TO OUR FELLOW SHAREHOLDERS:

We continued to see powerful customer acceptance of our off-price concept in the year 2000, highlighted by some of our strongest new store openings to date across all of our divisions. The year was one of solid performance for The TJX Companies, Inc. in a challenging retail environment. Sales and earnings fell slightly short of our goals for the year. This was primarily due to unseasonable weather patterns in certain major geographic areas, which affected customer visits and demand for seasonal apparel. We continued to see strong performance in regions that experienced seasonable weather. Additionally, while we achieved good expense control in many areas, increased fuel and distribution costs adversely affected expense ratios. However, sound inventory management enabled us to offer great values to our customers and maintain strong merchandise margins.

46% Return on Average Shareholders’ Equity: We are pleased to have achieved 46% after-tax return on average shareholders’ equity in 2000. Diluted earnings per share for The TJX Companies, Inc. increased by 12% to $1.86 per share from $1.66 in 1999. Net income for 2000 reached $538 million versus $522 million in the prior year. Net sales for 2000 were $9.6 billion, a 9% increase over last year. Consolidated comparable store sales grew by 2% in 2000, which was achieved over a 5% increase in the prior year.

SOLID PERFORMANCE ACROSS THE BOARD: In 2000, our generation of new T.J. Maxx and Marshalls store openings was among the best in the Company’s history. At these core businesses, maintaining liquid inventory positions and properly executing opportunistic buying techniques enabled us to achieve strong merchandise margins and contributed to our bottom line performance. Total sales for The Marmaxx Group (the internal combination of T.J. Maxx and Marshalls) increased by 6% in 2000, while comparable store sales increased by 2% over a 4% increase last year. Operating income was $858 million and operating margin was 10.4%. While Marmaxx did not achieve all of its goals, it produced solid results in 2000, as it has in many previous difficult retail environments.

In Canada, Winners outperformed our objectives and achieved excellent results in 2000. Total sales increased 21% over the prior year and comparable store sales increased 8% over an 8% increase last year. Operating income increased 29% and Winners achieved a record operating margin of 12.6%. We continue to be very pleased with the widespread customer response to Winners’ apparel and home fashions. The appeal of off-price values and home product bodes well for our plans to introduce HomeSense, our new Canadian home fashions format in 2001.

T.K. Maxx also had a very successful year in 2000, recording a total sales increase of 30% and a comparable store sales increase of 8% on top of a 12% increase last year. In the U.K. and Ireland alone, T.K. Maxx earned over $20 million in operating profit in 2000, more than twice what it earned in the prior year. These results, which were achieved despite several macro issues experienced in the U.K. including a fuel crisis and transportation constraints, document the strength of this concept. While we have closed our Netherlands T.K. Maxx stores, which did not perform up to our standards, we are very bullish about continuing to roll out T.K. Maxx in the U.K. and Ireland. We will continue to build our buying presence on the European mainland and view the continent as a viable long-term growth opportunity.

HomeGoods’ total sales increased 52% over last year and comparable store sales increased 3% over a 13% gain last year. Further, HomeGoods earned $4.7 million in 2000, a slight increase over last year. HomeGoods’ new store openings in 2000 were stronger than we had anticipated. This proved to be somewhat of a mixed blessing, as it caused increased pressure on our distribution capacity. In addition, during the second half of the year, some of our store openings experienced delays. The combination of our stronger-than-planned new store performance and these delays affected our ability to replenish our stores effectively, which led to a top and bottom line shortfall at HomeGoods. However, HomeGoods’ strong performance in the first half of the year, as well as the strength of our new stores, affirms our confidence in this business. We will continue to roll out this chain throughout the U.S. In 2001, we are implementing a number of initiatives, including the opening of a new 800,000 square foot distribution center, to remedy HomeGoods’ distribution constraints.

A.J. Wright had a very promising year, with its store base increasing by 67% from last year and comparable store sales increasing 19%. We continued to open A.J. Wright stores in new markets in the U.S. and are encouraged by the signs we are seeing with this developing concept. We are learning more every day about A.J. Wright’s moderate income customers’ habits and tastes. While A.J. Wright is still in its early stages, we continue to view it as an important long-term growth vehicle for our Company.

FINANCIALLY STRONG: TJX continues to maintain great financial flexibility with a strong balance sheet and exceptionally strong cash flow. The cash we generate not only supports the growth of all our divisions, but enables us to pursue other means to increase shareholder value. During 2000, we completed our $750 million share repurchase program, announced a new $1 billion program and repurchased $435 million of TJX stock, retiring 22 million shares. In February 2001, we raised $348 million in gross proceeds with a zero coupon convertible debt financing. These proceeds, along with our strong cash flow, will allow us to continue to aggressively grow our store base, invest in our infrastructure to support our growth and continue our share buyback program.

LOOKING AHEAD: TJX has great growth opportunities and we have accelerated our growth plans as T.J. Maxx and Marshalls continue to flourish and our newer divisions make increasingly greater contributions to our overall performance. On a consolidated basis, we expect to grow our store base by 12% in 2001 and in each of the next several years. We now anticipate netting 174 additional stores in 2001 and 193 in 2002. In addition, we continue to expect solid comparable store sales growth. With strong revenue growth and cash flow, we are confident in our ability to deliver significant earnings per share growth each year for the next several years.

OUR BOARD OF DIRECTORS: In June 2001, two of our very distinguished Directors will step down from our Board. Arthur Loewy, who served as the Company’s Chief Financial Officer from 1975 to 1989, and as a Director since 1989, has made numerous, significant contributions to our Company. John Nelson, who joined our Board in 1993 and served as TJX’s Chairman from 1995 to 1999, has been an invaluable resource to us. To both of them, we extend our deepest gratitude and best wishes for continued good health and happiness.

We welcome Gary Crittenden who joined our Board of Directors in April 2000 and Gail Deegan, who became a TJX Director in February 2001. Mr. Crittenden, Executive Vice President and Chief Financial Officer of American Express Company, has extensive experience in the retail industry. Gail Deegan, Executive Vice President and Chief Financial Officer of Houghton Mifflin Company, is a seasoned financial executive. We look forward to working with both Mr. Crittenden and Ms. Deegan and to their continuing contributions in the months and years ahead.

GRATITUDE FOR SUPPORT: We have many people to thank for our solid performance in 2000. First, we thank our associates, who are committed to fulfilling our corporate mission, striving continuously to provide our customers with a rewarding shopping experience as well as excellent customer service. Our vendors and other business partners also continued their strong support in 2000, helping us to fulfill our goals. We are grateful to our customers for their patronage and loyalty and we will continue to deliver great values to them every day. Lastly, we extend our appreciation to our shareholders for their ongoing support. We believe strongly in our Company and are devoted to being the best organization we can be. We believe that our success relies on the support of all of our constituencies. We not only recognize our obligations to them, but remain committed to fulfilling our common goals.

Respectfully,