Preface

In our work together over the past market. We begin by highlighting its 15 years, Merrill Lynch and Gemini extraordinary growth in 1999 and Consulting have endeavoured to focus on some of the drivers behind develop a better understanding of this growth. We then examine a high-net-worth individuals (HNWIs) subsegment of this market—the and what it takes to serve them super-wealthy or ultra-high-net- successfully. This is the fourth in an worth individuals. We analyse this annual series that sets out our views subsegment’s profile, evolution, and on key trends and developments in needs, and assess what it will take to the HNWI market and their succeed in meeting the implications for private banks and requirements of the clients it other institutions that seek to serve comprises. these clients. We continue to revise the Last year’s report had two major methodologies and analyses that themes. On the tactical side, we underpin our insights. Last year we examined how HNWIs fared in 1998, made significant refinements to our a year of increased economic Lorenz curve methodology to reflect turbulence and stock market updated income distribution volatility. On the strategic side, we statistics and equities at market assessed how change and innovation value. We have made only small, in private banking in recent years is incremental changes to our creating a more complex and methodology this year. dynamic private banking environment. We trust you will find this year’s analysis and insights interesting and This year we are concentrating on useful. two key aspects of the HNWI

Winthrop H. Smith, Jr. Mark Tilden Chairman Global Head of Financial Services Merrill Lynch International Gemini Consulting

World Report 2000 1 Merrill Lynch/Gemini Consulting World Wealth Report 2000: Key Findings

■ Seven million high-net-worth individuals worldwide hold more than $1 million each in financial asset wealth, totalling approximately $25.5 trillion.

■ Both the number of HNWIs and the wealth they hold grew in 1999 by over 18%, comfortably exceeding the 12% growth registered last year.

■ Growth in 1999 was driven by strong global economic performance overall and global stock market growth of 37%.

■ The big winners in 1999 were the 1.7 million Asian HNWIs whose wealth rose by 22.7%, thanks to a significant rebound in economic performance and a sharp upsurge in stock market values.

■ We expect HNWI financial asset wealth to expand by 12% a year, reaching $44.9 trillion by 2004.

■ The steady rise in HNWI assets is creating a super-class of HNWIs we call ultra-high-net-worth individuals (U-HNWIs), who have individual financial assets exceeding $30 million.

■ We estimate U-HNWIs now number over 55,000 globally, and their ranks are growing rapidly as family businesses are sold, new technology firms float their stock, and executive stock and option packages rise in value.

■ U-HNWIs have very sophisticated needs in terms of product diversity, specialist advice, information requirements, technology, and personal service.

2 World Wealth Report 2000 Market size and Figure 1: HNWI Wealth by Region, 1997–2004(E) ($ Trillion) a growth 0.9 44.9 Africa 1.0 Eastern Bloc Middle East y the end of the last century, 1.9 5.5 Latin America an estimated seven million Bpeople worldwide each held 9.5 Asia liquid financial assets exceeding 25.5 0.5 $1 million. Over a million new 0.6 0.5 21.6 1.1 3.1 19.1 0.5 people joined this exclusive HNWI 0.5 11.8 Europe 1.0 2.7 0.5 5.4 club in 1999, and their financial 0.9 2.5 4.4 4.0 assets around the globe increased by 6.7 5.6 over 18% to $25.5 trillion (see 4.8 14.3 North America

Figure 1). Two primary forces are 8.1 5.9 6.9 driving this growth. 1997 1998 1999 2004(E)

