19 September 2001

Dear Colleagues:

We are pleased to announce that Merrill Lynch is committing $10 million to support disaster relief efforts for the 11 September tragedies. As part of this commitment, the firm will match employee contributions to The September 11th Fund through a Special Matching Gift program.

The September 11th Fund was launched by the United Way of New York City and the New York Community Trust to provide relief to victims of the attacks in New York, Washington, D.C., and Pennsylvania. Every penny donated will be used to provide food, shelter and medical services — as well as grief and trauma counseling services — to victims and family members.

Employees may give to, or through, The September 11th Fund to one of the following:

• The September 11th Fund, providing food, shelter, medical services and counseling to victims and family members.

• The New York Police & Fire Widows' & Children's Benefit Fund, which assists families in coping with the financial burden of long-term education, housing and medical expenses.

• The Twin Towers Fund, established by Mayor Rudolph W. Giuliani to assist affected families of members of the uniformed services, including Emergency Medical Services and other rescue personnel as well as police and fire fighters.

Further information and details about how to contribute will be posted shortly on WorldNet and ml.com.

Here are other developments:

Merrill Lynch was among the thousands of companies and government agencies that had to respond to the latest global computer virus on Tuesday and Wednesday. We are pleased to report that through the superb efforts of our security and technology teams, the virus was contained with little or no impact on client service.

As a result of that fine work, and the work of thousands of employees since the 11 September tragedies, we continue to be fully operational as we trade all our products in all markets.

At a DBS on Wednesday in Princeton, Dave spoke about how we are coming back quick and strong. He was joined on the broadcast by EVP James Gorman, head of USPC's Client Relationship Group; and SVPs Bob Doll and Mary Taylor, co-heads of MLIM Americas. He indicated that financially we are in very strong shape with the most liquid, safest balance sheet we've had in our history. The security of our clients' assets is without question.

While we have taken a blow to our infrastructure, we have not taken a blow to our spirit. We have relocated almost all of our people. We are gaining strength each and every hour, as far as our ability to support our business efforts around the world.

We are handling a high volume of client orders and we are continuing to work through the few remaining glitches. While we expect the market to remain volatile in the short term, the fact that our clients are keeping cool and refusing to panic is a testament to all your hard work.

Afterward, Dave met in Princeton and Hopewell with colleagues who were displaced by the 11 September attack on the World Trade Center. He noted that our biggest concerns are not financial, they are about facilities and people. As the healing continues, it is more important than ever that our colleagues are sensitive and patient with each other.

We expect members of our Investment Banking and Research teams to begin occupying 222 Broadway at the end of this week. Environmental experts thoroughly examined the building, and test results indicated the building is clean and the air is safe to breathe. While the North Tower is in pristine condition, it lacks basic utilities. The South Tower sustained significant damage and it could be a year before we return to that building.

Unfortunately, we need to alert you to the fact that some unscrupulous individuals are using the 11 September tragedies to try to obtain account information from our clients. Our clients should be advised that under no circumstances should they provide account numbers or any other information. We lost no records in the attack.

Thank you all for your continued hard work.

David H. Komansky Chairman and CEO

E. Stanley O'Neal President and COO