AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 29, 1996
REGISTRATION NOS. 2-89536, 2-94915, 33-02813, 33-13386, 33-21320, 33-28038,
33-34403, 33-39606, 33-47078
33-49519 AND 33-53085
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 12
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, J AND K
(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
DEFINED ASSET FUNDS
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 16, 1996.
Check box if it is proposed that this filing will become effective on May 1,
1996 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 2003 Trust;
Series B, of the 2001 and 2005 Trusts; Series C, of the 2006 Trust; 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 1, 1996
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, 1995+, THE EVALUATION DATE
The following Trusts, each designated for the maturity of its underlying
Stripped Treasury Securities, are offered in Series A-K (see Portfolios).
1997
TRUST
--------------
FACE AMOUNT OF SECURITIES...............$ 56,787,427
NUMBER OF UNITS......................... 56,679,406
FACE AMOUNT OF SECURITIES PER 1,000
UNITS...................................$ 1,001.90
FRACTIONAL UNDIVIDED INTEREST IN TRUST
REPRESENTED BY EACH UNIT................ 1/56,679,406th
OFFERING PRICE PER 1,000 UNITS***
Aggregate offer side evaluation of
Securities in Trust*....................$ 53,736,620
--------------
Net asset value (divided by number
of Units, times 1,000)..................$ 948.08
Plus the applicable transaction
charge**............................$ 2.38
--------------
Offering Price per 1,000
Units***++..........................$ 950.46
--------------
--------------
SPONSOR'S REPURCHASE PRICE PER 1,000
UNITS
(based on offer side evaluation of
underlying Securities)++..............$ 948.08
REDEMPTION PRICE PER 1,000 UNITS (based
on bid side evaluation of underlying
Securities)****++ $ 947.45
CALCULATION OF ESTIMATED NET ANNUAL CASH
INTEREST INCOME PER $1,000 FACE AMOUNT
Gross annual cash income............$ 0.35
Less estimated annual expenses......$ 0.35
--------------
Estimated net annual cash income....$ 0.00
--------------
--------------
TRUSTEE'S ANNUAL FEE AND EXPENSES
Per $1,000 face amount of underlying
Securities (see Expenses and
Charges)..............................$ 0.35+++
2003
TRUST
--------------
FACE AMOUNT OF SECURITIES................................$ 80,300,141
NUMBER OF UNITS.......................................... 80,221,626
FACE AMOUNT OF SECURITIES PER 1,000 UNITS................$ 1,000.97
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY
EACH UNIT.............................................. 1/80,221,626th
OFFERING PRICE PER 1,000 UNITS***
Aggregate offer side evaluation of Securities in
Trust*...............................................$ 53,019,045
--------------
Net asset value (divided by number of Units, times
1,000)...............................................$ 660.90
Plus the applicable transaction charge**.............$ 6.68
--------------
Offering Price per 1,000 Units***+...................$ 667.58
--------------
--------------
SPONSOR'S REPURCHASE PRICE PER 1,000 UNITS
(based on offer side evaluation of underlying
Securities)+.........................................$ 660.90
REDEMPTION PRICE PER 1,000 UNITS (based on bid side
evaluation of underlying
Securities)****+.......................................$ 660.32
CALCULATION OF ESTIMATED NET ANNUAL CASH INTEREST INCOME
PER $1,000 FACE AMOUNT
Gross annual cash income.............................$ 0.35
Less estimated annual expenses.......................$ 0.35
--------------
Estimated net annual cash income.....................$ 0.00
--------------
--------------
TRUSTEE'S ANNUAL FEE AND EXPENSES
Per $1,000 face amount of underlying Securities (see
Expenses and Charges)..................................$ 0.35
- ------------------
+ The Indentures were signed and the initial deposits were made as of
April 30, 1984 (Series A: 2003 Trust), 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), April 20, 1993 (Series J: 2013 Trust ) and April 26,
1994 (Series K: 2004 and 2014 Trusts).
++ Plus any net cash.
+++ During the last three months of the 1997, 2002, 2005 Trusts and the
last twelve months of the 2007 Trust, the Trustee's Fee and therefore estimated
expenses will be eliminated, and the estimated net annual income will remain the
same (see Selection and Acquisition of Securities).
* Includes amortization of discount, calculated using the 'interest'
method, to expected date of settlement (three business days after purchase) for
Securities purchased on the Investment Summary date.
A-2
<PAGE>
<TABLE><CAPTION>
INVESTMENT SUMMARY AS OF DECEMBER 31, 1995+, THE EVALUATION DATE (CONTINUED)
1998 1999 2000 2001 2002
TRUST TRUST TRUST TRUST TRUST
- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
$ 63,535,020 $ 28,000,867 $ 27,673,806 $ 70,114,204 $ 11,573,540
63,485,140 27,997,201 27,637,020 69,865,193 11,563,316
$ 1,000.78 $ 1,000.13 $ 1,001.33 $ 1,003.56 $ 1,000.88
1/63,485,140th 1/27,997,201st 1/27,637,020th 1/69,865,193rd 1/11,563,316th
$ 57,056,045 $ 23,834,363 $ 22,326,175 $ 53,546,528 $ 8,353,525
- -------------- -------------- -------------- -------------- --------------
$ 898.73 $ 851.31 $ 807.83 $ 766.42 $ 722.41
$ 4.52 $ 6.44 $ 6.11 $ 7.74 $ 7.30
- -------------- -------------- -------------- -------------- --------------
$ 903.25 $ 857.75 $ 813.94 $ 774.16 $ 729.71
- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- --------------
$ 898.73 $ 851.31 $ 807.83 $ 766.42 $ 722.41
$ 898.14 $ 850.67 $ 807.18 $ 765.81 $ 721.81
$ 0.35 $ 0.35 $ 0.35 $ 0.35 $ 0.36
$ 0.35 $ 0.35 $ 0.35 $ 0.35 $ 0.36
- -------------- -------------- -------------- -------------- --------------
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- --------------
$ 0.35 $ 0.35 $ 0.35 $ 0.35 $ 0.36+++
<CAPTION>
2004 2005 2006 2007
TRUST TRUST TRUST TRUST
- ------------ ------------ ------------ ------------
$ 11,557,379 $ 37,260,278 $ 9,083,172 $ 20,579,922
11,563,330 36,917,304 8,847,662 20,101,562
$ 999.48 $ 1,009.29 $ 1,026.61 $ 1,023.79
1/11,563,330th 1/36,917,304th 1/8,847,662nd 1/20,101,562nd
$ 7,397,887 $ 22,430,026 $ 5,137,748 $ 10,944,413
- ------------ ------------ ------------ ------------
$ 639.77 $ 607.57 $ 580.68 $ 544.45
$ 9.74 $ 9.25 $ 8.84 $ 8.29
- ------------ ------------ ------------ ------------
$ 649.51 $ 616.82 $ 589.52 $ 552.74
- ------------ ------------ ------------ ------------
- ------------ ------------ ------------ ------------
$ 639.77 $ 607.57 $ 580.68 $ 544.45
$ 639.21 $ 606.97 $ 580.06 $ 543.81
$ 0.35 $ 0.35 $ 0.30 $ 0.33
$ 0.35 $ 0.35 $ 0.30 $ 0.33
- ------------ ------------ ------------ ------------
$ 0.00 $ 0.00 $ 0.00 $ 0.00
- ------------ ------------ ------------ ------------
- ------------ ------------ ------------ ------------
$ 0.35 $ 0.35+++ $ 0.30 $ 0.33+++
- ------------------
</TABLE>
**The transaction charges applicable as of the date above are .25% of the
Offering Price of the 1997 Trust (.251% of the net amount invested), .50% of the
Offering Price of the 1998 Trust (.503% of the net amount invested), .75% of the
Offering Price of the 1999 Trust (.756% of the net amount invested), .75% of the
Offering Price of the 2000 Trust (.756% of the net amount invested), 1.00% of
the Offering Price of the 2001 Trust (1.010% of the net amount invested), 1.00%
of the Offering Price of the 2002 Trust (1.010% of the net amount invested),
1.00% of the Offering Price of the 2003 Trust (1.010% of the net amount
invested), 1.50% of the Offering Price of the 2004 Trust (1.523% of the net
amount invested), 1.50% of the Offering Price of the 2005 Trust (1.523% of the
net amount invested), 1.50% of the Offering Price of the 2006 Trust (1.523% of
the net amount invested), and 1.50% of the Offering Price of the 2007 Trust
(1.523% 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 offer 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 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 $3.01, $5.11, $7.08, $6.76, $8.35, $7.90, $7.26,
$10.30, $9.85, $9.46 and $8.93 less than the Offering Price and $0.63, $0.59,
$0.64, $0.65, $0.61, $0.60, $0.58, $0.56, $0.60, $0.62 and $0.64 less than the
Sponsor's Repurchase Price per 1,000 Units, with respect to the 1997 through
2007 Trusts, respectively.
A-3
<PAGE>
INVESTMENT SUMMARY AS OF DECEMBER 31, 1995+, THE EVALUATION DATE
The following Trusts, each designated for the maturity of its underlying
Stripped Treasury Securities, are offered in Series A-K (see Portfolios).
