SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-Q
                     QUARTERLY REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended June 28, 2002

                     MERRILL LYNCH PREFERRED CAPITAL TRUST III
      (Exact name of Registrant as specified in its certificate of trust)

                         COMMISSION FILE NO.: 1-7182-06

       Delaware                                          13-7139561
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

  4 World Financial Center
     New York, New York                                   10080
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code: (212) 449-1000

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class                    Name of each exchange on which registered
-------------------                    -----------------------------------------
7% Trust Originated                    New York Stock Exchange
Preferred Securities ("TOPrS")
(and the related guarantee)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

                     MERRILL LYNCH PREFERRED FUNDING III, L.P.
                  (Exact name of Registrant as specified in its
                      certificate of limited partnership)

                         COMMISSION FILE NO.: 1-7182-05

          Delaware                                     13-3982448
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

   4 World Financial Center
      New York, New York                                     10080
(Address of principal executive offices)                   (Zip Code)

 Registrant's telephone number, including area code: (212) 449-1000

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class                    Name of each exchange on which registered
-------------------                    -----------------------------------------
7% Partnership Preferred               New York Stock Exchange
Securities (and the related
guarantee)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such requirements for the past 90 days. Yes |X| No |_|

As of August 9, 2002 no voting stock was held by non-affiliates of the
Registrants.
================================================================================
<PAGE>

                         PART I - FINANCIAL INFORMATION
                         ------------------------------

ITEM 1.   FINANCIAL STATEMENTS
          --------------------
<TABLE>
<CAPTION>

MERRILL LYNCH PREFERRED CAPITAL TRUST III BALANCE SHEETS (unaudited) (dollars in
thousands, except per security amounts)
-----------------------------------------------------------------------------------------------------------------------



                                                                                       JUNE 28, 2002  DECEMBER 28, 2001
                                                                                       -------------  -----------------
<S>                                                                                      <C>                <C>
ASSETS

Investment in partnership preferred securities                                            $  773,196         $  773,196
Income receivable                                                                             13,531             13,531
                                                                                          ----------         ----------
Total Assets                                                                              $  786,727         $  786,727
                                                                                          ==========         ==========

LIABILITY AND STOCKHOLDERS' EQUITY

Distributions payable                                                                     $   13,531         $   13,531
                                                                                          ----------         ----------
Stockholders' equity:

   Preferred securities (7% Trust Originated Preferred Securities; 30,000,000
      authorized, issued, and outstanding; $25 liquidation
      amount per security)                                                                   750,000            750,000

   Common securities (7% Trust Common Securities;
      927,840 authorized, issued, and outstanding;
      $25 liquidation amount per security)                                                    23,196             23,196
                                                                                          ----------         ----------
   Total Stockholders' equity                                                                773,196            773,196
                                                                                          ----------         ----------

Total Liability and Stockholders' Equity                                                  $  786,727         $  786,727
                                                                                          ==========         ==========
</TABLE>

See Note to Financial Statements

                                        2
<PAGE>

<TABLE>
<CAPTION>

MERRILL LYNCH PREFERRED CAPITAL TRUST III
STATEMENTS OF EARNINGS  (unaudited)
(dollars in thousands)
------------------------------------------------------------------------------------------------------------

                                                                             FOR THE THREE MONTHS ENDED
                                                                         -----------------------------------

                                                                          JUNE 28, 2002        JUNE 29, 2001
                                                                          -------------        -------------
<S>                                                                           <C>                <C>
EARNINGS

Income on partnership preferred securities                                    $  13,531            $  13,531
                                                                              =========            =========



                                                                               FOR THE SIX MONTHS ENDED
                                                                         -----------------------------------

                                                                         JUNE 28, 2002       JUNE 29, 2001
                                                                         --------------       --------------
EARNINGS

Income on partnership preferred securities                                    $  27,062            $  27,062
                                                                              =========            =========


</TABLE>

See Note to Financial Statements


                                        3
<PAGE>

<TABLE>
<CAPTION>

MERRILL LYNCH PREFERRED CAPITAL TRUST III
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY  (unaudited)
(dollars in thousands)
-------------------------------------------------------------------------------------------------

                                                                     FOR THE SIX MONTHS ENDED
                                                              -----------------------------------

                                                               JUNE 28, 2002        JUNE 29, 2001
                                                               -------------        -------------
<S>                                                              <C>                  <C>
PREFERRED SECURITIES

Balance, beginning and end of period                              $  750,000           $  750,000
                                                                  ----------           ----------

