##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 MERRILL LYNCH PREFERRED CAPITAL TRUST III
  COMMISSION FILE NO.: 1-7182-06
 Delaware(State or other jurisdiction of
    
    13-7139561incorporation or organization)
    
    (I.R.S. Employer Identification No.)4 World Financial CenterNew York, New York
    
    10080(Address of principal executive offices)
    
    (Zip Code)
   Title of each class
    
    Name of each exchange on which registered7% Trust Originated Preferred Securities (TOPrS)
    
    New York Stock Exchange(and the related guarantee)
  MERRILL LYNCH PREFERRED FUNDING III, L.P.
  COMMISSION FILE NO.: 1-7182-05
 Delaware(State or other jurisdiction of
    
    13-3982448incorporation or organization)
    
    (I.R.S. Employer Identification No.)4 World Financial CenterNew York, New York
    
    10080(Address of principal executive offices)
    
    (Zip Code)
   Title of each class
    
    Name of each exchange on which registered7% Partnership Preferred Securities
    
    New York Stock Exchange(and the related guarantee)
   Yes o No þ
 Yes o No þ
 þ o
 Yes o No o
 þ
 Rule 12b-2
 Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o
 Yes o No þ




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. RESERVEDPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE and QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS and SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. DISCLOSURE CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS and EXECUTIVE OFFICERS of the REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and MANAGEMENT and RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONSITEM 14. PRINCIPAL ACCOUNTANT FEES and SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEXHIBIT INDEXExhibit 12Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1    Table of Contents  
 
 PART I
 
 
 BUSINESS
      
 
 RISK FACTORS




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UNRESOLVED STAFF COMMENTS
  
 
 PROPERTIES
  
 
 LEGAL PROCEEDINGS
  
 
 RESERVED
 
 
 PART II
 
 
 MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES




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SELECTED FINANCIAL DATA
  
 
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  
 
 QUANTITATIVE and QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 
 FINANCIAL STATEMENTS and SUPPLEMENTARY DATA
  
 
 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  
 
 DISCLOSURE CONTROLS AND PROCEDURES




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Report on Internal Control Over Financial Reporting
   
 
 OTHER INFORMATION
  
 
 PART III
 
 
 DIRECTORS and EXECUTIVE OFFICERS of the REGISTRANT
  
 
 EXECUTIVE COMPENSATION
  
 
 SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and MANAGEMENT and
RELATED STOCKHOLDER MATTERS
  
 
 CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS




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PRINCIPAL ACCOUNTANT FEES and SERVICES
 Pre-Approval of Services Provided by the Independent Registered Public
Accounting Firms
    Fees Paid to the Independent Registered Public Accounting Firms
  2009
    
    
    2008Audit Fees(1)
    
    $
    15,000
    
    
    $
    12,200
 (1)
    
    Audit Fees consisted of fees for the audits and reviews of the Trusts and
the Partnerships financial statements filed with the SEC on Forms 10-K and
10-Q.




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PART IV
 
 
 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  1.
    
    Financial StatementsThe contents of the financial statements are listed on page
F-1, and the financial statements and accompanying
Reports of Independent Registered Public Accounting Firms
appear on pages F-2 through F-19.2.
    
    Financial Statement SchedulesNone.3.
    
    ExhibitsAn exhibit index has been filed as part of this report and is
incorporated herein by reference.




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INDEX TO FINANCIAL STATEMENTS
  FINANCIAL STATEMENTS
    
    PAGEMERRILL LYNCH PREFERRED CAPITAL TRUST IIIBalance Sheets, December 31, 2009 and December 26, 2008
    
    
    F-2Statements of Earnings, Year Ended December 31, 2009,
December 26, 2008 and December 28, 2007
    
    
    F-3Statements of Changes in Stockholders Equity, Year Ended
December 31, 2009, December 26, 2008 and December 28, 2007
    
    
    F-4Statements of Cash Flows, Year Ended December 31, 2009,
December 26, 2008 and December 28, 2007
    
    
    F-5Notes to Financial Statements
    
    
    F-6Reports of Independent Registered Public Accounting Firms
    
    
    F-8Supplemental Financial Information (Unaudited)
    
    
    F-10MERRILL LYNCH PREFERRED FUNDING III, L.P.Balance Sheets, December 31, 2009 and December 26, 2008
    
    
    F-11Statements of Earnings, Year Ended December 31, 2009,
December 26, 2008 and December 28, 2007
    
    
    F-12Statements of Changes in Partners Capital, Year Ended
December 31, 2009, December 26, 2008 and December 28, 2007
    
