UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
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| For the fiscal year ended:
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Commission file number: |
| December 31, 2014
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001-31941 |
MERRILL LYNCH DEPOSITOR, INC.
(ON BEHALF OF INDEXPLUS TRUST SERIES 2003-1)
(Exact name of registrant as specified in its charter)
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DELAWARE
(State or other
jurisdiction of
incorporation)
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13-3891329
(I. R. S. Employer
Identification No.) |
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ONE BRYANT PARK, 4th FL
NEW YORK, NEW YORK
(Address of principal
executive offices) |
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10036
(Zip Code) |
Registrant’s telephone number, including area code: (646) 855-6745
Securities registered pursuant to Section 12(b) of the Act:
INDEXPLUS Trust Certificates Series 2003-1, listed on The New York Stock
Exchange.
Securities registered pursuant to Section 12(g) of the Act:
Not Applicable.
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).
Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.
Large
accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting filer o
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).
Yes o No þ
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity,
as of the last business day of the registrant’s most recently completed second
fiscal quarter.
Not Applicable.
Indicate the number of shares outstanding for each of the registrant’s classes
of common stock, as of the latest practicable date.
Not Applicable.
DOCUMENTS INCORPORATED BY REFERENCE
For information with respect to the underlying
securities held by INDEXPLUS Trust Series 2003-1, please refer to respective periodic reports, including annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and other information of: The Boeing Company
(Commission file number 001-00442); Citigroup Inc. (Commission file number 001-09924); Credit Suisse Group AG (Commission
file number 001-33434) (condensed consolidated financial statements with respect to guarantor Credit Suisse Group AG and
issuer Credit Suisse (USA) of the underlying securities); Ford Motor Company (Commission file number 001-03950); General
Electric Capital Corporation (Commission file number 001-06461); Ally Financial Inc. (Commission file number
001-03754); The Goldman Sachs Group, Inc. (Commission file number 001-14965); Johnson & Johnson
(Commission file number 001-03215); Macy’s Retail Holdings Inc. (Commission file number 333-42940);
Macy’s, Inc. (Commission file number 001- 13536); Time Warner Inc. (Commission file number 001-15062);
Time Warner Companies, Inc. (Commission file number 001-08637); Turner Broadcasting System, Inc. (Commission file
number 001- 08911); United States Department of Treasury; Valero Energy Corporation (Commission file number
001-13175); Verizon Communications Inc. (Commission file number 001-08606); Verizon Global Funding Corp. (Commission
file number 333-73612); CBS Corporation (Commission file number 001-09553); CBS Operations Inc. (Commission file
number 333-62052-01) and Weyerhaeuser Company (Commission file number 001-04825) on file with the Securities and
Exchange Commission (the “SEC”). You can read and copy these reports and other information at the public
reference facilities maintained by the SEC at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. You may
obtain copies of this material for a fee by writing to the SEC’s Public Reference Section of the SEC at 100 F
Street, N.E., Washington, D.C. 20549. You may obtain information about the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. You can also access some of this information electronically by means of the
SEC’s website on the Internet at http:// www.sec.gov, which contains reports, proxy and information
statements and other information that the respective underlying securities issuers have filed electronically with the
SEC. The underlying securities issuer Daimler Finance North America LLC (“Daimler Finance”) and the
guarantor, Daimler AG, no longer file periodic Exchange Act reports. Unless and until the underlying securities
comprise 10% of the assets held by the trust, the trust is not required to liquidate its holdings of the asset. If such
circumstances were to occur, such as an increase in concentration of Daimler Finance assets to at least 10% of total
trust assets, the asset would have to be liquidated.
Although we have no reason to believe the information
concerning the respective underlying securities or the
respective underlying securities issuers contained in the
underlying securities issuer’s Exchange Act reports are not
reliable, neither the depositor nor the trustee participated in
the preparation of such documents or made any due diligence
inquiry with respect to the information provided therein. No
investigation with respect to the respective underlying
securities issuers (including, without limitation, no
investigation as to their respective financial condition or
creditworthiness) or of the respective underlying securities
has been made. You should obtain and evaluate the same
information concerning the respective underlying securities
issuers as you would obtain and evaluate if your investment
were directly in the respective underlying securities or in
other securities issued by the respective underlying securities
issuers. There can be no assurance that events affecting the
respective underlying securities or the respective underlying
securities issuers have not occurred or have not yet been
publicly disclosed which would affect the accuracy or
completeness of the publicly available documents described
above.
