Filing Compare · MERRILL LYNCH PREFERRED FUNDING III LP

~~Table~~UNITED ofSTATES ~~Contents~~SECURITIES AND EXCHANGE COMMISSION

~~UNITED~~WASHINGTON, ~~STATES SECURITIES~~D.C. ~~AND EXCHANGE COMMISSION~~ 20549

~~WASHINGTON,~~FORM ~~D.C. 20549~~ 10-K

~~FORM~~(Mark ~~10-K~~ One)

~~(Mark~~þ ~~One~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

þFor ~~ANNUAL~~the ~~REPORT~~fiscal ~~PURSUANT~~year TOended ~~SECTION~~December 31, 132011 ~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~o ~~the~~TRANSITION ~~fiscal~~REPORT ~~year~~PURSUANT ~~ended~~TO ~~December 31,~~SECTION ~~2010~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

oFor ~~TRANSITION~~the ~~REPORT~~transition ~~PURSUANT~~period ~~TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~from to

~~For the~~MERRILL ~~transition~~LYNCH ~~period~~PREFERRED ~~from to~~ CAPITAL TRUST III

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

~~(Exact~~COMMISSION ~~name~~FILE ofNO.: ~~Registrant as specified in its certificate of trust)~~1-7182-06

~~COMMISSION~~Delaware ~~FILE~~(State ~~NO.:~~or 1other jurisdiction of incorporation or organization) 13-~~7182-06~~ 7139561 (I.R.S. Employer Identification No.)

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



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

4Registrant’s ~~World~~telephone ~~Financial Center New York~~number, ~~New~~including ~~York~~area ~~(Address~~code: ~~of principal executive offices) 10080~~ (~~Zip Code~~212) 449-1000

~~Registrant’s~~SECURITIES ~~telephone~~REGISTERED ~~number,~~PURSUANT ~~including~~TO ~~area~~SECTION ~~code:~~ 12(~~212~~b) ~~449-1000~~OF THE ACT:

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



Title of each class		Name of each exchange on which registered

7% Trust Originated Preferred Securities (“TOPrS”) (and the related guarantee)		New York Stock Exchange

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

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

~~SECURITIES~~MERRILL ~~REGISTERED~~LYNCH ~~PURSUANT~~PREFERRED TOFUNDING ~~SECTION~~III, ~~12(g) OF THE ACT: NONE~~ L.P.

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

~~(Exact~~COMMISSION ~~name~~FILE ofNO.: ~~Registrant as specified in its certificate of limited partnership)~~1-7182-05

~~COMMISSION~~Delaware ~~FILE~~(State ~~NO.:~~or 1other jurisdiction of incorporation or organization) 13-~~7182-05~~ 3982448 (I.R.S. Employer Identification No.)

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



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

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

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

~~Registrant’s~~SECURITIES ~~telephone~~REGISTERED ~~number,~~PURSUANT ~~including~~TO ~~area~~SECTION ~~code:~~ 12(~~212~~b) ~~449-1000~~ OF THE ACT:

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



Title of each class		Name of each exchange on which registered

7% Partnership Preferred Securities (and the related guarantee)		New York Stock Exchange

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

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

~~SECURITIES~~Indicate ~~REGISTERED~~by ~~PURSUANT~~check TOmark ~~SECTION~~if ~~12(g)~~the OFRegistrants ~~THE~~are ~~ACT:~~well-known ~~NONE~~ seasoned issuers, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the Registrants are ~~well-known~~not ~~seasoned~~required ~~issuers,~~to ~~as defined~~file inreports ~~Rule~~pursuant to Section ~~405~~13 or Section 15(d) of the ~~Securities~~Exchange Act. Yes o No þ

Indicate by check mark ifwhether the Registrants: ~~are~~(1) have ~~not~~filed all reports required to ~~file~~be ~~reports pursuant~~filed toby Section 13 or ~~Section~~ 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such requirements for the past 90 days. Yes oþ No þ o

Indicate by check mark whether the Registrants: ~~(1)~~ have ~~filed~~submitted ~~all~~electronically ~~reports~~ and posted on its corporate Web site, if any, every Interactive Data File required to be ~~filed~~submitted byand ~~Section 13~~posted orpursuant ~~15(d)~~to Rule 405 of ~~the~~Regulation S-T ~~Securities~~(§ ~~Exchange~~232.405 ~~Act~~ of ~~1934~~ this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to ~~file~~submit ~~such reports),~~ and ~~(2) have~~post ~~been subject to~~ such ~~requirements for the past 90 days~~files). Yes þ No o

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~Registrants~~of ~~have~~delinquent ~~submitted~~filers ~~electronically~~pursuant ~~and posted~~to onItem 405 ~~its~~of ~~corporate~~Regulation S-K ~~Web~~is ~~site,~~not ifcontained ~~any~~herein, ~~every~~and ~~Interactive~~will ~~Data~~not ~~File~~be ~~required~~contained, to bethe ~~submitted~~best ~~and~~of ~~posted~~the ~~pursuant~~Registrants’ toknowledge, ~~Rule 405~~in ofdefinitive ~~Regulation S-T~~proxy (§or ~~232.405~~information ~~of this~~statements ~~chapter)~~incorporated ~~during~~by ~~the~~reference ~~preceding~~in 12Part ~~months~~III ~~(or~~of ~~for~~this ~~such~~Form ~~shorter~~10-K ~~period~~or ~~that~~any ~~the~~amendment ~~Registrants were required~~ to ~~submit~~this ~~and~~Form ~~post such files)~~10-K. ~~Yes o No o~~ þ

Indicate by check mark ifwhether ~~disclosure~~the ofRegistrants ~~delinquent~~are ~~filers~~large ~~pursuant~~accelerated tofilers, ~~Item 405 of~~accelerated ~~Regulation S~~filers, non-Kaccelerated ~~is not contained herein~~filers, ~~and~~or ~~will~~smaller ~~not~~reporting becompanies. ~~contained,~~See todefinition ~~the best~~ of ~~the~~“accelerated ~~Registrants’ knowledge~~filer”, in“large ~~definitive~~accelerated ~~proxy~~filer” orand ~~information statements~~“smaller ~~incorporated~~reporting bycompany” ~~reference~~ in ~~Part~~Rule ~~III~~12b-2 of ~~this~~the ~~Form~~Exchange ~~10-K or any amendment to this Form 10-K~~Act. þ (Check one)

~~Indicate~~Large ~~by check mark whether the Registrants are large~~ accelerated ~~filers, accelerated~~filer ~~filers,~~o ~~non-accelerated~~Accelerated ~~filers, or smaller reporting companies. See definition of “accelerated~~ filer”, ~~“large~~o Non-accelerated filer” ~~and~~þ ~~“smaller~~ Smaller reporting company” ~~in Rule 12b-2 of the Exchange Act.~~ o

Indicate by check mark whether the Registrants are shell companies (~~Check~~as ~~one~~defined in Rule 12b-2 of the Exchange Act) . Yes o No þ

~~Large~~As ~~accelerated~~of ~~filer~~the oclose ~~Accelerated~~of ~~filer~~business oon ~~Non~~June 30, 2011, no voting or non-~~accelerated~~voting ~~filer~~common þequity ~~Smaller~~of ~~reporting~~the ~~company~~Registrants owas held by non-affiliates of the Registrants.

~~Indicate~~The byRegistrants ~~check~~meet ~~mark~~the ~~whether~~conditions ~~the~~set ~~Registrants~~forth ~~are~~in ~~shell~~General ~~companies~~Instruction I (as1) ~~defined in~~(a) and ~~Rule~~(b) ~~12b~~of Form 10-2K ofand ~~the~~are ~~Exchange~~therefore ~~Act).~~filing ~~Yes~~this oform Nowith þ the reduced disclosure format.

AsDOCUMENTS ofINCORPORATED ~~the~~BY ~~close of business on June 30, 2010, no voting or non-voting common equity of the Registrants was held by non-affiliates of the Registrants.~~ REFERENCE:

~~The~~Information ~~Registrants~~set ~~meet~~forth under certain headings in the ~~conditions~~Prospectus, ~~set~~dated ~~forth~~January 12, in1998, ~~General~~filed ~~Instruction~~pursuant Ito ~~(1)~~Rule 424(~~a) and (~~b) of in connection with Registration Statement on Form S-3 10(No. 333-K42859) filed by the Registrants and ~~are~~Merrill ~~therefore~~Lynch ~~filing~~& Co., Inc., is incorporated by reference in this ~~form~~Form ~~with~~10-K ~~the~~in ~~reduced~~response ~~disclosure format~~to Part I.

~~DOCUMENTS~~TABLE ~~INCORPORATED~~OF ~~BY REFERENCE:~~ CONTENTS

~~Information~~PART ~~set~~I ~~forth~~ITEM ~~under~~1. ~~certain~~BUSINESS ~~headings~~3 inITEM ~~the~~1A. ~~Prospectus,~~RISK ~~dated~~FACTORS ~~January 12,~~3 ~~1998~~ITEM 1B. UNRESOLVED STAFF COMMENTS 3 ITEM 2. PROPERTIES 3 ITEM 3. LEGAL PROCEEDINGS 4 ITEM 4. MINE SAFETY DISCLOSURES 4 PART II ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, ~~filed pursuant~~RELATED toSTOCKHOLDER ~~Rule~~MATTERS ~~424(b)~~AND inISSUER ~~connection~~PURCHASES ~~with~~OF ~~Registration~~EQUITY ~~Statement~~SECURITIES on4 ~~Form~~ ITEM 6. SELECTED FINANCIAL DATA 4 ITEM 7. MANAGEMENT’S-3 ~~(No~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 4 ITEM 7A. ~~333-42859)~~ ~~filed by~~QUANTITATIVE ~~the~~AND ~~Registrants~~QUALITATIVE ~~and~~DISCLOSURES ~~Merrill~~ABOUT ~~Lynch~~MARKET &RISK Co4 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 5 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 5 ITEM 9A. CONTROLS AND PROCEDURES 5 ITEM 9B. OTHER INFORMATION 6 PART III ITEM 10. DIRECTORS, ~~Inc~~EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 6 ITEM 11. EXECUTIVE COMPENSATION 6 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 6 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, isAND ~~incorporated~~DIRECTOR byINDEPENDENCE ~~reference~~6 inITEM ~~this~~14. ~~Form~~PRINCIPAL ~~10-K~~ACCOUNTANT ~~in response~~FEES toAND ~~Part I~~SERVICES 6 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 8 ITEM 15.1 INDEX TO FINANCIALS 9 SIGNATURES 9 EXHIBIT INDEX 11 Exhibit 12 Exhibit 23.1 Exhibit 31.1 Exhibit 31.2 Exhibit 32.1 Exhibit 32.2 Exhibit 99.1 Exhibit 99.2 Exhibit 101

~~TABLE OF CONTENTS~~ 2

PART I			3
ITEM 1. BUSINESS			3
ITEM 1A. RISK FACTORS			3
ITEM 1B. UNRESOLVED STAFF COMMENTS			4
ITEM 2. PROPERTIES			4
ITEM 3. LEGAL PROCEEDINGS			4
ITEM 4. REMOVED AND RESERVED			4
PART II			4
ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			4
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			4
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			5
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			5
ITEM 9A. CONTROLS AND PROCEDURES			5
ITEM 9B. OTHER INFORMATION			6
PART III			6
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE			6
ITEM 11. EXECUTIVE COMPENSATION			6
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			6
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE			6
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES			6
PART IV			8
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES			8
SIGNATURES			9
EXHIBIT INDEX			11
Exhibit 12
Exhibit 23.1
Exhibit 23.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 99.1
Exhibit 99.2

PART I

2 ITEM 1. BUSINESS

~~Table~~MERRILL ofLYNCH ~~Contents~~PREFERRED CAPITAL TRUST III

~~PART~~Merrill I Lynch Preferred Capital Trust III (the “Trust”) is a statutory business trust formed under the Delaware Business Trust Act, as amended, pursuant to a declaration of trust and the filing of a certificate of trust with the Secretary of State of the State of Delaware on December 19, 1997, which was subsequently amended by an amended and restated declaration of trust dated as of January 12, 1998. Merrill Lynch & Co., Inc. (the “Company” or “Merrill Lynch”) is the sole owner of the Trust common securities. On January 1, 2009, the Company became a wholly-owned subsidiary of Bank of America Corporation (“Bank of America”). The Trust exists for the exclusive purposes of (i) issuing trust securities, consisting of 7% Trust Originated Preferred Securities (the “TOPrS”) and trust common securities (the “Trust Common Securities”), representing undivided beneficial ownership interests in the assets of the Trust, (ii) investing the gross proceeds of the trust securities in 7% Partnership Preferred Securities (the “Partnership Preferred Securities”) issued by Merrill Lynch Preferred Funding III, L.P. (the “Partnership”), and (iii) engaging in only those other activities necessary or incidental thereto.

