING, END OF PERIOD............ 44,756,622 27,696,889 19,979,135
________________________________________
</TABLE>
See Notes to Financial Statements.
D - 58
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1993
2000 TRUST 2010 TRUST
__________ __________
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1)............. $13,492,865 $6,874,278
Other.................................... 2,196 7,113
___________ __________
Total trust property........... 13,495,061 6,881,391
___________ __________
LESS LIABILITY - Other..................... 1,809 1,340
___________ __________
NET ASSETS (Note 2)........................ $13,493,252 $6,880,051
___________ __________
UNITS OUTSTANDING.......................... 18,753,153 19,979,135
__________ __________
UNIT VALUE................................. $.71952 $.34436
_______ _______
See Notes to Financial Statements.
D - 54
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
...............2000 TRUST..............
........Years Ended December 31,.......
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................... $ 5,476 $ 6,222 $ 7,551
Accretion of original issue discount...... 673,500 863,594 881,261
Trustee's fees and expenses............... (3,363) (7,261) (4,115)
______________________________________
Net investment income..................... 675,613 862,555 884,697
______________________________________
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on securities sold.......... 37,213 156,766 293,367
Unrealized appreciation (depreciation)
of investments.......................... 857,612 (37,928) 672,178
______________________________________
Realized and unrealized gain on
investments............................. 894,825 118,838 965,545
______________________________________
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................ $1,570,438 $981,393 $1,850,242
______________________________________
</TABLE>
See Notes to Financial Statements.
D - 55
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
................2010 TRUST..............
........Years Ended December 31,........
1991 1992 1993
____ ____ ____
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................... $ 19,136 $ 13,133 $ 8,362
Accretion of original issue discount...... 1,222,089 842,434 599,536
Trustee's fees and expenses............... (10,703) (12,942) (6,877)
_______________________________________
Net investment income..................... 1,230,522 842,625 601,021
_______________________________________
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold.......... 712,687 315,775 1,206,832
Unrealized appreciation (depreciation)
of investments.......................... 37,771 (541,986) (26,233)
________________________________________
Realized and unrealized gain (loss) on
investments............................. 750,458 (226,211) 1,180,599
_______________________________________
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................ $1,980,980 $616,414 $1,781,620
_______________________________________
</TABLE>
See Notes to Financial Statements.
D - 56
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
(a) Securities are stated at value as determined by an independent
evaluator based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evaluations for the
securities at Dates of Deposit. Cost of securities subsequent to dates
of purchase has been adjusted to include the accretion of original issue
discount on the Stripped Treasury Securities. Realized gain and loss on
sales of securities are determined using the first-in, first-out cost
basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision
for such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
2000 Trust
__________
Cost of 18,753,153 units at Dates of Deposit................... $ 9,565,942
Less sales charge.............................................. 143,489
___________
Net amount applicable to Holders............................... 9,422,453
Realized gain on securities sold............................... 498,872
Unrealized appreciation of investments......................... 1,584,446
Redemptions of units - net cost of units redeemed less
redemption amounts........................................... 127,180
Undistributed net investment income............................ 1,860,301
___________
Net assets..................................................... $13,493,252
___________
2010 Trust
__________
Cost of 19,979,135 units at Dates of Deposit................... $ 4,327,691
Less sales charge.............................................. 86,554
___________
Net amount applicable to Holders............................... 4,241,137
Realized gain on securities sold............................... 2,000,801
Unrealized appreciation of investments......................... 530,683
Redemptions of units - net cost of units redeemed less
redemption amounts........................................... (236,995)
Undistributed net investment income............................ 344,425
___________
Net assets..................................................... $ 6,880,051
___________
D - 59
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued as follows:
<TABLE>
<CAPTION>
Trust 1991 1992 1993
_____ ____ ____ ____
<S> <C> <C> <C> <C>
2000 2,361,231 7,328,893 972,864
2010 39,930,070 12,407,648 12,042,798
Units were redeemed as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
2000 2,636,935 2,390,103 2,870,255
2010 60,457,742 29,467,381 19,760,552
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day, or in the case of uncertificated units upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
holder as specified in writing to the Trustee.
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At December 31, 1993, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the adjusted cost as shown in each
Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that each Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 60
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
PORTFOLIOS
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
2000 TRUST
__________
1 Stripped Treasury 0% 2/15/00 $18,704,000 $11,821,939
Securities (Note B)
2 U.S. Treasury Notes 8.500 2/15/00 75,389 86,480
___________________________
Total $18,779,389 $11,908,419
___________________________
2010 TRUST
__________
1 Stripped Treasury 0% 2/15/10 $19,886,000 $ 6,246,251
Securities (Note B)
2 U.S. Treasury Bonds 9.375 2/15/06 78,223 97,344
___________________________
Total $19,964,223 $ 6,343,595
___________________________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of the
following types of securities: (a) U.S. Treasury debt obligations
which have been stripped of their remaining interest coupons, (b)
interest coupons which have been stripped from U.S. Treasury debt
obligations and (c) receipts or certificates for underlying
stripped U.S. Treasury debt obligations. The receipts or
certificates evidence ownership of future interest or principal
payments on U.S. Treasury notes or bonds. The receipts or
certificates are issued in registered form by a major bank which
acts as custodian and nominal holder of the underlying stripped
U.S. Treasury debt obligation. The Stripped Treasury Securities
are payable in full at maturity at their stated maturity amount,
and are not subject to redemption prior to maturity. The Stripped
Treasury Securities do not make any periodic payments of interest.
D - 61
<PAGE>
Value
(Note A)
________
$13,405,344
87,521
____________
$13,492,865
____________
$ 6,773,370
100,908
____________
$ 6,874,278
____________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series H:
We have audited the accompanying statement of condition of the the 2011 Trust
of The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities,
Series H, including the portfolio, as of December 31, 1993 and the related
statements of operations and of changes in net assets for the period May 1 to
December 31, 1991 and the years ended December 31, 1992 and 1993. These
financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Securities owned at December 31, 1993, as shown in such portfolio, were
confirmed to us by The Chase Manhattan Bank (National Association), the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the above-mentioned Trust of
The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities, Series H
at December 31, 1993 and the results of its operations and changes in its net
assets for the above-stated periods in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 62
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1993
2011 TRUST
__________
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1)............................ $3,854,990
Other................................................... 2,278
__________
Total trust property.......................... 3,857,268
LESS LIABILITY - Other.................................... 824
__________
NET ASSETS (Note 2)....................................... $3,856,444
__________
UNITS OUTSTANDING......................................... 12,023,998
__________
UNIT VALUE................................................ $.32073
_______
See Notes to Financial Statements.
D - 63
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
STATEMENTS OF OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
..............2011 TRUST..............
May 1
to
December 31, Years Ended December 31,
1991 1992 1993
____ _____ ____
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................... $ 783 $ 5,180 $ 4,737
Accretion of original issue discount.............. 40,574 307,165 294,464
Trustee's fees and expenses....................... (879) (5,360) (3,011)
________ ________ ________
Net investment income............................. 40,478 306,985 296,190
________ ________ ________
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on securities sold.................. 34,158 29,846 238,213
Unrealized appreciation of investments............ 91,188 116,174 386,516
________ ________ ________
Realized and unrealized gain on investments....... 125,346 146,020 624,729
________ ________ ________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $165,824 $453,005 $920,919
________ ________ ________
</TABLE>
See Notes to Financial Statements.
D - 64
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
..............2011 TRUST..............
May 1
to
December 31, Years Ended December 31,
1991 1992 1993
____ _____ ____
<S> <C> <C> <C>
OPERATIONS:
Net investment income............................ $ 40,478 $ 306,985 $ 296,190
Realized gain on securities sold................. 34,158 29,846 238,213
Unrealized appreciation of investments........... 91,188 116,174 386,516
__________ __________ __________
Net increase in net assets resulting from
operations..................................... 165,824 453,005 920,919
__________ __________ __________
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units..................... 1,250,830 5,691,235 919,691
Redemptions of units............................. (505,782) (3,377,073) (1,769,511)
__________ __________ __________
Net capital share transactions................... 745,048 2,314,162 (849,820)
__________ __________ __________
NET INCREASE IN NET ASSETS......................... 910,872 2,767,167 71,099
NET ASSETS, BEGINNING OF PERIOD.................... 107,306 1,018,178 3,785,345
__________ __________ __________
NET ASSETS, END OF PERIOD.......................... $1,018,178 $3,785,345 $3,856,444
__________ __________ __________
UNIT VALUE, END OF PERIOD.......................... $.23282 $.25240 $.32073
_______ _______ _______
UNITS OUTSTANDING, END OF PERIOD................... 4,373,318 14,997,268 12,023,998
_________ __________ __________
</TABLE>
See Notes to Financial Statements.
D - 65
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
(a) Securities are stated at value as determined by an independent
evaluator based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evaluations for the
securities at the Date of Purchase. Cost of securities subsequent to dates
of purchase has been adjusted to include the accretion of original issue
discount on the Stripped Treasury Securities. Realized gain and loss on
sales of securities are determined using the first-in, first-out cost basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision
for such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
2011 Trust
__________
Cost of 12,023,998 units at Dates of Deposit................... $2,773,932
Less sales charge.............................................. 55,479
__________
Net amount applicable to Holders............................... 2,718,453
Realized gain on securities sold............................... 302,217
Unrealized appreciation of investments......................... 593,878
Redemption of units - net cost of units redeemed less
redemption amounts........................................... (25,230)
Undistributed net investment income............................ 267,126
__________
Net assets..................................................... $3,856,444
__________
3. CAPITAL SHARE TRANSACTIONS
Units issued were as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
2011 6,200,890 25,175,856 3,319,138
Units redeemed were as follows:
Trust 1991 1992 1993
_____ ____ ____ ____
2011 2,379,670 14,551,906 6,292,408
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day, or in the case of uncertificated units upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
holder as specified in writing to the Trustee.
