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MF Global is a leadinG Global broker in
Futures, options and cash Markets.
We provide global access and local insight to the world’s
largest and fastest growing financial markets. When
companies, investors and traders look to mitigate risk
or invest in change, they rely on us to define and execute
their strategies with the products they want to trade, in
the markets they seek. Independent solutions, insightful
analysis, superior execution—every trade, every day.
1
Financial hiGhliGhts
in millions, except for per share data
F I s c a l Y e a r e n d e d m a r c h 31 ,
2008 2007 2006
execution-only commissions $ 486.2 $ 386.5 $ 261.8
cleared commissions 1,528.6 1,280.0 865.6
Principal transactions(1) 333.3 299.6 158.5
net interest income 503.8 351.1 214.6
net revenue(1) $ 1,687.7 $ 1,378.7 $ 946.5
Pre-tax margin(1) 17.8% 16.5% 14.1%
earnings per share(1) $ 1.57 $ 1.16 —
VoluMe net reVenue (1) net incoMe (1)
revenue, net of interest expense and
transaction-based expenses
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(1)
Information is presented on an adjusted basis which is a non-GaaP measure. For a reconciliation of non-GaaP measures with the comparable GaaP measures,
please see our annual report on Form 10-K for the fiscal year ended march 31, 2008.
letter to shareholders
dear Fellow shareholders, colleagues and Friends,
looking back on this first year as an independent public company,
i have seen a remarkable evolution in progress.
We understand that change is critical to long-term success. and through
the twists and turns of our first year as an independent public company,
it is clear to me that MF Global is evolving for the better, and a distinctively
resilient company has emerged. our business is becoming ever stronger,
more dominant and better able to create value going forward.
A YeAr of Growth
Whilst we faced severe challenges towards the end of our
financial year, i believe that our response to those challenges
has demonstrated the tenacity and underlying maturity
of MF Global. the overall growth that we have achieved in
2008 leaves me with a great sense of confidence in
our future.
despite some of the most turbulent market circumstances
in decades, we showed exceptional strength in 2008. the
numbers reveal underlying momentum, particularly in terms
of volume growth, net revenue and net income.(1) Volumes
rose 40 percent year-over-year. net revenue grew 22 per-
cent, while net income finished up 35 percent over the prior
year.(1) the increases were largely driven by the successful
execution of our growth strategies of further building higher
margin retail and over-the-counter businesses as well as
expanding our presence in asia pacific.
We achieved this growth organically as well as
through acquisitions.
kevin r. davis
chieF executiVe oFFicer
(1)
Information is presented on an adjusted basis which is a non-GaaP measure.
For a reconciliation of non-GaaP measures with the comparable GaaP measures, please
see our annual report on Form 10-K for the fiscal year ended march 31, 2008.
3
having successfully completed 19 acquisitions over the testinG our Mettle
last two decades, MF Global is regarded as the industry’s
MF Global’s first fiscal year as a public company was one
leading consolidator. in this past year, we expanded our
that tested the fortitude of the organization and resiliency
presence in asia pacific through the acquisitions of
of our colleagues around the world. in late February, we
brokerone, the largest online broker of futures and options
suffered an unauthorized trading loss—an aberration in
in australia, as well as Fxa securities ltd., a leading pro-
our long history of risk management. our response
vider of online foreign exchange products to retail investors
was immediate.
in Japan. excitingly, we have commenced the roll-out of this
once we knew the facts, we quickly made them public.
retail Fx product in a multilingual format throughout the
We launched an internal investigation and hired respected
asia pacific region.
outside firms to review and refresh our entire risk manage-
We’re focused on this region as it is undergoing massive
ment systems and processes. We are confident this incident
transformation and development—industrializing,
was an anomaly, and that the underlying causes have
modernizing and innovating, all at once. the demand for
been addressed.
risk transfer instruments and innovative retail products is
consequently, the incident and subsequent false rumors
intensifying as these markets continue their rapid growth.
about our company hurt our share price.
clearly, this growth will assist our retail and institutional
despite these challenges nothing could better demon-
offerings as corporate growth creates a rapid expansion of
strate the resiliency of our business than this: we delivered
the region’s mass affluent investor community. We expect
a record fourth quarter and year with exceptionally strong
that within two years, asia pacific will account for 20 per-
performance continuing into the first month of fiscal 2009.
cent of our business. this is up from nine percent at the
i believe this performance is a testament to the strength
time of our ipo and 12 percent at year-end fiscal 2008.
of MF Global’s highly talented people, distinct competitive
another recent acquisition, the uk-based choiceodds,
advantages and industry-leading franchise.
specializes in making online markets in the fast-growing
area of retail binary trading. the acquisition is part of our
offerinG Distinct ADvAntAGe in
overall european and asia pacific strategies, which will the GlobAl finAnciAl MArketplAce
ultimately result in the provision of a single platform offer-
ing an ever-wider array of listed and unlisted cash and as the head of the world’s leading futures and options
derivative products, ranging from contracts for differences broker, i am often asked why our clients prefer us.
