Exhibit 99.1


Risk Factors that Could Affect Our Business

In the course of conducting our business operations, we are exposed to a
variety of risks that are inherent to the financial services industry.  A
summary of some of the significant risks that could affect our financial
condition and results of operations is included below. Some of these risks are
managed in accordance  with  established risk management policies and
procedures, most of which are described in the Risk Management section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A").

    Market Risk
    -----------

Our  business may be adversely impacted by global market and economic conditions
that may cause fluctuations in interest rates, exchange rates, equity and
commodity prices and credit spreads. We are exposed to potential changes in the
value of financial instruments caused by fluctuations in interest rates,
currency exchange rates, equity and commodity prices, credit spreads, and/or
other risks. These fluctuations may result from changes in economic conditions,
investor sentiment, monetary and fiscal policies, the liquidity of global
markets, availability and cost of capital, the actions of credit rating
agencies, international and regional political events, and acts of war or
terrorism. We have large proprietary trading and investment positions, which
include positions in fixed income, currency, commodities and equity securities,
as well as in real estate, private equity and other investments. We have
incurred losses and may incur additional  losses as a result of increased
market volatility or decreased  market liquidity, as these fluctuations may
adversely impact the valuation of our trading and investment positions.
Conversely,  a decline in volatility may adversely  affect results in our
trading  businesses, which depend on market volatility to create client and
proprietary  trading opportunities.

We may incur additional  material losses in future periods due to write-downs
in the value of financial instruments. We recorded significant net write-downs
in the 2007 fiscal year, primarily related to U.S. ABS CDOs, sub-prime
residential mortgages, and credit valuation adjustments related to hedging
transactions with financial guarantors on U.S. ABS CDOs. The markets for U.S.
ABS CDOs and other sub-prime residential mortgage exposures remain extremely
illiquid in early 2008 and as a result, valuation of these exposures is complex
and involves a comprehensive process including the use of quantitative
modeling and management judgment. Valuation of these exposures will also
continue to be impacted by external market factors including default rates, a
decline in the value of the underlying property, such as residential or
commercial real estate, rating agency actions, the prices at which observable
market transactions occur and the financial strength of counterparties, such as
financial guarantors, with whom we have economically hedged some of our
exposure to these  assets. Our ability to mitigate our risk by selling or
hedging our exposures is also limited by the market environment.

Our business has been and may be adversely  impacted by significant  holdings of
financial assets or significant loans or commitments to extend loans. In the
course of our business, we often commit substantial amounts of capital to
certain types of businesses or asset classes, including our trading, structured
credit, residential and commercial real estate-related  activities, investment
banking, private equity and leveraged finance businesses. This commitment of
capital exposes us to a number of risks, including market risk, in the case of
our holdings of concentrated or illiquid positions in a particular asset class
as part of our trading, structured credit, residential and commercial real
estate-related  activities, and credit risk, in the case of our leveraged
lending businesses. Any decline in the value of such assets may reduce our
revenues or result in losses.


    Credit Risk
    -----------

Our business may be  adversely  impacted by an increase in our credit exposure
related to trading, lending, and other business activities. We are exposed to
potential credit-related losses that can occur as a result of an individual,
counterparty or issuer being unable or unwilling to honor its contractual
obligations. These credit exposures exist within lending relationships,
commitments, letters of credit, derivatives, including transactions we may
enter into to hedge our exposure to various assets, foreign exchange and other
transactions. These exposures may arise, for example, from a decline in the
financial condition of a counterparty, from entering into swap or other
derivative contracts under which counterparties have obligations to make
payments to us, from a decrease in the value of securities of third parties
that we hold as collateral, or from  extending credit to clients through loans
or other arrangements. As our credit exposure increases, it could have an
adverse effect on our business and profitability if material unexpected credit
losses occur.

    Risks Related to our Commodities Business
    -----------------------------------------

We are exposed to environmental, reputational and regulatory risk as a result
of our commodities related  activities. Through our commodities business, we
enter into exchange-traded contracts, financially settled over-the-counter
("OTC") derivatives, contracts for physical delivery and contracts  providing
for the transportation, transmission and/or storage rights on or in vessels,
barges, pipelines, transmission lines or storage facilities. Contracts relating
to physical ownership, delivery and/or related activities can expose us to
numerous risks, including performance, environmental and reputational risks.
For example, we may incur civil or criminal liability  under  certain
environmental laws and our business and reputation may be adversely affected.
In addition, regulatory authorities have recently intensified scrutiny of
certain energy  markets, which has resulted in increased regulatory and legal
enforcement, litigation and remedial proceedings involving companies engaged in
the activities in which we are engaged.

    International Risk
    ------------------

We have an increasing international presence and as a result, we are
increasingly subject to a number of risks in various jurisdictions. In the past
years, we have expanded our international operations and expect to continue to
do so in the future. This expansion, however, gives us a greater  exposure to a
number of risks, including economic, market, reputational, litigation and
regulatory  risks. For example, in many emerging  markets, the regulatory regime
governing  financial  services  firms is still developing, and the regulatory
authorities may adopt restrictive regulation or policies, such as exchange,
price or capital controls, that could have an adverse  effect on our
businesses. In  addition, in virtually all markets, we are competing with a
number of established competitors that in some cases may have significant
competitive advantages over us in those markets.