D - 66
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
NOTES TO FINANCIAL STATEMENTS
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At December 31, 1993, the cost of investment securities for Federal income
tax purposes was approximately equivalent to the adjusted cost as shown in
the Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that the Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 67
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
PORTFOLIO
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
2011 TRUST
__________
1 Stripped Treasury 0% 2/15/11 $12,052,000 $3,205,488
Securities (Note B)
2 U.S. Treasury Bonds 9.375 2/15/06 46,275 55,624
___________________________
Total $12,098,275 $3,261,112
___________________________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of the
following types of securities: (a) U.S. Treasury debt
obligations which have been stripped of their remaining
interest coupons, (b) interest coupons which have been stripped
from U.S. Treasury debt obligations, and (c) receipts or
certificates for underlying stripped U.S. Treasury debt
obligations. The receipts or certificates evidence ownership
of future interest or principal payments on U.S. Treasury notes
or bonds. The receipts or certificates are issued in
registered form by a major bank which acts as custodian and
nominal holder of the underlying stripped U.S. Treasury debt
obligation. The Stripped Treasury Securities are payable in
full at maturity at their stated maturity amount, and are not
subject to redemption prior to maturity. The Stripped Treasury
Securities do not make any periodic payments of interest.
D - 68
<PAGE>
Value
(Note A)
________
$3,795,295
59,695
____________
$3,854,990
____________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series I:
We have audited the accompanying statement of condition of the 2002 Trust of
The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities, Series
I, including the portfolio, as of December 31, 1993 and the related statements
of operations and of changes in net assets for the period April 28 to December
31, 1992 and the year ended December 31, 1993. These financial statements are
the responsibility of the Trustee. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Securities owned at December 31, 1993, as shown in such portfolio, were
confirmed to us by The Chase Manhattan Bank (National Association), the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the above-mentioned Trust
of The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities,
Series I at December 31, 1993 and the results of its operations and changes in
its net assets for the above-stated periods, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE
New York, NY
February 7, 1994
D - 69
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
...2002 TRUST...
________________
<S> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $3,122,624
Other............................................................ 312
__________
Total trust property.................................... 3,122,936
LESS LIABILITY - Other............................................. 2,083
__________
NET ASSETS (Note 2)................................................ $3,120,853
__________
UNITS OUTSTANDING.................................................. 4,988,332
_________
UNIT VALUE......................................................... $.62563
_______
</TABLE>
See Notes to Financial Statements.
D - 70
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
.........2002 TRUST.......
April 28
to Year Ended
December 31, December 31,
1992 1993
____ ____
<S> <C> <C>
INVESTMENT INCOME:
Interest income............................................ $ 797 $ 1,863
Accretion of original issue discount....................... 85,762 201,018
Trustee's fees and expenses................................ (1,410) (3,057)
_____________________
Net investment income...................................... 85,149 199,824
______________________
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on securities sold or redeemed............... 5,360 20,034
Unrealized appreciation of investments..................... 84,604 282,131
______________________
Net realized and unrealized gain on investments............ 89,964 302,165
______________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......... $175,113 $501,989
______________________
</TABLE>
See Notes to Financial Statements.
D - 71
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
........2002 TRUST.......
April 28
to Year Ended
December 31, December 31,
1992 1993
____ ____
<S> <C> <C>
OPERATIONS:
Net investment income...................................... $ 85,149 $ 199,824
Realized gain on securities sold........................... 5,360 20,034
Unrealized appreciation of investments..................... 84,604 282,131
______________________
Net increase in net assets resulting from operations....... 175,113 501,989
______________________
CAPITAL SHARE TRANSACTIONS (NOTE 3):
Issuance of additional units............................... 2,175,549 307,925
Redemption of units........................................ (107,462) (130,488)
______________________
Net capital share transactions............................. 2,068,087 177,437
______________________
NET INCREASE IN NET ASSETS................................... 2,243,200 679,426
NET ASSETS, BEGINNING OF PERIOD.............................. 198,227 2,441,427
______________________
NET ASSETS, END OF PERIOD.................................... $2,441,427 $3,120,853
______________________
NET VALUE, END OF PERIOD..................................... .52842 $.62563
__________________
UNITS OUTSTANDING, END OF PERIOD............................. 4,620,220 4,988,332
_____________________
</TABLE>
See Notes to Financial Statements.
D - 72
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
(a) Securities are stated at value as determined by an independent evaluator
based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evalautions for the
securities at Date of Deposit. Cost of securities subsequent to dates of
purchase has been adjusted to include the accretion of original issue discount
on the Stripped Treasury Securities. Realized gain and loss on sales of
securities are determined using the first-in, first-out cost basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
2002 Trust
__________
<TABLE>
<S> <C>
Cost of 4,988,332 units at Dates of Deposit............................. $2,512,169
Less sales charge....................................................... 37,686
__________
Net amount applicable to Holders........................................ 2,474,483
Realized gain on securities sold........................................ 25,394
Unrealized appreciation of investment................................... 366,735
Redemption of units - net cost of units redeemed less
redemption amounts.................................................... (12,178)
Undistributed net investment income..................................... 266,419
__________
Net capital applicable to Holders....................................... $3,120,853
__________
</TABLE>
3. CAPITAL SHARE TRANSACTIONS
Units were issued as follows:
Trust 1992 1993
_____ ____ ____
2002 4,401,119 577,911
Units were redeemed as follows:
Trust 1992 1993
_____ ____ ____
2002 207,934 209,799
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day, or in the case of uncertificated units, upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
Holder as specified in writing to the Trustee.
D - 73
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
NOTES TO FINANCIAL STATEMENTS
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At December 31, 1993, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the adjusted cost as shown in the
Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that the Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 74
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES FUND, SERIES I
PORTFOLIO
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
2002 TRUST
__________
1 Stripped Treasury 0% 02/15/02 $4,964,000 $2,731,227
Securities (Note B)
2 U.S. Treasury Notes 7.50% 11/15/01 23,923 24,662
__________ __________
Total $4,987,923 $2,755,889
__________ __________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of the
following types of securities: (a) U.S. Treasury debt obligations
which have been stripped of their remaining interest coupons, (b)
interest coupons which have been stripped from U.S. Treasury debt
obligations, and (c) receipts or certificates for underlying
stripped U.S. Treasury debt obligations. The receipts or
certificates evidence ownership of future interest or principal
payments on U.S. Treasury notes or bonds. The receipts or
certificates are issued in registered form by a major bank which
acts as custodian and nominal holder of the underlying stripped
U.S. Treasury debt obligation. The Stripped Treasury Securities
are payable in full at maturity at their stated maturity amount,
and are not subject to redemption prior to maturity. The Stripped
Treasury Securities do not make any periodic payments of interest.
D - 75
<PAGE>
Value
(Note A)
________
$3,095,898
26,726
__________
$3,122,624
__________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series J:
We have audited the accompanying statement of condition of the 2013 Trust of
The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities, Series
J, including the portfolio, as of December 31, 1993 and the related statements
of operations and of changes in net assets for the period April 21 to
December 31, 1993. These financial statements are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Securities owned at December 31, 1993, as shown in such portfolio, were
confirmed to us by The Chase Manhattan Bank (National Association), the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the above-mentioned Trust
of The Merrill Lynch Fund of Stripped ("Zero") U.S. Treasury Securities,
Series J at December 31, 1993 and the results of its operations and changes in
its net assets for the above-stated period, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
February 7, 1994
D - 76
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
...2013 TRUST...
________________
<S> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $ 876,616
Other............................................................ 446
__________
Total trust property.................................... 877,062
LESS LIABILITY - Other............................................. 545
__________
NET ASSETS (Note 2)................................................ $ 876,517
__________
UNITS OUTSTANDING.................................................. 3,201,118
_________
UNIT VALUE......................................................... $.27382
_______
</TABLE>
See Notes to Financial Statements.
D - 77
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
2013 TRUST
April 21
to
December 31,
1993
____
<S> <C>
INVESTMENT INCOME:
Interest income.......................................................... $ 419
Accretion of original issue discount..................................... 36,623
Trustee's fees and expenses.............................................. (519)
_______
Net investment income.................................................... 36,523
_______
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold or redeemed............................. 42,857
Unrealized depreciation of investments................................... (48,875)
_______
Net realized and unrealized loss on investments.......................... (6,018)
_______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $30,505
_______
</TABLE>
See Notes to Financial Statements.
D - 78
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
2013 TRUST
April 21
to
December 31,
1993
____
<S> <C>
OPERATIONS:
Net investment income.................................................. $ 36,523
Realized gain on securities sold....................................... 42,857
Unrealized depreciation of investments................................. (48,875)
__________
Net increase in net assets resulting from operations................... 30,505
__________
CAPITAL SHARE TRANSACTIONS (NOTE 3):
Issuance of additional units........................................... 1,381,341
Redemption of units.................................................... (637,561)
__________
Net capital share transactions......................................... 743,780
__________
NET INCREASE IN NET ASSETS............................................... 774,285
NET ASSETS, BEGINNING OF PERIOD.......................................... 102,232
__________
NET ASSETS, END OF PERIOD................................................ $ 876,517
__________
NET VALUE, END OF PERIOD................................................. .27382
______
UNITS OUTSTANDING, END OF PERIOD......................................... 3,201,118
_________
</TABLE>
See Notes to Financial Statements.