~~ITEM~~MERRILL 1.LYNCH ~~BUSINESS~~PREFERRED FUNDING III, L.P.

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

~~Merrill~~INCORPORATION ~~Lynch~~BY Preferred Capital Trust III (the “Trust”) is a statutory business trust formed under the Delaware Business Trust Act, as amended, pursuant to a declaration of trust and the filing of a certificate of trust with the Secretary of State on December 19, 1997, which was subsequently amended by an amended and restated declaration of trust dated as of January 12, 1998. Merrill Lynch & Co., Inc. (the “Company” or “Merrill Lynch”) is the sole owner of the Trust common securities. On January 1, 2009, the Company became a wholly-owned subsidiary of Bank of America Corporation (“Bank of America”). The Trust exists for the exclusive purposes of (i) issuing trust securities, consisting of 7% Trust Originated Preferred Securities (the “TOPrS”)and trust common securities (the “Trust Common Securities”), representing undivided beneficial ownership interests in the assets of the Trust, (ii) investing the gross proceeds of the trust securities in 7% Partnership Preferred Securities (the “Partnership Preferred Securities”) issued by Merrill Lynch Preferred Funding III, L.P. (the “Partnership”), and (iii) engaging in only those other activities necessary or incidental thereto. REFERENCE

~~MERRILL~~The ~~LYNCH~~information ~~PREFERRED~~set ~~FUNDING~~forth under the headings “Merrill Lynch Preferred Capital Trust III,” “Merrill Lynch Preferred Funding III, L.P. ,” “Description of the Trust Preferred Securities,” “Description of the Trust Guarantee,” “Description of the Partnership Preferred Securities,” and “Description of the Partnership Guarantee” contained in Exhibit 99.1 to this Form 10-K, which is excerpted from the Prospectus dated January 12, 1998 of the Trust and the Partnership, is incorporated by reference herein.

~~The~~ITEM Partnership is a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act, as amended, pursuant to an agreement of limited partnership and the filing of a certificate of limited partnership with the Secretary of State of the State of Delaware on December 19, 1997, which was subsequently amended by an amended and restated agreement of limited partnership dated January 16, 19981A. ~~The~~RISK Company is the sole general partner of the Partnership. The Partnership is managed by the general partner and exists for the exclusive purposes of (i) issuing its partnership interests, consisting of the Company’s general partner interest and the Partnership Preferred Securities, (ii) investing the proceeds thereof in certain eligible securities of the Company and wholly-owned subsidiaries of the Company (the “Affiliate Investment Instruments”) and certain eligible debt securities, and (iii) engaging in only those other activities necessary or incidental thereto. FACTORS

~~INCORPORATION~~The BYassets ~~REFERENCE~~ of the Trust consist solely of the Partnership Preferred Securities. The assets of the Partnership consist principally of the Affiliate Investment Instruments, consisting of debt securities of the Company and debt securities of one or more wholly-owned subsidiaries of the Company. In addition, the Company is the sole owner of the Trust Common Securities and is the sole general partner of the Partnership. Consequently, the risk factors that are applicable to the Company also are applicable to the Partnership and the Trust. A discussion of the most significant factors that could affect the Company’s businesses, operations and financial condition is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and is incorporated by reference from Exhibit 99.2 to this report.

~~The~~ITEM ~~information set forth under the headings “Merrill Lynch Preferred Capital Trust III,” “Merrill Lynch Preferred Funding III, L~~1B.~~P.,”~~ ~~“Description~~UNRESOLVED ofSTAFF the Trust Preferred Securities,” “Description of the Trust Guarantee,” “Description of the Partnership Preferred Securities,” and “Description of the Partnership Guarantee” contained in Exhibit 99.1 to this Form 10-K and in the Prospectus dated January 12, 1998 of the Trust and the Partnership is incorporated by reference herein. COMMENTS

~~ITEM~~Not 1Aapplicable. ~~RISK FACTORS~~

~~The~~ITEM ~~Company is the sole owner of the Trust Common Securities~~2. The Trust exists for the exclusive purposes of (i) issuing trust securities, consisting of the TOPrS and the Trust Common Securities, representing undivided beneficial ownership interests in the assets of the Trust, (ii) investing the gross proceeds of the trust securities in the Partnership Preferred Securities, and (iii) engaging in only those other activities necessary or incidental thereto. PROPERTIES

~~The Company also is the sole general partner of the Partnership~~None. The Partnership is managed by the general partner and exists for the exclusive purposes of (i) issuing its partnership interests, consisting of the Company’s general partner interest and the Partnership Preferred Securities,(ii) investing the proceeds thereof in certain eligible securities of the Company and wholly-owned subsidiaries of the Company and certain eligible debt securities, and (iii) engaging in only those other activities necessary or incidental thereto.

~~Table~~ITEM of3. ~~Contents~~LEGAL PROCEEDINGS

~~In the course of conducting its business operations, the Company is exposed to a variety of risks that are inherent to the financial services business~~None. A summary of some of the significant risks that could affect the Company’s financial condition and results of operations is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and is incorporated by reference from Exhibit 99.2 to this report.

ITEM 1B4. ~~UNRESOLVED~~MINE ~~STAFF~~SAFETY ~~COMMENTS~~DISCLOSURES

None.

~~ITEM~~PART ~~2. PROPERTIES~~II

~~The~~ITEM ~~Registrants~~5. doMARKET ~~not~~FOR ~~own~~REGISTRANTS’ orCOMMON ~~lease~~EQUITY, ~~any~~RELATED ~~real~~STOCKHOLDER ~~property.~~ MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~ITEM~~All 3of the Trust Common Securities and the entire general partnership interest in the Partnership are owned of record and beneficially by the Company. ~~LEGAL~~Accordingly, ~~PROCEEDINGS~~there is no established public market for the Trust Common Securities or the general partnership interest in the Partnership.

The ~~Registrants~~Company, ~~know~~as holder of nothe ~~material~~Trust ~~legal~~Common ~~proceedings~~Securities, ~~involving~~is entitled to receive cumulative cash distributions accumulating from January 16, 1998 and payable quarterly in arrears on each March 30, June 30, September 30 and December 30, commencing March 30, 1998, at an annual rate of 7% of the ~~Trust~~liquidation amount per annum. Distributions not paid on the scheduled payment date will accumulate and compound quarterly at a rate per annum equal to 7%. The certificate of limited partnership of the Partnership does not require any regular periodic distributions to be made to the general partner; however, to the extent that aggregate payments to the Partnership on the Affiliate Investment Instruments and on certain eligible debt securities exceed distributions accumulated or payable with respect to the ~~assets~~Partnership ofPreferred ~~either~~Securities, ofthe ~~them~~Partnership may at times have excess funds which shall be allocated to and may, at the general partner’s sole discretion, be distributed to the general partner.

ITEM 46. ~~REMOVED~~SELECTED ~~AND~~FINANCIAL ~~RESERVED~~DATA

~~PART~~No II disclosure is required for this Item pursuant to General Instruction I of Form 10-K.

ITEM 57. ~~MARKET FOR REGISTRANTS~~MANAGEMENT’S ~~COMMON~~DISCUSSION ~~EQUITY,~~AND ~~RELATED~~ANALYSIS ~~STOCKHOLDER~~OF ~~MATTERS~~FINANCIAL CONDITION AND ~~ISSUER~~RESULTS ~~PURCHASES~~ OF ~~EQUITY SECURITIES~~OPERATIONS

~~There~~No disclosure is norequired ~~established~~for ~~public~~this ~~market~~Item ~~for~~pursuant to General Instruction I of Form 10-K. There are no material changes in the ~~Trust~~amount ~~Common~~of ~~Securities~~revenue orand expense items between the ~~general~~ ~~partnership~~most ~~interest~~recent inyear presented and the ~~Partnership~~year immediately preceding it.

~~All~~ITEM of7A. ~~the~~QUANTITATIVE ~~Trust~~AND ~~Common~~QUALITATIVE ~~Securities~~DISCLOSURES ~~and~~ABOUT ~~the~~MARKET ~~entire general partnership interest in the Partnership are owned of record and beneficially by the Company.~~ RISK

~~The~~On ~~Company~~January 16, as1998, ~~holder of~~ the Trust ~~Common~~invested ~~Securities,~~the isgross ~~entitled~~proceeds ~~to receive~~from ~~cumulative~~the ~~cash~~sale ~~distributions~~of ~~accumulating~~the ~~from~~Trust ~~January 16,~~Common ~~1998~~Securities and ~~payable~~ ~~quarterly~~the TOPrS in ~~arrears~~the onPartnership ~~each~~Preferred ~~March 30,~~Securities ~~June 30,~~(the ~~September 30~~“Trust ~~and December 30,~~Assets”). ~~commencing~~The ~~March 30~~Partnership, ~~1998~~in turn, atinvested anthe ~~annual~~proceeds ~~rate~~from ofthe 7%sale of the ~~liquidation~~ ~~amount~~Partnership ~~per~~Preferred ~~annum.~~Securities ~~Distributions~~and ~~not~~a ~~paid~~capital oncontribution from the ~~scheduled~~Company ~~payment date~~in ~~will~~certain ~~accumulate~~Affiliate ~~and~~Investment ~~compound~~Instruments ~~quarterly~~and ateligible asecurities ~~rate~~(the ~~per~~“Partnership ~~annum~~Assets”). ~~equal~~To tothe ~~7%.~~extent ~~The certificate~~the ofPartnership ~~limited~~has ~~partnership~~funds ofavailable from the Partnership ~~does~~Assets, ~~not~~the ~~require~~general ~~any regular~~partner ~~periodic~~of ~~distributions~~the toPartnership bemay ~~made~~declare distributions to the ~~general~~Trust, ~~partner;~~as ~~however,~~holder to of the ~~extent~~Partnership ~~that~~Preferred ~~aggregate~~Securities. ~~payments~~The Trust’s ability to pay distributions to the ~~Partnership~~holders onof the ~~Affiliate Investment~~TOPrS ~~Instruments~~is ~~and~~dependent on ~~certain~~its ~~eligible~~receipt ~~debt~~of ~~securities exceed~~ distributions ~~accumulated~~on orthe ~~payable~~Trust ~~with~~Assets ~~respect~~from to the Partnership. ~~Preferred Securities~~Therefore, upon the receipt by the Partnership ~~may~~of atpayments ~~times~~from ~~have~~the ~~excess~~Partnership ~~funds~~Assets ~~which~~and ~~shall~~the ~~be allocated~~distribution thereof to ~~and~~the ~~may~~Trust, at the ~~general~~Trust ~~partner’s~~will ~~sole~~pass ~~discretion,~~through besuch ~~distributed~~ payments to the ~~general~~holders ~~partner~~of the TOPrS.

