Capital Projects and Expenditures

Delivering Shareholder Value

Selected Financial Data

Management's Discussion and Analysis Introduction

Business Environment

Consolidated Results of Operations

Business Segments

Global Operations

Non-Interest Expenses

Income Taxes

Balance Sheet

Capital Adequacy and Liquidity

Capital Projects and Expenditures

Risk Management

Non-Investment Grade Holdings and Highly Leveraged Transactions

Litigation and Recent Developments

Management's Discussion of Financial Responsibility

Independent Auditors' Report

Consolidated Statements of Earnings

Consolidated Balance Sheets

Changes in Stockholders' Equity

Comprehensive Income

Cash Flows

Note 1 - Summary of Significant Accounting Policies

Note 2 - Other Significant Events

Note 3 - Trading and Related Activities

Note 4 - Investments

Note 5 - Borrowings

Note 6 - Fair Value Information and Non-Trading Derivatives

Note 7 - Preferred Securities Issued by Subsidiaries

Note 8 - Stockholders’ Equity and Earnings Per Share

Note 9 - Commitments and Contingencies

Note 10 - Employee Benefit Plans

Note 11 - Employee Incentive Plans

Note 12 - Income Taxes

Note 13 - Regulatory Requirements and Dividend Restrictions

Note 14 - Segment and Geographic Information

Supplemental Financial Information (unaudited)

Capital Projects and Expenditures
Merrill Lynch continually prepares for the future by expanding its operations and investing in new technology to improve service to clients. To support business expansion, for example, Merrill Lynch is building a new European headquarters in London, for approximately $620 million; approximately $420 million has been spent to date.

Merrill Lynch has a long-term capital commitment of up to $600 million to Merrill Lynch HSBC, the 50/50-owned corporation created to provide global online investment and banking services. At December 29, 2000, $522 million of the total commitment was unfunded. The timing of the funding of this commitment will be determined by the Board of Directors of Merrill Lynch HSBC, which has equal representation from Merrill Lynch and HSBC. Merrill Lynch expects the commitment to be funded over a five year period.