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. MINE SAFETY DISCLOSURES
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
SIGNATURES
EX-31.1: CERTIFICATION
EX-99.1: TRUSTEE'S ANNUAL COMPLIANCE CERTIFICATE
EX-99.2: REPORT OF PRICEWATERHOUSECOOPERS LLP
EX-99.3: REPORT OF KPMG LLP
PART I
ITEM 1. BUSINESS
Not Applicable.
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ITEM 1A. RISK FACTORS
Your investment in the trust certificates will involve certain
risks. You should carefully consider the following discussion
of risks, and the other information included or incorporated by
reference in the applicable prospectus supplement and the
accompanying prospectus. You should also carefully consider any
risk factors and other information that the underlying
securities issuer may file in its Exchange Act reports as
referenced in the “Documents Incorporated by Reference” section above.
IF THE TRUST CERTIFICATES OR ANY OF THE UNDERLYING SECURITIES
ARE REDEEMED PRIOR TO THEIR MATURITY DATE, YOU MAY NOT BE ABLE
TO REINVEST YOUR REDEMPTION PROCEEDS AT A YIELD COMPARABLE TO
THE YIELD YOU WOULD HAVE RECEIVED ON YOUR TRUST CERTIFICATES.
The yield you will realize on your trust certificates depends
upon several factors, including:
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the purchase price of the trust certificates, |
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when you acquire your trust certificates, |
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whether an underlying securities issuer exercises an option
to redeem underlying securities, and |
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whether the trust redeems the trust certificates prior to
the final scheduled distribution date. |
The description of the underlying securities in the applicable
prospectus supplement indicates which of the underlying
securities can be redeemed prior to maturity at the option of
the associated underlying securities issuer. Because the
indicated underlying securities issuers have the right to
redeem the indicated underlying securities early, we cannot
assure you that the trust will be able to hold those underlying
securities until their maturity date.
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YOU MAY NOT BE PAID IF THE ASSETS OF THE TRUST ARE INSUFFICIENT
Distributions on the trust certificates will be made only from
available assets of the trust. The trust will have no
significant assets other than the portfolio of underlying
securities. The trust certificates are not obligations of and
do not represent any interests in the underwriter, the
depositor, the trustee, the market agent, the calculation agent
or any of their affiliates. Neither we nor the underwriter, the
trustee, the market agent, the calculation agent or any other
person or entity will be obligated to make any payments on the
trust certificates from its own assets, and trust certificates
holders will have no recourse against any of them or their
respective assets. If the payments received from the underlying
securities are insufficient to make distributions on the trust
certificates, you may not receive all or part of the full
amount due on your trust certificates.
NEITHER WE NOR THE TRUSTEE, THE UNDERWRITER, THE MARKET AGENT,
THE CALCULATION AGENT NOR ANY OF THEIR AFFILIATES WILL MANAGE
THE UNDERLYING SECURITIES
Except as described below, the trust will not dispose of any of
the underlying securities, even if an event occurs that
adversely affects any underlying securities issuer and/or the
value of any or all of the underlying securities. Under the
applicable trust agreement, the trust will dispose of an
underlying security only if:
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there is a credit event on an underlying security or an
underlying securities issuer, |
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there is a non-payment-related default that accelerates the
maturity of an underlying security, or |
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in the case of an underlying securities issuer that is
obliged to file Exchange Act reports, the relevant
underlying securities issuer ceases to file Exchange Act
reports and the related underlying securities comprise 10%
or more of the assets of the trust. |
Under the above circumstances, the trustee must retain a market
agent who will sell the defaulted underlying security on or
after the 30th day after receipt of notice of the default in
accordance with the sale procedures described in the applicable
prospectus supplement and distribute the net proceeds from such
sale to the holders of the trust certificates pro rata even if
adverse market conditions exist. Neither the trustee nor the
market agent has discretion to do otherwise. If adverse market
conditions exist at the time of the sale of the underlying
securities, you may incur greater losses than if the trust
continued to hold the underlying securities and sold them at a
later date.
