##### Table of Contents





UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  FORM 10-K
  X

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 26, 2008   Commission file number: 1-7182
  MERRILL LYNCH & CO., INC.
    Delaware

13-2740599(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer Identification No.)4 World Financial Center,
    New York, New York

10080(Address of principal executive offices)

(Zip Code)(212) 449-1000Registrants telephone number, including area code:   Securities registered pursuant to Section 12(b) of the
    Act:Title of Each Class

Name of Each Exchange on Which
    RegisteredTrust Preferred Securities of Merrill Lynch Capital
    Trust I (and the guarantees of the registrant with respect
    thereto); Trust Preferred Securities of Merrill Lynch
    Capital Trust II (and the guarantees of the registrant with
    respect thereto); Trust Preferred Securities of Merrill
    Lynch Capital Trust III (and the guarantees of the
    registrant with respect thereto)

New York Stock ExchangeConvertible Securities Exchangeable into Pharmaceutical HOLDRs
    due September 7, 2010

NYSE Alternext US LLC     Securities registered pursuant
    to Section 12(g) of the Act: None
     X YES           NO
    YES      X     NO
    X YES           NO
  Regulation S-K 10-K Form 10-K. X
  Rule 12b-2
 Large
    accelerated filer  X
    Accelerated filer
    Non-accelerated filer
    Smaller reporting company (Do not check if a smaller
    reporting company)
  Rule 12b-2
  YES      X     NO
      The registrant is a wholly owned subsidiary of Bank of
    America Corporation and meets the conditions set forth in
    General Instructions I(1)(a) and (b) of
    Form 10-K
    and is therefore filing this Form with a reduced disclosure
    format as permitted by Instruction I (2).




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##### Table of Contents



Securities
    registered pursuant to Section 12(b) of the Act and listed
    on the NYSE Arca are as follows:
  ® ® ® SM SM ® SM ® SM ® ® ® SM ® ® ® SM ® ® ® ® ® SM ® SM ® SM ® ® ® SM ® SM ® SM ® ® SM SM SM ® SM SM ® SM SM SM ® ® ® SM ® ® SM SM SM SM SM SM SM SM SM SM SM ® SM SM SM ® SM ® ® ® ® ® SM ® SM ® SM ® ® SM ® SM ® ® ® ® ® ® ® ® SM ® ® SM SM SM ® ® ® SM ® SM ® SM SM ® ® ® ® ® ® ® ® ® SM ® SM ® SM ® ® SM ® SM SM ® SM
 ii




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##### Table of Contents



the S&P
    500®

    Index Due June 25, 2010; Strategic Return
    Notes®

    Linked to the Select 10 Index due July 5, 2012; Strategic
    Return
    Notes®

    Linked to the Select Utility Index due February 25, 2009;
    Strategic Return
    Notes®

    Linked to the Select Utility Index due September 28, 2009;
    Accelerated Return
    NotesSM Linked to the PHLX Gold and Silver
    SectorSM Index Due June 2, 2009
  Securities
    registered pursuant to Section 12(b) of the Act and listed
    on The NASDAQ Stock Market are as follows:
  ® ® ® ® ® ® ® ® ® ® SM SM ® ® ® ® ® ® ® ® ® ® SM
   iii




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##### Table of Contents





ANNUAL
    REPORT ON
    FORM 10-K
    FOR THE YEAR ENDED DECEMBER 26, 2008
    TABLE OF CONTENTS
   Part I


3Item 1.  Business


3Item 1A. Risk Factors


5Item 1B. Unresolved Staff Comments


13Item 2.  Properties


13Item 3.  Legal
    Proceedings


13Item 4.  Submission of Matters
    to a Vote of Security Holders


13Part II


14Item 5.  Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


14Item 6.  Selected Financial
    Data


15Item 7.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


16Introduction


16Executive Overview


18Results of Operations


22Off-Balance Sheet Exposures


37Funding and Liquidity


41Item 7A. Quantitative and Qualitative
    Disclosures about Market Risk


45Item 8.  Financial Statements
    and Supplementary Data


51Report of Independent Registered Public
    Accounting Firm


51Consolidated Financial StatementsConsolidated Statements of (Loss)/Earnings


52Consolidated Balance Sheets


53Consolidated Statements of Changes in
    Stockholders Equity


55Consolidated Statements of Comprehensive
    (Loss)/Income


56Consolidated Statements of Cash Flows


57Notes to Consolidated Financial
    Statements


58Note 1. Summary of Significant
    Accounting Policies


58Note 2. Segment and Geographic
    Information


77Note 3. Fair Value


80Note 4. Securities Financing
    Transactions


92Note 5. Investment Securities


93Note 6. Securitization Transactions
    and Transactions with Variable Interest Entities
    (VIEs)


98Note 7. Loans, Notes, and Mortgages
    and Related Commitments to Extend Credit


108Note 8. Goodwill and Intangibles


110Note 9. Borrowings and Deposits


112Note 10. Stockholders Equity
    and Earnings Per Share


118Note 11. Commitments, Contingencies
    and Guarantees


123Note 12. Employee Benefit Plans


136Note 13. Employee Incentive Plans


144Note 14. Income Taxes


150Note 15. Regulatory Requirements


153Note 16. Discontinued Operations


155Note 17. Restructuring Charge


155Note 18. Quarterly Information
    (Unaudited)


156Item 9.  Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


157Item 9A. Controls and Procedures


157Item 9B. Other Information


161 1




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##### Table of Contents



Part III


161Item 10.  Directors, Executive
    Officers and Corporate Governance


161Item 11.  Executive
    Compensation


161Item 12.  Security Ownership of
    Certain Beneficial Owners and Management and related Stockholder
    Matters


161Item 13.  Certain Relationships
    and Related Transactions, and Director Independence


161Item 14.  Principal Accountant
    Fees and Services


161Part IV


163Item 15.  Exhibits and
    Financial Statement Schedules


163Signatures


164EX-12: STATEMENT RE: COMPUTATION OF RATIOSEX-23: CONSENT OF DELOITTE & TOUCHE LLPEX-24.1: POWER OF ATTORNEYEX-24.2: ASSISTANT SECRETARY'S CERTIFICATEEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATIONEX-99.2: CONDENSED FINANCIAL INFORMATION   2




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##### Table of Contents



PART I  Item 1.
    Business        Global
    Markets and Investment Banking
    Global
    Wealth Management
    SM SM and/or ®
 3




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Global
    Research
    Regulation
  non-U.S. government
  United
    States Regulatory Oversight and Supervision
  Holding
    Company Supervision
      Broker-Dealer
    Regulation
    Rule 15c3-1
 4




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##### Table of Contents



Non-U.S.
    Regulatory Oversight and Supervision
  non-U.S. regulators and/or
  Item 1A.
    Risk
    Factors    Business and economic conditions.
    Instability of the U.S. financial
    system.
 5




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International risk. non-U.S. markets. non-U.S. operations non-U.S. ownership. non-U.S. securities non-U.S. trading
  Soundness of other financial institutions.
     6




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Access to funds from subsidiaries and
    parent.
  Changes in accounting standards.
  Competition.
   7




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Credit concentration risk.
          Liquidity risk.
 8




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Market risk.
   9




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##### Table of Contents



Risks Related to our Commodities Business. and/or and/or
  Declining asset values.
    Merger risks.
 10




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##### Table of Contents



Regulatory considerations and restrictions on
    dividends.
    Litigation risks.
    Governmental fiscal and monetary policy.
 11




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##### Table of Contents



non-U.S. governments
  Operational risks.
  Products and services.
  Reputational risks.
  Risk management processes and strategies.
  Geopolitical risks. and/or
  Additional risks and uncertainties.
 12




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Principal
    Facilities in the United States
    54-acre
  Principal
    Facilities Outside the United States
    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   13




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.    (dollars in millions, except per share amounts)Total Number of

ApproximateShares

Dollar Value ofPurchased as

Shares that MayTotal Number of

Average

Part of Publicly

Yet be PurchasedShares

Price Paid

Announced

Under thePeriod

Purchased

per Share

Program(1)

ProgramFirst Quarter 2008 (Dec. 29, 2007  Mar. 28, 2008)Capital Management Program


-


$
-



-


$
3,971Employee
    Transactions(2)


17,078,898



54.59



N/A



N/ASecond Quarter 2008 (Mar. 29, 2008  June 27,
    2008)Capital Management Program


-


$
-



-


$
3,971Employee
    Transactions(2)


2,780,526



43.11



N/A



N/AThird Quarter 2008 (Jun. 28, 2008  Sept. 26, 2008)Capital Management Program


-


$
-



-


$
3,971Employee
    Transactions(2)


6,197,808



25.42



N/A



N/AMonth #1 (Sept. 27, 2008  Oct. 31, 2008)Capital Management Program


-


$
-



-


$
3,971Employee
    Transactions(2)


3,185,077



18.11



N/A



N/AMonth #2 (Nov. 1, 2008  Nov. 28, 2008)Capital Management Program


-


$
-



-


$
3,971Employee
    Transactions(2)


2,153,426



12.44



N/A



N/AMonth #3 (Nov. 29, 2008  Dec. 26, 2008)Capital Management Program


-


$
-



-


$
3,971Employee
    Transactions(2)


1,414,962



12.54



N/A



N/AFourth Quarter 2008 (Sept. 27, 2008  Dec. 26, 2008)Capital Management Program


-


$
-



-


$
3,971Employee
    Transactions(2)


6,753,465



15.14



N/A



N/AFull Year 2008 (Dec. 29, 2007  Dec. 26, 2008)Capital Management Program


-


$
-



-


$
3,971Employee
    Transactions(2)


32,810,697



39.99



N/A



N/A  (1)
    
    No repurchases were made for
    2008.(2)
    
    Included in the total number of
    shares purchased are: (i) shares purchased during the
    period by participants in the Merrill Lynch 401(k) Savings and
    Investment Plan (401(k)) and the Merrill Lynch
    Retirement Accumulation Plan (RAP), (ii) shares
    delivered or attested to in satisfaction of the exercise price
    by holders of ML & Co. employee stock options (granted
    under employee stock compensation plans) and (iii) Restricted
    Shares withheld (under the terms of grants under employee stock
    compensation plans) to offset tax withholding obligations that
    occur upon vesting and release of Restricted Shares.
    ML & Co.s employee stock compensation plans
    provide that the value of the shares delivered, attested, or
    withheld, shall be the average of the high and low price of
    ML & Co.s common stock (Fair Market Value) on
    the date the relevant transaction occurs. 14




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##### Table of Contents



Dividends
    Per Common Share
    First

Second

Third

Fourth(Declared and Paid)

Quarter

Quarter

Quarter

Quarter2008

$
0.35


$
0.35


$
0.35


$
0.352007

$
0.35


$
0.35


$
0.35


$
0.35     Securities
    Authorized for Issuance under Equity Compensation
    Plans
    Item 6.
    Selected
    Financial Data.   15




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results Of
    Operations  Forward-Looking
    Statements and Non-GAAP Financial Measures
  Form 10-K. Form 10-K, Form 10-Q Form 8-K.
   Introduction    Form 10-K Form 10-K.
 16




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GMI


GWMClients


Corporations, financial institutions, institutional investors,
    and governments


Individuals, small- to mid-size businesses, and employee benefit
    plansProducts and businesses


Global Markets (comprised of Fixed Income, Currencies & Commodities (FICC) & Equity Markets)   Facilitates client transactions and makes markets in securities, derivatives, currencies, commodities and other financial instruments to satisfy client demands   Provides clients with financing, securities clearing, settlement, and custody services   Engages in principal and private equity investing, including managing investment funds, and certain proprietary trading activities


Global Private Client (GPC)   Delivers products and services
    primarily through our Financial Advisors (FAs)
       Commission and fee-based investment
    accounts
       Banking, cash management, and credit
    services, including consumer and small business lending and
    Visa®

    cards
       Trust and generational planning
       Retirement services
       Insurance productsInvestment Banking


Global Investment Management (GIM)   Provides a wide range of securities
    origination services for issuer clients, including underwriting
    and placement of public and private equity, debt and related
    securities, as well as lending and other financing activities
    for clients globally
       Advises clients on strategic issues,
    valuation, mergers, acquisitions and restructurings


   Creates and manages hedge funds and
    other alternative investment products for GPC clients
       Includes net earnings from our ownership
    positions in other investment management companies, including
    our investment in BlackRock  17




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##### Table of Contents



Executive
    Overview  Company
    Results
      
    Net losses due to credit valuation adjustments (CVA)
    related to certain hedges with financial guarantors of
    $10.4 billion;
    Net write-downs of $10.2 billion (excluding CVA) on
    U.S. asset-backed collateralized debt obligations
    (U.S. ABS CDOs);
    Net write-downs of approximately $10.8 billion related to
    other-than-temporary impairment charges recognized on our
    U.S. banks investment securities portfolio, losses
    related to leveraged finance loans and commitments, losses
    related to certain government sponsored entities
    (GSEs) and major U.S. broker-dealers, the
    default of a major U.S. broker-dealer and other market
    dislocations;
    Net losses of $6.5 billion resulting primarily from
    write-downs and losses on asset sales across residential
    mortgage-related exposures and commercial real estate exposures;
    Net losses of $2.1 billion due to write-downs on private
    equity investments;
    Net gains of $5.1 billion due to the impact of the widening
    of Merrill Lynchs credit spreads on the carrying value of
    certain of our long-term debt liabilities;
    A net pre-tax gain of $4.3 billion from the sale of our 20%
    ownership stake in Bloomberg, L.P.;
    A $2.6 billion foreign currency gain related to currency
    hedges of our U.K. deferred tax assets;
    A $2.5 billion non tax-deductible payment to affiliates and
    transferees of Temasek Holdings (Private) Limited
    (Temasek) related to our July 2008 common stock
    offering;
    A $2.3 billion goodwill impairment charge related to our
    FICC and Investment Banking businesses;
    A $0.5 billion expense, including a $125 million fine,
    arising from Merrill Lynchs offer to repurchase auction
    rate securities (ARS) from our private clients and
    the associated settlement with regulators; and
    A $0.5 billion restructuring charge associated with
    headcount reduction initiatives conducted during the year.      Strategic
    and Other Significant Transactions
  Bank of
    America
   18




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Capital
    Transactions
  1 3
              CDO Sale
    and Termination of Monoline Hedges
   19




---



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Bloomberg,
    L.P.
    Auction
    Rate Securities
  12-month 15-month
  Goodwill
    Impairment
    Restructuring
    Charge
    Emergency
    Economic Stabilization Act of 2008
     20




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Other
    Events
   21




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Results
    Of Operations (dollars in millions , except per share amounts)%Change2008 vs.2008

2007

2007RevenuesPrincipal transactions

$
(27,225
)

$
(12,067
)


N/M
%Commissions


6,895



7,284



(5
)Managed accounts and other fee-based revenues


5,544



5,465



1Investment banking


3,733



5,582



(33
)Earnings from equity method investments


4,491



1,627



176Other


(10,065
)


(2,190
)


N/MSubtotal


(16,627
)


5,701



N/MInterest and dividend revenues


33,383



56,974



(41
)Less interest expense


29,349



51,425



(43
)Net interest profit


4,034



5,549



(27
)Revenues, net of interest expense


(12,593
)


11,250



N/MNon-interest expenses:Compensation and benefits


14,763



15,903



(7
)Communications and technology


2,201



2,057



7Brokerage, clearing, and exchange fees


1,394



1,415



(1
)Occupancy and related depreciation


1,267



1,139



11Professional fees


1,058



1,027



3Advertising and market development


652



785



(17
)Office supplies and postage


215



233



(8
)Other


2,402



1,522



58Payment related to price reset on common stock offering


2,500



-



N/MGoodwill impairment charge


2,300



-



N/MRestructuring charge


486



-



N/MTotal non-interest expenses


29,238



24,081



21Pre-tax loss from continuing operations


(41,831
)


(12,831
)


N/MIncome tax benefit


(14,280
)


(4,194
)


N/MNet loss from continuing operations


(27,551
)


(8,637
)


N/MDiscontinued operations:Pre-tax (loss)/earnings from discontinued operations


(141
)


1,397



N/MIncome tax (benefit)/expense


(80
)


537



N/MNet (loss)/earnings from discontinued operations


(61
)


860



N/MNet loss

$
(27,612
)

$
(7,777
)


N/MPreferred stock dividends


2,869



270



N/MNet loss applicable to common stockholders

$
(30,481
)

$
(8,047
)


N/MBasic loss per common share from continuing operations

$
(24.82
)

$
(10.73
)


N/MBasic (loss)/earnings per common share from discontinued
    operations


(0.05
)


1.04



N/MBasic loss per common share

$
(24.87
)

$
(9.69
)


N/MDiluted loss per common share from continuing operations

$
(24.82
)

$
(10.73
)


N/MDiluted (loss)/earnings per common share from discontinued
    operations


(0.05
)


1.04



N/MDiluted loss per common share

$
(24.87
)

$
(9.69
)


N/MBook value per share

$
7.12


$
29.34



(76
)Note:  Certain prior period amounts have
    been reclassified to conform to the current period
    presentation.
    N/M = Not Meaningful  22




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Consolidated
    Results of Operations
      2008
    Compared With 2007
       23




---



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24




---



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25




---



##### Table of Contents



U.S. ABS
    CDO and Other Mortgage-Related Activities
  non-U.S. residential
  Residential
    Mortgage-Related Activities (excluding U.S. banks
    investment securities portfolio)
  U.S. Prime
    U.S. Sub-prime
    U.S. Alt-A
    Non-U.S. Non-U.S. net
 26




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##### Table of Contents



U.S. Banks Investment Securities
    Portfolio
  (dollars in millions)Net





Netexposures as



Other net changes

exposures asof Dec. 28,

Net gains/(losses)

in net

of Dec. 26,2007

reported in income

exposures(1)

2008Residential Mortgage-Related (excluding U.S. banks
    investment securities portfolio):U.S.
    Prime(2)

$
27,789


$
76


$
6,934


$
34,799Other Residential:U.S. Sub-prime

$
2,709


$
(1,355
)

$
(1,159
)

$
195U.S. Alt-A


2,687



(1,461
)


(1,199
)


27Non-U.S.


9,379



(1,866
)


(4,133
)


3,380Total Other
    Residential(3)

$
14,775


$
(4,682
)

$
(6,491
)

$
3,602  (1)
    
    Represents U.S. Prime
    originations, foreign exchange revaluations, hedges, paydowns,
    maturities, changes in loan commitments and related
    funding.(2)
    
    As of December 26, 2008,
    net exposures include approximately $31.1 billion of prime
    loans originated with GWM clients (of which $15.0 billion
    were originated by First Republic Bank).(3)
    
    Includes warehouse lending,
    whole loans and residential mortgage-backed
    securities.  U.S. ABS
    CDO Activities
         27




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(dollars in millions)U.S. Super Senior ABS CDO
    Exposure

Long

Short(1)

NetDecember 28, 2007

$
30,432


$
(23,597
)

$
6,835Exposure Changes:Sale of
    CDOs(2)


(10,011
)


-



(10,011
)Termination and Settlement of Monoline and Insurance Company
    Hedges(3)


-



7,825



7,825Hedge Ineffectiveness


-



6,543



6,543Gains /
    (Losses)(4)


(17,765
)


7,483



(10,282
)Other(5)


(851
)


649



(202
)December 26, 2008

$
1,805


$
(1,097
)

$
708  (1)
    
    Hedges are affected by a
    variety of factors that impact the degree of their
    effectiveness. These factors may include differences in
    attachment point, timing of cash flows, control rights, limited
    recourse to counterparties and other basis risks.(2)
    
    Primarily consists of
    $6.7 billion of assets sold to Lone Star.(3)
    
    Primarily consists of
    termination of trades with ACA $(3.4) billion, AIG
    $(3.2) billion, and XL $(1.2) billion.(4)
    
    Primarily consists of loss on
    sale to Lone Star of $(4.4) billion and mark to market
    losses on CDOs of $(5.9) billion.(5)
    
    Primarily consists of
    liquidations and amortizations.     28




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Monoline
    Financial Guarantors
  and/or
  and/or
      (dollars in millions)Mark-to-Market Prior

Life-to-Dateto Credit

CreditCredit Default Swaps with
    Financial

Notional of

Net

Valuation

Valuation

CarryingGuarantors on U.S. Super Senior ABS CDOs

CDS

Exposure

Adjustments

Adjustments

ValueDecember 28, 2007

$
(19,901
)

$
(13,839
)

$
6,062


$
(2,608
)

$
3,454Settlement and potential termination of monoline hedges on long
    positions
    sold(1)


16,959



9,538



(7,421
)


5,626



(1,795
)Gains/(losses) and other activity


111



3,822



3,711



(3,912
)


(201
)December 26, 2008

$
(2,831
)

$
(479
)

$
2,352


$
(894
)

$
1,458   (1)
    
    We terminated all of our
    CDO-related hedges with XL, which at the time of sale had a
    carrying value of $1.0 billion, in exchange for an upfront
    payment of $500 million. This termination resulted in a net
    loss of $529 million.   29




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##### Table of Contents



(dollars in millions)Mark-to-Market Prior

Life-to-Dateto Credit

CreditCredit Default Swaps with
    Financial

Notional of

Net

Valuation

Valuation

CarryingGuarantors (Excluding U.S. Super Senior ABS CDO)

CDS(1)

Exposure(2)

Adjustments

Adjustments

ValueBy counterparty credit
    quality(3)AAA

$
(17,293
)

$
(13,718
)

$
3,575


$
(804
)

$
2,771AA


(16,672
)


(11,851
)


4,821



(1,832
)


2,989A


(1,197
)


(879
)


318



(118
)


200BBB


(5,570
)


(4,522
)


1,048



(440
)


608Non-investment grade or unrated


(9,581
)


(6,570
)


3,011



(1,809
)


1,202Total financial guarantor exposures

$
(50,313
)

$
(37,540
)

$
12,773


$
(5,003
)

$
7,770   (1)
    
    Represents the gross notional
    amount of CDS purchased as protection to hedge predominantly
    Corporate CDO, CLO, RMBS and CMBS exposure. Amounts do not
    include exposure with financial guarantors on U.S. super senior
    ABS CDOs which are reported separately above.(2)
    
    Represents the notional of the
    total CDS, net of gains prior to credit valuation
    adjustments.(3)
    
    Represents S&P rating band
    as of December 26, 2008.    U.S.
    Banks Investment Securities Portfolio
  other-than-temporary. other-than-temporary
    other-than-temporary
  
    Whether there has been an adverse change in the estimated cash
    flows of the security;
    The period of time over which it is estimated that the fair
    value will increase from the current level to at least the
    amortized cost level, or until principal and interest is
    estimated to be received; 30