D - 79
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
(a) Securities are stated at value as determined by an independent evaluator
based on bid side evaluations for the securities.
(b) Cost of securities is based on offering side evalautions for the
securities at Date of Deposit. Cost of securities subsequent to dates of
purchase has been adjusted to include the accretion of original issue discount
on the Stripped Treasury Securities. Realized gain and loss on sales of
securities are determined using the first-in, first-out cost basis.
(c) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
2. NET ASSETS, DECEMBER 31, 1993
2013 Trust
__________
<TABLE>
<S> <C>
Cost of 3,201,118 units at Dates of Deposit............................. $871,888
Less sales charge....................................................... 17,438
________
Net amount applicable to Holders........................................ 854,450
Realized gain on securities sold........................................ 42,857
Unrealized depreciation of investment................................... (48,875)
Redemption of units - net cost of units redeemed less
redemption amounts.................................................... 15,661
Undistributed net investment income..................................... 12,424
________
Net capital applicable to Holders....................................... $876,517
________
</TABLE>
3. CAPITAL SHARE TRANSACTIONS
Units were issued as follows:
Trust 1993
_____ ____
2013 5,141,650
Units were redeemed as follows:
Trust 1993
_____ ____
2013 2,356,948
Units may be redeemed at the office of the Trustee upon tender thereof
generally on any business day, or in the case of uncertificated units, upon
delivery of a request for redemption and payment of any relevant tax. The
Trustee will redeem units either in cash or in kind at the option of the
Holder as specified in writing to the Trustee.
D - 80
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
NOTES TO FINANCIAL STATEMENTS
4. INCOME TAXES
All Fund items of income received, accretion of original issue discount,
expenses paid, and realized gains and losses on securities sold are
attributable to the Holders, on a pro rata basis, for Federal income tax
purposes in accordance with the grantor trust rules of the United States
Internal Revenue Code.
At December 31, 1993, the cost of investment securities for Federal income tax
purposes was approximately equivalent to the adjusted cost as shown in the
Trust's portfolio.
5. DISTRIBUTIONS
It is anticipated that the Trust will not make any distributions until the
first business day following the maturity of its holdings in the Stripped
Treasury Securities which are noninterest-bearing.
D - 81
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES FUND, SERIES J
PORTFOLIO
AS OF DECEMBER 31, 1993
Portfolio No. Adjusted
and Title of Interest Face Cost
Securities Rates Maturities Amount (Note A)
__________ _____ __________ ______ ________
2013 TRUST
__________
1 Stripped Treasury 0% 02/15/13 $3,190,000 $909,996
Securities (Note B)
2 U.S. Treasury Bonds 10.375% 11/15/12(C) 10,906 15,495
__________ ________
Total $3,200,906 $925,491
__________ ________
Note A - See Note 1 to Financial Statements.
Note B - Stripped Treasury Securities consist of one or more of the
following types of securities: (a) U.S. Treasury debt obligations
which have been stripped of their remaining interest coupons, (b)
interest coupons which have been stripped from U.S. Treasury debt
obligations, and (c) receipts or certificates for underlying
stripped U.S. Treasury debt obligations. The receipts or
certificates evidence ownership of future interest or principal
payments on U.S. Treasury notes or bonds. The receipts or
certificates are issued in registered form by a major bank which
acts as custodian and nominal holder of the underlying stripped
U.S. Treasury debt obligation. The Stripped Treasury Securities
are payable in full at maturity at their stated maturity amount,
and are not subject to redemption prior to maturity. The Stripped
Treasury Securities do not make any periodic payments of interest.
Note C - Callable at par commencing 11/15/07.
D - 82
<PAGE>
Value
(Note A)
________
$861,555
15,061
________
$876,616
________
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ('ZERO')
U.S. TREASURY SECURITIES
FUND STRUCTURE
Each Series (a 'Fund') consists of a number of separate unit investment
trusts (each a 'Trust') created under New York law by one Trust indenture (the
'Indenture') among the Sponsor, the Trustee and the Evaluator. To the extent
that references in the Prospectus are to articles and sections of the Indenture,
which are hereby incorporated by reference, the statements made herein are
qualified in their entirety by this reference. On the initial date of deposit
for each Trust (the 'Initial Date of Deposit') the Sponsor deposited the
underlying Securities with the Trustee at prices equal to the valuation of those
Securities on the offer side of the market as determined by the Evaluator, and
the Trustee delivered to the Sponsor units of interest ('Units') representing
the entire ownership of that Trust in the Fund. Most if not all of the
Securities so deposited were represented by purchase contracts assigned to the
Trustee together with an irrevocable letter or letters of credit issued by a
commercial bank or banks in the amount necessary to complete their purchase. The
record holders ('Holders') of Units will have the right to have their Units
redeemed (see Redemption) at a price based on the aggregate bid side evaluation
of the Securities ('Redemption Price per Unit') if the Units cannot be sold in
the market which the Sponsor has committed to maintain (see Market for Units).
Redemption will be made in securities ('in kind') or in cash at the option of
the Holder.
The Sponsor may deposit additional Securities, with an identical maturity
to that of the Securities initially deposited, in any of the Trusts, and Units
in the Trusts may be continuously offered for sale by means of this Prospectus
(see Sale of Units--Distribution), resulting in a potential increase in the
number of outstanding Units of each Trust (see Selection and Acquisition of
Securities). However, each Unit will continue to represent the identical face
amount of Securities with identical maturity dates.
As used herein, 'Securities' includes the Stripped Treasury Securities and
interest-bearing Treasury Note deposited in the Trusts and described under
Portfolios and any additional Treasury Securities deposited thereafter or
contracts for the purchase thereof together with an irrevocable letter or
letters of credit sufficient to perform such contracts. As used herein, the term
'Units,' unless the context otherwise indicates, means the units of interest in
all Trusts.
RISK FACTORS
An investment in Units of a Trust should be made with an understanding of
the risks which an investment in deep discount debt obligations may entail,
including the risk that the value of the Trust's portfolio (the 'Portfolio') and
hence of the Units will decline with increases in interest rates. High inflation
and recession, together with the fiscal and monetary measures adopted to attempt
to deal with those and other economic problems, have contributed to recent wide
fluctuations in interest rates and thus in the value of fixed-rate debt
obligations generally. The Sponsor cannot predict future economic policies or
their consequences or, therefore, the course or extent of any similar
fluctuations in the future. Furthermore, a direct Holder (but not necessarily
Policyowners--see Taxes) will have significant amounts of taxable income
attributable to it before receipt of the cash attributable to that income.
Because interest on 'zero coupon' debt obligations is not distributed on a
current basis but in effect compounded, the value of securities of this type,
including the value of accrued and reinvested interest (and of a fund comprised
of these obligations), is subject to greater fluctuations than on obligations
that distribute income regularly. Accordingly, while the full faith and credit
of the U.S. government provides a high level of protection against credit risks
on the Securities, sale of Units before maturity of the Securities at a time
when interest rates have increased would involve greater market risk than in a
fund invested in debt obligations of comparable maturity that pay interest
currently. This risk is greater when the period to maturity is longer.
SPECIAL CHARACTERISTICS OF STRIPPED TREASURY SECURITIES
Bearer bonds are transferable by delivery; payments are made to the holder
of the bonds. Stripped bonds have been stripped of their unmatured interest
coupons; stripped coupons are coupons that have been stripped from an issuer's
bonds. Stripped Treasury Securities are sold at a deep discount because the
buyer of those securities receives only the right to receive a future fixed
payment on the security and not any rights to periodic
1
<PAGE>
interest payments thereon. Purchasers of these securities acquire, in effect,
discount obligations that are economically identical to the 'zero-coupon bonds'
that have been issued by corporations. Zero coupon bonds are debt obligations
that do not make any periodic payments of interest prior to maturity and
accordingly are issued at a deep discount.
Stripped Treasury Securities held by any Trust shall consist solely of one
or more of the following types of securities: (a) U.S. Treasury debt obligations
which have been stripped of their unmatured interest coupons, (b) coupons which
have been stripped from U.S. Treasury bearer bonds, either of which may be held
through the Federal Reserve Bank's book entry systems called 'Separate Trading
of Registered Interest and Principal of Securities' ('STRIPS') and 'Coupon Under
Book-Entry Safekeeping' ('CUBES'), and (c) receipts or certificates for stripped
U.S. Treasury debt obligations. STRIPS and CUBES, while direct obligations of
the United States and issued under programs introduced by the U.S. Treasury, are
not issued directly by the U.S. government. The STRIPS program facilitates
secondary market stripping of selected Treasury notes and bonds into individual
principal and interest components by purchasers with access to a book-entry
account at a Federal Reserve bank. Those obligations may be maintained in the
book-entry system operated by the Federal Reserve in a manner that permits
separate trading and ownership of interest and principal payments. The Federal
Reserve does not charge a fee for this service, but book-entry transfers of
interest and principal components are subject to the same fee schedule generally
applicable to transfers of Treasury securities. Receipts or certificates
evidence ownership of future interest or principal payments on U.S. Treasury
notes or bonds which are direct obligations of the United States of America. The
receipts or certificates are issued in registered form by a major bank which
acts as custodian and nominal holder of the underlying stripped U.S. Treasury
debt obligation (which may be held by it either in physical or in book entry
form). The terms of custody provide that the underlying debt obligations will be
held separate from the general assets of the custodian and will not be subject
to any right, charge, security interest, lien or claim of any kind in favor of
the custodian or any person claiming through the custodian, and the custodian
will be responsible for applying all payments received on those underlying debt
obligations to the related receipts or certificates without making any
deductions other than applicable tax withholding. The custodian is required to
maintain insurance for the protection of holders of receipts or certificates in
customary amounts against losses resulting from the custody arrangement due to
dishonest or fraudulent action by the custodian's employees. The holders of
receipts or certificates, as the real parties in interest, are entitled to the
rights and privileges of the underlying debt obligations including the right in
the event of default in payment of principal or interest thereon to proceed
individually against the United States without acting in concert with other
holders of those receipts or certificates or the custodian. Receipts and
certificates may not be as liquid as STRIPS or CUBES.