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THE VALUE OF THE TRUST CERTIFICATES DEPENDS UPON THE
CREDITWORTHINESS OF THE UNDERLYING SECURITIES ISSUERS AND THE
MARKET PRICES OF THE UNDERLYING SECURITIES.
The trust certificates represent interests in obligations of
the underlying securities issuers and will be subject to all
the risks associated with directly investing in each underlying
securities issuer’s debt obligations. The underlying indenture
and the terms and conditions governing each underlying security
may not limit the amount of indebtedness that may be incurred
by the relevant underlying securities issuer. In addition, an
investment in the trust certificates represents an investment
in the underlying securities and most of the underlying
securities are not listed on any securities exchange. The
underlying securities are generally purchased and sold through
dealers who make a market in such securities for their own
accounts, and there may be significant disparities in the
prices quoted for any of the underlying securities by
securities dealers at any point in time. Therefore, the market
for any of the underlying securities is less liquid than the
market for securities which are traded through a securities
exchange and the aggregate market value of a comparable amount
of the underlying securities may be higher than the market
price of the trust certificates. You should consider the nature
of each underlying security and the credit risk of each
underlying securities issuer before making an investment
decision regarding the trust certificates.
THE TRUST CERTIFICATEHOLDERS MAY SUFFER A LOSS UPON THE
OCCURRENCE OF A REMOVAL EVENT
Should a removal event, as described in the applicable
prospectus supplement, occur with respect to an underlying
security, the trustee on behalf of the trust will instruct the
market agent to sell such underlying security and distribute
the net proceeds of the sale of such underlying security to the
trust certificateholders. In such case, the certificate
principal balance of the trust certificates will be reduced by
the principal amount of the underlying security subject to such
removal event. If the amount distributable to the trust
certificateholders from the proceeds of the sale of the
underlying securities subject to the removal event is less than
the principal amount of such underlying securities plus any
accrued and unpaid interest thereof the trust
certificateholders will suffer a loss. Additionally, if less
than all of such underlying securities are sold and the
applicable underlying securities issuer defaults on payments
due on such unsold underlying securities, the trust
certificateholders will suffer a loss. The trust
certificateholders will also bear the risk of reinvestment
resulting from the reduction in the certificate principal
balance of the trust certificates.
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THE PASS-THROUGH RATE MAY BE REDUCED UPON PAYMENT OF PRINCIPAL
ON OR THE OCCURRENCE OF A REMOVAL EVENT WITH RESPECT TO
UNDERLYING SECURITIES
Because the pass-through rate on the trust certificates will be
determined in part by the weighted average interest rate of the
underlying securities, payments of principal on an underlying
security or the occurrence of a removal event may cause the
pass-through rate to decrease depending upon the interest rate
of such underlying security.
AS UNDERLYING SECURITIES ARE REMOVED FROM THE TRUST AT THEIR
MATURITY, REDEMPTION OR SALE, THE POOL OF UNDERLYING SECURITIES
WILL BECOME LESS DIVERSIFIED AND YOUR EXPOSURE TO ECONOMIC
FACTORS THAT DISPROPORTIONATELY AFFECT ONE OR MORE OF THE
REMAINING UNDERLYING SECURITIES WILL INCREASE.
As underlying securities mature, underlying securities are
redeemed or sold, or removal events occur, the pool of
underlying securities held by the trust will become less
diversified. These events could increase your risk of loss
resulting from the decline in one or more of the economic
factors disproportionately affecting any of the remaining
underlying securities.
PRINCIPAL AND INTEREST PAYMENTS ON THE UNDERLYING SECURITIES
ARE UNSECURED OBLIGATIONS OF THE UNDERLYING SECURITIES ISSUERS
Distributions on the trust certificates depend primarily on
principal and interest payments on the underlying securities.