~~ITEM 6. SELECTED FINANCIAL DATA~~4

NoITEM ~~disclosure~~8. isFINANCIAL ~~required~~STATEMENTS ~~for~~AND ~~this~~SUPPLEMENTARY ~~Item pursuant to General Instruction I of Form 10-K.~~ DATA

~~ITEM~~The 7.financial ~~MANAGEMENT’S~~statements ~~DISCUSSION~~and ~~AND~~notes ~~ANALYSIS~~thereto OFand ~~FINANCIAL~~the ~~CONDITION~~Reports ~~AND~~of ~~RESULTS~~Independent OFRegistered ~~OPERATIONS~~Public Accounting Firm set forth on pages F-1 through F-17 are incorporated by reference herein.

NoITEM ~~disclosure is required for this Item pursuant to General Instruction I of Form 10-K~~9. ~~There~~CHANGES ~~are~~IN noAND ~~material~~DISAGREEMENTS ~~changes~~WITH inACCOUNTANTS ~~the~~ON ~~amount~~ACCOUNTING ofAND ~~revenue~~FINANCIAL ~~and expense items between the most recent year presented and the year immediately preceding it.~~ DISCLOSURE

4 None.

~~Table~~ITEM of9A. ~~Contents~~CONTROLS AND PROCEDURES

~~ITEM~~The ~~7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~Trust

OnThe ~~January 16,~~person ~~1998,~~who functions as the ~~Trust~~equivalent ~~invested~~of the ~~gross~~Chief ~~proceeds~~Executive ~~from~~Officer and the ~~sale~~Chief Financial Officer of the Trust ~~Common~~has ~~Securities~~evaluated ~~and~~ the ~~TOPrS~~effectiveness inof the ~~Partnership~~Trust’s ~~Preferred~~disclosure ~~Securities (the~~controls ~~“Trust~~and ~~Assets”).~~procedures ~~The~~(as ~~Partnership,~~defined in ~~turn,~~Rule 13a-15(e) ~~invested~~under the ~~proceeds~~Securities ~~from~~Exchange ~~the sale~~Act of 1934 (the ~~Partnership~~"Exchange ~~Preferred~~Act")) ~~Securities~~as ~~and~~of athe ~~capital~~end ~~contribution~~of ~~from~~ the ~~Company~~ inperiod ~~certain~~covered ~~Affiliate~~by ~~Investment~~this ~~Instruments~~Form ~~and~~10-K. ~~eligible~~Based ~~securities~~on ~~(the “Partnership~~that ~~Assets”).~~evaluation, To the ~~extent~~person ~~the~~who ~~Partnership~~functions ~~has~~as ~~funds available from~~ the ~~Partnership~~equivalent ~~Assets,~~of the ~~general~~Chief ~~partner~~Executive ofOfficer and the ~~Partnership~~Chief ~~may~~Financial ~~declare distributions~~Officer toof the Trust, ashas ~~holder~~concluded ofthat the ~~Partnership Preferred Securities. The~~ Trust’s ~~ability~~disclosure tocontrols ~~pay~~and ~~distributions~~procedures toare ~~the~~effective, ~~holders~~as of the ~~TOPrS~~end ~~is dependent~~of onthe ~~its~~period ~~receipt~~covered ofby ~~distributions~~this onreport, ~~the~~in ~~Trust~~recording, ~~Assets~~processing, ~~from~~summarizing ~~the Partnership.~~and ~~Therefore,~~reporting ~~upon~~information ~~the~~required ~~receipt~~to be disclosed by the ~~Partnership~~Trust ofin ~~payments~~reports ~~from~~that ~~the Partnership~~it ~~Assets~~files ~~and~~or submits under the ~~distribution~~Exchange ~~thereof~~Act, towithin the ~~Trust,~~time ~~the~~periods ~~Trust~~specified ~~will pass~~in ~~through~~the ~~such~~Securities ~~payments~~and toExchange ~~the~~Commission's ~~holders~~("SEC") ofrules ~~the~~and ~~TOPrS~~forms.

~~ITEM~~In 8.addition, ~~FINANCIAL~~no ~~STATEMENTS~~change ~~AND~~in ~~SUPPLEMENTARY~~the ~~DATA~~Trust’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred in the fourth quarter of 2011 that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.

InThe response to this item, the financial statements and notes thereto and the Reports of Independent Registered Public Accounting Firms set forth on pages F-1 through F-19 are incorporated by reference herein. Partnership

~~ITEM~~The 9person who functions as the equivalent of the Chief Executive Officer and the Chief Financial Officer of the Partnership has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-K. ~~CHANGES~~Based INon ~~AND~~that ~~DISAGREEMENTS~~evaluation, ~~WITH~~the ~~ACCOUNTANTS~~person ONwho ~~ACCOUNTING~~functions ~~AND~~as ~~FINANCIAL~~the ~~DISCLOSURE~~equivalent of the Chief Executive Officer and the Chief Financial Officer of the Partnership has concluded that the Partnership’s disclosure controls and procedures are effective, as of the end of the period covered by this report, in recording, processing, summarizing and reporting information required to be disclosed by the Partnership in reports that it files or submits under the Exchange Act, within the time periods specified in the SEC's rules and forms.

~~Not~~In ~~applicable~~addition, no change in the Partnership’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred in the fourth quarter of 2011 that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

~~ITEM~~Report ~~9A.~~on ~~CONTROLS~~Internal ~~AND~~Control ~~PROCEDURES~~Over Financial Reporting

~~The~~Management recognizes its responsibility for establishing and maintaining adequate internal control over financial reporting and has designed internal controls and procedures to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements and related notes in accordance with generally accepted accounting principles in the United States of America. Management assessed the effectiveness of the Trust ’s and the Partnership’s internal control over financial reporting as of December 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that assessment, management believes that the Trust and the Partnership maintained effective internal control over financial reporting as of December 31, 2011.

~~The~~This ~~person~~report ~~who~~does ~~functions~~not asinclude ~~the~~an ~~equivalent~~attestation ofreport ~~the Chief Executive Officer and the Chief Financial Officer~~ of the Trust ~~has evaluated the effectiveness of the Trust~~’s ~~disclosure~~or ~~controls and procedures (as defined in Rule 13a-15(e) under~~ the Securities Exchange Act of 1934) as of the end of the period covered by this Form 10-K. Based on this evaluation, the person who functions as the equivalent of the Chief Executive Officer and the Chief Financial Officer of the Trust has concluded that the TrustPartnership’s ~~disclosure~~independent ~~controls~~registered ~~and~~public ~~procedures~~accounting ~~are~~firm ~~effective~~regarding asinternal ofcontrol ~~the~~over ~~end~~financial ~~of the period covered by this report~~reporting.

In addition, no change in the Trust’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred in the fourth quarter of 2010 that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting. 5

~~The~~ITEM ~~Partnership~~ 9B. OTHER INFORMATION

The person who functions as the equivalent of the Chief Executive Officer and the Chief Financial Officer of the Partnership has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Form 10-KNone. Based on this evaluation, the person who functions as the equivalent of the Chief Executive Officer and the Chief Financial Officer of the Partnership has concluded that the Partnership’s disclosure controls and procedures are effective as of the end of the period covered by this report.

InPART addition, no change in the Partnership’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred in the fourth quarter of 2010 that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting. III

5 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

~~Table~~No disclosure is required for this Item pursuant to General Instruction I of ~~Contents~~Form 10-K.

~~Report~~ITEM on11. ~~Internal~~EXECUTIVE ~~Control Over Financial Reporting~~ COMPENSATION

~~Management~~No ~~recognizes~~disclosure ~~its~~is ~~responsibility~~required for ~~establishing~~this ~~and~~Item ~~maintaining~~pursuant ~~adequate internal control over financial reporting and has designed internal controls and procedures~~ to ~~provide~~General ~~reasonable assurance~~Instruction ~~regarding~~I ~~the reliability~~ of ~~financial~~Form reporting and the preparation of the financial statements and related notes in accordance with generally accepted accounting principles in the United States of America. Management assessed the effectiveness of the Trust’s and the Partnership’s internal control over financial reporting as of December 31, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control10-~~Integrated Framework~~K. ~~Based on its assessment, management believes that the Trust and the Partnership maintained effective internal control over financial reporting as of December 31, 2010.~~

~~This~~ITEM ~~annual~~12. ~~report~~SECURITY ~~does~~OWNERSHIP ~~not~~OF ~~include~~CERTAIN anBENEFICIAL ~~attestation~~OWNERS ~~report~~AND ofMANAGEMENT ~~the~~AND ~~Trust’s~~RELATED orSTOCKHOLDER ~~the Partnership’s independent registered public accounting firm regarding internal control over financial reporting.~~ MATTERS

~~ITEM~~No ~~9B.~~disclosure ~~OTHER~~is ~~INFORMATION~~required for this Item pursuant to General Instruction I of Form 10-K.

~~None~~ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

~~PART~~No ~~III~~ disclosure is required for this Item pursuant to General Instruction I of Form 10-K.

ITEM 1014. ~~DIRECTORS,~~PRINCIPAL ~~EXECUTIVE~~ACCOUNTANT ~~OFFICERS~~FEES AND ~~CORPORATE GOVERNANCE~~SERVICES

NoPre-Approval ~~disclosure~~of isServices ~~required~~Provided ~~for~~by ~~this~~the ~~Item~~Independent ~~pursuant~~Registered toPublic ~~General~~Accounting ~~Instruction I of Form 10-K.~~ Firm

~~ITEM~~Subsequent 11to the acquisition of the Company by Bank of America and consistent with Securities and Exchange Commission (“SEC”) requirements, the Trust and the Partnership follow the policies established by the Audit Committee of the Board of Directors of Bank of America (the “BAC Audit Committee”) regarding engagements of the provision of audit services and permitted nonaudit services to the Trust and the Partnership by the independent registered public accounting firm and by any other accounting firm proposed to be retained to provide audit services (e.g., ~~EXECUTIVE~~in ~~COMPENSATION~~compliance with a foreign statute) or non-audit services.