2008
TRUST
--------------
FACE AMOUNT OF SECURITIES...............$ 50,604,418
NUMBER OF UNITS......................... 50,417,866
FACE AMOUNT OF SECURITIES PER UNIT......$ 1,003.70
FRACTIONAL UNDIVIDED INTEREST IN TRUST
REPRESENTED BY EACH UNIT................ 1/50,417,866th
OFFERING PRICE PER 1,000 UNITS***
Aggregate offer side evaluation of
Securities in Trust*....................$ 25,259,587
--------------
Net asset value (divided by number
of Units, times 1,000)..................$ 501.00
Plus the applicable transaction
charge**............................$ 7.63
--------------
Offering Price per 1,000
Units***++..........................$ 508.63
--------------
--------------
SPONSOR'S REPURCHASE PRICE PER 1,000
UNITS
(based on offer side evaluation of
underlying Securities)++..............$ 501.00
REDEMPTION PRICE PER 1,000 UNITS (based
on bid side evaluation of underlying
Securities)****++ $ 500.36
CALCULATION OF ESTIMATED NET ANNUAL CASH
INTEREST INCOME PER $1,000 FACE AMOUNT
Gross annual cash income............$ 0.36
Less estimated annual expenses......$ 0.36
--------------
Estimated net annual cash income....$ 0.00
--------------
--------------
TRUSTEE'S ANNUAL FEE AND EXPENSES
Per $1,000 face amount of underlying
Securities (see Expenses and
Charges)..............................$ 0.36+++
- ------------------
+ The Indentures were signed and the initial deposits were made as of
April 30, 1984 (Series A: 2003 Trust), 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), April 20, 1993 (Series J: 2013 Trust ) and April 26,
1994 (Series K: 2004 and 2014 Trusts).
++ Plus any net cash.
+++ During 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 three months (potentially up to 63 months if the
Treasury Note is called when it first becomes callable) of the 2013 Trust, the
Trustee's Fee and therefore estimated expenses will be eliminated, and the
estimated net annual income will remain the same (see Selection and Acquisition
of Securities).
* Includes amortization of discount, calculated using the 'interest'
method, to expected date of settlement (three business days after purchase) for
Securities purchased on the Investment Summary date.
A-4
<PAGE>
<TABLE><CAPTION>
INVESTMENT SUMMARY AS OF DECEMBER 31, 1995+, THE EVALUATION DATE (CONTINUED)
2009 2010 2011 2013 2014
TRUST TRUST TRUST TRUST TRUST
- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
$ 22,007,077 $ 19,523,929 $ 5,379,858 $ 4,206,496 $ 38,631,382
21,881,931 19,561,835 5,336,049 4,192,101 38,853,887
$ 1,005.71 $ 998.06 $ 1,008.21 $ 1,003.43 $ 994.27
1/21,881,931st 1/19,561,835th 1/5,336,049th 1/4,192,101st 1/38,853,887th
$ 10,306,964 $ 8,561,188 $ 2,203,459 $ 1,509,379 $ 12,979,842
- -------------- -------------- -------------- -------------- --------------
$ 471.02 $ 437.64 $ 412.93 $ 360.05 $ 334.06
$ 8.39 $ 7.79 $ 7.35 $ 6.41 $ 6.82
- -------------- -------------- -------------- -------------- --------------
$ 479.41 $ 445.43 $ 420.28 $ 366.46 $ 340.88
- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- --------------
$ 471.02 $ 437.64 $ 412.93 $ 360.05 $ 334.06
$ 470.43 $ 436.99 $ 412.28 $ 359.52 $ 333.43
$ 0.36 $ 0.37 $ 0.36 $ 0.36 $ 0.35
$ 0.36 $ 0.37 $ 0.36 $ 0.36 $ 0.35
- -------------- -------------- -------------- -------------- --------------
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- --------------
$ 0.36+++ $ 0.37+++ $ 0.36+++ $ 0.36+++ $ 0.35
</TABLE>
- ------------------
**The transaction charges applicable as of the date above are 1.50% of
the Offering Price of the 2008 Trust (1.523% of the net amount invested), 1.75%
of the Offering Price of the 2009 Trust (1.781% of the net amount invested),
1.75% of the Offering Price of the 2010 Trust (1.781% of the net amount
invested), 1.75% of the Offering Price of the 2011 Trust (1.781% of the net
amount invested), 1.75% of the Offering Price of the 2013 Trust (1.781% of the
net amount invested) and 2.00% of the Offering Price of the 2014 Trust (2.041%
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 offer 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 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 $8.27, $8.98, $8.44, $8.00, $6.94 and $7.45 less
than the Offering Price and $0.64, $0.59, $0.65, $0.65, $0.53 and $0.63 less
than the Sponsor's Repurchase Price per 1,000 Units, with respect to the 2008
through 2014 Trusts, respectively.
A-5
<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, it is expected that a Holder will
receive total distributions of approximately $1,000 for Units held until
maturity of the underlying Securities of that Trust. 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 2001, 2003 and 2005 Trusts).
With respect to the 2004 and 2014 Trusts, each Trust must be terminated no later
than one year after the maturity date of the Stripped Treasury Securities in
that Trust.
A-6
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders
of The Merrill Lynch Fund of Stripped ("Zero")
U.S. Treasury Securities, Series A (2003 Trust),
Series B (2001 and 2005 Trusts), Series C
(2006 Trust), Series D (1997 and 2007 Trusts),
Series E (1998 and 2008 Trusts), Series F (1999 and
2009 Trusts), Series G (2000 and 2010 Trusts),
Series H (2011 Trust), Series I (2002 Trust),
Series J (2013 Trust) and Series K (2004 and
2014 Trusts) (the Funds):
We have audited the accompanying statements of condition of the Funds, including
the portfolios, as of December 31, 1995 and the related statements of operations
and of changes in net assets for the periods ended December 31, 1995, 1994 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, 1995, 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 Funds at December 31, 1995
and the results of their operations and changes in their net assets for the
above-stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
February 7, 1996
D-1
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1995
2003 TRUST
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $52,972,470
Other 65,408
Total trust property 53,037,878
LESS LIABILITY - Other 5,493
NET ASSETS (Note 2) $53,032,385
UNITS OUTSTANDING 80,221,626
UNIT VALUE $.66107
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>
2003 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 29,639 $ 31,322 $ 35,982
Accretion of original issue
discount 3,641,500 3,575,917 3,767,614
Trustee's fees and expenses (19,424) (20,811) (21,329)
Net investment income 3,651,715 3,586,428 3,782,267
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold 892,759 921,823 2,757,943
Unrealized appreciation (depreciation) of
investments 7,537,583 (8,735,643) 3,465,550
Realized and unrealized gain (loss) on
investments 8,430,342 (7,813,820) 6,223,493
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $12,082,057 $(4,227,392) $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>
2003 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 3,651,715 $ 3,586,428 $ 3,782,267
Realized gain on securities sold 892,759 921,823 2,757,943
Unrealized appreciation (depreciation) of
investments 7,537,583 (8,735,643) 3,465,550
Net increase (decrease) in net assets
resulting from operations 12,082,057 (4,227,392) 10,005,760
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 888,564 826,575 1,509,919
Redemptions of units (4,430,713) (4,969,574) (9,728,606)
Net capital share transactions (3,542,149) (4,142,999) (8,218,687)
NET INCREASE (DECREASE) IN NET ASSETS 8,539,908 (8,370,391) 1,787,073
NET ASSETS, BEGINNING OF YEAR 44,492,477 52,862,868 51,075,795
NET ASSETS, END OF YEAR $53,032,385 $44,492,477 $52,862,868
UNIT VALUE, END OF YEAR $.66107 $.51703 $.56338
UNITS OUTSTANDING, END OF YEAR 80,221,626 86,053,770 93,832,418
</TABLE>
See Notes to Financial Statements.