    Liquidity Risk
    --------------

Our business and financial condition may be adversely impacted by an inability
to borrow  funds or sell  assets  to meet our obligations. We are exposed to
liquidity risk, which is the potential inability to repay short-term
borrowings with new borrowings or liquid assets that can be quickly converted
into cash while meeting other obligations and continuing to operate as a going
concern. Our liquidity may be impaired due to circumstances that we may be
unable to control, such as general market disruptions, disruptions in the
markets for any specific class of assets, including any disruption that would
require us to honor  commitments  to provide liquidity to certain off-balance
sheet vehicles, or an operational problem that affects our trading clients or
ourselves.  Our ability to sell assets may also be impaired if other market
participants are seeking to sell similar assets at the same time. Our inability
to borrow funds or sell assets to meet obligations, a negative  change in our
credit ratings that would have an adverse effect on our ability to borrow funds,
increases in the amount of collateral required by counterparties, or regulatory
capital restrictions imposed on the free flows of funds between us and our
subsidiaries may have a negative effect on our business and financial condition.

    Operational Risk
    ----------------

We may incur  losses due to the failure of people,  internal  processes  and
systems or from  external  events.  Our  business  may be adversely impacted by
operational  failures or from unfavorable  external events.  Such operational
risks may include exposure to theft and fraud, improper business practices,
client suitability and servicing risks, unauthorized transactions, product
complexity and pricing risk or from improper recording, evaluating or accounting
for transactions. We could suffer financial loss, disruption of our business,
liability to clients,  regulatory  intervention or reputational damage from such
events, which would affect our business and financial condition.

We may incur losses as a result of an inability to effectively evaluate or
mitigate the risks in our businesses. Our businesses expose us to a wide and
increasing number of risks, including market risk, credit risk, liquidity risk,
operational risk and litigation risk. For each of these and other risks that we
face, we attempt to formulate and refine a framework to identify and address
such risk. We have in the past and may in the future incur losses as a result
of a failure to correctly evaluate or effectively address the risks in our
business activities.

    Litigation Risk
    ---------------

Legal proceedings could adversely affect our operating results for a particular
period and impact our credit ratings. We have been named as a defendant in
various legal actions, including arbitrations, class actions, and other
litigation arising in connection with our activities as a global diversified
financial services institution. Some of the legal actions against us include
claims for substantial compensatory and/or punitive damages or claims for
indeterminate amounts of damages. Any prolonged decline in securities prices
may lead to increased actions against many firms, including Merrill Lynch, and
may lead to increased legal expenses and potential  liability. In some cases,
the issuers who would otherwise be the primary defendants are bankrupt or
otherwise in financial distress. Given the number of these matters, some are
likely to result in adverse judgments, penalties, injunctions, fines, or other
relief. We are also involved in investigations and/or proceedings by
governmental and self-regulatory agencies.

We may explore potential settlements before a case is taken through trial
because of uncertainty, risks, and costs inherent in the litigation  process.
In accordance with Statement of Financial Accounting  Standards ("SFAS") No. 5,
Accounting for Contingencies ("SFAS No. 5"), we will accrue a liability  when
it is probable that a liability has been incurred and the amount of the loss
can be reasonably estimated. In many lawsuits, arbitrations and investigations,
including almost all of the class action lawsuits disclosed in "Other
Information (Unaudited) - Legal Proceedings", it is not possible to determine
whether a liability has been incurred or to estimate the ultimate or minimum
amount of that liability until the matter is close to resolution, in which case
no accrual is made until that time. In view of the inherent difficulty of
predicting the outcome of such matters, particularly in matters in which
claimants seek substantial or indeterminate damages, we cannot predict what the
eventual loss or range of loss related to such matters will be.  Potential
losses may be material to our operating results for any particular period and
may impact our credit ratings.

    Regulatory and Legislative Risks
    --------------------------------

Many of our businesses are highly regulated and could be impacted, and in some
instances adversely impacted, by regulatory and legislative initiatives around
the  world. Our businesses may be affected by various U.S. and non-U.S.
legislative bodies and regulatory and exchange authorities, such as federal and
state securities and bank regulators including the SEC, the Federal Deposit
Insurance Corporation ("FDIC"), the Office of Thrift Supervision ("OTS"), and
the Utah Department of Financial Institutions; self-regulatory organizations
including the Financial Industry Regulatory Authority ("FINRA"), the Commodity
Futures Trading Commission ("CFTC"), the United Kingdom Financial Services
Authority ("FSA"), the Japan Financial Services Agency ("JFSA"), and the Irish
Financial  Regulator ("IFR"); and industry participants that continue to review
and, in many cases, adopt changes to their established rules and policies.
New laws or regulations or changes in the enforcement of existing laws and
regulations may also adversely affect our businesses. As we expand globally we
will encounter new laws, regulations and requirements that could impact our
ability to operate in new local markets.

    Competitive Environment
    -----------------------

Competitive  pressures in the financial  services  industry could adversely
affect our business and results of operations. We compete globally  for clients
on the basis of price, the range of products that we offer, the quality of our
services, our financial resources, and product and service innovation. The
financial services industry continues to be affected by an intensely competitive
environment, as demonstrated by the introduction of new technology  platforms,
consolidation through mergers, increased competition from new and established
industry participants and diminishing margins in many mature products and
services. We compete with U.S. and non-U.S. commercial banks and other
broker-dealers in brokerage, underwriting, trading, financing and advisory
businesses. For example, the financial services industry in general, including
us, has experienced intense price competition in brokerage, as the ability to
execute trades electronically, through the internet and through other
alternative trading systems, has pressured trading commissions and spreads.
Many of our non-U.S. competitors may have competitive advantages in their home
markets. In addition, our business is substantially dependent on our continuing
ability to compete effectively to attract and retain qualified  employees,
including successful FAs, investment  bankers, trading and risk management
professionals and other revenue-producing or support personnel.