The Stripped Treasury Securities in each Trust are payable in full at
maturity at their stated maturity amount and are not subject to redemption prior
to maturity. In addition, the Stripped Treasury Securities do not make any
periodic payments of interest. The Securities are sold at a substantial discount
from their face amounts payable at maturity. A holder of Stripped Treasury
Securities will be required to include annually in gross income an allocable
portion of the deemed original issue discount, prior to receipt of the cash
attributable to that income. However, an insurance company separate account such
as the Account can avoid being taxed on such income by deducting an equal amount
for an increase in reserves. Stripped Treasury Securities are marketable in
substantially the same manner as other discount Treasury securities.
Under generally accepted accounting principles, a holder of a security
purchased at a discount normally must report as an item of income for financial
accounting purposes the portion of the discount attributable to the applicable
reporting period. The calculation of this attributable income would be made on
the 'interest' method which generally will result in a lesser amount of
includible income in earlier periods and a correspondingly larger amount in
later periods. For Federal income tax purposes, the inclusion will be on a basis
that reflects the effective semi-annual compounding of accrued but unpaid
interest effectively represented by the discount. Although this treatment is
similar to the 'interest' method described above, the 'interest' method may
differ to the extent that generally accepted accounting principles permit or
require the inclusion of interest on the basis of a compounding period other
than the semi-annual period (see Taxes below).
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DESCRIPTION OF THE FUND
THE PORTFOLIO
The Portfolio of each Trust consists of different issues of Stripped
Treasury Securities, with fixed maturity dates and not having any equity or
conversion features, that do not pay interest before maturity and as such were
purchased at a deep discount (see above) and of the Treasury Note deposited in
order to provide cash income with which to pay the expenses of the Trust. It is
intended that the Portfolio for each Trust will comply with any investment
limitations required to assure favorable Federal income tax treatment for the
Policies issued by the Insurers.
SELECTION AND ACQUISITION OF SECURITIES
In selecting Securities for deposit in a Trust, the following factors,
among others, were considered by the Unit Investment Trusts division of Merrill
Lynch, Pierce, Fenner & Smith Incorporated: (i) the types of securities
available; (ii) the prices of those securities relative to other comparable
securities; (iii) the extent to which those securities trade at a discount from
par once the interest coupons are stripped; (iv) the yield to maturity of those
securities; and (v) the maturities of those securities.
The yield to maturity and discount from par on securities of the type
deposited in the Trusts depend on a variety of factors, including general money
market conditions, general conditions of the bond market, prevailing interest
rates and the maturities of the securities.
Each Trust consists of the Securities (or contracts to purchase the
Securities) listed under Portfolios and any additional Securities deposited in
the Trust pursuant to the terms of the Indenture (including provisions with
respect to deposit of Securities in connection with the sale of additional
Units) as long as they may continue to be held from time to time in the Trust,
together with accrued and undistributed interest on any interest-bearing
securities deposited in order to pay the expenses of the Trust, undistributed
cash representing payments of principal and cash realized from the disposition
of Securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any Security. In the event of a failure to deliver
any Security that has been purchased for a Trust under a contract ('Failed
Security'), the Sponsor is authorized under the Indenture to direct the Trustee
to acquire substitute securities ('Replacement Securities') to make up the
portfolio of the Trust. Replacement Securities for Securities initially
deposited must be deposited into the Trust within 110 days after the Initial
Date of Deposit; Replacement Securities for Securities deposited thereafter must
be deposited within 20 days after delivery of notice of the failed contract; the
purchase price may not exceed the amount of funds reserved for the purchase of
the Failed Security. The Replacement Securities must be Securities issued by the
U.S. Treasury (i) that if stripped make no periodic payments of interest, or if
interest-bearing are of the same issue, (ii) that have a fixed maturity
identical to that of the Failed Security, (iii) that are purchased at a price
that results in a yield to maturity as of the date of deposit of the Failed
Security which is equivalent (taking into consideration then-current market
conditions) to the yield to maturity of the Failed Security and (iv) that are
not when, as and if issued obligations. If this right of substitution is not
utilized to acquire Replacement Securities in the event of a failed contract,
the Sponsor will cause to be refunded the attributable transaction charge plus
the attributable Cost of Securities to Trust, plus accrued interest and
amortization attributable to the relevant Security to the date the Sponsor is
notified of the failure.
Because certain of the Securities from time to time may be sold under
certain circumstances described herein, each Trust is not expected to retain its
present size and composition (see Redemption). The Indenture also authorizes the
Sponsor to increase the size and number of Units of any Trust by the deposit of
additional Securities and the issue of a corresponding number of additional
Units, provided that the maturity of any additional Securities deposited in the
Trust is identical to the maturity of the Securities initially deposited in the
Trust.
THE UNITS
On the date of the Investment Summary of each Trust each Unit represented
the fractional undivided interest in the Securities held in the Trust and net
income of the Trust set forth in the Investment Summary. Thereafter, if Units of
any Trust are redeemed the face amount of Securities in that Trust will be
reduced by amounts allocable to redeemed Units, and the fractional undivided
interest represented by each remaining Unit
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in the balance will be increased. However, if additional Units are issued by any
Trust (through deposit of Securities by the Sponsor in connection with the sale
of additional Units), the aggregate face amount of Securities in the Trust will
be increased by amounts allocable to the additional Units, and the fractional
undivided interest represented by each Unit in the balance of the Trust will be
decreased. Units will remain outstanding until redeemed upon tender to the
Trustee by a Holder (which may include the Sponsor) or until the termination of
the Indenture (see Redemption and Administration of the Fund--Amendment and
Termination).
INCOME AND YIELD
The economic effect of purchasing Units of a Trust is that the investor who
holds his Units until maturity of the underlying Securities should receive
approximately a fixed yield, not only on his original investment but on all
earned discount during the life of the Securities. The assumed or implicit
automatic reinvestment at market rates at the time of purchase of the portion of
the yield represented by earned discount differentiates the Trusts from funds
consisting of customary securities on which current periodic interest is paid at
market rates at the time of issue. Accordingly, an investor in the Units, unlike
an investor in a fund comprised of customary securities, virtually eliminates
his risk of being unable to invest distributions at a rate as high as the yield
on his Trust, but will forego the ability to reinvest at higher rates in the
future.
The Treasury Note deposited in each Trust in order to pay the expenses of
the Trust includes an item of accrued but unpaid interest up to its date of
deposit. To avoid having Holders pay this accrued interest (which earns no
return) when Units are purchased, the Trustee pays this amount of accrued
interest to the Sponsor as a special distribution. The Trustee will recover the
amount of this distribution from interest received on the Treasury Note
deposited in the Trust. Although the Treasury Note will also accrue interest
during the period between the date of deposit and the date of settlement for
Units, the Sponsor anticipates that any such amount of accrued interest will be
minimal and, therefore, will not be added to the Offering Price of the Units.
The price per Unit will vary in accordance with fluctuations in the prices
of the Securities held by the Trust. Changes in the Offering Prices or in a
Trust's expenses will result in changes in the yields to maturity.
TAXES
The following discussion relates only to direct holders of Units of the
Trusts, and not to Policyowners. If an Account is the Holder, any taxable income
will in effect be offset by a deduction for an increase in reserves. For
information on tax consequences to Policyowners, see the attached Prospectus for
the Policies.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsor,
under existing law:
Each Trust is not an association taxable as a corporation for Federal
income tax purposes, and income received by the Trust will be treated as
the income of the Holders of the Trust in the manner set forth below.
Each Holder will be considered the owner of a pro rata portion of each
Security in his Trust under the grantor trust rules of Sections 671-679 of
the Internal Revenue Code of 1986, as amended (the 'Code'). The total cost
to a Holder for his Units, including the transaction charge, is allocated
among his pro rata portion of each Security in his Trust (in proportion to
the fair market values thereof on the date the Holder purchases his Units)
in order to determine his tax cost for his pro rata portion of each
Security.
Each Trust consists primarily of Stripped Treasury Securities. A Holder
is required to treat his pro rata portion of each Stripped Treasury
Security in his Trust as a bond that was originally issued on the date the
Holder purchased his Units at an original issue discount equal to the
excess of the stated redemption price at maturity over the Holder's tax
cost therefor as discussed above, and to include annually in income a
portion of such original issue discount determined under a formula which
takes into account the compounding of interest.
Each Holder will be considered to have received the income on his pro
rata portion of the Treasury Note in his Trust when interest on the Note is
received by his Trust. An individual Holder who itemizes deductions may
deduct his pro rata share of the fees and expenses of his Trust, but only
to the extent that this amount together with the Holder's other
miscellaneous deductions exceeds 2% of his adjusted gross income.