D-4
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
2001 TRUST 2005 TRUST
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $53,503,783 $22,408,023
Other 56,234 18,400
Total trust property 53,560,017 22,426,423
LESS LIABILITY - Other 5,103 981
NET ASSETS (Note 2) $53,554,914 $22,425,442
UNITS OUTSTANDING 69,865,193 36,917,304
UNIT VALUE $.76655 $.60745
</TABLE>
See Notes to Financial Statements.
D-5
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2001 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 25,558 $ 26,523 $ 31,082
Accretion of original issue discount 4,070,813 4,112,256 1,970,916
Trustee's fees and expenses (17,357) (23,626) (15,676)
Net investment income 4,079,014 4,115,153 1,986,322
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold 720,572 1,017,673 4,726,764
Unrealized appreciation (depreciation) of
investments 5,161,047 (8,491,267) 2,005,671
Realized and unrealized gain (loss) on
investments 5,881,619 (7,473,594) 6,732,435
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $9,960,633 $(3,358,441) $8,718,757
</TABLE>
See Notes to Financial Statements.
D-6
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES B
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2005 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 12,677 $ 12,787 $ 13,934
Accretion of original issue discount 1,371,217 1,297,432 1,373,844
Trustee's fees and expenses (10,695) (10,828) (10,862)
Net investment income 1,373,199 1,299,391 1,376,916
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold 369,384 368,832 716,371
Unrealized appreciation (depreciation) of
investments 3,590,504 (3,305,168) 1,407,540
Realized and unrealized gain (loss) on
investments 3,959,888 (2,936,336) 2,123,911
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $5,333,087 $(1,636,945) $3,500,827
See Notes to Financial Statements.
</TABLE>
D-7
<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 December 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 4,079,014 $ 4,115,153 $ 1,986,322
Realized gain on securities sold 720,572 1,017,673 4,726,764
Unrealized appreciation (depreciation)
of investments 5,161,047 (8,491,267) 2,005,671
Net increase (decrease)in net assets
resulting from operations 9,960,633 (3,358,441) 8,718,757
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 2,517,687 1,230,864 700,963
Redemptions of units (5,433,756) (6,500,507) (9,067,185)
Net capital share transactions (2,916,069) (5,269,643) (8,366,222)
NET INCREASE (DECREASE) IN NET ASSETS 7,044,564 (8,628,084) 352,535
NET ASSETS, BEGINNING OF YEAR 46,510,350 55,138,434 54,785,899
NET ASSETS, END OF YEAR $53,554,914 $46,510,350 $55,138,434
UNIT VALUE, END OF YEAR $.76655 $.63070 $.67405
UNITS OUTSTANDING, END OF YEAR 69,865,193 73,744,210 81,801,200
</TABLE>
See Notes to Financial Statements.
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 December 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,373,199 $ 1,299,391 $ 1,376,916
Realized gain on securities sold 369,384 368,832 716,371
Unrealized appreciation (depreciation)
of investments 3,590,504 (3,305,168) 1,407,540
Net increase (decrease) in net assets
resulting from operations 5,333,087 (1,636,945) 3,500,827
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 2,186,036 979,867 1,693,122
Redemptions of units (1,986,425) (1,937,561) (3,436,735)
Net capital share transactions 199,611 (957,694) (1,743,613)
NET INCREASE (DECREASE) IN NET ASSETS 5,532,698 (2,594,639) 1,757,214
NET ASSETS, BEGINNING OF YEAR 16,892,744 19,487,383 17,730,169
NET ASSETS, END OF YEAR $22,425,442 $16,892,744 $19,487,383
UNIT VALUE, END OF YEAR $.60745 $.46253 $.50723
UNITS OUTSTANDING, END OF YEAR 36,917,304 36,522,329 38,419,137
</TABLE>
See Notes to Financial Statements.
D-9
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
2006 TRUST
<S> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $5,132,212
Other 7,900
Total trust property 5,140,112
LESS LIABILITY - Other 6,175
NET ASSETS (Note 2) $5,133,937
UNITS OUTSTANDING 8,847,662
UNIT VALUE $.58026
</TABLE>
See Notes to Financial Statements.
D-10
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2006 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,699 $ 2,744 $ 3,441
Accretion of original issue discount 310,893 305,003 338,288
Trustee's fees and expenses (2,697) (2,651) (1,879)
Net investment income 310,895 305,096 339,850
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold 205,530 187,066 237,823
Unrealized appreciation (depreciation)
of investments 776,125 (906,211) 446,085
Realized and unrealized gain (loss) on
investments 981,655 (719,145) 683,908
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $1,292,550 $(414,049) $1,023,758
</TABLE>
See Notes to Financial Statements.
D-11
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES C
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
2006 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 310,895 $ 305,096 $ 339,850
Realized gain on securities sold 205,530 187,066 237,823
Unrealized appreciation (depreciation)
of investments 776,125 (906,211) 446,085
Net increase (decrease) in net assets
resulting from operations 1,292,550 (414,049) 1,023,758
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 926,723 418,164 455,062
Redemptions of units (1,012,052) (955,121) (868,372)
Net capital share transactions (85,329) (536,957) (413,310)
NET INCREASE (DECREASE) IN NET ASSETS 1,207,221 (951,006) 610,448
NET ASSETS, BEGINNING OF YEAR 3,926,716 4,877,722 4,267,274
NET ASSETS, END OF YEAR $5,133,937 $3,926,716 $4,877,722
UNIT VALUE, END OF YEAR $.58026 $.43332 $.47786
UNITS OUTSTANDING, END OF YEAR 8,847,662 9,061,845 10,207,360
</TABLE>
See Notes to Financial Statements.
D-12
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
1997 TRUST 2007 TRUST
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $53,701,117 $10,931,452
Other 24,416 2,818
Total trust property 53,725,533 10,934,270
LESS LIABILITY - Other 1,286 1,357
NET ASSETS (Note 2) $53,724,247 $10,932,913
UNITS OUTSTANDING 56,679,406 20,101,562
UNIT VALUE $.94786 $.54388
</TABLE>
See Notes to Financial Statements.
D-13
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
1997 TRUST
Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 20,865 $ 21,475 $ 23,900
Accretion of original issue discount 4,373,399 4,188,411 4,238,667
Trustee's fees and expenses (14,879) (15,353) (16,265)
Net investment income 4,379,385 4,194,533 4,246,302
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold 181,168 300,597 1,069,363
Unrealized appreciation (depreciation) of
investments 945,860 (5,176,128) 188,278
Realized and unrealized gain (loss) on
investments 1,127,028 (4,875,531) 1,257,641
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $5,506,413 $ (680,998) $5,503,943
</TABLE>
See Notes to Financial Statements.
D-14
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2007 TRUST
Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 7,248 $ 8,030 $ 10,681
Accretion of original issue discount 720,342 705,967 840,251
Trustee's fees and expenses (7,196) (8,899) (7,218)
Net investment income 720,394 705,098 843,714
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold 362,903 248,777 1,054,077
Unrealized appreciation (depreciation) of
investments 1,999,314 (2,051,001) 978,063
Realized and unrealized gain (loss) on
investments 2,362,217 (1,802,224) 2,032,140
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $3,082,611 $(1,097,126) $2,875,854
</TABLE>
See Notes to Financial Statements.
D-15
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
1997 TRUST
Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 4,379,385 $ 4,194,533 $ 4,246,302
Realized gain on securities sold 181,168 300,597 1,069,363
Unrealized appreciation (depreciation)
of investments 945,860 (5,176,128) 188,278
Net increase (decrease)in net assets
resulting from operations 5,506,413 (680,998) 5,503,943
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 3,441,998 3,919,628 642,043
Redemptions of units (7,916,778) (5,370,837) (8,848,290)
Net capital share transactions (4,474,780) (1,451,209) (8,206,247)
NET INCREASE (DECREASE) IN NET ASSETS 1,031,633 (2,132,207) (2,702,304)
NET ASSETS, BEGINNING OF PERIOD 52,692,614 54,824,821 57,527,125
NET ASSETS, END OF PERIOD $53,724,247 $52,692,614 $54,824,821
UNIT VALUE, END OF PERIOD $.94786 $.85553 $.86631
UNITS OUTSTANDING, END OF PERIOD 56,679,406 61,590,781 63,285,271
</TABLE>
See Notes to Financial Statements.