COMMON SECURITIES

Balance, beginning and end of period                                  23,196               23,196
                                                                  ----------           ----------

UNDISTRIBUTED EARNINGS

Balance, beginning of period                                               -                    -
Earnings                                                              27,062               27,062
Distributions                                                        (13,531)             (13,531)
Distributions payable                                                (13,531)             (13,531)
                                                                  ----------           ----------
Balance, end of period                                                     -                    -
                                                                  ----------           ----------


Total Stockholders' Equity                                        $  773,196           $  773,196
                                                                  ==========           ==========
</TABLE>

See Note to Financial Statements

                                        4
<PAGE>

<TABLE>
<CAPTION>

MERRILL LYNCH PREFERRED CAPITAL TRUST III
STATEMENTS OF CASH FLOWS  (unaudited)
(dollars in thousands)
-------------------------------------------------------------------------------------------------------------------

                                                                                      FOR THE SIX MONTHS ENDED
                                                                                -----------------------------------

                                                                                 JUNE 28, 2002        JUNE 29, 2001
                                                                                 -------------        -------------
<S>                                                                                  <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Earnings                                                                           $ 27,062            $  27,062
                                                                                     ---------            ---------
      Cash provided by operating activities                                             27,062               27,062
                                                                                     ---------            ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions                                                                       (27,062)             (27,062)
                                                                                     ---------            ---------
      Cash used for financing activities                                               (27,062)             (27,062)
                                                                                     ---------            ---------

NET CHANGE IN CASH                                                                           -                    -

CASH, BEGINNING OF PERIOD                                                                    -                    -
                                                                                     ---------            ---------
CASH, END OF PERIOD                                                                  $       -             $      -
                                                                                     =========            =========



SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:

Preferred and common distributions of $13,125 and $406, respectively, were
accrued at June 28, 2002.
</TABLE>

See Note to Financial Statements

                                        5
<PAGE>



MERRILL LYNCH PREFERRED CAPITAL TRUST III
NOTE TO FINANCIAL STATEMENTS  (unaudited)
JUNE 28, 2002
-------------------------------------------------------------------------------


BASIS OF PRESENTATION

These unaudited financial statements should be read in conjunction with the
audited financial statements included in the Annual Report on Form 10-K of
Merrill Lynch Preferred Capital Trust III (the "Trust") for the year ended
December 28, 2001. The December 28, 2001 balance sheet was derived from the
audited financial statements. The interim financial statements for the three-
and six-month periods are unaudited; however, in the opinion of the Regular
Trustees of the Trust, all adjustments, consisting only of normal recurring
accruals necessary for a fair statement of the results of operations, have been
included.

                                        6
<PAGE>

<TABLE>
<CAPTION>

MERRILL LYNCH PREFERRED FUNDING III, L.P.
BALANCE SHEETS  (unaudited)
(dollars in thousands)
----------------------------------------------------------------------------------------------------------------



                                                                               JUNE 28, 2002   DECEMBER 28, 2001
                                                                               -------------   -----------------
<S>                                                                              <C>                 <C>
ASSETS

Cash                                                                             $         -          $        -
                                                                                 -----------          ----------
Investments:
   Affiliate debentures                                                              900,546             900,547
   U.S. Treasury bills                                                                 9,152               9,359
                                                                                  ----------          ----------
   Total investments                                                                 909,698             909,906

Income receivable                                                                     15,761              15,761
                                                                                  ----------          ----------
Total Assets                                                                      $  925,459          $  925,667
                                                                                  ==========          ==========

LIABILITY AND PARTNERS' CAPITAL

Distributions payable                                                             $   15,761          $   15,761
                                                                                  ----------          ----------
Partners' capital:
   Limited partnership interest                                                      773,196             773,196
   General partnership interest                                                      136,502             136,710
                                                                                  ----------          ----------
   Total partners' capital                                                           909,698             909,906
                                                                                  ----------          ----------

Total Liability and Partners' Capital                                             $  925,459          $  925,667
                                                                                  ==========          ==========
</TABLE>

See Note to Financial Statements

                                        7
<PAGE>

<TABLE>
<CAPTION>


MERRILL LYNCH PREFERRED FUNDING III, L.P.
STATEMENTS OF EARNINGS  (unaudited)
(dollars in thousands)
-----------------------------------------------------------------------------------------------


                                                                FOR THE THREE MONTHS ENDED
                                                            -----------------------------------

                                                             JUNE 28, 2002        JUNE 29, 2001
                                                             -------------        -------------
<S>                                                            <C>                  <C>
EARNINGS