Source: Gemini Lorenz curve analysis. First, global real GDP expansion a. Adjusted for foreign HNWI ownership of securities. gained momentum in 1999, creating Figure 2: Global Market Capitalisation by Region, Year-end 1998 and 1999 ($ Trillion) new businesses, markets, and individual wealth. Once all the Annual Growth figures are in, a final OECD 1998–1999 economic growth figure of 3% is Worldwide 37.2% expected for 1999, reversing 1998’s 39.6 1.1 ROW 57.1% slowdown. Alan Greenspan 9.6 Asia 69.9% described the US economy’s 28.9 estimated 3.8% growth in 1999 as 0.7 5.7 Europe 26.3% “exceptional”, while economic 10.6 growth in the euro area also 8.4 accelerated significantly in the 18.3 North America 29.5% second half of 1999. Economic 14.1 activity in the dynamic Asian economies, meanwhile, recovered 1998 1999 earlier and more rapidly than Source: FIBV, www.fibv.com/stats/tm4.xls, 9/2/00. anticipated. The Latin American recovery was less evident, and GDP wealth. While growth in the US stock market growth—North growth took longer to reappear. As stock market was impressive—29.5% American HNWI wealth rose by expected, the former Soviet Union in 1999—Asian stock markets shot 17.4%. About 2.5 million North economies remained fragile. up even faster, averaging nearly 70%, Americans now account for over quickly boosting the wealth of Asian 30% of global HNWI wealth (see Second, global stock market growth HNWIs who tend to invest a Figure 3). Our analysis also of 37% in 1999 contributed heavily relatively large proportion of their indicates that burgeoning US wealth to increasing HNWI wealth (see wealth in their local markets. is enlarging the HNWI market base, Figure 2). We estimate that this even though US wealth is more exceptional stock market REGIONAL OUTLOOK evenly distributed than wealth in performance accounts for more than Due principally to these same two other parts of the globe, such as half the year’s 18% rise in HNWI major forces—GDP expansion and Latin America. The US continues to

World Wealth Report 2000 3 lead the world in the creation of Figure 3: Millions of HNWIs by Region, 1997–1999 younger, active HNWIs who are likely to have created their wealth in 7.0 0.04 Africa 0.2 Eastern Bloc the technology sector as the digital Middle East 0.2 Latin America 5.9 0.2 economy takes hold. And 0.04 5.2 0.2 1.7 Asia entrepreneurial IPOs and the 0.04 0.2 0.2 0.2 0.2 increasing frequency of significant 0.2 1.3 corporate option packages are 1.2 2.2 Europe intensifying this wealth-creation 1.8 trend even more. 1.6

2.5 North America 2.1 The wealth of Europe’s 2.2 million 1.8 HNWIs grew by over 19% in 1999, slightly faster than that of their US 1997 1998 1999 counterparts. Europeans now Source: Gemini Lorenz curve analysis. account for over 26% of global Note: Totals do not add up due to rounding. HNWI wealth. Average stock market growth of 26% in Western Europe provided a strong platform for Figure 4: Market Capitalisation and GDPGrowth of Largest Asian Economies wealth creation, and in some Annual Change in Stock Market Capitalisation, End December 1999 a countries whose stock markets grew (% Growth) at a furious pace, such as Germany 167% (30%) and France (50%), this effect was particularly pronounced. Prospects for growth in European 103% HNWI wealth will also be favourably 77% influenced as entrepreneurial IPOs 71% become more commonplace in Europe and more family businesses are sold, especially in Germany, Europe’s largest economy. Korea Singapore Hong Kong Japan By comparison, despite a strong increase in major local stock markets Real GDPGrowth, 1998–2000(E) (%) b such as Argentina (+85%) and Brazil 9.4 10 (+42.7%), Latin America’s 200,000 6.8 Korea 5.5 Singapore 6.7 HNWIs’ wealth grew by a relatively 5 Hong Kongc 4 meagre 14.8% due to a 0.6 0.7 0.3 Japan disappointing shortfall in underlying 0 –2.5 0 economic growth. –5.1 -5

–5.8

The 1.7 million HNWIs in Asia, up -10 from 1.3 million in 1998, were the 1998 1999 2000(E)

a. FIBV, www.fibv.com/stats/tm4.xls, 9/02/00. biggest winners. Their wealth grew b. Economist Intelligence Unit, “Country Forecast”, 4/2/00. by a healthy 22.7% in 1999. Real c. OECD, “Economic Outlook”, No. 66 (December 1999), p. 130.