A Holder will recognize taxable gain or loss when all or part of his pro
rata portion of a Security is disposed of by the Fund for an amount greater
or less than his adjusted tax basis. Any such taxable gain or loss will be
capital gain or loss except that any gain from the disposition of a
Holder's pro rata portion of a
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Security acquired by the Holder at a 'market discount' (i.e., if the
Holder's original cost for his pro rata portion of the Security (plus any
original issue discount which will accrue thereon) is less than its stated
redemption price at maturity) will be treated as ordinary income to the
extent the gain does not exceed the accrued market discount. Capital gains
are generally taxed at the same rate as ordinary income. However, the
excess of net long-term capital gains over net short-term capital losses
may be taxed at a lower rate than ordinary income for certain noncorporate
taxpayers. A capital gain or loss is long-term if the asset is held for
more than one year and short-term if held for one year or less. The
deduction of capital losses is subject to limitations. A Holder will also
be considered to have disposed of all or part of his pro rata portion of
each Security when he sells or redeems all or some of his Units.
A distribution to a Holder of Securities upon redemption of Units will
not be a taxable event to the Holder or to nonredeeming Holders. The
redeeming Holder's basis for such Securities will be equal to his basis for
the Securities (previously represented by his Units) prior to such
redemption, and his holding period for such Securities will include the
period during which he held his Units. However, a Holder may recognize
taxable gain or loss when the Holder sells the Securities so distributed
for cash.
Under the income tax laws of the State and City of New York, each Trust
is not an association taxable as a corporation and income received by the
Trust will be treated as the income of the Holders of the Trust in the same
manner as for Federal income tax purposes.
Holders will be required for Federal income tax purposes to include
amounts in ordinary gross income in advance of the receipt of the cash
attributable to such income. Therefore, direct holding of Units may be
appropriate only for a tax-deferred account which can have taxable income
attributed in advance of the receipt of the cash attributable to such
income.
The foregoing discussion relates only to Federal and certain aspects of
New York income taxes. Depending on their state of residence, Holders may
be subject to state and local taxation and should consult their own tax
advisers in this regard.
* * *
After the end of each calendar year, the Trustee will furnish to each
Holder a report from which the Holder may determine the income received by his
Trust on his pro rata portion of the Treasury Note, the gross proceeds received
by the Fund from the disposition of any Security and the Holder's pro rata
portion of the fees and expenses paid by his Trust. In order to enable them to
comply with Federal and state tax reporting requirements, upon request to the
Trustee Holders will be furnished with evaluations of Securities furnished to it
by the Evaluator.
SALE OF UNITS
OFFERING PRICE
The Offering Price per Unit of a Trust is computed as of the Evaluation
Time by adding (a) the aggregate offer side evaluation of the Securities in the
Trust (as determined by the Evaluator), (b) cash on hand in the Trust (other
than cash covering contracts to purchase Securities), (c) accrued and unpaid
interest as of the date of computation and (d) all other assets of the Trust;
deducting therefrom the sum of (x) taxes or other governmental charges against
the Trust not previously deducted, (y) accrued fees and expenses of the Trustee
(including legal and auditing expenses), the Evaluator and counsel, and certain
other expenses and (z) any cash held for distribution to Holders of record as of
a date prior to the evaluation; dividing the result by the number of Units of
the Trust outstanding as of the date of computation (Sections 4.01 and 5.01);
and adding the applicable transaction charge depending on the remaining years to
maturity of the Stripped Treasury Security in the Trust:
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PERCENT
PERCENT OF
OF NET
AMOUNT
OFFERING
REMAINING YEARS TO MATURITY PRICE INVESTED
- --------------------------------------------------------------- ------
Less than 2 years........................................ 0.25% 0.251%
At least 2 years but less than 3 years................... 0.50 0.503
At least 3 years but less than 5 years................... 0.75 0.756
At least 5 years but less than 8 years................... 1.00 1.010
At least 8 years but less than 13 years.................. 1.50 1.523
At least 13 years but less than 18 years................. 1.75 1.781
18 years or more......................................... 2.00 2.041
On Units sold to an Account, the Insurer initially pays the transaction
charge, which it intends to recover through an asset charge. See the
accompanying Prospectus for the Policies for further information. These
transaction charges are less than sales charges on comparable funds offered by
the Sponsor reflecting elimination of distribution expenses because all sales
are made to the Accounts. Because the income on the Treasury Note is designed to
exactly equal the Trust expenses, accrued interest on the Note is not reflected
in the offering, repurchase or redemption prices of Units. In practice, as
determined on an accrual basis by the auditors, accumulated expenses have been
slightly higher or lower than the interest on the Treasury Notes. These
differences are immaterial and may change over time. If there is an expense
deficit at termination of a Trust, either the Trustee will waive a part of its
fees or the Sponsor will bear sufficient expenses to eliminate the deficit. If a
surplus remains at termination, the amount will be distributed to Holders;
alternately, the Sponsor from time to time may direct the Trustee to distribute
part or all of any accumulated surplus. The Offering Price on the date of this
Prospectus or on any subsequent date will vary from the Offering Price on the
date of the Investment Summary in accordance with fluctuations in the aggregate
offering side evaluation of the underlying Securities in the Trust. Amortization
of discount will have the effect of increasing at any particular time the
offering side evaluation of the underlying Securities.
The aggregate bid or offer side evaluation of the Securities is determined
by the Evaluator in the following manner: (a) on the basis of current bid or
offer prices for the Securities, (b) if bid or offer prices are not available
for any Securities, on the basis of current bid or offer prices for comparable
securities, (c) by appraising the value of the Securities on the bid or offer
side of the market, or (d) by any combination of the above. The Evaluator may
obtain current price information as to the Securities from investment dealers or
brokers (including the Sponsor) which customarily deal in that type of
securities.
The Offering Price is determined on each business day during any initial
offering as of the Evaluation Time, effective for all sales of Units made since
the last of these evaluations and as of the Evaluation Time on the last business
day of each week during any period when there is no initial offering (i.e., when
no additional Units are being created), effective for all sales made during the
following week (Section 4.01). The term 'business day', as used herein and under
'Redemption', shall exclude Saturdays, Sundays; the following holidays as
observed by the New York Stock Exchange: New Year's Day, Washington's birthday,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas; and the following Federal holidays: Martin Luther King's birthday,
Columbus Day and Veterans' Day.
COMPARISON OF OFFERING PRICE, SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE
On the date of the Investment Summary the Offering Price per Unit of each
Trust (which includes the transaction charge) and the Sponsor's Repurchase Price
per Unit (each based on the offer side evaluation of Securities in the
Trust--see above) exceeded the Redemption Price per Unit (based on the bid side
evaluation thereof--see Redemption) by the amounts set forth in the Investment
Summary.
Because the bid side evaluations of the Units are lower than the offer side
evaluations thereof by the amounts set forth under Investment Summary and other
reasons (including fluctuations in the market prices of these Securities and the
fact that the Offering Price includes a transaction charge), the amount realized
by a Holder upon any sale or redemption of Units may be less than the price paid
for these Units.
DISTRIBUTION
During the initial offering period (i) for Units issued on the Initial Date
of Deposit and (ii) for additional Units issued after that date in respect of
additional Securities deposited by the Sponsor, Units may be purchased by an
Account at the Offering Price by means of this Prospectus (except that, as
explained above, the transaction
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charge is initially paid by the Insurer). The initial offering period in each
case will terminate on the date all newly issued Units are sold. Upon the
completion of any initial offering, Units acquired in the secondary market may
be offered by this Prospectus at the secondary market Offering Price determined
in the manner provided above as of the close of business on the last business
day of each week (see Market for Units), also less the transaction charge paid
by the Insurer.
SPONSOR'S PROFITS
Upon the sale of the Units, the Sponsor receives the transaction charge at
the rates set forth above. The Sponsor may also realize a profit or loss on each
deposit of Securities in a Trust. The profit or loss on the Initial Date of
Deposit for the Trusts of Series K are set forth in the Investment Summary. This
is the difference between the cost of the Securities to the Trust (which is
based on the offer side evaluation of the Securities on the Initial Date of
Deposit) and the purchase price of those Securities to the Sponsor. During the
initial offering period, and thereafter to the extent additional Units continue
to be offered for sale, the Sponsor also may realize profits or sustain losses
as a result of fluctuations after the date of deposit in the Offering Price of
the Units. Cash, if any, made available by buyers of Units to the Sponsor prior
to the settlement dates for purchase of Units may be used in the Sponsor's
business, subject to the limitations of Rule 15c3-3 under the Securities
Exchange Act of 1934, and may be of benefit to the Sponsor.
In maintaining a market for the Units the Sponsor will also realize profits
or sustain losses in the amount of any difference between the prices at which it
buys Units (based on the offer side evaluation of the Securities) and the prices
at which it resells those Units (which include the relevant transaction charge)
or the prices at which it may redeem those Units (based on the bid side
evaluation of the Securities), as the case may be.
MARKET FOR UNITS
The Sponsor has committed to maintain a secondary market for Units of each
Trust at its own expense and continuously to offer to purchase Units of each
Trust at prices, subject to change at any time, that will be computed on the
basis of the offer side evaluation of the Securities, taking into account the
same factors referred to in determining the offer side evaluation of the
Securities for purposes of sale of Units (see Sale of Units-- Offering Price).