NoOn ~~disclosure~~an isannual ~~required~~basis the BAC Audit Committee pre-approves a list of services and sets pre-approved fee levels that may be provided by PricewaterhouseCoopers LLP and their affiliates (“PwC”), the Trust’s and the Partnership’s registered independent public accounting firm, without obtaining engagement specific pre-approval from the BAC Audit Committee. The pre-approved list of services consists of audit services, audit-related services, tax services and all other services. All requests or applications for ~~this~~PwC ~~Item~~audit, ~~pursuant~~audit-related services, tax services or all other services must be submitted to ~~General~~members ~~Instruction~~of IBank of ~~Form~~ 10America’s corporate audit function or tax function to determine if the services are included within the pre-Kapproved list of services that have received BAC Audit Committee pre-approval. Any type of service that is not included on the pre-approved list of services must be specifically approved by the BAC Audit Committee or its designee. Any proposed service that is included on the list of pre-approved services but will cause the pre-approved fee level to be exceeded will also require specific pre-approval by the BAC Audit Committee or its designee, the BAC Audit Committee Chairman, provided that any such pre-approval by the BAC Audit Committee Chairman is presented to the full BAC Audit Committee at its next meeting. All of the services provided by, and fees paid to, PwC in 2011 were pre-approved by the BAC Audit Committee, and there were no services for which the de minimis exception permitted in certain circumstances under SEC rules was utilized.

~~ITEM~~PwC's ~~12.~~2011 ~~SECURITY~~and ~~OWNERSHIP~~2010 ~~OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS~~Fees

NoPwC’s ~~disclosure~~fees isfor ~~required~~professional services rendered in, or provided for, ~~this~~2011 ~~Item~~and ~~pursuant~~2010, respectively, to ~~General~~the ~~Instruction~~Trust Iand ~~of Form~~Partnership ~~10-K.~~ were:

~~ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE~~6

No disclosure is required for this Item pursuant to General Instruction I of Form 10-K.



	2011		2010
Audit Fees⁽¹⁾	$	15,000	$	15,000
Audit-related fees	—		—
Tax fees	—		—
All other fees	—		—
Total fees	$	15,000	$	15,000

~~ITEM~~(1) 14Audit Fees consisted of fees billed by PwC related to the audit of the Trust’s and the Partnership’s Financial Statements filed with the SEC. ~~PRINCIPAL~~Audit ~~ACCOUNTANT~~fees ~~FEES~~are ~~AND~~those ~~SERVICES~~billed or expected to be billed for audit services related to each fiscal year.

~~Pre-Approval of Services Provided by the Independent Registered Public Accounting Firm~~ 7

~~Subsequent~~PART to the acquisition of the Company by Bank of America and consistent with Securities and Exchange Commission (“SEC”) requirements, the Trust and the Partnership follow the policies established by the Audit Committee of the Board of Directors of Bank of America (the “BAC Audit Committee”) regarding engagements of the provision of audit services and permitted nonaudit services to them by the independent registered public accounting firm and by any other accounting firm proposed to be retained to provide audit services (e.g., in compliance with a foreign statute) or non-audit services. IV

6 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

~~Table~~Documents filed as part of ~~Contents~~this report:

On1 anFinancial annual basis the BAC Audit Committee pre-approves a list of services and sets pre-approved fee levels that may be provided by PricewaterhouseCoopers LLP and their affiliates (“PwC”), the Trust’s and the Partnership’s registered independent public accounting firm, without obtaining engagement specific pre-approval from the BAC Audit Committee. The pre-approved list of services consists of audit services, audit-related services, tax services and all other services. All requests or applications for PwC audit services, audit-related services, tax services or all other services must be submitted to members of Bank of America’s corporate audit function or tax function to determine if the services are included within the pre-approved list of services that have received BAC Audit Committee pre-approval. Any type of service that is not included on the pre-approved list of services must be specifically approved by the BAC Audit Committee or its designee. Any proposed service that is included on the list of pre-approved services but will cause the pre-approved fee level to be exceeded will also require specific pre-approval by the BAC Audit Committee or its designee, the BAC Audit Committee Chairman, provided that any such pre-approval by the BAC Audit Committee is presented to the full BAC Audit Committee at its next meeting. Statements

~~All~~The contents of the ~~fees~~financial ~~paid~~statements toare ~~PwC~~listed inon ~~2010~~page ~~were pre~~F-~~approved~~1, byand the ~~BAC~~financial ~~Audit~~statements ~~Committee,~~ and ~~there~~accompanying ~~were~~Reports ~~no services~~of ~~for~~Independent ~~which~~Registered ~~the~~Public deAccounting ~~minimis~~Firm ~~exception~~appear ~~permitted~~on inpages ~~certain~~F-2 ~~circumstances~~through ~~under SEC rules was utilized~~F-17.

~~Fees~~2 ~~Paid to the Independent Registered Public Accounting Firm~~ Exhibits

~~PwC’s~~An ~~fees~~exhibit ~~for~~index ~~professional~~has ~~services~~been ~~rendered~~filed inas orpart ~~provided~~of ~~for~~this ~~2010~~report ~~and~~on ~~2009,~~page ~~respectively,~~11 toand ~~the~~is ~~Trust~~incorporated ~~and~~herein ~~Partnership~~by ~~were:~~ reference.

	2010		2009
Audit Fees(1)	$	15,000	$	15,000
Audit-related fees		—		—
Tax fees		—		—
All other fees		—		—
Total fees	$	15,000	$	15,000

~~(1)~~INDEX ~~Audit~~TO ~~Fees~~FINANCIAL ~~consisted of fees for the audits and reviews of the Trust’s and the Partnership’s financial statements filed with the SEC on Forms 10-K and 10-Q.~~STATEMENTS

7 ITEM 15(1)




FINANCIAL STATEMENTS	PAGE

MERRILL LYNCH PREFERRED CAPITAL TRUST III

Balance Sheets, December 31, 2011 and December 31, 2010		10

Statements of Earnings, Year Ended December 31, 2011, December 31, 2010 and December 31, 2009		11

Statements of Changes in Stockholders’ Equity, Year Ended December 31, 2011, December 31, 2010 and December 31, 2009		12

Statements of Cash Flows, Year Ended December 31, 2011, December 31, 2010 and December 31, 2009		13

Notes to Financial Statements		14

Report of Independent Registered Public Accounting Firm		16

Supplemental Financial Information (Unaudited)		17

MERRILL LYNCH PREFERRED FUNDING III, L.P.

Balance Sheets, December 31, 2011 and December 31, 2010		18

Statements of Earnings, Year Ended December 31, 2011, December 31, 2010 and December 31, 2009		19

Statements of Changes in Partners' Capital, Year Ended December 31, 2011, December 31, 2010 and December 31, 2009		20

Statements of Cash Flows, Year Ended December 31, 2011, December 31, 2010 and December 31, 2009		21

Notes to Financial Statements		22

Report of Independent Registered Public Accounting Firm		24

Supplemental Financial Information (Unaudited)		25

~~PART IV~~ 9

~~ITEM~~MERRILL ~~15.~~LYNCH ~~EXHIBITS~~PREFERRED ~~AND~~CAPITAL ~~FINANCIAL~~TRUST ~~STATEMENT SCHEDULES~~III

~~Documents~~BALANCE ~~filed as part of this Report:~~ SHEETS

1.(dollars ~~Financial~~in ~~Statements~~thousands, except per security amounts)

The contents of the financial statements are listed on page F-1, and the financial statements and accompanying Reports of Independent Registered Public Accounting Firms appear on pages F-2 through F-19.



	December 31, 2011		December 31, 2010
ASSETS
Investment in affiliate partnership preferred securities	$	773,196	$	773,196
Total Assets	$	773,196	$	773,196

STOCKHOLDERS’ EQUITY

Stockholders’ Equity:
Preferred securities (7% Trust Originated Preferred Securities; 30,000,000 authorized, issued, and outstanding; $25 liquidation amount per security)	$	750,000	$	750,000
Common securities (7% Trust Common Securities; 927,840 authorized, issued, and outstanding; $25 liquidation amount per security)	23,196		23,196
Total Stockholders’ Equity	$	773,196	$	773,196

2.See ~~Financial~~Notes ~~Statement~~to ~~Schedules~~Financial Statements

~~None.~~ 10

3.MERRILL ~~Exhibits~~LYNCH PREFERRED CAPITAL TRUST III

AnSTATEMENTS ~~exhibit~~OF ~~index has been filed as part of this report and is incorporated herein by reference.~~ EARNINGS

8 (dollars in thousands)

~~INDEX~~See TONotes ~~FINANCIAL~~to ~~STATEMENTS~~ Financial Statements

~~ITEM 15(1)~~ 11

FINANCIAL STATEMENTS	PAGE
MERRILL LYNCH PREFERRED CAPITAL TRUST III
Balance Sheets, December 31, 2010 and December 31, 2009		F-2
Statements of Earnings, Year Ended December 31, 2010, December 31, 2009 and December 26, 2008		F-3
Statements of Changes in Stockholders’ Equity, Year Ended December 31, 2010, December 31, 2009 and December 26, 2008		F-4
Statements of Cash Flows, Year Ended December 31, 2010, December 31, 2009 and December 26, 2008		F-5
Notes to Financial Statements		F-6
Reports of Independent Registered Public Accounting Firms		F-8
Supplemental Financial Information (Unaudited)		F-10
MERRILL LYNCH PREFERRED FUNDING III, L.P.
Balance Sheets, December 31, 2010 and December 31, 2009		F-11
Statements of Earnings, Year Ended December 31, 2010, December 31, 2009 and December 26, 2008		F-12
Statements of Changes in Partners’ Capital, Year Ended December 31, 2010, December 31, 2009 and December 26, 2008		F-13
Statements of Cash Flows, Year Ended December 31, 2010, December 31, 2009 and December 26, 2008		F-14
Notes to Financial Statements		F-15
Reports of Independent Registered Public Accounting Firms		F-17
Supplemental Financial Information (Unaudited)		F-19

MERRILL LYNCH PREFERRED CAPITAL TRUST III

~~F-1~~ STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~Table~~(dollars ofin ~~Contents~~thousands)

MERRILL LYNCH PREFERRED CAPITAL TRUST III



	FOR THE YEAR ENDED
	December 31, 2011			December 31, 2010			December 31, 2009

PREFERRED SECURITIES
Balance, beginning and end of period	$	750,000		$	750,000		$	750,000

COMMON SECURITIES
Balance, beginning and end of period	23,196			23,196			23,196

UNDISTRIBUTED EARNINGS
Balance, beginning of period	—			—			—
Earnings	54,124			54,124			54,124
Distributions	(54,124		)	(54,124		)	(54,124		)
Balance, end of period	—			—			—
Total Stockholders’ Equity	$	773,196		$	773,196		$	773,196

~~BALANCE~~See ~~SHEETS (dollars~~Notes into ~~thousands,~~Financial ~~except per security amounts)~~ Statements

	December 31, 2010		December 31, 2009
ASSETS
Investment in affiliate partnership preferred securities	$	773,196	$	773,196
Total Assets	$	773,196	$	773,196
STOCKHOLDERS’ EQUITY
Stockholders’ equity:
Preferred securities (7% Trust Originated Preferred Securities; 30,000,000 authorized, issued, and outstanding; $25 liquidation amount per security)	$	750,000	$	750,000
Common securities (7% Trust Common Securities; 927,840 authorized, issued, and outstanding; $25 liquidation amount per security)		23,196		23,196
Total Stockholders’ equity	$	773,196	$	773,196

~~See~~MERRILL ~~Notes~~LYNCH toPREFERRED ~~Financial~~CAPITAL ~~Statements~~ TRUST III

~~F-2~~ STATEMENTS OF CASH FLOWS

~~Table~~(dollars ofin ~~Contents~~thousands)