Interest income:
   Affiliate debentures                                         $   15,760           $   15,759
   U.S. Treasury bills                                                  42                  103
                                                                ----------           ----------
Earnings                                                        $   15,802           $   15,862
                                                                ==========           ==========


                                                                  FOR THE SIX MONTHS ENDED
                                                            -----------------------------------

                                                             JUNE 28, 2002        JUNE 29, 2001
                                                             -------------        -------------
EARNINGS

Interest income:
   Affiliate debentures                                         $   31,520           $   31,519
   U.S. Treasury bills                                                 120                  244
                                                                ----------           ----------
Earnings                                                        $   31,640           $   31,763
                                                                ==========           ==========


                                                                                     ----------
</TABLE>

See Note to Financial Statements


                                        8
<PAGE>

<TABLE>
<CAPTION>

MERRILL LYNCH PREFERRED FUNDING III, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL  (unaudited)
(dollars in thousands)
------------------------------------------------------------------------------------------------


                                                                   FOR THE SIX MONTHS ENDED
                                                             -----------------------------------

                                                              JUNE 28, 2002        JUNE 29, 2001
                                                              -------------        -------------
<S>                                                             <C>                  <C>
LIMITED PARTNER'S CAPITAL

Balance, beginning of period                                     $  773,196           $  773,196
Net income allocated to limited partner                              27,062               27,062
Distributions                                                       (13,531)             (13,531)
Distributions payable                                               (13,531)             (13,531)
                                                                 ----------           ----------
Balance, end of period                                              773,196              773,196
                                                                 ----------           ----------


GENERAL PARTNER'S CAPITAL

Balance, beginning of period                                        136,710              136,558
Net income allocated to general partner                               4,577                4,701
Distributions                                                        (2,556)              (2,509)
Distributions payable                                                (2,229)              (2,230)
                                                                 ----------           ----------
Balance, end of period                                              136,502              136,520
                                                                 ----------           ----------

TOTAL PARTNERS' CAPITAL                                          $  909,698           $  909,716
                                                                 ==========           ==========
</TABLE>

See Note to Financial Statements

                                        9
<PAGE>


<TABLE>
<CAPTION>

MERRILL LYNCH PREFERRED FUNDING III, L.P.
STATEMENTS OF CASH FLOWS  (unaudited)
(dollars in thousands)
-------------------------------------------------------------------------------------------------------------------


                                                                                      FOR THE SIX MONTHS ENDED
                                                                            ---------------------------------------

                                                                                 JUNE 28, 2002        JUNE 29, 2001
                                                                                 -------------        -------------

<S>                                                                                    <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Earnings                                                                          $  31,640            $  31,763
   Accretion of U.S. Treasury bills                                                       (120)                (244)
   Increase in income receivable                                                             -                   (1)
                                                                                     ---------            ---------
      Cash provided by operating activities                                             31,520               31,518
                                                                                     ---------            ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Purchases of investment securities                                                   (9,096)              (9,096)
   Maturities of investment securities                                                   9,424                9,378
                                                                                     ---------            ---------
      Cash provided by financing activities                                                328                  282
                                                                                     ---------            ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions to limited partner                                                    (27,062)             (27,062)
   Distributions to general partner                                                     (4,785)              (4,739)
                                                                                     ---------             ---------
      Cash used for financing activities                                               (31,847)             (31,801)
                                                                                     ---------            ---------

NET CHANGE IN CASH                                                                           -                   (1)

CASH, BEGINNING OF PERIOD                                                                    -                    1
                                                                                     ---------            ---------
CASH, END OF PERIOD                                                                  $       -            $       -
                                                                                     =========            =========



SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:

Distributions of $15,761 were accrued at June 28, 2002.


</TABLE>

See Note to Financial Statements

                                       10
<PAGE>


MERRILL LYNCH PREFERRED FUNDING III, L.P.
NOTE TO FINANCIAL STATEMENTS  (unaudited)
JUNE 28, 2002
--------------------------------------------------------------------------------



BASIS OF PRESENTATION

These unaudited financial statements should be read in conjunction with the
audited financial statements included in the Annual Report on Form 10-K of
Merrill Lynch Preferred Funding III, L.P. (the "Partnership") for the year ended
December 28, 2001. The December 28, 2001 balance sheet was derived from the
audited financial statements. The interim financial statements for the three-
and six-month periods are unaudited; however, in the opinion of the General
Partner of the Partnership, all adjustments, consisting only of normal recurring
accruals necessary for a fair statement of the results of operations, have been
included.