D-16
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
2007 TRUST
Years Ended December 31
1995 1994 1993
OPERATIONS:
<S> <C> <C> <C>
Net investment income $ 720,394 $ 705,098 $ 843,714
Realized gain on securities sold 362,903 248,777 1,054,077
Unrealized appreciation (depreciation)
of investments 1,999,314 (2,051,001) 978,063
Net increase (decrease)in net assets
resulting from operations 3,082,611 (1,097,126) 2,875,854
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 686,393 213,762
Redemptions of units (1,785,206) (1,193,225) (3,238,370)
Net capital share transactions (1,098,813) (1,193,225) (3,024,608)
NET INCREASE (DECREASE) IN NET ASSETS 1,983,798 (2,290,351) (148,754)
NET ASSETS, BEGINNING OF PERIOD 8,949,115 11,239,466 11,388,220
NET ASSETS, END OF PERIOD $10,932,913 $ 8,949,115 $11,239,466
UNIT VALUE, END OF PERIOD $.54388 $.39904 $.44340
UNITS OUTSTANDING, END OF PERIOD 20,101,562 22,426,556 25,348,458
</TABLE>
See Notes to Financial Statements.
D-17
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES E
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
1998 TRUST 2008 TRUST
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $57,018,548 $25,227,203
Other 41,587 23,572
Total trust property 57,060,135 25,250,775
LESS LIABILITY - Other 4,343 8,804
NET ASSETS (Note 2) $57,055,792 $25,241,971
UNITS OUTSTANDING 63,485,140 50,417,866
UNIT VALUE $.89873 $.50066
</TABLE>
See Notes to Financial Statements.
D-18
<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
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 22,690 $ 22,510 $ 25,125
Accretion of original issue
discount 4,345,788 4,032,437 3,806,941
Trustee's fees and expenses (15,955) (16,133) (15,691)
Net investment income 4,352,523 4,038,814 3,816,375
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold 173,871 332,571 1,660,333
Unrealized appreciation (deprecia-
tion) of investments 2,540,891 (5,936,517) 648,235
Realized and unrealized gain (loss)
on investments 2,714,762 (5,603,946) 2,308,568
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 7,067,285 $(1,565,132) $6,124,943
</TABLE>
See Notes to Financial Statements.
D-19
<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
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 18,790 $ 21,497 $ 27,805
Accretion of original issue
discount 1,565,747 1,656,763 2,055,569
Trustee's fees and expenses (13,855) (16,170) (17,246)
Net investment income 1,570,682 1,662,090 2,066,128
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold 241,098 467,814 5,337,058
Unrealized appreciation (deprecia-
tion) of investments 5,452,882 (4,738,832) (835,824)
Realized and unrealized gain (loss)
on investments 5,693,980 (4,271,018) 4,501,234
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 7,264,662 $(2,608,928) $6,567,362
</TABLE>
See Notes to Financial Statements.
D-20
<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
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 4,352,523 $ 4,038,814 $ 3,816,375
Realized gain on securities sold 173,871 332,571 1,660,333
Unrealized appreciation (depreciation) of
investments 2,540,891 (5,936,517) 648,235
Net increase (decrease) in net assets
resulting from operations 7,067,285 (1,565,132) 6,124,943
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional Units 2,497,100 3,891,991 638,357
Redemptions of Units (3,371,785) (4,458,847) (9,971,447)
Net capital share transactions (874,685) (566,856) (9,333,090)
NET INCREASE (DECREASE) IN NET ASSETS 6,192,600 (2,131,988) (3,208,147)
NET ASSETS, BEGINNING OF PERIOD 50,863,192 52,995,180 56,203,327
NET ASSETS, END OF PERIOD $57,055,792 $50,863,192 $52,995,180
UNIT VALUE, END OF PERIOD $.89873 $.78992 $.81415
UNITS OUTSTANDING, END OF PERIOD 63,485,140 64,390,067 65,092,391
</TABLE>
See Notes to Financial Statements.
D-21
<PAGE>
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
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $1,570,682 $ 1,662,090 $ 2,066,128
Realized gain on securities sold 241,098 467,814 5,337,058
Unrealized appreciation (depreciation) of
investments 5,452,882 (4,738,832) (835,824)
Net increase (decrease) in net assets
resulting from operations 7,264,662 (2,608,928) 6,567,362
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional Units 285,598 845,437
Redemptions of Units (2,030,174) (3,749,194) (9,768,905)
Net capital share transactions (2,030,174) (3,463,596) (8,923,468)
NET INCREASE (DECREASE) IN NET ASSETS 5,234,488 (6,072,524) (2,356,106)
NET ASSETS, BEGINNING OF PERIOD 20,007,483 26,080,007 28,436,113
NET ASSETS, END OF PERIOD $25,241,971 $20,007,483 $26,080,007
UNIT VALUE, END OF PERIOD $.50066 $.36191 $.40278
UNITS OUTSTANDING, END OF PERIOD 50,417,866 55,283,741 64,750,242
</TABLE>
See Notes to Financial Statements.
D-22
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
1999 TRUST 2009 TRUST
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $23,816,445 $10,293,978
Other 3,842 15,390
Total trust property 23,820,287 10,309,368
LESS LIABILITY - Other 2,869 7,750
NET ASSETS (Note 2) $23,817,418 $10,301,618
UNITS OUTSTANDING 27,997,201 21,881,931
UNIT VALUE $.85071 $.47078
</TABLE>
See Notes to Financial Statements.
D-23
<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
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 9,808 $ 6,786 $ 5,242
Accretion of original issue discount 1,573,856 1,039,555 1,002,409
Trustee's fees and expenses (9,203) (6,414) (3,771)
Net investment income 1,574,461 1,039,927 1,003,880
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold 229,711 30,735 109,193
Unrealized appreciation (depreciation)of
investments 1,623,728 (1,649,501) 265,039
Realized and unrealized gain (loss) on
investments 1,853,439 (1,618,766) 374,232
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $3,427,900 $ (578,839) $1,378,112
</TABLE>
See Notes to Financial Statements.
D-24
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES F
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2009 TRUST
Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 8,713 $ 9,446 $ 11,694
Accretion of original issue discount 656,077 683,420 825,730
Trustee's fees and expenses (8,426) (9,012) (9,100)
Net investment income 656,364 683,854 828,324
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold 329,163 236,183 604,618
Unrealized appreciation (depreciation) of
investments 2,261,855 (1,964,408) 1,184,559
Realized and unrealized gain (loss) on
investments 2,591,018 (1,728,225) 1,789,177
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $3,247,382 $(1,044,371) $2,617,501
</TABLE>
See Notes to Financial Statements.
D-25
<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
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,574,461 $ 1,039,927 $ 1,003,880
Realized gain on securities sold 229,711 30,735 109,193
Unrealized appreciation (depreciation) of
investments 1,623,728 (1,649,501) 265,039
Net increase (decrease) in net assets
resulting from operations 3,427,900 (578,839) 1,378,112
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 3,923,258 11,083,330 150,449
Redemptions of units (3,494,807) (1,153,804) (1,546,344)
Net capital share transactions 428,451 9,929,526 (1,395,895)
NET INCREASE (DECREASE) IN NET ASSETS 3,856,351 9,350,687 (17,783)
NET ASSETS, BEGINNING OF YEAR 19,961,067 10,610,380 10,628,163
NET ASSETS, END OF YEAR $23,817,418 $19,961,067 $10,610,380
UNIT VALUE, END OF YEAR $.85071 $.73031 $.76453
UNITS OUTSTANDING, END OF YEAR 27,997,201 27,332,137 13,878,316
</TABLE>
See Notes to Financial Statements.
D-26
<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
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 656,364 $ 683,854 $ 828,324
Realized gain on securities sold 329,163 236,183 604,618
Unrealized appreciation (depreciation) of
investments 2,261,855 (1,964,408) 1,184,559
Net increase (decrease) in net assets
resulting from operations 3,247,382 (1,044,371) 2,617,501
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 452,445 409,149
Redemptions of units (1,567,198) (1,771,941) (2,888,682)
Net capital share transactions (1,114,753) (1,362,792) (2,888,682)
NET INCREASE (DECREASE) IN NET ASSETS 2,132,629 (2,407,163) (271,181)
NET ASSETS, BEGINNING OF YEAR 8,168,989 10,576,152 10,847,333
NET ASSETS, END OF YEAR $10,301,618 $ 8,168,989 $10,576,152
UNIT VALUE, END OF YEAR $.47078 $.33542 $.37304
UNITS OUTSTANDING, END OF YEAR 21,881,931 24,354,501 28,350,975
</TABLE>
See Notes to Financial Statements.