(cFds), Fx and cash equity, to binary trading. the answer is simple: we have a unique combination of
Fiscal 2008 also saw several of our other businesses highly talented brokerage professionals who collectively
evolve into engines of organic growth. in addition to offer unrivaled access to a broad range of financial markets
important advances in our retail and institutional online across the globe. there are many brokerage companies that
foreign exchange activities, we had great success with our offer some of the services and access to markets we pro-
u.s. fixed income and overall interest rate businesses. vide, but there are none that match the depth and breadth
Whilst the severe market conditions did necessitate a of client types, products and regions that MF Global offers.
re-configuration of our european cFd businesses, our and whilst we could not claim to be the only global
london-based, research-driven equities business has not company offering access to the world’s listed derivative
only made a valuable financial contribution, but also markets, we most certainly are unique in the absolute
established a reputation for excellence amongst its clients lack of any conflict in our business model or ownership.
and industry peers alike. taken together with continued
growth in our asia pacific-based businesses as well as
expansion of our global market leadership in retail, we
remain optimistic about our future.
4
We are now at the nexus of rapidly changing market
structures, where clients increasingly trade across and
between different asset classes, time zones, currencies
and product types. our core vision is to capitalize on
this evolution through our unique combination of
independence, product diversity and market leadership
across many of the world’s principal financial centers.
MF Global is truly an independent company—we do not lookinG AheAD
trade against our clients’ interests. this independence
in this ever-evolving marketplace, MF Global is ideally
enables us to deliver unbiased insight to a client base that
positioned opposite the secular trends driving the
ranges from the world’s largest banks, hedge funds and
industry: volatility is fueling global market activity; clients
industrial corporations to retail customers—all of whom
increasingly prefer the certainty of centrally cleared
are benefiting from an increasingly democratic marketplace
counterparties whilst seeking independent, unbiased bro-
with electronic access to an ever-wider variety of markets
kers; and the need for global access to local markets has
and asset classes.
never been more evident.
We are now at the nexus of rapidly changing market
i am confident in our prospects and our ability to capital-
structures, where clients increasingly trade across and
ize on these trends. We remain focused on delivering value
between different asset classes, time zones, currencies
to our shareholders, customers and colleagues alike.
and product types. our core vision is to capitalize on this
MF Global had an extraordinary first year. through resil-
evolution through our unique combination of independence,
ience, tenacity and disciplined focus we have emerged a
product diversity and market leadership across many of
stronger, leaner and better organization than ever before.
the world’s principal financial centers.
i am, as ever, confident that we are poised to seize the
our market leadership will help drive the evolution in
enormous opportunities of tomorrow.
market structures, and our innovation will help to pioneer
the use of new asset classes in different regions, further sincerely,
moving the market to our benefit.
local access and global insight serve as the foundation
for our worldwide strength. From our unique vantage point,
we are helping shape the capital markets of tomorrow.
increasingly, we are moving toward a single global market-
kevin r. davis
place and MF Global is uniquely positioned at its center.
chief executive officer
5
our Markets
strenGth oF sector MF Global adVantaGe
interest rate sophisticated investors continue to Broad range of financial instruments
develop an intricate array of strategies including corporate and government
products to reduce the overall cost of borrowing bonds, swaps and cash market
and financing, and to take positions on products related to U.s. treasury
the direction of financial markets securities
eQuities equity trading remains a mainstay of Fast, efficient electronic access to
the global economy local equity markets worldwide,
plus program trading services and
unbiased research
ForeiGn exchanGe rapid economic development in key large, diverse global network that
emerging market countries has driven facilitates quick price quotes and
expansion in the range of currencies transactions involving a broad
needed in international trade and number of currency pairs
investment
coMModities
enerGy the world runs on energy. Vital to leading broker in all energy markets
both prosperity and security, energy since their inception, including
supplies and costs impact every emerging areas such as greenhouse
aspect of the global economy gas emissions and renewable energy
Metals rapid economic growth, principally leading metals broker for hedgers/
in the Far east, and portfolio traders worldwide with a large diverse
diversification into alternative geographic client base of producers,
investments with a particular focus consumers, fabricators, merchants,
on commodities, drive demand financial service companies and
for metals institutional investors
aGriculture the original commodities market, acknowledged leader in the world’s
agricultural products trading largest agricultural commodities
manages, transfers or hedges the markets—many of which we
risks inherent in agricultural helped found
production—an essential
human endeavor
doMinant player on eVery MaJor exchanGe (1)
north aMerica europe asia paciFic
cbot # 1 eurex # 3 sGx # 4
cMe # 1 ice Futures # 1 sFe # 3
coMex # 1 liFFe # 1
nyMex # 1
(1)
Based upon annual rankings by volume for the year ended march 31, 2008. see our annual report on Form 10-K for the fiscal year ended march 31, 2008.
6
In an ever-evolving marketplace, we will continue
to build upon our competitive advantages to enhance
the value we create for our clients, shareholders
and colleagues around the world.
at the nexus oF chanGe, MF Global
capitalizes on its strenGths.
