UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KFOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934

|ý                                                                                                 | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
|------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------
|For the fiscal year ended February 28, 2005                                                      
|Commission file number:    333-119701
                                         
       333-119701

REFCO GROUP LTD., LLC
REFCO FINANCE INC.

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(Exact name of Registrant as Specified in Its Charter)

|Delaware
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)                                                                                                                     |  | 52-2169014
20-1400416
(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------
|One World Financial Center
200 Liberty Street, Tower A
New York, New York
(Address of Principal Executive Office)                                                                                    |  | 10281
(Zip Code)                                          
|Registrant's telephone number, including area code: (212) 693-7000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ý

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act
Rule 12b-2). Yes o    No ý

Refco Group Ltd., LLC is a single member limited liability company, and its sole member is New Refco Group Ltd., LLC. The aggregate market value of the
voting securities of Refco Finance Inc. held by non-affiliates as of May 31, 2005 was $0. The total number of shares of common stock of Refco Finance Inc. issued and
outstanding as of May 31, 2005 was 1,000.

DOCUMENTS
INCORPORATED BY REFERENCE
None



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REFCO GROUP LTD., LLC  REFCO FINANCE INC.  FORM 10-K  TABLE OF CONTENTS

|         |  |          |  |                                                                                       |  | Page
|-------- |  | -------- |  | ------------------------------------------------------------------------------------- |  | ----
|PART I   |  | 1       
|         |  | ITEM 1.  |  | BUSINESS                                                                              |  | 1   
|         |  | ITEM 2.  |  | PROPERTIES                                                                            |  | 10  
|         |  | ITEM 3.  |  | LEGAL PROCEEDINGS                                                                     |  | 10  
|         |  | ITEM 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  | 11  
|PART II  |  | 12      
|         |  | ITEM 5.  |  | MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITYHOLDER MATTERS              |  | 12  
|         |  | ITEM 6.  |  | SELECTED FINANCIAL DATA                                                               |  | 12  
|         |  | ITEM 7.  |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 15  
|         |  | ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 38  
|         |  | ITEM 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 40  
|         |  | ITEM 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  |  | 40  
|         |  | ITEM 9A. |  | CONTROLS AND PROCEDURES                                                               |  | 40  
|         |  | ITEM 9B. |  | OTHER INFORMATION                                                                     |  | 40  
|PART III |  | 41      
|         |  | ITEM 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    |  | 41  
|         |  | ITEM 11. |  | EXECUTIVE COMPENSATION                                                                |  | 44  
|         |  | ITEM 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  | 47  
|         |  | ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  | 49  
|         |  | ITEM 14. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                |  | 54  
|PART IV  |  | 55      
|         |  | ITEM 15. |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                            |  | 55  

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PART I

ITEM 1.    BUSINESS

In this Form 10-K, the terms "Refco Group" refers to Refco Group Ltd., LLC, "New Refco" refers to New Refco
Group Ltd., LLC, the sole member of Refco Group, "Refco Finance" refers to Refco Finance Inc., a wholly owned subsidiary of Refco Group, and "Refco," "we," "our" and "us" refer to Refco
Group and its subsidiaries,. The terms "fiscal year" and "FY" refer to the 52 or 53 weeks ended on the final day in February, while the terms "calendar year" and "year" refer to the year ended
December 31 of the year referenced.

Our Company

We are a leading independent provider of execution and clearing services for exchange-traded derivatives and a major provider of prime brokerage services in the
fixed income and foreign exchange markets. We offer our customers rapid, low-cost trade execution and clearing services on a broad spectrum of derivatives exchanges and
over-the-counter, or OTC, markets. Our customers include corporations, government agencies, hedge funds, managed futures funds, pension funds, financial institutions, retail
clients and professional traders. Our revenues are primarily comprised of transaction fees earned from executing and clearing customer orders, and interest income earned on cash balances in our
customers' accounts and from providing financing through repurchase transactions.

We
began operations in 1969 by providing execution and clearing services in agricultural commodities. Throughout the 1970s, we expanded our product offerings in response to the
introduction of new financial futures products. Our involvement in Prime Brokerage/Capital Markets began in 1982 in response to requests from existing futures customers for the ability to adjust their
futures positions after the futures market was closed. We formed the Prime Brokerage/Capital Markets division to provide this service by facilitating customer access to the cash markets, including the
interbank foreign exchange market, in our capacity as a broker in principal. The brokerage in principal business model
established the foundation both for our foreign exchange operations and for our other cash market brokerage activities. From 1983 to 1985, we emerged as a leading consolidator in the futures industry
by acquiring Chicago Grain, ContiCommodities and DLJ Futures. By 1985, we had built an international infrastructure and strong market position in global derivatives markets.

In
September 1998, Phillip Bennett was named our chief executive officer. Under his leadership, we formed a new senior executive team with significant industry experience to focus
on growing our business and strengthening our regulatory and customer focus. Under our new senior management team, we grew internally and through a number of acquisitions. In 2000, we acquired
Lind-Waldock, a leading retail derivatives brokerage operation. From 2001 to 2003, we enhanced our strong market position in the professional trader market by, among other things, the
acquisition of MacFutures Limited and the professional floor trader business of First Options.

Refco
Group is a Delaware limited liability company and Refco Finance is a Delaware corporation. Our principal executive offices are located at One World Financial Center, 200 Liberty
Street, Tower A, New York, New York 10281, and our telephone number is (212) 693-7000. We also have a website located at www.refco.com. The information that appears on our website is not a part of
and is not incorporated into this Form 10-K.

Recent Developments

Acquisition of Cargill Investor Services

On June 22, 2005, we announced that we entered into a definitive agreement to acquire the global brokerage operations of Cargill Investor Services, or CIS,
for $208.0 million in cash and future contingent cash payments of between $67.0 million and $192.0 million, based on performance of the

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acquired
operations. The transaction is expected to close in one to two months, subject to the receipt of antitrust clearance and other regulatory approvals. The transaction is also subject to
contractual closing conditions.

Services

We are organized into two operating business segments for financial reporting purposes: (i) Derivatives Brokerage & Clearing and (ii) Prime
Brokerage/Capital Markets, and we have one non-operating business segment, Corporate & Other. See Note R to our financial statements for our results of operations from the
respective business segments.

Derivatives Brokerage & Clearing

We execute and clear customers' orders for exchange-traded derivatives. Customers use our Derivatives Brokerage & Clearing platform to place buy and sell
orders for derivatives contracts, which we direct to the appropriate exchange for matching. We also facilitate confirmation and settlement of our customers' derivatives transactions and ensure that
our customers have the appropriate collateral in their accounts to support their derivatives positions. We conduct these activities in our capacity as a regulated Futures Commission Merchant, or FCM.
As an FCM, we are responsible to the applicable clearing house for our customers' transactions. We are the largest independent FCM in the United States based on domestic customer segregated fund
balances of approximately $4.0 billion as of February 28, 2005. In 2004, we were the largest customer in terms of contract volume of the Chicago Mercantile Exchange, or CME, the largest
derivatives exchange in the United States.

We
generate Derivatives Brokerage & Clearing revenues from: (i) transaction fees earned from executing and clearing customer orders and (ii) interest income earned
on cash balances in our customers' accounts. From fiscal year 2000 through fiscal year 2005, our Derivatives Brokerage & Clearing net revenues and operating profit have grown at a compound
annual growth rate of 24.3% and 33.3%, respectively, driven primarily by annual increases in contract volumes executed or cleared and annual increases in customer deposits. Our growth has been
generated both organically and through strategic acquisitions, which have broadened our customer base, service offerings, geographic reach and exchange coverage.

Our
business is diversified across customers, products and exchanges. The following charts illustrate our diversity across exchanges and contract types for fiscal year 2005:

Contract Volume
by Exchange(1)

Contract Volume
by Type(1)GRAPHIC

GRAPHIC


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Customers.As of February 28, 2005, our Derivatives Brokerage & Clearing division serviced over 193,000
customer accounts. Our customers include institutions, professional traders and retail investors.

Institutions.Institutions are typically large mutual funds, hedge funds, financial institutions, pension plans and other
non-financial entities. We market to our institutional customers through a sales force of experienced financial services professionals. We offer institutions high service levels,
anonymity, unconflicted access to a broad range of products and markets and competitive pricing. We believe that it is important to institutional customers that we do not speculatively trade with our
own capital in a strategy-based or directional manner and therefore avoid potential conflicts with our customers. We believe the quality of execution is very important to our institutional customers
and that we are able to provide such customers with efficient execution due to our scale, liquidity and
geographic breadth. We have experienced growth in our institutional customer base, in part, driven by the proliferation of hedge funds and an increasing corporate focus on risk management.

Professional Traders.Professional traders are either locals, who are individual members of derivatives exchanges trading for
their own account on the floors of those exchanges that maintain the open outcry method of price discovery, or professionals trading electronically from dedicated facilities built to service their
needs. We have a strong market position among professional traders and locals. Professional traders are high volume customers who require an operating platform with rapid execution at a low cost.
Locals fulfill an important role in the market as liquidity providers for the exchanges of which they are members. Through internal growth and acquisitions, we have increased our professional trader
customer base as part of our strategy to grow transaction volumes and our plan to diversify our customer base. This strategy allows us to integrate and efficiently process very large volumes and to
manage effectively the risks associated with this particular customer group. We also believe that this particular customer base will be of strategic significance in the future as markets become
increasingly automated. Locals are well suited to the development of off-the-floor trading locations, which provide them with direct access to electronic markets and enable us
to continue to benefit from the order flow and commission generating potential of these clients. Our MacFutures model is indicative of the opportunities presented by this trend. MacFutures, a London-
based business we acquired in March 2003, provides specialty clearing services for individual professional traders, specializing in the electronic derivatives and fixed income markets in
Europe. The model, which involves the recruiting and training of professional traders who are provided with access to electronic exchanges on our own off-the-floor trading
locations, has now been implemented in Chicago and Montreal.

Retail Investors.Retail customers are typically experienced individual investors. We have grown our retail customer base
historically through internally generated new accounts and through acquisitions. The global retail customer base is growing as new product offerings with a broad investor appeal, such as the
e-mini contracts, are listed on exchanges. We offer our retail customers access to a broad range of products and value added services, including research, real time quotes, risk management
tools, account information and customer support. Our retail customers also benefit from the operating platform that we have built to service our institutional and professional trader clients. We
market to retail customers through an actively managed lead generation and marketing strategy targeted at identifiable customer groups who we believe would be receptive to trading equity derivatives.
Specific examples of these initiatives include the following:



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Product Access.We provide our customers access to all significant exchange-traded derivatives contracts, including interest
rates, equity indexes, energy, agriculture, foreign currency, metals contracts and managed futures.

Exchanges.We provide our customers access to virtually all major global derivatives exchanges, including the CME, the
Chicago Board of Trade ("CBOT"), Chicago Board Options Exchange ("CBOE"), the New York Mercantile Exchange ("NYMEX"), London Metal Exchange ("LME"), Eurex, Euronext.liffe and the International
Petroleum Exchange ("IPE"). In recognition of the technological advances in the industry, we provide both open outcry and electronic access to the derivatives markets. The electronic trading platforms
we provide access to include GLOBEX, LIFFE CONNECT and NYMEX Access.

Competition.The primary competitors of our Derivatives Brokerage & Clearing business include affiliates of major
commercial and investment banks and independent FCMs. We compete for customers and transaction volume on the basis of our access to a broad range of products and exchanges, our service levels,
relationships, technology and operating platform and pricing. Many of our investment and commercial banking competitors maintain large proprietary trading operations.

Refco Alternative Investments.In June 2002, we created Refco Alternative Investments to develop product offerings
using alternative assets, such as managed futures, for distribution to our customers. These offerings result in the creation of asset management funds, utilizing both our sales force and third-party
distributors to raise assets. All investment decisions are made by third-party managers, and all brokerage activity of the funds is directed exclusively to our derivatives and cash brokerage
affiliates, driving transaction volume to our core transaction processing platform. Additionally, such funds typically earn an asset management fee. An important milestone was reached following the
negotiation with Standard and Poor's for the branding of a portfolio of Commodity Trading Advisors and the subsequent creation of a managed futures index, which is tracked by a public fund and a
series of private funds. This product, which took advantage of weaker equity markets and the non-correlated performance of derivatives investing to equity market performance, was
successfully launched in March 2003. As of February 28, 2005, approximately $612.8 million has been raised for this product, including our investment of approximately
$0.5 million. We have earned approximately $4.6 million in management fees during fiscal year 2005.

Prime Brokerage/Capital Markets

We offer prime brokerage services, including execution, clearing, securities financing, securities lending, custody and trade processing. We provide these prime
brokerage services primarily in the U.S. Treasury securities, foreign exchange and non-dollar fixed income markets. Our customers include hedge funds and other financial institutions.

Our
fixed income operating platform provides our customers access to the interdealer broker, or IDB, market for U.S. Treasury securities. The IDB market is an OTC, wholesale securities
market that allows brokers to trade with one another. Access to the IDB market is usually limited to member firms who can meet its membership requirements, such as the minimum capital requirement. We
allow our

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customers
to use our IDB membership and operating platform to gain direct access to transparent IDB market pricing and liquidity.

In
the case of foreign exchange, we act as a broker for customers wishing to transact business in the interbank foreign exchange market. We processed over $1.2 trillion in customer
transaction volume in fiscal year 2005. We enable our customers to trade in the majority of the world's principal currencies in the form of spot, forwards and options in OTC foreign exchange markets
via several trading platforms. These platforms include both voice broking in which our team of brokers place customer orders with market makers, primarily large money center banks, as well as online
platforms.

We
generate Prime Brokerage/Capital Markets revenues from: (i) transaction fees earned from executing and clearing customer orders and (ii) interest income earned from
providing financing through repo transactions. From fiscal year 2000 through fiscal year 2005, our Prime Brokerage/Capital Markets net revenues and operating profit have grown at compound annual
growth rates of approximately 26.0% and 38.2%, respectively. This growth has been driven primarily by an increase in the number of
customers, growth in the U.S. Treasury securities market and new product introductions. We have also grown through acquisitions.

Unlike
our exchange-traded derivatives business, our Prime Brokerage/Capital Markets activities are not conducted on exchanges. In order to effect Prime Brokerage/Capital Markets
transactions for our customers, we act as a principal executing the transaction with our customer and simultaneously executing an offsetting trade in the market. We do not trade speculatively in a
directional or strategy-based manner for our own account and only initiate an order in the market to match an offsetting customer transaction. Because we act as broker in principal in our capital
markets/fixed income business, these transactions are reported as "principal transactions, net" on our consolidated statement of income. We employ mark-to-market and margin
risk management procedures identical to those adopted in regulated agent markets. We believe that the risk involved in these transactions is comparable to that incurred in our traditional derivatives
brokerage operations.

Product Access.Within our Prime Brokerage/Capital Markets segment, we primarily provide fixed income and foreign exchange
products and services.



Fixed Income.Our worldwide trade execution capabilities extend to select sectors of the fixed income market, primarily in
U.S. Treasury securities, OTC options on U.S. Treasury securities, corporate debt and related OTC derivatives, sovereign debt and emerging market debt.

Our
most important fixed income offerings are U.S. Treasury products available in the IDB market and associated financing primarily through U.S. Treasury securities repurchase
agreements. We provide our customers with a single platform, "Refco Trader," to obtain access to dealer prices only available on IDB markets. Our customers use this platform to buy and sell U.S.
Treasury securities and obtain

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financing
through the repo market. We believe that the efficiency of the Refco Trader platform and the competitive bid offer spread in the IDB market is valuable to the fixed income fund manager and
professional trader.

Our
IDB product offering has been enhanced in recent years by the consolidation among traditional participants in fixed income markets. We have been able to exploit the consolidation
among liquidity providers without incurring any undue risk by providing professional customers and fixed income traders with an alternative source of liquidity through repurchase transactions. As we
do not trade speculatively in a directional or strategy-based manner for our own account, we do not face the conflicts of interests with our customers as our competitors that engage in both agency and
proprietary trading.

We
are targeting other fixed income markets, such as mortgage backed securities and European sovereign debt, where we can provide our customers a similar service offering and value
proposition as our U.S. Treasury offering. We also have a strong presence in Europe as one of the few non-bank repo clearing members of the London Clearing House, or LCH, and have an
expanding presence in Latin American, Eastern European and Southeast Asian markets.

Foreign Exchange.We are a major international broker of foreign exchange in the areas of execution and prime brokerage,
processing over $1.2 trillion in transaction volume during fiscal year 2005. We provide 24-hour trading facility coverage of all major and most minor currencies, with service including
spot, forwards, options, swaps and custom derivative overlays.

Our
largest foreign exchange business is the traditional voice brokerage business. Customers call us to execute foreign currency transactions. As a broker in principal, we enter into the
transaction with our customer and simultaneously enter into an offsetting transaction with a market maker. For providing this service, we earn either a transaction fee or the spread between the price
we charge our customer and the price that we pay the market maker. We compete for customers based on service, relationships, price competitiveness and by providing anonymity in trading.

We
have an online currency trading platform for our institutional customers developed in conjunction with Currenex, a leading global provider of currency pricing systems. This platform
provides our customers electronic access to the foreign currency prices of several major market makers. The overall market for trading currency electronically is growing quickly due to the speed and
cost benefits and the
price transparency. This type of direct access is generally not offered by commercial or investment banks.

We
have also developed retail online foreign exchange offerings. These products are web-enabled, rely on global Internet-based distribution and, most importantly, encourage
self-directed trading, which requires minimal human interaction on our part. This facilitates the handling of significant customer volumes with very low cost to income characteristics. An
active web-based marketing strategy is currently in process to take maximum advantage of this market opportunity. We also own 35% of FXCM, which provides a foreign currency trading
platform and execution services to retail investors.

Other.We have developed a worldwide clearing infrastructure that offers institutions and fund managers a single source for
execution and all related financing activities in both domestic and international equity markets. These capabilities allow us to offer investors capital leverage through global integrated financing,
securities lending, structured products and prime brokerage. We provide securities lending services for customers seeking to borrow equities to cover a short selling strategy or to generate additional
income by lending securities already owned. Customers may also leverage equity positions with us through the use of customized derivative products and currency-linked transactions. Our financing
structures include equity swaps, zero-cost options and repurchase agreements.

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Customers.Our Prime Brokerage/Capital Markets customers are primarily institutions, including hedge funds, mutual funds,
banks, broker-dealers and other corporate customers. We also serve a growing number of retail foreign exchange investors. All customers are subject to a detailed application process and credit check.

Competition.The primary competitors of our Prime Brokerage/Capital Markets business include affiliates of major commercial
and investment banks and independent broker-dealers. Customers value speed of execution, anonymity in trading, low price, customer service and access to a breadth of products.

Risk Management

Liquidity Policy

Our execution and clearing of derivatives requires limited working capital because the margin mechanism used by exchanges results in the customers providing the
required funding to maintain positions. We maintain excess regulatory capital to provide liquidity during periods of unusual market volatility. Similarly for our brokerage activities in the cash
markets, despite these transactions being brokered as principal and not as agent, we have adopted a futures-style margin methodology in which customer positions are valued daily and resulting realized
or unrealized losses must be paid immediately in cash. This practice protects us against the risk that adverse price movements may prevent customers from meeting their financial obligations to us.
Additionally, we have adopted a margin style procedure to control customer positions in our foreign exchange business. This account structure has facilitated considerable growth in the volume of
business conducted, while maintaining a low risk profile.

Regulatory Capital

Our primary U.S. regulated entities are Refco, LLC, an FCM, and Refco Securities, LLC, a broker-dealer. Each entity has regulatory capital requirements. As of
February 28, 2005, the excess capital for Refco, LLC and Refco Securities, LLC was $95.0 million and $75.4 million, respectively. See "Regulation."

Market Risk/Economic Liquidity

Our risk is credit related risk or risk related to our customers' ability to meet their margin obligations. Because we do not trade speculatively in a directional
or strategy-based manner for our own account, we have no direct exposure to market risk volatility or the potential price or liquidity risk that might arise.

Counterparty Risk Management

Our current system provides the ability to project the impact of market volatility on price movement. We perform frequent stress tests of our customer positions,
including intra-day trading analysis, daily equity change analysis, concentration risk analysis and premium seller analysis. Adjustments of margin or collateral requirements are made in
anticipation of unusual adverse market developments. These tests have resulted in minimal losses due to counterparty exposures. We continue to upgrade our risk management procedures and systems to
improve our ability to monitor actual and projected risk associated with customer operations. Our risk management department is responsible for the systematic review of customer exposure in both
regulated and nonregulated markets.

Technology and Information Systems

Our information technology group supports 14 locations worldwide, including our major management centers in New York, London and Chicago. Our exchange-traded
derivatives central processing capacity is located in Memphis, Tennessee with primary backup in Chicago.

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Our
core exchange-traded derivatives transaction-processing platform has been owned and developed by us since 1979. This system has accommodated our significant growth in recent years,
including the integration of significant levels of acquired volume. Our ability to process transactions on a proprietary platform provides us with a strategic advantage by offering significant
flexibility and high levels of responsiveness to changing customer and market conditions. Capital markets transaction processing platforms are outsourced. Fixed income prime brokerage and foreign
exchange brokerage operations utilize systems developed by third parties.

Customers
currently access our global network through both traditional means (i.e., the use of voice brokers) and electronically. For electronic access, we provide third party vendor
systems consistent with our focus on transaction processing rather than front-end technology while also offering a proprietary system for our retail customers. An increasing number of
these applications are web-enabled. We have developed a web strategy to enhance access to the system and to use our website as a driver for business development in the form of lead
creation. Among the capabilities that can be accessed online are risk management monitoring and access to tools, the account opening process as well as static forms, account statements and position
and funds information.

The
continued integrity and security of our systems is key to our business. All of our systems have off-site backups and redundancies. These capabilities have been thoroughly
tested, particularly during the events of September 2001 and the blackout of August 2003. In each case and despite the total loss of access to corporate headquarters in New York, our
business was comprehensively and effectively redirected to pre-planned alternative locations and operating platforms and services to customers remained essentially uninterrupted.

Employees

At February 28, 2005, we had approximately 2,448 employees. Approximately 1,685 of our employees are located in the United States. At the present time, no
employees are represented by unions, and we believe our relations with our employees are satisfactory.

Regulation

Most aspects of our business are subject to stringent regulation by U.S. federal and state regulatory agencies and derivatives and securities exchanges and by
non-U.S. government agencies or regulatory bodies and exchanges. New laws or regulations or changes to existing laws and regulations (including changes in interpretation or enforcement)
could materially adversely affect our financial condition or results of operations. As a global financial institution, to the extent that different
regulatory regimes impose inconsistent or iterative requirements on the conduct of our business, we will face complexity and additional costs in our compliance efforts.

As
an FCM, Refco, LLC's activities are regulated by the Commodity Futures Trading Commission, or CFTC, and the exchanges of which it is a member. Other of our subsidiaries, including
Refco Alternative Investments LLC, Refco Fund Management Inc. and Refcofund Holdings Corporation, are registered with the CFTC as commodity trading advisors and commodity pool operators. Refco,
LLC's business is also regulated by the National Futures Association, or NFA, of which Refco, LLC and certain of its affiliates are members. Violations of the rules of the CFTC, the NFA or the
exchanges could result in remedial actions including fines, registration terminations or revocations of exchange memberships.

Refco
Securities, LLC is registered as a broker-dealer with the SEC and in all 50 states, the District of Columbia and Puerto Rico and is a member of self-regulatory
organizations, including the National Association of Securities Dealers, or NASD and certain exchanges, including the CBOE. Broker-dealers are subject to regulations covering all aspects of the
securities business, including sales and trading practices, public offerings, publication of research reports, use of customers' funds and securities, capital structure, record keeping and the conduct
of directors, managers, officers and

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employees.
Broker-dealers are also regulated by securities administrators in those states where they do business. Violations of regulations governing a broker-dealer's actions could result in censure,
fine, the issuance of cease-and-desist orders, the suspension or expulsion from the securities industry of such broker-dealer or its officers or employees, or other similar
consequences.

Margin
lending by some of our broker-dealer subsidiaries is regulated by the Federal Reserve Board's restrictions on lending in connection with customer purchases and short sales of
securities, and NASD rules also require such subsidiaries to impose maintenance requirements on the value of securities contained in margin accounts. In many cases, our margin policies are more
stringent than these rules.

We
conduct some of our government securities activities through Refco Securities, LLC, an NASD member registered as a government securities broker-dealer with the SEC and in certain
states. The Department of Treasury has promulgated regulations concerning, among other things, capital adequacy, custody and use of government securities and transfers and control of governmental
securities subject to repurchase transactions. The rules of the Municipal Securities Rulemaking Board, which are enforced by the NASD, govern the municipal securities activities of Refco Securities,
LLC.

As
a registered broker-dealer, Refco Securities, LLC is subject to the SEC's and NASD's net capital rules, and, as an FCM, Refco, LLC is subject to the net capital requirements of the
CFTC and various exchanges. Many non-U.S. securities exchanges and regulatory authorities also have imposed rules relating to capital requirements applicable to our non-U.S.
subsidiaries.
These rules, which specify minimum capital requirements, are designed to measure general financial integrity and liquidity and require that at least a minimum amount of assets be kept in relatively
liquid form. Refco Securities, LLC computes its net capital requirements under the alternative method provided for in the rule, which requires that Refco Securities, LLC maintain net capital equal to
the greater of $250,000 or 2% of aggregate customer related debit items, as defined in SEC Rule 15c3-3. The net capital rule also provides that equity capital may not be withdrawn
or cash dividends paid if resulting net capital would be less than 5% of aggregate debits. As of February 28, 2005, Refco Securities, LLC had net capital of $82.0 million, which was
24.7% of aggregate debit balance and $75.4 million in excess of required net capital. Refco, LLC, is required to maintain net capital equal to the sum of 8% of the total risk margin
requirements for all positions carried in customer accounts and 4% of the total risk margin requirements for all positions carried in non-customer accounts. The net capital rule also
provides that Refco, LLC must maintain adjusted net capital in excess of an early warning level equal to 110% of its net capital requirement. As of February 28, 2005, Refco, LLC had net capital
of $283.9 million, which was $95.0 million in excess of required net capital.

Compliance
with the capital requirements may limit our operations requiring the intensive use of capital. Such requirements restrict our ability to withdraw capital from our
subsidiaries, which in turn may limit our ability to pay dividends or repay debt. Any change in such rules or the imposition of new rules affecting the scope, coverage, calculation or amount of
capital requirements, or a significant operating loss or any unusually large charge against capital, could adversely affect our ability to pay dividends or to expand or maintain present business
levels.

