MERRILL LYNCH capital PROTECTED

DISPERSION CERTIFICATES
protection

BENEFIT FROM THE DECOUPLING OF THE GLOBAL ECONOMIES WITH 100% CAPITAL PROTECTION

key features

what is dispersion?

n Potential to benefit from the decoupling of the U.S.

economy from other regional economies. The realisation
of this trend is strongly supported by Merrill Lynchs
research
n Potential to earn a high return independently of the
general direction of equity markets
n 100%1 participation in the highest Annual Dispersion of
a basket of 20 global blue-chip stocks
n 100% capital protection
n 5-year investment term
sample calculation
The tables below illustrate how the Certificates payout at maturity
is calculated. Lets assume that the performances of the stocks from
the initial investment date to the observation date are as follows. The
equally-weighted baskets performance is the average of the stocks
performances.
Date 1

Date 2

Date 3

Date 4

Date 5

Stock 1

-28%

34%

7%

-5%

51%

Stock 2

-12%

11%

18%

65%

106%

Stock ...

...

...

...

...

...

Stock ...

...

...

...

...

...

Stock 20

13%

62%

61%

61%

136%

-24%

-4%

3%

14%

38%

Basket

The difference between the performance of each stock and the Basket
would be as follows. The Annual Dispersion is the average of the
positive differences.
Date 1

Date 2

Date 3

Date 4

Date 5

Stock 1

0%

38%

4%

0%

13%

Stock 2

12%

15%

15%

51%

68%

Stock ...

...

...

...

...

...

Stock ...

...

...

...

...

...

Stock 20

37%

66%

58%

47%

98%

6%

21%

28%

39%

60%

Annual Dispersion

At maturity, investors will receive 100% of their initial investment back

plus 100%1 of the highest observed Annual Dispersion, i.e. 60%.

In general, when growth rates for different countries and sectors start
diverging from each other, stocks from different countries and sectors
tend to perform very differently from one another. In equity markets,
dispersion is a measure of this tendency. Dispersion is measured
by looking at the difference in performance of a set of stocks relative
to one another. The more the divergence between different equity
markets, the higher the dispersion.

WHY IS IT A GOOD TIME TO INVEST IN DISPERSION?

Merrill Lynchs research analysts expect divergence between different
equity markets to increase in the next few years2. In particular, Merrill
Lynch research analysts believe that the global economy is in a transition
phase where a decoupling between the U.S. equity market and other
regional equity markets is taking place. This means that a negative
economic cycle in the U.S. will affect other regional economies much
less than in previous years when the U.S. was the main growth engine.
As long as fundamental factors support growth in other regions, these
regions should continue to perform well even if the U.S. economy slows
down. Merrill Lynch research believes that evidence of the decoupling
lies in the following observations:
1) Economic growth remained resilient in regions such as Asia, Japan
and Europe despite economic slowdown of the U.S.
2) Asian exports of consumer goods to the U.S. constituted only 6% of
total Asian exports in 2006, down from 8% in 2001
3) Domestic demand in Asia, Europe and other regions is increasing
and this is compensating for the economic slowdown of the U.S.

how does the certificate work?

The Merrill Lynch Protected Dispersion Certificate (the Certificate) is a
5-year investment designed to offer investors the opportunity to benefit
from the potential increase in dispersion along with 100% capital
protection at maturity. The Certificate is linked to 20 blue-chip stocks
selected across different countries and sectors to maximise the chances
of benefiting from a high dispersion.
Annual Dispersion will be measured in the following way: every
year, the difference between the performance of each stock and the
performance of the equally-weighted basket of 20 stocks is recorded
(performances are measured from the initial date of investment each
time). If the difference is negative, a zero is recorded; otherwise the
positive difference is recorded. Annual Dispersion is then measured as

the average of these differences. At maturity, investors will receive

100% of their initial investment back plus 100%1 participation in
the highest Annual Dispersion.
1

The Participation Rate will be fixed on the Strike Date.

Based on several Merrill Lynch research reports issued between May 2007 and September
2007 such as : Global Decoupling: a marathon not a sprint 23 May 2007 and The Asian
Week Ahead 07 September 2007.

www.mlinvest.ch

MERRILL LYNCH capital PROTECTED

DISPERSION CERTIFICATES
protection
Sensitivity analysis3

Indicative Terms and Conditions

The table below shows what the Certificate would pay out at maturity
under different scenarios.
Highest Annual

Prinicpal Redemption at

Dispersion

Maturity

95%

100%

95.00%

195.00%

85%

100%

85.00%

185.00%

75%

100%

75.00%

175.00%

65%

100%

65.00%

165.00%

55%

100%

55.00%

155.00%

45%

100%

45.00%

145.00%

35%

100%

35.00%

135.00%

25%

100%

25.00%

125.00%

Issuer
Guarantor
Strike Date
Issue Date
Maturity Date
Currency
Issue Price
Subscription Period
Listing
ISIN
Valor
Symbol
Settlement Currency
Minimum Investment
Valuation Dates (t)

15%

100%

15.00%

115.00%

Share Performance

5%

100%

5.00%

105.00%

0%

100%

0.00%

100.00%

Return

Total Payout at
Maturity

Merrill Lynch International S.A., Luxembourg

On each Valuation Date, the performance of each Underlying Stock is measured

as level of the stock on that Valuation Date relative to its initial level on the Initial
Valuation Date.
The Performance of the Share k on the Valuation Date t is calculated according to
the following formula:

Merrill Lynch & Co. Inc., Delware (S&P: A+, Moodys: A1)
19 November 2007
26 November 2007
26 November 2012
Euro (EUR)
EUR 100 per Certificate
Until 16 November 2007 (17:00 CET)
Will be appliced for on the SWX Swiss Exchange
XS0328888523
3521170
MLPDC
Euro (EUR)
1 Certificate
19 November 2008, 19 November 2009, 19 November 2010, 21 November
2011, 19 November 2012

SharePerf (k,t) =

The Sensitivity Analysis is for illustration purposes only and does not reflect all the factors that may
affect the actual investment, including all possible loss scenarios.

where:
Sk,t is the price of the Share k on the Valuation Date t
Sk,0 is the price of the Share k on the Initial Valuation Date

underlying stocks
Basket Performance

The Certificate is linked to the following 20 stocks:

k

Share Issuer

General Electric Co

On each Valuation Date, the Basket Performance is measured as the average of

the Share Performances from the Initial Valuation Date up to that Valuation Date.
The Performance of the Basket on the Valuation Date t is calculated according to
the following formula:

Bloomberg Code

Pfizer Inc

GE US Equity
PFE US Equity

eXXON MOBILE CORP

johnson & johnson

XOM US Equity

microsoft corp

MSFT US Equity

wal-mart stores inc

WMT US Equity

Banco Bilbao Vizcaya Argenta

BBVA SM Equity

Telefonica SA

Tesco PLC

10

Vivendi

11

Total SA

FP FP Equity

12

Assicurazioni Generali

G IM Equity

13

NOVARTIS AG-REG

14

ROCHE HOLDING AG-GENUSSCHEIN

15

NESTLE SA-REG

BasketPerf(t) =

Annual Dispersion

AnnualDispersion(t) =

Cash Settlement Amount

CHINA MOBILE LTD

18

TOYOTA MOTOR CORP

7203 JP Equity

19

SONY CORP

6758 JP Equity

20

SAMSUNG ELECTRONICS CO LTD

1
20

20

MAX(0%,SharePerf (k,t) - BasketPerf(t))

k=1

On the Maturity, Date, investors receive:

Secondary Market
Calculation Agent
Governing Law
Sales Restrictions

Merrill Lynch will make a secondary market on a best efforts basis

Clearing
Business Days

Euroclear and Clearstream / SIS SegaIntersettle

ROG VX Equity

HUTCHISON WHAMPOA LTD

SharePerf (k,t)

P is the Participation Rate which is 100%1. The Participation Rate will be fixed on
the Strike Date.
HighestAnnualDispersion is the highest Annual Dispersion over the 5 Valuation
Dates.

NESN VX Equity

16

EUR99 + EUR99 x P x HighestAnnualDispersion

TSCO LN Equity

17

20

k=1

where:

TEF SM Equity

NOVN VX Equity

1
20

On each Valuation Date, Annual Dispersion is measured as the differences

between each Share Performance and the Basket Performance. Annual Dispersion
is calculated according to the following formula:

JNJ US Equity

VIV FP Equity

Sk,t
Sk,0

941 HK Equity
13 HK Equity

Merrill Lynch International

English Law
United States. The Securities will not be registered for public sale in any
jurisdiction and so will be available only in accordance with applicable, private
offering rules. The security described herein is not for sale in the U.S. or to U.S.
persons and this communication may not be distributed in the U.S.
European Union. No Prospectus (as defined in the EU Prospectus Directive
2003/71/EC (Prospectus Directive)) will be prepared in connection with the
Securities. Accordingly, the Securities may not be offered to thet public in any
European Economic Area (EEA) member state and any purchaser of the Securities
who subsequently sells any of their Securities in any EEA member state must
do so only in accordance with the requirements of the Prospectus Directive as
implemented in that member state.
London and TARGET

005930 KS Equity

+41 (0) 44 297 77 77 . mlinvestch@ml.com

. www.mlinvest.ch

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IMPORTANT INFORMATION
The Certificates are qualified as structured products, not as collective investment schemes in terms of the Swiss Federal Act on Collective Investment Schemes (CISA), and the Certificates are neither subject
to the approval nor to the supervision of the Swiss Federal Banking Commission. The Certificate constitute direct, unsubordinated, unconditional and unsecured obligations of the issuer and will rank equally
with the issuers other direct, unsubordinated, unconditional and unsecured contractual obligations. Third Parties, who offer or sell these Certificates in Switzerland or out of Switzerland publicly, have to
be a licensed bank, broker dealer or securities trader, or a licensed insurance company according to the relevant Swiss Laws, or a foreign institute under a similar prudential supervision. The insolvency of
the Issuer may lead to a partly or total loss of the invested capital. The Certificates are not issued or guaranteed by a bank. Past performance is no indication of future capital gains. Selling restrictions: USA,
US persons and United Kingdom. For product information to private investors do not hesitate to contact us, for placing an order and for advice contact your bank or adviser. The sole binding version of
the prospectus is available in English and can be obtained for free directly from Merrill Lynch Capital Markets AG, Zurich by calling: Tel. 044 / 297 77 77. Potential Investors shall read and understand the
chapters about risks investing in this certificate in the prospectus.
Neither the Issuer, Merrill Lynch & Co., Inc., nor Merrill Lynch International or its affiliates have made any representation and given you any advice concerning the appropriate accounting treatment or possible
tax consequences of this indicative transaction. Prior to purchasing the security, you should discuss with your professional advisers how such purchase would or could affect you. Investors with any questions
regarding the impact of an investment in the financial instrument on their tax position should consider their tax adviser. Merrill Lynch does not provide tax or legal advice.