    
    F-13Statements of Cash Flows, Year Ended December 31, 2009,
December 26, 2008 December 28, 2007
    
    
    F-14Notes to Financial Statements
    
    
    F-15Reports of Independent Registered Public Accounting Firms
    
    
    F-17Supplemental Financial Information (Unaudited)
    
    
    F-19
  F-1




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December 31, 2009
    
    
    December 26, 2008ASSETSInvestment in affiliate partnership preferred securities
    
    $
    773,196
    
    
    $
    773,196Interest receivable from affiliate
    
    
    
    
    
    
    13,531Total Assets
    
    $
    773,196
    
    
    $
    786,727LIABILITY AND STOCKHOLDERS EQUITYDistributions payable
    
    $
    
    
    
    $
    13,531Stockholders equity:Preferred securities (7% Trust
Originated Preferred Securities;
30,000,000 authorized, issued, and
outstanding; $25 liquidation
amount per security)
    
    
    750,000
    
    
    
    750,000Common securities (7% Trust Common
Securities; 927,840 authorized,
issued, and outstanding;
$25 liquidation amount per security)
    
    
    23,196
    
    
    
    23,196Total Stockholders equity
    
    
    773,196
    
    
    
    773,196Total Liability and Stockholders Equity
    
    $
    773,196
    
    
    $
    786,727
   F-2




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##### Table of Contents



FOR THE YEAR ENDEDDecember 31, 2009
    
    
    December 26, 2008
    
    
    December 28, 2007EARNINGSInterest on affiliate partnership preferred securities
    
    $
    54,124
    
    
    $
    54,124
    
    
    $
    54,124
   F-3




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FOR THE YEAR ENDEDDecember 31, 2009
    
    
    December 26, 2008
    
    
    December 28, 2007PREFERRED SECURITIESBalance, beginning and end of period
    
    $
    750,000
    
    
    $
    750,000
    
    
    $
    750,000COMMON SECURITIESBalance, beginning and end of period
    
    
    23,196
    
    
    
    23,196
    
    
    
    23,196UNDISTRIBUTED EARNINGSBalance, beginning of period
    
    
    
    
    
    
    
    
    
    
    Earnings
    
    
    54,124
    
    
    
    54,124
    
    
    
    54,124Distributions
    
    
    (54,124
    )
    
    
    (40,593
    )
    
    
    (40,593
    )Distributions payable
    
    
    
    
    
    
    (13,531
    )
    
    
    (13,531
    )Balance, end of period
    
    
    
    
    
    
    
    
    
    
    Total Stockholders Equity
    
    $
    773,196
    
    
    $
    773,196
    
    
    $
    773,196
   F-4




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FOR THE YEAR ENDEDDecember 31, 2009
    
    
    December 26, 2008
    
    
    December 28, 2007CASH FLOWS FROM OPERATING ACTIVITIES:Earnings
    
    $
    54,124
    
    
    $
    54,124
    
    
    $
    54,124Change in interest receivable from affiliate
    
    
    
    
    
    
    
    
    
    
    (13,531
    )Cash provided by operating activities
    
    
    54,124
    
    
    
    54,124
    
    
    
    40,593CASH FLOWS FROM FINANCING ACTIVITIES:Distributions
    
    
    (54,124
    )
    
    
    (54,124
    )
    
    
    (40,593
    )Cash used for financing activities
    
    
    (54,124
    )
    
    
    (54,124
    )
    
    
    (40,593
    )NET CHANGE IN CASH
    
    
    
    
    
    
    
    
    
    
    CASH, BEGINNING OF PERIOD
    
    
    
    
    
    
    
    
    
    
    CASH, END OF PERIOD
    
    $
    
    
    
    $
    
    
    
    $
    SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:There were no distributions accrued at December 31, 2009 and
$13,531 of distributions accrued at both December 26, 2008 and
December 28, 2007
   F-5




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F-6




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F-7




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   
  F-8




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
  F-9




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SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
 Quarterly Information
   For the Quarter EndedDec. 31,
    
    
    Sept. 30,
    
    
    June 30,
    
    
    Mar. 31,
    
    
    Dec. 26,
    
    
    Sept. 26,
    
    
    June 27,
    
    
    Mar 28,2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008Total Revenues
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531Earnings
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
    
    
    $
    13,531
  F-10




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December 31, 2009
    
    
    December 26, 2008ASSETSInvestments:Affiliate debentures
    
    $
    900,547
    
    
    $
    900,547U.S. Government and agencies
    
    
    9,105
    
    
    