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##### Table of Contents




    The period of time a securitys fair value has been below
    amortized cost;
    The amount by which the securitys fair value is below
    amortized cost;
    The financial condition of the issuer; and
    Managements ability and intent to hold the security until
    fair value recovers or until the principal and interest is
    received.      (dollars in millions)Net

Net

Unrealized

Other

NetExposures

Gains/(Losses)

Gains/(Losses)

Net Changes

Exposuresas of Dec. 28,

Reported in

Included in OCI

in Net

as of Dec. 26,

Cumulative2007

Income(2)

(pre-tax)

Exposures(3)

2008

OCI (pre-tax)U.S. Banks Investment Securities Portfolio:Sub-prime
    residential mortgage-backed securities

$
4,161


$
(485
)

$
(1,200
)

$
(463
)

$
2,013


$
(1,942
)Alt-A residential mortgage-backed securities


7,120



(3,028
)


(1,179
)


(618
)


2,295



(1,999
)Commercial mortgage-backed securities


5,791



(117
)


(3,186
)


637



3,125



(3,499
)Prime residential mortgage-backed securities


4,174



(349
)


(837
)


(1,143
)


1,845



(1,075
)Non-residential asset-backed securities


1,214



(27
)


(178
)


(383
)


626



(216
)Non-residential CDOs


903



(101
)


(407
)


(66
)


329



(483
)Other


240



(1
)


(56
)


15



198



(75
)Total(1)

$
23,603


$
(4,108
)

$
(7,043
)

$
(2,021
)

$
10,431


$
(9,289
)   (1)
    
    The December 26,
    2008 net exposures include investment securities of
    approximately $6.0 billion recorded in a non-bank legal
    entity.(2)
    
    Primarily represents losses on
    certain securities deemed to be
    other-than-temporarily
    impaired.(3)
    
    Primarily represents principal
    paydowns, sales and hedges.  other-than-temporary
  Commercial
    Real Estate
   31




---



##### Table of Contents



(dollars in millions)Net



NetNet Exposures

Gains/(Losses)

Other Net

Exposuresas of Dec. 28,

Reported in

Changes in Net

as of Dec. 26,2007

Income

Exposures(1)

2008Commercial Real Estate:Whole Loans/Conduits

$
11,585


$
(1,548
)

$
(6,192
)

$
3,845Securities and Derivatives


(123
)


(78
)


375



174Real Estate
    Investments(2)


7,486



(358
)


(1,443
)


5,685Total Commercial Real Estate, excluding First Republic

$
18,948


$
(1,984
)

$
(7,260
)

$
9,704First Republic Bank

$
2,300


$
71


$
748


$
3,119   (1)
    
    Primarily represents sales,
    paydowns and foreign exchange revaluations.(2)
    
    The Company makes equity and
    debt investments in entities whose underlying assets are real
    estate. The Company consolidates those entities in which we are
    the primary beneficiary in accordance with
    FIN No. 46(R), Consolidation of Variable Interest
    Entities (revised December 2003)  an interpretation
    of ARB No. 51. The Company does not consider itself to have
    economic exposure to the total underlying assets in those
    entities. The amounts presented are the Companys net
    investment and therefore exclude the amounts that have been
    consolidated but for which the Company does not consider itself
    to have economic exposure. 32




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##### Table of Contents



Business
    Segments
     agreed-upon
  
 Global Markets and Investment Banking
    GMI
    Results of Operations
  (dollars in millions)% Change2008 vs.2008

2007

2007Global MarketsFICC

$
(37,423
)

$
(15,873
)


N/M
%Equity Markets


7,668



8,286



(7
)Total Global Markets revenues, net of interestexpense


(29,755
)


(7,587
)


N/MInvestment BankingOrigination:Debt


931



1,550



(40
)Equity


1,047



1,629



(36
)Strategic Advisory Services


1,317



1,740



(24
)Total Investment Banking revenues, net of interestexpense


3,295



4,919



(33
)Total GMI revenues, net of interest expense


(26,460
)


(2,668
)


N/MNon-interest expenses before restructuring charge


14,753



13,677



8Restructuring charge


331



-



N/MPre-tax loss from continuing operations

$
(41,544
)

$
(16,345
)


N/MPre-tax profit margin


N/M



N/MTotal full-time employees


9,700



12,300  N/M = Not Meaningful
 33




---



##### Table of Contents



Fixed
    Income, Currencies and Commodities (FICC)
    U.S. sub-prime, Non-U.S. residential
    Equity
    Markets
   34




---



##### Table of Contents



Investment
    Banking
    Origination
      Strategic
    Advisory Services
    
 Global Wealth Management
       35




---



##### Table of Contents



GWM
    Results of Operations
  (dollars in millions)%Change2008 vs.2008

2007

2007GPCFee-based revenues

$
6,171


$
6,278



(2
)%Transactional and origination revenues


3,313



3,887



(15
)Net interest profit and related
    hedges(1)


2,337



2,318



1Other revenues


288



416



(31
)Total GPC revenues, net of interest expense


12,109



12,899



(6
)GIMTotal GIM revenues, net of interest expense


669



1,122



(40
)Total GWM revenues, net of interest expense


12,778



14,021



(9
)Non-interest expenses before restructuring charge


10,277



10,391



(1
)Restructuring charge


155



-



N/MPre-tax earnings from continuing operations

$
2,346


$
3,630



(35
)Pre-tax profit margin


18.4
%


25.9
%Total full-time employees


29,400



31,000Total Financial Advisors


16,090



16,740  N/M = Not Meaningful
 (1)
    
    Includes the interest component
    of non-qualifying derivatives, which are included in other
    revenues on the Consolidated Statements of
    (Loss)/Earnings.      Global
    Private Client
      Fee-Based
    Revenues
   36




---



##### Table of Contents



(dollars in billions)2008

2007Assets in client accounts:U.S.

$
1,125


$
1,586Non-U.S.


122



165Total

$
1,247


$
1,751Assets in Annuitized-Revenue Products

$
466


$
655     Transactional
    and Origination Revenues
    Net
    Interest Profit and Related Hedges
      Other
    Revenues
    Global
    Investment Management
     Off-Balance Sheet
    Exposures   37




---



##### Table of Contents



(dollars in millions)ExpirationLess than

1 - 3

3+ -

    5

Over 5Total

1 Year

Years

Years

YearsStandby liquidity facilities

$
9,144


$
6,279


$
-


$
2,849


$
16Auction rate security guarantees


5,235



-



5,235



-



-Residual value guarantees


738



322



96



320



-Standby letters of credit and other guarantees


40,499



825



2,738



690



36,246   Standby
    Liquidity Facilities
    Auction
    Rate Security Guarantees
  not-for-profit,
  Residual
    Value Guarantees
    Standby
    Letters of Credit and Other FIN 45 Guarantees
     38




---



##### Table of Contents



Derivatives
  Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indebtedness of
    Others
      Involvement
    with SPEs
   39




---



##### Table of Contents




    Municipal bond securitization SPEs: SPEs that issue
    medium-term paper, purchase municipal bonds as collateral and
    purchase a guarantee to enhance the creditworthiness of the
    collateral.
    Asset-backed securities SPEs: SPEs that issue
    different classes of debt, from super senior to subordinated,
    and equity and purchase assets as collateral, including
    residential mortgages, commercial mortgages, auto leases and
    credit card receivables.
    ABS CDOs: SPEs that issue different classes of debt,
    from super senior to subordinated, and equity and purchase
    asset-backed securities collateralized by residential mortgages,
    commercial mortgages, auto leases and credit card receivables.
    Synthetic CDOs: SPEs that issue different classes of
    debt, from super senior to subordinated, and equity, purchase
    high-grade assets as collateral and enter into a portfolio of
    credit default swaps to synthetically create the credit risk of
    the issued debt.
    Credit-linked note SPEs:  SPEs that issue
    notes linked to the credit risk of a company, purchase
    high-grade assets as collateral and enter into credit default
    swaps to synthetically create the credit risk to pay the return
    on the notes.
    Tax planning SPEs: SPEs are sometimes used to
    legally isolate transactions for the purpose of obtaining a
    particular tax treatment for our clients as well as ourselves.
    The assets and capital structure of these entities vary for each
    structure.
    Trust preferred security SPEs: These SPEs hold
    junior subordinated debt issued by ML & Co. or our
    subsidiaries, and issue preferred stock on substantially the
    same terms as the junior subordinated debt to third party
    investors. We also provide a parent guarantee, on a junior
    subordinated basis, of the distributions and other payments on
    the preferred stock to the extent that the SPEs have funds
    legally available. The debt we issue into the SPE is classified
    as long-term
    borrowings on our Consolidated Balance Sheets. The
    ML & Co. parent guarantees of its own subsidiaries are
    not required to be recorded in the Consolidated Financial
    Statements.
    Conduits: Generally, entities that issue commercial
    paper and subordinated capital, purchase assets, and enter into
    total return swaps or repurchase agreements with higher-rated
    counterparties, particularly banks. The Conduits generally have
    a liquidity
    and/or
    credit facility to further enhance the credit quality of the
    commercial paper issuance. A single seller conduit will execute
    total return swaps, repurchase agreements, and liquidity and
    credit facilities with one financial institution. A multi-seller
    Conduit will execute total return swaps, repurchase agreements,
    and liquidity and credit facilities with numerous financial
    institutions. Refer to Notes 6 and 11 to the Consolidated
    Financial Statements for additional information on Conduits.    
    Holder of Issued Debt and Equity: Merrill Lynch
    invests in debt of third party securitization vehicles that are
    SPEs and also invests in SPEs that we establish. In Merrill
    Lynch formed SPEs, we may be the holder of debt and equity of an
    SPE. These holdings will be classified as trading assets, loans,
    notes and mortgages or investment securities. Such holdings may
    change over time at our discretion and rarely are there
    contractual obligations that require us to purchase additional
    debt or equity interests. Significant obligations are disclosed
    in the
    off-balance
    sheet arrangements table above.
    Warehousing of Loans and Securities: Warehouse loans
    and securities represent amounts maintained on our balance sheet
    that are intended to be sold into a trust for the purposes of
    securitization. We may retain these loans and securities on our
    balance sheet for the benefit of a 40




---



##### Table of Contents



CDO managed by a third party. Warehoused loans are carried as
    held for sale and warehoused securities are carried as trading
    assets.  
    Securitizations: In the normal course of business,
    we securitize: commercial and residential mortgage loans;
    municipal, government, and corporate bonds; and other types of
    financial assets. Securitizations involve the selling of assets
    to SPEs, which in turn issue debt and equity securities
    (tranches) with those assets as collateral. We may
    retain interests in the securitized financial assets through
    holding tranches of the securitization. See Note 6 to the
    Consolidated Financial Statements.
    Structured Investment Vehicles
    (SIVs): SIVs are leveraged investment
    programs that purchase securities and issue asset-backed
    commercial paper and medium-term notes. These SPEs are
    characterized by low equity levels with partial liquidity
    support facilities and the assets are actively managed by the
    SIV investment manager. We have not been the sponsor or equity
    investor of any SIV, though we have acted as a commercial paper
    or medium-term note placement agent for various SIVs. Funding and
    Liquidity  Funding
    Credit
    Ratings
      Senior

Subordinated

Preferred

CommercialDebt

Debt

Stock

Paper

RatingRating Agency

Ratings

Ratings

Ratings

Ratings

OutlookDominion Bond Rating Service Ltd.

A(high)

A

A(low)

R-1 (middle)

Under Review -
    NegativeFitch Ratings

A+

A

BB

F1+

StableMoodys Investors Service, Inc.

A1

A2

Baa1

P-1

NegativeRating & Investment Information, Inc. (Japan)

A+

A

Not Rated

a-1

Rating Monitor with
    Direction UncertainStandard & Poors Ratings Services

A+

A

A-

A-1

Negative    41




---



##### Table of Contents



and/or
  Liquidity
    Risk
    Excess
    Liquidity and Unencumbered Assets
      (dollars in billions)December 26,

December 28,2008

2007Excess liquidity pool

$
56


$
79Unencumbered assets at bank subsidiaries


58



57Unencumbered assets at non-bank subsidiaries


42



64Global Liquidity Sources

$
156


$
200   non-U.S. broker-dealer
   42




---



##### Table of Contents



Committed
    Credit Facilities
              U.S.
    Government Liquidity Facilities
     43




---



##### Table of Contents



44




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Risk
    Management Philosophy
    Risk
    Management Process
    
    A risk governance structure that defined the responsibilities of
    the independent groups that monitored risk and the oversight
    activities of the board committees, the Regulatory Oversight and
    Controls Committee and Weekly Risk Review;
    A regular review of the risk management process by the Audit
    Committee of the Board of Directors (the Audit
    Committee) as well as a regular review of credit, market
    and liquidity risks and processes by the Finance Committee of
    the Board of Directors (the Finance Committee);
    Clearly defined risk management policies and procedures;
    Communication and coordination among the businesses, executive
    management, and risk functions while maintaining strict
    segregation of responsibilities, controls, and
    oversight; and
    Clearly articulated risk tolerance levels, which were included
    within the framework established by Global Risk Management.  Risk
    Governance Structure
    Board of
    Directors Committees
   45




---



##### Table of Contents



Global
    Risk Management
    Regulatory
    Oversight and Controls Committee (ROCC) and Other
    Governance Committees
      Market
    Risk
  and/or
          
    VaR measures do not convey the magnitude of extreme events; 46




---



##### Table of Contents




    Historical data that forms the basis of VaR may fail to predict
    current and future market volatility; and
    VaR does not reflect the effects of market illiquidity (i.e.,
    the inability to sell or hedge a position over a relatively long
    period).  U.S. sub-prime
  Trading
    Value at Risk
        Table 1  Trading Value at Risk  95%
    One-day
    General Market Risk VaR
  (dollars in millions)Daily







DailyYear-End

Average

High

Low

Year-End

Average2008

2008

2008

2008

2007

2007Trading
    Value-at-Risk(1)Interest rate and credit spread

$
36


$
49


$
92


$
28


$
52


$
52Equity


9



17



28



7



26



28Commodity


16



19



36



10



15



18Currency


7



6



15



-



5



5Subtotal(2)


68



91











98



103Diversification benefit


(27
)


(40
)










(33
)


(38
)Overall

$
41


$
51


$
90


$
30


$
65


$
65   (1)
    
    Based on a 95% confidence level
    and a
    one-day
    holding period.(2)
    
    Subtotals are not provided for
    highs and lows as they are not meaningful. 47




---



##### Table of Contents



Table 2  Trading Value at Risk  95%
    One-day
    Specific Risk VaR
  (dollars in millions)DailyYear-end

Average

High

Low

Year-end2008

2008

2008

2008

2007Trading
    value-at-risk(1)Interest rate and credit spread

$
100


$
73


$
114


$
54


$
69Equity


21



25



48



16



38Commodity


16



19



36



10



15Currency


7



6



15



-



5Subtotal(2)


144



123











127Diversification benefit


(44
)


(49
)










(46
)Overall

$
100


$
74


$
112


$
52


$
81   (1)
    
    Based on a 95% confidence level
    and a
    one-day
    holding period.(2)
    
    Subtotals are not provided for
    highs and lows as they are not meaningful.    Non-Trading
    Market Risk
  Counterparty Credit
    Risk
  available-for-sale held-to-maturity.
  ®
 48




---



##### Table of Contents



Counterparty
    Credit Risk
            Derivatives
   49




---



##### Table of Contents



(dollars in millions)Years to Maturity

MaturityCredit
    Rating(1)

0 to 3

3+ to 5

5+ to 7

Over 7

Netting(2)

TotalAA or above

$
7,773


$
3,537


$
3,654


$
18,905


$
(10,916
)

$
22,953A


9,719



2,589



2,260



6,998



(6,662
)


14,904BBB


4,873



2,094



942



14,424



(2,216
)


20,117BB


2,291



1,040



512



2,248



(259
)


5,832B or below


3,210



1,782



689



4,753



(674
)


9,760Unrated


1,918



188



25



566



(94
)


2,603Total

$
29,784


$
11,230


$
8,082


$
47,894


$
(20,821
)

$
76,169   (1)
    
    Represents credit rating agency
    equivalent of internal credit ratings.(2)
    
    Represents netting of payable
    balances with receivable balances for the same counterparty
    across maturity band categories. Receivable and payable balances
    with the same counterparty in the same maturity category,
    however, are net within the maturity category.   50




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          Fair Value
    Measurements, The Fair Value Option for
    Financial Assets and Financial Liabilities  Including
    an amendment of FASB Statement No. 115, Accounting for Uncertainty
    in Income Taxes, an Interpretation of FASB Statement
    No. 109.
    Internal Control  Integrated Framework
     51




---



##### Table of Contents



Merrill
    Lynch & Co., Inc. and Subsidiaries
    Consolidated Statements of (Loss)/Earnings  Year Ended Last Friday in December2008

2007

2006(dollars in millions, except per share amounts)

(52 weeks)

(52 weeks)

(52 weeks)RevenuesPrincipal transactions

$
(27,225
)

$
(12,067
)

$
7,248Commissions


6,895



7,284



5,985Managed accounts and other fee-based revenues


5,544



5,465



6,273Investment banking


3,733



5,582



4,648Earnings from equity method investments


4,491



1,627



556Other


(10,065
)


(2,190
)


2,883Subtotal


(16,627
)


5,701



27,593Interest and dividend revenues


33,383



56,974



39,790Less interest expense


29,349



51,425



35,571Net interest profit


4,034



5,549



4,219Gain on merger


-



-



1,969Revenues, net of interest expense


(12,593
)


11,250



33,781Non-interest expensesCompensation and benefits


14,763



15,903



16,867Communications and technology


2,201



2,057



1,838Brokerage, clearing, and exchange fees


1,394



1,415



1,096Occupancy and related depreciation


1,267



1,139



991Professional fees


1,058



1,027



885Advertising and market development


652



785



686Office supplies and postage


215



233



225Other


2,402



1,522



1,383Payment related to price reset on common stock offering


2,500



-



-Goodwill impairment charge


2,300



-



-Restructuring charge


486



-



-Total non-interest expenses


29,238



24,081



23,971Pre-tax (loss)/earnings from continuing operations


(41,831
)


(12,831
)


9,810Income tax (benefit)/expense


(14,280
)


(4,194
)


2,713Net (loss)/earnings from continuing operations


(27,551
)


(8,637
)


7,097Discontinued operations:Pre-tax (loss)/earnings from discontinued operations


(141
)


1,397



616Income tax (benefit)/expense


(80
)


537



214Net (loss)/earnings from discontinued operations


(61
)


860



402Net (loss)/earnings

$
(27,612
)

$
(7,777
)

$
7,499Preferred stock dividends


2,869



270



188Net (loss)/earnings applicable to common stockholders

$
(30,481
)

$
(8,047
)

$
7,311Basic (loss)/earnings per common share from continuing operations

$
(24.82
)


(10.73
)


7.96Basic (loss)/earnings per common share from discontinued
    operations


(0.05
)


1.04



0.46Basic (loss)/earnings per common share

$
(24.87
)

$
(9.69
)

$
8.42Diluted (loss)/earnings per common share from continuing
    operations

$
(24.82
)


(10.73
)


7.17Diluted (loss)/earnings per common share from discontinued
    operations


(0.05
)


1.04



0.42Diluted (loss)/earnings per common share

$
(24.87
)

$
(9.69
)

$
7.59Dividend paid per common share

$
1.40


$
1.40


$
1.00Average shares used in computing (losses)/earnings per common
    shareBasic


1,225.6



830.4



868.1Diluted


1,225.6



830.4



963.0    See Notes to Consolidated
    Financial Statements
 52




---



##### Table of Contents



Merrill
    Lynch & Co., Inc. and Subsidiaries
    Consolidated Balance Sheets  Dec. 26,

Dec. 28,(dollars in millions, except per
    share amounts)

2008

2007ASSETSCash and cash equivalents

$
68,403


$
41,346Cash and securities segregated for regulatory purposes or
    deposited with clearing organizations


32,923



22,999Securities financing transactionsReceivables under resale agreements (includes $62,146 in 2008
    and $100,214 in 2007 measured at fair value in accordance with
    SFAS No. 159)


93,247



221,617Receivables under securities borrowed transactions (includes
    $853 in 2008 measured at fair value in accordance with
    SFAS No. 159)


35,077



133,140128,324



354,757Trading assets, at fair value (includes securities
    pledged as collateral that can be sold or repledged of $18,663
    in 2008 and $45,177 in 2007)Derivative contracts


89,477



72,689Corporate debt and preferred stock


30,829



37,849Equities and convertible debentures


26,160



60,681Mortgages, mortgage-backed, and asset-backed


13,786



28,013Non-U.S.
    governments and agencies


6,107



15,082U.S. Government and agencies


5,253



11,219Municipals, money markets and physical commodities


3,993



9,136175,605



234,669Investment securities (includes $2,770 in 2008 and $4,685
    in 2007 measured at fair value in accordance with
    SFAS No. 159) (includes securities pledged as
    collateral that can be sold or repledged of $2,557 in 2008 and
    $16,124 in 2007)


57,007



82,532Securities received as collateral, at fair value


11,658



45,245Other receivablesCustomers (net of allowance for doubtful accounts of $143 in
    2008 and $24 in 2007)


51,131



70,719Brokers and dealers


12,410



22,643Interest and other


26,331



23,48789,872



116,849Loans, notes and mortgages (net of allowances for loan
    losses of $2,072 in 2008 and $533 in 2007) (includes $979 in
    2008 and $1,149 in 2007 measured at fair value in accordance
    with SFAS No. 159)


69,190



94,992Equipment and facilities (net of accumulated depreciation
    and amortization of $5,856 in 2008 and $5,518 in 2007)


2,928



3,127Goodwill and other intangible assets


2,616



5,091Other assets


29,017



18,443Total Assets

$
667,543


$
1,020,050  53




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##### Table of Contents



Merrill
    Lynch & Co., Inc. and Subsidiaries
    Consolidated Balance Sheets
  Dec. 26,

Dec. 28,(dollars in millions, except per
    share amounts)

2008

2007LIABILITIESSecurities financing transactionsPayables under repurchase agreements (includes $32,910 in 2008
    and $89,733 in 2007 measured at fair value in accordance with
    SFAS No. 159)

$
92,654


$
235,725Payables under securities loaned transactions


24,426



55,906117,080



291,631Short-term borrowings (includes $3,387 in 2008 measured
    at fair value in accordance with SFAS No. 159)