Some of these payments are unsecured obligations of the
underlying securities issuers. In any proceedings involving the
insolvency, liquidation or winding up of an underlying
securities issuer, holders of unsecured securities of that
underlying issuer will be paid only after the holders of that
underlying securities issuer’s secured obligations are paid in
full. As a result, you may not recover the principal amount of
your trust certificates attributable to such underlying
security.
THE RATINGS OF THE TRUST CERTIFICATES MAY CHANGE
At the time of issuance, Moody’s and/or Fitch Ratings assigned
ratings to the trust certificates on the original issue date in
one of the four highest categories assigned to long-term debt.
Any rating issued with respect to the trust certificates is not
a recommendation to purchase, sell or hold a security. Ratings
do not reflect upon the market price of the trust certificates
or their suitability for a particular investor. We cannot
assure you that initial ratings will remain for any given
period of time or that a ratings agency would not revise or
withdraw entirely the ratings if, in its judgment,
circumstances (including, without limitation, the rating of any
of the underlying securities) merit. A revision or withdrawal
of a rating may adversely affect the market price of the trust
certificates.
6
POTENTIAL CONFLICTS OF INTERESTS MAY ARISE BETWEEN US, THE
UNDERWRITER AND THE TRUST
We, Merrill Lynch, or one of its affiliates will acquire the
underlying securities comprising the trust’s portfolio.
Potential conflicts of interests may arise as Merrill Lynch and
its affiliates may engage in investment banking or may provide
other services for some or all of the underlying securities
issuers. In addition, Merrill Lynch and its affiliates may also
own, make purchases or sales, including sales to the trust,
establish long or short positions or engage in hedging
activities in some or all of the underlying securities for
their own accounts. All such activities may result in conflicts
of interests among Merrill Lynch, its affiliates and the trust
certificateholders.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Trust Certificates issued by INDEXPLUS Trust Series 2003-1
are represented by one or more physical certificates registered
in the name of Cede & Co., the nominee of the Depository Trust
Company. The Trust Certificates are listed on the New York
Stock Exchange.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Not Applicable.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Not Applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The Registrant has procedures so as to provide reasonable assurance that its future
Exchange Act filings will be filed within the applicable time periods.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Not Applicable.
ITEM 11. EXECUTIVE COMPENSATION
Not Applicable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
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Securities Authorized For Issuance Under Equity
Compensation Plans: None. |
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Security Ownership Of Certain Beneficial Owners: None. |
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Security Ownership Of Management: Not Applicable. |
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Changes In Control: None. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
None.
8
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Not Applicable.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements: Not Applicable.
(a)(2) Financial Statement Schedules: Not Applicable.
(a)(3) List of Exhibits
The following exhibits are filed as part of, and incorporated
by reference into, this Annual Report on Form 10-K:
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31.1. |
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Certification of the President of Registrant dated
March 13, 2015, pursuant to Rules 13a-14 and 15d-14
under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, with respect to the
Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2014. |
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99.1. |
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Trustee’s Annual Compliance Certificate dated
February 23, 2015. |
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99.2. |
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Report of PricewaterhouseCoopers LLP, Independent Accountants, dated March 11, 2015,
Registrant’s Assertion on Compliance with PPLUS Minimum Servicing Standards dated March 11, 2015 and PPLUS Minimum
Servicing Standards. |
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99.3. |
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Report of KPMG LLP, Independent
Registered Public Accounting Firm, dated
February 20, 2015, The Bank of New York Mellon’s Assertion
on Compliance with PPLUS Minimum Servicing
Standards dated February 20, 2015 and PPLUS Minimum
Servicing Standards. |
(b) Exhibits
The Registrant hereby files as part of this Annual Report
on Form 10-K the exhibits listed in Item 15(a)(3) set forth
above.
(c) Financial Statement Schedules
Not Applicable.
9
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, hereunto duly authorized.
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MERRILL LYNCH DEPOSITOR, INC.