The
USA PATRIOT Act of 2001, or the PATRIOT Act, contains anti-money laundering and financial transparency laws and mandates the implementation of various new regulations
applicable to FCMs, broker-dealers and other financial services companies, including standards for verifying customer identification at account opening and obligations to monitor customer transactions
and detect and report suspicious activities to the government. Institutions subject to the PATRIOT Act must implement specialized employee training programs, designate an anti-money
laundering compliance officer and submit to independent audits of the effectiveness of the compliance program. Anti-money laundering laws outside the United States contain similar
provisions. We have established policies, procedures and systems designed to comply with these regulations.

9

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Our
securities and futures businesses are also regulated extensively by non-U.S. governments, exchanges, self-regulatory organizations, central banks and
regulatory bodies, especially in those jurisdictions in which one of our subsidiaries maintains an office. For instance, the Financial Services Authority and Euronext.liffe regulate the activities of
Refco Overseas Limited in the United Kingdom. Other subsidiaries are also subject to regulation by securities, banking and finance regulatory authorities, exchanges and other
self-regulatory organizations in numerous other countries in which they do business.

Geographic Distribution of Our Business

We conduct the majority of our business and earn the majority of our revenues in the United States. We also have material operations in Bermuda and the United
Kingdom. Our foreign operations expose us to numerous risks, including operating in countries with less developed technological infrastructures than the United States, operating in differing and often
extensively regulated environments and exposing us to exchange rate fluctuations. See Note R to our audited financial statements for our results of operations for our foreign operations.

ITEM 2.    PROPERTIES

Our main corporate offices are located in approximately 71,247 square feet of leased office space at One World Financial Center, 200 Liberty Street, Tower A, New
York, New York 10281-1994. We also lease over 473,000 square feet of additional space throughout North America, Europe and Asia. Our primary management centers are located in Chicago and
London and at our New York corporate office. Our exchange-traded derivatives central processing system is run out of a leased facility located in Memphis, Tennessee. We believe that our leased
facilities are adequate to meet anticipated requirements for our current lines of business for the foreseeable future.

ITEM 3.    LEGAL PROCEEDINGS

Tradewinds

On April 1, 1999, Tradewinds Financial Corporation, Tradewinds Debt Strategies Fund, L.P., Tradewinds Offshore Fund, Limited, Tradewinds Clipper
Fund Ltd. and Tradewinds Secured Debt Fund (collectively, "Tradewinds") filed an action against Refco Securities, Inc., Refco Capital Markets, Ltd. and Martin Loftus
(collectively, "Refco") in the U.S. District Court for the Southern District of New York, alleging, among other things, that Refco breached a customer agreement governing certain margin accounts by
requiring Tradewinds to increase the value of collateral securing a margin loan from 60% to 100% in September 1998. Upon the completion of discovery, the parties stipulated that the court
lacked jurisdiction over Tradewinds' claims and the case was dismissed. Tradewinds refiled the action in the Supreme Court of the State of New York. On March 27, 2002, Refco filed a motion for
summary
judgment. On September 15, 2003, the court granted in part Refco's motion, dismissing six of the seven claims asserted against Refco. The court reserved for trial before a jury Tradewinds'
claim that Refco's actions breached the implied contractual duty of good faith and fair dealing. On March 16, 2004, the Appellate Division of the First Department of the State of New York
affirmed the decision of the trial court in all respects. In June 2004, the sole remaining claim was tried before a jury. On June 17, 2004, the jury returned a verdict in favor of
Tradewinds on the liability issue submitted to it by the trial judge. By memorandum decision and order dated March 3, 2005, the trial court granted Refco's post-trial motion to set
aside the jury verdict as against the weight of the evidence and ordered a new trial. Tradewinds has filed a notice of appeal of the order and Refco has filed a notice of cross appeal. The court
scheduled a pre-trial conference for August 12, 2005. If the parties' appeals have not been perfected by that date, the court will set a date for a new trial.

At
this time, it is not possible to predict the final outcome of this proceeding with certainty.

10

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SEC Investigation

In 2001, the Division of Enforcement of the SEC commenced an informal investigation into short sales of the stock of Sedona Corporation. The SEC requested that we
produce documents relating to any of our accounts that traded in the stock of Sedona. In June 2001, the SEC issued a formal order of investigation into short sales of Sedona stock, as well as
other transactions. In 2002 and 2003, we received subpoenas from the SEC and a request for a written statement. Generally, the subpoenas and the request required the production of documents, tapes and
information regarding two of our former brokers who handled the account of Amro International, S.A., one of our former customers that engaged through its account with us in short sales of Sedona stock
and whose financial advisor settled SEC charges with respect to such short sales in February 2003; our relationship with Amro and its two principals; other securities traded by Amro; and our
record keeping, supervisory and short sale policies and restrictions. On May 16, 2005, we announced that our subsidiary, Refco Securities, LLC, received a "Wells Notice" from the SEC arising
out of the investigation. Under SEC procedures, Refco Securities has the opportunity to make a submission to the SEC staff outlining why it believes any proposed enforcement action should not be
brought. Refco Securities is currently engaged in discussions with the SEC staff regarding the Wells Notice and the possible resolution of this matter, and continues to cooperate fully with the SEC in
respect of its investigation.

In
October 2003, we received a subpoena from the U.S. Attorney's Office for the Southern District of New York, which called for the production of documents we had produced to the
SEC. In addition to producing documents in response to the foregoing subpoenas, we have made our employees available to testify before the SEC and to be interviewed by the U.S. Attorneys' office.
Refco Securities, LLC has been advised orally that it is not currently the subject of the U.S. Attorneys' investigation.

At
the present time, it is not possible to predict the ultimate outcome of the foregoing matters with certainty. We have recorded a reserve for potential settlement and related costs.

Trading Technologies

On March 1, 2005, Trading Technologies International, Inc. filed an action against Refco Group, Refco, LLC and Refco EasySolutions, LLC
(collectively, the "Refco parties") in the U.S. District Court for the Northern District of Illinois, Eastern Division, alleging that the Refco parties infringed upon certain patents owned by Trading
Technologies relating to electronic trading software. In its complaint, Trading Technologies demanded a preliminary and permanent injunction against the Refco parties, as well as unspecified damages
and costs. The Refco parties filed certain counterclaims for breach of contract and attempted monopolization and an affirmative defense of patent misuse. On May 20, 2005, Trading Technologies
filed a motion to dismiss these counterclaims and affirmative defense. Trading Technologies has also announced that it has postponed its planned termination of certain licensing agreements with the
Refco parties until at least July 15, 2005.

Other

In addition to the matters discussed above, from time to time, we are party to litigation and administrative proceedings that arise in the ordinary course of our
business. We do not have any other pending litigation that, separately or in the aggregate, would in the opinion of management have a material adverse effect on our results of operations or financial
condition.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of fiscal year 2005.

11

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED               SECURITYHOLDER MATTERS

Refco Group is a single member limited liability company, and its sole member is New Refco. All outstanding shares of common stock of Refco Finance are held by
its parent, Refco Group. As of May 31, 2005, there were 1,000 shares of Refco Finance common stock outstanding.

Refco
Group paid aggregate distributions to their equity holders of $100.0 million, $120.0 million and $11.0 million in the fiscal years ended February 28,
2003, February 29, 2004 and February 28, 2005, respectively. As a limited liability company, Refco Group made these distributions to equity holders periodically during the above periods.

We
intend to retain all available funds and any future earnings to reduce debt and fund the development and growth of our business and do not anticipate paying any cash distributions in
the foreseeable future. Our ability to make distributions may also be restricted by the terms of the outstanding indebtedness of our subsidiaries, by the terms of any future indebtedness that we or
our subsidiaries may incur and by legal and regulatory requirements. Any future determination to pay distributions will be at the discretion of New Refco.

ITEM 6.    SELECTED FINANCIAL DATA

Set forth below is selected consolidated financial data, at the dates and for the periods indicated, for Refco Group as of and for the fiscal years ended
February 28, 2001, 2002 and 2003, February 29, 2004 and February 28, 2005. The selected consolidated financial data as of and for the fiscal years ended February 28, 2002
and 2003, February 29, 2004 and February 28, 2005 have been derived from Refco Group's audited consolidated financial statements for fiscal years 2002, 2003, 2004 and 2005, and the
selected consolidated financial data for the fiscal year ended February 28, 2001 has been derived from Refco Group's unaudited consolidated financial statements for fiscal year 2001.

The
financial data for the year ended February 28, 2005 represents the sum of the results of operations for Refco Group for the period from March 1, 2004 through
August 5, 2004 and for the period from August 6, 2004 through February 28, 2005 and are not indicative of the results that would have actually been obtained if the THL
Transactions (defined below under "Management's Discussion and Analysis of Financial Condition and Results of Operations") occurred on March 1, 2004. The selected historical financial data for
the periods indicated below include the results of our Asset Management business, substantially all of which was distributed as part of the THL Transactions.

You
should read the data set forth below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Certain Relationships and Related

12

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Transactions"
and our consolidated financial statements and the related notes thereto included elsewhere in this Form 10-K.

|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   | Period from March 1, 2004 through August 5, 2004 |       |   |      
|------------------------- | -------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----- | ----- | - | ----- | ----- | - | ------------------------------------------------ | ----- | - | -----
|
|
|
|
|
|Statement of Income Data: |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|Revenues:                 |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          | Commissions and brokerage                                |                                                                                                                                                                                                                                       | $ | 397   |       | $ | 478   |       | $ | 572                                              |       | $ | 645  
|                          | Interest                                                 |                                                                                                                                                                                                                                       |   | 1,528 |       |   | 1,711 |       |   | 2,387                                            |       |   | 1,052
|                          | Principal transactions, net                              |                                                                                                                                                                                                                                       |   | 103   |       |   | 99    |       |   | 83                                               |       |   | 166  
|                          | Asset management and advisory fees                       |                                                                                                                                                                                                                                       |   | 10    |       |   | 6     |       |   |                                                 |       |   | 7    
|                          | Other                                                    |                                                                                                                                                                                                                                       |   | 2     |       |   | 4     |       |   | 4                                                |       |   | 4    
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          |                                                          | Total revenues                                                                                                                                                                                                                        |   |       | 2,040 |   |       | 2,298 |   |                                                  | 3,046 |   |      
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|Expenses:                 |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          | Commissions and order execution costs                    |                                                                                                                                                                                                                                       |   | 250   |       |   | 324   |       |   | 385                                              |       |   | 412  
|                          | Interest                                                 |                                                                                                                                                                                                                                       |   | 1,406 |       |   | 1,557 |       |   | 2,182                                            |       |   | 898  
|                          | Employee compensation and benefits                       |                                                                                                                                                                                                                                       |   | 169   |       |   | 167   |       |   | 181                                              |       |   | 205  
|                          | General, administrative and other                        |                                                                                                                                                                                                                                       |   | 140   |       |   | 149   |       |   | 143                                              |       |   | 170  
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          |                                                          | Total expenses                                                                                                                                                                                                                        |   |       | 1,965 |   |       | 2,197 |   |                                                  | 2,891 |   |      
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          |                                                          | Income before provision for income taxes, minority interest, dividends on preferred securities issued by subsidiaries, income from equity investees, members' interest in earnings (losses) of subsidiary and discontinued
operations |   |       | 75    |   |       | 101   |   |                                                  | 155   |   |      
|                          | Provision for income taxes                               |                                                                                                                                                                                                                                       |   | 6     |       |   | 5     |       |   | 1                                                |       |   | 12   
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          |                                                          | Income before minority interest, dividends on preferred securities issued by subsidiaries, income from equity investees, members' interest in earnings (losses) of subsidiary and discontinued operations                             |   |       | 69    |   |       | 96    |   |                                                  | 154   |   |      
|                          | Minority interest                                        |                                                                                                                                                                                                                                       |   | 1     |       |   |      |       |   |                                                 |       |   |     
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          |                                                          | Income before dividends on preferred securities issued by subsidiaries, income from equity investees, members' interest in earnings (losses) of subsidiary and discontinued operations                                                |   |       | 68    |   |       | 96    |   |                                                  | 154   |   |      
|                          | Dividends on preferred securities issued by subsidiaries |                                                                                                                                                                                                                                       |   | 14    |       |   | 16    |       |   | 16                                               |       |   |     
|                          | Income from equity investees                             |                                                                                                                                                                                                                                       |   |      |       |   | 1     |       |   | 2                                                |       |   | 11   
|                          | Members' interest in earnings (losses) of subsidiary     |                                                                                                                                                                                                                                       |   |      |       |   |      |       |   |                                                 |       |   | 1    
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          | Income from continuing operations                        |                                                                                                                                                                                                                                       |   | 54    |       |   | 81    |       |   | 140                                              |       |   | 187  
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|Discontinued operations:  |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          | Income from discontinued operations                      |                                                                                                                                                                                                                                       |   | 20    |       |   | 14    |       |   | 1                                                |       |   |     
|                          | Applicable income tax expense                            |                                                                                                                                                                                                                                       |   | 2     |       |   | 2     |       |   | 1                                                |       |   |     
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      
|                          |                                                          | Net income                                                                                                                                                                                                                            |   | $     | 72    |   | $     | 93    |   | $                                                | 140   |   | $    
|                          |                                                          |                                                                                                                                                                                                                                       |   |       |       |   |       |       |   |                                                  |       |   |      

|                                                                |                                             | As of February 28,                                                   |        |    
|--------------------------------------------------------------- | ------------------------------------------- | -------------------------------------------------------------------- | ------ | ---
|
|
|                                                                |                                             |                                                                      |        |    
|Balance Sheet Data:                                             |                                             |                                                                      |        |    
|Total assets                                                    |                                             | $                                                                    | 18,277 |    
|Long-term debt and preferred securities issued by subsidiaries: |                                             |                                                                      |        |    
|                                                                | Long-term borrowings                        |                                                                      |        | 295
|                                                                | Subordinated debt                           |                                                                      |        | 41 
|                                                                | Preferred securities issued by subsidiaries |                                                                      |        | 160
|                                                                |                                             |                                                                      |        |    
|                                                                |                                             | Total long-term debt and preferred securities issued by subsidiaries |        |    
|Members' equity                                                 |                                             |                                                                      | 500    |    

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|                                  |  |   |    |  |   |    |  |   |    | Period from March 1, 2004 through August 5, 2004 |   |   
|--------------------------------- |  | - | -- |  | - | -- |  | - | -- | ------------------------------------------------ | - | --
|
|
|
|
|
|Other Financial Data:             |  |   |    |  |   |    |  |   |    |                                                  |   |   
|Depreciation and amortization     |  | $ | 22 |  | $ | 34 |  | $ | 23 |                                                  | $ | 26
|Long-term debt interest           |  |   | 23 |  |   | 25 |  |   | 27 |                                                  |   | 31
|Dividends on preferred securities |  |   | 14 |  |   | 16 |  |   | 16 |                                                  |   |  
|Capital expenditures              |  |   | 28 |  |   | 15 |  |   | 12 |                                                  |   | 11

|                                                                                                                                                                                                                   |                                  |                |   |       |       |   |       | Period from March 1, 2004 through August 5, 2004 |   |       |      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------- | -------------- | - | ----- | ----- | - | ----- | ------------------------------------------------ | - | ----- | -----
|
|
|
|
|Segment Data:                                                                                                                                                                                                      |                                  |                |   |       |       |   |       |                                                  |   |       |      
|Revenues:                                                                                                                                                                                                          |                                  |                |   |       |       |   |       |                                                  |   |       |      
|                                                                                                                                                                                                                   | Derivatives Brokerage & Clearing |                | $ | 692   |       | $ | 746   |                                                  | $ | 840   |      
|                                                                                                                                                                                                                   | Prime Brokerage/Capital Markets  |                |   | 2,217 |       |   | 2,609 |                                                  |   | 1,268 |      
|                                                                                                                                                                                                                   | Corporate & Other                |                |   | (611  | )     |   | (309  | )                                                |   | (234  | )    
|                                                                                                                                                                                                                   |                                  |                |   |       |       |   |       |                                                  |   |       |      
|                                                                                                                                                                                                                   |                                  | Total revenues |   | $     | 2,298 |   | $     | 3,046                                            |   | $     | 1,874
|                                                                                                                                                                                                                   |                                  |                |   |       |       |   |       |                                                  |   |       |      
|Income before provision for income taxes, dividends on preferred securities issued by subsidiaries, income from equity investees, members' interest in earnings (losses) of subsidiary and discontinued operations |                                  |                |   |       |       |   |       |                                                  |   |       |      
|                                                                                                                                                                                                                   | Derivatives Brokerage & Clearing |                | $ | 58    |       | $ | 77    |                                                  | $ | 122   |      
|                                                                                                                                                                                                                   | Prime Brokerage/Capital Markets  |                |   | 96    |       |   | 101   |                                                  |   | 125   |      
|                                                                                                                                                                                                                   | Corporate & Other                |                |   | (53   | )     |   | (23   | )                                                |   | (57   | )    
|                                                                                                                                                                                                                   |                                  |                |   |       |       |   |       |                                                  |   |       |      
|                                                                                                                                                                                                                   |                                  | Total          |   | $     | 101   |   | $     | 155                                              |   | $     | 189  
|                                                                                                                                                                                                                   |                                  |                |   |       |       |   |       |                                                  |   |       |      

---

14

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the information included under the caption "Selected Financial Data" and our consolidated financial
statements and the related notes thereto included elsewhere in this Form 10-K. Further, the following discussion includes information related to our Asset Management business,
substantially all the assets of which were distributed to Refco Group Holdings, Inc. on August 5, 2004. Reference to the year ended February 28, 2005 includes the period from
March 1, 2004 through August 5, 2004 combined with the period from August 6, 2004 through February 28, 2005.

General

We provide execution and clearing services for exchange-traded derivatives and provide prime brokerage services in the fixed income and foreign exchange markets.
We serve over 200,000 customer accounts from our 23 locations in 14 countries. Our international operations generated $610.8 million, or 45.9%, of our net revenues for the year ended
February 28, 2005 and $443.3 million, or 44.0%, of our net revenues for the year ended February 29, 2004. Our customers include corporations, government agencies, hedge funds,
managed futures funds, pension funds, financial institutions, retail clients and professional traders.

We
were historically organized into three operating business segments for financial reporting purposes: (i) Derivatives Brokerage & Clearing; (ii) Prime
Brokerage/Capital Markets; and (iii) Asset Management. We also have historically had a Corporate & Other non-operating business segment. Following the distribution of
substantially all the assets of our Asset Management business in connection with the THL Transactions described below, we are now organized into two operating business segments for financial reporting
purposes, Derivatives Brokerage & Clearing and Prime Brokerage/Capital Markets, and we have one non-operating business segment, Corporate & Other. We report the retained
assets from our Asset Management business, Refco Alternative Investments, as part of our Derivatives Brokerage & Clearing business.

The THL Transactions and the Reincorporation

On August 5, 2004, THL Refco Acquisition Partners, an affiliate of Thomas H. Lee Partners, L.P., and its affiliates and co-investors acquired
approximately 57% of the equity interests in Refco Group, which they hold through New Refco Group Ltd., LLC, for approximately $507.0 million in cash. In connection with the transaction,
Phillip Bennett, our President and Chief Executive Officer, exchanged his existing equity investment of approximately $382.5 million in Refco Group for an approximate 43% interest in New Refco,
and other members of our management made an investment in New Refco aggregating approximately $4.5 million in cash. Concurrently with the closing of the acquisition, Refco Group entered into
senior credit facilities providing for a fully drawn $800.0 million term loan and an undrawn $75.0 million revolving loan facility, and, together with Refco Finance, issued
$600.0 million in aggregate principal amount of senior subordinated notes. Also concurrently with the consummation of the transactions described above, Refco Group distributed
$550.0 million in cash as well as all of the equity interests of Forstmann-Leff International Associates, LLC, which at that time owned substantially all the assets of Refco Group's
Asset Management business, to Refco Group Holdings, Inc., an entity that was owned by Tone Grant and Phillip Bennett and that is now wholly owned by Phillip Bennett. We refer to the foregoing
transactions collectively as the "THL Transactions."

We
presently conduct our business through Refco Group and its direct and indirect subsidiaries. We intend to effect an initial public offering of common stock through Refco Inc.,
a newly formed Delaware corporation that will act as a holding company for our business. Immediately prior to the

15

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initial
public offering, Refco Inc. will enter into a series of transactions as a result of which, Refco Inc. will become the parent of New Refco and its wholly-owned and majority-owned
subsidiaries and will have no other assets or operations. We refer to these transactions as the "Reincorporation" and Refco Inc.'s initial public offering as the "initial public offering." For more
information on the THL Transactions and the Reincorporation, see "Certain Relationships and Related Transactions."

Factors Affecting Our Results

Our results of operations have been, and we expect will continue to be, affected principally by transaction volumes, interest rates, the level of global market
activity, market volatility and expense management. Our results of operations have also been affected by acquisitions.

Our
revenues are primarily comprised of: (i) transaction fees earned from executing and clearing customer orders, which we record as commissions and brokerage or principal
transactions, net
depending on the nature of the transaction, and (ii) interest income earned on cash balances in our customers' accounts and from providing secured financing through repurchase transactions.
From fiscal year 2000 through fiscal year 2005, our Derivatives Brokerage & Clearing net revenues increased at a compound annual growth rate of 24.3%, due primarily to annual increases in
contract volumes executed or cleared and in part attributable to acquisitions and annual increases in customer deposits. During the same period, our Prime Brokerage/Capital Markets net revenues
increased at a compound annual growth rate of 26.0%, due primarily to increases in both the number of customers and markets we serve as well as new product introductions and acquisitions.

Transaction Volumes

Since 2001, Derivatives Brokerage & Clearing transaction volumes, measured in numbers of contracts, have increased, reflecting the broad growth trend in
contract trading volumes currently being experienced in the derivatives industry. The continued convergence of derivatives and cash markets and the expanded use of derivatives for hedging and
investment purposes have been the primary drivers of this industry trend. This industry trend has been global in nature, with a rapid introduction of new products in a variety of international
markets. Prime Brokerage/Capital Markets transaction volumes, specifically foreign exchange dollar volumes and our customer securities financing and clearing volumes, increased reflecting expanded
U.S. government borrowing activity and the continued long-term growth of foreign exchange markets. Recently, this increase in volume has been accelerated by market volatility caused by
political uncertainty in the Middle East and its impact on energy supplies and the uncertain outlook concerning economic growth, interest rates and, in particular, the changing value of the U.S.
dollar. We have been able to take advantage of the increase in derivatives transaction volume because of our diverse customer base, product offering and market coverage and have benefited from the
increase in prime brokerage volumes as a result of new product initiatives, including online foreign exchange and emerging market debt brokerage.

Interest Rates

Due to the fact that a portion of our revenues is derived from interest earned from the investment of funds deposited with us primarily by customers of our
Derivatives Brokerage & Clearing business and the level of secured customer financing transactions in our Prime Brokerage/Capital Markets business, the level of prevailing interest rates
affects our revenues. We generally benefit from rising interest rates. Rising interest rates increase the amount of net interest income earned from these customer deposits and the potential financing
spread available on secured customer financing transactions. However, our interest expense also increases as a result of rising interest rates because borrowings under our new senior credit facilities
accrue interest at variable rates. Declining interest rates decrease the amount of net interest income earned on customer deposits and the spread available

16

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on
secured customer financing transactions. This is only partially offset by a decrease in interest rates on borrowings under our senior credit facilities.

Global Market Activity

Each of our primary business segments is global in nature, and the general expansion of the global economy and continued globalization of financial markets have
had a positive impact on our results of operations. The introduction of derivatives products internationally has accelerated in recent years, with emerging markets in Asia and Latin America
supplementing traditional centers in North America and Europe. This growth has been prompted by economic expansion in these regions, deregulation and globalization. Similar trends have emerged in our
Prime Brokerage/Capital Markets business as the capital markets in emerging economies have become more sophisticated. We believe this has presented us with growth opportunities in
non-dollar fixed income, emerging market debt and foreign exchange brokerage.

Expense Management

We have been able to leverage our operating capabilities to benefit from increased scale in our transaction volumes. By adding incremental volume to a
pre-existing platform, our marginal cost of growth in transaction processing has been minimal. We believe we will benefit from the scalable nature of our transaction processing
capabilities as more markets automate and move to electronic platforms. A high proportion of our marginal expense is variable in nature, which provides us an opportunity to improve our cost to income
ratio. We believe this characteristic will have a continuing positive impact on our results of operations.

Acquisitions

We have completed 16 acquisitions since 1999. It has been our practice to integrate and rationalize acquired companies as rapidly as possible, transferring
operations to our existing platform. During the fiscal year ended February 28, 2002, we acquired the professional floor trader business of First Options, MST Canada Co. and Main Street Trading,
all derivatives brokerage businesses. We acquired two other derivatives brokerage businesses during the fiscal year ended February 28, 2003: a division of Spear, Leeds & Kellogg and CFG
Financial Group Inc. During the fiscal year ended February 29, 2004, we acquired three asset management businesses, Edinburgh Fund Managers Ltd., Societe Generale Investment
Managers and Cardales UK Ltd., and five derivatives brokerage businesses, MacFutures Ltd., Carlton Brokerage Ltd., Friedberg Mercantile Group, RB&H and Trafalgar
Commodities Ltd. In September 2004, we acquired the customer accounts and related assets of Pioneer Futures, a division of Pioneer Futures, Inc. In April 2005, we acquired the
customer accounts and related business operations of The League Corp. In May 2005, we made a cash offer to the existing shareholders of EasyScreen plc, which closed on May 31, 2005. We
currently hold 95.3% of EasyScreen's outstanding ordinary share capital. In addition, we entered into a purchase and sale agreement to acquire the global brokerage operations of Cargill Investor
Services in June 2005.

Results of Operations

Revenues

Total Revenues.The components of our total revenues are commissions and brokerage, interest, principal transactions, net,
asset management and advisory fees and other income.

Commissions
and brokerage revenue. Commissions and brokerage revenues represent transaction fees earned on executed or cleared contracts in our Derivatives Brokerage & Clearing
business and transaction fees on trades in our Prime Brokerage/Capital Markets business. The transaction fees we charge are based on the type of customer, the type of transaction, the method of
trading and the

17

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volume
of trading activity that a particular customer conducts with us. The aggregate amount of commissions and brokerage revenues is a function of the number of transactions we process and the amount
of gross commissions charged to customers in respect of those transactions.