7
independent
do not comPete WIth oUr clIents
100
Focused on our clients
%
0
conFlicts oF interest
∞
opportunities
eQuities
a bulge bracket investment bank wishes to unwind a large position and consequently has to buy
50,000 listed options in a thinly traded name. the new york equity derivatives team identifies a seller,
negotiates the price and delta, and crosses 50,000 options inside the bid offer spread. both clients
remain anonymous and the market has not moved.
8
MF Global does not trade against its clients.
In other words, there are absolutely no conflicts
of interest. none. this means our goals stay
aligned with those of our clients—to find the
best price and deliver the best execution and
clearing services, worldwide.
9
diVersiFied
a UnIqUelY Balanced BUsIness
5
continents
12
countries
70 +
e xchanGe aFFiliations
ForeiGn exchanGe
during a single conversation, a large u.s. hedge fund client instructs his MF Global broker to execute
a foreign equity transaction, hedge the Fx exposure to this trade in the otc market, and establish an
options position in the u.s. interest rate market to perfectly hedge this trade.
10
because MF Global is uniquely diversified across
products, markets, clients and regions, we are better
positioned to foresee and adapt quickly to changing
market dynamics.
proDucts reGions
e xchanGe-tr aded north amerIc a
oVer-the-coUnter eUroPe
cash secUrItIes asIa PacIFIc
MArkets clients
Interest r ates corPor atIons
ForeIGn e xchanGe FInancIal InstItUtIons
eqUItIes hedGe FUnds
commodItIes asset manaGers
ProFessIonal tr aders
retaIl
11
insiGht
ProVIdInG local access and GloBal InsIGht
2.1 billion
contracts brokered in Fiscal 2008
8.4 Million
aVeraGe daily VoluMe in Fiscal 2008
2,200
Value-added brokers around the World
+
Metals
an aluminum fabricator has extended fixed pricing terms to a group of its customers and is
also holding working capital inventory. if aluminum prices increase, margins on the manufacturer’s
fixed price product sales decline; if aluminum prices fall, the firm’s inventory is exposed to write
downs. the MF Global metals team meets with the fabricator’s finance, purchasing, and sales heads
and structures a hedging strategy to manage the firm’s price risks.
12
MF Global excels at generating ideas, sourcing
solutions and identifying opportunities for clients.
our brokers represent the best in the industry,
with unique insight and knowledge across markets,
geographies and product types. our clients know
and trust that we are at the heart of the financial
marketplace as evidenced by our long-standing
relationships.
13
leadinG presence
Unmatched Pools oF lIqUIdItY
# 1
in Market share on Most
MaJor exchanGes (1)
2 nd
larGest exchanGe by aVeraGe daily VoluMe (1)
40
VoluMe GroWth outpacinG
eVery MaJor exchanGe (1)
%
enerGy
a multi-national integrated shipping company seeks to protect itself from rising crude oil and
diesel fuel prices, utilizing both exchange-traded futures contracts and customized over-the-counter
energy derivatives, and seeks guidance from MF Global for the best approach. MF Global’s energy
teams are able to source liquidity from major oil companies, refiners and hedge fund investors to
execute the shipping company’s hedge structure seamlessly. under MF Global’s auspices, the customer
seamlessly executes futures, options, swaps and derivatives through various exchanges, clearing
houses and counterparties, implementing its hedge structure with confidence and satisfaction that
the optimal structure and price levels have been achieved.
(1)
For fiscal 2008, if mF Global was an exchange
14
in futures and options, no other broker executes
and clears more volume.
We have created a powerful cycle of liquidity—
with more clients seeking tighter bids and offers
generating more trades, equating to increasing
volume flow through mF Global. Whether on an
exchange or over-the-counter, floor based or
electronic, mF Global excels at executing and
clearing trades, no matter the complexity,
sophistication, market or geography.
15
endurinG strenGth
a 225-Year leGacY oF creatInG ValUe
33
VoluMe—FiVe year caGr
%
27 %
net reVenue—FiVe year caGr (1)
31 %
net incoMe—FiVe year caGr (1)
interest rates
in 1784, the british admiralty awards James Man and his newly founded commodities brokerage a
contract to supply rum, a valuable commodity of the day, to the royal navy. More than 200 years later,
the interest rate markets are the ocean of capital that keeps business afloat. a macro hedge
fund contacts MF Global, now the leading executor of short-term interest rate-based futures and
options, to establish a position in eurodollar options, hedging against its borrowing exposure.
(1)
Information is presented on an adjusted basis which is a non-GaaP measure. For a reconciliation of non-GaaP measures with the comparable GaaP measures,
please see our annual report on Form 10-K for the fiscal year ended march 31, 2008.
16
the hallmark of MF Global is its enduring strength.
as an independent, U.s.-listed public company,
we are one year old. But we carry forward a legacy
of 225 years, and with it a track record of strong
performance. the qualities that differentiate us add
up to a distinct advantage in the marketplace,
and embody our strength as a business and as
an investment.
this is MF Global.
17
board oF directors
From left to right:
lawrence M. schloss kevin r. davis edward l. Goldberg christopher J. smith
dIrector chIeF execUtIVe oFFIcer, dIrector chIeF oPeratInG oFFIcer,
dIrector dIrector
robert s. sloan eileen s. Fusco
alison J. carnwath
dIrector dIrector
chaIrman
18