4 World Wealth Report 2000 GDP growth rebounded dramatically increasingly more complex than level an identifiable shift in needs in 1999, and local stock markets those of the “ordinary” HNWI, and and behaviour emerges that calls for thrived (see Figure 4). If this growth all financial institutions looking for a different market approach. These continues, the number of Asian high-margin annuity business have a needs are covered in detail in the HNWIs will soon rival those of North stake in attracting this super-rich section after next. America and Europe. This has segment of the world population. significant implications for financial The second part of this year’s World The worldwide population of institutions serving the Asian market, Wealth Report is devoted to U-HNWIs stood at approximately particularly in Japan where less understanding this segment, its 55,000 in 1999, up by 18% on 1998 stringent rules on IPOs, better needs, and the implications for (see Figure 5). They held financial performance on collective those who want to serve the very assets of $7.9 trillion in 1999, investment products, and relatively wealthy people it comprises. representing nearly a third—31%—of low yields on domestic fixed income the world’s total HNWI financial and savings will contribute to a U-HNWI MARKET SIZE wealth. The hurdle rate required to significant new inflow of individual We have defined the threshold of enter this super-wealthy class is funds into the stock market. wealth required to be considered a rising as its wealth accumulates. In U-HNWI today as $30 million in 1996, for instance, the amount of The rise in HNWI financial assets liquid financial assets. At this wealth wealth it took to make the Forbes shows little sign of abating. We have raised our estimates of growth over Figure 5: Growth in U-HNWI Numbers and Wealth, 1996–1999 the next 5 years from 9% up to 12% Number of U-HNWIs a 55,400 a year, reaching $44.9 trillion in 46,900 2004. This more optimistic growth 41,600 rate projection reflects not only the 36,500 new financial wealth being created by continuing global economic prosperity and the expansion of existing financial assets through reinvested interest payments, dividends, and capital appreciation. It also assumes HNWIs will invest a higher proportion of their assets in 1996 1997 1998 1999 higher risk, higher yielding financial Financial Wealth of U-HNWIs($ Trillion) a investments such as equities and 7.9 venture capital. 6.8 6.2

5.5 Spotlight on the U-HNWI market he upward thrust in HNWI Tassets is creating a super-class of HNWIs we call ultra-high-net- worth individuals (U-HNWIs). The financial services these individuals 1996 1997 1998 1999 Source: Gemini Lorenz curve analysis. and their families need are becoming a. Defining U-HNWIs as individuals with financial assets in excess of $30m.

World Wealth Report 2000 5 400 rich list was $415 million, but by Figure 6: Drivers of Growth in U-HNWI Segment 1999 this figure had jumped to $625 million. In the UK the increase required to join the 250 richest Technology IPOs & during the same period was even entrepreneurship greater, very nearly doubling from £63 million in 1996 to £121 million in 1999. Stock market Sales of family performance and businesses DRIVERS OF GROWTH GDP growth In addition to the prolonged bull market and strong GDP growth, several economic and social trends Executive stock and option are contributing to the rising packages fortunes of the super-wealthy (see Figure 6). To begin with, technology IPOs and other entrepreneurial ventures are Figure 7: German Capital Market Developments creating record numbers of new Number of IPOs and Their Value (_ Billions) a U-HNWIs at an ever-increasing rate. on All German Stock Markets, 1994–1999 13.0 Prominent among them are the 168 group of Internet multimillionaires who launched such enterprises as: Amazon, e-Bay, Yahoo!, Red Hat, and Ameritrade in the US; QXL and Lastminute.com in the UK; and, in a related sector, Softbank in Asia. Of 67 3.6 3.8 the $48 billion in total venture 3.2 2.5 capital invested in the US in 1999, a 35 20 lopsided $30 billion plus went to 15 13

Internet-related start-ups. 0.6 1994 1995 1996 1997 1998 1999 These are the high-profile cases of Market Capitalisation of Nemaxb Companies, 1997–1999 the new super-rich. Less obvious are (_ Billions) 111.3 the increasing sales of family businesses that are also fuelling U-HNWI growth. In Germany, for example, 168 companies floated in 1999, more than in the 5 previous years combined (see Figure 7), and 26.1 76,000 of the 700,000 mittelstand companies are looking for a buyer. 4.1 US pension funds placed $88 billion 1997 1998 1999 Source: Deutsche Börse, Gemini analysis. into private equity in 1998, and 24% Note: Figures exclude Deutsche Telekom. a. Excludes Deutsche Telekom placing of f8,857m worth of shares in November 1996. of US mid-sized private companies, b. Neuer Markt index—typically mittelstand and technology companies.