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| Date: March 13, 2015 |
By: |
/s/ Dylan Lohonen |
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Name: |
Dylan Lohonen |
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Title: |
President |
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EXHIBIT 31.1
I, Dylan Lohonen, certify that:
1. I have reviewed this annual report on Form 10-K, and all reports on
Form 8-K containing distribution or servicing reports filed in respect of
periods included in the year covered by this annual report, of Merrill Lynch
Depositor, Inc., on behalf of INDEXPLUS Trust Series 2003-1;
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by this annual report;
3. Based on my knowledge, the distribution or servicing information
required to be provided to the depositor by the trustee under the pooling and
servicing, or similar, agreement, for inclusion in these reports is included in
these reports;
4. I am responsible for reviewing the activities performed by the
depositor and the trustee under the pooling and servicing, or similar, agreement
and based upon my knowledge and the annual compliance review required under that
agreement, and except as disclosed in the reports, the depositor and trustee
have each fulfilled its obligations under that agreement; and
5. The reports disclose all significant deficiencies relating to the
compliance by the depositor or trustee with the minimum servicing or similar
standards based upon the report provided by an independent public accountant,
after conducting a review in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or similar procedure, as set forth in the pooling
or servicing, or similar, agreement, that is included in these reports.
In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties: The Bank of New York Mellon and
its officers and agents.
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| Date: March 13, 2015 |
/s/ Dylan
Lohonen |
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Dylan Lohonen |
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President |
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EXHIBIT 99.1
THE BANK OF NEW YORK MELLON
Officer’s Certificate
February 23, 2015
MERRILL LYNCH DEPOSITOR, INC.
One Bryant Park
4th Floor – Structured Credit Trading
New York, New York 10036
PREFERREDPLUS, PPLUS
TRUST AND INDEXPLUS CERTIFICATE
The undersigned, James W. P. Hall,
Vice President of The Bank of New York Mellon (formerly The Bank of New York), a New York corporation (the “Trustee”), hereby
certifies in such capacity that, based on his knowledge, the Trustee has complied, in all
material respects, with all conditions and covenants applicable to the Trustee under the
Standard Terms for Trust Agreements dated February 20, 1998 between Merrill Lynch
Depositor, Inc. as depositor (the “Depositor”) and the Trustee, as successor to United
States Trust Company of New York, as trustee and securities intermediary (the “Securities
Intermediary”), in each case as amended by a series supplement between the Depositor, the
Trustee and the Securities Intermediary for each trust series listed in the attached
schedule.
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Very truly yours,
The Bank of New York Mellon (formerly
The Bank of New York), as Trustee
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By: |
/s/
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James W. P. Hall |
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Name: |
James W. P. Hall |
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Title: |
Vice President |
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SCHEDULE
INDEXPLUS Trust Series 2003-1
PPLUS Trust Series GSC-2
PPLUS Trust Series GSG-2
PreferredPLUS Trust Series CZN-1
PreferredPLUS Trust
Series FAR-1
EXHIBIT 99.2
[PricewaterhouseCoopers Letterhead]
Report of Independent Accountants
Merrill Lynch Depositor, Inc.
We have examined management’s assertion that as of and for the year ended December 31, 2014,
Merrill Lynch Depositor, Inc. (the
“Company”) has complied, in all material aspects, with its established minimum servicing
standards described in the accompanying Management’s Assertion on Compliance with PPLUS Minimum Servicing Standards with
respect to INDEXPLUS Trust Series 2003-1, dated March 11, 2015. The Company’s management is responsible for the assertion related to their compliance
with the minimum servicing standards excluding those with respect to the Bank of New York Mellon as Trustee, Custodian,
Paying Agent and Transfer Agent. Our responsibility is to express an opinion on management’s assertion based on our examination.
Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Company’s compliance with its minimum servicing standards and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion.
Our examination does not provide a legal determination on the Company’s compliance with its minimum servicing standards.
In our opinion, management’s assertion referred to above presents, in all material respects, the Company’s compliance with its minimum servicing standards as of and for the year ended December 31, 2014, based on the criteria set forth in Appendix I.
/s/ PricewaterhouseCoopers LLP
New York, NY
March 11, 2015
Management’s Assertion on Compliance with PPLUS Minimum
Servicing Standards
March 11,
2015
As of and
for the year ended December 31, 2014, Merrill Lynch Depositor, Inc.