Interest
revenue. Interest revenue represents both interest earned from the investment of customer funds deposited with us as margin for their trading activities in our Derivatives
Brokerage & Clearing business and interest earned from providing secured customer financing through repurchase agreements as part of our Prime Brokerage/Capital Markets business. The latter
involves taking a customer's security and refinancing it with a qualified financial counterparty. We earn interest revenue on these transactions by charging our customer a pre-determined
spread above our cost of refinancing. Overall, interest revenue is driven by the level of customer deposits placed with our brokerage operations, the level of secured financing transactions we provide
to our customers and the level of prevailing interest rates. Typically, the net interest that we earn is lower in a low interest rate environment and higher in a higher interest rate environment.

Principal
transactions, net. Principal transactions, net revenue is generated mainly by our Prime Brokerage/Capital Markets business and is derived from broking transactions in
non-exchange traded derivatives and foreign exchange products. To execute a customer's order in non-exchange traded derivatives and foreign exchange products we enter into a
transaction with our customer and a simultaneous and offsetting transaction in the market. We generally price the customer transaction such that we earn a small positive spread on the offsetting
transaction, which we record on our income statement as principal transactions, net. This revenue represents our compensation for executing our customers' orders, and therefore is analogous to the
commissions we earn when executing our clearing contracts for exchange traded derivative contracts.

Although
the absence of a central clearing counterparty requires us to broker such transactions as principal, the risks associated with such transactions are not materially greater than
those associated with the brokerage of exchange-traded derivatives. Our customers bear the risk of the economic results of such transactions, and we confine ourselves to earning the positive spread on
the transaction. Nonetheless, because of our principal role, we are required to record certain other aspects of the transactions, including a record of realized and unrealized gains and losses
relating to such customer transactions. These transaction gains are for the benefit of our customers and any losses are for the account of our customers who secure the payment to us of any such losses
by depositing margin funds as collateral. Analyses of the realized and unrealized gains and losses as recognized and recorded under principal transactions, net for each of the years ended
February 28, 2005, February 29, 2004 and February 28, 2003 are included in our consolidated financial statements and the related notes thereto included elsewhere in this
Form 10-K. See Note B to our audited consolidated financial statements.

Asset
management and advisory fees revenues. Asset management and advisory fees revenues primarily represent fees we charge for managing funds. The amount of these revenues has
traditionally fluctuated with the level of funds under management and the investment performance of these funds.

Net Revenues.Although we report total revenues on a gross basis in our consolidated financial statements for purposes of
segment reporting and analyzing our revenues, we believe that net revenues provide a more meaningful indication of our operating results. Net revenues represent total revenues less interest expense.
Interest expense includes interest paid to Derivatives Brokerage & Clearing customers on the funds they maintain with us and interest paid to finance counterparties in our Prime
Brokerage/Capital Markets business for the financing of customer securities. For purposes of calculating net revenues, interest expense excludes interest paid on long-term debt. We net
interest expense against revenues because a substantial portion of our interest expense pertains to customer transactions from which we derive interest income but in which we have a related charge for
interest expense.

18

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Expenses

Commissions and Order Execution Costs.Commissions and order execution costs include variable expenses related directly to
transactions conducted in our brokerage operations. These costs include exchange and clearing house fees, fees paid to third parties for execution of customer orders and sales commissions paid in
those cases where customers are introduced and their orders are handled by non-salaried sales personnel.

Employee Compensation and Benefits Expenses.Employee compensation and benefits expenses include the cost of our global
salaried employees. These expenses include base compensation, bonus compensation (whether discretionary or performance related) and the cost of medical insurance and other related employee benefits.

General, Administrative and Other Expenses.General, administrative and other expenses include all other operating expenses,
including primarily lease expenses, communications and quotation systems expenses, travel and entertainment expenses, depreciation and amortization, professional fees and other miscellaneous expenses.

Income from Equity Investees

We own minority interests in various businesses. We record income earned by these businesses based on our proportionate ownership. This income is recorded on our
income statement as income from equity investees. These companies are engaged in both derivatives brokerage and prime brokerage operations in key product segments (such as retail foreign exchange
brokerage) and important geographical markets (such as the Taiwan derivatives markets). Because we consider these activities integral to our global operations and material to our results of
operations, we historically included earnings from these activities in operating profit for comparative purposes.

Operating Profit

Operating profit represents income before provision for income taxes, dividends on preferred securities issued by subsidiaries, income from equity investees,
members' interest in earnings (losses) of subsidiary and discontinued operations.

Income Taxes

We will be treated as a partnership for federal income tax purposes. Under applicable regulations, members of a limited liability company treated as a partnership
are responsible for their individual income tax liabilities related to the limited liability company's results of operations. Because we generated taxable income, we included in distributions to our
members amounts sufficient to facilitate the payment of tax liabilities arising from the limited liability company's income. Accordingly, we have not provided for federal income taxes related to our
results of operations. We made aggregate distributions, which included distributions with respect to members' tax liabilities arising from the limited liability company's income, of
$100.0 million, $120.0 million and $11.0 million in the years ended February 28, 2003, February 29, 2004 and February 28, 2005, respectively. These
distributions exclude any distributions made in connection with the THL Transactions. The provision for income taxes included in our consolidated financial statements relates to income taxes of
foreign subsidiaries.

Periodic Results

The following tables summarize our results of operations for the periods indicated and include our consolidated net revenues and net revenues and income before
taxes and certain other items by segment. The consolidated financial data for the fiscal years ended February 28, 2003, February 29, 2004 and February 28, 2005 have been derived
from our audited consolidated financial statements.

19

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For
purposes of the tables and discussions below, the results of operations for the year ended February 28, 2005 represent the sum of results of operations for the period prior to
the THL Transactions from March 1, 2004 through August 5, 2004 and for the period subsequent to the THL Transactions from August 6, 2004 through February 28, 2005 and are
not indicative of the results that would actually have been obtained if the THL Transactions had occurred on March 1, 2004.

The
information contained in the following tables should be read in conjunction with "Selected Financial Data" and our consolidated financial statements and the related notes thereto
included elsewhere in this Form 10-K.

|                                           |                | Fiscal Year Ended February 28, |         
|------------------------------------------ | -------------- | ------------------------------ | --------
|
|
|Commissions and brokerage                  |                | $                              | 571.5   
|Interest                                   |                |                                | 2,387.3 
|Principal transactions, net                |                |                                | 82.6    
|Asset Management and advisory fees         |                |                                | 0.1     
|Other                                      |                |                                | 4.6     
|                                           |                |                                |         
|                                           | Total revenues |                                | $       
|Interest expense                           |                |                                | (2,182.3
|Interest expense from long-term borrowings |                |                                | 27.2    
|                                           |                |                                |         
|                                           | Net revenues   |                                | $       
|                                           |                |                                |         

|                                                                                                                                                                                                                    |                                       | Fiscal Year Ended February 28, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------------------------------ | -
|
|
|Net revenues:                                                                                                                                                                                                       |                                       |                                |  
|                                                                                                                                                                                                                    | Derivatives Brokerage & Clearing      |                                | $
|                                                                                                                                                                                                                    | Prime Brokerage/Capital Markets       |                                |  
|                                                                                                                                                                                                                    | Corporate & Other(3)                  |                                |  
|                                                                                                                                                                                                                    | Eliminations(3)                       |                                |  
|                                                                                                                                                                                                                    |                                       |                                |  
|                                                                                                                                                                                                                    |                                       | Total net revenues             |  
|                                                                                                                                                                                                                    |                                       |                                |  
|Expenses:                                                                                                                                                                                                           |                                       |                                |  
|                                                                                                                                                                                                                    | Commissions and order execution costs |                                | $
|                                                                                                                                                                                                                    | Employee compensation and benefits    |                                |  
|                                                                                                                                                                                                                    | General, administrative and other     |                                |  
|                                                                                                                                                                                                                    |                                       |                                |  
|                                                                                                                                                                                                                    |                                       | Total                          |  
|                                                                                                                                                                                                                    |                                       |                                |  
|Income before provision for income taxes, dividends on preferred securities issued by subsidiaries, income from equity investees, members' interest in earnings (losses) of subsidiary and discontinued operations: |                                       |                                |  
|                                                                                                                                                                                                                    | Derivatives Brokerage & Clearing      |                                | $
|                                                                                                                                                                                                                    | Prime Brokerage/Capital Markets       |                                |  
|                                                                                                                                                                                                                    | Corporate & Other(3)                  |                                |  
|                                                                                                                                                                                                                    |                                       |                                |  
|                                                                                                                                                                                                                    |                                       | Total                          |  
|                                                                                                                                                                                                                    |                                       |                                |  

---

20

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Results for the Year Ended February 28, 2005 Compared to the Year Ended February 29, 2004

Net Revenues.Net revenues on a consolidated basis for the year ended February 28, 2005 increased
$324.2 million, or 32.2%, to $1,331.9 million from $1,007.7 million for the year ended February 29, 2004. The increase in net revenues for the year ended
February 28, 2005 was primarily due to the growth in transaction volumes that reflects broad secular trends across all major market segments that we serve. Commissions and brokerage revenue for
the year ended February 28, 2005 increased $203.3 million, or 31.5%, to $848.7 million from $645.4 million for the year ended February 29, 2004. The increase was
primarily due to an increase of 38.6% in derivative transaction volumes from 472 million contracts cleared for the year ended February 29, 2004 to 654 million contracts cleared
for the year ended February 28, 2005. Net interest revenue, excluding interest from long-term borrowings, for the year ended February 28, 2005 decreased $2.9 million,
or 1.6%, to $182.2 million from $185.1 million for the year ended February 29, 2004. The decline in net interest revenues was driven by lower interest rates realized on customer
deposits as well as the impact of the timing and duration at which investments mature. Principal transactions, net revenue for the year ended February 28, 2005 increased $114.2 million,
or 68.8%, to $280.1 million from $165.9 million for the year ended February 29, 2004. This increase was primarily due to a 78.3% increase in foreign exchange dollar volumes to
$1,216.5 billion for the year ended February 28, 2005.

Commissions and Order Execution Costs.Commissions and order execution costs on a consolidated basis for the year ended
February 28, 2005 increased $190.6 million, or 46.3%, to $602.5 million from $411.9 million for the year ended February 29, 2004. The increase in commissions and
order execution costs for the year ended February 28, 2005 was primarily due to the increase in transaction volume in all of our business segments and the addition of new business operations.

Employee Compensation and Benefits Expenses.Employee compensation and benefits expenses on a consolidated basis for the year
ended February 28, 2005 increased $62.1 million, or 30.3%, to $267.0 million from $204.9 million for the year ended February 29, 2004. The increase in employee
compensation and benefits expenses was due in part to the addition of several new operating groups acquired during the year ended February 28, 2005. These groups include Trafalgar Commodities
and the Wexford Fixed Income Group in New York as well as the further expansion of the MacFutures Group, particularly the commencement of its U.S. operations where the start-up expenses
have exceeded anticipated revenues. In addition, bonus accruals increased as a function of increased profitability in certain business segments in the geographical markets that we serve, including
Asia and Europe, where local currency appreciation also had the effect of increasing equivalent U.S. dollar compensation levels.

General, Administrative and Other Expenses.General, administrative and other expenses on a consolidated basis for the year
ended February 28, 2005 increased $73.2 million, or 43.0%, to $243.5 million from $170.3 million for the year ended February 29, 2004. General, administrative and
other expenses for the year ended February 28, 2005 increased $14.8 million, or 8.7%, due in part to expenses associated with acquisitions during the year ended February 28, 2005,
including $9.8 million of expenses associated with the physical integration of acquired businesses and the recognition of a legal reserve of $5.0 million. Our results for the year ended
February 28, 2005 reflect the financial impact of the THL Transactions. The THL Transactions resulted in an increase in depreciation and amortization expense associated with the
amortization of customer relationships determined as a result of the THL Transactions. The increase in amortization of the customer relationships determined as a result of the
THL Transactions for the year ended February 28, 2005 was $8.8 million compared to the year ended February 29, 2004. Total depreciation and amortization expense was
$30.0 million and $26.2 million for the years ended February 28, 2005 and February 29, 2004, respectively. Amortization expense due to the THL Transactions increased
general, administrative and other expenses by $8.8 million, or 5.2%, to $234.7 million for the year ended February 28, 2005.

21

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Operating Profit.Operating profit for the year ended February 28, 2005 decreased $38.9 million, or 20.5%, to
$150.6 million from $189.5 million for the year ended February 29, 2004. Operating profit for the year ended February 28, 2005 includes significant incremental expenses
associated with the THL Transactions. In addition to the increased cost of depreciation and amortization of customer relationships, interest expense on long-term borrowings
increased compared to the year ended February 29, 2004. For the year ended February 28, 2005, all of these incremental expenses related to the THL Transactions totaled
$13.5 million and $68.2 million, respectively, compared with pre-THL Transactions expenses of $4.7 million and $31.1 million, respectively, for the year
ended February 29, 2004. The THL Transactions therefore resulted in a total increase in expenses of $45.9 million for the year ended February 28, 2005. Further, our working
capital was reduced by $113.0 million, which was included in the cash distribution as part of the THL Transactions that decreased interest revenue by an estimated $3.1 million.
The increase in interest expense from long-term borrowings and amortization of customer relationships combined with reduction in working capital decreased our operating profit by
$49.0 million, or 25.9%.

In
addition, we record operating profit exclusive of the income we derive from investments in non-consolidated equity investees. Income from investments in
non-consolidated equity investees is recorded in income from equity investees and included in income from continuing operations. These companies are engaged in both derivatives brokerage
and prime brokerage operations in key product segments (such as retail foreign exchange brokerage) and important geographical markets (such as the Taiwan derivatives markets). Because we consider
these activities integral to our global operations and material to our results of operations, we historically included earnings from these activities in operating profit. Operating profit excluding
the earnings from equity investees for the year ended February 28, 2005 decreased $38.9 million, or 20.5%, to $150.6 million from $189.5 million for the year ended
February 29, 2004. The decrease in operating profit reflected a shift in product mix within our operations to products offered by equity investees, particularly retail foreign exchange
brokerage. Income from our share of our equity investees'
operations totaled $24.9 million for the year ended February 28, 2005 compared with $11.5 million for the year ended February 29, 2004. Members' interest in earnings
(losses) of subsidiary is also included as a decrease in total revenues and is recovered in our income from continuing operations. The increase in income from equity investees and the decrease in
members' interest in earnings (losses) of subsidiary of $25.6 million increased operating profit by 13.5% for the year ended February 28, 2005. Our operating profit is also impacted by
the recognition of a legal reserve of $5.0 million and the $9.8 million of expenses associated with the physical integration of acquired businesses, which decreased operating profit by
$14.8 million, or 7.8%, for the year ended February 28, 2005.

Segment Information

Derivatives Brokerage & Clearing

Net Revenues.Derivatives Brokerage & Clearing net revenues for the year ended February 28, 2005 increased
$193.1 million, or 24.8%, to $971.4 million from $778.3 million for the year ended February 29, 2004. The increase in Derivatives Brokerage & Clearing net revenues
for the year ended February 28, 2005 was primarily due to increased transaction volume in all markets and in all geographic sectors that we serve, particularly electronic markets utilized by
our professional trading customers and non-ferrous metals brokerage activities in Europe, which are reflected in commissions and brokerage revenues and principal transactions, net. Global
demand for commodity materials resulted in increased activity in physical commodity markets, while interest rate uncertainties increased the level of interest rate derivative volumes. In Europe and
Singapore, local foreign exchange operations (reported in Derivatives Brokerage & Clearing) also increased. Derivatives Brokerage & Clearing contract volume for the year ended
February 28, 2005 increased by 182 million contracts, or 38.6%, to 654 million contracts cleared from 472 million contracts cleared for the year ended February 29,
2004. Commissions and brokerage income increased by 22.1% as a result of increased

22

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transaction
volume and changing customer mix. This increase includes European and Singapore foreign exchange revenues and European non-ferrous metals brokerage revenues. Substantially all
of the assets of our Asset Management business were distributed to Refco Group Holdings, Inc. as part of the THL Transactions. We report the retained assets from the Asset Management
business, Refco Alternative Investments, as part of our Derivatives Brokerage & Clearing business. Refco Alternative Investments' net revenues for the year ended February 28, 2005
increased $4.8 million, or 70.1%, to approximately $11.6 million from $6.8 million for the year ended February 29, 2004.

Operating Profit.Derivatives Brokerage & Clearing operating profit for the year ended February 28, 2005
increased $13.0 million, or 10.7%, to $134.5 million from $121.5 million for the year ended February 29, 2004. The increase in Derivatives Brokerage & Clearing
operating profit for the year ended February 28, 2005 was primarily due to commissions and brokerage income that increased by 22.1% as a result of increased transaction volume. The increase in
income from equity investees increased operating profit by $0.3 million, or 0.2%, for the year ended February 28, 2005. Operating profit includes expenses associated with the
THL Transactions, most notably the increase in the amortization of customer relationships determined as a result of the THL Transactions. The increased amortization for the Derivatives
Brokerage & Clearing customer relationships determined as a result of the THL Transactions for the year ended February 28, 2005 was $0.9 million. The increase in the
amortization of customer relationships and the $6.8 million of expenses associated with the physical integration of acquired businesses decreased operating profit by $7.7 million, or
6.3%, for the year ended February 28, 2005.

Prime Brokerage/Capital Markets

Net Revenues.Prime Brokerage/Capital Markets net revenues for the year ended February 28, 2005 increased
$116.2 million, or 40.4%, to $404.1 million from $287.9 million for the year ended February 29, 2004. The increase in Prime Brokerage/Capital Markets net revenues for the
year ended February 28, 2005 was primarily due to the increase of 25.1% in the average net customer securities financing portfolio to $31.4 billion from $25.1 billion for the year
ended February 29, 2004 and a 78.3% increase in foreign exchange dollar volumes, which totaled $1,216.5 billion for the year ended February 28, 2005, up from $682.4 billion
for the year ended February 29, 2004.

Operating Profit.Prime Brokerage/Capital Markets operating profit for the year ended February 28, 2005 increased
$12.9 million, or 10.4%, to $137.5 million from $124.6 million for the year ended February 29, 2004. Operating profit also includes the members' interest in losses of
subsidiary of $11.0 million. Additionally, Prime Brokerage/Capital Markets operating profit excludes income from equity investees, which totaled $22.1 million for the year ended
February 28, 2005. The increase in income from equity investees and the members' interest in losses of subsidiary increases operating profit by $25.3 million, or 20.3%, for the year
ended February 28, 2005. Operating profit includes expenses associated with the THL Transactions, most notably the increase in the amortization of customer relationships determined as a
result of the THL Transactions. The increased amortization for the Prime Brokerage/Capital Markets customer relationships recognized on the THL Transactions for the year ended
February 28, 2005 was $7.9 million. The increase in amortization of customer relationships and $2.5 million of expenses associated with the physical integration of acquired
businesses decreased operating profit by $10.4 million, or 8.3%, for the year ended February 28, 2005. The underlying increase in Prime Brokerage/Capital Markets operating profit for the
year ended February 28, 2005 was primarily due to the continued growth in Prime Brokerage/Capital Markets net revenues, particularly the 78.3% increase in foreign exchange dollar volumes to a
total for the year ended February 28, 2005 of $1,216.5 billion and the inclusion of the Wexford Fixed Income Group, which was acquired in January 2004 and contributed
$4.5 million to operating profit in the year ended February 28, 2005.

23

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Results for the Year Ended February 29, 2004 Compared to the Year Ended February 28, 2003

Net Revenues.Net revenues on a consolidated basis for the year ended February 29, 2004 increased
$116.7 million, or 13.1%, to $1,007.7 million from $891.0 million for the year ended February 28, 2003. The increase in net revenues for the year ended February 29,
2004 was primarily due to the significant increase in brokerage transaction volume, which was partially offset by a decline in net interest revenues. In general, our volumes have increased as the
volumes in our industry and sector have increased. Commissions and brokerage revenues for the year ended February 29, 2004 increased $73.9 million, or 12.9%, to $645.4 million
from $571.5 million for the year ended February 29, 2003. Derivative contracts cleared increased by 71 million contracts to 472 million contracts for the year ended
February 29, 2004. This increase was primarily the result of the acquisition of MacFutures in February 2003, which was included in the full results of operations for the year ended
February 29, 2004. While customer deposits increased 7.9% from $3.8 billion for the year ended February 28, 2003 to $4.1 billion for the year ended February 29, 2004
and customer secured financing transactions increased 19.0% with average net customer securities financing portfolio of $25.1 billion for the year ended February 29, 2004, net interest
revenues for the year ended February 29, 2004 decreased 20.3% to $185.1 million from $232.2 million for the year ended February 28, 2003 primarily as a result of the very
low interest rate environment and the impact of the timing and duration at which investments mature. Principal transactions, net revenue for the year ended February 29, 2004 increased
$83.3 million, or 100.8%, to $165.9 million from $82.6 million for the year ended February 28, 2003. The increase was due primarily to a 43.8% increase in customer foreign
exchange transaction volumes worldwide to $682.4 billion for the year ended February 29, 2004. Asset management and advisory fees revenues for
the year ended February 29, 2004 increased $7.2 million to $7.3 million from $0.1 million for the year ended February 28, 2003 as a result of improved investment
performance resulting from stronger equity markets. Overall, transaction pricing across products and markets remained generally consistent with the prior year.

Commissions and Order Execution Costs.Commissions and order execution costs on a consolidated basis for the year ended
February 29, 2004 increased $26.5 million, or 6.9%, to $411.9 million from $385.4 million for the year ended February 28, 2003. The increase in commissions and order
execution costs for the year ended February 29, 2004 was primarily due to a 17.7% increase in Derivatives Brokerage & Clearing transactions volume. However, the rate of increase of
expenses was lower than the increase in transaction volumes across both business segments, in part because of a shift in overall product mix towards Prime Brokerage/Capital Market operations. Most of
the latter volume is conducted by corporate sales groups and not commission-based sales personnel.

Employee Compensation and Benefits Expenses.Employee compensation and benefits expenses on a consolidated basis for the year
ended February 29, 2004 increased $23.9 million, or 13.2%, to $204.9 million from $181.0 million for the year ended February 28, 2003. The increase in employee
compensation and benefits expenses for the year ended February 29, 2004 was primarily due to the addition to our payroll of the majority of employees of acquired companies, specifically
MacFutures, Trafalgar Commodities and Carlton Brokerage.

General, Administrative and Other Expenses.General, administrative and other expenses on a consolidated basis for the year
ended February 29, 2004 increased $27.7 million, or 19.4%, to $170.3 million from $142.6 million for the year ended February 28, 2003. The increase in general,
administrative and other expenses for the year ended February 29, 2004 was primarily due to the incremental expenses associated with acquired operations. Total depreciation and amortization
expense was $26.2 million and $23.5 million for the years ended February 29, 2004 and February 28, 2003, respectively.

Operating Profit.Operating profit on a consolidated basis for the year ended February 29, 2004 increased
$34.7 million, or 22.4%, to $189.5 million from $154.8 million for the year ended February 28, 2003. The increase in operating profit for the year ended February 29,
2004 was primarily

24

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due
to the increase in net revenues derived from the increased transaction volume noted above, together with the improvement in operating margins created by the reduction in sales commission costs and
our ability to control the overall level of general and administrative expenses.

Segment Information

Derivatives Brokerage & Clearing

Net Revenues.Derivatives Brokerage & Clearing net revenues for the year ended February 29, 2004 increased
$104.3 million, or 15.5%, to $778.3 million from $674.0 million for the year ended February 28, 2003. The increase in Derivatives Brokerage & Clearing net revenues
for the year ended February 29, 2004 was primarily due to increased transaction volume in all major geographic and product sectors that we serve. Dollar price increases in physical commodity
markets driven by the growth of Asian economies, particularly China, resulted in an increase in trading of agricultural and metals derivatives contracts. The changing outlook for interest rates
combined with the addition of the MacFutures platform in March 2003, increased financial futures contract volume, particularly interest rate products. Derivatives Brokerage & Clearing
contract volume for the year ended February 29, 2004 increased by 71 million, or 17.7%, to 472 million contracts cleared from 401 million contracts cleared for the year
ended February 28, 2003. Commissions and brokerage income increased by 13.7%, primarily as a result of increased transaction volume, and this was additionally increased by an increase of 14.3%
in net interest revenue resulting from increased customer deposits and changes in the timing and duration of investments. Approximately $6.8 million, or 0.7%, of net revenues was attributable
to our Asset Management business.

Operating Profit.Derivatives Brokerage & Clearing operating profit for the year ended February 29, 2004
increased $44.6 million, or 58.0%, to $121.5 million from $76.9 million for the year ended February 28, 2003. The increase in Derivatives Brokerage & Clearing
operating profit for the year ended February 29, 2004 was primarily due to a 17.7% increase in derivative contracts cleared and a 9.0% reduction in sales commission costs (calculated as a
percent of commissions and brokerage revenue) reflecting a reduced reliance on commission sales groups. Additionally, net interest income rose primarily as a result of the 7.9% increase in customer
deposits to a record $4.1 billion. This offset lower investment yields resulting from the generally lower interest rate environment.

Prime Brokerage/Capital Markets

Net Revenues.Prime Brokerage/Capital Markets net revenues for the year ended February 29, 2004 increased
$44.2 million, or 18.1%, to $287.9 million from $243.7 million for the year ended February 28, 2003. The increase in Prime Brokerage/Capital Markets net revenues for the
year ended February 29, 2004 was primarily due to the increase in transaction volume and revenues of our foreign exchange brokerage activities. The increase in transaction volume reflected the
continued expansion of our fixed income clearing operations. The increase in foreign exchange revenues reflected the diversification of our product offerings and the launch of online wholesale and
retail products in June 2003. Prime Brokerage/Capital Markets net revenues also increased as a result of an increase in the average net customer securities financing portfolio to
$25.1 billion from $20.8 billion for the year ended February 28, 2003. The decrease in net interest revenue of 26.6% to $104.5 million for the year ended
February 29, 2004 was mainly due to the lower interest rate environment and changes in the timing and duration of investments.

Operating Profit.Prime Brokerage/Capital Markets operating profit for the year ended February 29, 2004 increased
$24.0 million, or 23.9%, to $124.6 million from $100.6 million for the year ended February 28, 2003. The increase in Prime Brokerage/Capital Markets operating profits was
primarily due to the 43.8% increase in foreign exchange dollar volumes to $682.4 billion for the year ended February 29, 2004.