During the initial offering period or thereafter, on a given day, the price
offered by the Sponsor for the purchase of Units shall be an amount not less
than the Redemption Price per Unit, based on the aggregate bid side evaluation
of Securities in the relevant Trust on the date on which the Units are tendered
for redemption. The Sponsor, of course, does not in any way guarantee the
enforceability, marketability or price of any Securities in the Trust or of the
Units.
The Sponsor may redeem any Units it has purchased in the secondary market
if it determines it is undesirable to continue to hold those Units in its
inventory, provided that it has committed to redeem Units only in an amount to
substantially equal the value of one or more Securities, so that uninvested cash
generated by a redemption is de minimis. Factors which the Sponsor will consider
in making this determination will include the number of units of all series of
all funds which it has in its inventory, the saleability of the units and its
estimate of the time required to sell the units and general market conditions.
REDEMPTION
While it is anticipated that Units in most cases can be sold for amounts
exceeding the Redemption Price per Unit (see Market for Units), Units may be
redeemed at the office of the Trustee, upon tender on any business day, as
defined under Sale of Units--Offering Price, of Certificates or, in the case of
uncertificated Units, delivery of a request for redemption, and payment of any
relevant tax, without any other fee (Section 5.02). Certificates to be redeemed
must be properly endorsed or accompanied by a written instrument or instruments
of transfer.
The Trustee will redeem Units either in cash or in kind at the option of
the Holder as specified in writing to the Trustee. Unless otherwise specified,
redemptions will be made in cash. Not later than the seventh calendar day
following the tender (or if the seventh calendar day is not a business day on
the first business day prior thereto), the Holder will be entitled to receive
the proceeds of the redemption in an amount and value of Securities per Unit
equal to the Redemption Price per Unit (see below) as determined as of the
Evaluation Time next following the tender. The Redemption Price per Unit for in
kind distributions (the 'In Kind Distribution') will take the form of the
distribution of whole Securities represented by the fractional undivided
interest in the applicable Trust of the Units tendered for redemption (based
upon the Redemption Price per Unit) (Section
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5.02). Because the Sponsor is committed to maintain a market at prices in excess
of the Redemption Price per Unit, the Sponsor expects to repurchase any Units
tendered for redemption in cash no later than the close of business on the
business day following the tender.
If the tendering Holder requests distribution in kind, the Trustee as
Distribution Agent for the account of the tendering Holder shall sell any
portion of the In Kind Distribution represented by fractional interests in
accordance with the instructions of the tendering Holder and distribute net cash
proceeds to the tendering Holder together with certificates representing whole
Securities received as the In Kind Distribution. In implementing these
redemption procedures, the Trustee shall make any adjustments necessary to
reflect differences between the Redemption Price of the Units and the value of
the In Kind Distribution as of the date of tender.
The Trustee is empowered to sell Securities from a Trust in order to make
funds available for cash redemptions (Section 5.02). The Securities will be sold
so as to maintain, as closely as practicable, the percentage relationship
between the face amounts of Stripped Treasury Securities and the Treasury Note
in the Trust at the time of sale. Provision is made under the Indenture for the
Sponsor to specify minimum face amounts in which blocks of Securities are to be
sold in order to obtain the best price for the Trust. While these minimum
amounts may vary from time to time in accordance with market conditions, the
Sponsor believes that the minimum face amounts which would be specified would
range from $25,000 to $100,000.
To the extent that Securities are redeemed in kind or sold, the size of the
relevant Trust will be reduced. Sales will usually be required at a time when
Securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. In addition, because of the minimum face amounts in which
Securities are required to be sold, the proceeds of sale may, if the Sponsor
fails to adhere to its commitment described above, exceed the amount required at
the time to redeem Units; any excess proceeds will be deposited in the Capital
Account. The price received upon redemption may be more than or less than the
amount paid by the Holder depending on the value of the Securities in the Trust
at the time of redemption.
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange, Inc. is closed other than for
customary weekend and holiday closings or (2) for any period during which, as
determined by the Securities and Exchange Commission, (i) trading on that
Exchange is restricted or (ii) an emergency exists as a result of which disposal
or evaluation of the Securities is not reasonably practicable, or (3) for any
other periods which the Commission may by order permit (Section 5.02).
Redemption Price per Unit of a Trust is computed by the Trustee as of the
Evaluation Time on each June 30 and December 31 (or the last business day prior
thereto), on any business day, as of the Evaluation Time next following the
tender of any Unit for redemption, and on any other business day desired by the
Trustee or the Sponsor, on the bid side of the market, taking into account the
same factors referred to in determining the offering side evaluation for
purposes of sale of Units (see Sale of Units--Offering Price).
While Securities of the type included in the Trusts' Portfolios involve
minimal risk of loss of principal when held to maturity, due to variations in
interest rates the market value of the Securities and Redemption Price per Unit
can be expected to fluctuate during the period of an investment in a Trust.
EXPENSES AND CHARGES
INITIAL EXPENSES
All expenses incurred in establishing the Trusts and the initial offering
of Units and any additional Units, including the cost of the initial preparation
and printing of documents related to the Fund, cost of the initial evaluation,
the initial fees and expenses of the Trustee, legal expenses, advertising and
selling expenses and any other out-of-pocket expenses, will be paid by the
Sponsor at no charge to the Trusts.
NO SPONSOR'S FEES
The Sponsor receives no fee from the Trusts for its services as such.
However, while the transaction charges paid by the Insurers to the Sponsor are
not directly charged to the Accounts, because of the asset charge by the
Insurers, Policyowners will indirectly bear these charges (see the accompanying
Prospectus).
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FEES
The Trustee's and Evaluator's fees are set forth in the Investment Summary.
The Trustee's fees, payable in semi-annual installments, are based on the
largest face amount of Securities in a Trust during the preceding semi-annual
period. For its services as Trustee, the Trustee receives annually $0.18 per
$1,000 face amount of Treasury Securities. When a Treasury Note matures before
termination of a Trust, the Trustee will waive its fee thereafter. Certain
regular and recurring expenses of each Trust, including the Evaluator's fee and
certain mailing and printing expenses, are borne by the Trustee. Expenses in
excess of the amount included for those expenses in the Trustee's Annual Fee and
Expenses under the Investment Summary are borne by the Trust (Section 3.14). The
Trustee also receives benefits to the extent that it holds funds on deposit in
the various non-interest bearing accounts created under the Indenture.
The interest bearing Securities in certain Trusts mature several months or
years before the Stripped Treasury Securities therein (see Portfolios). The
Trustee will reduce its fees and expenses for these Trusts in the amount of
interest that would have accrued on these Securities between their maturity date
and the maturity date of the Stripped Treasury Securities in the Trust. This
reduction will eliminate the necessity of charging the Capital Account for the
Trust expenses during this period.
OTHER CHARGES
These include: (a) fees of the Trustee for extraordinary services (Section
8.05), (b) certain expenses of the Trustee (including legal and auditing
expenses) and of counsel designated by the Sponsor (Sections 3.04, 3.09, 8.01e]
and 8.05), (c) various governmental charges (Sections 3.03 and 8.01h]), (d)
expenses and costs of any action taken to protect any Trust (Section 8.01d]),
(e) indemnification of the Trustee for any loss, liabilities and expenses
incurred without gross negligence, bad faith or wilful misconduct on its part
(Section 8.05) and (f) indemnification of the Sponsor for any losses,
liabilities and expenses incurred without gross negligence, bad faith, wilful
misconduct or reckless disregard of its duties (Section 7.02b]). The amounts of
these charges and fees are secured by a lien on the relevant Trust and, if the
balances in the Income and Capital Accounts (see below) are insufficient, the
Trustee has the power to sell Securities to pay these amounts (Section 8.05).
ADMINISTRATION OF THE FUND
RECORDS
The Trustee keeps records of transactions of each Trust, including a
current list of the Securities and a copy of the Indenture, which are available
to record Holders for inspection at the office of the Trustee at reasonable
times during business hours (Sections 8.02 and 8.04).
ACCOUNTS AND DISTRIBUTIONS
The terms of the Securities provide for payment to the holders thereof
(including the Trusts) upon their maturities. Interest received on any
Securities in a Trust which bear current interest, including that part of the
proceeds of any disposition of any such Security which represents accrued
interest and any late payment penalties, is credited to an Income Account for
the applicable Trust and all other receipts to a Capital Account for the Trust
(Sections 3.01 and 3.02). Distributions to Holders as of the Record Day normally
will be made by mail on the following Distribution Day and shall consist of an
amount substantially equal to each Holder's pro rata share of the distributable
cash balance in the Income and Capital Accounts of the Trust computed as of the
close of business on the Record Day. The Distribution Day normally shall be the
next business day following the maturity of the Stripped Treasury Securities in
the Trust Portfolio; the Record Day shall be the business day immediately
preceding the Distribution Day. However, the Sponsor may direct distribution of
any cash balance in the Income and Capital Accounts not otherwise allocated on
the last Business Day of any year.
The amount to be distributed may change as Securities are exchanged, paid
or sold. Proceeds received from the disposition or payment of any of the
Securities which are not used for redemption will be held in the Capital Account
(Section 3.04). However, the Sponsor is committed to maintain a secondary market
and to redeem Units only when the value of Units redeemed substantially equals
the value of one or more portfolio Securities. Amounts, if any, in the Income
Account will be distributed to Holders pro rata upon termination of the Trust. A
Reserve Account may be created by the Trustee by withdrawing from the Income or
Capital Accounts, from time to time, amounts which it deems requisite to
establish a reserve for any taxes or other governmental charges that
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may be payable out of the Trust (Section 3.03). Funds held by the Trustee in the
various accounts created under the Indenture do not bear interest (Section
8.01).