    9,101Total investments
    
    
    909,652
    
    
    
    909,648Interest receivable from affiliate
    
    
    
    
    
    
    15,760Total Assets
    
    $
    909,652
    
    
    $
    925,408LIABILITY AND PARTNERS CAPITALDistribution Payable
    
    $
    
    
    
    $
    15,760Partners capital:Limited partnership interest
    
    
    773,196
    
    
    
    773,196General partnership interest
    
    
    136,456
    
    
    
    136,452Total partners capital
    
    
    909,652
    
    
    
    909,648Total Liability and Partners Capital
    
    $
    909,652
    
    
    $
    925,408
   F-11




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FOR THE YEAR ENDEDDecember 31, 2009
    
    
    December 26, 2008
    
    
    December 28, 2007EARNINGSInterest income:Affiliate debentures
    
    $
    63,038
    
    
    $
    63,038
    
    
    $
    63,038U.S. Government and agencies
    
    
    30
    
    
    
    206
    
    
    
    442Earnings
    
    $
    63,068
    
    
    $
    63,244
    
    
    $
    63,480
   F-12




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FOR THE YEAR ENDEDDecember 31, 2009
    
    
    December 26, 2008
    
    
    December 28, 2007LIMITED PARTNERS CAPITALBalance, beginning of period
    
    $
    773,196
    
    
    $
    773,196
    
    
    $
    773,196Net income allocated to limited partner
    
    
    54,124
    
    
    
    54,124
    
    
    
    54,124Distributions
    
    
    (54,124
    )
    
    
    (40,593
    )
    
    
    (40,593
    )Distribution payable
    
    
    
    
    
    
    (13,531
    )
    
    
    (13,531
    )Balance, end of period
    
    
    773,196
    
    
    
    773,196
    
    
    
    773,196GENERAL PARTNERS CAPITALBalance, beginning of period
    
    
    136,452
    
    
    
    136,475
    
    
    
    136,492Net income allocated to general partner
    
    
    8,944
    
    
    
    9,120
    
    
    
    9,356Distributions
    
    
    (8,940
    )
    
    
    (6,914
    )
    
    
    (7,144
    )Distributions payable
    
    
    
    
    
    
    (2,229
    )
    
    
    (2,229
    )Balance, end of period
    
    
    136,456
    
    
    
    136,452
    
    
    
    136,475TOTAL PARTNERS CAPITAL
    
    $
    909,652
    
    
    $
    909,648
    
    
    $
    909,671
   F-13




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FOR THE YEAR ENDEDDecember 31, 2009
    
    
    December 26, 2008
    
    
    December 28, 2007CASH FLOWS FROM OPERATING ACTIVITIES:Earnings
    
    $
    63,068
    
    
    $
    63,244
    
    
    $
    63,480Accretion of interest on securities issued by
U.S. Government and agencies
    
    
    (30
    )
    
    
    (206
    )
    
    
    (442
    )Change in interest receivable from affiliate
    
    
    
    
    
    
    (1
    )
    
    
    (15,759
    )Cash provided by operating activities
    
    
    63,038
    
    
    
    63,037
    
    
    
    47,279CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investment securities
    
    
    (18,192
    )
    
    
    (18,190
    )
    
    
    (18,192
    )Maturities of investment securities
    
    
    18,218
    
    
    
    18,420
    
    
    
    18,650Cash provided by investing activities
    
    
    26
    
    
    
    230
    
    
    
    458CASH FLOWS FROM FINANCING ACTIVITIES:Distributions to limited partner
    
    
    (54,124
    )
    
    
    (54,124
    )
    
    
    (40,593
    )Distributions to general partner
    
    
    (8,940
    )
    
    
    (9,143
    )
    
    
    (7,144
    )Cash used for financing activities
    
    
    (63,064
    )
    
    
    (63,267
    )
    
    
    (47,737
    )NET CHANGE IN CASH
    
    
    
    
    
    
    
    
    
    
    CASH, BEGINNING OF PERIOD
    
    
    
    
    
    
    
    
    
    
    CASH, END OF PERIOD
    
    $
    
    
    
    $
    
    
    
    $
    SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:There were no distributions accrued at December 31, 2009 and
$15,760 and $15,759 of distributions accrued at December 26, 2008 and
December 28, 2007, respectively
   F-14




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F-15




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F-16




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F-17




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F-18




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SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
 Quarterly Information
   For the Quarter EndedDec. 31,
    