D-27
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES G
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
2000 TRUST 2010 TRUST
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $22,308,192 $8,548,499
Other 4,396 7,022
Total trust property 22,312,588 8,555,521
LESS LIABILITY - Other 2,436 1,312
NET ASSETS (Note 2) $22,310,152 $8,554,209
UNITS OUTSTANDING 27,637,020 19,561,835
UNIT VALUE $.80726 $.43729
</TABLE>
See Notes to Financial Statements.
D-28
<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,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 9,467 $ 6,916 $ 7,551
Accretion of original issue discount 1,427,959 991,190 881,261
Trustee's fees and expenses (9,230) (6,728) (4,115)
Net investment income 1,428,196 991,378 884,697
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain (loss) on securities sold (242,518) 47,190 293,367
Unrealized appreciation (depreciation)
of investments 1,912,465 (1,847,249) 672,178
Realized and unrealized gain (loss) on
investments 1,669,947 (1,800,059) 965,545
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $3,098,143 $ (808,681) $1,850,242
</TABLE>
See Notes to Financial Statements.
D-29
<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,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 7,635 $ 7,302 $ 8,362
Accretion of original issue discount 608,550 505,061 599,536
Trustee's fees and expenses (7,603) (7,403) (6,877)
Net investment income 608,582 504,960 601,021
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on securities sold (140,604) 261,562 1,206,832
Unrealized appreciation (depreciation) of
investments 2,097,508 (1,125,138) (26,233)
Realized and unrealized gain (loss)on
investments 1,956,904 (863,576) 1,180,599
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $2,565,486 $ (358,616) $1,781,620
</TABLE>
See Notes to Financial Statements.
D-30
<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,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,428,196 $ 991,378 $ 884,697
Realized gain (loss) on securities sold (242,518) 47,190 293,367
Unrealized appreciation (depreciation)
of investments 1,912,465 (1,847,249) 672,178
Net increase (decrease) in net assets
resulting from operations 3,098,143 (808,681) 1,850,242
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 5,018,288 3,985,324 679,422
Redemptions of units (1,639,913) (836,261) (1,985,206)
Net capital share transactions 3,378,375 3,149,063 (1,305,784)
NET INCREASE IN NET ASSETS 6,476,518 2,340,382 544,458
NET ASSETS, BEGINNING OF YEAR 15,833,634 13,493,252 12,948,794
NET ASSETS, END OF YEAR $22,310,152 $15,833,634 $13,493,252
UNIT VALUE, END OF YEAR $.80726 $.67823 $.71952
UNITS OUTSTANDING, END OF YEAR 27,637,020 23,345,619 18,753,153
</TABLE>
See Notes to Financial Statements.
D-31
<PAGE>
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,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 608,582 $ 504,960 $ 601,021
Realized gain (loss) on securities sold (140,604) 261,562 1,206,832
Unrealized appreciation (depreciation) of
investments 2,097,508 (1,125,138) (26,233)
Net increase (decrease) in net assets
resulting from operations 2,565,486 (358,616) 1,781,620
CAPITAL SHARE TRANSACTIONS (Note 3):
Issuance of additional units 4,594,434 3,725,175 3,975,770
Redemptions of units (5,495,933) (3,356,388) (6,429,139)
Net capital share transactions (901,499) 368,787 (2,453,369)
NET INCREASE (DECREASE) IN NET ASSETS 1,663,987 10,171 (671,749)
NET ASSETS, BEGINNING OF YEAR 6,890,222 6,880,051 7,551,800
NET ASSETS, END OF YEAR $8,554,209 $6,890,222 $6,880,051
UNIT VALUE, END OF YEAR $.43729 $.30742 $.34436
UNITS OUTSTANDING, END OF YEAR 19,561,835 22,412,755 19,979,135
See Notes to Financial Statements.
D-32
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1995
2011 TRUST
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $2,199,963
Other 2,106
Total trust property 2,202,069
LESS LIABILITY - Other 380
NET ASSETS (Note 2) $2,201,689
UNITS OUTSTANDING 5,336,049
UNIT VALUE $.41261
</TABLE>
See Notes to Financial Statements.
D-33
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2011 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,432 $ 3,618 $ 4,737
Accretion of original issue discount 172,906 245,966 294,464
Trustee's fees and expenses (2,339) (3,441) (3,011)
Net investment income 172,999 246,143 296,190
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold or redeemed 136,243 115,674 238,213
Unrealized appreciation (depreciation) of investments 534,185 (755,936) 386,516
Realized and unrealized gain (loss) on investments 670,428 (640,262) 624,729
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $843,427 $(394,119) $920,919
</TABLE>
See Notes to Financial Statements.
D-34
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES H
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
2011 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 172,999 $ 246,143 $ 296,190
Realized gain on securities sold 136,243 115,674 238,213
Unrealized appreciation (depreciation)
of investments 534,185 (755,936) 386,516
Net increase (decrease) in net assets
resulting from operations 843,427 (394,119) 920,919
CAPITAL SHARE TRANSACTIONS (NOTE 3):
Issuance of additional units 229,724 472,768 919,691
Redemption of units (1,381,820) (1,424,735) (1,769,511)
Net capital share transactions (1,152,096) (951,967) (849,820)
NET INCREASE (DECREASE) IN NET ASSETS (308,669) (1,346,086) 71,099
NET ASSETS, BEGINNING OF YEAR 2,510,358 3,856,444 3,785,345
NET ASSETS, END OF YEAR $2,201,689 $2,510,358 $3,856,444
NET VALUE, END OF YEAR $.41261 $.28462 $.32073
UNITS OUTSTANDING, END OF YEAR 5,336,049 8,820,153 12,023,998
</TABLE>
See Notes to Financial Statements.
D-35
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
2002 TRUST
<S> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $ 8,346,580
Other 809
Total trust property 8,347,389
LESS LIABILITY - Other 564
NET ASSETS (Note 2) $ 8,346,825
UNITS OUTSTANDING 11,563,316
UNIT VALUE $.72184
</TABLE>
See Notes to Financial Statements.
D-36
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2002 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,416 $ 2,064 $ 1,863
Accretion of original issue discount 422,658 245,717 201,018
Trustee's fees and expenses (3,076) (389) (3,057)
Net investment income 422,998 247,392 199,824
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold or redeemed 8,260 20,034
Unrealized appreciation (depreciation) of
investments 917,851 (491,502) 282,131
Realized and unrealized gain (loss) on
investments 917,851 (483,242) 302,165
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $1,340,849 $(235,850) $501,989
</TABLE>
See Notes to Financial Statements.
D-37
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES I
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
2002 TRUST
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 422,998 $ 247,392 $ 199,824
Realized gain on securities sold 8,260 20,034
Unrealized appreciation (depreciation) of
investments 917,851 (491,502) 282,131
Net increase (decrease) in net assets resulting
from operations 1,340,849 (235,850) 501,989
CAPITAL SHARE TRANSACTIONS (NOTE 3):
Issuance of additional units 3,151,933 1,337,796 307,925
Redemptions of units (368,756) (130,488)
Net capital share transactions 3,151,933 969,040 177,437
NET INCREASE IN NET ASSETS 4,492,782 733,190 679,426
NET ASSETS, BEGINNING OF PERIOD 3,854,043 3,120,853 2,441,427
NET ASSETS, END OF PERIOD $8,346,825 $3,854,043 $3,120,853
NET VALUE, END OF PERIOD $.72184 $.58210 $.62563
UNITS OUTSTANDING, END OF PERIOD 11,563,316 6,620,929 4,988,332
</TABLE>
See Notes to Financial Statements.
D-38
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
2013 TRUST
<S> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $1,507,148
Other 1,137
Total trust property 1,508,285
LESS LIABILITY - Other 95
NET ASSETS (Note 2) $1,508,190
UNITS OUTSTANDING 4,192,101
UNIT VALUE $.35977
</TABLE>
See Notes to Financial Statements.
D-39
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2013 TRUST
April 21
to
Years Ended December 31, December 31,
1995 1994 1993
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,715 $ 3,103 $ 419
Accretion of original issue discount 177,770 180,168 36,623
Trustee's fees and expenses (2,236) (2,451) (519)
Net investment income 178,249 180,820 36,523
REALIZED AND UNREALIZED GAIN (LOSS)ON INVESTMENTS:
Realized gain (loss) on securities sold
or redeemed 196,847 (312,022) 42,857
Unrealized appreciation (depreciation) of
investments 526,105 (114,971) (48,875)
Realized and unrealized gain (loss) on
investments 722,952 (426,993) (6,018)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $901,201 $(246,173) $ 30,505
</TABLE>
See Notes to Financial Statements.