PORTFOLIO SUPERVISION
Each Trust is part of a unit investment trust and not an actively managed
fund. Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The Portfolios of the Trusts, however, will not
be actively managed and therefore adverse conditions will not necessarily
require the sale of securities from a Trust. However, the Sponsor may direct the
disposition of Securities upon default in payment of amounts due on any of the
Securities which is not promptly cured, institution of certain legal
proceedings, default in payment of amounts due on other Treasury Securities, or
decline in price or the occurrence of other market or credit factors that in the
opinion of the Sponsor would make the retention of these Securities in any Trust
detrimental to the interest of the Holders of that Trust. If a default in
payment of amounts due on any Security occurs and if the Sponsor fails to give
instructions to sell or hold the Security the Indenture provides that the
Trustee, within 30 days of that failure by the Sponsor, may sell the Security
(Sections 3.07 and 3.10).
REPORTS TO HOLDERS
The Trustee will furnish Holders of record with each distribution a
statement of the amounts of interest and of other receipts which are being
distributed, expressed in each case as a dollar amount per Unit. After the end
of each calendar year, the Trustee will furnish to Holders of record a statement
(i) summarizing transactions for the year in the Income, Capital and Reserve
Accounts of each Trust, (ii) identifying Securities sold and purchased during
the year and listing Securities held and the number of Units outstanding at the
end of the year by the Trust, (iii) stating the Trust's Redemption Price per
Unit based upon the computation thereof made at the end of the year and (iv)
specifying any amounts distributed during the year from the Trust's Income and
Capital Accounts (Section 3.06). The accounts of each Trust shall be audited at
least annually by independent certified public accountants designated by the
Sponsor, and the report of the accountants shall be furnished by the Trustee to
Holders upon request (Section 8.01e]).
In order to enable them to comply with Federal and state tax reporting
requirements, Holders will be furnished upon request to the Trustee with
evaluations of Securities furnished to it by the Evaluator (Section 4.02).
CERTIFICATES
The Sponsor may collect additional charges for registering and shipping
Certificates to purchasers. These Certificates are transferable or
interchangeable upon presentation at the office of the Trustee, with a payment
of $2.00 if required by the Trustee (or other amounts specified by the Trustee
and approved by the Sponsor) for each new Certificate and any sums payable for
taxes or other governmental charges imposed upon this transaction (Section 6.01)
and compliance with the formalities necessary to redeem Certificates (see
Redemption). Mutilated, destroyed, stolen or lost Certificates will be replaced
upon delivery of satisfactory indemnity and payment of expenses incurred
(Section 6.02).
Alternatively, Holders may elect to hold their Units in uncertificated
form. The Trustee will credit each such Holder's account with the number of
Units purchased by that Holder. This relieves the Holder of the responsibility
for safekeeping of Certificates and of the need to deliver Certificates upon
sale of Units. Uncertificated Units are transferable through the same procedures
applicable to Units evidenced by Certificates (see above), except that no
Certificate need be presented to the Trustee and none will be issued upon
transfer unless requested by the Holder. A Holder may at any time request the
Trustee (at the Trust's cost) to issue Certificates for Units.
AMENDMENT AND TERMINATION
The Sponsor and Trustee may amend the Indenture without the consent of
Holders (a) to cure any ambiguity or to correct or supplement any provision
thereof which may be defective or inconsistent, (b) to change any provision
thereof as may be required by the Securities and Exchange Commission or any
successor governmental agency, or (c) to make any other provisions which do not
materially adversely affect the interest of the Holders (as determined in good
faith by the Sponsor). The Indenture may also be amended in any respect by the
Sponsor and Trustee, or any of the provisions thereof may be waived, with the
consent of the Holders of 51% of the Units then
10
<PAGE>
outstanding, provided that none of these amendments or waivers will reduce the
interest in any Trust of any Holder without the consent of the Holder or reduce
the percentage of Units required to consent to any of these amendments or
waivers without the consent of all Holders (Section 10.01).
The Indenture will terminate upon the earlier of the disposition of the
last Security held thereunder or the mandatory termination date. The Indenture
as to any Trust may be terminated by the Sponsor if the face amount of the Trust
is less than the minimum set forth under Investment Summary and may be
terminated at any time by written instruments executed by the Sponsor and
consented to by Holders of 51% of the Units (Sections 8.01g] and 9.01). The
Trustee will deliver written notice of any termination to each Holder within a
reasonable period of time prior to the termination, specifying the times at
which the Holders may surrender their Certificates for cancellation. Within a
reasonable period of time after the termination, the Trustee must sell all of
the Securities then held and distribute to each Holder, upon surrender for
cancellation of his Certificates, and after deductions for accrued but unpaid
fees, taxes and governmental and other charges, the Holder's interest in the
Income and Capital Accounts (Section 9.01). This distribution will normally be
made by mailing a check in the amount of each Holder's interest in these
accounts to the address of the Holder appearing on the record books of the
Trustee.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
THE TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units at
any time or by the Sponsor without the consent of any of the Holders if the
Trustee becomes incapable of acting or becomes bankrupt or its affairs are taken
over by public authorities. The resignation or removal shall become effective
upon the acceptance of appointment by the successor. In case of resignation or
removal the Sponsor is to use its best efforts to appoint a successor promptly
and if upon resignation of the Trustee no successor has accepted appointment
within thirty days after notification, the Trustee may apply to a court of
competent jurisdiction for the appointment of a successor (Section 8.06). The
Trustee shall be under no liability for any action taken in good faith in
reliance on prima facie properly executed documents or for the disposition of
monies or Securities, nor shall it be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Security. This
provision, however, shall not protect the Trustee in cases of wilful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the Securities
or upon the interest thereon. In addition, the Indenture contains other
customary provisions limiting the liability of the Trustee (Sections 3.07, 3.10,
8.01 and 8.05).
THE EVALUATOR
The Evaluator may resign or may be removed, effective upon the acceptance
of appointment by its successor, by the Sponsor, who is to use its best efforts
to appoint a successor promptly. If upon resignation of the Evaluator no
successor has accepted appointment within thirty days after notification, the
Evaluator may apply to a court of competent jurisdiction for the appointment of
a successor (Section 4.04). Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information available to
it; provided, however, that the Evaluator shall be under no liability to the
Trustee, the Sponsor or the Holders for errors in judgment. This provision,
however, shall not protect the Evaluator in cases of wilful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties
(Section 4.03). The Trustee, the Sponsor and the Holders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof.
THE SPONSOR
If the Sponsor fails to perform its duties or becomes incapable of acting
or becomes bankrupt or its affairs are taken over by public authorities, then
the Trustee may (a) appoint a successor Sponsor at rates of compensation deemed
by the Trustee to be reasonable and as may not exceed amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and liquidate
the Trusts or (c) continue to act as Trustee without terminating the Indenture
(Section 8.01f]). The Sponsor shall be under no liability to the Trusts or to
the Holders for taking any action or for refraining from taking any action in
good faith or for errors in judgment and shall not be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any Security.
11
<PAGE>
This provision, however, shall not protect the Sponsor in cases of wilful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties (Section 7.02). The Sponsor may transfer all or
substantially all of its assets to a corporation or partnership which carries on
its business and duly assumes all of its obligations under the Indenture and in
such event shall be relieved of all further liability under the Indenture
(Section 7.01).
MISCELLANEOUS
TRUSTEE
The Trustee is The Chase Manhattan Bank, N.A., a national banking
association with its corporate trust office at 1 Chase Manhattan Plaza--3B, New
York, New York 10081, which is subject to supervision by the Comptroller of the
Currency, the Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve System.
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsor.
AUDITORS
The financial statements, including the Portfolios of the Trusts, included
herein have been examined by Deloitte & Touche, independent accountants, as
stated in their opinions appearing herein and have been included in reliance
upon those opinions given on the authority of that firm as experts in accounting
and auditing.
SPONSOR
The Sponsor is a Delaware corporation and is engaged in the underwriting,
securities and commodities brokerage business, and is a member of the New York
Stock Exchange, Inc., other major securities exchanges and commodity exchanges,
and the National Association of Securities Dealers, Inc. The Sponsor and Merrill
Lynch Asset Management, Inc., a Delaware corporation, each of which is a
subsidiary of Merrill Lynch & Co., Inc., are engaged in the investment advisory
business. The Sponsor has acted as principal underwriter and managing
underwriter of other investment companies. The Sponsor, in addition to
participating as a member of various selling groups or as an agent of other
investment companies, executes orders on behalf of investment companies for the
purchase and sale of securities of these companies and sells securities to these
companies in its capacity as a broker or dealer in securities.