37,895



24,914Deposits


96,107



103,987Trading liabilities, at fair valueDerivative contracts


71,363



73,294Equities and convertible debentures


7,871



29,652Non-U.S.
    governments and agencies


4,345



9,407U.S. Government and agencies


3,463



6,135Corporate debt and preferred stock


1,318



4,549Municipals, money markets and other


1,111



55189,471



123,588Obligation to return securities received as collateral, at
    fair value


11,658



45,245Other payablesCustomers


44,924



63,582Brokers and dealers


12,553



24,499Interest and other


32,918



44,54590,395



132,626Long-term borrowings (includes $49,521 in 2008 and
    $76,334 in 2007 measured at fair value in accordance with
    SFAS No. 159)


199,678



260,973Junior subordinated notes (related to trust preferred
    securities)


5,256



5,154Total Liabilities


647,540



988,118COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred Stockholders Equity (liquidation
    preference of $30,000 per share;issued: 2008  244,100 shares; 2007 
    155,000 shares; liquidation preference of $1,000 per share;
    issued: 2008 and 2007  115,000 shares;
    liquidation preference of $100,000 per share; issued:
    2008  17,000 shares)


8,605



4,383Common Stockholders EquityShares exchangeable into common stock


-



39Common stock (par value
    $1.331/3
    per share; authorized: 3,000,000,000 shares; issued:
    2008  2,031,995,436 shares; 2007 
    1,354,309,819 shares)


2,709



1,805Paid-in capital


47,232



27,163Accumulated other comprehensive loss (net of tax)


(6,318
)


(1,791
)(Accumulated deficit) / retained earnings


(8,603
)


23,73735,020



50,953Less: Treasury stock, at cost (2008 
    431,742,565 shares; 2007 
    418,270,289 shares)


23,622



23,404Total Common Stockholders Equity


11,398



27,549Total Stockholders Equity


20,003



31,932Total Liabilities and Stockholders Equity

$
667,543


$
1,020,050    See Notes to Consolidated
    Financial Statements
 54




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##### Table of Contents



Merrill
    Lynch & Co., Inc. and Subsidiaries
    Consolidated Statements of Changes in Stockholders
    Equity  Year Ended Last Friday in DecemberAmounts

Shares(dollars in millions)

2008

2007

2006

2008

2007

2006Preferred Stock, netBalance, beginning of year

$
4,383


$
3,145


$
2,673



257,134



104,928



89,685Issuances


10,814



1,615



374



172,100



165,000



12,000Redemptions


(6,600
)


-



-



(66,000
)


-



-Shares (repurchased) re-issuances


8



(377
)


98



211



(12,794
)


3,243Balance, end of year

$
8,605


$
4,383


$
3,145



363,445



257,134



104,928Common Stockholders EquityShares Exchangeable into Common StockBalance, beginning of year

$
39


$
39


$
41



2,552,982



2,659,926



2,707,797Exchanges


(39
)


-



(2
)


(2,544,793
)


(106,944
)


(47,871
)Balance, end of year


-



39



39



8,189



2,552,982



2,659,926Common StockBalance, beginning of year


1,805



1,620



1,531



1,354,309,819



1,215,381,006



1,148,714,008Capital issuance and
    acquisition(1)(2)


648



122



-



486,166,666



91,576,096



-Preferred stock conversion


236



-



-



177,322,917



-



-Shares issued to employees


20



63



89



14,196,034



47,352,717



66,666,998Balance, end of year


2,709



1,805



1,620



2,031,995,436



1,354,309,819



1,215,381,006Paid-in CapitalBalance, beginning of year


27,163



18,919



13,320Capital issuance and
    acquisition(1)(2)


11,544



4,643



-Preferred stock conversion


6,970



-



-Employee stock plan activity and other


(553
)


1,962



2,351Amortization of employee stock grants


2,108



1,639



3,248Balance, end of year


47,232



27,163



18,919Accumulated Other Comprehensive Loss:Foreign Currency Translation Adjustment (net of tax)Balance, beginning of year


(441
)


(430
)


(507
)Translation adjustment


(304
)


(11
)


77Balance, end of year


(745
)


(441
)


(430
)Net Unrealized Gains (Losses) on Investment SecuritiesAvailable-for-Sale (net of tax)Balance, beginning of year


(1,509
)


(192
)


(181
)Net unrealized losses on available-for-sale securities


(7,617
)


(2,460
)


(15
)Adjustment to initially apply
    SFAS 159(3)


-



172



-Other
    adjustments(4)


3,088



971



4Balance, end of year


(6,038
)


(1,509
)


(192
)Deferred Gains (losses) on Cash Flow Hedges (net of tax)Balance, beginning of year


83



2



(3
)Net deferred (losses) gains on cash flow hedges


(2
)


81



5Balance, end of year


81



83



2Defined benefit pension and postretirement plans (net of tax)Balance, beginning of year


76



(164
)


(153
)Net gains


306



240



-Minimum pension liability adjustment


-



-



(76
)Adjustment to apply SFAS 158 change in measurement
    date(3)


2



-



-Adjustment to initially apply
    SFAS 158(3)


-



-



65Balance, end of year


384



76



(164
)Balance, end of year


(6,318
)


(1,791
)


(784
)(Accumulated deficit) Retained EarningsBalance, beginning of year


23,737



33,217



26,824Net (loss) earnings


(27,612
)


(7,777
)


7,499Preferred stock dividends declared


(2,869
)


(270
)


(188
)Common stock dividends declared


(1,853
)


(1,235
)


(918
)Adjustment to initially apply SFAS 157


-



53



-Adjustment to apply SFAS 158 change in measurement date


(6
)


-



-Adjustment to initially apply SFAS 159


-



(185
)


-Adjustment to initially apply FIN 48


-



(66
)


-Balance, end of year


(8,603
)


23,737



33,217Treasury Stock, at costBalance, beginning of year


(23,404
)


(17,118
)


(7,945
)


(418,270,289
)


(350,697,271
)


(233,112,271
)Shares repurchased


-



(5,272
)


(9,088
)


-



(62,112,876
)


(116,610,876
)Shares reacquired from employees and
    other(5)


(363
)


(1,014
)


(89
)


(16,017,069
)


(5,567,086
)


(1,021,995
)Share exchanges


145



-



4



2,544,793



106,944



47,871Balance, end of year


(23,622
)


(23,404
)


(17,118
)


(431,742,565
)


(418,270,289
)


(350,697,271
)Total Common Stockholders Equity

$
11,398


$
27,549


$
35,893Total Stockholders Equity

$
20,003


$
31,932


$
39,038  (1)
    
    The 2008 activity relates to the
    July 28, 2008 public offering and additional shares issued
    to Davis Selected Advisors and Temasek Holdings.(2)
    
    The 2007 activity relates to the
    acquisition of First Republic Bank and to additional shares
    issued to Davis Selected Advisors and Temasek
    Holdings.(3)
    
    This adjustment is not reflected
    on the Statement of Comprehensive (Loss)/Income.(4)
    
    Other adjustments primarily
    relate to income taxes, policyholder liabilities and deferred
    policy acquisition costs.(5)
    
    Share amounts are net of
    reacquisitions from employees of 19,057,068,
    12,490,283 shares and 6,622,887 shares, in 2008, 2007
    and 2006, respectively.  See Notes to Consolidated
    Financial Statements
 55




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##### Table of Contents



Merrill
    Lynch & Co., Inc. and Subsidiaries
    Consolidated Statements of Comprehensive (Loss)/Income  Year Ended Last Friday in December(dollars in millions)

2008

2007

2006Net (Loss)/Earnings

$
(27,612
)

$
(7,777
)

$
7,499Other Comprehensive (Loss) IncomeForeign currency translation adjustment:Foreign currency translation gains (losses)


694



(282
)


(366
)Income tax (expense) benefit


(998
)


271



443Total


(304
)


(11
)


77Net unrealized gains (losses) on investment securities
    available-for-sale:Net unrealized losses arising during the period


(11,916
)


(2,291
)


(16
)Reclassification adjustment for realized losses/(gains) included
    in net (loss)/earnings


4,299



(169
)


1Net unrealized losses on investment securities available-for-sale


(7,617
)


(2,460
)


(15
)Adjustments for:Policyholder liabilities


-



4



1Income tax benefit


3,088



967



3Total


(4,529
)


(1,489
)


(11
)Deferred gains (losses) on cash flow hedges:Deferred gains (losses) on cash flow hedges


240



162



9Reclassification adjustment for realized losses (gains) included
    in net earnings


(241
)


(30
)


(2
)Income tax (expense) benefit


(1
)


(51
)


(2
)Total


(2
)


81



5Defined benefit pension and postretirement plans:Minimum pension liability adjustment


-



-



(110
)Net actuarial gains


489



353Prior service cost


(4
)


6Reclassification adjustment for realized losses included innet (loss)/earnings


(5
)


23



-Income tax (expense) benefit


(174
)


(142
)


34Total


306



240



(76
)Total Other Comprehensive Loss


(4,529
)


(1,179
)


(5
)Comprehensive (Loss)/Income

$
(32,141
)

$
(8,956
)

$
7,494    See Notes to Consolidated
    Financial Statements
 56




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##### Table of Contents



Merrill
    Lynch & Co., Inc. and Subsidiaries



Consolidated
    Statements of Cash Flows  Year Ended Last Friday in December(dollars in millions)

2008

2007

2006Cash flows from operating activities:Net (loss)/earnings

$
(27,612
)

$
(7,777
)

$
7,499Adjustments to reconcile net (loss)/earnings to cash provided by
    (used for) operating activitiesGain on merger


-



-



(1,969
)Gain on sale of MLIG


-



(316
)


-Depreciation and amortization


886



901



523Share-based compensation expense


2,044



1,795



3,156Payment related to price reset on common stock offering


2,500



-



-Goodwill impairment charge


2,300



-



-Deferred taxes


(16,086
)


(4,924
)


(360
)Gain on sale of Bloomberg L.P. interest


(4,296
)


-



-Loss (earnings) from equity method investments


306



(1,409
)


(421
)Other


13,556



160



1,045Changes in operating assets and liabilities:Trading assets


59,064



(29,650
)


(55,392
)Cash and securities segregated for regulatory purposes or
    deposited with clearing organizations


(6,214
)


(8,886
)


(1,019
)Receivables under resale agreements


128,370



(43,247
)


(15,346
)Receivables under securities borrowed transactions


98,063



(14,530
)


(26,126
)Customer receivables


19,561



(21,280
)


(9,562
)Brokers and dealers receivables


10,236



(3,744
)


(6,825
)Proceeds from loans, notes, and mortgages held for sale


21,962



72,054



41,317Other changes in loans, notes, and mortgages held for sale


2,700



(86,894
)


(47,670
)Trading liabilities


(34,338
)


23,878



9,554Payables under repurchase agreements


(143,071
)


13,101



29,557Payables under securities loaned transactions


(31,480
)


12,414



24,157Customer payables


(18,658
)


14,135



13,795Brokers and dealers payables


(11,946
)


113



4,791Trading investment securities


3,216



9,333



(867
)Other, net


(31,588
)


2,411



6,400Cash provided by (used for) operating activities


39,475



(72,362
)


(23,763
)Cash flows from investing activities:Proceeds from (payments for):Maturities of available-for-sale securities


7,250



13,362



13,222Sales of available-for-sale securities


29,537



39,327



16,176Purchases of available-for-sale securities


(31,017
)


(58,325
)


(31,357
)Proceeds from the sale of discontinued operations


12,576



1,250



-Equipment and facilities, net


(630
)


(719
)


(1,174
)Loans, notes, and mortgages held for investment


(13,379
)


5,113



(681
)Other investments


1,336



(5,049
)


(6,543
)Transfer of cash balances related to merger


-



-



(651
)Acquisitions, net of cash


-



(2,045
)


-Cash provided by (used for) investing activities


5,673



(7,086
)


(11,008
)Cash flows from financing activities:Proceeds from (payments for):Commercial paper and short-term borrowings


12,981



6,316



9,123Issuance and resale of long-term borrowings


70,194



165,107



87,814Settlement and repurchases of long-term borrowings


(109,731
)


(93,258
)


(42,545
)Deposits


(7,880
)


9,884



4,108Derivative financing transactions


543



848



608Issuance of common stock


9,899



4,787



1,838Issuance of preferred stock, net


9,281



1,123



472Common stock repurchases


-



(5,272
)


(9,088
)Other common stock transactions


(833
)


(60
)


539Excess tax benefits related to share-based compensation


39



715



531Dividends


(2,584
)


(1,505
)


(1,106
)Cash (used for) provided by financing activities


(18,091
)


88,685



52,294Increase in cash and cash equivalents


27,057



9,237



17,523Cash and cash equivalents, beginning of period


41,346



32,109



14,586Cash and cash equivalents, end of period

$
68,403


$
41,346


$
32,109Supplemental Disclosure of Cash Flow Information:Income taxes paid

$
1,518


$
1,846


$
2,638Interest paid


30,397



49,881



35,685   Non-cash investing and financing
    activities :
  As a result of the conversion of
    $6.6 billion of Merrill Lynchs mandatory convertible
    preferred stock, series 1, the Company recorded additional
    preferred dividends of $2.1 billion in 2008. The preferred
    dividends were paid in additional shares of common and preferred
    stock.
  In satisfaction of Merrill
    Lynchs obligations under the reset provisions contained in
    the investment agreement with Temasek, Merrill Lynch agreed to
    pay Temasek $2.5 billion, all of which was paid through the
    issuance of common stock.
  As a result of the completed
    sale of Merrill Lynchs 20% ownership stake in Bloomberg,
    L.P., Merrill Lynch recorded a $4.3 billion pre-tax gain.
    In connection with this sale, Merrill Lynch received notes
    totaling approximately $4.3 billion that have been recorded
    as held-to-maturity investment securities on the Consolidated
    Balance Sheets.
  See Notes to Consolidated
    Financial Statements
 57




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##### Table of Contents



Merrill
    Lynch & Co., Inc. and SubsidiariesNotes to Consolidated Financial Statements
    December 26, 2008
  
 Note 1.  Summary of Significant
    Accounting Policies
  Description
    of Business
    
    Merrill Lynch, Pierce, Fenner & Smith Incorporated
    (MLPF&S), a
    U.S.-based
    broker-dealer in securities and futures commission merchant;
    Merrill Lynch International (MLI), a U.K.-based
    broker-dealer in securities and dealer in equity and credit
    derivatives;
    Merrill Lynch Government Securities Inc. (MLGSI), a
    U.S.-based
    dealer in U.S. Government securities;
    Merrill Lynch Capital Services, Inc., a
    U.S.-based
    dealer in interest rate, currency, credit derivatives and
    commodities;
    Merrill Lynch Bank USA (MLBUSA), a
    U.S.-based,
    state chartered, Federal Deposit Insurance Corporation
    (FDIC)-insured depository institution;
    Merrill Lynch Bank & Trust Co., FSB
    (MLBT-FSB), a
    U.S.-based,
    federally chartered, FDIC-insured depository institution;
    Merrill Lynch International Bank Limited (MLIB), an
    Ireland-based bank;
    Merrill Lynch Mortgage Capital, Inc., a
    U.S.-based
    dealer in syndicated commercial loans;
    Merrill Lynch Japan Securities Co., Ltd. (MLJS), a
    Japan-based broker-dealer;
    Merrill Lynch Derivative Products, AG, a Switzerland-based
    derivatives dealer; and
    ML IBK Positions Inc., a
    U.S.-based
    entity involved in private equity and principal investing.    
    Securities brokerage, trading and underwriting;
    Investment banking, strategic advisory services (including
    mergers and acquisitions) and other corporate finance activities;
    Wealth management products and services, including financial,
    retirement and generational planning;
    Investment management and advisory and related record-keeping
    services;
    Origination, brokerage, dealer, and related activities in swaps,
    options, forwards, exchange-traded futures, other derivatives,
    commodities and foreign exchange products;
    Securities clearance, settlement financing services and prime
    brokerage;
    Private equity and other principal investing activities;
    Proprietary trading of securities, derivatives and loans;
    Banking, trust, and lending services, including deposit-taking,
    consumer and commercial lending, including mortgage loans, and
    related services;
    Insurance and annuities sales; and
    Research services on a global basis  Bank of
    America Acquisition
   58




---



##### Table of Contents



Basis of
    Presentation
    non-U.S. subsidiaries non-U.S. subsidiaries.
       59




---



##### Table of Contents



Discontinued
    Operations
      Consolidation
    Accounting Policies
      Consolidation of All Majority-Owned Subsidiaries, Accounting
    for Limited Partnership Investments The
    Equity Method of Accounting for Investments in Common Stock
  and/or Consolidation of Variable Interest Entities and/or
   60




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##### Table of Contents



Accounting for Transfers and Servicing of Financial Assets
    and Extinguishment of Liabilities
  Securitization
    Activities
    
    The transferred assets have been legally isolated from the
    transferor even in bankruptcy or other receivership;
    The transferee has the right to pledge or exchange the assets it
    received, or if the entity is a QSPE, the beneficial interest
    holders have the right to pledge or exchange their beneficial
    interests; and
    The transferor does not maintain effective control over the
    transferred assets (e.g. the ability to unilaterally cause the
    holder to return specific transferred assets).  Revenue
    Recognition
           61




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##### Table of Contents



Use of
    Estimates
    
    Valuations of assets and liabilities requiring fair value
    estimates;
    The allowance for credit losses;
    Determination of other-than-temporary impairments for
    available-for-sale investment securities;
    The outcome of litigation;
    Assumptions and cash flow projections used in determining
    whether VIEs should be consolidated and the determination of the
    qualifying status of QSPEs;
    The realization of deferred taxes and the recognition and
    measurement of uncertain tax positions;
    The carrying amount of goodwill and other intangible assets;
    The amortization period of intangible assets with definite lives;
    Incentive-based compensation accruals and valuation of
    share-based payment compensation arrangements; and
    Other matters that affect the reported amounts and disclosure of
    contingencies in the financial statements.    Fair
    Value Measurement
  Accounting for
    Certain Investments in Debt and Equity Securities Accounting for Derivative Instruments
    and Hedging Activities Fair Value Option for Financial
    Assets and Liabilities
  Fair Value Measurements No. 02-3, Issues Involved in Accounting for Derivative Contracts Held
    for Trading Purposes and Contracts Involved in Energy Trading
    and Risk Management Activities (EITF 02-3),
 62




---



##### Table of Contents



and/or
  EITF 02-3. EITF 02-3, EITF 02-3 EITF 02-3 and/or
    Liquidity
    Counterparty
    Credit Risk
     63




---



##### Table of Contents



Legal
    Reserves
    Income
    Taxes
  Accounting for Income
    Taxes
  Accounting for Uncertainty in Income Taxes
    Goodwill
    and Intangibles
    Employee
    Stock Options
   64




---



##### Table of Contents



Balance
    Sheet
  Cash and
    Cash Equivalents
    Cash and
    Securities Segregated for Regulatory Purposes or Deposited with
    Clearing Organizations
  and/or and/or
  Securities
    Financing Transactions
      and/or
     65




---



##### Table of Contents



Rule 15c3-3
  and/or
      Trading
    Assets and Liabilities
      Derivatives
   66




---



##### Table of Contents



net-by-counterparty
        1.
    Merrill Lynch issued debt in a variety of maturities and
    currencies to achieve the lowest cost financing possible. In
    addition, Merrill Lynchs regulated bank entities accept
    time deposits of varying rates and maturities. Merrill Lynch
    enters into derivative transactions to hedge these liabilities.
    Derivatives used most frequently include swap agreements that:  
    Convert fixed-rate interest payments into variable-rate interest
    payments;
    Change the underlying interest rate basis or reset
    frequency; and
    Change the settlement currency of a debt instrument.  2.
    Merrill Lynch entered into hedges on marketable investment
    securities to manage the interest rate risk, currency risk, and
    net duration of its investment portfolios. As of
    December 26, 2008 these hedges had been discontinued.3.
    Merrill Lynch has fair value hedges of long-term fixed rate
    resale and repurchase agreements to manage the interest rate
    risk of these assets and liabilities. Subsequent to the adoption
    of SFAS No. 159, Merrill Lynch elects to account for
    these instruments on a fair value basis rather than apply hedge
    accounting.4.
    Merrill Lynch uses foreign-exchange forward contracts,
    foreign-exchange options, currency swaps, and
    foreign-currency-denominated debt to hedge its net investments
    in foreign operations. These derivatives and cash instruments
    are used to mitigate the impact of changes in exchange rates.5.
    Merrill Lynch enters into futures, swaps, options and forward
    contracts to manage the price risk of certain commodity
    inventory.      1.
    A hedge of the fair value of a recognized asset or liability
    (fair value hedge). Changes in the fair value of
    derivatives that are designated and qualify as fair value hedges
    of interest rate risk, along with the gain or loss on the hedged
    asset or liability that is attributable to the hedged risk, are
    recorded in current period earnings as interest revenue or
    expense. Changes in the fair value of derivatives that are
    designated and qualify as fair value hedges of commodity price
    risk, along with 67




---



##### Table of Contents



the gain or loss on the hedged asset or liability that is
    attributable to the hedged risk, are recorded in current period
    earnings in principal transactions.  2.
    A hedge of the variability of cash flows to be received or paid
    related to a recognized asset or liability (cash
    flow hedge). Changes in the fair value of derivatives that
    are designated and qualify as effective cash flow hedges are
    recorded in accumulated other comprehensive loss until earnings
    are affected by the variability of cash flows of the hedged
    asset or liability (e.g., when periodic interest accruals on a
    variable-rate asset or liability are recorded in earnings).3.
    A hedge of a net investment in a foreign operation. Changes in
    the fair value of derivatives that are designated and qualify as
    hedges of a net investment in a foreign operation are recorded
    in the foreign currency translation adjustment account within
    accumulated other comprehensive loss. Changes in the fair value
    of the hedging instruments that are associated with the
    difference between the spot translation rate and the forward
    translation rate are recorded in current period earnings in
    other revenues.        non-U.S. dollar non-U.S. dollar
 68




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##### Table of Contents



Netting
    of Derivative Contracts
  Offsetting Amounts Related to Certain
    Contracts
  Derivatives
    that Contain a Significant Financing Element
    Investment
    Securities
    Marketable
    Investments
          
    Identifying securities with indicators of possible impairment;
    Analyzing individual securities with fair value less than
    amortized cost for specific factors including:  
    An adverse change in cash flows
    The estimated length of time to recover from fair value to
    amortized cost 69