D-40
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES J
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
2013 TRUST
April 21
to
Years Ended December 31, December 31,
1995 1994 1993
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 178,249 $ 180,820 $ 36,523
Realized gain (loss) on securities sold 196,847 (312,022) 42,857
Unrealized appreciation (depreciation) of
investments 526,105 (114,971) (48,875)
Net increase (decrease) in net assets resulting
from operations 901,201 (246,173) 30,505
CAPITAL SHARE TRANSACTIONS (NOTE 3):
Issuance of additional units 1,141,322 3,211,198 1,381,341
Redemption of units (2,823,552) (1,552,323) (637,561)
Net capital share transactions (1,682,230) 1,658,875 743,780
NET INCREASE (DECREASE) IN NET ASSETS (781,029) 1,412,702 774,285
NET ASSETS, BEGINNING OF PERIOD 2,289,219 876,517 102,232
NET ASSETS, END OF PERIOD $1,508,190 $2,289,219 $ 876,517
NET VALUE, END OF PERIOD $.35977 $.24129 $.27382
UNITS OUTSTANDING, END OF PERIOD 4,192,101 9,487,523 3,201,118
</TABLE>
See Notes to Financial Statements.
D-41
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES K
STATEMENTS OF CONDITION
AS OF DECEMBER 31, 1995
<TABLE><CAPTION>
2004 TRUST 2014 TRUST
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
(see Portfolio and Note 1) $7,391,410 $12,955,120
Other 1,465 6,411
Total trust property 7,392,875 12,961,531
LESS LIABILITY - Other 352 4,196
NET ASSETS (Note 2) $7,392,523 $12,957,335
UNITS OUTSTANDING 11,563,330 38,853,887
UNIT VALUE $.63931 $.33349
</TABLE>
See Notes to Financial Statements.
D-42
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES K
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2004 TRUST
April 27
Year Ended to
December 31, December 31,
1995 1994
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,399 $ 941
Accretion of original issue discount 382,113 92,946
Trustee's fees and expenses (2,324) (903)
Net investment income 383,188 92,984
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold 9,233
Unrealized appreciation (depreciation) of investments 1,024,439 (124,406)
Realized and unrealized gain (loss) on investments 1,033,672 (124,406)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $1,416,860 $(31,422)
</TABLE>
See Notes to Financial Statements.
D-43
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES K
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
2014 TRUST
April 27
Year Ended to
December 31, December 31,
1995 1994
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 10,839 $ 1,979
Accretion of original issue discount 790,915 111,279
Trustee's fees and expenses (8,616) (1,990)
Net investment income 793,138 111,268
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on securities sold 2,112,868 (208,605)
Unrealized appreciation of investments 980,160 175,148
Realized and unrealized gain (loss) on investments 3,093,028 (33,457)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $3,886,166 $ 77,811
</TABLE>
See Notes to Financial Statements.
D-44
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES K
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
2004 TRUST
April 27
Year Ended to
December 31, December 31,
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 383,188 $ 92,984
Realized gain on securities sold 9,233
Unrealized appreciation (depreciation) of investments 1,024,439 (124,406)
Net increase (decrease) in net assets resulting from
operations 1,416,860 (31,422)
CAPITAL SHARE TRANSACTIONS (NOTE 3):
Issuance of additional units 2,339,663 4,127,042
Redemptions of units (561,188)
Net capital share transactions 1,778,475 4,127,042
NET INCREASE IN NET ASSETS 3,195,335 4,095,620
NET ASSETS, BEGINNING OF PERIOD 4,197,188 101,568
NET ASSETS, END OF PERIOD $7,392,523 $4,197,188
UNIT VALUE, END OF PERIOD $.63931 $.49590
UNITS OUTSTANDING, END OF PERIOD 11,563,330 8,463,782
</TABLE>
See Notes to Financial Statements.
D-45
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES K
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
2014 TRUST
April 27
Year Ended to
December 31, December 31,
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 793,138 $ 111,268
Realized gain (loss) on securities sold 2,112,868 (208,605)
Unrealized appreciation of investments 980,160 175,148
Net increase in net assets resulting from
operations 3,886,166 77,811
CAPITAL SHARE TRANSACTIONS (NOTE 3):
Issuance of additional units 22,696,883 5,732,846
Redemptions of units (17,927,869) (1,611,186)
Net capital share transactions 4,769,014 4,121,660
NET INCREASE IN NET ASSETS 8,655,180 4,199,471
NET ASSETS, BEGINNING OF PERIOD 4,302,155 102,684
NET ASSETS, END OF PERIOD $12,957,335 $4,302,155
UNIT VALUE, END OF PERIOD $.33349 $.22335
UNITS OUTSTANDING, END OF PERIOD 38,853,887 19,262,056
</TABLE>
See Notes to Financial Statements.
D-46
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Funds are 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 Funds in the preparation of their
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 such
dates 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 Funds are not subject to income taxes. Accordingly, no provision
for such taxes is required.
2. NET ASSETS, DECEMBER 31, 1995
Series A (2003 Trust)
Cost of 80,221,626 units at Dates of Deposit $19,435,818
Less sales charge 340,095
Net amount applicable to Holders 19,095,723
Realized gain on securities sold 10,919,375
Unrealized appreciation of investments 11,339,163
Redemptions of units - net cost of units redeemed less
redemption amounts (5,134,507)
Undistributed net investment income 16,812,631
Net assets $53,032,385
Series B (2001 Trust)
Cost of 69,865,193 units at Dates of Deposit $21,665,749
Less sales charge 324,986
Net amount applicable to Holders 21,340,763
Realized gain on securities sold 12,930,203
Unrealized appreciation of investments 6,908,145
Redemptions of units - net cost of units redeemed less
redemption amounts (3,674,351)
Undistributed net investment income 16,050,154
Net assets $53,554,914
Series B (2005 Trust)
Cost of 36,917,304 units at Dates of Deposit $ 8,618,723
Less sales charge 150,828
Net amount applicable to Holders 8,467,895
Realized gain on securities sold 5,477,577
Unrealized appreciation of investments 4,051,348
Redemptions of units - redemption amounts less net cost
of units redeemed (335,354)
Undistributed net investment income 4,763,976
Net assets $22,425,442
D-47
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
NOTES TO FINANCIAL STATEMENTS
2. NET ASSETS, DECEMBER 31, 1995 (Continued)
Series C (2006 Trust)
Cost of 8,847,662 units at Dates of Deposit $ 2,128,222
Less sales charge 37,244
Net amount applicable to Holders 2,090,978
Realized gain on securities sold 1,066,040
Unrealized appreciation of investments 880,453
Redemptions of units - net cost of units redeemed less
redemption amounts 235,916
Undistributed net investment income 860,550
Net assets $ 5,133,937
Series D (1997 Trust)
Cost of 56,679,406 units at Dates of Deposit $28,251,446
Less sales charge 423,772
Net amount applicable to Holders 27,827,674
Realized gain on securities sold 3,726,946
Unrealized appreciation of investments 1,988,294
Redemptions of units - net cost of units redeemed less
redemption amounts 1,265,169
Undistributed net investment income 18,916,164
Net assets $53,724,247
Series D (2007 Trust)
Cost of 20,101,562 units at Dates of Deposit $ 3,778,729
Less sales charge 66,128
Net amount applicable to Holders 3,712,601
Realized gain on securities sold 4,101,930
Unrealized appreciation of investments 3,032,645
Redemptions of units - net cost of units redeemed less
redemption amounts (2,894,270)
Undistributed net investment income 2,980,007
Net assets $10,932,913
Series E (1998 Trust)
Cost of 63,485,140 units at Dates of Deposit $30,303,750
Less sales charge 454,556
Net amount applicable to Holders 29,849,194
Realized gain on securities sold 4,926,983
Unrealized appreciation of investments 3,782,487
Redemptions of units - net cost of units redeemed less
redemption amounts (919,400)
Undistributed net investment income 19,416,528
Net assets $57,055,792
D-48
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
NOTES TO FINANCIAL STATEMENTS
2. NET ASSETS, DECEMBER 31, 1995 (Continued)
Series E (2008 Trust)
Cost of 50,417,866 units at Dates of Deposit $ 9,859,296
Less sales charge 172,538
Net amount applicable to Holders 9,686,758
Realized gain on securities sold 8,694,854
Unrealized appreciation of investments 6,455,103
Redemptions of units - net cost of units redeemed less
redemption amounts (5,592,457)
Undistributed net investment income 5,997,713
Net assets $25,241,971
Series F (1999 Trust)
Cost of 27,997,201 units at Dates of Deposit $17,810,164
Less sales charge 311,678
Net amount applicable to Holders 17,498,486
Realized gain on securities sold 409,509
Unrealized appreciation of investments 1,275,951
Redemptions of units - net cost of units redeemed less
redemption amounts 1,591,130
Undistributed net investment income 3,042,342
Net assets $23,817,418
Series F (2009 Trust)
Cost of 21,881,931 units at Dates of Deposit $ 4,790,388
Less sales charge 83,832
Net amount applicable to Holders 4,706,556
Realized loss on securities sold (584,413)
Unrealized appreciation of investments 2,663,200