(the “Company”) has complied, in all material respects, with the Company’s
established minimum servicing standards, as set forth in Appendix I, for
servicing the securities in each of the Trust Series, as listed on Schedule A
hereto, excluding those with respect to the Bank of New York Mellon as Trustee,
Custodian, Paying Agent and Transfer Agent.
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| By: |
/s/ Dylan Lohonen |
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Dylan Lohonen |
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President
Merrill Lynch Depositor, Inc. |
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***************
SCHEDULE A
PreferredPLUS Trust Series CZN-1
PreferredPLUS Trust Series FAR-1
PPLUS Trust Series GSG-2
PPLUS Trust Series GSC-2
INDEXPLUS Trust Series 2003-1
Appendix I
PPLUS Minimum Servicing Standards intended
for use
in connection with the Annual Accountants
Report ("AAR")
Below is Merrill Lynch Depositor, Inc.'s ("the
Depositor"), Merrill Lynch Structured Credit Derivatives ("SCD") and the Merrill Lynch Credit Derivatives Operations
Group ("OG") (collectively Merrill Lynch) minimum servicing standards for the PreferredPlus Program ("PPlus").
The
Bank of New York Mellon ("the Bank" or “the Trustee”) acting as Trustee, Custodian, Paying Agent, and Transfer
Agent on behalf of the PPlus Program has agreed to comply with all of the following minimum servicing standards. Merrill Lynch
has obtained a certification from the Bank that it has complied with these criteria for
the period January 1, 2014 to December 31, 2014.
| MINIMUM Servicing STANDARD |
Applicable
Servicing STANDARD |
| Reference |
Criteria |
Performed by the Depositor |
Performed by Bank/Trustee |
| CUSTODIAL BANK ACCOUNT RECONCILIATIONS |
| 1 |
The Bank must reconcile all related custodial bank accounts.
|
|
X |
| The Bank will include the Distribution report as Exhibit 99.1 in the Form 8-Ks filed with the SEC. |
|
X |
| VERIFICATION OF INCOMING TRUST COLLATERAL INTEREST PAYMENTS |
| 2 |
The Bank must have a tickler system in place so that they will be expecting and monitoring the custodial bank account for receipt of the collateral coupon interest. Each of the tickler systems shall be updated on an on-going basis as each new trust series is created. |
|
X |
| The Bank will ensure all interest payments are deposited into the custodial bank accounts and related bank clearing accounts on the day the Bank is in receipt of the funds. |
|
X |
| The Bank must prove the arithmetic accuracy of the amount of interest received by the Trust from the underlying securities and ensure that the face amount, description, coupon rate, and maturity date of the securities held in the Trust agree to the PPM Supplement dated Date XX, 20XX |
|
X |
| MINIMUM Servicing STANDARD |
Applicable
Servicing STANDARD |
| Reference |
Criteria |
Performed by the Depositor |
Performed by Bank/Trustee |
TRUST DISBURSEMENTS |
| 3 |
The Bank must prove the arithmetic accuracy of the amount of interest to be paid by the Trust to the Debt Unit holders by referring to the PPM Supplement dated Date XX, 20XX. |
|
X |
| The Bank will make all disbursements via wire transfer to The Depository Trust Company ("DTC") on the scheduled trust distribution date as soon as the amount of interest received from the underlying collateral into the custodial bank account has been received and verified for accuracy. |
|
X |
| PARTIAL REDEMPTIONS |
| 4 |
If there is a partial redemption of the trust certificates the Bank and the Depositor must ensure that the redemption proceeds received by the Trust and distributed by the Bank are in accordance with the series supplement. |
X |
X |
| DEFAULTS |
| 5 |
If the Bank has actual knowledge of an event of default on the underlying securities that did not cause the Trust to liquidate, the Bank must distribute a formal notice of default to the Depositor, the certificateholders, the rating agencies and SCD/OG. |
|
X |
| If the Bank has actual knowledge of an event of default on the underlying securities that did not cause the Trust to liquidate, the procedures for a vote or consent of the certificateholders as set forth in the Standard Terms and series Supplement must be complied with. |
|
X |
| CALL WARRANT EXERCISES AND OPTIONAL EXCHANGES |
| 6 |
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the Trust to liquidate, the Bank must give the Depositor and the affected certificateholders notice of any exercise of call warrants or optional exchange. Such notice must contain the amount of certificates to be purchased, the call price, and any other relevant information. |