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##### Table of Contents




    The severity and duration of the fair value decline from
    amortized cost
    Deterioration in the financial condition of the issuer;  
    Discussing evidential matter, including an evaluation of the
    factors that could cause individual securities to have an
    other-than-temporary impairment;
    Determining whether management intends to hold the security
    through to recovery. Absent other indicators of possible
    impairment, to the extent that Merrill Lynch has the ability and
    intent to hold the securities, no impairment charge will be
    recognized; and
    Documenting the analysis and conclusions.  Non-Qualifying
    Investments
    and/or Investment Companies
    The Equity Method of Accounting for Investments
    in Common Stock
  SFAS 115-1 SFAS 124-1, The Meaning of Other-Than-Temporary Impairment and Its
    Application to Certain Investments
  Loans,
    Notes and Mortgages, Net
     70




---



##### Table of Contents



Other
    Receivables and Payables
  Customer
    Receivables and Payables
    Brokers
    and Dealers Receivables and Payables
   71




---



##### Table of Contents



Interest
    and Other Receivables and Payables
    Equipment
    and Facilities
          Goodwill
  Goodwill and Other
    Intangible Assets
  Intangible
    Assets
  Accounting for the Impairment or
    Disposal of Long-Lived Assets
  Other
    Assets
   72




---



##### Table of Contents



Deposits
    Short-
    and Long-Term Borrowings
        Stock-Based
    Compensation
  Share-Based
    Payment
 73




---



##### Table of Contents



New
    Accounting Pronouncements
  EITF 99-20-1, Amendments to the Impairment Guidance of EITF Issue
    No. 99-20 EITF 99-20-1), EITF 99-20-1 EITF 99-20, Recognition of Interest Income and Impairment on Purchased
    Beneficial Interests and Beneficial Interests That Continue to
    Be Held by a Transferor in Securitized Financial Assets, EITF 99-20-1 EITF 99-20-1 EITF 99-20-1
  FAS 140-4 Disclosures by Public Entities
    (Enterprises) about Transfers of Financial Assets and Interests
    in Variable Interest Entities FAS 140-4 FAS 140-4
  No. 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset Is Not Active FAS 157-3). FAS 157-3 FAS 157-3 FAS 157-3
  FAS 133-1 FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees:
    An Amendment of FASB Statement No. 133 and FASB
    Interpretation No. 45; and Clarification of the Effective
    Date of FASB Statement No. 161 FAS 133-1 FIN 45-4), FAS 133-1 FIN 45-4 FAS 133-1 FIN 45-4 Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others FAS 133-1 FIN 45-4
 74




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##### Table of Contents



14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1), Accounting for
    Convertible Debt and Debt Issued with Stock Purchase
    Warrants 14-1 14-1 ® 14-1
  Disclosure about Derivative Instruments and Hedging
    Activities, an Amendment of FASB Statement No. 133
  FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase
    Financing Transactions FAS 140-3). FAS 140-3, FAS 140-3 FAS 140-3
  Noncontrolling Interests in Consolidated Financial
    Statements-an amendment of ARB No. 51
 75




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##### Table of Contents



Business Combinations
  No. FIN 39-1, Amendment of FASB Interpretation No. 39 FIN 39-1). FIN 39-1 FIN 39-1 FIN 39-1 FIN 39-1
  Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans, an amendment of FASB Statements
    No. 87, 88, 106 and 132R
   76




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##### Table of Contents



Note 2.  Segment and Geographic Information  Segment
    Information
          
    Revenues and expenses are assigned to segments where directly
    attributable;
    Principal transactions, net interest and investment banking
    revenues and related costs resulting from the client activities
    of GWM are allocated among GMI and GWM based on production
    credits, share counts, trade counts, and other measures that
    estimate relative value;
    Interest (cost of carry) is allocated by charging each segment
    based on its capital usage and Merrill Lynchs blended cost
    of capital;
    Merrill Lynch has revenue and expense sharing agreements for
    joint activities between segments, and the results of each
    segment reflect the
    agreed-upon
    apportionment of revenues and expenses associated with these
    activities; and
    Residual expenses (i.e. those related to overhead and support
    units) are attributed to segments based on specific
    methodologies (e.g. headcount, square footage, intersegment
    agreements). 77




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##### Table of Contents



(dollars in millions)GMI

GWM

MLIM(1)

Corporate(2)

Total2008Non-interest revenues

$
(25,416
)

$
10,464


$
-


$
(1,675
)

$
(16,627
)Net interest
    (loss)/profit(3)


(1,044
)


2,314



-



2,764



4,034Net revenues


(26,460
)


12,778



-



1,089



(12,593
)Non-interest
    expenses(4)


15,084



10,432



-



3,722



29,238Pre-tax (loss)/earnings from continuing
    operations(5)

$
(41,544
)

$
2,346


$
-


$
(2,633
)

$
(41,831
)Year-end total assets

$
568,868


$
97,849


$
-


$
826


$
667,5432007Non-interest revenues

$
(4,950
)

$
11,719


$
-


$
(1,068
)

$
5,701Net interest
    profit(3)


2,282



2,302



-



965



5,549Net revenues


(2,668
)


14,021



-



(103
)


11,250Non-interest expenses


13,677



10,391



-



13



24,081Pre-tax (loss)/earnings from continuing
    operations(5)

$
(16,345
)

$
3,630


$
-


$
(116
)

$
(12,831
)Year-end total
    assets(6)

$
920,388


$
99,196


$
-


$
466


$
1,020,0502006Non-interest revenues

$
15,947


$
9,738


$
1,867


$
2,010


$
29,562Net interest
    profit/(loss)(3)


2,358



2,103



33



(275
)


4,219Net revenues


18,305



11,841



1,900



1,735



33,781Non-interest expenses


13,013



9,551



1,263



144



23,971Pre-tax earnings from continuing
    operations(5)

$
5,292


$
2,290


$
637


$
1,591


$
9,810Year-end total
    assets(6)

$
747,737


$
93,017


$
-


$
545


$
841,299  (1)
    
    MLIM ceased to exist in
    connection with the BlackRock Merger in September
    2006. (2)
    
    Results for 2008 and 2007
    include an allocation of non-interest revenues (principal
    transactions) and net interest profit among the business and
    corporate segments associated with certain hybrid financing
    instruments accounted for under SFAS No. 159. Results
    for 2006 include $2.0 billion of non-interest revenues and
    $202 million of non-interest expenses related to the
    closing of the BlackRock
    merger.(3)
    
    Management views interest and
    dividend income net of interest expense in evaluating
    results.(4)
    
    Includes restructuring charges
    recorded in 2008 of $331 million for GMI and
    $155 million for GWM. See Note 17 for further
    information.(5)
    
    See Note 16 for further
    information on discontinued operations.(6)
    
    Amounts have been restated to
    properly reflect goodwill balances in the respective business
    segments. Such amounts were previously included in Corporate.
    For 2007 and 2006, such amounts were $3,161 million in GMI
    and $1,930 million in GWM and $2,045 million in GMI
    and $357 million in GWM, respectively.  Geographic
    Information
    
    United States;
    Europe, Middle East, and Africa (EMEA);
    Pacific Rim;
    Latin America; and
    Canada. 78




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##### Table of Contents




    Revenues and expenses are generally recorded based on the
    location of the employee generating the revenue or incurring the
    expense without regard to legal entity;
    Pre-tax earnings or loss from continuing operations include the
    allocation of certain shared expenses among regions; and
    Intercompany transfers are based primarily on service agreements.    (dollars in millions)2008

2007

2006(2)Net revenuesEurope, Middle East, and
    Africa(1)

$
(2,390
)

$
5,973


$
6,896Pacific Rim


69



5,065



3,703Latin America


1,237



1,401



1,009Canada


161



430



386Total Non-U.S.


(923
)


12,869



11,994United
    States(3)(5)(6)


(11,670
)


(1,619
)


21,787Total net revenues

$
(12,593
)

$
11,250


$
33,781Pre-tax earnings from continuing
    operations(4)(7)Europe, Middle East, and
    Africa(1)

$
(6,735
)

$
1,211


$
2,091Pacific Rim


(2,559
)


2,403



1,204Latin America


340



632



357Canada


5



235



181Total Non-U.S.


(8,949
)


4,481



3,833United
    States(3)(5)(6)


(32,882
)


(17,312
)


5,977Total pre-tax (loss) earnings from continuing
    operations(7)

$
(41,831
)

$
(12,831
)

$
9,810  (1)
    
    The EMEA 2008 results include
    net losses of $4.3 billion primarily related to residential
    and commercial mortgage-related exposures. (2)
    
    The 2006 results include net
    revenues earned by MLIM of $1.9 billion, which include
    non-U.S. net
    revenues of $1.0 billion.(3)
    
    Corporate net revenues and
    adjustments are reflected in the U.S. region.(4)
    
    The 2006 pre-tax earnings from
    continuing operations include the impact of the
    $1.8 billion of one-time compensation expenses incurred in
    2006. These costs have been allocated to each of the
    regions.(5)
    
    The U.S. 2008 results include
    net losses of $21.5 billion, primarily related to credit
    valuation adjustments related to hedges with financial
    guarantors, losses from ABS CDOs, losses from residential and
    commercial mortgage-related exposures, other than temporary
    impairment charges recognizedin the investment
    portfolio of Merrill Lynchs U.S. banks, and losses on
    leveraged finance loans and commitments. These losses were
    partially offset by gains resulting from the widening of Merrill
    Lynchs credit spreads on the carrying value of certain
    long-term liabilities and a net gain related to the sale of
    Merrill Lynchs ownership stake in Bloomberg L.P. (see
    Note 5).(6)
    
    The U.S. 2007 results include
    net losses of $23.2 billion related to ABS CDOs, U.S.
    sub-prime residential mortgages and securities, and credit
    valuation adjustments related to hedges with financial
    guarantors on U.S. ABS CDOs.(7)
    
    See Note 16 for further
    information on discontinued operations. 79




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##### Table of Contents



Note 3.  Fair Value  Fair
    Value Measurements
  Fair
    Value Hierarchy
      Level 1.
    Financial assets and liabilities whose values are based on
    unadjusted quoted prices for identical assets or liabilities in
    an active market that Merrill Lynch has the ability to access
    (examples include active exchange-traded equity securities,
    exchange-traded derivatives, most U.S. Government and
    agency securities, and certain other sovereign government
    obligations).Level 2.
    Financial assets and liabilities whose values are based on
    quoted prices in markets that are not active or model inputs
    that are observable either directly or indirectly for
    substantially the full term of the asset or liability.
    Level 2 inputs include the following:  a)
    Quoted prices for similar assets or liabilities in active
    markets (for example, restricted stock);  b)
    Quoted prices for identical or similar assets or liabilities in
    non-active markets (examples include corporate and municipal
    bonds, which trade infrequently);  c)
    Pricing models whose inputs are observable for substantially the
    full term of the asset or liability (examples include most
    over-the-counter derivatives, including interest rate and
    currency swaps); and  d)
    Pricing models whose inputs are derived principally from or
    corroborated by observable market data through correlation or
    other means for substantially the full term of the asset or
    liability (examples include certain residential and commercial
    mortgage-related assets, including loans, securities and
    derivatives).  Level 3.
    Financial assets and liabilities whose values are based on
    prices or valuation techniques that require inputs that are both
    unobservable and significant to the overall fair value
    measurement. These inputs reflect managements own
    assumptions about the assumptions a market participant would use
    in pricing the asset or liability (examples include certain
    private equity investments, certain residential and commercial
    mortgage-related assets (including loans, securities and
    derivatives), and long-dated or complex derivatives (including
    certain equity and currency derivatives and long-dated options
    on gas and power)).     80




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##### Table of Contents



Recurring
    Fair Value
    (dollars in millions)Fair Value Measurements on a Recurring Basisas of December 26, 2008NettingLevel 1

Level 2

Level 3

Adj(1)

TotalAssets:Securities segregated for regulatory purposes or deposited with
    clearing organizations

$
1,421


$
10,156


$
-



-


$
11,577Receivables under resale agreements


-



62,146



-



-



62,146Receivables under securities borrowed transactions


-



853



-



-



853Trading assets, excluding derivative contracts


30,106



33,902



22,120



-



86,128Derivative contracts


8,538



1,239,225



37,325



(1,195,611
)


89,477Investment securities


2,280



29,254



3,279



-



34,813Securities received as collateral


9,430



2,228



-



-



11,658Loans, notes and mortgages


-



690



359



-



1,049Other
    assets(2)


-



8,046



-



-



8,046Liabilities:Payables under repurchase agreements

$
-


$
32,910


$
-



-


$
32,910Short-term borrowings


-



3,387



-



-



3,387Trading liabilities, excluding derivative contracts


14,098



4,010



-



-



18,108Derivative contracts


8,438



1,254,158



35,018



(1,226,251
)


71,363Obligation to return securities received as collateral


9,430



2,228



-



-



11,658Long-term
    borrowings(3)


-



41,575



7,480



-



49,055Other payables  interest and
    other(2)


10



741



-



(79
)


672  (1)
    
    Represents counterparty and
    cash collateral netting. (2)
    
    Primarily represents certain
    derivatives used for non-trading purposes.(3)
    
    Includes bifurcated embedded
    derivatives carried at fair value.    and/or
    and/or
 81




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##### Table of Contents



and/or
  (dollars in millions)Fair Value Measurements on a Recurring Basisas of December 28, 2007NettingLevel 1

Level 2

Level 3

Adj(1)

TotalAssets:Securities segregated for regulatory purposes or deposited with
    clearing organizations

$
1,478


$
5,595


$
84


$
-


$
7,157Receivables under resale agreements


-



100,214



-



-



100,214Trading assets, excluding derivative contracts


71,038



81,169



9,773



-



161,980Derivative contracts


4,916



522,014



26,038



(480,279
)


72,689Investment securities


2,240



53,403



5,491



-



61,134Securities received as collateral


42,451



2,794



-



-



45,245Loans, notes and mortgages


-



1,145



63



-



1,208Other
    assets(2)


7



1,739



-



(24
)


1,722Liabilities:Payables under repurchase agreements

$
-


$
89,733


$
-


$
-


$
89,733Trading liabilities, excluding derivative contracts


43,609



6,685



-



-



50,294Derivative contracts


5,562



526,780



35,107



(494,155
)


73,294Obligation to return securities received as collateral


42,451



2,794



-



-



45,245Long-term
    borrowings(3)


-



75,984



4,765



-



80,749Other payables  interest and
    other(2)


2



287



-



(13
)


276  (1)
    
    Represents counterparty and
    cash collateral netting. (2)
    
    Primarily represents certain
    derivatives used for non-trading purposes.(3)
    
    Includes bifurcated embedded
    derivatives carried at fair value.  Level 3
    Assets and Liabilities as of December 28,
    2007
    and/or
    and/or
   82




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##### Table of Contents



(dollars in millions)Level 3 Financial Assets and LiabilitiesYear Ended December 26, 2008Total Realized and Unrealized Gains

Total Realized and

Purchases,or (Losses) included in Income

Unrealized Gains

IssuancesBeginning

Principal

Other



or (Losses)

and

Transfers

EndingBalance

Transactions

Revenue

Interest

included in Income

Settlements

in (out)

BalanceAssets:Securities segregated for regulatory purposes or deposited with
    clearing organizations

$
84


$
-


$
-


$
1


$
1


$
(79
)

$
(6
)

$
-Trading assets


9,773



(5,460
)


-



122



(5,338
)


10,114



7,571



22,120Derivative contracts, net


(9,069
)


(11,955
)


-



5



(11,950
)


26,187



(2,861
)


2,307Investment securities


5,491



(1,021
)


(1,535
)


-



(2,556
)


426



(82
)


3,279Loans, notes and mortgages


63



-



(105
)


(8
)


(113
)


399



10



359Liabilities:Long-term borrowings

$
4,765


$
5,582


$
285


$
-


$
5,867


$
1,198


$
7,384


$
7,480           (dollars in millions)Level 3 Financial Assets and LiabilitiesYear Ended December 28, 2007Total Realized and Unrealized Gains

Total Realized and

Purchases,or (Losses) included in Income

Unrealized Gains

IssuancesBeginning

Principal

Other



or (Losses)

and

Transfers

EndingBalance

Transactions

Revenue

Interest

included in Income

Settlements

in (out)

BalanceAssets:Securities segregated for regulatory purposes or deposited with
    clearing organizations

$
-


$
(5
)

$
-


$
1


$
(4
)

$
-


$
88


$
84Trading assets


2,021



(4,180
)


-



46



(4,134
)


2,945



8,941



9,773Derivative contracts, net


(2,030
)


(7,687
)


4



25



(7,658
)


465



154



(9,069
)Investment securities


5,117



(2,412
)


518



8



(1,886
)


3,000



(740
)


5,491Loans, notes and mortgages


7



-



(18
)


-



(18
)


(5
)


79



63Liabilities:Long-term borrowings

$
-


$
524


$
7


$
-


$
531


$
2,203


$
3,093


$
4,765  83




---



##### Table of Contents



(dollars in millions)Unrealized Gains or (Losses) for Level 3 Assets and
    Liabilities Still HeldYear Ended December 26, 2008

Year Ended December 28, 2007Principal

Other





Principal

OtherTransactions

Revenue

Interest

Total

Transactions

Revenue

Interest

TotalAssets:Securities segregated for regulatory purposes or deposited with
    clearing organizations

$
-


$
-


$
1


$
1


$
(5
)

$
-


$
1


$
(4
)Trading assets


(4,945
)


-



83



(4,862
)


(4,205
)


-



4



(4,201
)Derivative contracts, net


114



-



5



119



(7,826
)


(2
)


25



(7,803
)Investment securities


(964
)


(1,523
)


-



(2,487
)


(2,412
)


428



8



(1,976
)Loans, notes and mortgages


-



(94
)


(8
)


(102
)


-



1



-



1Liabilities:Long-term borrowings

$
5,221


$
285


$
-


$
5,506


$
524


$
7


$
-


$
531       Non-recurring
    Fair Value
    (dollars in millions)LossesNon-Recurring Basis
    as of December 26, 2008

Year EndedLevel 1

Level 2

Level 3

Total

Dec. 26, 2008Assets:Loans, notes and mortgages

$
-


$
4,386


$
6,727


$
11,113


$
(6,555
)Goodwill


-



-



-



-



(2,300
)Liabilities:Other liabilities

$
-


$
1,258


$
67


$
1,325


$
(653
)     (dollars in millions)LossesNon-Recurring Basis as of December 28, 2007

Year EndedLevel 1

Level 2

Level 3

Total

Dec. 28, 2007Assets:Loans, notes and mortgages

$
-


$
32,594


$
7,157


$
39,751


$
(1,304
)Liabilities:Other liabilities

$
-


$
666


$
-


$
666


$
(502
)   and/or
 84




---



##### Table of Contents



Fair
    Value Option
      (dollars in millions)Changes in Fair Value for the Year Ended

Changes in Fair Value for the Year EndedDec. 26, 2008, for Items Measured at Fair

Dec. 28, 2007, for Items Measured at FairValue Pursuant to Fair Value Option

Value Pursuant to Fair Value OptionGains/

Gains/

Total

Gains/



Total(losses)

(losses)

Changes

(losses)

Gains

ChangesPrincipal

Other

in Fair

Principal

Other

in FairTransactions

Revenues

Value

Transactions

Revenues

ValueAssets:Receivables under resale agreements

$
190


$
-


$
190


$
124


$
-


$
124Investment securities


(1,637
)


(923
)


(2,560
)


234



43



277Loans, notes and mortgages


(87
)


(11
)


(98
)


(2
)


73



71Liabilities:Payables under repurchase agreements

$
(54
)

$
-


$
(54
)

$
(7
)

$
-


$
(7
)Short-term borrowings


(438
)


-



(438
)


-



-



-Long-term
    borrowings(1)


15,938



1,709



17,647



3,857



1,182



5,039  (1)
    
    Other revenues primarily
    represent fair value changes on non-recourse long-term
    borrowings issued by consolidated SPEs.    Resale
    and repurchase agreements:
   85




---



##### Table of Contents



Securities
    borrowed transactions:
    Investment
    securities:
    Loans,
    notes and mortgages:
      Short-term
    and long-term borrowings:
       86




---



##### Table of Contents



(dollars in millions)Fair Value

Principalat

AmountDecember 26,

Due Upon2008

Maturity

DifferenceAssets:Receivables under resale agreements

$
62,146


$
61,466


$
680Receivables under securities borrowed transactions


853



853



-Loans, notes and mortgages


979



1,326



(347
)Liabilities:Long-term
    borrowings(1)

$
49,521


$
62,244


$
(12,723
)  (1)
    
    The majority of the difference
    relates to the impact of the widening of Merrill Lynchs
    credit spreads, the change in fair value of non-recourse debt,
    and zero coupon notes issued at a substantial discount from the
    principal amount.  (dollars in millions)Fair Value

Principalat

AmountDecember 28,

Due Upon2007

Maturity

DifferenceAssets:Receivables under resale agreements

$
100,214


$
100,090


$
124Loans, notes and
    mortgages(1)


1,149



1,355



(206
)Liabilities:Long-term
    borrowings(2)

$
76,334


$
81,681


$
(5,347
)  (1)
    
    The majority of the difference
    relates to loans purchased at a substantial discount from the
    principal amount.(2)
    
    The majority of the difference
    relates to the impact of the widening of Merrill Lynchs
    credit spreads, the change in fair value of non-recourse debt,
    and zero coupon notes issued at a substantial discount from the
    principal amount.  Trading
    Risk Management
   
    A risk governance structure that defined the oversight process
    and its components;
    A regular review of the risk management process by the Audit
    Committee of the Board of Directors as well as a regular review
    of credit, market and liquidity risks and processes by the
    Finance Committee of the Board of Directors;
    Clearly defined risk management policies and procedures;
    Communication and coordination among the businesses, executive
    management, and risk functions while maintaining strict
    segregation of responsibilities, controls, and
    oversight; and
    Clearly articulated risk tolerance levels, which were consistent
    with business strategy, capital structure, and current and
    anticipated market conditions.    Market
    Risk
   87




---



##### Table of Contents



Interest
    Rate Risk
      Currency
    Risk
    Equity
    Price Risk
    Credit
    Spread Risk
   88




---



##### Table of Contents



Commodity
    Price and Other Risks
  and/or and/or
  Counterparty
    Credit Risk
          Concentrations
    of Credit Risk
    Concentration
    of Risk to Financial Guarantors
     89




---



##### Table of Contents



Concentration
    of Risk to the U.S. Government and its Agencies
    Concentration
    of Risk to the Mortgage Markets
   