MERRILL LYNCH PREFERRED CAPITAL TRUST III



	FOR THE YEAR ENDED
	December 31, 2011			December 31, 2010			December 31, 2009

CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings	$	54,124		$	54,124		$	54,124
Cash provided by operating activities	54,124			54,124			54,124

CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions	(54,124		)	(54,124		)	(54,124		)
Cash used for financing activities	(54,124		)	(54,124		)	(54,124		)

NET CHANGE IN CASH	—			—			—
CASH, BEGINNING OF PERIOD	—			—			—
CASH, END OF PERIOD	$	—		$	—		$	—

~~STATEMENTS~~See OFNotes ~~EARNINGS~~ to Financial Statements

~~(dollars in thousands)~~ 13

	FOR THE YEAR ENDED
	December 31, 2010		December 31, 2009		December 26, 2008
EARNINGS
Interest on affiliate partnership preferred securities	$	54,124	$	54,124	$	54,124

MERRILL LYNCH PREFERRED CAPITAL TRUST III

~~See~~NOTES ~~Notes~~TO toFINANCIAL ~~Financial Statements~~ STATEMENTS

~~F-3~~ December 31, 2011

~~Table~~1. ofORGANIZATION ~~Contents~~AND PURPOSE

~~MERRILL~~Merrill ~~LYNCH~~Lynch ~~PREFERRED~~Preferred ~~CAPITAL~~Capital ~~TRUST~~Trust III (the “Trust”) is a statutory business trust formed under the Delaware Business Trust Act, as amended. Merrill Lynch & Co., Inc. (the “Company”) is the sole owner of the Trust common securities. The Trust exists for the exclusive purposes of (i) issuing trust securities, consisting of 7% Trust Originated Preferred Securities (the “Trust Preferred Securities”) and trust common securities (the “Trust Common Securities”), representing undivided beneficial ownership interests in the assets of the Trust, (ii) investing the gross proceeds of the trust securities in 7% Partnership Preferred Securities (the “Partnership Preferred Securities”) issued by Merrill Lynch Preferred Funding III, L.P. (the “Partnership”), and (iii) engaging in only those other activities necessary or incidental thereto.

~~STATEMENTS~~The OFCompany ~~CHANGES~~has INagreed ~~STOCKHOLDERS’~~to ~~EQUITY~~ (i) pay all fees and expenses related to the organization and operations of the Trust (including taxes, audit fees, duties, assessments, or government charges of whatever nature (other than withholding taxes) imposed by the United States or any other domestic taxing authority upon the Trust) and the offering of the Trust Preferred Securities and (ii) be responsible for all debts and other obligations of the Trust (other than with respect to the Trust Preferred Securities and the Trust Common Securities). The Company has agreed to indemnify the trustees and certain other persons to the fullest extent permitted by applicable law for expenses arising from certain claims.

On January 1, 2009, the Company became a wholly-owned subsidiary of Bank of America Corporation (~~dollars~~“Bank inof ~~thousands~~America”) .

	FOR THE YEAR ENDED
	December 31, 2010			December 31, 2009			December 26, 2008
PREFERRED SECURITIES
Balance, beginning and end of period	$	750,000		$	750,000		$	750,000
COMMON SECURITIES
Balance, beginning and end of period		23,196			23,196			23,196
UNDISTRIBUTED EARNINGS
Balance, beginning of period		—			—			—
Earnings		54,124			54,124			54,124
Distributions		(54,124	)		(54,124	)		(40,593	)
Distributions payable		—			—			(13,531	)
Balance, end of period		—			—			—
Total Stockholders’ Equity	$	773,196		$	773,196		$	773,196

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~See~~BASIS ~~Notes~~OF ~~to Financial Statements~~ PRESENTATION

~~F-4~~ The financial statements are presented in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates that affect reported amounts and disclosure of contingencies in the financial statements. As such, actual results could differ from those estimates.

~~Table of Contents~~INVESTMENTS

~~MERRILL~~The ~~LYNCH~~investment ~~PREFERRED~~in ~~CAPITAL~~the ~~TRUST~~affiliate ~~III~~ partnership preferred securities represents a limited partnership interest and is recorded at cost. Income on the Partnership Preferred Securities is accrued when earned.

~~STATEMENTS~~INCOME ~~OF CASH FLOWS~~ TAXES

~~(dollars~~The inTrust ~~thousands)~~ does not incur any income tax liabilities. Such liabilities are incurred directly by the security holders.

	FOR THE YEAR ENDED
	December 31, 2010			December 31, 2009			December 26, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings	$	54,124		$	54,124		$	54,124
Cash provided by operating activities		54,124			54,124			54,124
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions		(54,124	)		(54,124	)		(54,124	)
Cash used for financing activities		(54,124	)		(54,124	)		(54,124	)
NET CHANGE IN CASH		—			—			—
CASH, BEGINNING OF PERIOD		—			—			—
CASH, END OF PERIOD	$	—		$	—		$	—

3. INVESTMENT IN AFFILIATE PARTNERSHIP PREFERRED SECURITIES

~~SUPPLEMENTAL~~The ~~DISCLOSURE~~Trust OFholds ~~CASH~~30,000,000 ~~FLOWS:~~ 7% Partnership Preferred Securities and 927,840 7% Trust Common Securities, $25 liquidation amount per each security. The interest payment dates and redemption provisions of the Partnership Preferred Securities, which became redeemable on March 30, 2008 at the option of the Partnership, correspond to the distribution payment dates and redemption provisions of the Trust Preferred Securities. Upon any redemption of the Partnership Preferred Securities, the Trust Preferred Securities will be redeemed. The Company has guaranteed, on a subordinated basis, the payment of distributions by the Partnership on the Partnership Preferred Securities if, as, and when declared out of funds legally available and payments upon liquidation of the Partnership or the redemption of the Partnership Preferred Securities to the extent of funds legally available.

~~There~~4. ~~were~~STOCKHOLDERS’ ~~no distributions accrued at December 31, 2010 and December 31, 2009 and $13,531 was accrued at December 26, 2008.~~ EQUITY

~~See~~TRUST ~~Notes~~PREFERRED ~~to Financial Statements~~ SECURITIES

~~F-5~~ The Trust issued 30,000,000 7% Trust Preferred Securities, $25 liquidation amount per security in a public offering on January 16, 1998. The Trust Preferred Securities became redeemable on March 30, 2008 at the option of the Trust, in whole or in part, at a redemption price equal to $25 per security. Distributions on the Trust Preferred Securities are cumulative from the date of original issue and are payable quarterly if, as, and when the Trust has funds available for payment. Holders of the Trust Preferred Securities have limited voting rights and are not entitled to vote to appoint, remove, or replace, or to increase or decrease the number of, trustees, which voting rights are vested exclusively in the holder of the Trust Common Securities. Under certain circumstances, the Trust Preferred Securities have preferential rights to payment relative to the Trust Common

~~Table of Contents~~14

MERRILL LYNCH PREFERRED CAPITAL TRUST III

NOTES TO FINANCIAL STATEMENTS

December 31, ~~2010~~ 2011

1Securities. ~~ORGANIZATION AND PURPOSE~~

~~Merrill~~The ~~Lynch~~Company ~~Preferred~~has ~~Capital~~guaranteed, ~~Trust~~on ~~III (the “Trust”) is~~ a ~~statutory~~subordinated ~~business trust formed under the Delaware Business Trust Act~~basis, ~~as amended. Merrill Lynch & Co., Inc. (~~the ~~“Company”)~~payment isin ~~the~~full ~~sole owner~~ of ~~the~~all ~~Trust~~distributions ~~common~~and ~~securities. The~~other ~~Trust~~payments ~~exists~~on ~~for~~ the ~~exclusive purposes of (i) issuing trust securities, consisting of 7%~~ Trust ~~Originated~~ Preferred Securities ~~(the~~to ~~“Trust Preferred Securities”) and trust common securities (~~the ~~“Trust~~extent ~~Common~~that ~~Securities”), representing undivided beneficial ownership interests in~~ the ~~assets of the~~ Trust, ~~(ii) investing~~has ~~the~~funds ~~gross~~legally ~~proceeds~~available. ofThis ~~the~~guarantee ~~trust~~and ~~securities in 7% Partnership Preferred Securities (~~the ~~“Partnership~~partnership ~~Preferred~~distribution ~~Securities”) issued~~guarantee byare ~~Merrill~~subordinated ~~Lynch~~to ~~Preferred~~all ~~Funding~~other ~~III,~~liabilities ~~L.P.~~of (the ~~“Partnership”), and (iii) engaging in only those other activities necessary or incidental thereto~~Company.

~~The~~TRUST ~~Company~~COMMON has agreed to (i) pay all fees and expenses related to the organization and operations of the Trust (including taxes, audit fees, duties, assessments, or government charges of whatever nature (other than withholding taxes) imposed by the United States of America or any other domestic taxing authority upon the Trust) and the offering of the Trust Preferred Securities and (ii) be responsible for all debts and other obligations of the Trust (other than with respect to the Trust Preferred Securities and the Trust Common Securities). The Company has agreed to indemnify the trustees and certain other persons to the fullest extent permitted by applicable law for expenses arising from certain claims. SECURITIES

OnThe ~~January 1~~Trust issued 927,840 ~~2009~~7% Trust Common Securities, $25 liquidation amount per security, to the Company on January 16, 1998. The Trust Common Securities became aredeemable ~~wholly-owned~~on ~~subsidiary~~March 30, of2008 ~~Bank~~at the option of ~~America~~ ~~Corporation~~the ~~(“Bank~~Trust, ofin ~~America”)~~whole or in part, at a redemption price equal to $25 per security.

~~2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~ 15

~~BASIS~~REPORT OF ~~PRESENTATION~~ INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~The~~To ~~financial~~Trustees ~~statements are presented in accordance with accounting principles generally accepted in the United States~~ of ~~America,~~Merrill ~~which~~Lynch ~~require~~Preferred ~~management~~Capital ~~to make~~Trust ~~estimates that affect reported amounts and disclosure of contingencies in the financial statements. As such, actual results could differ from those estimates.~~ III:

~~Effective~~In ~~January 1,~~our ~~2009~~opinion, the ~~Trust~~accompanying ~~adopted~~balance ~~calendar~~sheets ~~quarter-end~~and the related statements of earnings, changes in stockholders’ equity, and ~~year-end reporting~~cash ~~periods~~flows topresent ~~coincide~~fairly, ~~with~~in ~~those~~all material respects, the financial position of Merrill Lynch Preferred Capital Trust III (the ~~Company~~“Trust”) at December 31, 2011 and ~~Bank~~December 31, 2010, and the results of ~~America. Earnings~~its operations and its cash flows for each of the ~~intervening~~three years in the period ~~between~~ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Trust’s ~~fiscal~~management. ~~year~~Our ~~ended December 26,~~responsibility ~~2008~~is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the ~~calendar~~audit ~~year~~to ~~beginning~~obtain ~~January 1,~~reasonable ~~2009~~assurance ~~were~~about ~~not~~ whether the financial statements are free of material misstatement. ~~During~~An ~~this~~audit ~~period~~includes examining, on a test basis, evidence supporting the ~~Trust~~amounts ~~received~~and ~~cash~~disclosures ofin ~~$13.5 million from~~the anfinancial ~~affiliate~~statements, assessing the accounting principles used and ~~paid~~significant ~~$13~~estimates made by management, and evaluating the overall financial statement presentation.~~5 million~~ inWe ~~distributions~~believe that our audits provide a reasonable basis for our opinion.