    
    Sept. 30,
    
    
    June 30,
    
    
    Mar. 31,
    
    
    Dec. 28,
    
    
    Sept. 29,
    
    
    June 27,
    
    
    Mar. 28,2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008Total Revenues
    
    $
    15,765
    
    
    $
    15,765
    
    
    $
    15,767
    
    
    $
    15,771
    
    
    $
    15,791
    
    
    $
    15,803
    
    
    $
    15,819
    
    
    $
    15,831Earnings
    
    $
    15,765
    
    
    $
    15,765
    
    
    $
    15,767
    
    
    $
    15,771
    
    
    $
    15,791
    
    
    $
    15,803
    
    
    $
    15,819
    
    
    $
    15,831
  F-19




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MERRILL LYNCH PREFERRED CAPITAL TRUST III*By:
    /s/ MARLENE DEBELName:
    Marlene DebelTitle:
    Regular Trustee 
 *
    
    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 Trustees, the
Property Trustee and the Delaware Trustee) together exercise all powers and
perform all functions with respect to the Trust.




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Merrill Lynch Preferred Funding III, L.P.By:

Merrill Lynch & Co., Inc. as General Partner SIGNATURE
    
    TITLE/s/ THOMAS W. PERRY

(Thomas W. Perry)
    
    Chief Accounting Officer and Controller
  SIGNATURE
    
    TITLE/s/ THOMAS K. MONTAG

(Thomas K. Montag)
    
    Chief Executive Officer
(Principal Executive Officer)/s/ ROBERT QUTUB

(Robert Qutub)
    
    Chief Financial Officer
(Principal Financial Officer)/s/ THOMAS W. PERRY

(Thomas W. Perry)
    
    Chief Accounting Officer and
Controller/s/ BRIAN T. MOYNIHAN

(Brian T. Moynihan)
    
    Chairman and Director/s/ NEIL A. COTTY

(Neil A. Cotty)
    
    Director/s/ SALLIE L. KRAWCHECK

(Sallie L. Krawcheck)
    
    Director/s/ BRUCE THOMPSON

(Bruce Thompson)
    
    Director




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4.1
    
    
    Certificate of Trust dated December 19, 1997, of the Trust
(incorporated by reference to Exhibit 4.1 to the Registration
Statement on Form S-3 (No. 333-42859) (the Registration Statement)).4.2
    
    
    Form of Amended and Restated Declaration of Trust of the Trust
(incorporated by reference to Exhibit 4.2 to the Registration
Statement).4.3
    
    
    Certificate of Limited Partnership, dated as of December 19,
1997, of the Partnership (incorporated by reference to Exhibit 4.3
to the Registration Statement).4.4
    
    
    Form of Amended and Restated Agreement of Limited Partnership
of the Partnership (incorporated by reference to Exhibit 4.4 to
the Registration Statement).4.5
    
    
    Form of Trust Preferred Securities Guarantee Agreement between
the Company and The Bank of New York Mellon, as guarantee trustee
(incorporated by reference to Exhibit 4.5 to the Registration
Statement).4.6
    
    
    Form of Partnership Preferred Securities Guarantee Agreement
between the Company and The Bank of New York Mellon, as guarantee
trustee (incorporated by reference to Exhibit 4.6 to the
Registration Statement).4.7
    
    
    Form of Subordinated Debenture Indenture between the Company
and The Bank of New York Mellon, as trustee (incorporated by
reference to Exhibit 4.7 to the Registration Statement on Form S-3
(No. 333-16603)).4.8
    
    
    Form of Affiliate Debenture Guarantee Agreement between the
Company and The Bank of New York Mellon, as guarantee trustee
(incorporated by reference to Exhibit 4.8 to the Registration
Statement).4.9
    
    
    Form of Trust Preferred Security (included in Exhibit 4.2 above).4.10
    
    
    Form of Partnership Preferred Security (included in Exhibit 4.4 above).4.11
    
    
    Form of Subordinated Debenture (incorporated by reference to
Exhibit 4.11 to the Registration Statement).12
    *
    
    Statement re: Computation of Ratios of Earnings to Combined
Fixed Charges and Preferred Securities Distributions (unaudited).23.1
    *
    
    Consent of PricewaterhouseCoopers LLP.23.2
    *
    
    Consent of Deloitte & Touche LLP.31.1
    *
    
    Rule 13a-14(a) Certification.31.2
    *
    
    Rule 13a-14(a) Certification.32.1
    *
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    *
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1
    *
    
    Excerpt of Merrill Lynch & Co., Inc. Annual Report on
Form 10-K for the year ended December 31, 2009.
 
 *
    
    Filed herewith