    Net exposures of $34.8 billion in U.S. Prime
    residential mortgage-related positions and $3.6 billion in
    other residential mortgage-related positions, excluding Merrill
    Lynchs U.S. banks investment securities
    portfolio;
    Net exposure of $10.4 billion in Merrill Lynchs
    U.S. banks investment securities portfolio;
    Net exposure of $9.7 billion in commercial real estate
    related positions, excluding First Republic, and
    $3.1 billion in First Republic commercial real estate
    related positions; and
    Net exposure of $0.7 billion in U.S. super senior ABS
    CDOs.      Other
    Concentrations of Risk
   90




---



##### Table of Contents



Derivatives
    one-day
       91




---



##### Table of Contents



Note 4.  Securities Financing Transactions    non-U.S. governments Rule 15c3-3
      (dollars in millions)Dec. 26,

Dec. 28,2008

2007Trading asset categoryMortgages, mortgage-backed, and asset-backed securities

$
12,462


$
11,873Equities and convertible debentures


10,995



9,327Corporate debt and preferred stock


15,024



17,144U.S. Government and agencies


4,982



11,110Municipals and money markets


1,320



450Non-U.S.
    governments and agencies


587



2,461Total

$
45,370


$
52,365    92




---



##### Table of Contents



Note 5.  Investment Securities    
    SFAS No. 115 investments held by ML & Co.
    and certain of its non-broker-dealer entities, including Merrill
    Lynch banks. SFAS No. 115 investments consist of: 
    Debt securities, including debt held for investment and
    liquidity and collateral management purposes that are classified
    as available-for-sale, debt securities held for trading
    purposes, and debt securities that Merrill Lynch intends to hold
    until maturity;
    Marketable equity securities, which are generally classified as
    available-for-sale. 
    Non-qualifying investments are those that do not fall within the
    scope of SFAS No. 115. Non-qualifying investments
    consist principally of: 
    Equity investments, including investments in partnerships and
    joint ventures. Included in equity investments are investments
    accounted for under the equity method of accounting, which
    consist of investments in (i) partnerships and certain
    limited liability corporations where Merrill Lynch has more than
    minor influence (generally defined as greater than a three
    percent interest) and (ii) corporate entities where Merrill
    Lynch has the ability to exercise significant influence over the
    investee (generally defined as ownership and voting interest of
    20% to 50%). Also included in equity investments are private
    equity investments that Merrill Lynch holds for capital
    appreciation
    and/or
    current income and which are accounted for at fair value in
    accordance with the Investment Company Guide, as well as private
    equity investments accounted for at fair value under the fair
    value option election in SFAS No. 159. The carrying value
    of such private equity investments reflects expected exit values
    based upon market prices or other valuation methodologies,
    including discounted expected cash flows and market comparables
    of similar companies.
    Deferred compensation hedges, which are investments economically
    hedging deferred compensation liabilities and are accounted for
    at fair value.    (dollars in millions)2008

2007Investment securitiesAvailable-for-sale(1)

$
34,103


$
50,922Trading


1,745



5,015Held-to-maturity(2)


4,576



267Non-qualifying(3)Equity
    investments(4)


24,306



29,623Deferred compensation hedges


1,001



1,710Investments in trust preferred securities and other investments


431



438Total

$
66,162


$
87,975  93




---



##### Table of Contents



(1)
    
    At December 26, 2008 and
    December 28, 2007, includes $9.2 billion and
    $5.4 billion, respectively, of investment securities
    reported in cash and securities segregated for regulatory
    purposes or deposited with clearing organizations.(2)
    
    The 2008 balance primarily
    relates to notes issued by Bloomberg Inc. in connection with the
    sale of Merrill Lynchs 20% stake in Bloomberg
    L.P.(3)
    
    Non-qualifying for
    SFAS No. 115 purposes.(4)
    
    Includes Merrill Lynchs
    investment in BlackRock.     
    Whether there has been an adverse change in the estimated cash
    flows of the security;
    The period of time over which it is estimated that the fair
    value will increase from the current level to at least the
    amortized cost level, or until principal and interest is
    estimated to be received;
    The period of time a securitys fair value has been below
    amortized cost;
    The amount by which the securitys fair value is below
    amortized cost;
    The financial condition of the issuer; and
    Managements ability and intent to hold the security until
    fair value recovers or until the principal and interest is
    received.       94




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##### Table of Contents



(dollars in millions)December 26, 2008

December 28, 2007Cost/

Gross

Gross

Estimated

Cost/

Gross

Gross

EstimatedAmortized

Unrealized

Unrealized

Fair

Amortized

Unrealized

Unrealized

FairCost

Gains

Losses

Value

Cost

Gains

Losses

ValueAvailable-for-SaleMortgage-and asset-backed

$
42,142


$
19


$
(9,390
)

$
32,771


$
50,904


$
29


$
(2,384
)

$
48,549U.S. Government and agencies


712



2



-



714



322



-



-



322Corporate debt


343



-



(72
)


271



729



10



(18
)


721Other(1)


259



-



-



259



1,200



6



-



1,206Total debt securities


43,456



21



(9,462
)


34,015



53,155



45



(2,402
)


50,798Equity securities


93



17



(22
)


88



110



25



(11
)


124Total

$
43,549


$
38


$
(9,484
)

$
34,103


$
53,265


$
70


$
(2,413
)

$
50,922Held-to-MaturityCorporate debt
    and
    municipal(2)

$
4,560


$
-


$
-


$
4,560


$
254


$
-


$
-


$
254Mortgage-and asset-backed


16



-



-



16



13



-



-



13Total

$
4,576


$
-


$
-


$
4,576


$
267


$
-


$
-


$
267  (1)
    
    Includes investments in
    non-U.S. Government and agency securities and certificates of
    deposit.(2)
    
    Primarily relates to notes
    issued by Bloomberg Inc. in connection with the sale of Merrill
    Lynchs 20% ownership stake in Bloomberg, L.P.    (dollars in millions)Less than 1 Year

More than 1 Year

TotalEstimated

Unrealized

Estimated

Unrealized

Estimated

UnrealizedAsset category

Fair Value

Losses

Fair Value

Losses

Fair Value

LossesDecember 26, 2008Mortgage- and asset-backed

$
8,449


$
(4,132
)

$
22,291


$
(5,910
)

$
30,740


$
(10,042
)U.S. Government and agencies


3



-



-



-



3



-Corporate debt


2



(2
)


192



(78
)


194



(80
)Total debt securities


8,454



(4,134
)


22,483



(5,988
)


30,937



(10,122
)Equity securities


1



(2
)


55



(20
)


56



(22
)Total temporarily impaired securities

$
8,455


$
(4,136
)

$
22,538


$
(6,008
)

$
30,993


$
(10,144
)December 28, 2007Mortgage- and asset-backed

$
38,162


$
(2,159
)

$
7,912


$
(389
)

$
46,074


$
(2,548
)U.S. Government and agencies


2



-



-



-



2



-Corporate debt


182



(14
)


41



(5
)


223



(19
)Other(1)


201



-



-



-



201



-Total debt securities


38,547



(2,173
)


7,953



(394
)


46,500



(2,567
)Equity securities


64



(10
)


-



-



64



(10
)Total temporarily impaired securities

$
38,611


$
(2,183
)

$
7,953


$
(394
)

$
46,564


$
(2,577
)  (1)
    
    Includes investments in
    certificates of deposit.   95




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##### Table of Contents



(dollars in millions)2008

2007Security DescriptionAlt A

$
3,105


$
148Sub-prime


544



477Prime


275



17CDOs


288



285Total

$
4,212


$
927     (dollars in millions)Available-for-Sale

Held-to-MaturityEstimated



EstimatedAmortized

Fair

Amortized

FairCost

Value

Cost

ValueDue in one year or less

$
777


$
774


$
-


$
-Due after one year through five years


237



215



246



246Due after five years through ten years


235



192



1,314



1,314Due after ten years


65



63



3,000



3,0001,314



1,244



4,560



4,560Mortgage- and asset-backed securities


42,142



32,771



16



16Total(1)

$
43,456


$
34,015


$
4,576


$
4,576  (1)
    
    Expected maturities may differ
    from contractual maturities because borrowers may have the right
    to call or prepay obligations with or without prepayment
    penalties.    (dollars in millions)2008

2007

2006Proceeds

$
29,537


$
39,327


$
16,176Gross realized gains


33



224



160Gross realized losses


(28
)


(55
)


(161
)    96




---



##### Table of Contents



Equity
    Method Investments
    (dollars in millions)December 26, 2008

December 28, 2007Carrying

Ownership

Carrying

OwnershipAmount

Percentage

Amount

PercentageBlackRock
    Inc.(1)

$
8,000



50
%

$
7,964



50
%Bloomberg
    L.P.(2)


-



-



-



20Warburg Pincus Funds IX and X,
    L.P.(3)


651



7



560



7WCG Master
    Fund Ltd.(4)


998



31



1,234



60  (1)
    
    Carrying amount includes a 44%
    voting common equity interest and a non-voting preferred equity
    interest.(2)
    
    Ownership stake was sold in
    2008. Carrying amount at December 28, 2007 was zero as a
    result of dividends received in excess of cumulative equity
    method earnings and Merrill Lynchs initial
    investment.(3)
    
    Investment in private equity
    funds. Carrying value and ownership percentage as of
    December 28, 2007 only reflects Warburg Pincus Fund IX
    .(4)
    
    Investment in an alternative
    investment fund. Merrill Lynch does not consolidate this
    investment as its ownership percentage represents a non-voting
    interest.        (dollars in millions)2008(1)

2007(2)

2006(2)Revenues

$
6,513


$
11,725


$
6,013Operating income


761



4,726



2,331(Loss)/earnings before income taxes


(7
)


4,692



2,362Net (loss)/earnings


(308
)


4,107



2,161   (dollars in millions)2008

2007(2)Total assets

$
60,628


$
49,438Total liabilities


34,396



32,672Minority interest


869



603  (1)
    
    Results relating to the
    investment in Bloomberg L.P. reflect amounts through
    June 30, 2008, as the investment was sold on July 17,
    2008(2)
    
    Does not include summarized
    financial information for Warburg Pincus Fund X,
    L.P. 97




---



##### Table of Contents



Note 6.  Securitization Transactions and
    Transactions with Variable Interest Entities
    (VIEs)  FAS 140-4 FAS 140-4
  and/or
    
    Retaining or holding an interest in the VIE,
    Providing liquidity or other support to the VIE or directly to
    the investors in the VIE. This includes liquidity facilities,
    guarantees, and derivatives that absorb the risk of the assets
    in the VIE, including total return swaps and written credit
    default swaps,
    Servicing the assets in the VIE, and
    Acting as counterparty to derivatives that do not absorb the
    risk of the assets in the VIE. These derivatives include:
    interest rate derivatives, currency derivatives and derivatives
    that introduce risk into the VIE such as purchased credit
    default swap protection where the VIE takes credit risk
    (generally found in credit-linked note structures) or equity
    derivatives where the VIE takes equity risk (generally found in
    equity-linked note structures).      Primary Beneficiary
  Sponsor/Significant VIH (Non-securitization
    transactions)
  Securitization transactions ,
 98




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##### Table of Contents



Loan and
    Real Estate VIEs
  
    Merrill Lynch has involvement with VIEs that hold mortgage
    related loans or real estate. These VIEs include entities that
    are primarily designed to obtain exposure to mortgage related
    assets or invest in real estate for both clients and Merrill
    Lynch. Loan and real estate VIEs include 1) failed
    securitization transactions where residential and commercial
    mortgages are transferred to VIEs that do not meet QSPE
    conditions (typically as a result of derivatives entered into by
    the VIE that pertain to interests held by Merrill Lynch) and
    2) loan VIEs that hold mortgage loans where Merrill Lynch
    holds most or all of the issued financing but does not have
    voting control. Loan and real estate VIEs are reported in the
    Primary Beneficiary table and the Sponsor/Significant VIH table.
    In addition, many loan VIEs, specifically those related to
    residential and commercial mortgages, are securitization VIEs
    that meet the QSPE criteria in SFAS No. 140.
    Transactions where Merrill Lynch is the transferor of loans to a
    VIE or QSPE and accounts for the transaction as a sale are
    reflected in the Securitization tables of this Note.
    Merrill Lynch generally consolidates failed securitization VIEs
    where it retains the residual interests in the VIE and therefore
    absorbs the majority of the VIEs expected losses, gains or
    both. As a result of the illiquidity in the securitization
    markets, Merrill Lynch has been unable to sell certain
    securities, which has prohibited these VIEs from being
    considered QSPEs. Depending upon the liquidity in the
    securitization market, these transactions and future
    transactions could continue to fail QSPE status and may require
    consolidation and related disclosures. Given that these VIEs
    have been designed to meet the QSPE requirements, Merrill Lynch
    has no control over the assets held by these VIEs. These assets
    have been pledged to the noteholders in the VIEs, and these
    assets are included in the firm-owned assets pledged balance
    reported in Note 4. In most instances, the beneficial
    interest holders in these VIEs have no recourse to the general
    credit of Merrill Lynch; rather their investments are paid
    exclusively from the assets in the VIE. Securitization VIEs that
    hold loan assets are typically financed through the issuance of
    several classes of debt (i.e., tranches) with ratings that range
    from AAA to unrated residuals.
    Loan VIEs that hold mortgage loans and are not securitization
    VIEs are typically wholly owned or have a small amount of
    financing provided by investors (which may include the
    investment manager) through different classes of loans or
    securities. Where Merrill Lynch consolidates these VIEs, Merrill
    Lynch has the ability to use the assets to fund operations.
    Real estate VIEs that hold property are typically financed
    through the issuance of one or more classes of loans or
    securities (e.g. senior, junior, and mezzanine) and an equity
    tranche. The investors have recourse only to the real estate
    assets held by these VIEs. In most real estate entities, the
    equity tranche is considered sufficient to finance the
    activities of the entity, and the entity would meet the
    conditions to be considered a VRE. The real estate entities
    included in this disclosure are VIEs because generally they do
    not have sufficient equity to finance their activities.  Guaranteed
    and Other Funds
  
    Merrill Lynch sponsors funds that provide a guaranteed return to
    investors at the maturity of the VIE. This guarantee may include
    a guarantee of the return of an initial investment or of the
    initial investment plus an agreed upon return depending on the
    terms of the VIE. Investors in certain of these VIEs have
    recourse to Merrill Lynch to the extent that the value of the
    assets held by the VIEs at maturity is less than the guaranteed
    amount. In some instances, Merrill Lynch is the primary
    beneficiary and must consolidate the fund. In instances where
    Merrill Lynch is not the primary beneficiary, the guarantees
    related to these funds are further discussed in Note 11.
    These VIEs are typically financed by a single tranche of limited
    life preferred shares or similar debt instruments that pass
    through the economics of the underlying assets and derivative
    contracts. 99




---



##### Table of Contents




    Merrill Lynch has made certain investments in alternative
    investment fund structures that are VIEs. Merrill Lynch may be
    the primary beneficiary of these funds as a result of a majority
    investment in the vehicles. In instances where Merrill Lynch is
    not the primary beneficiary of these funds, it is still
    considered to be the sponsor and generally has continued
    involvement through derivatives with these VIEs. These VIEs are
    reflected in the Sponsor/Significant VIH table. These VIEs are
    typically financed by a single tranche of limited life preferred
    shares or similar debt instruments that pass through the
    economics of the underlying assets and derivative contracts.
    Merrill Lynch had established two asset-backed commercial paper
    conduits (Conduits), one of which remained active
    until July 2008. Merrill Lynch had variable interests in these
    Conduits in the form of 1) a liquidity facility that
    protected commercial paper holders against short term changes in
    the fair value of the assets held by the Conduit in the event of
    a disruption in the commercial paper market, and 2) a
    credit facility to the Conduit that protected commercial paper
    investors against credit losses for up to a certain percentage
    of the portfolio of assets held by the Conduit. Merrill Lynch
    also provided a liquidity facility to a third Conduit that it
    did not establish and Merrill Lynch had purchased all the assets
    from this Conduit at December 28, 2007. The remaining
    Conduit became inactive in July 2008, as Merrill Lynch purchased
    the assets of this Conduit. Merrill Lynch does not intend to
    utilize this or the other Conduits discussed above in the
    future. At December 26, 2008, Merrill Lynch had no
    liquidity and credit facilities outstanding or maximum exposure
    to loss as these Conduits are no longer active.    Credit-Linked
    Note and Other VIEs
  and/or
    Collateralized
    Debt Obligations/Collateralized Loan Obligations
    (CDO/CLOs)
   100




---



##### Table of Contents



Repackaging
    Transactions
    Municipal
    Bond Securitizations
      and/or
  Variable
    Interest Entities
     101




---



##### Table of Contents



FAS 140-4
  (dollars in millions)Liabilities afterConsolidated VIEs



Assets after intercompany eliminations

intercompany

Recourse toType of VIE

Total Assets

Unrestricted

Restricted(1)

eliminations

Merrill
    Lynch(2)December 26, 2008Loan and real estate
    VIEs(3)

$
9,080


$
2,475


$
2,680


$
4,769


$
3,479Guaranteed and other
    funds(4)


1,370



998



119



227



113Credit-linked note and other
    VIEs(5)


746



226



-



48



48CDOs/CLOs(6)


693



-



360



489



237  (1)
    
    Assets are considered
    restricted when they cannot be freely pledged or sold by Merrill
    Lynch.(2)
    
    This column reflects the
    extent, if any, to which investors have recourse to Merrill
    Lynch beyond the assets held by the VIE and assumes a total loss
    of the assets held by the VIE.(3)
    
    For Loan and real estate VIEs,
    assets are primarily recorded in Loans, notes and mortgages.
    Assets related to VIEs that hold real estate investments are
    included in Other assets. Liabilities are primarily recorded in
    Short-term borrowings. Recourse relates to derivative contracts
    entered into with Merrill Lynch that are in a liability
    position.(4)
    
    For Guaranteed and other
    fund VIEs, the assets are reflected in Investment
    securities and Trading asset  corporate debt and
    preferred stock, and liabilities are reflected in Long- term
    borrowings. Recourse relates to Merrill Lynchs maximum
    exposure to loss associated with derivative contracts that
    provide a minimum return to investors.(5)
    
    For Credit-linked note and
    other VIEs, the assets are reflected in Trading
    assets  corporate debt and preferred stock and
    liabilities are recorded in Long-term borrowings.(6)
    
    For CDOs/CLOs, assets are
    recorded in Trading assets  mortgage, mortgage-backed
    and asset-backed and Loans, notes and mortgages and liabilities
    are recorded in Long-term borrowings. Certain consolidated CDOs
    are established to provide full recourse secured financing to
    Merrill Lynch. The recourse associated with CDOs/CLOs relates to
    these consolidated transactions.      (dollars in millions)Assets on Merrill

Liabilities on

MaximumSponsor/Significant VIH



Lynchs Balance

Merrill Lynchs

ExposureType of VIE

Size of
    VIE(1)

Sheet(2)

Balance
    Sheet(2)

to
    Loss(3)December 26, 2008Loan and real estate
    VIEs(4)

$
1,174


$
560


$
61


$
560Guaranteed and other
    funds(5)


1,845



271



537



271Credit-linked note and other
    VIEs(6)


11,372



5,169



857



8,815  102




---



##### Table of Contents



(1)
    
    Size generally reflects the
    estimated principal of securities issued by the VIE or the
    principal of the underlying assets held by the VIE and serves to
    provide information on the relative size of the VIE as compared
    to Merrill Lynchs involvement with the VIE.(2)
    
    Assets and Liabilities on
    Merrill Lynchs Balance Sheet reflect the effect of
    FIN 39 balance sheet netting, if applicable.(3)
    
    The maximum exposure to loss
    includes: the assets held by Merrill Lynch - including the value
    of derivatives that are in an asset position, and the notional
    amount of liquidity and other support provided to VIEs generally
    through total return swaps over the assets of the VIE. The
    maximum exposure to loss for liquidity and other support assumes
    a total loss on the referenced assets held by the VIE.(4)
    
    The assets of Loan and real
    estate VIEs are primarily recorded in Loans, notes and
    mortgages. The liabilities of these VIEs are recorded in Trading
    liabilities  derivative contracts.(5)
    
    The assets of Guaranteed and
    other fund VIEs are recorded in Trading assets- derivative
    contracts or Trading assets  equities and convertible
    debentures, and liabilities are recorded in Trading
    liabilities  derivative contracts or Payables under
    repurchase agreements in instances where assets were transferred
    but the transfer did not meet the sale requirements of
    SFAS No. 140.(6)
    
    The assets/liabilities of
    Credit-linked note and other VIEs are recorded in Trading
    assets/liabilities-derivative contracts. In certain
    transactions, Merrill Lynch enters into total return swaps over
    assets held by the VIEs. Maximum exposure to loss represents the
    sum of the notional amount of these derivatives and the value of
    any assets on Merrill Lynchs balance sheet.  FAS 140-4 FAS 140-4
  (dollars in millions)Significant VariablePrimary Beneficiary

Interest HolderNet

Recourse

Total

MaximumAsset

to Merrill

Asset

ExposureSize(4)

Lynch(5)

Size(6)

to LossDecember 28, 2007Loan and real estate VIEs

$
15,420


$
-


$
307


$
232Guaranteed and other
    funds(1)


4,655



928



246



23Credit-linked note and other
    VIEs(2)


83



-



5,438



9,081Tax planning
    VIEs(3)


1



-



483



15  (1)
    
    The maximum exposure for
    guaranteed and other funds is the fair value of Merrill
    Lynchs investments, derivatives entered into with the VIEs
    if they are in an asset position, and liquidity and credit
    facilities with certain VIEs.(2)
    
    The maximum exposure for
    credit-linked note and other VIEs is the notional amount of
    total return swaps that Merrill Lynch has entered into with the
    VIEs. This assumes a total loss on the referenced asset
    underlying the total return swaps. The maximum exposure may be
    different than the total asset size due to the netting of
    certain derivatives in the VIE.(3)
    
    The maximum exposure for tax
    planning VIEs reflects indemnifications made by Merrill Lynch to
    investors in the VIEs.(4)
    
    This column reflects the size
    of the assets held in the VIE after accounting for intercompany
    eliminations and any balance sheet netting of assets and
    liabilities as permitted by FIN 39.(5)
    
    This column reflects the
    extent, if any, to which investors have recourse to Merrill
    Lynch beyond the assets held in the VIE. For certain loan and
    real estate VIEs, recourse to Merrill Lynch represents the
    notional amount of derivatives that Merrill Lynch has on the
    assets in the VIEs.(6)
    
    This column reflects the total
    size of the assets in the VIE. 103




---



##### Table of Contents



Securitizations
  and/or and/or
      (dollars in millions)MaximumLimited Continued Involvement