~~INVESTMENTS~~ /s/ PricewaterhouseCoopers LLP

~~The~~New ~~investment~~York, inNew ~~the affiliate partnership preferred securities represents a limited partnership interest and is recorded at cost. Income on the Partnership Preferred Securities is accrued when earned.~~ York

~~INCOME~~March 21, ~~TAXES~~ 2012

~~The Trust does not incur any income tax liabilities. Such liabilities are incurred directly by the security holders.~~ 16

~~F-6~~ SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)

~~Table~~Quarterly ~~of Contents~~Information

~~MERRILL~~The ~~LYNCH~~unaudited ~~PREFERRED~~quarterly ~~CAPITAL~~results ~~TRUST~~of operations of Merrill Lynch Preferred Capital Trust III ~~NOTES~~ TOfor ~~FINANCIAL~~the ~~STATEMENTS~~ years ended December 31, 2011 and 2010 are prepared in conformity with U.S. generally accepted accounting principles and reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results of operations for the periods presented. Results of any interim period are not necessarily indicative of results for a full year.

3.(dollars ~~INVESTMENT~~in ~~IN AFFILIATE PARTNERSHIP PREFERRED SECURITIES~~ thousands)

The Trust holds 30,000,000 7% Partnership Preferred Securities and 927,840 7% Trust Common Securities, $25 liquidation amount per each security. The interest payment dates and redemption provisions of the Partnership Preferred Securities, which became redeemable on March 30, 2008 at the option of the Partnership, correspond to the distribution payment dates and redemption provisions of the Trust Preferred Securities. Upon any redemption of the Partnership Preferred Securities, the Trust Preferred Securities will be redeemed. The Company has guaranteed, on a subordinated basis, the payment of distributions by the Partnership on the Partnership Preferred Securities if, as, and when declared out of funds legally available and payments upon liquidation of the Partnership or the redemption of the Partnership Preferred Securities to the extent of funds legally available.



	For the Quarter Ended
	Dec. 31, 2011		Sept. 30, 2011		June 30, 2011		Mar. 31, 2011		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010		Mar 31, 2010
Total Revenues	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531
Earnings	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531

~~4. STOCKHOLDERS’ EQUITY~~ 17

~~TRUST~~MERRILL LYNCH PREFERRED ~~SECURITIES~~ FUNDING III, L.P.

~~The~~BALANCE Trust issued 30,000,000 7% Trust Preferred Securities, $25 liquidation amount per security in a public offering on January 16, 1998. The Trust Preferred Securities became redeemable on March 30, 2008 at the option of the Trust, in whole or in part, at a redemption price equal to $25 per security. Distributions on the Trust Preferred Securities are cumulative from the date of original issue and are payable quarterly if, as, and when the Trust has funds available for payment. Holders of the Trust Preferred Securities have limited voting rights and are not entitled to vote to appoint, remove, or replace, or to increase or decrease the number of, trustees, which voting rights are vested exclusively in the holder of the Trust Common Securities. Under certain circumstances, the Trust Preferred Securities have preferential rights to payment relative to the Trust Common Securities. SHEETS

~~The~~(dollars ~~Company has guaranteed, on a subordinated basis, the payment~~ in full of all distributions and other payments on the Trust Preferred Securities to the extent that the Trust has funds legally available. This guarantee and the partnership distribution guarantee are subordinated to all other liabilities of the Company. thousands)

TRUST COMMON SECURITIES



	December 31, 2011		December 31, 2010

ASSETS

Investments:
Affiliate debentures	$	900,547	$	900,547
U.S. Government and agencies	9,098		9,101
Total investments	909,645		909,648
Total Assets	$	909,645	$	909,648

PARTNERS’ CAPITAL

Limited partnership interest	$	773,196	$	773,196
General partnership interest	136,449		136,452
Total Partners’ Capital	$	909,645	$	909,648

~~The~~See ~~Trust~~Notes ~~issued 927,840 7% Trust Common Securities, $25 liquidation amount per security,~~ to ~~the~~Financial ~~Company on January 16, 1998. The Trust Common Securities became redeemable on March 30, 2008 at the option of the Trust, in whole or in part, at a redemption price equal to $25 per security.~~ Statements

~~F-7~~ 18

~~Table~~MERRILL ofLYNCH ~~Contents~~PREFERRED FUNDING III, L.P.

~~REPORT~~STATEMENTS OF ~~INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~ EARNINGS

To(dollars ~~Trustees~~in ~~of Merrill Lynch Preferred Capital Trust III:~~ thousands)

In our opinion, the accompanying balance sheets and the related statements of earnings, changes in stockholders’ equity, and cash flows present fairly, in all material respects, the financial position of Merrill Lynch Preferred Capital Trust III (the “Trust”) at December 31, 2010 and December 31, 2009, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



	FOR THE YEAR ENDED
	December 31, 2011		December 31, 2010		December 31, 2009

EARNINGS
Interest income:
Affiliate debentures	$	63,038	$	63,038	$	63,038
U.S. Government and agencies	19		17		30
Earnings	$	63,057	$	63,055	$	63,068

~~/s/~~See ~~PricewaterhouseCoopers~~Notes ~~LLP New~~to ~~York,~~Financial ~~New York March 28, 2011~~ Statements

~~F-8~~ 19

~~Table~~MERRILL ofLYNCH ~~Contents~~PREFERRED FUNDING III, L.P.

~~REPORT~~STATEMENTS OF ~~INDEPENDENT~~CHANGES ~~REGISTERED~~IN ~~PUBLIC~~PARTNERS’ ~~ACCOUNTING FIRM~~ CAPITAL

To(dollars ~~the~~in ~~Trustees of Merrill Lynch Preferred Capital Trust III:~~ thousands)

We have audited the accompanying statements of earnings, changes in stockholders’ equity and cash flows of Merrill Lynch Preferred Capital Trust III (the “Trust”) for the year ended December 26, 2008 (”2008 financial statements”). These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audit.



	FOR THE YEAR ENDED
	December 31, 2011			December 31, 2010			December 31, 2009

LIMITED PARTNER’S CAPITAL
Balance, beginning of period	$	773,196		$	773,196		$	773,196
Net income allocated to limited partner	54,124			54,124			54,124
Distributions	(54,124		)	(54,124		)	(54,124		)
Balance, end of period	773,196			773,196			773,196

GENERAL PARTNER’S CAPITAL
Balance, beginning of period	136,452			136,456			136,452
Net income allocated to general partner	8,933			8,931			8,944
Distributions	(8,936		)	(8,935		)	(8,940		)
Balance, end of period	136,449			136,452			136,456
TOTAL PARTNERS’ CAPITAL	$	909,645		$	909,648		$	909,652

WeSee ~~conducted~~Notes ~~our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit~~ to ~~obtain~~Financial reasonable assurance about whether the financial statements are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Statements

In our opinion, such 2008 financial statements present fairly, in all material respects, the results of the Trust’s operations and its cash flows for the year ended December 26, 2008, in conformity with accounting principles generally accepted in the United States of America. 20

AsMERRILL ~~discussed~~LYNCH inPREFERRED ~~Note~~FUNDING 1III, ~~Merrill Lynch & Co~~L.~~, Inc~~P. ~~became a wholly-owned subsidiary of Bank of America Corporation on January 1, 2009.~~

~~/s/~~STATEMENTS ~~Deloitte~~OF &CASH ~~Touche LLP New York, New York March 25, 2009~~ FLOWS

~~F-9~~ (dollars in thousands)



	FOR THE YEAR ENDED
	December 31, 2011			December 31, 2010			December 31, 2009

CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings	$	63,057		$	63,055		$	63,068
Accretion of interest on securities issued by U.S. Government and agencies	(19		)	(17		)	(30		)
Cash provided by operating activities	63,038			63,038			63,038

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities	(9,096		)	(18,190		)	(18,192		)
Maturities of investment securities	9,118			18,211			18,218
Cash provided by investing activities	22			21			26

CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to limited partner	(54,124		)	(54,124		)	(54,124		)
Distributions to general partner	(8,936		)	(8,935		)	(8,940		)
Cash used for financing activities	(63,060		)	(63,059		)	(63,064		)

NET CHANGE IN CASH	—			—			—

CASH, BEGINNING OF PERIOD	—			—			—
CASH, END OF PERIOD	$	—		$	—		$	—

~~SUPPLEMENTAL~~See ~~FINANCIAL~~Notes ~~INFORMATION~~to ~~(UNAUDITED)~~ Financial Statements

~~Quarterly Information~~ 21

~~The~~MERRILL ~~unaudited~~LYNCH ~~quarterly~~PREFERRED ~~results~~FUNDING ~~of operations of Merrill Lynch Preferred Capital Trust~~ III ~~for 2010 and 2009 are prepared in conformity with U.S. generally accepted accounting principles and reflect all adjustments that are~~, ~~in the opinion of management, necessary for a fair presentation of the results of operations for the periods presented~~L. ~~Results of any interim period are not necessarily indicative of results for a full year~~P.

~~(dollars~~NOTES inTO ~~thousands)~~ FINANCIAL STATEMENTS

	For the Quarter Ended
	Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar 31,
	2010		2010		2010		2010		2009		2009		2009		2009
Total Revenues	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531
Earnings	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531	$	13,531

December 31, 2011

~~F-10~~ 1. ORGANIZATION AND PURPOSE

~~Table~~Merrill Lynch Preferred Funding III, L.P. (the “Partnership”) is a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act, as amended. Merrill Lynch & Co. Inc. (the “Company”) is the sole general partner of ~~Contents~~the Partnership. The Partnership is managed by the general partner and exists for the exclusive purposes of (i) issuing its partnership interests, consisting of the Company’s general partner interest and the Partnership Preferred Securities, (ii) investing the proceeds thereof in certain eligible securities of the Company and wholly-owned subsidiaries of the Company (the “Affiliate Investment Instruments”) and certain eligible debt securities, and (iii) engaging in only those other activities necessary or incidental thereto.

~~MERRILL~~The ~~LYNCH~~Company, ~~PREFERRED~~in ~~FUNDING~~its ~~III~~capacity as sole general partner of the Partnership, Lhas agreed to (i) pay all fees and expenses related to the organization and operations of the Partnership (including taxes, audit fees, duties, assessments, or government charges (other than withholding taxes) imposed by the United States or any other domestic taxing authority upon the Partnership) and (ii) be responsible for all debts and other obligations of the Partnership (other than with respect to the Partnership Preferred Securities).P In such capacity, the Company has also agreed to indemnify certain officers and agents of the Partnership to the fullest extent permitted by applicable law for losses by reason of certain acts or omissions on behalf of the Partnership to the extent of the Partnership’s assets.

~~BALANCE~~On ~~SHEETS~~ January 1, 2009, the Company became a wholly-owned subsidiary of Bank of America Corporation (“Bank of America”).

~~(dollars~~2. inSUMMARY ~~thousands)~~ OF SIGNIFICANT ACCOUNTING POLICIES

	December 31, 2010		December 31, 2009
ASSETS
Investments:
Affiliate debentures	$	900,547	$	900,547
U.S. Government and agencies		9,101		9,105
Total investments		909,648		909,652
Total Assets	$	909,648	$	990,652
PARTNERS’ CAPITAL
Limited partnership interest	$	773,196	$	773,196
General partnership interest		136,452		136,456
Total Partners’ Capital	$	909,648	$	909,652

BASIS OF PRESENTATION

~~See~~The ~~Notes~~financial statements are presented in accordance with accounting principles generally accepted in the United States of America, which require management to ~~Financial~~make ~~Statements~~ estimates that affect reported amounts and disclosure of contingencies in the financial statements. As such, actual results could differ from those estimates.