Redemptions of units - net cost of units redeemed less
redemption amounts 1,449,146
Undistributed net investment income 2,067,129
Net assets $10,301,618
Series G (2000 Trust)
Cost of 27,637,020 units at Dates of Deposit $15,890,722
Less sales charge 278,088
Net amount applicable to Holders 15,612,634
Realized gain on securities sold 303,544
Unrealized appreciation of investments 1,649,662
Redemptions of units - net cost of units redeemed less
redemption amounts 1,275,836
Undistributed net investment income 3,468,476
Net assets $22,310,152
D-49
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
NOTES TO FINANCIAL STATEMENTS
2. NET ASSETS, DECEMBER 31, 1995 (Continued)
Series G (2010 Trust)
Cost of 19,561,835 units at Dates of Deposit $ 4,571,626
Less sales charge 80,003
Net amount applicable to Holders 4,491,623
Realized gain on securities sold 2,121,759
Unrealized appreciation of investments 1,503,053
Redemptions of units - net cost of units redeemed less
redemption amounts 50,096
Undistributed net investment income 387,678
Net assets $ 8,554,209
Series H (2011 Trust)
Cost of 5,336,049 units at Dates of Deposit $1,259,237
Less sales charge 25,185
Net amount applicable to Holders 1,234,052
Realized gain on securities sold 554,134
Unrealized appreciation of investments 372,127
Redemptions of units - net cost of units redeemed less
redemption amounts (222,165)
Undistributed net investment income 263,541
Net assets $2,201,689
Series I (2002 Trust)
Cost of 11,563,316 units at Dates of Deposit $6,721,922
Less sales charge 100,829
Net amount applicable to Holders 6,621,093
Realized gain on securities sold 33,654
Unrealized appreciation of investments 793,083
Redemptions of units - net cost of units redeemed less
redemption amounts 22,945
Undistributed net investment income 876,050
Net assets $8,346,825
Series J (2013 Trust)
Cost of 4,192,101 units at Dates of Deposit $1,094,806
Less sales charge 21,896
Net amount applicable to Holders 1,072,910
Realized loss on securities sold (72,318)
Unrealized appreciation of investments 362,259
Redemptions of units - net cost of units redeemed less
redemption amounts 73,900
Undistributed net investment income 71,439
Net assets $1,508,190
D-50
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
NOTES TO FINANCIAL STATEMENTS
2. NET ASSETS, DECEMBER 31, 1995 (Concluded)
Series K (2004 Trust)
Cost of 11,563,330 units at Dates of Deposit $ 6,168,158
Less sales charge 123,363
Net amount applicable to Holders 6,044,795
Realized gain on securities sold 9,233
Unrealized appreciation of investments 900,033
Redemption of units - net cost of units redeemed less
redemption amounts 4,342
Undistributed net investment income 434,120
Net assets $ 7,392,523
Series K (2014 Trust)
Cost of 38,853,887 units at Dates of Deposit $10,353,523
Less sales charge 181,188
Net amount applicable to Holders 10,172,335
Realized gain on securities sold 1,904,263
Unrealized appreciation of investments 1,155,308
Redemptions of units - net cost of units redeemed less
redemption amounts (422,027)
Undistributed net investment income 147,456
Net assets $12,957,335
3. CAPITAL SHARE TRANSACTIONS
Additional units were issued as follows:
Series Trust 1995 1994 1993
A 2003 1,593,397 1,583,219 2,866,682
B 2001 3,772,845 1,928,908 1,129,643
B 2005 4,044,894 2,087,385 3,480,932
C 2006 1,643,266 983,437 1,054,074
D 1997 3,856,382 4,563,407 742,180
D 2007 1,647,168 0 524,545
E 1998 3,055,836 4,892,359 782,851
E 2008 0 804,899 2,449,524
F 1999 5,041,514 14,996,491 195,741
F 2009 1,297,277 1,138,211 0
G 2000 6,914,376 5,786,280 972,864
G 2010 12,489,075 12,472,504 12,042,798
H 2011 739,495 1,508,368 3,319,138
I 2002 4,942,387 2,265,189 577,911
J 2013 4,474,457 12,770,407 5,141,650
K 2004 4,100,931 8,262,575 0
K 2014 81,964,087 26,575,919 0
D-51
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARE TRANSACTIONS (Continued)
Units were redeemed as follows:
Series Trust 1995 1994 1993
A 2003 7,425,541 9,361,867 18,103,063
B 2001 7,651,862 9,985,898 14,007,510
B 2005 3,649,919 3,984,193 7,644,062
C 2006 1,857,449 2,128,952 1,863,979
D 1997 8,767,757 6,257,897 10,487,565
D 2007 3,972,162 2,921,902 7,152,408
E 1998 3,960,763 5,594,683 12,598,098
E 2008 4,865,875 10,271,400 25,873,411
F 1999 4,376,450 1,542,670 2,053,965
F 2009 3,769,847 5,134,685 8,104,288
G 2000 2,622,975 1,193,814 2,870,255
G 2010 15,339,995 10,038,884 19,760,552
H 2011 4,223,599 4,712,213 6,292,408
I 2002 0 632,592 209,799
J 2013 9,769,879 6,484,002 2,356,948
K 2004 1,001,383 0 0
K 2014 62,372,256 7,755,231 0
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 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, 1995, 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-52
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
PORTFOLIOS
AS OF DECEMBER 31, 1995
Portfolio No. Adjusted
and Title of Interest Face Cost Value
Securities Rate Maturities Amount (Note A) (Note A)
Series A (2003 Trust)
1 Stripped Treasury
Securities (Note B) 0% 8/15/03 $80,044,625 $41,333,807 $52,629,435
2 U.S. Treasury Bonds 11.125 8/15/03 255,516 299,500 343,035
Total $80,300,141 $41,633,307 $52,972,470
Series B (2001 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/01 $69,906,325 $46,341,245 $53,237,607
2 U.S. Treasury Bonds 11.750 2/15/01 207,879 254,393 266,176
Total $70,114,204 $46,595,638 $53,503,783
Series B (2005 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/05 $37,148,940 $18,211,180 $22,250,388
2 U.S. Treasury Bonds 11.625 11/15/04 111,338 145,495 157,635
Total $37,260,278 $18,356,675 $22,408,023
Series C (2006 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/06 $ 9,054,000 $ 4,217,383 $ 5,094,681
2 U.S. Treasury Bonds 9.375 2/15/06 29,172 34,376 37,531
Total $ 9,083,172 $ 4,251,759 $ 5,132,212
Series D (1997 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/97 $56,511,423 $51,451,289 $53,420,518
2 U.S. Treasury Notes 7.250 11/15/96 276,004 261,534 280,599
Total $56,787,427 $51,712,823 $53,701,117
Series D (2007 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/07 $20,507,000 $ 7,821,536 $10,837,635
2 U.S. Treasury Bonds 9.375 2/15/06 72,922 77,271 93,817
Total $20,579,922 $ 7,898,807 $10,931,452
D-53
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
PORTFOLIOS
AS OF DECEMBER 31, 1995
Portfolio No. Adjusted
and Title of Interest Face Cost Value
Securities Rate Maturities Amount (Note A) (Note A)
Series E (1998 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/98 $63,260,000 $52,965,454 $56,727,772
2 U.S. Treasury Notes 8.125 2/15/98 275,020 270,607 290,776
Total $63,535,020 $53,236,061 $57,018,548
Series E (2008 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/08 $50,412,000 $18,568,228 $24,979,650
2 U.S. Treasury Bonds 9.375 2/15/06 192,418 203,872 247,553
Total $50,604,418 $18,772,100 $25,227,203
Series F (1999 Trusts)
1 Stripped Treasury
Securities (Note B) 0% 2/15/99 $27,891,000 $22,422,128 $23,695,357
2 U.S. Treasury Notes 8.875 2/15/99 109,867 118,366 121,088
Total $28,000,867 $22,540,494 $23,816,445
Series F (2009 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/09 $21,922,000 $ 7,535,247 $10,184,523
2 U.S. Treasury Bonds 9.375 2/15/06 85,077 95,532 109,455
Total $22,007,077 $ 7,630,779 $10,293,978
Series G (2000 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/00 $27,561,000 $20,537,938 $22,182,471
2 U.S. Treasury Notes 8.500 2/15/00 112,806 120,592 125,721
Total $27,673,806 $20,658,530 $22,308,192
D-54
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
PORTFOLIOS
AS OF DECEMBER 31, 1995
Portfolio No. Adjusted
and Title of Interest Face Cost Value
Securities Rate Maturities Amount (Note A) (Note A)
Series G (2010 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/10 $19,447,000 $ 6,955,648 $ 8,449,527
2 U.S. Treasury Bonds 9.375 2/15/06 76,929 89,798 98,972
Total $19,523,929 $ 7,045,446 $ 8,548,499
Series H (2011 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/11 $5,359,000 $1,801,934 $2,173,128
2 U.S. Treasury Bonds 9.375 2/15/06 20,858 25,902 26,835
Total $5,379,858 $1,827,836 $2,199,963
Series I (2002 Trust)
1 Stripped Treasury
Securities (Note B) 0% 02/15/02 $11,518,000 $7,496,068 $8,285,358
2 U.S. Treasury Notes 7.500 11/15/01 55,540 57,429 61,222
Total $11,573,540 $7,553,497 $8,346,580
Series J (2013 Trust)
1 Stripped Treasury
Securities (Note B) 0% 02/15/13 $4,192,000 $1,127,210 $1,487,112
2 U.S. Treasury Bonds 10.375 11/15/12(C) 14,496 17,680 20,036
Total $4,206,496 $1,144,890 $1,507,148
D-55
<PAGE>
THE MERRILL LYNCH FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES
PORTFOLIOS
AS OF DECEMBER 31, 1995
Portfolio No. Adjusted
and Title of Interest Face Cost Value
Securities Rate Maturities Amount (Note A) (Note A)
Series K (2004 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/04 $11,488,000 $ 6,427,664 $ 7,320,613
2 U.S. Treasury Notes 5.875 2/15/04 69,379 63,713 70,797
Total $11,557,379 $ 6,491,377 $ 7,391,410
Series K (2014 Trust)
1 Stripped Treasury
Securities (Note B) 0% 2/15/14 $38,511,000 $11,619,939 $12,762,160
2 U.S. Treasury Bonds 11.250 2/15/15 120,382 179,873 192,960
Total $38,631,382 $11,799,812 $12,955,120
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-56
<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).