6 World Wealth Report 2000 with individual net value ranging Figure 8: Number of $ by Region, 1990–1999 from $80 million to $250 million, expect to be acquired within the 514 next 3 years. 14 Middle East 32 Latin America 423 77 Asia 16 The increasing use of stock options 40

as part of executive compensation 120 274 232 9 packages is also swelling the ranks of 11 28 276 North America 7 the super-wealthy. This is 65 64 140

particularly evident in the US, where 84 72 rewarding senior executives with 107 115 Europe option packages has become 78 88 commonplace. In 1998 alone, CEOs 1990 1993 1996 1999 at 92 of the top 200 US firms were Source: “International Billionaires List”, Forbes, 15 July 1996, 5 July 1999; “World’s Wealthiest People”, Forbes, 5 July 1993; “The World’s given options worth more than Billionaires”, Forbes, 23 July 1990; www.forbes.com/tool/toolbox/billnew/. $10 million apiece. And it was not just CEOs who were favoured with the world in the creation of super- telecommunications, software, and such options—overall these wealthy individuals (see Figure 8). computing sectors. The wealth companies granted their employees By the turn of the century the US sources of the top 400 richest US shares and options in 1998 worth 2% accounted for 54% of the total individuals, shown in Figure 9, of their outstanding equity. As this number of global billionaires, up illustrate this pattern, and we believe practice becomes more widespread from 31% in 1990. the same pattern would hold for the elsewhere in the world, and these broader U-HNWI market segment in options accumulate, the ranks of the The US also illustrates how the the US. super-wealthy are expected to source of U-HNWI wealth has moved multiply even further. away from oil, real estate, and U-HNWI NEEDS inherited money towards self-made, In last year’s World Wealth Report Nowhere are these drivers more technology-related sources of we examined the needs of the new, obvious than in the US, which leads wealth, particularly in the younger, self-made, active-investing

Figure 9: Wealth Source of 400 Wealthiest US Individuals, 1984–1999

1984 1993 1999

Other Other Other 20% Inherited Inherited Inherited 19% 26% 27% 22% 32%

Software Internet Real 4% 4% Estate 3% Telecoms Telecoms Oil 1% 5% Real 2% Computers Estate 3% Computers 4% 3% Software Finance Retailing Oil 3% 18% 10% 5% Real Retailing Estate 10% Publishing & Media Finance Publishing & Media 7% 10% Telecoms Publishing & Media 14% 8% Finance Oil 5% Computers Retailing 10% 8% 8% 5% 4%

Total = $124bn Total = $327bn Total = $1,032bn

Source: “The Four Hundred Edition”, Forbes, 1 October 1984, 3 October 1993, 11 October 1999; Interactive Database, www.forbes.com/tool/toolbox/rich400.

World Wealth Report 2000 7 HNWIs. Like that group, today’s A good example is the need to that conveys a clear picture of “new-money” U-HNWIs also have a create liquidity from non-liquid overall performance and worth. different perspective from their wealth. U-HNWIs have a clearer Tailored statements that can be often less dynamic “old-money” vision of short-term developments, integrated into the U-HNWI’s global counterparts. They take a shorter and are often ready to risk a higher financial position are essential, along term perspective, are less risk- proportion of their wealth in more with the ability to handle multi- averse, insist on top performance, speculative investments. New currency consolidation. and are far more demanding. Their U-HNWIs are, for instance, goal is not merely to preserve wealth frequently eager to participate in Third, U-HNWIs require ready access but to accumulate it. venture capital and private to specialist advisory services, such equity funds. as international tax and legal Many old-money U-HNWIs are specialists, and a savvy relationship adopting these more sophisticated Second, U-HNWIs usually divide manager who knows what he or she and aggressive attitudes and tactics. their extensive financial assets across doesn’t know. The relationship The latest generation of inherited several providers and specialists, and manager must have substantial wealth U-HNWIs are following they want consolidated information depth and breadth of financial courses that lean closer to new- money approaches than their old- Figure 10: Key Differentiating Factors for U-HNWI Clients money origins might suggest. Products Services