|
X |
| MINIMUM Servicing STANDARD |
Applicable
Servicing STANDARD |
| Reference |
Criteria |
Performed by the Depositor |
Performed by Bank/Trustee |
| |
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the trust to liquidate, the Bank must notify the rating agencies of the call exercise or optional exchange. |
|
X |
| |
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the trust to liquidate, the Bank must give notice of exercise or optional exchange to the Depositor and certificate registrar of any certificates that were called. |
|
X |
| COMMUNICATIONS WITH CERTIFICATEHOLDERS |
| 7 |
If there was any occasion for the exercise of voting rights or
giving consents by the certificateholders, the Bank must provide notice to the certificateholders within 5 business days of the
Trust's receipt of notice of the occasion and the Bank must vote or give consents as directed by certificateholders. |
|
X |
EXHIBIT 99.3
[KPMG LLP Letterhead]
Independent
Accountants’ Report
The Board of Directors
The Bank of
New York Mellon:
We have examined the accompanying
management’s assertion that The Bank of New York Mellon (formerly The Bank of New York) (the “Company”) complied with the
PPLUS Minimum Servicing Standards (“Servicing Standards”) for the INDEXPLUS Trust Series 2003-1 transaction
as of and for the year ended December 31, 2014. With respect to Servicing Standards 4,
5 and 6, management’s assertion indicates that there were no activities performed
during the year ended December 31, 2014 with respect to the INDEXPLUS Trust Series
2003-1 transaction, because there were no occurrences of events that would require the
Company to perform such activities. Management is responsible for the Company’s
compliance with the Servicing Standards. Our responsibility is to express an
opinion on management’s assertion about the Company’s compliance based on our
examination.
Our examination was conducted in
accordance with attestation standards established by the American Institute of Certified Public
Accountants and, accordingly, included examining, on a test basis, evidence about the
Company’s compliance with the PPLUS Minimum Servicing Standards specified above and performing
such other procedures as we considered necessary in the circumstances. We believe that
our examination provides a reasonable basis for our opinion. Our examination does not
provide a legal determination on the Company’s compliance with the PPLUS Minimum
Servicing Standards.
In our opinion, management’s assertion that the Company
complied with the aforementioned PPLUS Minimum Servicing Standards for the INDEXPLUS Trust Series 2003-1 transaction as
of and for the year ended December 31, 2014 is fairly stated, in all material respects.
/s/ KPMG LLP
Chicago, Illinois
February 20, 2015
MANAGEMENT ASSERTION
The Bank of New York Mellon (formerly The Bank of New York) (the
“Company”) is responsible for complying with the requirements of the PPLUS Minimum Servicing Standards
(“Servicing Standards”) as they relate to the INDEXPLUS Trust Series 2003-1 transaction. With respect to
Servicing Standards 4, 5, and 6, there were no activities performed during the year ended December 31, 2014 with
respect to the INDEXPLUS Trust Series 2003-1 transaction, because there were no occurrences of events that would require
the Company to perform such activities. The Company is responsible for establishing and maintaining
effective internal control over compliance with the Servicing Standards. The Company has performed
an evaluation of its compliance with the requirements of the Servicing Standards as it relates to
INDEXPLUS Trust Series 2003-1 as of and for the year ended December 31, 2014. Based on this evaluation, the Company
asserts that as of and for the year ended December 31, 2014, it has complied with the requirements of the PPLUS Minimum
Servicing Standards (attached).
/s/ Richard P. Stanley
The Bank of New York Mellon
Richard P. Stanley
Executive Vice President
February 20, 2015
|
|
Appendix I
PPLUS Minimum Servicing Standards intended
for use
in connection with the Annual Accountants
Report ("AAR")
Below is Merrill Lynch Depositor, Inc.'s ("the
Depositor"), Merrill Lynch Structured Credit Derivatives ("SCD") and the Merrill Lynch Credit Derivatives Operations
Group ("OG") (collectively Merrill Lynch) minimum servicing standards for the PreferredPlus Program ("PPlus").