12
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONTAIN ALL OF THE INFORMATION WITH RESPECT TO THE
INVESTMENT COMPANY SET FORTH IN ITS REGISTRATION STATEMENT AND EXHIBITS RELATING
THERETO WHICH HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT
OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
- --------------------------------------------------------------------------------
THE MERRILL LYNCH FUND OF STRIPPED ('ZERO')
U.S. TREASURY SECURITIES, SERIES A THROUGH K
INDEX
- --------------------------------------------------------------------------------
PAGE
--------------------
Investment Summary.......................................... A-2
Accountants' Opinion Relating to Series A................... D-1
Statements of Conditions of Series A........................ D-2
Portfolios of Series A...................................... D-7
Accountants' Opinion Relating to Series B................... D-8
Statements of Condition of Series B......................... D-9
Portfolios of Series B...................................... D-21
Accountant's Opinion Relating to Series C................... D-22
Statements of Condition of Series C......................... D-23
Portfolios of Series C...................................... D-28
Accountants' Opinion Relating to Series D................... D-29
Statements of Condition of Series D......................... D-30
Portfolios of Series D...................................... D-35
Accountant's Opinion Relating to Series E................... D-36
Statements of Condition of Series E......................... D-37
Portfolio of Series E....................................... D-44
Accountants' Opinion Relating to Series F................... D-45
Statements of Conditions of Series F........................ D-46
Portfolios of Series F...................................... D-52
Accountants' Opinion Relating to Series G................... D-53
Statements of Conditions of Series G........................ D-54
- --------------------------------------------------------------------------------
INDEX
- --------------------------------------------------------------------------------
PAGE
--------------------
Portfolios of Series G...................................... D-61
Accountants' Opinion Relating to Series H................... D-62
Statement of Conditions of Series H......................... D-63
Portfolio of Series H....................................... D-68
Accountant's Opinion Relating to Series I................... D-69
Statement of Condition of Series I.......................... D-70
Portfolio of Series I....................................... D-75
Accountant's Opinion Relating to Series J................... D-76
Statement of Condition of Series J.......................... D-77
Portfolio of Series J....................................... D-82
Fund Structure.............................................. 1
Risk Factors................................................ 1
Description of the Fund..................................... 3
Taxes....................................................... 4
Sale of Units............................................... 5
Market for Units............................................ 7
Redemption.................................................. 7
Expenses and Charges........................................ 8
Administration of the Fund.................................. 9
Resignation, Removal and Limitation on Liability............ 11
Miscellaneous............................................... 12
- --------------------------------------------------------------------------------
SPONSOR: EVALUATOR:
Merrill Lynch, Pierce, Kenny S&P Evaluation
Fenner & Smith Inc. Services
Unit Investment Trusts 65 Broadway
Post Office Box 9051 New York, N.Y. 10006
Princeton, N.J. 08543-9051
(609) 282-8500
TRUSTEE: INDEPENDENT ACCOUNTANTS:
The Chase Manhattan Bank, N. A. Deloitte & Touche
Unit Trust Department 1633 Broadway
Box 2051 3rd Floor
New York, N.Y. 10081 New York, N.Y. 10019
1-800-323-1508
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
WITH RESPECT TO THIS INVESTMENT COMPANY NOT CONTAINED IN PARTS A AND B OF THIS
PROSPECTUS; AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. PARTS A AND B OF THIS PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH
OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
16116-5/94
<PAGE>
THE MERRILL LYNCH FUND OF
STRIPPED ('ZERO') U.S. TREASURY SECURITIES, SERIES A, B, C, D, E, F, G, H, I AND
J
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet of Form S-6.
The Prospectus.
The Signatures.
The following exhibits:
4.1 --Consent of the Evaluator.
5.1 --Consent of independent accountants.
R-1
<PAGE>
THE MERRILL LYNCH FUND OF
STRIPPED ('ZERO') U.S. TREASURY SECURITIES, SERIES A, B, C, D, E, F, G, H, I AND
J
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
MERRILL LYNCH FUND OF STRIPPED ('ZERO') U.S. TREASURY SECURITIES, SERIES A, B,
C, D, E, F, G, H, I AND J CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR
EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE
SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT OR
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW
YORK ON THE 22ND DAY OF APRIL, 1994.
SIGNATURES APPEAR ON PAGE R-3.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Merrill Lynch, Pierce, have been filed
Fenner & Smith Incorporated: under
Form SE and the
following 1933 Act
File
Number: 33-43466
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By
ERNEST V. FABIO
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
Exhibit 5.1
THE MERRILL LYNCH FUND OF
STRIPPED ('ZERO') U.S. TREASURY SECURITIES
SERIES A, B, C, D, E, F, G, H, I AND J
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee
of The Merrill Lynch Fund of Stripped ('Zero')
U.S. Treasury Securities Series A, B, C, D, E, F, G, H, I and J
We hereby consent to the use in Post-Effective Amendment No. 10 to Registration
Statement Nos. 2-89536, 2-94915, 33-02813, 33-13386, 33-21320, 33-28038,
33-34403, 33-39606, 33-47078 and 33-49519 of our opinions dated February 7, 1994
relating to the financial statements of The Merrill Lynch Fund of Stripped
('Zero')
U.S. Treasury Securities Series A, B, C, D, E, F, G, H, I and J and to the
reference to us under the heading 'Auditors' in the Prospectus which is a part
of this Registration Statement.
DELOITTE & TOUCHE
New York, N.Y.
April 20, 1994
<PAGE>
EXHIBIT 4.1
KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.
65 BROADWAY
NEW YORK, N.Y. 10006
TELEPHONE (212) 770-4405
FAX 212/797-8681
April 20, 1994
F. A. Shinal
Senior Vice President
Chief Financial Officer
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Unit Investment Trust Division
P.O. Box 9051
Princeton, New Jersey 08543-9051
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza--3B
New York, New York 10081
RE: THE MERRILL LYNCH FUND OF STRIPPED
('ZERO') U.S. TREASURY SECURITIES, SERIES A, B, C, D, E, F, G, H, I and J
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File Nos. 2-89536, 2-94915, 33-02813, 33-13386, 33-21320, 33-28038, 33-34403,
33-39606, 33-47078 and 33-49519 for the above-captioned trusts. We hereby
acknowledge that Kenny S&P Evaluation Services, a division of Kenny Information
Systems, Inc. is currently acting as the evaluator for the trust. We hereby
consent to the use in the Amendment of the reference to Kenny S&P Evaluation
Services, a division of Kenny Information Systems, Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in our
KENNYBASE database.
You are hereby authorized to file copies of this letter with the Securities
and Exchange Commission.
Sincerely,
F.A. SHINAL
Senior Vice President
Chief Financial Officer
<PAGE>
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
April 19, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We hereby represent that the Post-Effective Amendments to the registered
unit investment trusts described in Exhibit A attached hereto do not contain
disclosures which would render them ineligible to become effective pursuant to
Rule 485(b) under the Securities Act of 1933.
Very truly yours,
Davis Polk & Wardwell
Attachment
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
1933 ACT 1940 ACT
FUND NAME CIK FILE NO. FILE NO.
- --------- --- -------- --------
<S> <C> <C> <C>
DEFINED ASSET FUNDS-MITF CAIS-3 750119 2-92328 811-1777
DEFINED ASSET FUNDS-MITF CAIS-25 771977 2-98764 811-1777
DEFINED ASSET FUNDS-MITF CAIS-26 773474 2-99131 811-1777
DEFINED ASSET FUNDS-MITF CAIS-28 775974 33-00103 811-1777
DEFINED ASSET FUNDS-CIF ITS-42 883653 33-49231 811-2295
DEFINED ASSET FUNDS-MITF ITS-186 868150 33-44052 811-1777
DEFINED ASSET FUNDS-CIF MPS-306 781808 33-43361 811-2295
DEFINED ASSET FUNDS-MITF MPS-227 702296 2-77303 811-1777
DEFINED ASSET FUNDS-MITF MPS-283 719723 2-83885 811-1777
DEFINED ASSET FUNDS-MITF MPS-331 748897 2-92003 811-1777
DEFINED ASSET FUNDS-MITF MPS-405 780764 33-08083 811-1777
DEFINED ASSET FUNDS-MITF MPS-406 780765 33-08262 811-1777
DEFINED ASSET FUNDS-MITF MPS-407 780768 33-08445 811-1777
DEFINED ASSET FUNDS-MITF MPS-441 780894 33-17343 811-1777
DEFINED ASSET FUNDS-MITF MPS-442 780912 33-17352 811-1777
DEFINED ASSET FUNDS-MITF MPS-472 781926 33-24836 811-1777
DEFINED ASSET FUNDS-MITF MPS-473 781927 33-25018 811-1777
DEFINED ASSET FUNDS-MITF MSS 1M 773285 2-99000 811-1777
DEFINED ASSET FUNDS-MITF MSS 27 895614 33-49297 811-1777
DEFINED ASSET FUNDS-MITF MSS 2I 780469 33-06713 811-1777
DEFINED ASSET FUNDS-MITF MSS 2J 780470 33-07577 811-1777
DEFINED ASSET FUNDS-MITF MSS 3O 780503 33-16727 811-1777
DEFINED ASSET FUNDS-MITF MSS 6P 847180 33-32423 811-1777
DEFINED ASSET FUNDS-USTS-A Monarch 740833 2-89536 811-3965
DEFINED ASSET FUNDS-USTS-B Monarch 759665 2-94915 811-3965
DEFINED ASSET FUNDS-USTS-C Monarch 782699 33-02813 811-3965
DEFINED ASSET FUNDS-USTS-D Monarch 782701 33-13386 811-3965
DEFINED ASSET FUNDS-USTS-E Monarch 782707 33-21320 811-3965
DEFINED ASSET FUNDS-USTS-F Monarch 782708 33-28038 811-3965
DEFINED ASSET FUNDS-USTS-G Monarch 782709 33-34403 811-3965
DEFINED ASSET FUNDS-USTS-H Monarch 782711 33-39606 811-3965
DEFINED ASSET FUNDS-USTS-I Monarch 782713 33-47078 811-3965
DEFINED ASSET FUNDS-USTS-J Monarch 891766 33-49519 811-3965
TOTAL: 33 FUNDS
</TABLE>