Figure 10 outlines the key Institutional rather than individual Consolidation of information focus differentiating factors for U-HNWI • Provision of global custodian clients as opposed to HNWIs. Their • Option to invest in products of an services institutional nature and calibre: • Consolidation of financial requirements are broadly similar, but a – ’s wealth of $85bn is performance when portfolios are equivalent to some smaller banks’ split or several providers are used U-HNWI needs are ratcheted up total AUM several notches. In particular, new • Increased magnitude of investable Advice on more complex tax and U-HNWIs treat their personal assets assets means institutional spreads legal matters are demanded like business assets, which calls for • Managing tax liabilities across • Ability to leverage business assets geographies more of an institutional than and link to personal assets individual focus. They want to • Setting up a bespoke legal Greater diversity of product infrastructure for estate planning choose from a diverse array of (trusts, succession planning, etc.) • Availability of a wider range of products from different providers, specialist products, e.g.: • Resolving residency and domicile issues – Access to private equity with high and spread their assets across a minimum investment thresholds wider band of risks and across a – Special allocations at IPOs More personal service broader geographic area. In – Option to have custom-made • Relationship manager typically structured products becomes a closer, more personal addition, many U-HNWIs need adviser: Greater diversification across – With direct access to specialists when highly specialised advice and adopt geographies requested the newest technologies to manage • Through offshore asset investment • More frequent access to, and their wealth. These specific needs • Through greater exposure to a consultation with, senior wider range of markets: management have important implications. – Focus on regional diversification at HNWI level – Focus on global diversification at First, given the sums of money U-HNWI level with greater emerging markets coverage involved, U-HNWIs demand highly structured, personalised products, Source: Aggregated findings from Relationship Manager interviews. often linked to their business affairs. a. “ 2000”, Sunday Times, 19 March 2000 (estimate of £53bn taken with an exchange rate of £1:$1.6 used).

8 World Wealth Report 2000 knowledge, as well as the immediate not liquid, and is tied to original areas, ranging from asset counsel of top-class specialist business interests. Due to the management to corporate finance. advisers from a whole range of public nature of its origins (e.g. Sourcing from third parties brings disciplines, including investment IPOs), furthermore, new U-HNWIs challenges of its own—managing the bankers, product specialists, and are more open about their wealth relationship with outside providers experts in tax, legal, art, estate, trust, than are their old-money and ensuring seamless delivery to and property. counterparts, do not require the clients are necessary, but not trivial, same level of secrecy, and do not requirements. Many of the new U-HNWIs are usually hold substantial assets in accustomed to dealing with venture secure offshore accounts. For Similarly, providing the range of capitalists and investment bankers, U-HNWIs, performance is far more expert advice U-HNWIs routinely and they demand the same type of important than location. need will not be easy. Successful relationship with their private players will have to provide up-to- banker—innovative and fast-paced. W H AT IT WILL TAKE date expertise not only in Typically, too, the U-HNWI expects TO SUCCEED investments, tax and legal, real to deal closely with senior The high stakes involved in serving estate, planning, and management and receive individual the U-HNWI segment are creating insurance, but also potentially in personal service from the highest predictably intense competition. personal offerings such as levels. Although the cost to serve this education, healthcare, and general segment is high, both in terms of “concierge services”. And this Fourth, U-HNWIs demand quick management time and the provision advice will need to be delivered responses to requests and of expensive technology and quickly, clearly, and at the client’s immediate access to information specialists, the higher revenues convenience. anytime, anywhere. To serve them generated by the extensive effectively, providers need the latest assets under management also From a technology perspective, the and best technologies available to promise substantially superior best providers will differentiate satisfy these information needs. profits. themselves by offering the most Account information and up-to-date methods to track, performance tracking, leading Success in serving new U-HNWIs will monitor, analyse, and display research, market data, stock belong to those players who offer individualised financial performance recommendations, and transactional unparalleled service in terms of data by asset type. Sophisticated capability—all delivered 24 hours a product, advice, and technology, U-HNWIs also want detailed day, 7 days a week, 365 days a year and can link these areas of expertise attribution statements that specify through the Internet—will be an to both personal and corporate not just whether investment essential entry requirement to wealth. managers have reached their serving this market. performance targets, but how. Have To succeed in offering the best they, for instance, strayed from an Finally, a significant proportion of products (covering all asset types, agreed risk profile to achieve the U-HNWI wealth is likely to be geographies, and risk preferences), returns? sourced and held onshore. providers will first need to According to Reuters, for instance, determine how to source each Finally, successful players will new onshore wealth was behind product. An in-house approach leverage their U-HNWI clients’ two-thirds of one smaller, traditional involves the difficult challenge of business assets to maximise personal private bank’s new client accounts integrating and cooperating across wealth. First, they will exploit in 1999. A lot of that new money is the provider’s diverse business IPO/private equity deals to provide