25

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Seasonality

Our business has experienced seasonal fluctuations. Financial markets often experience reduced trading activity during summer months and in the last fiscal
quarter as a result of holidays. Traditional commodity derivatives, such as energy contracts, will reflect changing supply/demand factors related to heating/cooling seasons. As a result of these
factors, we may experience relatively high trading volume and revenue during our first and third fiscal quarters and lower trading volume in our second fiscal quarter. However, this trend is not
evident in every year and in recent years has been moderated by globalization and an expanded range of products that tend to counteract traditional seasonality trends. For these reasons, seasonality
was not a major factor in our 2005 fiscal year.

Liquidity and Capital Resources

We expect our primary uses of cash over the next twelve months to be for working capital and debt service. Also, consistent with past practice and policy, we may
from time to time evaluate acquisition opportunities in our core businesses. If we were to consummate an acquisition, we may utilize cash for that purpose.

Cash Flows

As a financial institution, our cash flows are complex and interrelated and highly dependent upon our operating performance, levels of customer activity and
secured financing activities. Our cash flows from operations were $528.9 million and $391.2 million for the period from March 1, 2004 through August 5, 2004 and the period
from August 6, 2004 through February 28, 2005, respectively, as compared to $727.9 million for the year ended February 29, 2004 as earnings and operating assets and
liabilities exceeded cash and cash equivalents utilized in secured financing activities. Included in cash used in financing activities is $150.0 million that was used to make a voluntary
prepayment of our term loan during the quarter ended February 28, 2005. During the year ended February 28, 2005, we increased cash by $206.4 million as cash flows from operating
activities and discontinued operations of $920.0 million and $21.8 million, respectively, exceeded cash used in investing and financing activities of $92.2 million and
$643.2 million, respectively. During the year ended February 29, 2004, we increased cash and cash equivalents by $90.0 million as cash flows from operating activities of
$727.9 million exceeded cash used in investing activities, financing activities and discontinued operations of $118.9 million, $384.7 million and $134.3 million,
respectively. During the year ended February 28, 2003, we increased cash and cash equivalents by $81.5 million overall as cash provided by operating activities and financing activities
of $80.6 million and $54.5 million, respectively, exceeded cash used in investing activities and discontinued operations of $3.5 million and $50.1 million, respectively.

Historically,
we included a portion of our excess cash balances from our Derivatives Brokerage & Clearing business in segregated cash accounts to maximize the investment yield on
these funds. We included approximately $257.1 million in the segregated cash account balance as of February 29, 2004. Consequently, changes in our cash and cash equivalent balance
included in the segregated account historically affected our cash flow from operating activities. As of February 28, 2005, the excess cash balances were swept from the segregated cash accounts
and are included in cash and cash equivalents and can be used to meet our debt service obligations without any restrictions. See "Contractual Obligations and Commitments."

Working Capital

Our primary requirement for working capital relates to funds we are required to maintain at exchanges or clearing organizations to support our customers' trading
activities. We require that our customers deposit funds with us in support of their trading activities, which we in turn deposit with exchanges or clearing organizations to satisfy our obligations.
These required deposits account for the majority of our working capital requirements and thus our primary use of working capital is funded directly or indirectly by our customers. Our working capital
needs are otherwise primarily limited to

26

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regulatory
capital requirements which we have satisfied in the past from internally generated cash flow and available funds.

Notwithstanding
the self-funding nature of our operations, we may sometimes be required to fund timing differences arising from the delayed receipt of customer funds or
timing differences associated with the settlement of customer transactions in securities markets. Historically, these timing differences have been funded either with internally generated cash flow or,
if needed, with funds drawn under short-term borrowing facilities, including committed lines of credit. We have $75.0 million of available borrowings under a revolving credit
facility for working capital purposes. Separately, our finance subsidiary, Refco Capital, LLC, utilizes secured bank facilities to refinance specialized financing arrangements entered into with
select customers from time to time. As of February 28, 2005, there were no borrowings outstanding under these facilities.

Our
two primary U.S. regulated subsidiaries are Refco, LLC and Refco Securities, LLC. Refco, LLC is subject to the CFTC minimum financial requirements, which
requires it to maintain net capital equal to the sum of 8% of the total risk margin requirements for all positions carried in customer accounts and 4% of the total risk margin requirements for all
positions carried in non-customer accounts. As of February 28, 2005, Refco, LLC had net capital of $283.9 million, which was $95.0 million in excess of required
net capital. Refco Securities, LLC is subject to the uniform net capital requirements of the SEC, which require the maintenance of minimum net capital. Refco Securities, LLC computes its net
capital requirements under the alternative method provided for by the SEC's rules, which require that Refco Securities, LLC maintain net capital equal to the greater of $250,000 or 2% of
aggregate customer related debit items as defined in the SEC's rules. The net capital rule also provides that equity capital may not be withdrawn or cash dividends paid if resulting net capital would
be less than 5% of aggregate customer-related debit items. As of February 28, 2005, Refco Securities, LLC had net capital of $82.0 million which was 24.7% of aggregate customer-related
debit items and $75.4 million in excess of required net capital.

As
a matter of policy, we maintain excess regulatory capital to provide liquidity during periods of unusual market volatility, and this has been sufficient in the past to absorb volatile
market events. Similarly, for our brokerage activities in the OTC markets, despite these transactions being brokered as principal and not as agent, we have adopted a futures-style margin methodology
to protect us against
price movements, and this also reduces the amount of capital needed to conduct business because even if we are required to post funds with clearing organizations in order to facilitate
customer-initiated transactions, we are able to use customer deposits for this purpose rather than our own funds. As a result, we are able to execute a substantial volume of transactions without the
need for large amounts of working capital.

Funding
for purposes other than working capital requirements, including the financing of acquisitions, has been provided either through internally generated cash flow or through specific
long-term financing arrangements described below. Substantially all the assets of our Asset Management business, which accounted for 1.3% of fiscal year 2005 revenue and an operating
income of $7.4 million in fiscal year 2005, were distributed to Refco Group Holdings, Inc. in connection with the THL Transactions. Our Asset Management business generated nominal
cash flow for fiscal year 2005.

Long-Term Debt

It has been our policy to match the varied nature of our liquidity requirements with appropriately structured funding sources. Prior to the
THL Transactions, our long-term debt consisted principally of long-term notes, which we had traditionally used to finance acquisitions. We repaid all these notes in
connection with the THL Transactions. However, in connection with the THL Transactions we incurred a substantial amount of new long-term debt. As of February 28, 2005,
we had $1,246.0 million of long-term debt outstanding, including the current portion of long-term debt. We intend to continue to fund long-term requirements,
including acquisitions, with long-term debt. Our long-term debt currently consists of our senior credit facilities and the notes.

27

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In connection with the THL Transactions, we entered into senior credit facilities consisting of a $75.0 million revolving credit facility and an $800.0 million term loan
facility. In January 2005, we voluntarily prepaid $150.0 million of borrowings under the term loan facility, and available borrowings thereunder were reduced to $648.0 million. On
March 15, 2005, we refinanced and replaced the term loan facility with a new term loan facility providing for borrowings of up to an aggregate principal amount of $648.0 million. As of
May 31, 2005, $644.0 million remained outstanding under the term loan facility. Refco Group and Refco Finance also issued $600.0 million aggregate principal amount of senior
subordinated notes in connection with the THL Transactions. The proceeds from the term loans, along with the proceeds from the issuance of the senior subordinated notes, were used to fund the
cash payments made to our existing stockholders, repay existing indebtedness and pay related transaction fees and expenses. See "Certain Relationships and Related TransactionsThe Equity
Purchase and Contribution Agreement."

The
senior credit facilities contain restrictive covenants which, among other things, limit indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions,
capital expenditures, mergers and consolidations, prepayments of other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. In addition, the senior credit
facilities require compliance with a variety of covenants. We were in compliance with those covenants as of February 28, 2005. The most restrictive covenants relate to ratios of Consolidated
EBITDA to Consolidated Interest Charges (interest coverage ratio), Adjusted Consolidated Funded Indebtedness (net of Cash on Hand) to Consolidated EBITDA (total leverage ratio), and maximum capital
expenditures, all as defined in the senior credit facilities. The minimum interest coverage and maximum leverage ratios are computed based on our results for the last twelve months ended. More
specifically, the senior credit facilities' covenants require us to maintain:



We
expect to maintain compliance with these covenants for the foreseeable future. Consolidated EBITDA, as defined in the senior credit facilities, differs from the term "EBITDA" as it is
commonly used in our industry. In addition to adjusting net income to exclude interest expense, income taxes and depreciation and amortization, Consolidated EBITDA, as defined in the senior credit
facilities, also adjusts net income by excluding items or expenses not typically excluded in the calculation of "EBITDA": letter of credit fees; non-cash expenses resulting from employee
benefit and management compensation plans, the grant of stock and stock options to our employees or the treatment of such options under variable plan accounting; extraordinary charges;
non-cash amortization of financing costs; cash expenses incurred in connection with the THL Transactions, permitted investments and issuances

28

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of
equity or debt (in each case, whether or not consummated); any losses realized upon the disposition of property or assets outside the ordinary course of business; to the extent actually reimbursed,
expenses incurred to the extent covered by indemnification provisions of any agreement on connection with a permitted acquisition; to the extent covered by insurance, expenses with respect to
liability or casualty events or business interruptions; permitted management fees; non-cash purchase accounting adjustments and step-ups with respect to re-valuing
assets and liabilities in connection with the THL Transactions or any permitted investments; non-cash losses from joint ventures and non-cash minority interest
reductions; fees and expenses in connection with permitted exchanges or refinancings; non-cash, non-recurring charges with respect to employee severance; other
non-cash, non-recurring charges that do not result in a cash charge in a future period; cash charges that do not exceed $25.0 million in the aggregate or
$15.0 million during any fiscal year; other expenses reducing Consolidated Net Income that do not represent a cash item in such period or any future period; fines, penalties, settlement
payments or judgment payments related to the Tradewinds litigation or the SEC and/or U.S. attorneys' investigation into the sale of stock of Sedona Corporation (to the extent the payments do not
exceed $10.0 million in the aggregate and are made on or prior to August 5, 2005 or Refco Group is indemnified for such payments); and, for purposes of calculating the ratios described
above, the net cash proceeds of certain equity issuances in an amount as is necessary to ensure compliance with the ratios, solely to the extent that such net cash proceeds are (i) received no
later than twenty business days after the date of delivery of the applicable compliance certificate and (ii) not otherwise required to be applied to prepay borrowings under the senior credit
facilities or to determine the permissibility of a transaction under the senior credit facilities; less non-cash income, extraordinary gains and gains realized upon the disposition of
property outside the ordinary course of business; plus/minus unrealized gains/losses in respect of certain hedging arrangements.

We
present Consolidated EBITDA because it is a material component of the covenants contained in our senior credit facilities. Non-compliance with those covenants could result
in the acceleration of all amounts outstanding under the senior credit facilities, which could have a material adverse effect on our results of operations, financial position and cash flow. While the
determination of "unusual and non-recurring losses" is subject to interpretation and requires judgment of management, we believe the items and calculations set forth below are in
accordance with the senior credit facilities. Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate
whether cash flows will be sufficient to fund cash needs.

The
following is a calculation of our minimum interest coverage and maximum leverage ratios under our senior credit facilities as of February 28, 2005. The terms and related
calculations are defined in the senior credit facilities (in thousands, except ratios).

February 28, 2005Calculation of minimum Interest Coverage Ratio:Twelve months ended Consolidated EBITDA(1)

$
292,211Consolidated Interest Charges(2)

$
59,884Actual Interest Coverage Ratio(3)


4.88xMinimum permitted Interest Coverage Ratio


2.15xCalculation of maximum Leverage Ratio:Adjusted Consolidated Funded Indebtedness (net of Cash on Hand)

$
893,117Twelve months ended Consolidated EBITDA(1)

$
292,211Actual Leverage Ratio(4)


3.06xMaximum permitted Leverage Ratio


6.25x


---

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Interest expense on Consolidated Funded Indebtedness

$
64,295Interest income on Cash on Hand


(4,411
)Consolidated Interest Charges

$
59,884


The
senior credit facilities are secured by, among other things:



In
addition, the senior credit facilities are guaranteed by New Refco and Refco Group's non-regulated restricted domestic subsidiaries.

Borrowings
under the senior credit facilities bear interest at a floating rate, which can be either the Eurodollar rate plus an applicable margin or, at the borrower's option, an
alternative base rate (defined as the higher of (x) the Bank of America prime rate and (y) the federal funds effective rate, plus one half percent (.50%) per annum) plus an applicable
margin. The applicable margins for Eurodollar rate loans and alternative base loans in respect of the revolving credit facility are subject to adjustment based on Leverage Ratio (as defined), as set
forth in the following table:

Applicable RatePricing
Level

Leverage Ratio

Eurodollar Rate

Base
Rate1

>5.00:1

2.75
%
1.75
%2

>4.50:1 but £5.00:1

2.50
%
1.50
%3

>4.00:1 but £4.50:1

2.00
%
1.00
%4

£4.00:1

1.75
%
0.75
%


30

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The
applicable margins under the term loan facility are subject to adjustment based on the debt ratings of the senior credit facilities by S&P and Moody's, as set forth in the following
table:

|  |  |                                                                        |  | Applicable Rate |  
|- |  | ---------------------------------------------------------------------- |  | --------------- | -
|
|1 |  | rated at least BB- by S&P and Ba3 by Moody's                           |  | 1.75            | %
|2 |  | rated at least BB- by S&P and B1 by Moody's and Level 1 does not apply |  | 2.00            | %
|3 |  | if neither Level 1 nor Level 2 applies                                 |  | 2.25            | %

The
weighted average interest rates per annum in effect as of February 28, 2005 for the term loan facility is 4.79%. The interest rate payable under the senior credit facilities
will increase by 2.00% per annum during the continuance of any payment or bankruptcy event of default.

For
Eurodollar rate loans, Refco Group may select interest periods of one, two, three or six months and, to the extent available to all lenders, nine or twelve months. Interest will be
payable at the end of the selected interest period, but no less frequently than every three months within the selected interest period.

The
senior credit facilities also require payment of a commitment fee on the difference between committed amounts and amounts actually borrowed under the revolving credit facility. Prior
to the maturity date, funds borrowed under the revolving credit facility may be borrowed, repaid and reborrowed, without premium or penalty.

The
term loan facility is subject to amortization in equal quarterly installments of principal as set forth in the table below.

Year

Term Loan Facility1

$
8.0 million2

$
8.0 million3

$
8.0 million4

$
8.0 million5

$
8.0 million6

$
8.0 million7

$
600.0 million


Voluntary
prepayments of principal amounts outstanding under the senior credit facilities are permitted at any time. A 1% prepayment penalty will be assessed to any prepayment of
principal made on the term loan facility where (a) such prepayment is made with the proceeds of, or in connection with, a new tranche of senior secured term loans incurred on or before
March 15, 2006, (b) such new term loans have an interest rate margin that is less than the applicable rate on the term loan facility, and (c) such new term loans are incurred for
the primary purpose of refinancing the term loan facility. Further, if a prepayment of principal is made with respect to a Eurodollar rate loan on a date other than the last day of the applicable
interest period, the lenders will require compensation for any funding losses and expenses incurred as a result of the prepayment.

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In
addition, mandatory prepayments are required to prepay amounts outstanding under the senior credit facilities in an amount equal to:



The
senior credit facilities contain customary events of default, including without limitation, payment defaults, breaches of representations and warranties, covenant defaults,
cross-defaults to other indebtedness in excess of specified amounts, events of bankruptcy and insolvency specified in the senior credit facilities, judgment defaults in excess of specified amounts,
failure of any material provision of any guaranty or security document supporting the senior credit facilities to be in full force and effect, and a change of control.

In
connection with the THL Transactions, Refco Group, together with Refco Finance as co-issuer, issued $600.0 million aggregate principal amount of 9% senior
subordinated notes. The senior subordinated notes rank equally in right of payment with all of Refco Group's existing and future senior indebtedness and rank senior in right of payment to all Refco
Group's existing and future subordinated indebtedness. These notes are not secured, and as such, have no underlying assets to secure the payment of principal or interest. The senior subordinated notes
are guaranteed on a senior unsecured basis by Refco Group's non-regulated domestic subsidiaries. The senior subordinated notes mature on August 1, 2012, with interest at a rate of
9% payable semi-annually in arrears on February 1 and August 1, commencing on February 1, 2005.

The
senior subordinated notes may be redeemed at any time, in whole or in part, on or after August 1, 2008 at a redemption price equal to 104.5% of the principal amount of the
senior subordinated notes in the first year, declining yearly to par at August 1, 2010, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to
August 1, 2007, Refco Group may redeem the senior subordinated notes in the aggregate up to 35% of the original principal amount using the net proceeds of certain equity offerings (including
the initial public offering) at a redemption price equal to 109.0% of the principal amount of the senior subordinated notes, plus accrued and unpaid interest, if any, to the date of redemption. The
indenture does not contain any mandatory prepayment provisions.

Upon
the occurrence of a change of control, each holder of the senior subordinated notes will have the right to require Refco Group to repurchase that holder's senior subordinated notes
at a price

32

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equal
to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

The
indenture governing the senior subordinated notes contains covenants that, among other things, limit the ability of Refco Group and its subsidiaries, subject to certain
qualifications and exceptions, to: incur or guarantee additional indebtedness; sell assets; pay dividends and make other equity distributions; purchase or redeem capital stock; make investments;
consolidate or merge with or into other companies; and engage in transactions with affiliates.

The
senior subordinated notes contain certain events of default, including failure to pay principal and interest on the notes, failure to comply with covenants, subject to a
60-day grace period in certain instances, and certain bankruptcy, insolvency or reorganization events with respect to Refco Group or its subsidiary guarantors.

Our
subsidiary Refco Capital, LLC has a $20.0 million credit facility, pursuant to which Refco Capital, LLC provides financing to fund the margin requirements of some of
commercial customers who maintain futures trading accounts with us. Advances under this facility are secured by Refco Capital, LLC's security interest in the customer's rights to payments arising from
these accounts. We currently have no outstanding debt under this facility.

Refco
Securities, LLC has two lines of credit with Euroclear Bank S.A./N.V. in the aggregate amount of $550.0 million for the purpose of settling intra-day
transactions and, if necessary, financing positions overnight. As of February 28, 2005, no amounts were outstanding under these facilities.

Our
subsidiaries Refco Singapore Pte. Ltd. and Refco Investment Services Pte Ltd. (Singapore) have facilities to assist with working capital requirements. The aggregate
amount available under these facilities is approximately $29.4 million. We have guaranteed our subsidiaries' obligations under these facilities. There is currently no outstanding debt under
these facilities.

In
addition, several of our subsidiaries have facilities with various financial institutions to, among other things, provide credit support to some of our customers, satisfy minimum
exchange and clearing house collateral requirements and provide stock financing in exchange-approved warehouses. The total availability under these facilities is approximately $501.4 million.
We have guaranteed all of our subsidiaries' obligations under these facilities, with the exception of one $10.0 million facility. As of
February 28, 2005, letters of credit in the aggregate amount of approximately $1.1 million were outstanding under these facilities.

We
believe that our cash flow is sufficient to meet our term debt service requirements and that our cash and cash equivalents, as well as cash flow from operations, will be sufficient to
fund our operations for the foreseeable future.

Liquidity Risk

Ready access to cash is essential to our business. Our liquidity could be impaired by an inability to access lines of credit, an inability to access funds from
our subsidiaries or an inability to liquidate customer positions or otherwise sell assets. This situation may arise due to circumstances that we may be unable to control, such as a general market
disruption or an operational problem that affects third parties or us. Further, our ability to liquidate customer positions or otherwise sell assets may be impaired if other market participants are
seeking to sell similar assets at the same time. Our credit ratings are important to our liquidity. A reduction in our credit ratings could adversely affect our liquidity and competitive position,
increase our borrowing costs, limit our access to the capital markets or trigger our obligations under bilateral provisions in some of our trading and collateralized financing contracts. Under such
contracts, counterparties could terminate contracts with us or require us to post additional collateral. Termination of our trading and collateralized financing contracts could cause us to

33

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sustain
losses and impair our liquidity by requiring us to find other sources of financing or to make significant cash payments or securities movements.

Contractual Obligations and Commitments

We have contractual obligations to make future payments under long-term debt and long-term non-cancelable lease agreements and
have contingent commitments under a variety of commercial arrangements. See Notes D and K to our consolidated financial statements for further information regarding our commitments and contingencies.
The table below shows as of February 28, 2005 our contractual obligations and commitments, including our payments due by period:

Payments due by periodTotal

Less than
1 year

13 years

45 years

More than
5 years(in millions)Long-term debt obligations

$
1,246.0

$
8.0

$
16.0

$
16.0

$
1,206.0Operating lease obligations


70.7


11.7


23.7


15.6


19.7Total

$
1,316.7

$
19.7

$
39.7

$
31.6

$
1,225.7


In
addition to the contractual obligations and commitments set forth above, we may be obligated to make earn-out payments in connection with acquisitions we have completed in
the past.

Off Balance Sheet Arrangements

In the normal course of our customer brokerage activities in Prime Brokerage/Capital Markets products, where no central clearing counterparty (such as an
exchange) exists, we enter into various contractual commitments as a principal in order to facilitate the execution of a customer transaction. Such commitments often involve forward settlement and
include exchange-traded futures, fixed income and equity swaps, foreign currency forwards and option contracts. We use these commitments to offset
the customer order and generate a positive profit spread for us. We also enter into forward repurchase agreements. Such activities involve customers and counterparties in and outside the United
States.

The
following table shows the gross notional or contractual amounts of contracts held or issued by us that require forward settlement. This table reflects only off-balance
sheet contracts. It should be noted that these off-balance sheet contracts are often offset by on-balance sheet items not shown here.

|                                   |       | As of February 28, 2003 |           | As of February 29, 2004 |   | As of February 28, 2005 |     
|---------------------------------- | ----- | ----------------------- | --------- | ----------------------- | - | ----------------------- | ----
|
|
|Forward currency contracts         |       | $                       | 28,303.4  |                         | $ | 0.9                     |     
|Swaps contracts                    |       |                         | 90.0      |                         |   | 2.0                     |     
|Options contracts, sold or written |       |                         | 117,827.8 |                         |   | (224.8                  | )   
|Options contracts, purchased       |       |                         | 119,908.9 |                         |   | 224.3                   |     
|Exchange-traded futures            |       |                         | 2,355.4   |                         |   | (7.1                    | )   
|                                   |       |                         |           |                         |   |                         |     
|                                   | Total |                         | $         | 268,485.5               |   | $                       | (4.7
|                                   |       |                         |           |                         |   |                         |     

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We record our contractual commitments at market or fair value. Changes in market or fair value are recorded currently in income. The level of reported market risk is determined by a
number of factors, including size, composition and diversification of positions held, market volatility and changes in interest and foreign exchange rates. However, in our case the level of reported
market and financial risk associated with these contractual commitments is mitigated by our role as principal broker and the fact that such transactions are offset ultimately by our obligation to pay
the customers profits relating to such transactions and our practice of ensuring that losses, whether realized or unrealized, are secured with customer deposits. As a practical matter, the actual
level of market risk on financial instruments entered into on behalf of customers is limited by other financial instruments recorded on and, as in the case of the above table, off balance sheet. This
limits overall market risk and the net impact of such transactions on our income statement. To ensure this our management actively monitors those positions to review the effectiveness of the offset or
hedging strategy.

Critical Accounting Policies and Estimates

Our discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. During the preparation of these consolidated financial statements, we are required to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including
those related to principal transactions, provisions for doubtful accounts on receivables, fair values of derivative financial instruments and goodwill and intangible assets. We base our estimates on
historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such
differences may be material to our consolidated financial statements.

We
believe that the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Principal Transactions

As a broker of prime brokerage and capital markets products (e.g., foreign exchange), which do not trade on regulated exchanges, we enter into contractual
commitments, as principal, involving forward settlement in order to execute customer transactions in such markets. We record these contracts at market or fair value and generally immediately hedge
these contracts with offsetting contracts, which results in a profit spread for us. Because the market or fair value of these transactions are based on observable market data, this profit spread is
recognized immediately in our statement of income under "principal transactions, net." We recognized net revenues of $160.8 million, $119.2 million, $165.9 million and
$82.6 million from principal transactions for the period from August 6, 2004 through February 28, 2005, the period from March 1, 2004 through August 5, 2004 and the
years ended February 29, 2004 and February 28, 2003, respectively. Because the market or fair value of these contracts may vary over time, it is our policy whenever possible to enter
into hedging, (i.e., offsetting) arrangements that fully secure the value of the spread achieved when the transaction is first executed. In certain instances, it may be possible to secure only a
portion of the spread achieved, exposing us to potential adverse changes in the market or fair value of the instrument. We believe, however, that our exposure to adverse changes in the market or fair
value instruments we hold is immaterial because typically we are able to fully hedge the value of the spread achieved and, in many instances in which we are not able to do so, any changes in the
market or fair value of the contractual commitments we enter into as principal generally offset each other.

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Receivables from CustomersProvisions for Doubtful Accounts

Our receivables are generally collateralized with marketable securities. For some customer receivables that are not fully secured, we establish reserves for
doubtful accounts when, in the opinion of management, such reserves are appropriate. We have established reserves of $61.2 million and $65.2 million against receivables from customers as
of February 28, 2005 and February 29, 2004, respectively. Our allowance for doubtful accounts is based upon management's continuing review and evaluation of the factors such as
collateral value, aging and the financial condition of our customers. The allowance is assessed to reflect best estimate of probable losses that have been incurred as of the balance sheet date. Any
changes are included in the current period operating results. We pursue collection of these receivables through various means, including legal action and collection agencies, and generally do not
charge-off any of these receivables. Although these reserves have been adequate historically, the default of a large customer or prolonged period of weakness in global financial markets
could adversely affect the ability of our customers to meet their obligations. We do not establish reserves for unidentified losses, which may be inherent in our customer base.

