Company Overview Merrill

Company Overview Merrill Lynch is a holding company that, through its subsidiaries and affiliates, provides investment, financing and asset management products on a global basis. The company's private client group provides retail brokerage; trust services, and mutual funds, as well as life insurance and annuities. The global markets & investment banking group offers investment banking, brokerage, and clearing services to corporate and government clients. The firm also provides asset management via Merrill Lynch investment managers. Merrill Lynch is headquartered in New York City, New York. For the fiscal year ended December 2003, the company generated revenues of $27,745 million, representing a one year sales growth of 1.8%. Net income for the year was $3,988 million. Business Description

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Merrill Lynch is a holding company that provides investment, financing, advisory and related products and services on a global basis. These services include securities brokerage, trading and underwriting and investment banking. Strategic services, including mergers and acquisitions, and other corporate finance advisory activities are also important businesses. Furthermore, the company engages in asset management, brokerage and related activities. Merrill Lynch organizes its business into three segments: global markets & investment banking (GMI), the private client group (GPC) and Merrill Lynch investment managers (MLIM). GMI provides trading, investment banking, and advisory services to corporate and institutional clients worldwide. In investment banking, Merrill Lynch is the world's major underwriter of global debt and equity. The company organizes GMI along three lines: global clients, global client businesses, and regions. Global clients consists of the institutional client and investment banking teams that work closely together. Institutional client focuses on providing value-added advice and execution services to institutional investor clients worldwide. Investment banking provides strategic advisory and financing services to corporations, financial institutions, and governments on a global basis. Global client businesses include debt markets and equity markets. Debt markets trade, structure, and underwrite debt and debt-related products worldwide. Equity markets include global trading and origination of equity and equity-linked products. It also includes Merrill Lynch's equity securities financing and clearing businesses. The GPC provides products and services related to the accumulation and management of wealth, including, for example, brokerage and related activities; retirement, investment and custody services. US private client serves individuals, small- to mid-sized businesses, and employee benefit plans, using a planning-based approach to provide cash, asset, liability, and transition management services. Merrill Lynch actively uses technology to enhance client service and leverage financial consultants. Initiatives include trusted global advisor SM (TGA SM), a technology platform for financial consultants, and Merrill Lynch Online SM, an internet-based service that enables clients to access account information and research, communicate with financial consultants, place orders electronically, and engage in eCommerce. MLIM completes the group's hand of core businesses. Merrill Lynch conducts its asset management activities through MLIM using, principally, the Merrill Lynch, Mercury and Hotchkis and Wiley brand names. The segment offers an exceptionally diverse and balanced array of money management capabilities: dollar and non-dollar; equity and fixed income; active as well as passive; and quantitative asset management. The division is one of the largest asset managers in the world with around $500 billion in assets under management. History

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In 1885, Burrill & Housman, an investment firm and Merrill Lynch's direct predecessor, was founded. In 1914 Charles E. Merrill & Co. began operating. Sixteen months later, the name changed to Merrill, Lynch & Co. Throughout its history the firm took many groundbreaking steps and grew to become one of the leaders of its industry.