World Wealth Report 2000 9 interesting products in which new Serving these clients well will be customised, high-tech services that U-HNWIs can invest. Second, by expensive. Because the rewards will precisely meet these sophisticated, linking corporate finance activity to also be substantial, however, many ultra-wealthy individuals’ needs, private banking, they will identify will regard the U-HNWI market as a while delivering expertise, potential U-HNWIs early, and be in prime target for which it is well convenience, and—most of all—top the best position to retain them as worth raising their sights. The performance. clients when they enter the super- winners will be those players who wealthy league. offer the most highly developed,

Appendix: Figure A-1: Generic Lorenz Curves Methodology 100% e have estimated the size and growth of Wwealth in various regions using the Gemini Lorenz curve methodology. This was originally developed during consulting Cum. % of engagements with Merrill Lynch in the 1980s. We Wealth used it to calculate at a macro-level the value of private wealth (financial and non-financial) in each country, and the distribution of this wealth across the population.

0% 100% For the World Wealth Report 1999, we revised Cum. % of Population the methodology significantly. In addition to applying the up-to-date annual statistics, we modified areas to ensure that the model reflected more precisely year-on-year changes in accumulated private wealth. As this captures The wealth distribution of each country is based global wealth. We updated the split of financial financial assets at book value, an adjustment is on known relationships between wealth and vs. non-financial assets, included Eastern Europe made based on world stock market indices so income (in countries where the necessary as a separate region, enlarged the number of that the final figures reflect the market value of information exists). Data on income distribution countries in the model, and included year-end the equity portion of HNWI wealth. is provided by the World Bank. We use the levels of publicly held securities. resulting Lorenz curves to distribute the wealth Offshore investments are theoretically accounted across the owners of wealth, whom we assume For this edition we have made some minor for but, in practice, only insofar as countries are to be the adult population in each case. Of modifications to increase the model’s overall able to make accurate estimates of relative flows course, the varies for each level of accuracy. Due to the availability of more of property and investment flows in and out of country. comprehensive and authoritative data, we have: their jurisdictions. The data supporting the analysis is drawn from a • Applied up-to-date International Monetary We have therefore included a correction to wide range of sources. We cannot, therefore, Fund and World Bank national income accommodate undeclared savings in the figures. warrant its exactitude, and we can accept no statistics. In the few countries for which figures are liability in that regard. • Updated the income distribution by country. published, we have compared the results of our calculations with published values of total • Used a more comprehensive source for household wealth, and these estimates have market capitalisation data. proved accurate.

Total wealth levels by country are estimated To arrive at financial asset wealth as a proportion using national account statistics from the of total wealth, we have used statistics for International Monetary Fund to identify the total countries with available data to calculate their amount of private savings in each year. These financial wealth figures, and extrapolated these savings are summed over time to arrive at total results to the rest of the world.

10 World Wealth Report 2000 industry. Our consultants provide clients clients. With 40,000 people working across Gemini Consulting with expertise and practical experience in Europe, the Americas, and the Far East, Cap strategy formulation, shareholder value Gemini is the European leader in IT Gemini Consulting is a global management creation, organisational effectiveness, and services. By combining management consulting firm with fully integrated consulting and IT services, the Cap Gemini capabilities in strategy, operations, people, business process re-engineering. Operating from twenty-nine offices around the world, Group is uniquely positioned to help clients and information technology. We partner exploit the opportunities created by the our global teams provide integrated with clients to execute projects from emergence of the network economy. conception to design to successful consulting and information technology (IT) implementation. We are dedicated to services to clients in all major industry helping clients achieve sustainable results in sectors. areas critical to their successful Gemini Consulting is an independent, performance. wholly-owned subsidiary of the Cap Gemini Gemini Consulting has a long-standing Group, which gives us access to record of success in the financial services unparalleled IT expertise to support our