Size/Principal

Assets on

Liabilities on

Exposure to

2008 Gain

2008 CashType of Entity

Outstanding(1)

Balance
    Sheet(2)(4)

Balance
    Sheet(2)(4)

Loss(3)

on Sale

FlowsDecember 26, 2008QSPEs:Repackaging transactions

$
4,267


$
564


$
316


$
564


$
-


$
76Non-QSPEs:Credit-linked note and other VIEs


17,950



2,953



140



2,953



-



539CDOs/CLOs


20,741



676



-



676



-



15  (1)
    
    Size/Principal Outstanding
    reflects the estimated principal of the underlying assets held
    by the VIE/SPEs.(2)
    
    Assets and Liabilities on
    Merrill Lynchs Balance Sheet reflect the effect of
    FIN 39 balance sheet netting, if applicable.(3)
    
    The maximum exposure to loss
    includes the value of derivatives that are in an asset
    position.(4)
    
    Assets and liabilities of these
    entities are all recorded in Trading assets 
    Derivative contracts or Trading liabilities 
    Derivative contracts. 104




---



##### Table of Contents



(dollars in millions)Continued Involvement

Size/Principal

Assets on

Liabilities on

Maximum

2008 Loss

2008 CashType of Entity

Outstanding(1)

Balance
    Sheet(2)

Balance
    Sheet(2)

Exposure to
    Loss(3)

on Sale

FlowsDecember 26, 2008QSPEs:Residential mortgage
    loans(4)

$
78,162


$
1,667


$
207


$
1,654


$
-


$
10,141Municipal
    bonds(5)


9,377



487



674



8,644



-



5,824Other(6)


18,366



288



-



288



-



1,091Non-QSPEs:Loan and real estate
    entities(7)


10,182



6,757



-



6,757



(22
)


3,035CDOs/CLOs(8)


59,475



3,584



344



8,155



-



(578
)  (1)
    
    Size/Principal Outstanding
    reflects the estimated principal of the underlying assets held
    by the VIE/SPEs.(2)
    
    Assets and Liabilities on
    Merrill Lynchs Balance Sheet reflect the effect of
    FIN 39 balance sheet netting, if applicable.(3)
    
    The maximum exposure to loss
    includes the following: the assets held by Merrill
    Lynch  including the value of derivatives that are in
    an asset position and retained interests in the VIEs/SPEs; and
    the notional amount of liquidity and other support generally
    provided through total return swaps. The maximum exposure to
    loss for liquidity and other support assumes a total loss on the
    referenced assets held by the VIE.(4)
    
    For Residential mortgage loans
    QSPEs, assets on balance sheet are primarily securities issued
    by the entity and are recorded in Trading assets-mortgages,
    mortgage-backed and asset-backed or Investment securities.
    Derivatives with the SPEs are recorded in Trading
    assets  derivative contracts and Trading
    liabilities  derivative contracts.(5)
    
    For Municipal bond QSPEs,
    assets are recorded in Trading assets  municipals,
    money markets and physical commodities or Investment securities,
    and liabilities are recorded in Trading liabilities 
    derivative contracts. At December 26, 2008, the carrying
    value of the liquidity and other support related to these
    transactions was $674 million.(6)
    
    Other QSPEs primarily includes
    commercial mortgage securitizations. Assets are primarily
    recorded in Trading assets  mortgages,
    mortgage-backed and asset-backed.(7)
    
    For Loan and real estate VIEs,
    assets are included in Trading assets  corporate debt
    and preferred stock and Loans, notes and mortgages and primarily
    relate to asset-backed financing arrangements such as the sale
    of U.S. super senior ABS CDOs to an affiliate of Lone Star
    Funds.(8)
    
    For CDOs/CLOs, assets are
    recorded primarily in Trading assets  derivative
    contracts and mortgage, mortgage-backed, and asset-backed and
    liabilities are recorded in Trading liabilities 
    derivative contracts. The maximum exposure to loss includes
    approximately $4.9 billion notional amount of total return
    swaps over assets that were transferred to the CDOs by third
    parties (in these transactions, the assets that Merrill Lynch
    transferred to the CDOs are not covered by the total return
    swaps) and $177 million notional amount of senior liquidity
    facilities that provide support to CDOs/CLOs that hold assets
    that were transferred by Merrill Lynch.  and/or
   105




---



##### Table of Contents



(dollars in millions)Residential



Commercial LoansMortgage

Municipal

and CorporateLoans

Bonds

BondsRetained interest amount

$
406


$
487


$
947Weighted average credit losses (rate per
    annum)(1)


0.0
%


0.0
%


1.9
%Impact on fair value of 10% adverse change

$
(1
)

$
-


$
(1
)Impact on fair value of 20% adverse change

$
(1
)

$
-


$
(3
)Weighted average discount rate


7.3
%


2.7
%


5.7
%Impact on fair value of 10% adverse change

$
(8
)

$
(11
)

$
(6
)Impact on fair value of 20% adverse change

$
(16
)

$
(17
)

$
(11
)Weighted average life (in years)


3.8



8.7



6.2Weighted average prepayment speed
    (CPR)(2)


36.9
%


-
%


5.8
%Impact on fair value of 10% adverse change

$
(2
)

$
-


$
-Impact on fair value of 20% adverse change

$
(3
)

$
-


$
(1
)   CPR=Constant Prepayment
    Rate
 (1)
    
    Credit losses are computed only
    on positions for which expected credit loss is either a key
    assumption in the determination of fair value or is not
    reflected in the discount rate.(2)
    
    Relates to select
    securitization transactions where assets are
    prepayable.    Mortgage
    Servicing Rights
   106




---



##### Table of Contents



(dollars in millions)Carrying ValueMortgage servicing rights, December 28, 2007(fair
    value is $476)

$
389Additions


6Amortization


(153
)Valuation allowance adjustments


(33
)Mortgage servicing rights, December 26, 2008(fair
    value is $243)

$
209     (dollars in millions)2008

2007Servicing fees

$
351


$
341Ancillary and late fees


51



63Total

$
402


$
404     (dollars in millions)Fair value of capitalized MSRs

$
243Weighted average prepayment speed (CPR)


26.6
%Impact on fair value of 10% adverse change

$
(15
)Impact on fair value of 20% adverse change

$
(30
)Weighted average discount rate


17.0
%Impact on fair value of 10% adverse change

$
(7
)Impact on fair value of 20% adverse change

$
(16
)    107




---



##### Table of Contents



Note 7.  Loans, Notes, Mortgages
    and Related Commitments to Extend Credit
    
    Consumer loans, which are substantially secured, including
    residential mortgages, home equity loans, and other loans to
    individuals for household, family, or other personal
    expenditures; and
    Commercial loans including corporate and institutional loans
    (including corporate and financial sponsor, non-investment grade
    lending commitments), commercial mortgages, asset-based loans,
    small- and middle-market business loans, and other loans to
    businesses.    (dollars in millions)Loans

Commitments(1)2008

2007

2008(2)(3)

2007(3)Consumer:Mortgages

$
29,397


$
26,939


$
8,269


$
7,023Other


1,360



5,392



2,582



3,298Commercial and small- and middle-market business:Investment grade


17,321



18,917



28,269



36,921Non-investment grade


23,184



44,277



9,291



30,99071,262



95,525



48,411



78,232Allowance for loan losses


(2,072
)


(533
)


-



-Reserve for lending-related commitments


-



-



(2,471
)


(1,408
)Total, net

$
69,190


$
94,992


$
45,940


$
76,824  (1)
    
    Commitments are outstanding as
    of the date the commitment letter is issued and are comprised of
    closed and contingent commitments. Closed commitments represent
    the unfunded portion of existing commitments available for draw
    down. Contingent commitments are contingent on the borrower
    fulfilling certain conditions or upon a particular event, such
    as an acquisition. A portion of these contingent commitments may
    be syndicated among other lenders or replaced with capital
    markets funding.(2)
    
    See Note 11 for a maturity
    profile of these commitments.(3)
    
    In addition to the loan
    origination commitments included in the table above, at
    December 26, 2008, Merrill Lynch entered into agreements to
    purchase $284 million of loans that, upon settlement of the
    commitment, will be classified in loans held for investment and
    loans held for sale. Similar loan purchase commitments totaled
    $330 million at December 28, 2007. See Note 11
    for additional information.    (dollars in millions)2008

2007Allowance for loan losses, at beginning of period

$
533


$
478Provision for loan losses


1,886



169Charge-offs


(360
)


(73
)Recoveries


14



36Net charge-offs


(346
)


(37
)Other


(1
)


(77
)Allowance for loan losses, at end of period

$
2,072


$
533    108




---



##### Table of Contents




    Negative amortizing features that permit the borrower to draw on
    unfunded commitments to pay current interest (commercial loans
    only);
    Subject the borrower to payment increases over the life of the
    loan; and
    High LTV ratios.   109




---



##### Table of Contents



(dollars in millions)2008(2)

2007(2)Loans with negative amortization features

$
229


$
1,232Loans where borrowers may be subject to payment
    increases(1)


22,041



15,697Loans with high LTV ratios


1,490



5,478Loans with both high LTV ratios and loans where borrowers may be
    subject to payment increases


4,101



3,315  (1)
    
    Includes $10.2 billion and
    $5.9 billion of prime residential mortgage loans with low
    LTV ratios at December 26, 2008 and December 28, 2007,
    respectively, that were acquired or originated in connection
    with the acquisition of First Republic.(2)
    
    Includes loans from
    securitizations where due to Merrill Lynchs inability to
    sell certain securities, the VIEs were not considered QSPEs
    thereby resulting in Merrill Lynchs consolidation of the
    VIEs. Merrill Lynchs exposure is limited to (i) any
    retained interest (see Note 6) and (ii) the
    representations and warranties made upon securitization (see
    Note 11).    and/or
  SM SM
    
 Note 8.  Goodwill and
    Intangibles
   Goodwill
  Goodwill and Other
    Intangible Assets
 110




---



##### Table of Contents



(dollars in millions)GMI

GWM

TotalGoodwill:December 29, 2006

$
1,907


$
302


$
2,209Goodwill acquired


1,009



1,315



2,324Translation adjustment and other


54



3



57December 28, 2007


2,970



1,620



4,590Impairment charge


(2,300
)


-



(2,300
)Translation adjustment and other


(69
)


-



(69
)December 26, 2008

$
601


$
1,620


$
2,221     Intangible
    Assets
  Accounting for the Impairment or
    Disposal of Long-Lived Assets
 111




---



##### Table of Contents



(dollars in millions)2008

2007Customer relationships

Gross Carrying Amount

$
295


$
311Accumulated amortization


(87
)


(64
)Net carrying amount


208



247Core deposits

Gross Carrying Amount


194



194Accumulated amortization


(52
)


(17
)Net carrying amount


142



177Other(1)

Gross Carrying Amount


122



139Accumulated amortization


(77
)


(62
)Net carrying amount


45



77Total

Gross Carrying Amount


611



644Accumulated amortization


(216
)


(143
)Net carrying amount

$
395


$
501  (1)
    
    Other is primarily related to
    trademarks and technology.    (1)
  (dollars in millions)2009

$
722010


602011


562012


522013


48  (1)
    
    The above amounts do not
    reflect the impact of acquisition accounting under
    SFAS 141(R) as of January 1, 2009.  
 Note 9.  Borrowings and
    Deposits
      112




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##### Table of Contents




    Certain debt issuances are issued at a discount to their
    redemption amount, which will accrete up to the redemption
    amount as they approach maturity;
    Certain debt issuances are accounted for at fair value and
    incorporate changes in Merrill Lynchs creditworthiness as
    well as other underlying risks (see Note 3);
    Certain structured notes whose coupon or repayment terms are
    linked to the performance of debt and equity securities,
    indices, currencies or commodities reflect the fair value of
    those risks; and
    Certain debt issuances are adjusted for the impact of fair value
    hedge accounting (see Note 1).    (dollars in millions)2008

2007(2)Senior debt issued by ML & Co.

$
140,615


$
148,190Senior debt issued by subsidiaries  guaranteed by
    ML & Co.


11,598



14,878Senior structured notes issued by ML & Co.


34,541



45,133Senior structured notes issued by subsidiaries 
    guaranteed by ML & Co.


24,048



31,401Subordinated debt issued by ML & Co.


13,317



10,887Junior subordinated notes (related to trust preferred securities)


5,256



5,154Other subsidiary financing 
    non-recourse(1)

    and/or not guaranteed by ML & Co.


13,454



35,398Total

$
242,829


$
291,041  (1)
    
    Other subsidiary
    financing  non-recourse is primarily attributable to
    collateralized borrowings of subsidiaries.(2)
    
    Certain 2007 amounts have been
    reclassified to conform with the current years
    presentation.    (dollars in millions)2008

2007Short-term borrowingsCommercial paper

$
20,104


$
12,908Promissory notes


-



2,750Secured short-term
    borrowings(1)


14,137



4,851Other unsecured short-term borrowings


3,654



4,405Total

$
37,895


$
24,914Long-term
    borrowings(2)Fixed-rate
    obligations(3)

$
101,403


$
102,020Variable-rate
    obligations(4)(5)


96,511



156,743Zero-coupon contingent convertible debt
    (LYONs®)


1,599



2,210Other Zero-coupon obligations


165



-Total

$
199,678


$
260,973DepositsU.S.

$
79,528


$
76,634Non U.S.


16,579



27,353Total

$
96,107


$
103,987  (1)
    
    Consisted primarily of
    borrowings from Federal Home Loan Banks for both periods, and as
    of December 26, 2008, also included borrowings under a
    secured bank credit facility.(2)
    
    Excludes junior subordinated
    notes (related to trust preferred securities). 113




---



##### Table of Contents



(3)
    
    Fixed-rate obligations are
    generally swapped to floating rates.(4)
    
    Variable interest rates are
    generally based on rates such as LIBOR, the U.S. Treasury Bill
    Rate, or the Federal Funds Rate.(5)
    
    Included are various
    equity-linked, credit-linked or other indexed
    instruments.  Disclosures about Fair Value of
    Financial Instruments
    2008

2007Short-term borrowings


2.95
%


4.64
%Long-term borrowings


4.65



4.35Junior subordinated notes (related to trust preferred securities)


6.83



6.91   Long-Term
    Borrowings
    (dollars in millions)Less than 1 year

$
45,174



23
%1  2 years


25,481



132+ 

    3 years


19,664



103+ 

    4 years


19,083



104+ 

    5 years


19,393



10Greater than 5 years


70,883



34Total

$
199,678



100
%       ®
 114




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##### Table of Contents



Floating
    Rate
    LYONs®
  ® ®
  ® ® ®
  ®
  
    Merrill Lynch may redeem the
    LYONs®

    at any time on or after March 13, 2014.
    Investors may require Merrill Lynch to repurchase the
    LYONs®

    in 2010, 2012, 2014, 2017, 2022 and 2027. Repurchases may be
    settled only in cash.
    Until March 2014, the conversion rate on the
    LYONS®

    will be adjusted upon the issuance of a quarterly cash dividend
    to holders of Merrill Lynch common stock to the extent that such
    dividend exceeds $0.16 per share. In 2008, Merrill Lynchs
    common stock dividend exceeded $0.16 per share and, as a result,
    Merrill Lynch adjusted the conversion ratio to 16.8528 from
    16.5000. In addition, the conversion rate on the
    LYONs®

    will be adjusted for any other cash dividends or distributions
    to all holders of Merrill Lynch common stock until March 2014.
    After March 2014, cash dividends and distributions will cause
    the conversion ratio to be adjusted only to the extent such
    dividends are extraordinary.
    The conversion rate on the
    LYONs®

    will also adjust upon: (1) dividends or distributions
    payable in Merrill Lynch common stock, (2) subdivisions,
    combinations or certain reclassifications of Merrill Lynch
    common stock, (3) distributions to all holders of Merrill
    Lynch common stock of certain rights to purchase the stock at
    less than the sale price of Merrill Lynch common stock at that
    time, and (4) distributions of Merrill Lynch assets or debt
    securities to holders of Merrill Lynch common stock (including
    certain cash dividends and distributions as described above).  ®
  
    If the closing price of Merrill Lynch common stock for at least
    20 of the last 30 consecutive trading days ending on the last
    day of the calendar quarter is more than the conversion trigger
    price. The conversion trigger price for the
    LYONs®

    at December 31, 2008 was $78.04. That is, on and after
    January 1, 2009, a holder could have converted
    LYONs®

    into the value of 16.8528 shares of Merrill Lynch common
    stock if the Merrill Lynch stock price had been greater than
    $78.04 for at least 20 of the last 30 consecutive trading days
    ending December 31, 2008;
    During any period in which the credit rating of the
    LYONs®

    is Baa1 or lower by Moodys Investor Services, Inc., BBB+
    or lower by Standard & Poors Credit Market
    Services, or BBB+ or lower by Fitch, Inc.;
    If the
    LYONs®

    are called for redemption;
    If Merrill Lynch is party to a consolidation, merger or binding
    share exchange; or 115




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##### Table of Contents




    If Merrill Lynch makes a distribution that has a per share value
    equal to more than 15% of the sale price of its shares on the
    day preceding the declaration date for such distribution.  ® ® ®
    ® ®
  Junior
    Subordinated Notes (related to trust preferred
    securities)
        (dollars in millions)AGGREGATEPRINCIPALAMOUNT

AGGREGATEOF TRUST

PRINCIPAL

ANNUAL



EARLIESTISSUE

PREFERRED

AMOUNT

DISTRIBUTION

STATED

REDEMPTIONTRUST

DATE

SECURITIES

OF NOTES

RATE

MATURITY

DATEML Preferred Capital Trust III

Jan1998

$
750


$
900



7.00
%

Perpetual

Mar2008ML Preferred Capital Trust IV

Jun1998


400



480



7.12


Perpetual

Jun2008ML Preferred Capital Trust V

Nov1998


850



1,021



7.28


Perpetual

Sep2008ML Capital Trust I

Dec2006


1,050



1,051



6.45


Dec2066(1)

Dec2011ML Capital Trust II

May2007


950



951



6.45


Jun2062(2)

Jun2012ML Capital Trust III

Aug2007


750



751



7.375


Sep2062(3)

Sep2012Total



$
4,750(4
)

$
5,154  (1)
    
    Merrill Lynch has the option to
    extend the maturity of the junior subordinated note until
    December 2086.(2)
    
    Merrill Lynch has the option to
    extend the maturity of the junior subordinated note until June
    2087.(3)
    
    Merrill Lynch has the option to
    extend the maturity of the junior subordinated note until
    September 2087.(4)
    
    Includes related investments of
    $25 million, which are deducted for equity capital
    purposes. 116




---



##### Table of Contents



Committed
    Credit Facilities
                Deposits
    (dollars in millions)2008

2007U.S.Savings and Demand
    Deposits(1)

$
71,377


$
69,707Time Deposits


8,151



6,927Total U.S. Deposits


79,528



76,634Non-U.S.Non-interest bearing


664



803Interest bearing


15,915



26,550Total
    Non-U.S.
    Deposits


16,579



27,353Total Deposits

$
96,107


$
103,987  117




---



##### Table of Contents



(1)
    
    Includes $1.9 billion and
    $1.8 billion of non-interest bearing demand deposits as of
    December 26, 2008 and December 28, 2007,
    respectively.      Other
   Note 10.  Stockholders Equity and
    Earnings Per Share    Preferred
    Equity
      1 3
   118




---



##### Table of Contents



(dollars in millions)INITIAL

TOTAL

AGGREGATE



EARLIESTISSUE

SHARES

LIQUIDATION



REDEMPTIONSERIES

DESCRIPTION

DATE

ISSUED

PREFERENCE

DIVIDEND

DATE1

Perpetual Floating Rate Non-Cumulative


Nov-2004



21,000


$
630



3-mo LIBOR +
    75bps(2
)


Nov-20092

Perpetual Floating Rate


Mar-2005



37,000



1,110



3-mo LIBOR +



Nov-2009Non-Cumulative














65bps(2
)3

Perpetual 6.375% Non-Cumulative


Nov-2005



27,000



810



6.375
%


Nov-20104

Perpetual Floating Rate


Nov-2005



20,000



600



3-mo LIBOR +



Nov-2010Non-Cumulative














75bps(3
)5

Perpetual Floating Rate


Mar-2007



50,000



1,500



3-mo LIBOR +



May-2012Non-Cumulative














50bps(3
)6

Perpetual 6.70% Non-Cumulative


Sept-2007



65,000



65



6.700
%


Feb-20097

Perpetual 6.25% Non-Cumulative


Sept-2007



50,000



50



6.250
%


Mar-20108

Perpetual 8.625% Non-Cumulative


Apr-2008



89,100



2,673



8.625
%


May-2013Total








359,100


$
7,438(1
)  (1)
    
    Preferred stockholders
    equity reported on the Consolidated Balance Sheets is reduced by
    amounts held in inventory as a result of market making
    activities.(2)
    
    Subject to 3.00% minimum rate
    per annum.(3)
    
    Subject to 4.00% minimum rate
    per annum.  Mandatory
    Convertible
         119




---



##### Table of Contents



Current stock price

Current stock priceis greater than or

is less than orInitial minimum

Initial threshold

equal to initial threshold

equal to initial minimumSeries

conversion price

appreciation price

appreciation price

conversion priceSeries 2

$
33.00


$
38.61



2,590 shares



3,030 sharesSeries 3

$
22.50


$
26.33



3,798 shares



4,444 shares         Common
    Stock
  1 3
     120




---



##### Table of Contents



121




---



##### Table of Contents



Accumulated
    Other Comprehensive Loss
    (dollars in millions)2008

2007Foreign currency translation adjustmentUnrealized (losses), net of gains

$
(942
)

$
(1,636
)Income taxes


197



1,195Total


(745
)


(441
)Unrealized (losses) on investment securities
    available-for-saleUnrealized (losses), net of gains


(10,099
)


(2,759
)Adjustments for:Adjustment to initially apply SFAS No. 159


-



277Income taxes


4,061



973Total


(6,038
)


(1,509
)Deferred gains on cash flow hedgesDeferred gains


135



136Income taxes


(54
)


(53
)Total


81



83Defined benefit pension and postretirement plansNet actuarial gains


538



49Net prior service cost


66



70Foreign currency translation gain


53



58Adjustment to apply SFAS No. 158 change in measurement
    date


2



-Income taxes


(275
)


(101
)Total


384



76Total accumulated other comprehensive loss

$
(6,318
)

$
(1,791
)  122




---



##### Table of Contents



Earnings
    Per Share
    (dollars in millions, except per share amounts)2008

2007

2006Net (loss)/earnings from continuing operations

$
(27,551
)

