Global Markets & Investment Banking (GMI) With global equity indices posting their third year of declines, 2002 was an extraordinarily challenging year in the institutional business.

Underscoring our emphasis on operating discipline, profitable market share and revenue diversification, GMI delivered $2.4 billion in pre-tax earnings on net revenues that were 18% lower than 2001. Due in part to strong expense management, GMI achieved a pre-tax profit margin of 28.6% — among the highest in the industry.

Expense control, however, was not the only story. To build a more diversified business model, GMI invested strategically across its businesses, especially in fixed income, where our debt markets group reported record revenues and profits. With continued focus on efficiency, discipline and diversification, GMI — one of the world's premier investment banking and capital markets organizations — is leveraging its scale, relationships and expertise for strong future growth.

Global Private Client (GPC) In a year that reaffirmed the value of trusted financial advice, GPC reported full-year, pre-tax earnings of $1.3 billion on net revenues that declined 11% to $8.8 billion. Pre-tax profit margin was 14.8%. GPC — the world's preeminent wealth management franchise — provides clients with the industry's broadest array of best-in-class products and services accessible through a single point of contact, the Merrill Lynch Financial Advisor. The combination of our U.S. and international businesses, coupled with our successful strategy of diversifying revenues — including those from fee-based sources — provides opportunities for growth and efficiency across market cycles.

With our highly trained Financial Advisors, and one of the industry's most comprehensive offerings, we are well positioned to capitalize on our competitive advantages in the future.

Merrill Lynch Investment Managers (MLIM) MLIM achieved strong results by focusing on investment performance, increasing sales and profitability, despite a third year of declining equity values.

For the year, approximately 70% of global client assets exceeded either their benchmarks or industry averages for investment performance. MLIM capitalized on this success to increase sales penetration in proprietary, third-party and institutional channels.

Despite net revenues 20% lower than 2001, MLIM significantly increased its profitability. On pre-tax earnings of $321 million, MLIM recorded a pre-tax profit margin of 20.7%.

With strength in performance and profitability, MLIM is taking the actions necessary to continue to add to our bottom line in the years ahead.

In each of our businesses, GMI, GPC and MLIM, our operating discipline has enabled us to continue investing for growth and diversification, despite a difficult revenue environment. This discipline drives not only our financial performance, but also our company's culture.