In 1930, the company sold its retail brokerage business and branches to E.A. Pierce, while it began to concentrate on investment banking. The company continued to expand further until 1940 when it joined EA Pierce and Cassatt in a merger. Over the next few decades, the company began to expand worldwide, opening its London office in 1960. Merrill was also the first US brokerage firm to establish a presence in Tokyo. The purchase of C.J. Devine four years later, meant that Merrill Lynch became a government dealer in fixed income securities. In line with its quest for expansion and diversification, the company acquired White, Weld, an international investment banking firm at the end of the 1970s, and thus took its first major step toward building a capital markets powerhouse. The success story continued when, in 1985, Merrill Lynch became the first foreign securities firm to become a regular member of the Tokyo Stock Exchange. Growth continued in the 1990s. The 1995 acquisition of Smith New Court made Merrill Lynch the largest equity organization in the world. Later in the decade, the company made further acquisitions including that of Hotchkis and Wiley, and McIntosh Securities. 2000 saw an impressive year for Merrill Lynch who once again shattered earnings records as it reported full year 2000 profits of $3.8 billion, up 41% from 1999. Also in 2000, Goldman Sachs, Merrill Lynch, Morgan Stanley Dean Witter launched a major market initiative called BondBook, the First Electronic Market With Trading Support of Major Dealers. Embracing modern media, the company launched Merrill Lynch Direct, an expansive online investing website, in 1999. The following year saw the unveiling of a new Internet-based capability, 'ideal', for issuing securities, transforming the way corporations and institutions access the global capital markets. Also in 2000, Merrill Lynch formed a joint venture with HSBC - to form the first global, online investment and banking company. This complemented the company's globalization strategy by speeding the launch of services to the growing number of self-directed affluent investors outside the US. In less than a year, the company built and launched this new business in Canada and Australia, along with a high-tech research service in the UK. In July 2001, Merrill Lynch announced it had acquired a 30% share of the Munich-based M&A consultancy Sannwald Jaenecke & Cie. The agreement between Merrill and an independent M&A firm specializing in mid-sized transactions, was a new development in the German market, and the first deal of its kind for Merrill Lynch. The September 2001 terrorist attacks and the weakened economy forced Merrill Lynch to streamline; the firm scaled down all international operations in late 2001. In January 2002, CIBC announced that it had successfully completed the purchase of the shares of Merrill Lynch's asset management business in Canada, operated by Merrill Lynch Investment Managers Canada, manager of the 29 Merrill Lynch mutual funds, Frontiers pools and separately managed accounts. During the summer of 2002, Merrill Lynch was at the center of an investigation led by New York attorney general Eliot Spitzer, examining "conflicts of interest" between equity research and investment banking activities. Despite no admission of wrongdoing, Merrill Lynch agreed to a $100 million fine and the subsequent restructuring of relations between its research and present or potential clients. The investigator's scrutiny soon spread across Wall Street to Merrill Lynch's peers, consequently reshaping investmentbanking practices. In May 2002, Merrill Lynch withdrew from the fledgling MLHSBC online brokerage operation it set up with HSBC in 2000. Operating out of the UK, Australia and Canada, the unit was conceived on the crest of the Internet wave, and although one of the most ambitious Internet joint-ventures ever, it never fulfilled its promise. The unit had suffered from sluggish investor interest and negative market conditions. While Merrill Lynch continued to make its research available through the MLHSBC website, the unit was integrated into the HSBC Group. Amid a bad year for the bank, it gained a much-needed boost to its flagging reputation when it emerged in July 2002 that its research analysts' European stock list, Europe 1, had outperformed the market by 30% in the last two years.

In August 2002, there was yet another blow to Merrill's reputation when South Korea's financial regulator found Merrill Lynch (along with UBS Warburg) guilty of unfairly providing market sensitive information to clients. It claimed that the two banks had "leaked" equity research to clients prior to its release on the wider market. The subsequent penalties saw the forced suspension of some employees and enforced pay-cuts for others. In September 2002, Merrill, in keeping with its Wall Street peers, continued to streamline its operations and cut staff from non-core areas. It announced it had slashed its sales and support staff in the Middle East in an effort to focus on the upper end of the financial market. By January 2003, the bank, due to flat markets, low demand for new stock issues and a significant fall in merger and acquisition activity, had cut 30% of its work force, or about 21,700 jobs, since the summer of 2000. Later in the month takeover speculation surrounded Merrill. There was rumor that UBS Warburg was considering a takeover bid of the investment bank. Such circulated after a report appeared in the BoersenZeitung. The newspaper claimed Marcel Ospel, chairman of UBS, was seriously interested in the pros and cons of a takeover. UBS Warburg remains highly committed to the US market, and the capture of Merrill Lynch would have rendered it with a vast role in Wall Street banking, providing essential sales channels to strengthen its core business. Both banks refused to comment on the speculation, and subsequently interest died down. In October 2002, Merrill Lynch was facing the possibility of legal action from Commerzbank, one of its clients. A query made to the Standard & Poor's ratings agency by Merrill Lynch's credit department sparked a potential legal battle between the two banks. Commerzbank claimed that a 6% fall in the bank's share price was a result of Merrill's query into the German giant's financial health. In October 2002, Merrill Lynch faced being sued for $1 billion in damages by a group of investors. A lawsuit, seeking class-action status, was filed in Florida and centered on allegations that Merrill did not properly warn investors of the risks of one of its funds. Plaintiffs claim that ML Investment Managers did not properly explain that its Focus Twenty mutual fund would invest in speculative stocks, particularly from the hi-tech and telecoms sectors. Moreover, the suit claimed that that the managers chose stocks linked to existing and potential clients of the firm's investment banking arm. The firms have since come to a settlement agreement with the plaintiffs. In November 2003, Stan O'Neal, Merrill Lynch chairman and chief executive, announced that he was to hire approximately 2,000 more brokers by 2006, underscoring its determination to boost earnings from the retail side of its business. Mr. Gorman stated that the US market would be the focus of the recruiting drive but Merrill would also make additions overseas. In December 2003, the company announced it had been granted a preparatory license from the Chinese Security Regulatory Commission (CRSC) to establish a joint venture fund management company with BOC International China Limited (BOCICL) and BOC International Holdings (BOCIH). MLIM was expected to hold a 16.5% stake in the joint venture. In January 2004, the company acquired the US equities and options execution and clearing unit of ABN AMRO. Major Products & Services