2
<PAGE>
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.
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 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
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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.
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:
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
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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
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 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. This is the difference between the
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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 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 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
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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).
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.
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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 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).
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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 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.
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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.
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 and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.
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.
11
<PAGE>
AUDITORS
The financial statements, including the Portfolios of the Trusts, included
herein have been examined by Deloitte & Touche LLP, 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 All Series................. D-1
Statement of Conditions of Series A......................... D-2
Portfolio of Series A....................................... D-53
Statements of Condition of Series B......................... D-5
Portfolios of Series B...................................... D-53
Statement of Condition of Series C.......................... D-10
Portfolio of Series C....................................... D-53
Statements of Condition of Series D......................... D-13
Portfolios of Series D...................................... D-53
Statements of Condition of Series E......................... D-18
Portfolio of Series E....................................... D-54
Statements of Conditions of Series F........................ D-23
Portfolios of Series F...................................... D-54
Statements of Conditions of Series G........................ D-28
Portfolios of Series G...................................... D-54
Statement of Conditions of Series H......................... D-33
Portfolio of Series H....................................... D-55
- --------------------------------------------------------------------------------
INDEX
- --------------------------------------------------------------------------------
PAGE
--------------------
Statement of Condition of Series I.......................... D-36
Portfolio of Series I....................................... D-55
Statement of Condition of Series J.......................... D-39
Portfolio of Series J....................................... D-55
Statements of Condition of Series K......................... D-42
Portfolios of Series K...................................... D-56
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 Limitations on Liability 11
Miscellaneous............................................... 11
- --------------------------------------------------------------------------------
SPONSOR: EVALUATOR:
Merrill Lynch, Pierce, Kenny S&P Evaluation
Fenner & Smith Incorporated Services, a division of
Defined Asset Funds J. J. Kenny Co., Inc.
Post Office Box 9051 65 Broadway
Princeton, N.J. 08543-9051 New York, N.Y. 10006
(609) 282-8500
TRUSTEE: INDEPENDENT ACCOUNTANTS:
The Chase Manhattan Bank, N. A. Deloitte & Touche, LLP
(a National Banking Association) 2 World Financial Center
Customer Service Retail Department 9th Floor
770 Broadway--7th Floor New York, N.Y. 10281-1414
New York, N.Y. 10003-9598
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.
- --------------------------------------------------------------------------------
14850-5/96
<PAGE>
THE MERRILL LYNCH FUND OF
STRIPPED ('ZERO') U.S. TREASURY SECURITIES, SERIES A, B, C, D, E, F, G, H, I, J
AND K
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, J
AND K
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, J AND K 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 29TH DAY OF MARCH, 1996.
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
EXHIBIT 4.1
KENNY S&P EVALUATION SERVICES
A Division of J.J. Kenny Co., Inc.
65 BROADWAY
NEW YORK, N.Y. 10006-2551
TELEPHONE (212) 770-4422
FAX 212/797-8681
March 29, 1996
Frank A. Ciccotto
Vice President
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, New Jersey 08543-9051
The Chase Manhattan Bank, N.A.
Customer Service Retail Department
770 Broadway--7th Floor
New York, New York 10003-9598
RE: THE MERRILL LYNCH FUND OF STRIPPED
('ZERO') U.S. TREASURY SECURITIES, SERIES A, B, C, D, E, F, G, H, I, J and
K
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, 33-49519 and 33-53085 for the above-captioned trusts. We
hereby acknowledge that Kenny S&P Evaluation Services, a division of J. J. Kenny
Co., 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 J. J. Kenny Co., Inc. as evaluator.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
FRANK A. CICCOTTO
Exhibit 5.1
THE MERRILL LYNCH FUND OF
STRIPPED ('ZERO') U.S. TREASURY SECURITIES
SERIES A, B, C, D, E, F, G, H, I, J AND K
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, J and K
We hereby consent to the use in Post-Effective Amendment No. 12 to Registration
Statement Nos. 2-89536, 2-94915, 33-02813, 33-13386, 33-21320, 33-28038,
33-34403, 33-39606, 33-47078, 33-49519 and 33-53085 of our opinions dated
February 7, 1996 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,
J and K and to the reference to us under the heading 'Auditors' in the
Prospectus which is a part of this Registration Statement.
DELOITTE & TOUCHE LLP
New York, N.Y.
March 29, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> G (2010)
<S> <C>
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> K (2004)
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> DEC-31-1995
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> K (2014)
<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> J (2013)
<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> I (2002)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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<NET-CHANGE-IN-ASSETS> 4,492,782
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<PER-SHARE-NAV-END> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> H (2011)
<S> <C>
<PERIOD-TYPE> YEAR
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<PER-SHARE-NAV-END> 0
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> F (2009)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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<PER-SHARE-NAV-END> 0
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> E (1998)
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> DEC-31-1995
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> C (2006)
<S> <C>
<PERIOD-TYPE> YEAR
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<OTHER-INCOME> 310,893
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<NET-INVESTMENT-INCOME> 310,895
<REALIZED-GAINS-CURRENT> 205,530
<APPREC-INCREASE-CURRENT> 776,125
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<ACCUMULATED-NII-PRIOR> 858,234
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> C (1996)
<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> B (2005)
<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 17
<NAME> B (2001)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> A (2003)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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<NET-INVESTMENT-INCOME> 3,651,715
<REALIZED-GAINS-CURRENT> 892,759
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<NET-CHANGE-FROM-OPS> 12,082,057
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<NUMBER-OF-SHARES-SOLD> 1,593,397
<NUMBER-OF-SHARES-REDEEMED> 7,425,541
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,539,908
<ACCUMULATED-NII-PRIOR> 14,878,509
<ACCUMULATED-GAINS-PRIOR> 0
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<PER-SHARE-NAV-END> 0
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</TABLE>
<PAGE>
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
March 29, 1996
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-TS Provident Mutual Series A 786284 33-02455 811-4541
DEFINED ASSET FUNDS-USTS-A Monarch 740833 2-89536 811-3965
TOTAL: 2 FUNDS
</TABLE>