                                       11
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Merrill Lynch Preferred Capital Trust III (the "Trust") is a statutory business
trust formed under the Delaware Business Trust Act, as amended, pursuant to a
declaration of trust and the filing of a certificate of trust with the Secretary
of State on December 19, 1997, which was subsequently amended by an amended and
restated declaration of trust dated as of January 12, 1998. The Trust exists for
the exclusive purposes of (i) issuing trust securities, consisting of 7% Trust
Originated Preferred Securities (the "TOPrS") and trust common securities (the
"Trust Common Securities"), representing undivided beneficial ownership
interests in the assets of the Trust, (ii) investing the gross proceeds of the
trust securities in 7% Partnership Preferred Securities (the "Partnership
Preferred Securities") issued by Merrill Lynch Preferred Funding III, L.P. (the
"Partnership"), and (iii) engaging in only those other activities necessary or
incidental thereto.

The Partnership is a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act, as amended, pursuant to an agreement of limited
partnership and the filing of a certificate of limited partnership with the
Secretary of State on December 19, 1997, which was subsequently amended by an
amended and restated agreement of limited partnership dated January 16, 1998.
Merrill Lynch & Co., Inc. (the "Company") is the sole general partner of the
Partnership. The Partnership is managed by the general partner and exists for
the exclusive purposes of (i) issuing its partnership interests, consisting of
the Company's general partner interest and the Partnership Preferred Securities,
(ii) investing the proceeds thereof in certain eligible securities of the
Company and wholly owned subsidiaries of the Company (the "Affiliate Investment
Instruments") and certain eligible debt securities, and (iii) engaging in only
those other activities necessary or incidental thereto.

The Registrants' activities are limited to issuing securities and investing the
proceeds as described above. Since the Trust was organized on December 19, 1997,
its activities, as specified in its declaration of trust, have been limited to
the issuance of the TOPrS and the Trust Common Securities, the investing of the
proceeds in the Partnership Preferred Securities, and the payment of
distributions on the TOPrS and the Trust Common Securities in accordance with
their terms. Since the Partnership was organized on December 19, 1997, its
activities, as specified in its agreement of limited partnership, have been
limited to the issuance of the Partnership Preferred Securities, the receipt of
a capital contribution from the Company, as general partner, the investment of
the proceeds in Affiliate Investment Instruments and certain eligible debt
securities, and the payment of distributions on the Partnership Preferred
Securities.


ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

On January 16, 1998, the Trust invested the gross proceeds from the sale of the
Trust Common Securities and the TOPrS in the Partnership Preferred Securities
(the "Trust Assets"). The Partnership, in turn, invested the proceeds from the
sale of the Partnership Preferred Securities and a capital contribution from the
Company in certain Affiliate Investment Instruments and eligible securities (the
"Partnership Assets"). To the extent the Partnership has funds available from
the Partnership Assets, the general partner of the Partnership may declare
distributions to the Trust, as holder of the Partnership Preferred Securities.
The Trust's ability to pay distributions to the holders of the TOPrS is
dependent on its receipt of distributions on the Trust Assets from the
Partnership. Therefore, upon the receipt by the Partnership of payments from the
Partnership Assets and the distribution thereof to the Trust, the Trust will
pass through such payments to the holders of the TOPrS.


                                       12
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         12   Computation  of Ratios of Earnings to Combined  Fixed Charges and
              Preferred Securities Distributions

         99   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


(b)      Reports on Form 8-K

         None


                                       13
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed on their
behalf by the undersigned, thereunto duly authorized on the 9th day of August,
2002.


                               MERRILL LYNCH PREFERRED CAPITAL TRUST III*

                               By: /s/ JOHN C. STOMBER
                                   ---------------------------------------------
                              Name: John C. Stomber
                             Title: Regular Trustee



                               MERRILL LYNCH PREFERRED FUNDING III, L.P.*


                               By: MERRILL LYNCH & CO., INC., as General Partner

                               By: /s/ JOHN C. STOMBER
                                   ---------------------------------------------
                              Name: John C. Stomber
                               Title:  Senior Vice President and Treasurer



------------

* There is no principal executive officer(s), principal financial officer,
controller, principal accounting officer or board of directors of the
Registrants. The Trustees of the Trust (which include the Regular Trustee, the
Property Trustee and the Delaware Trustee) together exercise all powers and
perform all functions with respect to the Trust.


                                       14
<PAGE>



                                INDEX TO EXHIBITS

EXHIBITS

12       Computation  of  Ratios of  Earnings  to  Combined  Fixed  Charges  and
         Preferred Securities Distributions

99       Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
         Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

                                       15
<PAGE>