~~F-11~~ INVESTMENTS

~~Table~~The Partnership’s investment in affiliate debentures is recorded at cost. Its investment in U.S. Government and agency securities is recorded at accreted cost and matures within one year. At December 31, 2011, the estimated fair value of ~~Contents~~the investment in affiliate debentures is approximately $733 million and the fair value of the investment in U.S. Government and agency securities approximates its carrying value.

~~MERRILL~~INCOME ~~LYNCH PREFERRED FUNDING III, L.P.~~ TAXES

~~STATEMENTS~~The OFPartnership ~~EARNINGS~~ does not incur any income tax liabilities. Such liabilities are incurred directly by the partners.

~~(dollars~~3. inINVESTMENT ~~thousands)~~ IN AFFILIATE DEBENTURES

	FOR THE YEAR ENDED
	December 31, 2010		December 31, 2009		December 26, 2008
EARNINGS
Interest income:
Affiliate debentures	$	63,038	$	63,038	$	63,038
U.S. Government and agencies		17		30		206
Earnings	$	63,055	$	63,068	$	63,244

The Partnership holds debentures of the Company and a wholly-owned subsidiary of the Company. The debentures mature on December 30, 2017 and bear interest at 7% per annum. The interest payment dates and redemption provisions of the debentures, which became redeemable at the option of the Company and its subsidiary on March 30, 2008, correspond to the distribution payment dates and redemption provisions of the Partnership Preferred Securities. Interest and redemption payments on the subsidiary debenture are guaranteed by the Company on a subordinated basis.

~~See~~4. ~~Notes~~PARTNERS’ ~~to Financial Statements~~ CAPITAL

~~F-12~~ The Partnership issued 30,000,000 7% Partnership Preferred Securities and 927,840 7% Trust Common Securities, $25 liquidation amount per each security, to the Trust on January 16, 1998. Distributions on the Partnership Preferred Securities are cumulative from the date of original issue and are payable quarterly if, as, and when declared by the general partner. The Partnership Preferred Securities became redeemable on March 30, 2008 at the option of the Partnership, at a redemption price equal to $25 per security. Except as provided in the Amended and Restated Agreement of Limited Partnership of the Partnership entered into by the Company and the Trust and the Partnership Preferred Securities Guarantee Agreement of the Partnership executed and delivered by the Company, and as otherwise provided by law, the holders of the Partnership Preferred Securities have no voting rights.

~~Table~~The Company has guaranteed the payment of ~~Contents~~distributions by the Partnership on the Partnership Preferred Securities if, as, and

~~MERRILL LYNCH PREFERRED FUNDING III, L.P.~~ 22

~~STATEMENTS~~MERRILL OFLYNCH ~~CHANGES~~PREFERRED INFUNDING ~~PARTNERS’~~III, ~~CAPITAL~~ L.P.

~~(dollars~~NOTES inTO ~~thousands)~~ FINANCIAL STATEMENTS

	FOR THE YEAR ENDED
	December 31, 2010			December 31, 2009			December 26, 2008
LIMITED PARTNER’S CAPITAL
Balance, beginning of period	$	773,196		$	773,196		$	773,196
Net income allocated to limited partner		54,124			54,124			54,124
Distributions		(54,124	)		(54,124	)		(40,593	)
Distributions payable		—			—			(13,531	)
Balance, end of period		773,196			773,196			773,196
GENERAL PARTNER’S CAPITAL
Balance, beginning of period		136,456			136,452			136,475
Net income allocated to general partner		8,931			8,944			9,120
Distributions		(8,935	)		(8,940	)		(6,914	)
Distributions payable		—			—			(2,229	)
Balance, end of period		136,452			136,456			136,452
TOTAL PARTNERS’ CAPITAL	$	909,648		$	909,652		$	909,648

December 31, 2011

~~See~~when ~~Notes~~declared out of funds legally available and payments upon liquidation of the Partnership or the redemption of the Partnership Preferred Securities to ~~Financial~~the ~~Statements~~ extent of funds legally available. This guarantee is subordinated to all other liabilities of the Company.

~~F-13~~ Contemporaneously with the issuance of the Partnership Preferred Securities, the Company, as general partner, contributed capital to the Partnership in the amount of approximately $137 million. The Partnership may at times have excess funds which are allocated to the Company and may, in the Company’s sole discretion, be distributed to the Company to the extent that aggregate payments by the Company to the Partnership exceed distributions accumulated or payable with respect to the Partnership Preferred Securities.

~~Table of Contents~~23

~~MERRILL~~REPORT ~~LYNCH~~OF ~~PREFERRED~~INDEPENDENT ~~FUNDING~~REGISTERED ~~III,~~PUBLIC ~~L.P.~~ ACCOUNTING FIRM

~~STATEMENTS~~To OFthe ~~CASH~~General ~~FLOWS~~ Partner and Limited Partner of Merrill Lynch Preferred Funding III, L.P.:

In our opinion, the accompanying balance sheets and the related statements of earnings, changes in partners’ capital, and cash flows present fairly, in all material respects, the financial position of Merrill Lynch Preferred Funding III, L.P. (~~dollars~~the “Partnership”) at December 31, 2011 and December 31, 2010, and the results of its operations and its cash flows for each of the three years in ~~thousands~~the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) . Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

	FOR THE YEAR ENDED
	December 31, 2010			December 31, 2009			December 26, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings	$	63,055		$	63,068		$	63,244
Accretion of interest on securities issued by U.S. Government and agencies		(17	)		(30	)		(206	)
Change in interest receivable from affiliate		—			—			(1	)
Cash provided by operating activities		63,038			63,038			63,037
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities		(18,190	)		(18,192	)		(18,190	)
Maturities of investment securities		18,211			18,218			18,420
Cash provided by investing activities		21			26			230
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to limited partner		(54,124	)		(54,124	)		(54,124	)
Distributions to general partner		(8,935	)		(8,940	)		(9,143	)
Cash used for financing activities		(63,059	)		(63,064	)		(63,267	)
NET CHANGE IN CASH		—			—			—
CASH, BEGINNING OF PERIOD		—			—			—
CASH, END OF PERIOD	$	—		$	—		$	—

/s/ PricewaterhouseCoopers LLP

~~SUPPLEMENTAL~~New ~~DISCLOSURE~~York, OFNew ~~CASH FLOWS:~~ York

~~There were no distributions accrued at December~~March 3121, ~~2010~~2012 ~~and December 31, 2009 and $15,760 was accrued at December 26, 2008.~~

~~See Notes to Financial Statements~~ 24

~~F-14~~ SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)

~~Table~~Quarterly ~~of Contents~~Information

~~MERRILL~~The ~~LYNCH~~unaudited ~~PREFERRED~~quarterly ~~FUNDING~~results of operations of Merrill Lynch Preferred Funding III, L.P. for the years ended December 31, 2011 and 2010 are prepared in conformity with U.S. generally accepted accounting principles and reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results of operations for the periods presented. Results of any interim period are not necessarily indicative of results for a full year.

~~NOTES~~(dollars TOin ~~FINANCIAL STATEMENTS December 31, 2010~~thousands)

1. ORGANIZATION AND PURPOSE



	For the Quarter Ended
	Dec. 31, 2011		Sept. 30, 2011		June 30, 2011		Mar. 31, 2011		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010		Mar. 31, 2010
Total Revenues	$	15,761	$	15,766	$	15,764	$	15,766	$	15,764	$	15,763	$	15,763	$	15,765
Earnings	$	15,761	$	15,766	$	15,764	$	15,766	$	15,764	$	15,763	$	15,763	$	15,765

Merrill Lynch Preferred Funding III, L.P. (the “Partnership”) is a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act, as amended. Merrill Lynch & Co. Inc. (the “Company”) is the sole general partner of the Partnership. The Partnership is managed by the general partner and exists for the exclusive purposes of (i) issuing its partnership interests, consisting of the Company’s general partner interest and the Partnership Preferred Securities, (ii) investing the proceeds thereof in certain eligible securities of the Company and wholly-owned subsidiaries of the Company (the “Affiliate Investment Instruments”) and certain eligible debt securities, and (iii) engaging in only those other activities necessary or incidental thereto. 25

The Company, in its capacity as sole general partner of the Partnership, has agreed to (i) pay all fees and expenses related to the organization and operations of the Partnership (including taxes, audit fees, duties, assessments, or government charges (other than withholding taxes) imposed by the United States or any other domestic taxing authority upon the Partnership) and (ii) be responsible for all debts and other obligations of the Partnership (other than with respect to the Partnership Preferred Securities). In such capacity, the Company has also agreed to indemnify certain officers and agents of the Partnership to the fullest extent permitted by applicable law for losses by reason of certain acts or omissions on behalf of the Partnership to the extent of the Partnership’s assets. SIGNATURES

OnPursuant ~~January 1,~~to ~~2009~~the requirements of the Securities Exchange Act of 1934, the ~~Company~~Registrant ~~became~~has aduly ~~wholly-owned~~caused ~~subsidiary~~this ~~of Bank~~report ofto ~~America~~be ~~Corporation~~signed ~~(“Bank~~on its behalf by the undersigned, thereunto duly authorized on the 21st day of ~~America”)~~March 2012.

2MERRILL LYNCH PREFERRED CAPITAL TRUST III* By: /s/ ANGELA C. ~~SUMMARY~~JONES OFName: ~~SIGNIFICANT~~Angela ~~ACCOUNTING~~C. ~~POLICIES~~ Jones Title: Regular Trustee

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

The financial statements are presented in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates that affect reported amounts and disclosure of contingencies in the financial statements. As such, actual results could differ from those estimates. 9

Effective January 1, 2009, the Partnership adopted calendar quarter-end and year-end reporting periods to coincide with those of the Company and Bank of America. Earnings for the intervening period between the Partnership’s fiscal year ended December 26, 2008 and the calendar year beginning January 1, 2009 were not material. During this period, the Partnership received cash of $15.8 million from an affiliate and paid $15.8 million in distributions. SIGNATURES

~~INVESTMENTS~~ Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant, by Merrill Lynch & Co., Inc. as General Partner, has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 21st day of March 2012.

~~The~~MERRILL ~~Partnership’s~~LYNCH ~~investment~~PREFERRED inFUNDING ~~affiliate~~III, ~~debentures is recorded at cost~~L. ~~Its investment in U~~P.S. ~~Government~~By: ~~and~~MERRILL ~~agency~~LYNCH ~~securities~~& ~~is recorded at accreted cost and matures within one year~~CO. ~~At December 31~~, ~~2010~~INC., ~~the~~as ~~estimated~~General ~~fair value~~Partner ofBy: ~~the~~/s/ ~~investment~~PETER inD. ~~affiliate~~TAUBE ~~debentures~~Name: isPeter ~~approximately~~D. ~~$824 million and~~Taube ~~the~~Title: ~~fair~~Chief ~~value~~Accounting ofOfficer ~~the investment in U.S. Government~~ and ~~agency~~Controller ~~securities approximates~~Merrill ~~its~~Lynch ~~carrying~~& ~~value~~Co. , Inc.

