Merrill Lynch to price Proceeds linked to the Select 25 Proceeds index

By Angela McDaniels

Seattle, Aug. 17 - Merrill Lynch & Co., Inc. plans to price an issue of PROtected Covered Call EnhancED Income NoteS (Proceeds) linked to the Select 25 Proceeds index, according to a 424B3 filing with the Securities and Exchange Commission.

The notes are expected to settle in September and will mature in September 2011.

Payout at maturity will be par in cash if the index level finishes at 103.09% of its initial level or lower. Otherwise, payout will be par plus any gain on the index.

The Select 25 Proceeds index is a composite index that measures the performance of a strategy that allocates hypothetical funds among three index components:

• Basket Units representing the value of hypothetical purchases of certain stocks and sales of call options on those stocks in the Select 25 Basket using a covered-call strategy. Merrill Lynch International will select the stocks to be included in the basket by determining which 25 stocks in the S&P 500 index have the highest liquidity, highest dividend yield and highest dividend yield across their sector;

• Zero-Coupon Bond Units representing the value of hypothetical zero-coupon bonds; and

• Leverage Units representing the cost of hypothetical borrowed funds, which may increase allocations to the Basket Units.

Merrill Lynch said the index will be rebalanced periodically, which will reflect changes in the performance of the Basket Units, prevailing interest rates and market conditions.

Merrill Lynch, Pierce Fenner & Smith Inc. will be the underwriter.

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