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Merrill Lynch, through its various subsidiaries and affiliates, provides a range of investment, financing, advisory, insurance, banking. Its products and services include: Alternative Investments: Managed Futures and Hedge Funds BasicSM Retirement Plan CMA Visa SignatureSM Program Convertible Securities Deaf/Hard of Hearing (D/HOH) Investor Services Disability Income Insurance Priority Client Services Roth Individual Retirement Account (Roth IRA) Special TMASM Accounts and Services

The Municipal Bond High-Net-Worth Portfolio Report Traditional Individual Retirement Account (Traditional IRA) Transfer on Death Services Trust Management (TMASM Accounts) US Treasury Inflation-Indexed Securities Company View

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The following is a statement from E. Stanley O'Neal, CEO of Merrill Lynch. This statement has been taken from the company's 2003 Annual Report: In 2003, Merrill Lynch proved that it could perform at an extraordinary level strategically, operationally and financially. We made a number of critical decisions two years ago that resulted in fundamental changes in the way we serve clients, approach the financial markets, manage our resources, work with each other and demand excellence from ourselves. The result has been transformational. Merrill Lynch is now a company with one of the most attractive profit margins in the industry, capable of creatively meeting the needs of clients and committed to disciplined growth and superior shareholder returns. A Year of Record Performance Merrill Lynch reported net earnings of $4.0 billion for 2003 - a record. Our full-year pretax profit margin rose to 28.0% - also a record. Earnings per diluted share were $4.05, up 54% from $2.63 per share in the prior year. Net revenues were $20.2 billion, up 8% from 2002. Return on average common equity was 16.1%, up from 11.7% in 2002. We are proud of our performance because our success would not have been possible but for the collective efforts of all 48,100 Merrill Lynch employees. Their commitment to excellence, dedication to serving clients, hard work and determination are what define Merrill Lynch. Together, we have enhanced efficiency throughout the company, creating tremendous operating leverage with a very large percentage of incremental revenues dropping to the bottom line. Improving Markets in Which to Grow We finished the year with considerable momentum and an improving business environment, after three years of market declines. Major stock indices rose meaningfully and bond markets remained strong. Corporations reported healthy profits. Across the globe, economies began to grow. There were outstanding opportunities for our clients and for Merrill Lynch. We met those opportunities with a focus on broadening and deepening relationships, diversifying sources of revenue, continuing to invest with discipline and making sure compensation was tied closely to actual performance at every level of the company. We expect more of ourselves than simply to benefit from a rising market tide. Our goal is to perform well across market cycles. We set a course to reshape Merrill Lynch and diversify our revenue sources. The results of that effort are reflected in the performance of our businesses in 2003. Global Markets & Investment Banking In Global Markets & Investment Banking (GMI), we combined our debt and equity sales trading resources into a single global markets unit and we integrated our capital markets origination and advisory capabilities into our investment banking unit. We realigned these businesses to better meet the increasingly sophisticated, interrelated needs of our corporate and institutional clients. We've broadened our debt markets activities, including credit, principal investments, secured financing, and municipal finance. We have significantly enhanced our foreign exchange activities around the world and grown revenues considerably in this area. As a result of these efforts, the revenue profile of our debt business is more balanced and we have more sources of potential growth. These opportunities require relatively little additional investment on our part, but have the potential to produce significant additional revenue. In equities, we have a long history of success based on a high-touch platform that is considered by many to be the best in the industry. We intend to keep it that way with continued investment of capital, people and management focus. But we also are refining our business model. We've built a growing portfolio of trading businesses and expanded our technology capabilities to better serve those clients requiring more automated trading and investment decision support.