$
(8,637
)

$
7,097Net (loss)/earnings from discontinued operations


(61
)


860



402Preferred stock dividends


(2,869
)


(270
)


(188
)Net (loss)/earnings applicable to common
    shareholders  for basic EPS


(30,481
)


(8,047
)


7,311Interest expense on
    LYONs®


-



-



1Net (loss)/earnings applicable to common
    shareholders  for diluted
    EPS(1)

$
(30,481
)

$
(8,047
)

$
7,312(shares in thousands)Weighted-average basic shares
    outstanding(2)


1,225,611



830,415



868,095Effect of dilutive instruments:Employee stock
    options(3)


-



-



42,802FACAAP
    shares(3)


-



-



21,724Restricted shares and
    units(3)


-



-



28,496Convertible
    LYONs®(4)


-



-



1,835ESPP
    shares(3)


-



-



10Dilutive potential common shares


-



-



94,867Diluted
    Shares(5)(6)


1,225,611



830,415



962,962Basic EPS from continuing operations

$
(24.82
)

$
(10.73
)

$
7.96Basic EPS from discontinued operations


(0.05
)


1.04



0.46Basic EPS

$
(24.87
)

$
(9.69
)

$
8.42Diluted EPS from continuing operations

$
(24.82
)

$
(10.73
)

$
7.17Diluted EPS from discontinued operations


(0.05
)


1.04



0.42Diluted EPS

$
(24.87
)

$
(9.69
)

$
7.59  (1)
    
    Due to the net loss for the
    year ended December 26, 2008, inclusion of the incremental
    shares on the Mandatory Convertible Preferred Stock would be
    antidilutive and, therefore, those shares have not been included
    as part of the Diluted EPS calculation. See Mandatory
    Convertible section above for additional information.(2)
    
    Includes shares exchangeable
    into common stock.(3)
    
    See Note 13 for a
    description of these instruments.(4)
    
    See Note 9 for additional
    information on
    LYONs®.(5)
    
    Due to the net loss for the
    year-ended December 28, 2007, the Diluted EPS calculation
    excludes 192 million instruments as they were antidilutive.
    At year-end 2006 there were 25,119 instruments that were
    antidilutive and thus were not included in the above
    calculations.(6)
    
    Due to the net loss for the
    year-ended December 26, 2008, the Diluted EPS calculation
    excludes 585 million instruments as they were
    antidilutive. Note 11.  Commitments, Contingencies and
    Guarantees  Litigation
   123




---



##### Table of Contents



Accounting for
    Contingencies
  Specific
    Litigation
  IPO
    Allocation Litigation
  In re Initial Public Offering Securities
    Litigation:
  Enron
    Litigation
  Newby v. Enron Corp. et al.:
 124




---



##### Table of Contents



Stoneridge Investment v. Scientific
    Atlanta
  Subprime
    Mortgage-Related Litigation
  In re Merrill Lynch & Co., Inc. Securities,
    Derivative, and ERISA Litigation In re Merrill
    Lynch & Co., Inc. Securities, Derivative, and ERISA
    Litigation
  Louisiana Sheriffs Pension & Relief
    Fund v. Conway, et al. In re Merrill Lynch & Co., Inc. Securities,
    Derivative, and ERISA Litigation
  Connecticut Carpenters Pension Fund, et al. v. Merrill
    Lynch & Co., Inc., et al.
  Iron Workers Local No. 25 Pension Fund v.
    Credit-Based Asset Servicing and Securitization LLC, et
    al.
 125




---



##### Table of Contents



Public Employees Retirement System of
    Mississippi v. Merrill Lynch & Co. Inc.:
    Lehman
    Brothers Litigation
  In re Lehman Brothers Securities and ERISA
    Litigation In
    re Lehman Brothers Securities and ERISA Litigation
  Auction
    Rate Litigation
  Burton v. Merrill Lynch & Co., Inc., et
    al. Stanton v. Merrill Lynch & Co., Inc., et
    al.
 126




---



##### Table of Contents



Mayor and City Council of Baltimore Maryland v.
    Citigroup, Inc., et al. and Russell Mayfield, et al. v.
    Citigroup, Inc., et al.
    Diane Blas v. ONeal, et al. and Louisiana
    Municipal Police Employees Retirement System v. Thain, et
    al.:
  Municipal
    Derivatives Litigation
  In re Municipal Derivatives Antitrust
    Litigation: In re Municipal Derivatives
    Antitrust Litigation No. 08-2516), In re Municipal Derivatives Antitrust
    Litigation No. 08-2516).
  Bank
    Sweep Programs Litigation
  DeBlasio v. Merrill Lynch, et al.:
 127




---



##### Table of Contents



Mediafiction
    Litigation
    Compensation
    and Merger-Related Inquiries
   128




---



##### Table of Contents



Commitments
    (dollars in millions)Commitment expirationLess thanTotal

1 year

1 - 3 years

3+- 5 years

Over 5 yearsLending
    commitments(1)

$
48,411


$
13,115


$
13,314


$
15,050


$
6,932Purchasing and other commitments


8,117



3,685



1,064



1,579



1,789Operating leases


3,907



683



1,260



965



999Commitments to enter into forward dated resale and securities
    borrowing agreements


24,536



24,536



-



-



-Commitments to enter into forward dated repurchase and
    securities lending agreements


16,557



16,557



-



-



-  (1)
    
    See Note 7.  Lending
    Commitments
        Purchasing
    and Other Commitments
     129




---



##### Table of Contents



Operating
    Leases
          (dollars in millions)WFC(1)

Other

Total2009

$
179


$
504


$
6832010


179



486



6652011


179



416



5952012


179



346



5252013


134



306



4402014 and thereafter


-



999



999Total

$
850


$
3,057


$
3,907  (1)
    
    World Financial Center
    Headquarters, New York.   130




---



##### Table of Contents



(dollars in millions)2008

2007

2006Rent expense

$
837


$
762


$
649Sublease revenue


(189
)


(190
)


(154
)Net rent expense

$
648


$
572


$
495   Guarantees
  FAS 133-1 FIN 45-4,
  (dollars in millions)MaximumPayout /

Less than





Over

CarryingNotional

1 year

1 - 3 years

3+- 5 years

5 years

Value(1)Derivative contracts:Credit derivatives:Investment
    grade(2)

$
1,269,176


$
72,511


$
186,709


$
595,860


$
414,096


$
126,054Non-investment
    grade(2)


808,589



44,374



224,611



292,637



246,967



156,542Total credit derivatives


2,077,765



116,885



411,320



888,497



661,063



282,596Other derivatives


1,387,513



406,837



378,680



251,941



350,055



89,677Total derivative contracts

$
3,465,278


$
523,722


$
790,000


$
1,140,438


$
1,011,118


$
372,273Other guarantees:Standby liquidity facilities

$
9,144


$
6,279


$
-


$
2,849


$
16


$
669Auction rate security guarantees


5,235



-



5,235



-



-



278Residual value guarantees


738



322



96



320



-



9Standby letters of credit and other guarantees


40,499



825



2,738



690



36,246



633  (1)
    
    Derivative contracts are shown
    on a gross basis prior to cash collateral or counterparty
    netting.(2)
    
    Refers to the creditworthiness
    of the underlying reference obligations.  Derivative
    Contracts
   131




---



##### Table of Contents



Credit
    Derivatives
  and/or
      Other
    Derivative Contracts
       132




---



##### Table of Contents



Standby
    Liquidity Facilities
    (dollars in millions)Merrill Lynch Liquidity
    Facilities Can Be Drawn:

Municipal Bonds to WhichIn 7 Days with

In 7 Days with

After 7 and Up



Merrill Lynch Has RecourseNet Liquidity

Gross Liquidity

to
    364 Days(1)

Total

if Facilities Are DrawnMerrill Lynch provides standby liquidity facilities

$
3,822


$
1,609


$
3,213


$
8,644


$
8,302  (1)
    
    Initial liquidity support is
    provided by third parties within seven days, to be reimbursed by
    Merrill Lynch within 364 days.        Auction
    Rate Security Guarantees
   133




---



##### Table of Contents



Residual
    Value Guarantees
    Standby
    Letters of Credit and Other FIN 45 Guarantees
       134




---



##### Table of Contents



Other
    Guarantees
   135




---



##### Table of Contents



and/or
 Note 12.  Employee Benefit Plans      Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R) Employers Accounting for Pensions Employers Accounting for
    Settlements and Curtailments of Defined Benefit Pension Plans
    and for Termination Benefits. Employers Accounting for
    Postretirement Benefits Other Than Pensions. Employers Disclosures about
    Pensions and Other Postretirement Benefits. Employers Accounting for
    Postemployment Benefits.
   136




---



##### Table of Contents



Defined
    Contribution Pension Plans
        catch-up
  non-U.S. defined non-U.S. plans
  Defined
    Benefit Pension Plans
    non-U.S. subsidiaries
 137




---



##### Table of Contents



non-U.S. pension
  Postretirement
    Benefits Other Than Pensions
  non-U.S. subsidiaries.
 138




---



##### Table of Contents



non-U.S. defined
  (dollars in millions)Non-U.S. Defined

Total DefinedU.S. Defined Benefit

Benefit

Benefit

PostretirementPension Plans

Pension
    Plans(1)

Pension Plans

Plans(2)2008

2007

2008

2007

2008

2007

2008

2007Benefit obligationsBalance, beginning of period

$
1,681


$
1,804


$
1,498


$
1,662


$
3,179


$
3,466


$
263


$
307Adjustment due to Change inMeasurement Date


24



-



27



-



51



-



5



-Service cost


-



-



30



28



30



28



6



7Interest cost


97



96



79



81



176



177



15



16Net actuarial (gains)


(28
)


(90
)


(103
)


(255
)


(131
)


(345
)


(57
)


(51
)Employee contributions


-



-



3



2



3



2



-



-Amendments


-



-



-



(6
)


-



(6
)


-



-Benefits paid


(139
)


(108
)


(45
)


(34
)


(184
)


(142
)


(17
)


(17
)Curtailment and
    settlements(3)


-



(21
)


(5
)


(28
)


(5
)


(49
)


(1
)


-Foreign exchange and other


-



-



(303
)


48



(303
)


48



(6
)


1Balance, end of period


1,635



1,681



1,181



1,498



2,816



3,179



208



263Fair value of plan assetsBalance, beginning of period


2,261



2,273



1,263



1,103



3,524



3,376



-



-Actual return on plan assets


438



94



21



58



459



152



-



-Settlements(3)


-



(21
)


(4
)


(28
)


(4
)


(49
)


-



-Contributions


99



23



80



130



179



153



17



17Benefits paid


(139
)


(108
)


(45
)


(34
)


(184
)


(142
)


(17
)


(17
)Foreign exchange and other


-



-



(290
)


34



(290
)


34



-



-Balance, end of period


2,659



2,261



1,025



1,263



3,684



3,524



-



-Funded status end of period


1,024



580



(156
)


(235
)


868



345



(208
)


(263
)Fourth-quarter activity, net


-



2



-



5



-



7



-



4Amount recognized inConsolidated Balance Sheet

$
1,024


$
582


$
(156
)

$
(230
)

$
868


$
352


$
(208
)

$
(259
)Assets

$
1,033


$
592


$
11


$
19


$
1,044


$
611


$
-


$
-Liabilities


(9
)


(10
)


(167
)


(249
)


(176
)


(259
)


(208
)


(259
)Amount recognized inConsolidated Balance Sheet

$
1,024


$
582


$
(156
)

$
(230
)

$
868


$
352


$
(208
)

$
(259
)  (1)
    
    Primarily represents the U.K.
    pension plan which accounts for 69% of the benefit obligation
    and 80% of the fair value of plan assets at December 26,
    2008.(2)
    
    Approximately 92% of the
    postretirement benefit obligation at the end of the period
    relates to the U.S. postretirement plan.(3)
    
    Relates to settlement of two
    non-U.S. pension plans in 2008 and one of the U.S.
    non-qualified pension plans and two non-U.S. pension plans
    in 2007.   139




---



##### Table of Contents



non-U.S. plans
  (dollars in millions)U.S. Defined

Non-U.S.Benefit

Defined

Total DefinedPension

Benefit

BenefitPlans

Pension Plans

Pension Plans2008

2007

2008

2007

2008

2007Plans with ABO in excess of plan assetsPBO

$
9


$
10


$
349


$
1,332


$
358


$
1,342ABO


9



10



301



1,232



310



1,242FV plan assets


-



-



182



1,081



182



1,081Plans with PBO in excess of plan assetsPBO

$
9


$
10


$
349


$
1,360


$
358


$
1,370ABO


9



10



301



1,258



310



1,268FV plan assets


-



-



182



1,108



182



1,108     (dollars in millions)Non-U.S. Defined

Total DefinedU.S. Defined Benefit

Benefit

Benefit

PostretirementPension Plans

Pension Plans

Pension Plans

PlansNet actuarial (gain)/loss

$
(563
)

$
189


$
(374
)

$
(164
)Prior service credit


-



(7
)


(7
)


(59
)Foreign currency translation (gain)/loss and adjustment due to
    change in measurement date


-



(57
)


(57
)


2Total

$
(563
)

$
125


$
(438
)

$
(221
)       Non-U.S.

TotalU.S. Defined

Defined

DefinedBenefit

Benefit

BenefitPension

Pension

Pension

PostretirementPlans

Plans

Plans

Plans2008

2007

2008

2007

2008

2007

2008

2007Discount rate


6.3
%


6.0
%


6.2
%


5.8
%


6.2
%


5.9
%


6.3
%


6.0
%Rate of compensation increase


N/A



N/A



4.6



4.7



4.6



4.7



N/A



N/AHealthcare cost trend
    rates(1)Initial


N/A



N/A



N/A



N/A



N/A



N/A



9.0



8.8Long-term


N/A



N/A



N/A



N/A



N/A



N/A



5.0



5.0  N/A=Not Applicable
 (1)
    
    The healthcare cost trend rate
    is assumed to decrease gradually through 2018 and remain
    constant thereafter. 140




---



##### Table of Contents



(dollars in millions)U.S. Pension

Non-U.S. Pension

Total Pension

PostretirementPlans

Plans

Plans

Plans2008

2007

2006

2008

2007

2006

2008

2007

2006

2008

2007

2006Defined contribution pension plan cost

$
274


$
278


$
228


$
89


$
85


$
68


$
363


$
363


$
296



N/A



N/A



N/ADefined benefit and postretirement plans Service
    cost(1)


-



-



-



30



28



27



30



28



27


$
5


$
7


$
8Interest cost


97



96



95



79



81



66



176



177



161



15



16



17Expected return on plan
    assets(2)


(118
)


(117
)


(112
)


(82
)


(81
)


(63
)


(200
)


(198
)


(175
)


-



-



-Amortization of (gains)/losses, prior service costs and other


(2
)


(4
)


-



12



31



20



10



27



20



(10
)


(6
)


(5
)Cost of SFAS No. 88 Events


-



-



-



-



-



-



-



-



-



(5
)


-



-Total defined benefit and postretirement plan costs


(23
)


(25
)


(17
)


39



59



50



16



34



33



5



17



20Total net periodic benefit cost

$
251


$
253


$
211


$
128


$
144


$
118


$
379


$
397


$
329


$
5


$
17


$
20  N/A=Not Applicable
 (1)
    
    The U.S. plan was terminated in
    1988 and thus does not incur service costs.(2)
    
    Effective 2006 Merrill Lynch
    modified the investment policy relating to the U.S. Terminated
    Pension Plan which increased the expected long-term rate of
    return on plan assets. The increase in the expected return on
    plan assets for the
    Non-U.S.
    plans from 2006 to 2007 can primarily be attributed to the U.K.
    Pension Plan as a result of increased contributions, favorable
    actual investment returns and exchange rate movements.      U.S. Defined

Non-U.S. Defined

Total DefinedBenefit

Benefit

Benefit

PostretirementPension Plans

Pension Plans

Pension Plans

Plans2008

2007

2006

2008

2007

2006

2008

2007

2006

2008

2007

2006Discount rate


6.0
%


5.5
%


5.3
%


5.8
%


4.9
%


4.9
%


5.9
%


5.2
%


5.1
%


6.0
%


5.5
%


5.3
%Expected long-term return on pension plan assets


5.3



5.3



4.9



6.9



6.8



6.6



5.9



5.8



5.4



N/A



N/A



N/ARate of compensation increase


N/A



N/A



N/A



4.7



4.5



4.3



4.7



4.5



4.3



N/A



N/A



N/AHealthcare cost trend
    rates(1)Initial


N/A



N/A



N/A



N/A



N/A



N/A



N/A



N/A



N/A



8.8



9.5



10.3Long-term


N/A



N/A



N/A



N/A



N/A



N/A



N/A



N/A



N/A



5.0



5.0



4.9  N/A=Not Applicable
 (1)
    
    The healthcare cost trend rate
    is assumed to decrease gradually through 2018 and remain
    constant thereafter. 141




---



##### Table of Contents



Plan
    Assumptions
          (dollars in millions)1% Increase

1% Decrease2008

2007

2008

2007Effect on:Other postretirement benefits cost

$
2


$
3


$
(2
)

$
(2
)Accumulated benefit obligation


19



23



(16
)


(20
)   Investment
    Strategy and Asset Allocation
   142




---



##### Table of Contents



Defined Benefit Pension PlansU.S. Plans

Non-U.S. PlansTarget





TargetAllocation

2008

2007

Allocation

2008

2007Debt securities


100
%


100
%


100
%


9
%


11
%


15
%Equity securities


-



-



-



33



22



52Real estate


-



-



-



6



5



6Other


-



-



-



52



62



27Total


100
%


100
%


100
%


100
%


100
%


100
%   Estimated
    Future Benefit Payments
    (dollars in millions)Defined Benefit Pension Plans

Postretirement
    Plans(3)U.S.(1)

Non-U.S.(2)

Total

Gross Payments

Medicare Subsidy

Net Payments2009

$
108


$
33


$
141


$
19


$
3


$
162010


111



34



145



21



4



172011


114



34



148



22



4



182012


117



36



153



23



5



182013


119



37



156



23



5



182014 through 2018


622



201



823



119



31



88  (1)
    
    The U.S. defined benefit
    pension plan payments are primarily funded under the terminated
    plan annuity contract.(2)
    
    The U.K., Swiss and Japan
    pension plan payments represent approximately 49%, 17% and 13%,
    respectively, of the
    non-U.S.
    2009 expected defined benefit pension payments.(3)
    
    The U.S. postretirement plan
    payments, including the Medicare subsidy, represent
    approximately 95% of the total 2009 expected postretirement
    benefit payments.  Postemployment
    Benefits
   143




---



##### Table of Contents



Note 13.  Employee Incentive Plans          Long-Term
    Incentive Compensation Plans (LTIC Plans), Employee
    Stock Compensation Plan (ESCP) and Equity Capital
    Accumulation Plan (ECAP)
    Restricted
    Shares and Units
   144




---



##### Table of Contents



LTIC Plans

ECAP

ESCPRestricted

Restricted

Restricted

Restricted

RestrictedShares

Units

Shares

Shares

UnitsAuthorized for issuance at:December 26, 2008


660,000,000



N/A



104,800,000



75,000,000



N/ADecember 28, 2007


660,000,000



N/A



104,800,000



75,000,000



N/AAvailable for issuance
    at:(1)December 26, 2008


39,409,796



N/A



-



19,692,085



N/ADecember 28, 2007


63,164,095



N/A



10,825,078



28,601,214



N/AOutstanding, end of 2006


29,272,338



7,916,925



19,885



29,081,187



5,712,989Granted  2007


6,193,079



2,087,899



7,009



13,153,487



2,439,219Paid, forfeited, or released from contingencies


(13,895,368
)


(3,107,137
)


(2,919
)


(5,929,819
)


(2,170,943
)Outstanding, end of 2007


21,570,049



6,897,687



23,975



36,304,855



5,981,265Granted  2008


506,412



12,094,494



6,732



-



36,545,501Paid, forfeited, or released from contingencies


(13,351,660
)


(4,582,512
)


(12,576
)


(27,373,905
)


(8,104,569
)Outstanding, end of 2008


8,724,801



14,409,669



18,131



8,930,950



34,422,197  N/A = Not Applicable
 (1)
    
    Includes shares reserved for
    issuance upon the exercise of stock options. 145




---



##### Table of Contents



No Future Service Required

Future Service RequiredWeighted Avg



Weighted AvgShares/Units

Grant Price

Shares/Units

Grant PriceOutstanding at December 28, 2007


48,738,883


$
66.33



22,038,948


$
83.60Granted  2008


14,099,302



52.13



35,053,837



52.19Delivered


(46,722,014
)


67.23



-



-Forfeited


(1,697,122
)


75.28



(5,006,086
)


64.16Service criteria
    satisfied(1)


12,351,587



82.90



(12,351,587
)


82.90Outstanding at December 26, 2008


26,770,636



64.36



39,735,112



58.56  (1)
    
    Represents those awards for
    which employees attained retirement-eligibility or for which
    service criteria were satisfied during 2008, subsequent to the
    grant date.      2008

2007

2006LTIC PlansRestricted Shares

$
34.25


$
80.56


$
75.45Restricted Units


42.60



81.28



71.63ECAP Restricted Shares


49.04



88.55



70.22ESCP PlansRestricted Shares


N/A



95.83



71.54Restricted Units


55.59



95.60



71.67   Non-Qualified
    Stock Options
     146




---



##### Table of Contents



Weighted-Options

AverageOutstanding

Exercise PriceOutstanding, beginning of 2006


176,713,075



49.10Granted  2006


368,973



72.72Exercised


(46,257,695
)


39.78Forfeited


(336,546
)


49.20Outstanding, end of 2006


130,487,807



52.47Granted  2007


3,376,222



49.37Exercised


(20,786,338
)


43.77Forfeited


(268,617
)


45.75Outstanding, end of 2007


112,809,074



54.00Granted  2008


17,692,428



49.22Exercised


(4,126,509
)


32.19Forfeited


(1,243,611
)


53.84Outstanding, end of 2008


125,131,382


$
54.04Exercisable, end of 2008


105,800,355


$
54.66         Share-Based Payment
  2008

2007

2006Risk-free interest rate


3.14
%


4.79
%


4.40
%Expected life (in years)


6.6



4.3



4.5Expected volatility


39.42
%


21.39
%


28.87
%Expected dividend yield


3.20
%


1.49
%


1.37
%    147




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##### Table of Contents



2008Risk-free interest rate


3.61
%Expected life (in years)


7.9Expected volatility


35.00
%Expected dividend yield


2.52
%       Employee
    Stock Purchase Plans (ESPP)
    2008

2007

2006Available, beginning of year


21,710,119



22,572,871



23,462,435Purchased through plan


(2,571,438
)


(862,752
)


(889,564
)Available, end of year


19,138,681



21,710,119



22,572,871     Director
    Plans
     148




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##### Table of Contents



Financial Advisor Capital Accumulation Award Plans
    (FACAAP)
      Other
    Compensation Arrangements
       149




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##### Table of Contents



Note 14.  Income Taxes    (dollars in millions)2008

2007

2006U.S. federalCurrent

$
(854
)

$
(391
)

$
1,370Deferred


(6,516
)


(867
)


386U.S. state and localCurrent


218



(73
)


271Deferred


(895
)


(112
)


(116
)Non-U.S.Current


2,442



1,194



1,432Deferred


(8,675
)


(3,945
)


(630
)Income tax (benefit)/expense from continuing operations

$
(14,280
)

$
(4,194
)

$
2,713Income tax (benefit)/expense from discontinued operations

$
(80
)

$
537


$
214     (dollars in millions)2008

2007

2006U.S. federal income tax at statutory rate

$
(14,641
)

$
(4,491
)

$
3,431U.S. state and local income taxes, net of federal effect


(440
)


(120
)


101Non-U.S.
    operations


2,663



809



(539
)Capital losses including foreign subsidiary stock (net of
    valuation allowance)


(2,651
)


-



-Payment related to price reset on common stock offering


875



-



-Tax-exempt interest


(159
)


(201
)


(163
)Dividends received deduction


(96
)


(188
)


(49
)Other


169



(3
)


(68
)Income tax (benefit)/expense from continuing operations

$
(14,280
)

$
(4,194
)

$
2,713Income tax (benefit)/expense from discontinued operations

$
(80
)

$
537


$
214        150




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##### Table of Contents



(dollars in millions)2008

2007Valuation and other reserves

$
7,233


$
2,109Net operating loss carryforwards


4,721



4,009Capital loss


2,867



-Deferred compensation


1,991



2,419Stock options


1,045



1,016Employee benefits and pension


135



382Foreign exchange translation


763



611Deferred interest


772



729Goodwill


604



29Partnership activity


299



(9
)Deferred foreign tax credit


418



543Other


860



779Gross deferred tax assets


21,708



12,617Valuation allowances


(4,015
)


(73
)Total deferred tax assets


17,693



12,544Deferred tax liabilitiesBlackRock investment


209



1,274Deferred income


44



449Interest and dividends


396



161Depreciation and amortization


42



213Other


555



606Total deferred tax liabilities


1,246



2,703Net deferred tax assets

$
16,447


$
9,841   tax-related
   151




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##### Table of Contents



(dollars in millions)2008

2007Balance, beginning of year

$
1,526


$
1,482Additions based on tax positions related to the current year


212



226Additions for tax positions of prior years


61



46Reductions for tax positions of prior years


(255
)


(244
)Settlements


(4
)


(1
)Expiration of statute of limitations


-



(1
)Cumulative translation adjustments


36



18Balance, end of year

$
1,576


$
1,526        152




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##### Table of Contents



JURISDICTION

YEARS SUBJECT TO
    EXAMINATIONU.S. federal

20052008New York State and City

20022008U.K.