Fair Values of Derivative Financial Instruments and Securities

As a broker, we enter into transactions involving derivative financial instruments and securities on behalf of our customers. These transactions are carried at
market value or, if market prices are not readily available, fair value. Changes in fair value are recognized immediately in net income. Market values for exchange-traded derivatives are based on
quoted market prices. Fair market values for OTC derivative financial instruments are based on pricing models that are in turn based on observable market data intended to approximate the amounts that
would be received from or paid to a third party in settlement of the contracts. Valuation models include the use of management estimates and current market information. Management is also required to
make assumptions on how the fair value of derivative financial instruments and securities is affected by current market conditions. If management's underlying assumptions for evaluating fair value
prove to be inaccurate, there could be material differences in our consolidated operating results.

Substantially
all of our holdings of securities owned and securities sold, not yet purchased are based on quoted market values or pricing models which are based on observable market
data.

Goodwill

Goodwill is the cost of acquired companies or businesses in excess of the fair value of identifiable net assets as of acquisition date. Prior to
December 1, 2001, we amortized goodwill over a period of 25 years on a straight-line basis. Effective December 1, 2001, we adopted SFAS No. 142, Goodwill and Other Intangible Assets.
Consequently, goodwill is no longer amortized but, instead, is tested at least annually for impairment. We are
required to record an impairment loss if the estimated fair value of an operating segment is less than its estimated net book value. We derive the fair value of each of our operating segments
primarily based on earnings multiples. A prolonged reduction in the earnings of one of our operating segments could result in an impairment charge in our results. We performed our last annual
impairment test during the fourth quarter of fiscal year 2005 and identified no impairment. As of February 28, 2005, the carrying value of our goodwill was $716.6 million.

Identifiable Intangible Assets

Identifiable intangible assets, which consist primarily of customer relationships, and trade names, are amortized over their weighted average economic useful
lives. Customer relationships are amortized on an accelerated basis based upon patterns of usage. These intangible assets are tested for potential impairment whenever events or changes in
circumstances suggest that an asset's carrying value may not be fully recoverable. An impairment loss, calculated as the difference between the estimated fair value

36

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and
the carrying value of the identifiable intangible asset, is recognized if the expected undiscounted cash flows relating to the identifiable intangible asset is less than the corresponding carrying
value. Trade names have been classified as indefinite-lived assets and are not amortized but tested annually for impairment. The valuation of our identifiable intangible assets is dependent upon
assumptions in areas such as growth rates, customer retention and profitability. Changes to these assumptions or a prolonged period of weakness in global financial markets could adversely impact our
businesses and impair the value of our identifiable intangible assets. We performed our last impairment test during the fourth quarter of fiscal year 2005 and identified no impairment. We discontinued
the MacFutures trade name on November 10, 2004 and wrote off the book value of the trade name, which was approximately $0.5 million. As of February 28, 2005, the carrying value of
our identifiable intangibles was $578.7 million.

Use of Estimates

The use of generally accepted accounting principles requires management to make estimates. In addition to the estimates we use in connection with fair value
measurements and the accounting for goodwill and identifiable intangible assets, the use of estimates is also important in determining provisions for potential losses that may arise from litigation
and regulatory proceedings.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (revised),Share-Based
Payment("SFAS 123R"). SFAS 123R requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the
grant-date fair value of the award with the cost to be recognized over the period during which an employee is required to provide service in exchange for the award. We are required to
adopt the provisions of SFAS 123R as of the beginning of the first interim period that begins after June 15, 2005, although earlier adoption is permitted. We are in the process of
determining the impact, if any, of SFAS 123R on our consolidated financial statements.

In
May 2005, the FASB issued SFAS No. 154,Accounting Changes and Error Correctionsa replacement of APB Opinion No. 20 and FASB
Statement No. 3. SFAS No. 154 replaces Accounting Principles Board Opinion No. 20,Accounting Changes, and
SFAS No. 3,Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a
change in accounting principle. This statement applies to all voluntary changes in accounting principle and also applies to changes required by an accounting pronouncement in the unusual instance that
the pronouncement does not include specific transition provisions. The statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15,
2005. We will adopt the provisions of SFAS No. 154 beginning in fiscal year 2007. Management believes that the adoption of the provisions of SFAS No. 154 will not have a material impact
on our current consolidated financial statements.

FORWARD-LOOKING STATEMENTS

This Form 10-K contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of
historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of
operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These
statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe" and other words and terms of similar meaning in connection with any discussion of the
timing or nature of future operating or financial performance or other events.

37

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These
forward-looking statements are based on assumptions that we have made in light of our industry experience and on our perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Form 10-K, you should understand that these statements are
not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based
on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements.
These factors include, among others:



There
may be other factors that may cause our actual results to differ materially from the forward-looking statements.

Because
of these factors, we caution that you should not place undue reliance on any of our forward-looking statements. Further, any forward-looking statement speaks only as of the date
on which it is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risks relate to counterparty, interest rate and exchange rate risk.

Customer and Counterparty Risk

We are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations. These parties may default on their
obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. As a clearing broker, we generally bear the risk of the defaults or misconduct of our customers. In
addition, we have experienced, due to competitive factors, pressure to extend credit and to price more aggressively the credit risks we take. Although we regularly

38

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review
credit exposures to specific customers and counterparties and to specific industries, countries and regions that we believe may present credit concerns, default risk may arise from events or
circumstances that are difficult to detect or foresee. In addition, concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other
institutions, which in turn could adversely affect us.

As
a matter of policy, we continue to upgrade our risk management procedures and systems to improve our ability to monitor actual and projected risk associated with customer positions.
Our Global Risk Management department is responsible for the systematic review of customer exposure in both regulated and nonregulated markets. Our current system provides the ability to project the
impact of market volatility on price movement. Using various stress tests, we quantify potential adverse price movements in order to determine whether such movements would adversely affect the
customer's ability to pay margin. We perform frequent stress tests to our customers' positions, including intra-day trading analysis, daily equity change analysis, concentration risk
analysis, position liquidity analysis and premium seller analysis. Adjustments of margin or collateral requirements are made in anticipation of unusual adverse market developments.

We
have a policy that requires customers to deposit margin in respect of their trading accounts irrespective of the credit rating of the customer in question. This policy also applies to
daily margin calls. As of February 28, 2005, the dollar value of customer margin calls in excess of $500,000 was $18.7 million relating to 13 customer accounts in our Derivatives
Brokerage & Clearing business and margin calls in excess of $100,000 totaled $1.4 million relating to one customer account in our Prime Brokerage/Capital Markets business. The total
amount of margin calls over $50,000 that had been outstanding for more than three days as of February 28, 2005 was $9.7 million in our Derivatives Brokerage & Clearing business
and Prime Brokerage/Capital Markets business. We also have exposure with respect to certain credit line customers and clearing organizations associated with the exchanges of which we are a member. As
of February 28, 2005, our aggregate exposure to margin financing was $44.8 million.

Interest Rate Risk

In the ordinary course of our operations, we have limited our exposure to interest rate risk. Our balance sheet, which reflects a substantial amount of
short-term and highly liquid assets, consists of equally matched assets and liabilities. We generate interest income from the positive spread earned on customer deposits or secured
customer financing transactions, and the basis for the calculation of interest received and paid is entirely matched. This is the case in both rising and falling interest rate environments, although
we have the opportunity to create higher levels of interest income in a rising interest rate environment.

In
the future, we expect to have greater exposure to changes in interest rates. Borrowings under our new senior credit facilities accrue interest at variable rates. Interest rate changes
may therefore impact the amount of our interest payments and our future earnings and cash flows. Conversely, interest rate changes may affect the fair market value of our fixed rate debt, such as the
senior subordinated notes. Assuming we had completed the THL Transactions and applied the proceeds as of February 29, 2004, we would have had variable-rate debt of approximately
$800.0 million. Assuming we had incurred this debt on March 1, 2003, holding other variables constant, including levels of debt, a one percentage point increase in interest rates would
have had an estimated impact on pre-tax earnings and cash flows for the year ended February 29, 2004 of $8.0 million (or $6.5 million after giving effect to our
repayment of $150.0 million of borrowings outstanding under our senior credit facility during the quarter ended February 28, 2005). Although interest expense related to our
variable-rate debt may increase in a rising interest rate environment, we expect the impact to be mitigated in part by increased interest income generated from the investment of customer
balances. We invest these balances on a daily basis in a variety of permissible short-term instruments.

39

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Exchange Rate Risk

We conduct global operations. Our revenues are denominated predominately in U.S. dollars with our most significant non-dollar currency flows being
denominated in Euros and Pounds Sterling. Our expenses are also denominated predominantly in U.S. dollars and to a lesser extent in a variety of local currencies reflecting the location of physical
operations, including in the United Kingdom, Canada, France and Singapore.

Currently,
our general practice is to invest in assets that match the currency in which we expect related liabilities to be paid. Members' equity held in local business units is kept
primarily in local currencies to the extent that members' equity is required to satisfy regulatory and self-imposed
capital requirements. This facilitates our efforts to ensure that capital held in local business units will be able to support the local business irrespective of currency movements. However, this may
adversely affect our reported combined members' equity when expressed in U.S. dollars. The table below shows the approximate effect on members' equity of instantaneous adverse movements in currency
exchange rates of 10% on our major currency exposures at February 28, 2005 against the U.S. dollar.

|                |  | Adverse exchange
rate movement
against the U.S. dollar |   | Approximate decline in
members' equity
(in millions)
|--------------- |  | ------------------------------------------------------ | - | ----------------------------------------------------
|Euro            |  | 10                                                     | % | $                                                   
|Pounds sterling |  | 10                                                     | % |                                                     
|Canadian dollar |  | 10                                                     | % |                                                     

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and related notes are included in Part IV of this Form 10-K, beginning on page F-1.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND                FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Our management evaluated, with the participation of our principal executive and principal financial officer, the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), as of December 31, 2004. Based on their evaluation, our principal executive and principal financial officer concluded that our disclosure controls and procedures
were effective as of February 28, 2005.

There
have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that
occurred during our fourth quarter of 2005, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

None.

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PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors and Executive Officers

The following table sets forth the names and ages as of June 30, 2005 of each executive officer of Refco Group.

|Name               |  | Age |  | Position                                                                                    
|------------------ |  | --- |  | --------------------------------------------------------------------------------------------
|Phillip R. Bennett |  | 56  |  | President, Chief Executive Officer and Chairman                                             
|Joseph J. Murphy   |  | 44  |  | Executive Vice President; President and Chief Executive Officer of Refco Global Futures, LLC
|Gerald M. Sherer   |  | 57  |  | Executive Vice President and Chief Financial Officer                                        
|William M. Sexton  |  | 40  |  | Executive Vice President and Chief Operating Officer                                        
|Santo C. Maggio    |  | 53  |  | Executive Vice President; President and Chief Executive Officer of Refco Securities, LLC    
|Dennis A. Klejna   |  | 58  |  | Executive Vice President and General Counsel                                                

Phillip R. Bennetthas served as President, Chief Executive Officer and Chairman of Refco Group since September 1998. He also
serves as the President of Refco Capital Holdings, LLC and as the President and Chief Executive Officer of New Refco. Mr. Bennett joined Refco Group in 1981 from The Chase Manhattan Bank, where
he held various positions involving credit and commercial lending in New York, Toronto, Brussels and London from 1970 to 1981. Among other positions at Chase, Mr. Bennett served as a member of
its Commodity Lending Department. He is a graduate of Cambridge University, England.

Joseph J. Murphyhas served as President of Refco Global Futures, LLC, one of our subsidiaries, since March 1999. He also serves as
Executive Vice President of Refco Group responsible for global marketing and as President Refco, LLC, our FCM subsidiary. From 1994 to 1999, Mr. Murphy was Executive Managing Director of HSBC
Futures Americas and Cash Securities based in Chicago. Prior to joining HSBC, Mr. Murphy was a Vice President and Producing Manager with Chase Manhattan Futures Corporation in New York. He also
held management positions in the Treasury Department of The Chase Manhattan Bank. Mr. Murphy holds a degree from Providence College located in Providence, Rhode Island. His professional
affiliations include memberships with the CBOT and CME. Mr. Murphy is a member of the Board of Directors and Chairman of the FIA and a member of the Board of Directors and Vice Chairman of The
Clearing Corporation.

Gerald M. Shererhas served as Executive Vice President and Chief Financial Officer of Refco Group since January 2005. From 1997 to
2004, Mr. Sherer held various positions at Deutsche Bank, including Deputy Global Head of Controlling and the Chief Financial Officer of the Investment Bank, and most recently, served as Chief
Financial Officer of the Americas and the Global Head of Internal Controls. Previously, Mr. Sherer was Chief Financial Officer of all U.S. operations at CIBC Woody Gundy in New York from 1995
to 1997. He also served as Senior Vice President of the Finance Division for Goldman Sachs from 1982 to 1995. Mr. Sherer holds a B.S. in Computer Science from Northern Arizona University and an
M.B.A from Fordham University.

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William M. Sextonhas served as Executive Vice President and Chief Operating Officer of Refco Group since August 2004. He joined
Refco Group in April 1999 and has served in various capacities, including as Executive Vice President and Chief Operating Officer of Refco, LLC, our FCM subsidiary, since July 2001. He
is responsible for information technology, operations, accounting and finance, credit, margins and risk for our futures businesses. From 1991 to 1997, Mr. Sexton served in various capacities at
The Chase Manhattan Bank, including the financial controller for the U.S. FCM, institutional sales for marketing derivatives, foreign exchange and treasury products. Mr. Sexton holds a B.S. in
Business Administration from Pace University and an M.B.A. from Fordham University, both with concentrations in finance. He is a member of the NFA. He is also a member of the FIA, the NYMEX FCM
Advisory Committee, the FIA Operations and Technology Divisions and is a member of the Board of Directors of Eurex U.S.

Santo C. Maggiohas served as Executive Vice President of Refco Group and President and Chief Executive Officer of Refco Securities, LLC,
our NASD broker-dealer subsidiary, since 1991. Mr. Maggio has also served as President of Refco Capital Markets, Ltd., one of our subsidiaries, since 2001. He joined Refco Group in 1985.
From 1976 to 1982, Mr. Maggio was employed as Vice President of Inland Consultants Corporation and from 1982 to 1985 as Vice President for McMahan Securities. Mr. Maggio holds an
accounting degree from Hunter College, City University of New York.

Dennis A. Klejnahas served as Executive Vice President and General Counsel of Refco Group since joining Refco Group in
January 1999. Prior to joining Refco Group, Mr. Klejna was in private law practice in the Washington, D.C. office of Vinson & Elkins, L.L.P. from 1996 to 1998, where his practice
was focused on derivatives trading regulation. He was Director of the Division of Enforcement at the CFTC from 1983 to 1995. Mr. Klejna is a member of the Committee on Futures Regulation of the
Bar Association of the City of New York, the New York State Bar Association Committee on Futures and Derivatives Regulation and the Committee on the Regulation of Futures and Derivative Instruments of
the American Bar Association. He serves on the Executive Committee of the Law and Compliance Division of the FIA and the Board of Editors of the Futures and Derivatives Law Report. As an Adjunct
Professor at the Georgetown University Law Center from 1998 to 2000, he taught futures and derivatives regulation. Mr. Klejna is a graduate of Fordham College and Fordham Law School and served
as a Captain in the U.S. Army Judge Advocate General's Corps.

The
following table sets forth the names and ages of the members of the board of managers of our sole member, New Refco.

Name

AgeLeo R. Breitman

64Nathan Gantcher

64David V. Harkins

64Scott L. Jaeckel

34Thomas H. Lee

61Ronald L. O'Kelley

60Scott A. Schoen

46


Leo R. Breitmanwas Chairman and Chief Executive Officer of Fleet BankMassachusetts from 1991 through
March 2004 and also served as Senior Lending Officer of FleetBoston Financial Corporation from 2002 through March 2004. He retired in May 2004. From 1996 to 2002,
Mr. Breitman was Managing Director of the Commercial Banking Division of FleetBoston Financial Corporation. Mr. Bretiman is a director of American Biltrite Inc. and Metris
Companies, Inc. Mr. Breitman holds a B.B.A in Finance from The George Washington University and an M.B.A in Finance from Boston University.

42

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Nathan Gantcherwas Co-chairman, President and Chief Executive Officer of Alpha Investment Management L.L.C. from 2002 until
August 2004 when the firm was sold. Prior to joining Alpha Investment Management, Mr. Gantcher was a private investor from 1999 to 2001. Mr. Gantcher served as Vice Chairman of
CIBC Oppenheimer Corp. from 1997 to 1999. Prior to becoming Vice Chairman of CIBC Oppenheimer Corp., Mr. Gantcher served as Co-Chief Executive Officer of Oppenheimer &
Co., Inc. Mr. Gantcher currently serves as a director of Mack-Cali Realty Corporation and is a member of its audit, nominating and corporate governance and executive
committees. He serves as a member of the board of trustees of CharterMac and is a member of its nominating and governance, compensation and capital markets committees. He also has served as a member
of the board of directors of NDS Group plc since January 2004 and is a member of its audit and compensation committees. Mr. Gantcher currently serves as a member of each of the
Council of Foreign Relations and the Overseers Committee of the Columbia University Graduate School of Business. Mr. Gantcher received his A.B. in economics and biology from Tufts University
and his M.B.A. from the Columbia University Graduate School of Business.

David V. Harkinsis Vice Chairman and Managing Director of Private Equity Funds of Thomas H. Lee Partners, L.P. In the past five years,
Mr. Harkins has also served as President of Thomas H. Lee Partners, L.P. Mr. Harkins served briefly as the interim Chief Executive Officer of Conseco, Inc., an insurance and
financial services company, from April 2000 until June 2000. Mr. Harkins is also a director of Nortek, Inc., Metris Companies, Inc., National Dentex Corporation and
Syratech Corporation. Mr. Harkins is a graduate of the U.S. Military Academy.

Scott L. Jaeckelis a Managing Director of Thomas H. Lee Partners, L.P. He served as a Vice President of Thomas H. Lee Partners, L.P. from
2001 until December 2004. Previously, Mr. Jaeckel worked at Thomas H. Lee Company from 1994 to 1996, rejoining in 1998 as an Associate. From 1992 to 1994, Mr. Jaeckel worked at
Morgan Stanley & Co. Incorporated in the Corporate Finance Department. He currently serves as a director of Paramax Capital Group and Warner Music Group. He holds a B.A. in Economics and
Mathematics from the University of Virginia and an M.B.A. from Harvard Business School.

Thomas H. Leefounded the Thomas H. Lee Company, the predecessor of Thomas H. Lee Partners, L.P., in 1974 and since that time has served
as its Chairman and CEO. From 1966 through 1974, Mr. Lee was with First National Bank of Boston where he directed the bank's high technology lending group from 1968 to 1974 and became a Vice
President in 1973. Prior to 1966, Mr. Lee was a securities analyst in the institutional research department of L.F. Rothschild in New York. Mr. Lee serves or has served as a Director of
numerous public and private companies in which THL and its affiliates have invested, including Finlay Enterprises, Inc., The Smith & Wollensky Restaurant Group, Inc., General
Nutrition Companies, Metris Companies, Inc., Playtex Products, Inc., Snapple Beverage Corp., Vertis Holdings, Inc., Warner Music Group, and Wyndham International, Inc. In
addition, Mr. Lee is a Member of the JP Morgan National Advisory Board. Mr. Lee is currently a Trustee of Lincoln Center for the Performing Arts, The Museum of Modern Art, NYU Medical
Center, The Rockefeller University, and Whitney Museum of American Art among other civic and charitable organizations. He also serves on the Executive Committee for Harvard University's Committee on
University Resources. Mr. Lee is a 1965 graduate of Harvard College.

Ronald L. O'Kelleyhas been Chairman and Chief Executive Officer of Atlantic Coast Venture Investments Inc., a private investment
company, since 2002. Mr. O'Kelley served as Executive Vice President, Chief Financial Officer and Treasurer of State Street Corporation from 1995 to 2002, as Chief Financial Officer at Douglas
Aircraft Company from 1991 to 1995 and as Chief Financial Officer at Rolls Royce Inc. from 1983 to 1991. He also served in senior financial positions at Citicorp from 1975 to 1983 and at Texas
Instruments Incorporated from 1969 to 1975. Mr. O'Kelley is a director of U.S. Shipping Partners L.P. and Selective Insurance Group, Inc. Mr. O'Kelley holds an A.B. in Mathematics
from Duke University and an M.B.A. from Carnegie Mellon University.

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Scott A. Schoenis a Co-President of Thomas H. Lee Partners, L.P., which he joined in 1986. He served as a Managing Director
of Thomas H. Lee Partners, L.P. from 1992 to 2004 and a Vice President from 1988 to 1992. Prior to joining the firm, Mr. Schoen was in the Private Finance Department of Goldman, Sachs &
Co. Mr. Schoen is a director of AXIS Capital Holdings Limited, Affordable Residential Communities, Inc., TransWestern Publishing, L.P., United Industries Corporation, Wyndham
International and Simmons Company. Mr. Schoen is a Vice Chairman of the Board and a member of the Executive Committee of the United Way of Massachusetts Bay. He is also a member of the Advisory
Board of the Yale School of Management. Mr. Schoen is a 1980 graduate of Yale College and holds an M.B.A. from Harvard Business School and a J.D. from Harvard Law School.

We
do not have a board of managers and are member-managed by our sole member, New Refco.

Except
as set forth in "Certain Relationships and Related TransactionsSecurityholders Agreement," there are no arrangements or understandings between any of our
members of executive officers and any other person pursuant to which that person was elected or appointed to his position.

Audit Committee

The Audit Committee of the Board of Managers of New Refco is comprised of Messrs. O'Kelley, Gantcher and Breitman, and performs the functions of an audit
committee with respect to us. The Audit Committee makes recommendations concerning the engagement of independent public accountants, reviews with the independent public accountants the scope and
results of the audit engagement, approves professional services provided by the independent public accountants, reviews the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of our internal accounting controls. We have determined that each of Messrs. Breitman, Gantcher and O'Kelley satisfies standards for
independence set forth in our policies, is independent in accordance with the applicable rules of the Sarbanes-Oxley Act of 2002, and meets
the criteria for independence under the Exchange Act. In addition, Mr. O'Kelley, the chairman of the audit committee, is an "audit committee financial expert," within the meaning of the
Exchange Act.

Code of Ethics

In connection with the initial public offering, Refco Inc. expects to adopt a code of ethics for our executive and senior officers and a code of business conduct
applicable to all of our employees to address the elements of financial reporting and disclosure as defined in Item 406 of Regulation S-K under the Securities Exchange Act of 1934.

ITEM 11.    EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation awarded to, earned by or paid by Refco Group to Refco Group's chief executive officer and
each of Refco Group's four most highly compensated executive officers during each of the last three fiscal years. The bonuses set forth below include amounts earned in the year shown but paid in the
subsequent year.

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Summary Compensation Table

|                                                                                                              |  |                |  | Annual Compensation           |  |                               |  | Long-Term
Compensation  |           |            
|------------------------------------------------------------------------------------------------------------- |  | -------------- |  | ----------------------------- |  | ----------------------------- |  | ----------------------- | --------- | -----------
|
|Phillip R. Bennett
President, Chief Executive
Officer and Chairman                                            |  | 2005
2004
2003 |  | 1,266,667
1,500,000
1,500,000 |  | 2,007,438
2,469,000
2,196,000 |  | 461,671
444,840
500,692 | (1)(1)(1) | 250,800


|Joseph J. Murphy
Executive Vice President;
President and Chief
Executive Officer of
Refco Global Futures, LLC |  | 2005
2004
2003 |  | 1,000,000
1,000,000
1,000,000 |  | 1,475,551
1,920,000
1,640,000 |  | 

                   |           | 146,300


|Gerald M. Sherer(3)
Executive Vice President
and Chief Financial Officer                                      |  | 2005
2004
2003 |  | 166,667

                   |  | 

                         |  | 

                   |           | 543,000


|William M. Sexton
Executive Vice President
and Chief Operating Officer                                        |  | 2005
2004
2003 |  | 675,000
500,000
500,000       |  | 737,775
960,000
820,000       |  | 

                   |           | 146,300


|Santo C. Maggio
Executive Vice President;
President and Chief
Executive Officer of
Refco Securities, LLC      |  | 2005
2004
2003 |  | 602,083
500,000
500,000       |  | 943,664
1,252,000
1,084,000   |  | 

                   |           | 146,300


|Robert C. Trosten(4)
Executive Vice President
and Chief Financial Officer                                     |  | 2005
2004
2003 |  | 583,335
1,000,000
1,000,000   |  | 1,629,967
2,139,000
1,838,000 |  | 

                   |           | 

      

---

In
connection with the THL Transactions, New Refco granted Class B Units to members of our management. See "Certain Relationships and Related TransactionsRestricted
Unit Agreements" for a description of the Class B Units.

There
were no option grants to the executive officers listed in the table above in fiscal 2005.

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Employment Agreements

Phillip Bennett Employment Agreement.On June 8, 2004, Phillip Bennett entered into an Executive Employment and
Non-Competition Agreement with Refco Group that became effective on the date of the closing of the THL Transactions. Under the agreement, Mr. Bennett serves as Refco Group's
Chairman, President and Chief Executive Officer and reports directly to Refco Group's Board of Managers for an initial term ending on February 28, 2007. After such date, Mr. Bennett will
continue to serve with an automatic renewal thereafter for additional one year terms, unless either party terminates the agreement in accordance with its provisions.

Under
the terms of the agreement, Refco Group will pay Mr. Bennett an annual base salary of $1,100,000, and he will be eligible to receive an annual bonus as determined in
accordance with Refco Group's Management Bonus Pool Plan and will be able to participate in equity-based compensation plans, including through the grant of Class B Units pursuant to a
Restricted Unit Agreement with New Refco. In certain circumstances, Mr. Bennett's termination will entitle him to a severance package including two years of his base salary and annual bonus at
the time of termination. In addition, Mr. Bennett has agreed that during the term of the agreement and for a two year period thereafter (but in no event, less than five years), he will not,
directly or indirectly (i) compete with us, (ii) solicit or hire any of our officers, managers, consultants or executives or (iii) solicit any of our customers or suppliers or
potential or prospective customers or suppliers of whom he was aware prior to or during the term of his employment.