In investment banking, we now are well positioned to provide clients with the full breadth of our strategic advisory and corporate finance capabilities. We are better able to bring in additional services to our existing client relationships and generate growth. Our investment banking revenues gained momentum in 2003 and this business is significantly more profitable than at its peak revenue level in 2000. Our performance and future prospects in investment banking have never been better. We are taking steps to assure the business continues to grow, targeting a number of new hires - senior bankers in key geographic markets, industries and product areas - to strengthen our leading presence in financial institutions, real estate, energy and power, and to fill gaps in sectors where Merrill Lynch has been underrepresented, such as leveraged finance. Wealth Management Businesses In 2003, Merrill Lynch's wealth management businesses, Global Private Client (GPC) and Merrill Lynch Investment Managers (MLIM), further solidified their positions as industry leaders. These businesses present enormous opportunity to drive much of Merrill Lynch's future growth and we have only begun to realize their tremendous potential. In Global Private Client, we made good progress in implementing Total MerrillSM - broadening the range of products and services we provide to each individual household. We're adding revenue sources and more fee-based business, which reduces our reliance on transaction commissions. We have had back-to-back record years in home mortgage origination, providing more than $20 billion in mortgage financing to our clients in 2003. But even with the great year we had in mortgages,we generated more revenue last year by providing cash management and financing services to small businesses. We also continue to innovate in retirement services. Merrill Lynch financial advisors set the industry standard for expertise, quality of client service and ability to access a full array of financial products and services. We added more than 200 top-quality advisors in the second half of the year, and we will continue to hire. We also are open to acquisitions that leverage our scale and accelerate our growth in GPC. In Merrill Lynch Investment Managers, we took important steps to enhance distribution of our highperforming products. In GPC's open architecture system, MLIM competes on investment performance like any other asset manager - and does so effectively. MLIM finished the year with more than 70% of assets under management ahead of benchmark or median for one, three and five years. In 2003, net sales of MLIM mutual funds in GPC were positive for the first time since 1997. MLIM also is developing relationships with third-party distributors. For example, we had particular success selling retail funds in Europe and Asia, driven by investment performance and an attractive product array. A Strong Platform for Moving Forward The people of Merrill Lynch have worked hard to reshape the company into one capable of performing at the highest level. We achieved record earnings last year on net revenues that were some $7 billion less than they were in 2000. We have built a solidly profitable and strategically sound platform on which we can grow for years to come. Managing growth is a dynamic process that requires focus, commitment and discipline throughout an organization. We believe we have the right combination to do that at Merrill Lynch. We are setting aggressive but realistic goals for performance and we are achieving them. We are positioned to succeed in each of our businesses, responsibly and in a manner consistent with the uncompromising expectations of our clients and shareholders. We are constantly evolving to provide the finest client service and meet the full breadth of our clients' needs. We are determined to produce consistently better results than at comparable periods in ourpast and to use fewer resources to do so. We are an engaged corporate citizen, giving back to our communities. And we are committed to attracting, encouraging and rewarding talent, providing our people with opportunities to grow and add ever-increasing value. Merrill Lynch is one of the world's great franchises. All of us are custodians of that franchise. We have a responsibility to preserve and nurture it and realize its full potential. And we have the people, the resources, the commitment and the ability to meet that challenge. I look forward to reporting to you on our progress in the quarters and years ahead.