~~INCOME~~Pursuant ~~TAXES~~ to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following directors and officers of Merrill Lynch & Co., Inc., General Partner of the Registrant, in the capacities indicated on the 21st day of March 2012.

~~The~~SIGNATURE ~~Partnership~~TITLE ~~does~~/s/ ~~not~~THOMAS ~~incur~~K. ~~any~~MONTAG ~~income~~Thomas ~~tax~~K. ~~liabilities~~Montag Director and Chief Executive Officer(Principal Executive Officer) /s/ JENNIFER M. ~~Such~~HILL ~~liabilities~~Jennifer ~~are incurred~~M. ~~directly~~Hill byChief ~~the~~Financial ~~partners~~Officer(Principal Financial Officer) /s/ PETER D. TAUBE Peter D. Taube Chief Accounting Officer and Controller(Principal Accounting Officer) /s/ BRIAN T. MOYNIHAN Brian T. Moynihan Chairman and Director /s/ TERRENCE P. LAUGHLIN Terrence P. Laughlin Director /s/ BRUCE R. THOMPSON Bruce R. Thompson Director

~~F-15~~ 10

~~Table~~EXHIBIT ~~of Contents~~INDEX

MERRILL LYNCH PREFERRED FUNDING III, L.P. NOTES TO FINANCIAL STATEMENTS December 31, 2010




4.1			Certificate of Trust dated December 19, 1997, of the Trust (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 (No. 333-42859) (the “Registration Statement”)).

4.2			Form of Amended and Restated Declaration of Trust of the Trust (incorporated by reference to Exhibit 4.2 to the Registration Statement).

4.3			Certificate of Limited Partnership, dated as of December 19, 1997, of the Partnership (incorporated by reference to Exhibit 4.3 to the Registration Statement).

4.4			Form of Amended and Restated Agreement of Limited Partnership of the Partnership (incorporated by reference to Exhibit 4.4 to the Registration Statement).

4.5			Form of Trust Preferred Securities Guarantee Agreement between the Company and The Bank of New York Mellon, as guarantee trustee (incorporated by reference to Exhibit 4.5 to the Registration Statement).

4.6			Form of Partnership Preferred Securities Guarantee Agreement between the Company and The Bank of New York Mellon, as guarantee trustee (incorporated by reference to Exhibit 4.6 to the Registration Statement).

4.7			Form of Subordinated Debenture Indenture between the Company and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.7 to the Registration Statement on Form S-3 (No. 333-16603)).

4.8			Form of Affiliate Debenture Guarantee Agreement between the Company and The Bank of New York Mellon, as guarantee trustee (incorporated by reference to Exhibit 4.8 to the Registration Statement).

4.9			Form of Trust Preferred Security (included in Exhibit 4.2 above).

4.10			Form of Partnership Preferred Security (included in Exhibit 4.4 above).

4.11			Form of Subordinated Debenture (incorporated by reference to Exhibit 4.11 to the Registration Statement).

12			Statement re: Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Securities Distributions (unaudited).⁽¹⁾

23.1			Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm of the Registrants.⁽¹⁾

31.1			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.⁽¹⁾

31.2			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.⁽¹⁾

32.1			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.⁽¹⁾

32.2			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.⁽¹⁾

99.1			Excerpt of information under the headings “Merrill Lynch Preferred Capital Trust III,” “Merrill Lynch Preferred Funding III, L.P.,” “Description of the Trust Preferred Securities,” “Description of the Trust Guarantee,” “Description of the Partnership Preferred Securities,” and “Description of the Partnership Guarantee” contained in the Prospectus dated January 12, 1998 of the Trust and the Partnership.⁽¹⁾

99.2			Excerpt of Merrill Lynch & Co., Inc. Annual Report on Form 10-K for the year ended December 31, 2011 - Item 1A. "Risk Factors".⁽¹⁾

101			The following materials from Merrill Lynch Preferred Capital Trust III and Merrill Lynch Preferred Funding III, L.P. Annual Report on Form 10-K for the fiscal year ended December 31, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Earnings, (iii) the Statements of Changes in Stockholders' Equity, (iv) the Statements of Cash Flows, and (v) the Notes to Financial Statements, tagged as blocks of text.⁽¹⁾⁽²⁾

3(1) Filed herewith. ~~INVESTMENT~~(2) INThese ~~AFFILIATE~~interactive ~~DEBENTURES~~ data files shall not be deemed filed for purposes of Section 11or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act 1934, as amended, or otherwise subject to liability under those sections.

4. PARTNERS’ CAPITAL

The Partnership issued 30,000,000 7% Partnership Preferred Securities and 927,840 7% Trust Common Securities, $25 liquidation amount per each security, to the Trust on January 16, 1998. Distributions on the Partnership Preferred Securities are cumulative from the date of original issue and are payable quarterly if, as, and when declared by the general partner. The Partnership Preferred Securities became redeemable on March 30, 2008 at the option of the Partnership, at a redemption price equal to $25 per security. Except as provided in the Limited Partnership Agreement and Partnership Preferred Securities Guarantee Agreement, and as otherwise provided by law, the holders of the Partnership Preferred Securities have no voting rights.

The Company has guaranteed the payment of distributions by the Partnership on the Partnership Preferred Securities if, as, and when declared out of funds legally available and payments upon liquidation of the Partnership or the redemption of the Partnership Preferred Securities to the extent of funds legally available. This guarantee is subordinated to all other liabilities of the Company.

Contemporaneously with the issuance of the Partnership Preferred Securities, the Company, as general partner, contributed capital to the Partnership in the amount of approximately $137 million. The Partnership may at times have excess funds which are allocated to the Company and may, in the Company’s sole discretion, be distributed to the Company to the extent that aggregate payments by the Company to the Partnership exceed distributions accumulated or payable with respect to the Partnership Preferred Securities.

F-16

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the General Partner and Limited Partner of Merrill Lynch Preferred Funding III, L.P.:

In our opinion, the accompanying balance sheets and the related statements of earnings, changes in partners’ capital, and cash flows present fairly, in all material respects, the financial position of Merrill Lynch Preferred Funding III, L.P. (the “Partnership”) at December 31, 2010 and December 31, 2009, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP New York, New York March 28, 2011

F-17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the General Partner and Limited Partner of Merrill Lynch Preferred Funding III, L.P.:

We have audited the accompanying statements of earnings, changes in partners’ capital and cash flows of Merrill Lynch Preferred Funding III, L.P. (the “Partnership”) for the year ended December 26, 2008 (“2008 financial statements”). These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2008 financial statements present fairly, in all material respects, the results of the Partnership’s operations and its cash flows for the year ended December 26, 2008, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1, Merrill Lynch & Co., Inc. became a wholly-owned subsidiary of Bank of America Corporation on January 1, 2009.

/s/ Deloitte & Touche LLP New York, New York March 25, 2009

F-18

SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)

Quarterly Information

The unaudited quarterly results of operations of Merrill Lynch Preferred Funding III, L.P. for 2010 and 2009 are prepared in conformity with U.S. generally accepted accounting principles and reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results of operations for the periods presented. Results of any interim period are not necessarily indicative of results for a full year.

(dollars in thousands)

	For the Quarter Ended
	Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,
	2010		2010		2010		2010		2009		2009		2009		2009
Total Revenues	$	15,764	$	15,763	$	15,763	$	15,765	$	15,765	$	15,765	$	15,767	$	15,771
Earnings	$	15,764	$	15,763	$	15,763	$	15,765	$	15,765	$	15,765	$	15,767	$	15,771

F-19

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 28th day of March, 2011.

MERRILL LYNCH PREFERRED CAPITAL TRUST III* By: /s/ MARLENE DEBEL Name: Marlene Debel Title: Regular Trustee

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

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant, by Merrill Lynch & Co., Inc. as General Partner, has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 28th day of March, 2011.

Merrill Lynch Preferred Funding III, L.P. By: Merrill Lynch & Co., Inc. as General Partner

SIGNATURE TITLE /s/ PETER D. TAUBE Chief Accounting Officer and Controller (Peter D. Taube)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following directors and officers of Merrill Lynch & Co., Inc., General Partner of the Registrant, in the capacities indicated on the 28th day of March, 2011.

SIGNATURE TITLE /s/ THOMAS K. MONTAG (Thomas K. Montag) Director and Chief Executive Officer (Principal Executive Officer) /s/ ROBERT QUTUB (Robert Qutub) Chief Financial Officer (Principal Financial Officer) /s/ PETER D. TAUBE (Peter D. Taube) Chief Accounting Officer and Controller (Principal Accounting Officer) /s/ BRIAN T. MOYNIHAN (Brian T. Moynihan) Chairman and Director /s/ CHARLES H. NOSKI (Charles H. Noski) Director /s/ SALLIE L. KRAWCHECK (Sallie L. Krawcheck) Director /s/ BRUCE THOMPSON (Bruce Thompson) Director

EXHIBIT INDEX

4.1		Certificate of Trust dated December 19, 1997, of the Trust (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 (No. 333-42859) (the “Registration Statement”)).
4.2		Form of Amended and Restated Declaration of Trust of the Trust (incorporated by reference to Exhibit 4.2 to the Registration Statement).
4.3		Certificate of Limited Partnership, dated as of December 19, 1997, of the Partnership (incorporated by reference to Exhibit 4.3 to the Registration Statement).
4.4		Form of Amended and Restated Agreement of Limited Partnership of the Partnership (incorporated by reference to Exhibit 4.4 to the Registration Statement).
4.5		Form of Trust Preferred Securities Guarantee Agreement between the Company and The Bank of New York Mellon, as guarantee trustee (incorporated by reference to Exhibit 4.5 to the Registration Statement).
4.6		Form of Partnership Preferred Securities Guarantee Agreement between the Company and The Bank of New York Mellon, as guarantee trustee (incorporated by reference to Exhibit 4.6 to the Registration Statement).
4.7		Form of Subordinated Debenture Indenture between the Company and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.7 to the Registration Statement on Form S-3 (No. 333-16603)).
4.8		Form of Affiliate Debenture Guarantee Agreement between the Company and The Bank of New York Mellon, as guarantee trustee (incorporated by reference to Exhibit 4.8 to the Registration Statement).
4.9		Form of Trust Preferred Security (included in Exhibit 4.2 above).
4.10		Form of Partnership Preferred Security (included in Exhibit 4.4 above).
4.11		Form of Subordinated Debenture (incorporated by reference to Exhibit 4.11 to the Registration Statement).
12	*	Statement re: Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Securities Distributions (unaudited).
23.1	*	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm of the Registrants.
23.2	*	Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.
31.1	*	Rule 13a-14(a) Certification.
31.2	*	Rule 13a-14(a) Certification.
32.1	*	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	*	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	*	Excerpt of information under the headings “Merrill Lynch Preferred Capital Trust III,” “Merrill Lynch Preferred Funding III, L.P.,” “Description of the Trust Preferred Securities,” “Description of the Trust Guarantee,” “Description of the Partnership Preferred Securities,” and “Description of the Partnership Guarantee” contained in the Prospectus dated January 12, 1998 of the Trust and the Partnership.
99.2	*	Excerpt of Merrill Lynch & Co., Inc. Annual Report on Form 10-K for the year ended December 31, 2010.

* Filed herewith

FOR THE YEAR ENDED

December 31, 2011

December 31, 2010

December 31, 2009

Interest on affiliate partnership preferred securities