Executive Employment Agreements.In connection with the THL Transactions, Joseph Murphy, William Sexton, Santo Maggio and
Dennis Klejna entered into Executive Employment and Non-Competition Agreements with Refco Group. In December 2004, Gerald Sherer entered into an Executive Employment and
Non-Competition Agreement with Refco Group. Each of these agreements has substantially identical terms, except for the applicable positions and annual base salary amounts for each employee
as described below. In addition, Mr. Sherer's agreement provides that if after February 28, 2006 the aggregate value of any Class B Units granted to him and any other equity
incentive issued to him is less than $3.5 million, we will pay him the difference in cash. The same provision applies if we terminate Mr. Sherer without cause prior to
February 28, 2006. Under all the agreements, each employee is eligible for an annual bonus to be determined in accordance with the Senior Management Bonus Pool Plan adopted by Refco Group and
will be able to participate in equity-based compensation plans, including through the grant of Class B Units pursuant to Restricted Unit Agreements entered into with New Refco. The position and
initial base salary for each of the employees under the agreements is as listed below:

|Name           |  | Position                                                                                     |  | Base Salary
|-------------- |  | -------------------------------------------------------------------------------------------- |  | -----------
|Joseph Murphy  |  | Executive Vice President; President and Chief Executive Officer of Refco Global Futures, LLC |  | $          
|Gerald Sherer  |  | Executive Vice President and Chief Financial Officer                                         |  |            
|William Sexton |  | Executive Vice President and Chief Operating Officer                                         |  |            
|Santo Maggio   |  | Executive Vice President; President and Chief Executive Officer of Refco Securities, LLC     |  |            
|Dennis Klejna  |  | Executive Vice President and General Counsel                                                 |  |            

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Each employee will be entitled to a severance package in certain circumstances, which shall entitle such employee to 18 months of his base salary and annual bonus as of the date
of termination. In addition, each employee will agree that during the term of the agreement and for an 18-month period thereafter, such employee will not, directly or indirectly
(i) compete with Refco Group, (ii) solicit or hire any of Refco Group's officers, managers, consultants or executives or (iii) solicit any of Refco Group's customers or suppliers
or potential or prospective customers or suppliers of whom he was aware prior to or during the term of his employment.

Senior Management Bonus Pool Plan

The Senior Management Bonus Pool Plan enables participating senior managers to receive bonuses based on Refco Group's performance. If Refco Group's actual EBITDA
(subject to specified adjustments) for a fiscal year is between 95% and 105% of the budgeted EBITDA for the year, the bonus pool amount to be divided among all participating senior managers generally
will be the greater of 100% of the aggregate base compensation of such senior managers or, subject to the cap described below, 2.1% of our actual EBITDA (subject to specified adjustments). The bonus
pool amount will be adjusted if actual EBITDA (subject to specified adjustments) is more than 105% or less than 95% of budgeted EBITDA. The aggregate bonus pool amount to be divided among all
participating senior managers in any event cannot be greater than 150% of the aggregate base compensation of such senior managers. For purposes of calculating the bonus pool amount, EBITDA is our
consolidated earnings before income taxes, depreciation and amortization. EBITDA is then adjusted to take into account the estimated amount of the bonus pool and add back the management fees payable
pursuant to the Management Agreement with THL Managers V, LLC. See "Certain Relationships and Related TransactionsManagement Agreement."

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Refco Finance is a wholly owned subsidiary of Refco Group Ltd., LLC, a limited liability company wholly owned by New Refco, a limited liability company
whose members include THL Refco Acquisition Partners, other affiliates and co-investors of Thomas H. Lee Partners, L.P., Refco Group Holdings, Inc., a subchapter S corporation that is wholly
owned by Phillip R. Bennett, The Phillip R. Bennett Three Year Annuity Trust and members of our management team.

The
following table sets forth certain information regarding the beneficial ownership of New Refco, which owns all of our membership interests, by: (i) each person or entity who
owns any class of its outstanding voting securities and (ii) each person who is a member of its board of managers, each person who is an executive officer and such members of its board of
managers and executive officers as a group. New Refco has authorized 101.0 million Class A Units, 100.0 million of which are outstanding. New Refco has also authorized
7.0 million Class B Units, approximately 5.9 million of which are outstanding. The Class B Units are non-voting and have been issued under the restricted unit agreements
that New Refco entered into with certain members of our management, which began to vest on February 28, 2005. See "Certain Relationships and Related TransactionsRestricted Unit
Agreements." To our knowledge, each such member has sole voting and investment power as to the units shown unless otherwise noted. Beneficial ownership of the units listed in the table has been
determined in accordance with the applicable rules and regulations promulgated under the Exchange

47

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Act.
Unless otherwise indicated, the address for each holder listed below is c/o Refco Group Ltd., LLC, One World Financial Center, 200 Liberty Street, Tower A, New York, New York
10281.

|                                                                                                              |  | Securities Beneficially Owned | 
|------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | 
|
|
|Principal Securityholders:                                                                                    |  |                               | 
|Thomas H. Lee Partners and affiliates(1)
c/o Thomas H. Lee Partners, L.P.
100 Federal Street
Boston, MA 02110 |  | 56,875.32                     | 
|Managers and Executive Officers:                                                                              |  |                               | 
|Phillip R. Bennett(2)                                                                                         |  | 42,905.95                     | 
|Joseph J. Murphy                                                                                              |  | 56.09                         | 
|Gerald M. Sherer                                                                                              |  |                              | 
|William M. Sexton                                                                                             |  | 112.17                        | 
|Santo C. Maggio                                                                                               |  | 28.04                         | 
|Dennis A. Klejna                                                                                              |  | 22.43                         | 
|Leo R. Breitman                                                                                               |  |                              | 
|Nathan Gantcher                                                                                               |  |                              | 
|David V. Harkins(3)                                                                                           |  |                              | 
|Scott L. Jaeckel(3)                                                                                           |  |                              | 
|Thomas H. Lee(3)                                                                                              |  |                              | 
|Ronald L. O'Kelley                                                                                            |  |                              | 
|Scott A. Schoen(3)                                                                                            |  |                              | 
|All board of managers members and executive officers
as a group (13 persons)                                  |  | 43,124.68                     | 

---

48

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All
units included in the above presentation have been adjusted to reflect the Unit Split.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Equity Purchase and Contribution Agreement

On June 8, 2004, THL Refco Acquisition Partners entered into an equity purchase and merger agreement with Refco Group, Refco Group Holdings, Inc.
and other parties named therein, which was amended on July 9, 2004 to, among other things, add New Refco as a party and modify the structure of the transactions contemplated by the agreement.
The Purchase Agreement provided for a series of transactions that resulted in New Refco becoming Refco Group's parent and THL Refco Acquisition Partners and its affiliates and co-investors
owning an approximate 57% interest in New Refco, based on a valuation of New Refco of approximately $2.3 billion.

Upon
consummation of the transactions contemplated by the Purchase Agreement, the following transactions occurred:



49

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Upon
consummation of the THL Transactions, THL Refco Acquisition Partners and its affiliates and co-investors owned 57% of the equity interests of New Refco, and Phillip R.
Bennett,
our President and Chief Executive Officer, through his wholly-owned subsidiary, Refco Group Holdings, Inc., owned approximately 43% of the equity interests of New Refco.

In
connection with the THL Transactions, Refco Group Holdings, Inc. agreed to reimburse THL Refco Acquisition Partners and its assignees for certain tax benefits received by Refco
Group Holdings, Inc. related to the acquisition of membership interests in Refco Group held by BAWAG Overseas, Inc. In March 2005, Refco Group Holdings, Inc. paid THL Refco
Acquisition Partners approximately $2.2 million pursuant to the agreement. No further payments will accrue under the agreement upon completion of the initial public offering.

Limited Liability Company Agreement of New Refco

The amended and restated limited liability company agreement of New Refco authorized New Refco to issue Class A and Class B units. The
Class A and Class B units generally have identical rights and preferences, except that the Class B Units are nonvoting and have different rights as to certain distributions. A
board of managers has the exclusive authority to manage and control New Refco's business and affairs. The board of managers' composition is determined in accordance with the provisions of the
securityholders agreement described below.

Securityholders Agreement

Pursuant to the securityholders agreement entered into in connection with the THL Transactions, units of New Refco that are beneficially owned by Refco Group
Holdings, Inc., THL Refco Acquisition Partners or any of its affiliates or any limited partners of them so long as THL Refco Acquisition Partners or any of its affiliates maintains voting
control over the units held, (collectively, the "THL Holders"), the executive investors and certain of New Refco's other employees and employees of New Refco's subsidiaries, which we refer to as
employees, are subject to restrictions on transfer, as well as the other provisions described below. When we refer to "units" of New Refco in the following discussion, such reference includes New
Refco's common stock following a change in corporate form, whether in preparation for an initial public offering or otherwise.

The
securityholders agreement provides that the THL Holders, Refco Group Holdings, Inc., the executive investors, employees and all other parties to the agreement will vote all of
their shares to

50

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elect
and continue in office New Refco's board of managers, initially consisting of eight managers composed of:



The
board of managers may be increased to nine and the THL Holders will be entitled to designate an additional manager (for a total of five managers designated by the THL Holders) if New
Refco fails to meet specified yearly performance requirements.

The
securityholders agreement also provides:



It
is expected that Securityholders Agreement will be amended and restated in connection with the initial public offering to provide for a voting agreement with respect to, among other
things, Refco Inc.'s board of directors, tag along rights and registration rights.

Management Agreement

Pursuant to the management agreement entered into in connection with the THL Transactions, THL Managers V, LLC renders to New Refco and each of its subsidiaries
advisory and consulting services. In consideration of those services, either New Refco or Refco Group will pay to THL Managers V, LLC semi-annually, an aggregate per annummanagement fee equal to the
greater of:



New
Refco also paid THL Managers V, LLC at the closing of the THL Transactions a transaction advisory fee of $30.0 million.

New
Refco also agreed to indemnify THL Managers V, LLC and its affiliates from and against all losses, claims, damages and liabilities arising out of or related to the performance by THL
Managers V, LLC of the services pursuant to the management agreement. Upon the consummation of the initial public offering, THL Managers V, LLC intends to terminate the agreement pursuant to its
terms, which will require New Refco to make a final payment to THL Managers V, LLC.

51

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Restricted Unit Agreements

In connection with the THL Transactions, members of senior management were granted Class B Units of New Refco pursuant to restricted unit agreements
entered into on the closing date of the THL Transactions. Phillip Bennett, Joseph Murphy, William Sexton, Santo Maggio, Robert Trosten and Dennis Klejna were granted approximately 1,203,365, 701,963,
701,963, 701,963 and 350,981 Class B Units, respectively. Upon Mr. Trosten's resignation, his Class B Units were forfeited and returned to New Refco.

On
October 31, 2004, New Refco declared a 202,551.721-for-one split of its Class A and Class B Units (the "Unit Split"). New Refco also
granted an aggregate of 1,818,655.1 Class B Units to certain employees of Refco Group and its subsidiaries. In November 2004, New Refco granted an aggregate of 60,000 Class B
Units to Messrs. Breitman, Gantcher and O'Kelley who are members of its board of managers. On December 6, 2004, New Refco granted 690,000 Class B Units to Gerald Sherer, our
Executive Vice President and Chief Financial Officer.

The
Class B Units granted to management and employees are subject to vesting requirements under restricted unit agreements as follows:



The
Class B Units granted to the members of New Refco's board of managers vest ratably on each of February 28, 2005, February 28, 2006, February 28, 2007 and
February 29, 2008.

Vesting
of all units is subject to acceleration upon a change of control. Upon the termination of a holder, unvested Class B Units are forfeited to New Refco and vested
Class B Units may be repurchased by New Refco at fair market value.

In
connection with the formation of Refco Inc., holders of Class B Units will contribute their Class B Units to Refco Inc. in exchange for the number of
shares of its common stock that its Board of Directors determines in good faith to have a fair value at least equal to the fair value of the Class B Units being exchanged. Following the
exchange, the current vesting schedule will continue to apply to the shares of common stock received in the exchange.

Escrow Agreement

Pursuant to the escrow agreement entered into in connection with the THL Transactions, New Refco and THL Refco Acquisition Partners delivered approximately
$36.4 million of the purchase price at the closing to HSBC Bank USA, as escrow agent, to satisfy any earn-out amounts that are to be paid by New Refco after the closing of the THL
Transactions. The escrowed funds were separated into seven separate escrow accounts, each representing a separate earn-out amount.

If
an earn-out payment is due by New Refco, the escrow agent will release a portion of the funds from the earn-out account designated on written instructions
given by New Refco's chief executive officer. If the escrowed amount in a given earn-out account exceeds the amount of all obligations with respect to a particular earn-out
account, then the escrow agent will release the amount of any excess to Refco Group Holdings, Inc. upon joint written instructions signed by the chief executive officer, THL Refco Acquisition
Partners and Refco Group Holdings, Inc. If the earn-out amount to be distributed by

52

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New
Refco exceeds the escrowed amount in the designated earn-out account, then Refco Group Holdings, Inc. will be liable for the deficiency.

In
November 2004, pursuant to the procedures set forth in the escrow agreement, approximately $22.2 million of escrowed funds were paid to Refco Group with respect to
MacFutures Ltd. The balance of the $25.0 million originally designated for the MacFutures escrow account was remitted to Refco Group Holdings, Inc. No other amounts have been paid
under the escrow agreement.

Management Investment

In connection with the THL Transactions, Phillip Bennett, through his continuing ownership interest in Refco Group Holdings, Inc., rolled over an
approximate $382.5 million equity investment into the common equity interests of New Refco. Messrs. Sexton, Murphy, Maggio and Klejna made investments of $1.0 million, $500,000,
$250,000 and $200,000, respectively, in the common equity interests of New Refco in connection with the THL Transactions.

Profit Sharing Agreement

Prior to the consummation of the THL Transactions, Refco Group Holdings, Inc., which is wholly owned by Phillip Bennett, our President and Chief Executive
Officer who beneficially owns an approximate 43% interest in New Refco through Refco Group Holdings, Inc. and The Phillip R. Bennett Three Year Annuity Trust, was part of a profit sharing
agreement with Joseph J. Murphy, our Executive Vice President and the President and Chief Executive Officer of Refco Global Futures, LLC; William M. Sexton, our Executive Vice President and Chief
Operating Officer; Santo C. Maggio, our Executive Vice President and Chief Executive Officer of Refco Securities, LLC; and Dennis A. Klejna, our Executive Vice President and General Counsel. Upon
consummation of the THL Transactions, Refco Group Holdings, Inc. acquired the interests in the profit sharing agreement held by Messrs. Murphy, Sexton, Maggio and Klejna for
approximately $13.7 million, $9.0 million, $8.4 million and $6.5 million, respectively. Refco Group Holdings, Inc. paid Messrs. Murphy, Sexton, Maggio and
Klejna approximately $9.5 million, $7.0 million, $6.0 million and $6.5 million, respectively, on the closing date of the THL Transactions. The outstanding amounts due to
Messrs. Murphy, Sexton and Maggio are payable in equal installments from Refco Group Holdings, Inc. on December 31, 2005 and December 31, 2006. These payments will be
accelerated upon the consummation of the initial public offering.

Currenex Fees

Through a joint venture with Putnam Investments, Thomas H. Lee Partners, L.P. has an indirect ownership interest in Currenex, Inc., which is a technology
firm that has created an electronic platform for trading currencies. We paid fees of $1.7 million and $0.3 million for the years ended February 28, 2005 and February 29,
2004, respectively, to Currenex in connection with the use of its platform.

53

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ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

Aggregate fees were billed to us by our principal accountants, Grant Thornton LLP, for audit services related to the two most recent fiscal years and for other
professional services billed in the most recent two fiscal years were as follows:

2004

2005Audit Fees

$
1,351,342

$
6,683,232Audit-Related Fees


23,221


38,818Tax Fees


11,700


21,245Total

$
1,386,263

$
6,743,295


Audit
services for 2005 included the audit of our annual financial statements, review of interim financial statements, a re-audit of our 2002 financial statements and services provided
in connection with securities offerings, including comfort letters and consents related to SEC filings.

Audit
services are assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. These services include audits of
certain subsidiaries and due diligence related to acquisitions.

Tax
services consisted of preparation and consultations with respect to certain of our foreign subsidiaries' tax returns.

54

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PART IV

ITEM 15.    EXHIBITS and FINANCIAL STATEMENT SCHEDULES



|Exhibit |  | Name of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1     |  | Certificate of Formation of Refco Group Ltd., LLC.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.2     |  | Amended and Restated Limited Liability Company Agreement of Refco Group Ltd., LLC.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.3     |  | Certificate of Incorporation of Refco Finance Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.4     |  | By-laws of Refco Finance Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.1     |  | Indenture, dated as of August 5, 2004, among Refco Group Ltd., LLC, Refco Finance Inc. and Wells Fargo Bank, National Association, as trustee.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.2     |  | First Supplemental Indenture, dated as of August 5, 2004, among Refco Group Ltd., LLC, Refco Finance Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as trustee.(3)                                                                                                                                                                                                                                                                                                                                                                        
|4.3     |  | Registration Rights Agreement, dated as of August 5, 2004, among Refco Finance Holdings LLC, Refco Finance Inc. and Credit Suisse First Boston LLC, Banc of America Securities LLC and Deutsche Bank Securities Inc.(1)                                                                                                                                                                                                                                                                                                                                                              
|4.4     |  | Securityholders Agreement, dated as of August 5, 2004, among New Refco Group Ltd., LLC, Refco Group Holdings, Inc., THL Refco Acquisition Partners and certain other Affiliates of Thomas H. Lee Partners, L.P. the Limited Partners or
Affiliates of Limited Partners, the Executive Investors and the Employees party thereto.(4)                                                                                                                                                                                                                                                  
|10.1    |  | Equity Purchase and Merger Agreement, dated as of June 8, 2004, among Refco Group Ltd., LLC, Refco Group Holdings, Inc., THL Refco Acquisition Partners and Refco Merger LLC.(1)                                                                                                                                                                                                                                                                                                                                                                                                     
|10.2    |  | Executive Employment and Non-Competition Agreement, dated as of June 8, 2004, by and between Refco Group Ltd., LLC and Phillip R. Bennett.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.3    |  | First Amendment to Equity Purchase and Merger Agreement, dated as of July 9, 2004, among Refco Group Ltd., LLC, Refco Group Holdings, Inc., THL Refco Acquisition Partners, Refco Merger LLC and New Refco Group Ltd., LLC.(4)                                                                                                                                                                                                                                                                                                                                                       
|10.4    |  | Executive Employment and Non-Competition Agreement, dated as of June 21, 2004, by and between Refco Group Ltd., LLC and Joseph Murphy.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.5    |  | Executive Employment and Non-Competition Agreement, dated as of July 30, 2004, by and between Refco Group Ltd., LLC and William M. Sexton.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.6    |  | Executive Employment and Non-Competition Agreement, dated as of July 30, 2004, by and between Refco Group Ltd., LLC and Santo Maggio.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.7    |  | Executive Employment and Non-Competition Agreement, dated as of July 30, 2004, by and between Refco Group Ltd., LLC and Dennis Klejna.(5)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.8    |  | Credit Agreement, dated as of August 5, 2004, among Refco Finance Holdings LLC, New Refco Group Ltd., LLC, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, the other Lenders party thereto, Banc of America
Securities LLC, Credit Suisse First Boston, acting through its Cayman Islands Branch, and Deutsche Bank Securities Inc., as Co-Lead Arrangers and Joint Book Running Managers, Credit Suisse First Boston, acting through its Cayman Islands Branch, as
Syndication Agent, and Deutsche Bank Securities Inc., as Documentation Agent.(1)
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

55

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|10.9  |  | Assumption Agreement, dated as of August 5, 2004, made by Refco Group Ltd., LLC, in favor of Bank of America, N.A., as administrative agent.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10 |  | Security Agreement, dated as of August 5, 2004, made by Refco Finance Holdings LLC, New Refco Group Ltd., LLC and the Additional Grantors to Bank of America, N.A., as administrative agent.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.11 |  | Security Agreement Supplement, dated August 5, 2004, made by Refco Group Ltd., LLC and Guarantors party thereto to Bank of America, N.A., as administrative agent.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.12 |  | Parent Guaranty, dated as of August 5, 2004, made by New Refco Group Ltd., LLC in favor of the Secured Parties named in the Credit Agreement, dated as of August 5, 2004.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.13 |  | Subsidiary Guaranty, dated as of August 5, 2004, made by the Guarantors in favor of the Secured Parties named in the Credit Agreement, dated as of August 5, 2004.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.14 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and Phillip R. Bennett.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.15 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and Joseph Murphy.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.16 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and William M. Sexton.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.17 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and Santo C. Maggio.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.18 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and Dennis A. Klejna.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.19 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd., LLC and Robert C. Trosten.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.20 |  | Management Agreement, dated as of August 5, 2004, by and between New Refco Group Ltd., LLC, Refco Group Ltd., LLC and THL Managers V, LLC.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.21 |  | Escrow Agreement, dated August 5, 2004, among New Refco Group Ltd., LLC, Refco Group Holdings, Inc., THL Refco Acquisition Partners and HSBC Bank USA, National Association.(6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.22 |  | Restricted Unit Agreement, dated as of November 10, 2004, between New Refco Group Ltd., LLC and Leo R. Breitman.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.23 |  | Restricted Unit Agreement, dated as of November 10, 2004, between New Refco Group Ltd., LLC and Ronald O' Kelley.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.24 |  | Restricted Unit Agreement, dated as of November 19, 2004, between New Refco Group Ltd., LLC and Nathan Gantcher.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.25 |  | Executive Employment and Non-Competition Agreement, dated as of December 6, 2004, by and between Refco Group Ltd., LLC and Gerald M. Sherer.(6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.26 |  | Restricted Unit Agreement, dated as of December 6, 2004, between New Refco Group Ltd., LLC and Gerald M. Sherer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.27 |  | Amendment, dated as of March 15, 2005, to the Credit Agreement, dated as of August 5, 2004, among Refco Group Ltd., LLC (successor by merger to Refco Finance Holdings LLC), as borrower, New Refco Group Ltd., LLC, each lender from time to
time party thereto, Banc of America Securities LLC, Credit Suisse First Boston, acting through its Cayman Islands branch, and Deutsche Bank Securities Inc., as co-lead arrangers and joint book running managers, Credit Suisse First Boston, acting
through its Cayman Islands Branch, as Syndication Agent, Deutsche Bank Securities Inc., as Documentation Agent, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.(6)
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

56

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|10.28 |  | Form of New Refco Group Ltd., LLC Restricted Unit Agreement.(6)                                                       
|----- |  | ----------------------------------------------------------------------------------------------------------------------
|10.29 |  | Purchase and Sale Agreement, dated as of June 21, 2005, between Refco Group Ltd., LLC and Cargill, Incorporated.      
|12.1  |  | Statement re Computation of Ratio of Earnings to Fixed Charges.                                                       
|21.1  |  | List of Subsidiaries.(4)                                                                                              
|31.1  |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                   
|31.2  |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                   
|32.1  |  | Certification of Chief Executive Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
|32.2  |  | Certification of Chief Financial Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

---

57

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

| |  | REFCO GROUP LTD., LLC
(REGISTRANT)
| |  | ----------------------------------
| |  | By:                               
| |  | Date: June 28, 2005               

Pursuant
to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.

|     |  | Signature                                             |  | Title                                                                                             |  | Date         
|---- |  | ----------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- |  | -------------
|     |  |                                                       |  |                                                                                                   |  |              
|     |  | /s/NEW REFCO GROUP LTD., LLCNew Refco Group Ltd., LLC |  | Sole Member                                                                                       |  | June 28, 2005
|*By: |  | /s/PHILLIP R. BENNETTPhillip R. Bennett               |  | President, Chief Executive Officer and Chairman                                                   |  | June 28, 2005
|     |  | /s/PHILLIP R. BENNETTPhillip R. Bennett               |  | President and Chief Executive Officer (Principal Executive Officer)                               |  | June 28, 2005
|     |  | /s/GERALD M. SHERERGerald M. Sherer                   |  | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |  | June 30, 2005

58

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Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| |  | REFCO FINANCE INC.
(REGISTRANT)
| |  | -------------------------------
| |  | By:                            
| |  | Date: June 28, 2005            

Pursuant
to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.

|Signature                               |  | Title                                                                              |  | Date         
|--------------------------------------- |  | ---------------------------------------------------------------------------------- |  | -------------
|                                        |  |                                                                                    |  |              
|/s/PHILLIP R. BENNETTPhillip R. Bennett |  | President, Chief Executive Officer and Director (Principal Executive Officer)      |  | June 28, 2005
|/s/GERALD M. SHERERGerald M. Sherer     |  | Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) |  | June 30, 2005

59

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INDEX TO EXHIBITS

|Exhibit |  | Name of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1     |  | Certificate of Formation of Refco Group Ltd., LLC.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.2     |  | Amended and Restated Limited Liability Company Agreement of Refco Group Ltd., LLC.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.3     |  | Certificate of Incorporation of Refco Finance Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3.4     |  | By-laws of Refco Finance Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.1     |  | Indenture, dated as of August 5, 2004, among Refco Group Ltd., LLC, Refco Finance Inc. and Wells Fargo Bank, National Association, as trustee.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.2     |  | First Supplemental Indenture, dated as of August 5, 2004, among Refco Group Ltd., LLC, Refco Finance Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as trustee.(3)                                                                                                                                                                                                                                                                                                                                                                        
|4.3     |  | Registration Rights Agreement, dated as of August 5, 2004, among Refco Finance Holdings LLC, Refco Finance Inc. and Credit Suisse First Boston LLC, Banc of America Securities LLC and Deutsche Bank Securities Inc.(1)                                                                                                                                                                                                                                                                                                                                                              
|4.4     |  | Securityholders Agreement, dated as of August 5, 2004, among New Refco Group Ltd., LLC, Refco Group Holdings, Inc., THL Refco Acquisition Partners and certain other Affiliates of Thomas H. Lee Partners, L.P. the Limited Partners or
Affiliates of Limited Partners, the Executive Investors and the Employees party thereto.(4)                                                                                                                                                                                                                                                  
|10.1    |  | Equity Purchase and Merger Agreement, dated as of June 8, 2004, among Refco Group Ltd., LLC, Refco Group Holdings, Inc., THL Refco Acquisition Partners and Refco Merger LLC.(1)                                                                                                                                                                                                                                                                                                                                                                                                     
|10.2    |  | Executive Employment and Non-Competition Agreement, dated as of June 8, 2004, by and between Refco Group Ltd., LLC and Phillip R. Bennett.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.3    |  | First Amendment to Equity Purchase and Merger Agreement, dated as of July 9, 2004, among Refco Group Ltd., LLC, Refco Group Holdings, Inc., THL Refco Acquisition Partners, Refco Merger LLC and New Refco Group Ltd., LLC.(4)                                                                                                                                                                                                                                                                                                                                                       
|10.4    |  | Executive Employment and Non-Competition Agreement, dated as of June 21, 2004, by and between Refco Group Ltd., LLC and Joseph Murphy.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.5    |  | Executive Employment and Non-Competition Agreement, dated as of July 30, 2004, by and between Refco Group Ltd., LLC and William M. Sexton.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.6    |  | Executive Employment and Non-Competition Agreement, dated as of July 30, 2004, by and between Refco Group Ltd., LLC and Santo Maggio.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.7    |  | Executive Employment and Non-Competition Agreement, dated as of July 30, 2004, by and between Refco Group Ltd., LLC and Dennis Klejna.(5)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.8    |  | Credit Agreement, dated as of August 5, 2004, among Refco Finance Holdings LLC, New Refco Group Ltd., LLC, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, the other Lenders party thereto, Banc of America
Securities LLC, Credit Suisse First Boston, acting through its Cayman Islands Branch, and Deutsche Bank Securities Inc., as Co-Lead Arrangers and Joint Book Running Managers, Credit Suisse First Boston, acting through its Cayman Islands Branch, as
Syndication Agent, and Deutsche Bank Securities Inc., as Documentation Agent.(1)
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