division to increase focus on the global clients investment management, lending, Merrill Lynch expansion of this business. foreign exchange, estate planning, and a complete range of Swiss banking services. Merrill Lynch is one of the world’s leading The US Private Client Group serves Private clients outside of the US hold over financial management and advisory individuals, small to mid-sized businesses, $185 billion in assets at Merrill Lynch. companies with offices in forty-three and employee benefit plans, using a countries and total client assets exceeding planning-based approach to provide cash, On 18 April 2000, Merrill Lynch and HSBC $1.8 trillion. As an investment bank, it is the asset, liability, and transition management Holdings plc announced a groundbreaking top global underwriter and market maker of services. Through more than 14,000 50:50 partnership to create the first global debt and equity securities and a leading Financial Consultants in about 800 offices online banking and investment services strategic adviser to corporations, across the United States, Merrill Lynch company. The new firm will serve individual governments, institutions, and individuals provides sound financial advice, effective customers across the world, except in the worldwide. Through Merrill Lynch execution, and a wide array of financial United States, providing the industry’s most Investment Managers, the company is one services and products. comprehensive and innovative range of of the world’s largest managers of financial online banking and brokerage services for assets, which total $568 billion. Merrill Lynch’s rapidly growing International consumers who prefer to make informed Private Client business offers a wide range of investment decisions for themselves. Over the years, Merrill Lynch’s Private Client global and local business segment has become the leading services designed to address the asset, provider of retail securities services in the liability, and transition needs of private United States by taking Wall Street to Main clients outside the United States. Through Street. In 1997 its International Private 4,000 Financial Consultants in 200 offices in Client Group was established as a separate thirty-five countries, Merrill Lynch offers

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World Wealth Report 2000 11 Gemini Consulting Barcelona (34-93) 495 88 89 Milan (39-02) 773321 Offices Berlin (49-30) 885 94 20 Munich (49-89) 551960 Boston (1-617) 491 5200 New York (1-212) 768 2066 Brussels (32-2) 716 1261 Oslo (47-24) 12 85 00 Bucharest (40) 92 655 101 Paris (33-1) 41 08 40 00 Cologne (49-221) 91 26 44 0 Riga (371) 7 320 722 Copenhagen (45) 39 77 86 00 St. Petersburg (7-812) 326 1805 Detroit (1-248) 447 4725 Singapore (65) 484 3188 Frankfurt (49-6172) 485 0 Stockholm (46-8) 458 6000 Helsinki (358-9) 7251 7251 Tokyo (81-3) 5545 7001 Johannesburg (27-11) 280 6000 Utrecht (31-30) 252 7150 Lisbon (351-1) 353 7688 Vienna (43-1) 51 38 350 London (44-20) 7340 3000 Warsaw (48-22) 690 5000 Lyon (33) 4 78 63 60 50 Zürich (41-1) 396 8080 Madrid (34-91) 436 46 20

Merrill Lynch Abu Dhabi 9712-336-030 Monte Carlo 377-92-16-67-67 Offices Amsterdam 31-20-592-5777 Montevideo 598-2518-2600 Auckland 649-356-2929 Montreal 514-846-1050 Bahrain 973-530-260 Munich 49-89-41-30-50 Bangkok 662-275-0888 Newcastle 44-191-227-6100 Barcelona 34-93-366-2000 New York 212-907-7600 Beirut 9611-348-175 Panama 507-263-9911 Beverly Hills 310-285-6888 Paris 331-40-69-7100 Bombay 91-22-2819-717 Penang 60-4-228-3355 Brisbane 617-3234-7222 Perth 61-8-9326-7600 Buenos Aires 5411-4317-7500 Rio de Janeiro 5521-532-1899 Capetown 2721-423-1440 Rome 39-6-683-3931 Caracas 582-209-5111 San Francisco 415-693-5500 Dubai 9714-397-5555 Santiago de Chile 562-370-7000 Durban 2731-560-3600 São Paulo 5511-3175-4100 Edinburgh 44-131-473-1000 Singapore 65-331-3888 Frankfurt 49-69-589-99-0 Sydney 61-2-9225-6500 Geneva 4122-703-1212 Taipei 8862-2376-3666 Hong Kong 852-2844-5678 Tokyo 81-3-5288-5500 + 32 offices throughout Japan Johannesburg 2711-305-5101 Toronto 416-369-7400 London 44-20-7867-6000 + 110 offices throughout Canada Luxembourg 352-49-49-111 Vienna 431-531-40-0 Madrid 34-91-432-9900 Wellington 644-495-1400 Melbourne 613-9659-2666 Zürich 411-289-48-00 Miami 305-416-6600 Milan 39-02-655-941

12 World Wealth Report 2000