20062008Canada

20042008India

3/31/923/31/08Japan

3/31/08Hong Kong

20062008Singapore

19982008       non-U.S. subsidiaries non-U.S. operations.
 Note 15.  Regulatory Requirements      non-U.S. subsidiaries
  Securities
    Regulation
  Rule 15c3-1
 153




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##### Table of Contents



Banking
    Regulation
    (dollars in millions)MLBUSA

MLBT-FSBWellCapitalized

Actual

Actual

Actual

ActualMinimum

Ratio

Amount

Ratio

AmountTier 1 leverage


5
%


6.98
%

$
4,321



7.45
%

$
2,686Tier 1 capital


6
%


11.15
%


4,321



10.62
%


2,686Total capital


10
%


12.42
%


4,816



11.41
%


2,888      154




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##### Table of Contents



Note 16.  Discontinued Operations ­ ­          (dollars in millions)2008

2007

2006Total revenues, net of interest expense

$
28


$
1,542


$
878(Losses) / earnings before income taxes


(141
)


1,397



616Income tax (benefit) /expense


(80
)


537



214Net (loss) / earnings from discontinued operations

$
(61
)

$
860


$
402     (dollars in millions)2008

2007Assets:Loans, notes and mortgages

$
117


$
12,995Other assets


53



332Total Assets

$
170


$
13,327Liabilities:Other payables, including interest

$
5


$
489Total Liabilities

$
5


$
489     
 Note 17.
    Restructuring Charge    155




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##### Table of Contents



Note 18.
    Quarterly Information (Unaudited)     (dollars in millions, except per share amounts)For The Quarter EndedDec. 26,

Sept. 26,

June 27,

Mar. 28,

Dec. 28,

Sept. 28,

June 29,

Mar. 30,2008

2008

2008

2008

2007

2007

2007

2007Revenues

$
(9,832
)

$
7,846


$
6,056


$
12,686


$
4,432


$
13,702


$
23,429


$
21,112Interest expense


3,595



7,830



8,172



9,752



12,624



13,322



13,970



11,509Revenues, net of interest expense


(13,427
)


16



(2,116
)


2,934



(8,192
)


380



9,459



9,603Non-interest expenses


8,741



8,267



5,995



6,235



6,728



4,018



6,633



6,702Pre-tax (loss)/earnings from continuing operations


(22,168
)


(8,251
)


(8,111
)


(3,301
)


(14,920
)


(3,638
)


2,826



2,901Income tax (benefit)/expense


(6,340
)


(3,131
)


(3,477
)


(1,332
)


(4,623
)


(1,258
)


816



871Net (loss)/earnings from continuing operations


(15,828
)


(5,120
)


(4,634
)


(1,969
)


(10,297
)


(2,380
)


2,010



2,030Pre-tax (loss)/earnings from discontinued operations


(31
)


(53
)


(32
)


(25
)


795



211



197



194Income tax (benefit)/expense


(15
)


(21
)


(12
)


(32
)


331



72



68



66Net (loss)/earnings from discontinued operations


(16
)


(32
)


(20
)


7



464



139



129



128Net (loss)/earnings

$
(15,844
)

$
(5,152
)

$
(4,654
)

$
(1,962
)

$
(9,833
)

$
(2,241
)

$
2,139


$
2,158(Loss)/earnings per common share:Basic (loss)/earnings per common share from continuing operations

$
(9.94
)

$
(5.56
)

$
(4.95
)

$
(2.20
)

$
(12.57
)

$
(2.99
)

$
2.32


$
2.35Basic (loss)/earnings per common share from discontinued
    operations


(0.01
)


(0.02
)


(0.02
)


0.01



0.56



0.17



0.16



0.15Basic (loss)/earnings per common share

$
(9.95
)

$
(5.58
)

$
(4.97
)

$
(2.19
)

$
(12.01
)

$
(2.82
)

$
2.48


$
2.50Diluted (loss)/earnings per common share from continuing
    operations

$
(9.94
)

$
(5.56
)

$
(4.95
)

$
(2.20
)

$
(12.57
)

$
(2.99
)

$
2.10


$
2.12Diluted (loss)/earnings per common share from discontinued
    operations


(0.01
)


(0.02
)


(0.02
)


0.01



0.56



0.17



0.14



0.14Diluted (loss)/earnings per common share

$
(9.95
)

$
(5.58
)

$
(4.97
)

$
(2.19
)

$
(12.01
)

$
(2.82
)

$
2.24


$
2.26  156




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rule 13a-15(e)
  Material
    Weaknesses in Internal Control Over Financial
    Reporting
          Form 10-K.
    Report on
    Internal Control Over Financial Reporting
   157




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##### Table of Contents



Internal
    Control-Integrated Framework.
  Internal
    Control-Integrated Framework Report of Independent Registered Public
    Accounting Firm
  Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(f)
 158




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    Internal Control 
    Integrated Framework
           159




---



##### Table of Contents



Internal Control  Integrated Framework
        160




---



##### Table of Contents



Item 9B.
    Other
    Information  Not
    Applicable.
  PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services  Pre-Approval
    of Services Provided by the Independent Registered Public
    Accounting Firm
      
    Audit services include audit, review and attest services
    necessary in order to complete the audit and quarterly reviews
    of our financial statements, as well as services that generally
    only the independent registered public accounting firm can
    provide, such as comfort letters, statutory audits, consents and
    review of documents filed with the SEC or other regulatory
    bodies.
    Audit-Related services are assurance and related services
    provided by the independent registered public accounting firm
    that are reasonably related to the review of our financial
    statements and are not audit services.
    Tax services include all services performed by the independent
    registered public accounting firms tax personnel except
    those services specifically related to the audit of our
    financial statements, and include tax compliance, tax advice and
    tax planning services.
    All Other services are services not captured in the other three
    categories that are not prohibited services, as defined by the
    SEC, and that the Audit Committee believes will not impair the
    independence of the independent registered public accounting
    firm.   161




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##### Table of Contents



Fees Paid
    to the Independent Registered Public Accounting Firm
    2008

2007Audit
    Fees(1)

$
46,300,000


$
45,100,000Audit-related
    fees(2)


7,400,000



8,500,000Tax
    fees(3)


2,800,000



3,500,000Total fees

$
56,500,000


$
57,100,000   Forms 10-K 10-Q Form 8-K
  agreed-upon agreed-upon
   162




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules      Form 10-K
    page E-1
 163




---



##### Table of Contents



SIGNATURES  th
  Merrill Lynch &
    Co., Inc.
  By*
    /s/  Brian
    T. Moynihan   Title:
    Chief Executive Officer  th
  Signature

Title*/s/  Brian
    T. MoynihanBrian
    T. Moynihan

Chief Executive Officer (Principal Executive Officer)*/s/  Neil
    A. CottyNeil
    A. Cotty

Chief Financial Officer (Principal Financial Officer)*/s/  Gary
    CarlinGary
    Carlin

Chief Accounting Officer and Controller (Principal Accounting
    Officer)*/s/  Kenneth
    D. LewisKenneth
    D. Lewis

Chairman*/s/  Joe
    L. PriceJoe
    L. Price

Director*/s/  Amy
    Woods BrinkleyAmy
    Woods Brinkley

DirectorBy: /s/  Teresa
    M. BrennerTeresa
    M. Brenner
    Attorney-in-Fact  164




---



##### Table of Contents



EXHIBIT INDEX
  001-07182. Form 10-Q, Form 10-K, Form 8-K Form S-3 10-Q, 10-K, 8-K S-3,
  Plan of acquisition, reorganization, arrangement, liquidation
    or succession2
.1

Agreement and Plan of Merger, dated as of September 15,
    2008, by and between Merrill Lynch & Co., Inc. and
    Bank of America Corporation (incorporated by reference to
    Exhibit 2.1 to Merrill Lynchs Current Report on
    Form 8-K
    dated September 19, 2008).Articles of Incorporation and By-Laws3
.1

Restated Certificate of Incorporation of Merrill Lynch,
    effective as of May 3, 2001 (incorporated by reference to
    Exhibit 3.1 to
    8-K dated
    November 14, 2005).3
.2

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s Floating Rate
    Non-Cumulative Preferred Stock, Series 1, par value $1.00
    per share, effective as of October 25, 2004 (the
    Series 1 Preferred Stock) (incorporated by
    reference to Exhibit 3.2 and 4.1 to
    8-K dated
    November 14, 2005).3
.3

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s Floating Rate
    Non-Cumulative Preferred Stock, Series 2, par value $1.00,
    effective as of March 9, 2005 (the Series 2
    Preferred Stock) (incorporated by reference to
    Exhibit 3.3 and 4.2 to
    8-K dated
    November 14, 2005).3
.4

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s 6.375%
    Non-Cumulative Preferred Stock, Series 3, par value $1.00
    per share, effective as of November 14, 2005 (the
    Series 3 Preferred Stock) (incorporated by
    reference to Exhibit 3.4 and 4.3 to
    8-K dated
    November 14, 2005).3
.5

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s Floating Rate
    Non-Cumulative Preferred Stock, Series 4, par value $1.00
    per share, effective as of November 14, 2005 (the
    Series 4 Preferred Stock) (incorporated by
    reference to Exhibit 3.5 and 4.4 to
    8-K dated
    November 14, 2005).3
.6

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s Floating Rate
    Non-Cumulative Preferred Stock, Series 5, par value $1.00
    per share, effective as of March 16, 2007 (the
    Series 5 Preferred Stock) (incorporated by
    reference to Exhibit 3.6 and 4.5 to
    8-K dated
    March 21, 2007).3
.7

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s 6.70%
    Non-Cumulative Perpetual Preferred Stock, Series 6, par
    value $1.00 per share, effective as of September 21, 2007
    (the Series 6 Preferred Stock) (incorporated by
    reference to Exhibit 3.7 and 4.6 to
    Form 8-K
    dated September 24, 2007).3
.8

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s 6.25%
    Non-Cumulative Perpetual Preferred Stock, Series 7, par
    value $1.00 per share, effective as of September 21, 2007
    (the Series 7 Preferred Stock) (incorporated by
    reference to Exhibit 3.8 and 4.7 to
    8-K dated
    September 24, 2007).3
.9

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s 9.00%
    Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock,
    Series 1, par value $1.00 per share, effective as of
    January 15, 2008 (incorporated by reference to
    Exhibit 3.9 and 4.8 to
    8-K dated
    January 16, 2008). 165




---



##### Table of Contents



3
.10

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s 8.625%
    Non-Cumulative Preferred Stock, Series 8 (incorporated by
    reference to Exhibits 3.10 and 4.9 to
    Form 8-K
    dated April 29, 2008).3
.11

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s 9.00%
    Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock,
    Series 2, par value $1.00 per share and liquidation
    preference $100,000 per share (incorporated by reference to
    Exhibits 3.11 and 4.10 to
    Form 8-K
    dated August 1, 2008).3
.12

Certificate of Designations establishing the rights,
    preferences, privileges, qualifications, restrictions and
    limitations relating to ML & Co.s 9.00%
    Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock,
    Series 3, par value $1.00 per share and liquidation
    preference $100,000 per share (incorporated by reference to
    Exhibits 3.12 and 4.11 are incorporated by reference to
    Registrants Current Report on
    Form 8-K
    dated August 1, 2008).3
.13

Certificate of Merger merging MER Merger Corporation with and
    into Merrill Lynch & Co., Inc. (incorporated by
    reference to Exhibit 3.1 to
    8-K dated
    January 2, 2009).3
.14

Certificate of Amendment to Certificate of Designations of 9.00%
    Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock,
    Series 2 of ML & Co. (incorporated by reference
    to Exhibit 3.2 to
    8-K dated
    January 2, 2009).3
.15

Certificate of Amendment to Certificate of Designations of 9.00%
    Non-Voting Mandatory Convertible Non-Cumulative Preferred Stock,
    Series 3 of Merrill Lynch & Co., Inc.
    (incorporated by reference to Exhibit 3.3 to
    8-K dated
    January 2, 2009).3
.16

By-Laws of Merrill Lynch & Co., Inc. as of
    January 1, 2009 (incorporated by reference to
    Exhibit 3.4 to
    8-K dated
    January 2, 2009).Instruments Defining the Rights of Security Holders,
    Including Indentures ML & Co. hereby undertakes to
    furnish to the SEC, upon request, copies of any agreements not
    filed defining the rights of holders of long-term debt
    securities of ML & Co., none of which authorize an
    amount of securities that exceed 10% of the total assets of
    ML & Co.4
.1

Senior Indenture, dated as of April 1, 1983, as amended and
    restated as of April 1, 1987, between ML & Co.
    and The Bank of New York
    Mellon,1

    as Trustee (1983 Senior Indenture) and the
    Supplemental Indenture thereto dated as of March 5, 1990
    (incorporated by reference to Exhibit 4(i) to
    10-K for the
    fiscal year ended December 29, 1999 (1999
    10-K)).4
.2

Sixth Supplemental Indenture to the 1983 Senior Indenture, dated
    as of October 25, 1993, between ML & Co. and The
    Bank of New York Mellon (incorporated by reference to
    Exhibit 4(ii) to 1999
    10-K).4
.3

Twelfth Supplemental Indenture to the 1983 Senior Indenture,
    dated as of September 1, 1998, between ML & Co.
    and The Bank of New York Mellon (incorporated by reference to
    Exhibit 4(a) to
    8-K dated
    October 21, 1998).4
.4

Fifteenth Supplemental Indenture to the 1983 Senior Indenture,
    dated as of October 14, 2003, between ML & Co.
    and The Bank of New York Mellon (incorporated by reference to
    Exhibit 4(b)(ix) to
    S-3 (file
    no. 333-109802))4
.5

Nineteenth Supplemental Indenture to the 1983 Senior Indenture,
    dated as of September 17, 2007 between ML & Co.,
    and The Bank of New York Mellon (incorporated by reference to
    Exhibit 4.5 to ML & Co.s 10-K for the fiscal year
    ended December 28, 2007)4
.6

Senior Indenture, dated as of October 1, 1993 between
    ML & Co. and The Bank of New York Mellon (1993
    Senior Indenture) (incorporated by reference to
    Exhibit(4)(iv) to
    10-K for
    fiscal year ended December 25, 1998 (1998
    10-K)).    1
 166




---



##### Table of Contents



4
.7

First Supplemental Indenture to the 1993 Senior Indenture, dated
    as of June 1, 1998, between ML & Co. and The Bank
    of New York Mellon (incorporated by reference to
    Exhibit 4(a) to
    8-K dated
    July 2, 1998).4
.8

Form of Subordinated Indenture, dated as of December 17,
    1996, between ML & Co. and The Bank of New York
    Mellon, as trustee (1996 Subordinated Indenture)
    (incorporated by reference to Exhibit 4.7 to
    S-3 (file
    no. 333-16603).4
.9

Supplemental Indenture to the 1996 Subordinated Indenture, dated
    as of May 16, 2006, between ML & Co. and The Bank
    of New York Mellon, as trustee (incorporated by reference to
    Exhibit 4(a) to ML & Co.s Report on
    Form 8-K
    dated May 16, 2006)4
.10

Junior Subordinated Indenture, dated as of December 14,
    2006, between Merrill Lynch & Co., Inc. and The Bank
    of New York Mellon, as trustee (2006 Junior Subordinated
    Indenture) (incorporated by reference to Exhibit 4(a)
    to ML & Co.s Report on
    Form 8-K
    dated December 14, 2006).4
.11

First Supplemental Indenture to the 2006 Junior Subordinated
    Indenture, dated as of December 14, 2006, between Merrill
    Lynch & Co., Inc. and The Bank of New York Mellon, as
    trustee (incorporated by reference to Exhibit 4(b) to
    ML & Co.s Report on
    Form 8-K
    dated December 14, 2006).4
.12

Second Supplemental Junior Subordinated Indenture to the 2006
    Junior Subordinated Indenture, dated as of May 2, 2007,
    between ML & Co. and The Bank of New York Mellon, as
    Trustee (incorporated by reference to Exhibit 4(b) to
    Form 8-K
    dated May 2, 2007).4
.13

Third Supplemental Indenture to the 2006 Junior Subordinated
    Indenture, dated as of August 22, 2007, between
    ML & Co. and The Bank of New York Mellon, as Trustee
    (incorporated by reference to Exhibit 4(b) to
    Form 8-K
    dated August 22, 2007).4
.14

Indenture, dated as of December 14, 2004, between
ML & Co. and The Bank of New York Mellon, relating to
ML & Co.s Exchange Liquid Yield
Optiontm

Notes due 2032 (Zero Coupon  Floating
Rate  Senior) (incorporated by reference to
Exhibit 4(a)(vii) to
S-3 (file
no. 333-122639)).4
.15

First Supplemental Indenture, dated as of March 6, 2008,
    between Merrill Lynch & Co., Inc. and The Bank of New
    York Mellon, as trustee (incorporated by reference to
    Exhibit 4 to Merrill Lynch & Co., Inc.s
    Form 8-K
    filed March 6, 2008).4
.16

Second Supplemental Indenture, dated as of January 1, 2009,
    between Merrill Lynch & Co., Inc., Bank of America
    Corporation and The Bank of New York Mellon, as trustee
    (incorporated by reference to Exhibit 4 to Merrill
    Lynch & Co., Inc.s
    Form 8-K
    filed January 5, 2009.)Material Contracts10
.1

Amended and Restated Stockholder Agreement, dated as of
    July 16, 2008, by and between Merrill Lynch &
    Co., Inc. and BlackRock, Inc. (filed as Exhibit 7.02 to
    ML & Co.s Amendment No. 1 to
    Schedule 13D dated July 22, 2008).10
.2

Letter Agreement, dated October 26, 2008, between the
    United States Department of the Treasury and ML & Co.
    (incorporated by reference to Exhibit 10.2 to 3Q08
    10-Q).10
. 3

Exchange Agreement, dated as of December 26, 2008, between
    Merrill Lynch & Co., Inc. and BlackRock, Inc.
    (incorporated by reference to Exhibit 10.01 of BlackRock
    Inc.s current report on
    Form 8-K,
    filed on December 29, 2008).10
.4

Exchange Agreement, dated as of December 26, 2008, between
    The PNC Financial Services Group, Inc. and BlackRock, Inc.
    (incorporated by reference to Exhibit 10.02 of BlackRock
    Inc.s current report on
    Form 8-K,
    filed on December 29, 2008.)11


Statement re: computation of earnings per common share (the
    calculation of per share earnings is in Part II,
    Item 8, Note 10 to the Consolidated Financial
    Statements (Stockholders Equity and Earnings Per Share)
    and is not required in accordance with Section(b)(11) of
    Item 601 of
    Regulation S-K).12
*

Statement re: computation of ratios.23
*

Consent of Independent Registered Public Accounting Firm,
    Deloitte & Touche LLP. 167




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##### Table of Contents



24
.1*

Power of Attorney.24
.2*

Assistant Secretarys Certificate.31
.1*

Rule 13a-14(a)
    Certification of the Chief Executive Officer.31
.2*

Rule 13a-14(a)
    Certification of the Chief Financial Officer.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.Additional Exhibits99
.1

Stock Option Agreement, dated September 15, 2008, between
    Merrill Lynch & Co., Inc. and Bank of America
    Corporation (incorporated by reference to Exhibit 99.1 to
    Merrill Lynchs Current Report on
    Form 8-K
    dated September 19, 2008).99
.2*

Condensed Financial Information of Registrant Merrill
    Lynch & Co., Inc. (Parent Company Only)    *
    
    Filed herewith 168