60

---



|10.9  |  | Assumption Agreement, dated as of August 5, 2004, made by Refco Group Ltd., LLC, in favor of Bank of America, N.A., as administrative agent.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10 |  | Security Agreement, dated as of August 5, 2004, made by Refco Finance Holdings LLC, New Refco Group Ltd., LLC and the Additional Grantors to Bank of America, N.A., as administrative agent.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.11 |  | Security Agreement Supplement, dated August 5, 2004, made by Refco Group Ltd., LLC and Guarantors party thereto to Bank of America, N.A., as administrative agent.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.12 |  | Parent Guaranty, dated as of August 5, 2004, made by New Refco Group Ltd., LLC in favor of the Secured Parties named in the Credit Agreement, dated as of August 5, 2004.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.13 |  | Subsidiary Guaranty, dated as of August 5, 2004, made by the Guarantors in favor of the Secured Parties named in the Credit Agreement, dated as of August 5, 2004.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.14 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and Phillip R. Bennett.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.15 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and Joseph Murphy.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.16 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and William M. Sexton.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.17 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and Santo C. Maggio.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.18 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd. and Dennis A. Klejna.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.19 |  | Restricted Unit Agreement, dated as of August 5, 2004, between New Refco Group Ltd., LLC and Robert C. Trosten.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.20 |  | Management Agreement, dated as of August 5, 2004, by and between New Refco Group Ltd., LLC, Refco Group Ltd., LLC and THL Managers V, LLC.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.21 |  | Escrow Agreement, dated August 5, 2004, among New Refco Group Ltd., LLC, Refco Group Holdings, Inc., THL Refco Acquisition Partners and HSBC Bank USA, National Association.(6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.22 |  | Restricted Unit Agreement, dated as of November 10, 2004, between New Refco Group Ltd., LLC and Leo R. Breitman.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.23 |  | Restricted Unit Agreement, dated as of November 10, 2004, between New Refco Group Ltd., LLC and Ronald O' Kelley.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.24 |  | Restricted Unit Agreement, dated as of November 19, 2004, between New Refco Group Ltd., LLC and Nathan Gantcher.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.25 |  | Executive Employment and Non-Competition Agreement, dated as of December 6, 2004, by and between Refco Group Ltd., LLC and Gerald M. Sherer.(6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.26 |  | Restricted Unit Agreement, dated as of December 6, 2004, between New Refco Group Ltd., LLC and Gerald M. Sherer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.27 |  | Amendment, dated as of March 15, 2005, to the Credit Agreement, dated as of August 5, 2004, among Refco Group Ltd., LLC (successor by merger to Refco Finance Holdings LLC), as borrower, New Refco Group Ltd., LLC, each lender from time to
time party thereto, Banc of America Securities LLC, Credit Suisse First Boston, acting through its Cayman Islands branch, and Deutsche Bank Securities Inc., as co-lead arrangers and joint book running managers, Credit Suisse First Boston, acting
through its Cayman Islands Branch, as Syndication Agent, Deutsche Bank Securities Inc., as Documentation Agent, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.(6)
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

61

---



|10.28 |  | Form of New Refco Group Ltd., LLC Restricted Unit Agreement.(6)                                                       
|----- |  | ----------------------------------------------------------------------------------------------------------------------
|10.29 |  | Purchase and Sale Agreement, dated as of June 21, 2005, between Refco Group Ltd., LLC and Cargill, Incorporated.      
|12.1  |  | Statement re Computation of Ratio of Earnings to Fixed Charges.                                                       
|21.1  |  | List of Subsidiaries.(4)                                                                                              
|31.1  |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                   
|31.2  |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                   
|32.1  |  | Certification of Chief Executive Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
|32.2  |  | Certification of Chief Financial Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

---

62

---





INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Refco Group Ltd., LLCReports of Independent Registered Public Accounting Firm

F-2Consolidated Balance Sheets as of February 28, 2005 (Successor) and February 29, 2004 (Predecessor)

F-4Consolidated Statements of Income for the Successor period from August 6, 2004 through February 28, 2005, the Predecessor period from March 1, 2004 through August 5, 2004 and for the years
ended February 29, 2004 and February 28, 2003

F-5Consolidated Statements of Changes in Members' Equity for the Successor period from August 6, 2004 through February 28, 2005, the Predecessor period from March 1, 2004 through August 5,
2004 and for the years ended February 29, 2004 and February 28, 2003

F-6Consolidated Statements of Cash Flows for the Successor period from August 6, 2004 through February 28, 2005, the Predecessor period from March 1, 2004 through August 5, 2004 and for the
years ended February 29, 2004 and February 28, 2003

F-7Notes to Consolidated Financial Statements

F-8


F-1

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Member ofRefco Group Ltd., LLC

We
have audited the accompanying consolidated balance sheet of Refco Group Ltd., LLC (the "Successor" or "Company") (a Delaware limited liability company) and subsidiaries as of
February 28, 2005 and the related consolidated statements of income, changes in member's equity and cash flows for the period from August 6, 2004 through February 28, 2005. These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor are we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Refco Group Ltd., LLC and subsidiaries
as of February 28, 2005, and the results of their operations and their cash flows for the period from August 6, 2004 through February 28, 2005 in conformity with accounting
principles generally accepted in the United States of America.

Grant
Thornton LLP
New York, New York
May 24, 2005

F-2

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Member ofRefco Group Ltd., LLC

We
have audited the accompanying consolidated balance sheet of Refco Group Ltd., LLC (the "Predecessor" or "Company") (a Delaware limited liability company) and subsidiaries as of
February 29, 2004, and the related consolidated statements of income, changes in members' equity and cash flows for the period from March 1, 2004 through August 5, 2004 and for
the years ended February 29, 2004 and February 28, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Refco Group Ltd., LLC and subsidiaries
as of February 29, 2004, and the results of their operations and their cash flows for the period from March 1, 2004 through August 5,
2004 and for the years ended February 29, 2004 and February 28, 2003 in conformity with accounting principles generally accepted in the United States of America.

Grant
Thornton LLP
New York, New York
May 24, 2005

F-3

---





REFCO GROUP LTD., LLC AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS

Successor
February 28,
2005

Predecessor
February 29,
2004(in thousands)Cash and cash equivalents

$
522,621

$
316,213Cash and securities segregated under federal and other regulations:Cash and cash equivalents


1,102,539


1,375,838Securities purchased under agreements to resell


58,650


55,061Securities purchased under agreements to resell


30,235,871


22,974,308Deposits with clearing organizations and others


2,439,653


1,831,765Receivables from securities borrowed


3,128,304


1,808,566Receivables from broker-dealers and clearing organizations


1,996,331


504,810Receivables from customers, net of $61,190 and $65,200 in reserves, respectively


2,081,968


1,591,385Receivables from equity members





210,223Securities owned, at market or fair value


5,594,797


2,032,535Memberships in exchanges (market value: February 28, 2005: $60,566, February 29, 2004: $41,337)


36,638


15,869Assets of discontinued operations (Note C)





276,012Goodwill


716,566


145,718Identifiable intangible assets


578,702


23,272Other assets


275,209


170,597Total assets

$
48,767,849

$
33,332,172LiabilitiesShort-term borrowings, including current portion of long-term borrowings

$
32,628

$
88,890Securities sold under agreements to repurchase


28,625,903


23,763,252Payable from securities loaned


3,028,933


1,867,047Payable to broker-dealers and clearing organizations


741,122


583,643Payable to customers


6,847,558


5,053,337Securities sold, not yet purchased, at market or fair value


7,833,022


807,485Liabilities of discontinued operations (Note C)





44,878Accounts payable, accrued expenses and other liabilities


252,582


171,651Long-term borrowings


1,238,000


315,500Subordinated debt





16,000Total liabilities


48,599,748


32,711,683Commitments and contingent liabilitiesMembership interests issued by subsidiary


15,351


4,405Members' equity


152,750


616,084Total liabilities and members' equity

$
48,767,849

$
33,332,172


The
accompanying notes are an integral part of these financial statements.

F-4

---





REFCO GROUP LTD., LLC AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME

Successor

PredecessorPeriod from
August 6,
2004 through
February 28,
2005



Year EndedPeriod from
March 1,
2004 through
August 5, 2004February 29,
2004

February 28,
2003(in thousands)RevenuesCommissions and brokerage

$
486,705

$
362,020

$
645,440

$
571,520Interest


1,817,103


768,713


1,051,695


2,387,339Principal transactions, net


160,830


119,235


165,936


82,554Asset management and advisory fees


8,801


3,676


7,255


123Other


5,973


2,469


3,973


4,563Total revenues


2,479,412


1,256,113


1,874,299


3,046,099ExpensesCommissions and order execution costs


358,528


244,009


411,894


385,375Interest


1,765,218


706,640


897,674


2,182,346Employee compensation and benefits


158,465


108,528


204,854


180,962General, administrative and other


145,970


97,576


170,415


142,585Total expenses


2,428,181


1,156,753


1,684,837


2,891,268Income before provision for income taxes, dividends on preferred securities issued by subsidiaries, income from equity investees, members' interest in earnings (losses) of subsidiary and discontinued
operations


51,231


99,360


189,462


154,831Provision for income taxes


6,250


7,994


11,687


1,223Income before dividends on preferred securities issued by subsidiaries, income from equity investees, members' interest in earnings (losses) of subsidiary and discontinued operations


44,981


91,366


177,775


153,608Dividends on preferred securities











15,576Income from equity investees


16,578


8,345


11,544


1,673Members' interest in earnings (losses) of subsidiary


(16,749
)

5,771


1,273


Income from continuing operations


78,308


93,940


188,046


139,705Discontinued operations:Income (loss) from discontinued operations





7,383


(401
)

1,151Applicable income tax expense





3,344


489


737Net income

$
78,308

$
97,979

$
187,156

$
140,119


The
accompanying notes are an integral part of these financial statements.

F-5

---





REFCO GROUP LTD., LLC AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' EQUITY

|                                                                                   |  | Members' equity |         
|---------------------------------------------------------------------------------- |  | --------------- | --------
|
|
|                                                                                   |  |                 |         
|Balance, February 28, 2002 (predecessor)                                           |  | $               | 527,897 
|Capital withdrawals                                                                |  |                 | (100,000
|Net income                                                                         |  |                 | 140,119 
|Currency translation adjustment                                                    |  |                 |        
|                                                                                   |  |                 |         
|Balance, February 28, 2003 (predecessor)                                           |  |                 | 568,016 
|Capital withdrawals                                                                |  |                 | (120,000
|Loss on early extinguishment of preferred securities issued by subsidiaries        |  |                 | (39,774 
|Net income                                                                         |  |                 | 187,156 
|Currency translation adjustment                                                    |  |                 |        
|                                                                                   |  |                 |         
|Balance, February 29, 2004 (predecessor)                                           |  |                 | 595,398 
|Net income                                                                         |  |                 | 97,979  
|Currency translation adjustment                                                    |  |                 |        
|                                                                                   |  |                 |         
|Balance, August 5, 2004 (predecessor)                                              |  |                 | 693,377 
|Distribution of Asset Management business                                          |  |                 | (230,913
|Distribution of cash                                                               |  |                 | (550,000
|                                                                                   |  |                 |         
|Balance, August 5, 2004 (predecessor, adjusted)                                    |  |                 | (87,536 
|Resetting of equity accounts due to the Transactions                               |  |                 | 87,536  
|                                                                                   |  |                 |         
|Balance, August 5, 2004 (successor)                                                |  |                 |        
|Push down of capital contribution to fund portion of
purchase price                |  |                 | 511,494 
|Carry over of predecessor basis                                                    |  |                 | (33,661 
|Deemed dividend                                                                    |  |                 | (403,612
|                                                                                   |  |                 |         
|Balance, August 6, 2004 as adjusted to give effect to the Transactions (successor) |  |                 | 74,221  
|Capital withdrawals                                                                |  |                 | (11,000 
|Net income                                                                         |  |                 | 78,308  
|Issuance of New Refco's Class B Units to employees                                 |  |                 | 1,875   
|Currency translation adjustment                                                    |  |                 |        
|                                                                                   |  |                 |         
|Balance, February 28, 2005                                                         |  | $               | 143,404 
|                                                                                   |  |                 |         

The
accompanying notes are an integral part of these financial statements.

F-6

---





REFCO GROUP LTD., LLC AND SUBSIDIARIES    CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                  |                                                                              |   |                                                                          |           |                                                        | Year Ended |         
|------------------------------------------------- | ---------------------------------------------------------------------------- | - | ------------------------------------------------------------------------ | --------- | ------------------------------------------------------ | ---------- | --------
|
|
|
|Cash flows from operating activities              |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  | Net income                                                                   |   | $                                                                        | 78,308    |                                                        | $          | 97,979  
|                                                  |                                                                              |   | (Loss) income from discontinued operations                               |           |                                                        |           |         
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  | Net income from continuing operations                                        |   |                                                                          | 78,308    |                                                        |            | 93,940  
|                                                  | Noncash items included in net income                                         |   |                                                                          |           |                                                        |            |         
|                                                  |                                                                              |   | Depreciation and amortization                                            |           |                                                        | 18,046     |         
|                                                  |                                                                              |   | Stock compensation expense                                               |           |                                                        | 1,875      |         
|                                                  | Members' interest in earnings (losses) of subsidiary                         |   |                                                                          | (16,749   | )                                                      |            | 5,771   
|                                                  | (Increase) decrease in operating assets                                      |   |                                                                          |           |                                                        |            |         
|                                                  |                                                                              |   | Cash and securities segregated under federal and other regulations:      |           |                                                        |            |         
|                                                  |                                                                              |   |                                                                          |           | Cash and cash equivalents                              |            |         
|                                                  |                                                                              |   |                                                                          |           | Securities purchased under agreements to resell        |            |         
|                                                  |                                                                              |   | Securities purchased under agreements to resell                          |           |                                                        | 4,432,778  |         
|                                                  |                                                                              |   | Deposits with clearing organizations and others                          |           |                                                        | (1,081,361 | )       
|                                                  |                                                                              |   | Receivables from securities borrowed                                     |           |                                                        | (1,082,330 | )       
|                                                  |                                                                              |   | Receivables from broker-dealers and clearing organizations               |           |                                                        | (781,745   | )       
|                                                  |                                                                              |   | Receivables from customers                                               |           |                                                        | 504,736    |         
|                                                  |                                                                              |   | Receivables from equity members                                          |           |                                                        |           |         
|                                                  |                                                                              |   | Securities owned, at market or fair value                                |           |                                                        | (2,828,729 | )       
|                                                  |                                                                              |   | Memberships in exchanges                                                 |           |                                                        | (422       | )       
|                                                  |                                                                              |   | Other assets                                                             |           |                                                        | 5,904      |         
|                                                  | Increase (decrease) in operating liabilities                                 |   |                                                                          |           |                                                        |            |         
|                                                  |                                                                              |   | Short-term borrowings, including current portion of long-term borrowings |           |                                                        | 24,628     |         
|                                                  |                                                                              |   | Securities sold under agreements to repurchase                           |           |                                                        | (6,037,147 | )       
|                                                  |                                                                              |   | Payable from securities loaned                                           |           |                                                        | 937,810    |         
|                                                  |                                                                              |   | Payable to broker-dealers and clearing organizations                     |           |                                                        | (749,962   | )       
|                                                  |                                                                              |   | Payable to customers                                                     |           |                                                        | 1,595,688  |         
|                                                  |                                                                              |   | Securities sold, not yet purchased, at market or fair value              |           |                                                        | 5,612,862  |         
|                                                  |                                                                              |   | Accounts payable, accrued expenses and other liabilities                 |           |                                                        | 42,560     |         
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  |                                                                              |   |                                                                          |           | Net cash provided by operating activities              |            |         
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|Cash flows from investing activities              |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  | Distribution of cash in asset management business                            |   |                                                                          |          |                                                        |            | (24,457 
|                                                  | Payment of acquisition fees                                                  |   |                                                                          | (46,989   | )                                                      |            | (3,536  
|                                                  | Acquisition of businesses, net of cash acquired                              |   |                                                                          | (17,225   | )                                                      |            |        
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  |                                                                              |   |                                                                          |           | Net cash used in investing activities                  |            |         
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|Cash flows from financing activities              |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  | Issuance of long-term borrowings                                             |   |                                                                          |          |                                                        |            |        
|                                                  | Proceeds from new borrowings                                                 |   |                                                                          | 1,400,000 |                                                        |            |        
|                                                  | Repayment of long-term borrowings                                            |   |                                                                          | (539,436  | )                                                      |            | (37,000 
|                                                  | Payment to former shareholders                                               |   |                                                                          | (19,815   | )                                                      |            |        
|                                                  | Payment to former shareholder for sale of interest in predecessor            |   |                                                                          | (861,749  | )                                                      |            |        
|                                                  | Payment of deferred financing costs                                          |   |                                                                          | (43,648   | )                                                      |            |        
|                                                  | Payment for redemption of preferred securities issued by subsidiaries        |   |                                                                          |          |                                                        |            |        
|                                                  | Distribution of cash                                                         |   |                                                                          |          |                                                        |            | (550,000
|                                                  | Net contributions (withdrawals) to membership interests issued by subsidiary |   |                                                                          | 28,815    |                                                        |            | (6,891  
|                                                  | Capital withdrawals                                                          |   |                                                                          | (11,000   | )                                                      |            |        
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  |                                                                              |   |                                                                          |           | Net cash (used in) provided by financing activities    |            |         
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  |                                                                              |   |                                                                          |           | Net cash provided by (used in) discontinued operations |            |         
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  |                                                                              |   |                                                                          |           | Net increase (decrease) in cash and cash equivalents   |            |         
|Cash and cash equivalents, beginning of year      |                                                                              |   | 244,986                                                                  |           |                                                        | 316,213    |         
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|Cash and cash equivalents, end of year            |                                                                              | $ | 522,621                                                                  |           | $                                                      | 244,986    |         
|                                                  |                                                                              |   |                                                                          |           |                                                        |            |         
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                              |   |                                                                          |           |                                                        |            |         
|Noncash financing activities                      |                                                                              |   |                                                                          |           |                                                        |            |         
|                                                  | Pushdown of partial step-up of assets and liabilities in Transactions        |   |                                                                          | 567,719   |                                                        |            |        
|                                                  | Distribution of Asset Management business, net of cash                       |   |                                                                          | 213,378   |                                                        |            |        
|                                                  |                                                                              |   | Income taxes paid                                                        |           | $                                                      | 8,186      |         
|                                                  |                                                                              |   | Interest paid                                                            |           | $                                                      | 1,797,800  |         

The accompanying notes are an integral part of these financial statements.

F-7

---





REFCO GROUP LTD., LLC AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE AORGANIZATION

Refco Group Ltd., LLC (the "Company") is a limited liability company under the laws of the State of Delaware. The consolidated financial statements include
the accounts of the Company and its subsidiaries (collectively, the "Group"). The Group is a diversified financial services organization and is among the leading firms in the futures and options
brokerage business. In addition to its futures and options activities, the Group provides fund management and administrative services and is also a substantial broker of cash market products,
including government securities, foreign exchange and foreign exchange options, international equities and emerging markets debt. The Group's worldwide headquarters in New York are complemented by a
network of U.S. and international offices.

The
Group's principal operating subsidiaries comprise Refco Securities, LLC, a registered broker-dealer, Refco, LLC, a registered Futures Commission Merchant and Refco Capital
Markets, Ltd., an offshore securities and foreign exchange broker.

Prior
to the closing date of the Transactions on August 5, 2004, the Company was 90% owned by Refco Group Holdings, Inc. ("RGHI"), a Delaware corporation. The remaining 10% was
owned by BAWAG Overseas, Inc., a third-party financial institution.

The Transactions

On June 8, 2004, THL Refco Acquisition Partners entered into an equity purchase and merger agreement with the Company, RGHI and certain other parties,
which was amended on July 9, 2004 (the
"Purchase Agreement"). The Purchase Agreement provided for a series of transactions that resulted in New Refco Group Ltd., LLC ("New Refco") becoming the Company's parent and THL Refco
Acquisition Partners and its affiliates and co-investors acquiring a 56.7% interest in New Refco, based on a valuation of New Refco of $2.3 billion, following the closing of the
Transactions on August 5, 2004. THL Refco Acquisition Partners and its affiliates are affiliates of Thomas H. Lee Partners, L.P. Thomas H. Lee Partners, L.P. is a leading private equity firm
focused on identifying and acquiring substantial ownership stakes in mid-to large-cap growth companies.

Concurrently
with the consummation of the Transactions, the Group distributed $550.0 million in cash and other capital distributions and all the equity interests of
Forstmann-Leff International Associates, LLC, which upon consummation of the Transactions owned substantially all the assets of the Company's Asset Management business (the "Asset
Management Distribution"), to RGHI, an entity wholly owned by Phillip Bennett upon consummation of the Transactions. This distribution did not include the retained assets from the Group's Asset
Management Business, Refco Alternative Investments, which have been retained and became part of the Group's Derivatives Brokerage & Clearing business.

The
financing for the Transactions, including the refinancing of the outstanding debt, was provided by:



F-8

---





As
a result, THL Refco Acquisition Partners and its affiliates and co-investors acquired 56.7% of New Refco, Phillip Bennett received 42.8% of ownership and management
purchased an ownership of 0.5%. Furthermore, THL Refco Acquisition Partners and its affiliates and co-investors and RGHI contributed their interests in the Company to New Refco; and Refco
Finance Holdings LLC merged with and into the Company with the Company continuing as the surviving entity.

The
acquisition by THL Refco Acquisition Partners and its affiliates and co-investors of a portion of RGHI's interest in the Company and RGHI's contribution of its interest
in the Company to New Refco are each accounted for as a purchase in conformity with Statement of Financial Accounting Standards ("SFAS") No. 141,Business
Combinations, in accordance with Emerging Issues Task Force ("EITF") No. 88-16,Basis in Leveraged Buyout
Transactions, with intangible assets recorded in accordance with SFAS No. 142,Goodwill and Other Intangible Assets. This
guidance requires the continuing residual interest retained by the continuing management investors, as a result of the Transactions, be reflected at its predecessor basis. In accordance with EITF
Issue No. 90-12,Allocating Basis to Individual Assets and Liabilities for Transactions within the Scope of Issue
No. 88-16, a step-up of assets and liabilities to fair value was recorded in purchase accounting for the remaining interest in the Company
acquired by THL Refco Acquisition Partners and its affiliates and co-investors. The amount of the distribution to the selling shareholders in excess of the predecessor basis was reflected
as a deemed dividend of $403.6 million in equity in the opening consolidated balance sheet.

The
purchase price including transaction costs was approximately $2.3 billion. The sources and uses of funds in connection with the acquisition are summarized below (in
thousands):

Sources:Proceeds from Secured Term Loan

$
800,000Proceeds from Senior Subordinated Notes


600,000Proceeds from equity investors


511,494Available cash


172Fair value of existing equity investment


382,507Total sources

$
2,294,173Uses:Purchase price of member units

$
1,373,242Repayment of old debt and penalties


387,436Transaction and debt financing fees


94,173Payments to former shareholders


19,815Other


37,000Fair value of existing equity investment


382,507Total uses

$
2,294,173


F-9

---



The
Company has prepared an allocation of the purchase price to the assets acquired and liabilities assumed based upon their respective fair values as determined by an
independent third-party valuation firm as of the date of the acquisition. The allocation of the purchase price to the fair value of the net assets acquired is summarized below (in thousands):

Predecessor
Basis

Fair
Value

Deemed
Dividend

Push-down of
existing
carry-over basis

Successor
BasisCash and cash equivalents, securities purchased and deposits

$
39,191,022

$
39,191,022

$


$


$


$
39,191,022Receivables, securities owned and other assets


6,810,999


6,810,999











6,810,999Memberships in exchanges, at fair value


17,879


49,997


(13,781
)







36,216
(a)Total assets acquired


46,019,900


46,052,018


(13,781
)







46,038,237Short-term borrowings, securities sold and payables


45,717,287


45,717,287











45,717,287Accounts payable, accrued expenses and other liabilities


199,945


222,654











222,654Total liabilities assumed


45,917,232


45,939,941











45,939,941Net tangible assets


102,668


112,077


(13,781
)







98,296Intangible assets


24,556


986,800


(412,862
)







573,938
(a)Net assets acquired


127,224


1,098,877


(426,643
)







672,234Purchase price, including carryover basis by Phillip Bennett





2,248,691


(403,612
)

(382,507
)

(33,661
)

1,428,911Excess purchase price





1,149,814


23,031


(382,507
)

(33,661
)

756,677Goodwill





1,109,702


23,031


(382,507
)

(33,661
)

716,565Deferred financing costs, net





40,112











40,112$
1,149,814

$
23,031

$
(382,507
)
$
(33,661
)
$
756,677


---

Payments were also made to or for the account of existing equity holders, including $24.9 million relating to pre-payment
penalties on the Company's existing debt, and $19.8 million relating to obligations triggered by the Company's change of control.

The
following unaudited pro forma consolidated summary of operations presents information of the Company as if the Transactions had occurred on March 1, 2003 and 2004,
respectively.

|              |  | Year Ended
February 28,
2005 |           | Year Ended
February 29,
2004
|------------- |  | ---------------------------- | --------- | ----------------------------
|
|Total revenue |  | $                            | 3,735,525 |                             
|Net income    |  | $                            | 141,952   |                             

F-10

---



These
pro forma results are for illustrative purposes. They do not purport to be indicative of the results of operations that actually would have resulted had the Transactions occurred
as of March 1, 2003 or 2004, or the future results of operations of the Company.