The
Bank of New York Mellon ("the Bank" or “the Trustee”) acting as Trustee, Custodian, Paying Agent, and Transfer
Agent on behalf of the PPlus Program has agreed to comply with all of the following minimum servicing standards. Merrill Lynch
has obtained a certification from the Bank that it has complied with these criteria for
the period January 1, 2014 to December 31, 2014.
| MINIMUM Servicing STANDARD |
Applicable
Servicing STANDARD |
| Reference |
Criteria |
Performed by the Depositor |
Performed by Bank/Trustee |
| CUSTODIAL BANK ACCOUNT RECONCILIATIONS |
| 1 |
The Bank must reconcile all related custodial bank accounts.
|
|
X |
| The Bank will include the Distribution report as Exhibit 99.1 in the Form 8-Ks filed with the SEC. |
|
X |
| VERIFICATION OF INCOMING TRUST COLLATERAL INTEREST PAYMENTS |
| 2 |
The Bank must have a tickler system in place so that they will be expecting and monitoring the custodial bank account for receipt of the collateral coupon interest. Each of the tickler systems shall be updated on an on-going basis as each new trust series is created. |
|
X |
| The Bank will ensure all interest payments are deposited into the custodial bank accounts and related bank clearing accounts on the day the Bank is in receipt of the funds. |
|
X |
| The Bank must prove the arithmetic accuracy of the amount of interest received by the Trust from the underlying securities and ensure that the face amount, description, coupon rate, and maturity date of the securities held in the Trust agree to the PPM Supplement dated Date XX, 20XX |
|
X |
| MINIMUM Servicing STANDARD |
Applicable
Servicing STANDARD |
| Reference |
Criteria |
Performed by the Depositor |
Performed by Bank/Trustee |
TRUST DISBURSEMENTS |
| 3 |
The Bank must prove the arithmetic accuracy of the amount of interest to be paid by the Trust to the Debt Unit holders by referring to the PPM Supplement dated Date XX, 20XX. |
|
X |
| The Bank will make all disbursements via wire transfer to The Depository Trust Company ("DTC") on the scheduled trust distribution date as soon as the amount of interest received from the underlying collateral into the custodial bank account has been received and verified for accuracy. |
|
X |
| PARTIAL REDEMPTIONS |
| 4 |
If there is a partial redemption of the trust certificates the Bank and the Depositor must ensure that the redemption proceeds received by the Trust and distributed by the Bank are in accordance with the series supplement. |
X |
X |
| DEFAULTS |
| 5 |
If the Bank has actual knowledge of an event of default on the underlying securities that did not cause the Trust to liquidate, the Bank must distribute a formal notice of default to the Depositor, the certificateholders, the rating agencies and SCD/OG. |
|
X |
| If the Bank has actual knowledge of an event of default on the underlying securities that did not cause the Trust to liquidate, the procedures for a vote or consent of the certificateholders as set forth in the Standard Terms and series Supplement must be complied with. |
|
X |
| CALL WARRANT EXERCISES AND OPTIONAL EXCHANGES |
| 6 |
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the Trust to liquidate, the Bank must give the Depositor and the affected certificateholders notice of any exercise of call warrants or optional exchange. Such notice must contain the amount of certificates to be purchased, the call price, and any other relevant information. |
|
X |
| MINIMUM Servicing STANDARD |
Applicable
Servicing STANDARD |
| Reference |
Criteria |
Performed by the Depositor |
Performed by Bank/Trustee |
| |
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the trust to liquidate, the Bank must notify the rating agencies of the call exercise or optional exchange. |
|
X |
| |
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the trust to liquidate, the Bank must give notice of exercise or optional exchange to the Depositor and certificate registrar of any certificates that were called. |
|
X |
| COMMUNICATIONS WITH CERTIFICATEHOLDERS |
| 7 |
If there was any occasion for the exercise of voting rights or
giving consents by the certificateholders, the Bank must provide notice to the certificateholders within 5 business days of the
Trust's receipt of notice of the occasion and the Bank must vote or give consents as directed by certificateholders. |
|
X |