Unlocking value is the hallmark of well-run companies. At Merrill Lynch,
we have extended the definition of strategic leverage beyond financial
growth and performance to encompass the active exchange of ideas
and resources – across our firm and among our businesses.
By leveraging the critical resources and relationships that drive our growth,
we improve our ability to deliver comprehensive solutions to our clients. In this way,
strategic leverage not only maximizes returns for every shareholder, it maximizes
the value we deliver to all clients who entrust their finances to Merrill Lynch.
Our leadership position in global financial markets is attributable, in large part, to the investments
we have made in building a powerful franchise in virtually every region of the world.
The sharing of financial, human, intellectual and technological resources across this global
franchise helps maintain our firm's momentum and accelerates returns on the investments
we have made in our future. 
For our shareholders, operating leverage fosters stronger
revenue growth, increased market share and improved profitability. For our employees,
the sharing of ideas and resources engenders career opportunities that may not be
available elsewhere. Most important, for our clients, combining leadership in local
markets with an unparalleled global presence makes it possible to produce
increasingly innovative financial solutions and greater investment performance.
As a key component of the Merrill Lynch business model,
operating leverage is driven by three primary factors: client
relationships, intellectual capital and technology.
Benefiting From a Global Network of Relationships Our three primary businesses – Corporate and Institutional, Private Client, and Investment Managers – enjoy strong relationships with thousands of corporate, institutional and governmental clients and millions of individual investors worldwide. Leveraging this network of relationships gives us outstanding opportunities not only to build our business, but to satisfy our clients' needs more effectively. For example, together with our institutional sales organization, our private client business around the
world is a key distributor of products created by our investment banking, capital markets and investment management teams. Private clients benefit from the availability of securities and solutions that may better satisfy their needs, while institutional and corporate clients benefit from liquidity
created through diverse distribution channels.
Combining local
client relationships with global resources has enabled us to provide
integrated solutions both within and across geographic borders. This
has been especially helpful to our equity, debt and advisory businesses,
which increasingly are serving corporations doing business in multiple
markets. We are the only firm that ranks among the top three in equity underwriting
and secondary trading in all the major regions of the world. As these
businesses continue to deepen their corporate relationships, our global preeminence
in underwriting and distributing securities will grow. The close collaboration of our
businesses provides opportunities for clients to derive benefits that extend well beyond
traditional relationships. Proof of this is the $28 billion of assets entrusted to our investment
management group from referrals of investment banking clients.
Sharing Intellectual Capital The expertise, creativity and resourcefulness of our people are the lifeblood of Merrill Lynch. These qualities are the human force behind our brand. This is especially evident within our research organization. Operated as a separate resource outside of any individual business unit, world-class analysts generate insights and ideas for the Financial Consultants in our private client business, our institutional sales and trading teams, and our corporate clients. In a securities business where execution of transactions is being commoditized, our top-ranked research capabilities provide a critical point of differentiation for the advisory services our more sophisticated clients require. The synergies realized from sharing research have enabled us to maximize the value of our investment in this critical area; we have built a research organization that is second to none.
The Merrill Lynch research team includes more than 900 research professionals covering
the world from 35 locations in 26 countries. That group – which includes economists,
industry analysts, investment strategists, market analysts, quantitative and equity
derivative analysts, convertibles experts and high-yield strategists – provides our firm
and clients with macroeconomic perspectives, investment strategies and specific security
recommendations. In 2000, their success in doing so helped Merrill Lynch win the greatest
number of equity research "All-Star Team" positions globally, with 208 positions over all in
Institutional Investor's polls, 23% more than our nearest competitor. Of course, our research
team is only one example of how we are leveraging the intellectual capital of Merrill Lynch.
We also employ hundreds of leading experts in financial specialties ranging from generational
planning to corporate finance. By promoting a culture in which their ideas and expertise are shared
across our firm, we create a more productive and satisfying experience for clients and employees alike.
Realizing Value From Technological Excellence Operating leverage has been particularly valuable in the area of technology, which represents the latest and largest enabler of change throughout the world. In today's environment, technological excellence not only makes us more responsive to changing business and market conditions, it enables us to seize opportunities that arise from rapid change.
We're working hard to maximize the return on every dollar we invest in technology – placing great emphasis on leveraging technology spending to benefit our businesses, clients and bottom line. Merrill Lynch is also leading the drive toward integrating technology more closely into our industry's processes, including alliances with other capital markets participants to create entirely new trading platforms. These strategic partnerships are generating new levels of liquidity and price transparency. Merrill Lynch is also driving technological change through strategic investments in selected technology innovators. As new technologies become
commercially viable, these partnerships have the potential to generate financial returns for
our firm while giving us a head start in using innovative technologies to better serve our
clients. In effect, the financial leverage we provide these innovators has created a
strategic accelerator for Wall Street's – and our company's – technological future.