For
purposes of identification and description, Refco Group Ltd., LLC and its subsidiaries are referred to as the "Predecessor" for the period prior to the Transactions, the "Successor"
for the period subsequent to the Transactions and the "Group" for both periods.

NOTE BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The consolidated financial statements include the accounts of the Company and each of its subsidiaries, all of which are wholly owned, except for Refco
Securities, LLC, which issues non-voting membership interests in the normal course of business. All material intercompany transactions and balances have been eliminated in consolidation.

20%
to 50% owned companies are accounted for using the equity method and included in "Other Assets."

The
Group consolidates entities deemed to be variable interest entities ("VIEs") when the Group is determined to be the primary beneficiary under Financial Accounting Standards Board
("FASB") Interpretation No. 46 Revised (December 2003),Consolidation of Variable Entities("Interpretation 46 R").

The
preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign currency translation

In the normal course of business, the Group engages in transactions denominated in foreign currencies. For financial reporting purposes, assets, liabilities and
contractual commitments in foreign currencies have been translated at the year-end spot rate and revenues and expenses are translated at average rates of exchange for the fiscal year.
Gains and (losses) resulting from foreign currency transactions, included in the consolidated statements of income, were $(1.5) million, $0 million, $(0.7) million and
$(15.7) million for the period from August 6, 2004 through February 28, 2005, the period from March 1, 2004 through August 5, 2004 and the years ended
February 29, 2004 and February 28, 2003, respectively. Gains and (losses) resulting from translating foreign currency financial statements into U.S. dollars are included in cumulative
currency translation adjustment, which represents other comprehensive income, a separate component of members' equity.

F-11

---



Cash and cash equivalents

Cash and cash equivalents are defined as cash and short-term liquid investments with original maturities of 90 days or less when acquired.

Cash and securities segregated under federal and other regulations

Cash and cash equivalents have been segregated in special reserve bank accounts for the benefit of clients under various regulatory requirements. These
requirements at year-end are set forth below:

February 28,
2005

February 29,
2004(in thousands)Rule 15c3-3 of the Securities Exchange Act of 1934

$
27,209

$
25,271Section 1.20 of the Commodity Exchange Act


500,585


924,613Foreign subsidiaries regulated under various foreign regulations


574,745


425,954$
1,102,539

$
1,375,838


As
of February 28, 2005 and February 29, 2004, securities purchased under agreements to resell of $58.7 million and $55.1 million, respectively are held for
the benefit of clients under Rule 15c3-3 of the Securities Exchange Act of 1934.

Securities purchased under agreements to resell and Securities sold under agreements to repurchase

Securities purchased under agreements to resell and Securities sold under agreements to repurchase are treated as financing transactions and are carried at the
amounts at which the securities will be reacquired or resold as specified in the respective agreements plus accrued interest. These carrying amounts approximate their fair values. It is the Group's
policy to take possession of securities purchased under agreements to resell, which consist largely of securities issued by the U.S. Government. The Group retains the right to re-pledge
collateral received in secured financing transactions.

As
permitted by FASB Interpretation No. 41,Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements,
the Group nets certain securities purchased under agreements to resell and securities sold under agreements to repurchase for financial reporting purposes.

Securities-lending activities

Securities borrowed and securities loaned transactions are generally reported as collateralized financings. Securities-borrowed transactions require the Company
to deposit cash with the lender. With respect to securities loaned, the Company receives collateral in the form of cash in an amount generally in excess of the market value of securities loaned. The
Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as necessary.

F-12

---



Receivables from and payable to customers

These balances primarily pertain to margin and open contractual commitments related to customers' futures, foreign currency forward and securities transactions.
Receivables from and payable to customers in connection with futures and foreign currency forward transactions include gains and losses
on open futures, options and forward contracts. Receivables from and payable to customers in connection with securities transactions include amounts due on cash and margin transactions.

Receivables
from customers, net of reserves at each year end are as follows:

February 28,
2005

February 29,
2004(in thousands)Futures transactions

$
626,422

$
212,299Foreign currency and other OTC derivative transactions


811,026


38,724Securities transactions


627,024


1,340,362Other


17,496


$
2,081,968

$
1,591,385


Payable
to customers at each year end are as follows:

February 28,
2005

February 29,
2004(in thousands)Futures transactions

$
4,853,138

$
4,052,363Foreign currency and other OTC derivative transactions


359,085


394,936Securities transactions


1,635,335


606,038$
6,847,558

$
5,053,337


These
receivables are generally collateralized with marketable securities. The Group's allowance for doubtful accounts is based upon management's continuing review and evaluation of
factors such as collateral value, aging and the financial condition of the customers. The allowance is assessed to reflect best estimate of probable losses that have been incurred as of the balance
sheet date. Any changes are included in the current period operating results. The Group pursues collection of these receivables through various means, including legal action and collection agencies.
Reserves of $61.2 million and $65.2 million have been provided against receivables from customers as of February 28, 2005 and February 29, 2004, respectively. The Group
generally nets receivables and payables related to its customers' futures, foreign currency forwards and securities transactions on a counterparty basis pursuant to master netting agreements. Where
possible, it is the Group's policy to settle these transactions on a net basis with its counterparties.

Financial instruments

The consolidated balance sheets generally reflect purchases and sales of financial instruments owned or sold on a trade-date basis.

F-13

---



Securities owned and Securities sold, not yet purchased

Securities owned and Securities sold, not yet purchased consist primarily of U.S. and foreign equity and fixed-income securities, which are stated at quoted
market values, with unrealized gains and losses recognized in income under "Principal transactions, net." Securities not readily marketable are valued at fair value as determined by management. Fair
value is the amount at which an instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Derivative financial instruments

As a broker, the Group enters into transactions involving derivative financial instruments in relation to its customer business. These transactions are generally
immediately economically hedged by back-to-back trades with other financial institutions. All derivative financial instruments are carried at market value or, if market prices
are not readily available, fair value. Market values for exchange-traded derivatives are based on quoted market prices. Fair market values for over-the-counter derivative
financial instruments are based on pricing models that are based on observable market data intended to approximate the amounts that would be received from or paid to a third party in settlement of the
contracts.

Derivatives
used for economic hedging purposes include swaps, forwards, futures and purchased options. Unrealized gains or losses on these derivative contracts are recognized currently
in the statement of income as Principal transactions, net. The Group does not apply hedge accounting as defined in Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and
Hedging Activities, as all financial instruments are marked to market with changes in fair values reflected in
earnings. Therefore, the disclosures required in paragraphs 44 and 45 of the statement are generally not applicable with respect to these financial instruments.

Memberships in exchanges

Exchange memberships comprise both rights to trade on exchanges and deposits made in relation to these memberships. Exchange memberships owned are recorded at
cost and tested annually for impairment.

Furniture, equipment and leasehold improvements

Furniture, equipment and leasehold improvements are recorded at cost less accumulated depreciation and amortization. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are amortized over the lesser of the economic useful life
of the improvement or the term of the lease.

Impairment of assets

The Company reviews its long-lived assets and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying
amounts may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair
value of the assets.

F-14

---



Goodwill

Goodwill is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. Prior to March 1, 2002, goodwill was
amortized over a period of 25 years on a straight-line basis. Effective March 1, 2002, the Group adopted SFAS No. 142,Goodwill and Other
Intangible Assets; consequently, goodwill is no longer amortized but, instead, is tested at least annually for impairment. An impairment loss is triggered if the estimated fair
value of an operating segment is less than its estimated net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. Goodwill was
recognized as part of the Transactions on August 5, 2004. Goodwill relates to the excess purchase price over the fair value of the net assets acquired by the Company.

Identifiable intangible assets

Identifiable intangible assets consist primarily of customer relationships and trade names. Customers relationships are amortized on an accelerated basis based
upon patterns of usage over a weighted-average economic useful life of approximately 13 years. These intangible assets are tested for potential
impairment whenever events or changes in circumstances suggest that an asset's or asset group's carrying value may not be fully recoverable in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.An impairment loss, calculated as the difference between the estimated fair
value and the carrying value of an asset or asset group, is recognized if the expected undiscounted cash flows relating to the asset or asset group are less than the corresponding carrying value.
Trade names have been classified as indefinite-lived assets and are not amortized but tested annually for impairment.

Stock-based compensation

The Group measures compensation expense for its employee stock-based compensation plans using the fair value method prescribed by SFAS No. 123, Accounting
for Stock-Based Compensation.

Income taxes

The Group has elected to be treated as a limited liability company for federal income tax purposes, as defined in the regulations. Under these regulations,
members are responsible for their individual income tax liabilities related to the Group's operating results. Accordingly, the Group has not provided for Federal income taxes related to its operating
results. The provision for income taxes relates to income taxes of foreign subsidiaries.

Revenue recognition

Commissions and brokerage are recorded on a trade-date basis as securities transactions occur. Commissions and brokerage includes per contract charges
for trade execution and clearing. Fees are charged at various rates based on the product traded and the method of trade. Commissions earned and related expenses on customers' open futures positions
are recognized on a half-turn basis. The Group reports gross commission income on transactions executed by introducing brokers and reports commissions paid to introducing brokers as
commission expense.

F-15

---



Interest
is recognized on an accrual basis. Interest income or interest expense on repurchase agreements and collateralized financing arrangements are recognized as interest over the
life of the
transaction. Interest income and expense for matched repurchase agreement transactions are presented net in the consolidated statements of income.

Certain
Prime Brokerage/Capital Markets transaction fee revenues are recorded as principal transactions, net in the Consolidated Statements of Income. In these instances the customer may
not pay a separately billed commission rate related to a given transaction. Instead, the equivalent of a commission is included in the revenues of the transaction following its execution on behalf of
the customer. These transactions are specific to those markets in which no third party clearing organization is utilized and involve primarily client foreign exchange transactions.

The
Group, as a broker of derivatives products, enters into contractual commitments, as principal, involving forward settlement. The Group generally enters into offsetting contracts to
achieve economic hedges, which result in a profit spread for the Group. Both the contractual commitment and the offsetting contract are recorded at fair value. The Group does not apply hedge
accounting as defined in SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, and all offsetting contracts are marked to
market and included in the Consolidated Statements of Income. Both realized and unrealized gains and losses are recognized and recorded in the consolidated statements of income under "Principal
transactions, net" as follows:

|                          |       | Period from August 6, 2004
through February 28, 2005 |        | Period from March 1, 2004
through August 5, 2005 |   | Year Ended
February 29, 2004 |         | Year Ended
February 28, 2003 |       
|------------------------- | ----- | ---------------------------------------------------- | ------ | ------------------------------------------------ | - | ---------------------------- | ------- | ---------------------------- | ------
|
|
|
|Foreign currency forwards |       | $                                                    | 41,099 |                                                  | $ | (12,530                      | )       | $                            | 28,569
|Futures                   |       |                                                      | 65,166 |                                                  |   | (37,419                      | )       |                              | 27,747
|Options                   |       |                                                      | 19,414 |                                                  |   | 1,107                        |         |                              | 20,521
|Treasury notes            |       |                                                      | 52,338 |                                                  |   | 26,621                       |         |                              | 78,959
|Bonds                     |       |                                                      | 4,942  |                                                  |   | 1,721                        |         |                              | 6,663 
|Other                     |       |                                                      | (4,393 | )                                                |   | 2,764                        |         |                              | (1,629
|                          |       |                                                      |        |                                                  |   |                              |         |                              |       
|                          | Total |                                                      | $      | 178,566                                          |   | $                            | (17,736 | )                            | $     
|                          |       |                                                      |        |                                                  |   |                              |         |                              |       

The following table shows the gross notional or contractual amounts of derivatives held by the Group.

As of February 28, 2005

As of February 29, 2004Notional

Fair Value

Notional

Fair Value(in thousands)Forward currency contracts

$
79,683,493

$
(5,382
)
$
41,586,917

$
(715
)Swap contracts


30,056


(3,199
)

2,927,400


1,304Option contracts sold or written


19,125,420


(352,428
)

10,383,291


(272,078
)Option contracts purchased


14,478,439


370,410


10,723,550


272,528Exchange-traded futures


14,246,658


(1,873
)

3,735,774


(1,585
)Total

$
127,564,066

$
7,528

$
69,356,932

$
(546
)


F-16

---



Asset
management and advisory fees primarily include fees from investment management and other financial service related products and are recognized as services are provided. They are
determined in accordance with contracts based upon a percentage of assets under management or the volume of financial service products sold through our distribution platform.

Accounting Changes

Consolidation of Variable Interest Entities

On March 1, 2004, the Group adopted Interpretation 46 R, which contains substantial changes to the original FASB Interpretation No. 46, Consolidation of
Variable Interest Entities("FIN 46"). The changes to these pronouncements include revisions to the calculation of expected losses and
expected residual returns and reducing the impact of decision maker and guarantor fees in those calculations. Revisions were also made to the definition of a variable interest entity, which changes
the method of determining whether certain entities should be included in the Group's Consolidated Financial Statements as VIEs. The Group has determined that no entities are required to be
consolidated and that the adoption of Interpretation 46 R has not had a material impact on the Group's financial statements.

Recently issued accounting pronouncement

In December 2004, the FASB issued SFAS No. 123 (revised),Share-Based Payment("SFAS 123R").
SFAS 123R requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award with
the cost to be recognized over the period during which an employee is required to provide service in exchange for the award. The Company is required to adopt the provisions of SFAS 123R as of
the beginning of the first fiscal year that begins after June 15, 2005, although earlier adoption is permitted. The Company is in the process of determining the impact, if any, of
SFAS 123R on its consolidated financial statements.

NOTE CDISCONTINUED OPERATIONS

On August 5, 2004, the Company distributed all the equity interests of Forstmann-Leff International Associates, LLC, which owned substantially
all the assets of the Predecessor's Asset Management business, to Refco Group Holdings, Inc., an entity wholly owned by Phillip Bennett upon consummation of the Transactions.

Financial
information related to Forstmann-Leff International Associates, LLC is reported separately in the Company's income statement as discontinued operations. Prior
period information has been adjusted on the same basis to reflect this presentation.

F-17

---



Operating
results for Forstmann-Leff International Associates, LLC included in the discontinued operations are presented in the following table.

|                           |  |   |        | Year Ended
|-------------------------- |  | - | ------ | ----------
|
|
|
|Revenue                    |  | $ | 47,660 |           
|Expenses                   |  |   | 40,277 |           
|Income before income taxes |  |   | 7,383  |           
|Income tax expenses        |  |   | 3,344  |           
|                           |  |   |        |           
|Net income (loss)          |  | $ | 4,039  |           
|                           |  |   |        |           

The
following table presents the carrying amounts of major classes of assets and liabilities of Forstmann-Leff International Associates, LLC as of
February 29, 2004. These assets and liabilities are included under the captions "Assets of discontinued operations" and "Liabilities of discontinued operations" on the Group's
February 29, 2004 consolidated balance sheet.

February 29, 2004(in thousands)Cash and cash equivalents

$
22,030Receivable from customers


25,582Other assets


228,400Total assets

$
276,012Payable to customers

$
42,380Other liabilities(a)


2,498Total liabilities

$
44,878


---



NOTE DSHORT-TERM BORROWINGS, LONG-TERM BORROWINGS AND OTHER BORROWINGS

Short-term borrowings

The Group obtains short-term borrowings through bank loans. Short-term borrowings also include the portion of long-term
borrowings maturing within one year and certain long-term borrowings that may be payable within one year at the option of the holder. The carrying value of these short-term obligations
approximates fair value due to their short-term nature.

Bank
loans are generally from major money center banks and are primarily payable on demand. Interest is paid at prevailing short-term market rates. The Group enters into loan
agreements with banks, which may be collateralized by letters of credit or other forms of collateral. Generally, the amounts pledged represent the underlying collateral for the Group's receivables
from customers.

F-18

---



Short-term
borrowings at year end are set forth below:

February 28, 2005

February 29, 2004(in thousands)Bank loans

$
24,628

$
20,890Current portion of long-term borrowings


8,000


68,000Total

$
32,628

$
88,890


The
weighted average interest rate on outstanding bank loans, which includes short-term funding and overdrafts, was 3.78% and 1.58% at February 28, 2005 and
February 29, 2004, respectively.

Interest
rates paid on short-term borrowings, excluding the current portion of long-term borrowings, ranged from 1.89% to 7.4% and 1.58% to 2.25% for the years
ended February 28, 2005 and February 29, 2004, respectively.

Long-term borrowings

Long-term borrowings of $1,246.0 million and $383.5 million for the years ended February 28, 2005 and February 29, 2004,
respectively, consist of the following loans:

|                                                 |                                                     | February 28, 2005 |           | February 29, 2004
|------------------------------------------------ | --------------------------------------------------- | ----------------- | --------- | -----------------
|
|New Senior Credit Facility:                      |                                                     |                   |           |                  
|                                                 | Secured Term Loan                                   |                   | $         | 646,000          
|                                                 | Secured Revolving Loan                              |                   |           |                 
|9% Senior Subordinated Notes, due August 1, 2012 |                                                     |                   | 600,000   |                  
|Old Senior Notes:                                |                                                     |                   |           |                  
|                                                 | Series A Senior Notes 2004                          |                   |           |                 
|                                                 | Senior Notes 2005                                   |                   |           |                 
|                                                 | Series B Senior Notes 2006                          |                   |           |                 
|                                                 | Senior Notes 2007                                   |                   |           |                 
|                                                 | Series A Senior Notes 2007                          |                   |           |                 
|                                                 | Series B Senior Notes 2009                          |                   |           |                 
|                                                 |                                                     |                   |           |                  
|                                                 |                                                     |                   | 1,246,000 |                  
|                                                 | Less: Portion included within short-term borrowings |                   |           | 8,000            
|                                                 |                                                     |                   |           |                  
|Total long-term borrowings                       |                                                     | $                 | 1,238,000 |                  
|                                                 |                                                     |                   |           |                  

Predecessor:

The long-term borrowings represent unsecured syndicated senior notes with major financial institutions. These borrowings were subject to acceleration
in the event of a change in control and were repaid in full in connection with the Transactions on August 5, 2004.

Successor:

In connection with the Transactions on August 5, 2004, the Company entered into a new Senior Credit Facility (the "New Senior Credit Facility") and issued
9% Senior Subordinated Notes, a portion the proceeds from which was used to repay the outstanding amounts under the old senior notes and the old subordinated loan from a member.

F-19

---



The
New Senior Credit Facility provides for a $75.0 million revolving credit facility in revolving credit loans and letters of credit. The revolving credit facility matures on
August 5, 2010. The New Senior Credit Facility also provides for an $800.0 million secured term loan facility. The secured term loan facility matures on August 5, 2011. See
"Note SSubsequent Events" for additional information on the New Senior Credit Facility.

The
secured term loan facility was fully drawn immediately after the closing of the Transactions on August 5, 2004. None of the revolving credit facility had been drawn as of this
date. This facility will meet the Group's future needs for working capital and general corporate purposes.

The
New Senior Credit Facility bears interest, at the Group's option, at either the Eurodollar Rate or the Base Rate (both as defined), plus an applicable interest rate margin. The
applicable margins under the term loan facility and the revolving credit facility are determined based upon the Leverage Ratio (as defined), as set forth in the following table:

Applicable RateTerm Loans

Revolving LoansPricing
Level

Leverage Ratio

Eurodollar Rate

Base
Rate

Eurodollar Rate

Base
Rate1

>5.00:1

2.75
%
1.75
%
2.75
%
1.75
%2

>4.50:1 but £5.00:1

2.75
%
1.75
%
2.50
%
1.50
%3

>4.00:1 but £4.50:1

2.75
%
1.75
%
2.00
%
1.00
%4

£4.00:1

2.75
%
1.75
%
1.75
%
0.75
%


The
weighted average interest rates per annum in effect as of February 28, 2005 for the secured term loan facility was 4.79%. The interest rate payable under the New Senior Credit
Facility will increase by 2.00% per annum during the continuance of any payment or bankruptcy event of default.

The
New Senior Credit Facility is also secured by, among other things:



In
addition, the New Senior Credit Facility is guaranteed by New Refco and the Company's non-regulated restricted domestic subsidiaries.

On
January 24, 2005, the Group made a voluntary prepayment on the principal amount outstanding of the secured term loan facility in the amount of $150.0 million. The
write-off of the unamortized deferred financing costs in connection with the voluntary prepayment was included in interest expense.

F-20

---



On
August 5, 2004, the Company completed a financing, which consisted of the sale of $600.0 million of 9% Senior Subordinated Notes due 2012 (the "New Notes") pursuant to a
private offering. The New Notes bear interest at the rate of 9% per annum, which is payable semi-annually in cash in arrears on February 1 and August 1. The New Notes mature
on August 1, 2012. The payment of the principal of, premium, if any, and interest on the New Notes and the payment of any Subsidiary Guaranty will be subordinate in right of payment to the
prior payment in full of all Senior Indebtedness of the Issuers or the relevant Subsidiary Guarantor, as the case may be. The Company has issued 9% Senior Subordinated Notes due 2012 (the "Exchange
Notes") in exchange for all New Notes, pursuant to an exchange offer whereby holders of the New Notes will receive Exchange Notes that have been registered under the Securities Act of 1933, as
amended, having terms substantially identical in all material aspects to the New Notes, except that the Exchange Notes will not contain terms with respect to transfer restrictions.

At
any time prior to August 1, 2007, the Company may redeem up to 35% of the aggregate principal amount of the New Notes at a price of 109.000% in connection with a Designated
Offering, as defined. With the exception of a Designated Offering, the New Notes are redeemable at the option of the Company beginning August 1, 2008 at prices decreasing from 104.500% of the
principal amount thereof to par on August 1, 2010 and thereafter. Prior to August 1, 2008, the Company has the option to redeem all, but not less than all, of the New Notes at a
redemption price equal to 100% of the principal amount of the New Notes, plus an Applicable Premium, as defined, plus accrued and unpaid interest to the redemption date. The Company is not required to
make mandatory redemption or sinking fund payments with respect to the New Notes.

The
indenture for the New Notes requires the Company and its subsidiaries to comply with certain restrictive covenants, including a restriction on dividends; and limitations on the
incurrence of indebtedness, certain payments and distributions and sales of the Company's assets and stock. The
Company was in compliance with all contractual debt commitments as of February 28, 2005 and February 29, 2004, respectively.

The
New Notes are fully and unconditionally guaranteed on an unsecured, senior subordinated basis by all of the Company's active domestic non-regulated subsidiaries. The
Condensed Consolidating Financial Information in Note R provides additional guarantor/non-guarantor information.

The
table below sets out the maturities of the Group's long-term borrowings (in thousands):

Fiscal year ended2006

$
8,0002007


8,0002008


8,0002009


8,0002010


8,0002011 and thereafter


1,206,000Total

$
1,246,000


The
Group's interest expense from long-term borrowings for the period from August 6, 2004 through February 28, 2005 and the period from March 1, 2004
through August 5, 2004 was $52.6 million and $11.7 million, respectively. For the years ended February 29, 2004 and February 28, 2003, interest expense from
long-term borrowings was $31.1 million and $27.2 million, respectively.

F-21

---



Other borrowings

Subordinated debt of $16.0 million, included in the consolidated balance sheets, consists of a subordinated loan from a member. The subordinated debt
outstanding at February 29, 2004 bears interest at the prime rate and matures June 1, 2005. For the year ended February 29, 2004, the weighted-average interest rate on the
subordinated debt was 4.08%. Subordinated debt is subordinated to the claims of present and future general creditors. The subordinated debt was repaid in full in connection with the Transactions on
August 5, 2004.

NOTE ESECURITIES OWNED AND SECURITIES SOLD, NOT YET PURCHASED

Securities
owned and Securities sold, not yet purchased, consist of trading and investment securities and derivative financial instruments at market or fair value.

February 28,
2005

February 29,
2004(in thousands)Securities owned consists of:U.S. Treasuries

$
3,269,667

$
1,316,754Foreign governments


1,779,353


290,317Corporate bonds


62,529


Options


383,142


251,623Fund investments


22,528


87,233Equities


36,087


8,697Other


41,491


77,911$
5,594,797

$
2,032,535Securities sold, not yet purchased consist of:U.S. Treasuries

$
5,301,510

$
555,039Foreign governments


2,101,947


Corporate bonds


57,727


Options


364,433


251,172Other


7,405


1,274$
7,833,022

$
807,485


As
of February 28, 2005 and February 29, 2004, the Group had not pledged any securities owned as collateral with counterparties.

F-22

---





NOTE FGOODWILL

The changes in goodwill by reportable segment for the period from August 6, 2004 through February 28, 2005, the period from March 1, 2004
through August 5, 2004 and the year ended February 29, 2004 are as follows:

|                                |  | Derivatives
Brokerage &
Clearing |         | Prime
Brokerage/Capital
Markets |   | Total  
|------------------------------- |  | -------------------------------- | ------- | ------------------------------- | - | -------
|
|Predecessor:                    |  |                                  |         |                                 |   |        
|Balance as of February 28, 2003 |  | $                                | 121,971 |                                 | $ | 4,410  
|Acquisition                     |  |                                  | 19,337  |                                 |   |       
|Disposition                     |  |                                  |        |                                 |   |       
|Impairment losses               |  |                                  |        |                                 |   |       
|                                |  |                                  |         |                                 |   |        
|Balance as of February 29, 2004 |  | $                                | 141,308 |                                 | $ | 4,410  
|                                |  |                                  |         |                                 |   |        
|Acquisition                     |  |                                  |        |                                 |   |       
|Disposition                     |  |                                  |        |                                 |   |       
|Impairment losses               |  |                                  |        |                                 |   |       
|                                |  |                                  |         |                                 |   |        
|Balance as of August 5, 2004    |  | $                                | 141,308 |                                 | $ | 4,410  
|                                |  |                                  |         |                                 |   |        
|Successor:                      |  |                                  |         |                                 |   |        
|Acquisition                     |  |                                  | 286,626 |                                 |   | 429,940
|Disposition                     |  |                                  |        |                                 |   |       
|Impairment losses               |  |                                  |        |                                 |   |       
|                                |  |                                  |         |                                 |   |        
|Balance as of February 28, 2005 |  | $                                | 286,626 |                                 | $ | 429,940
|                                |  |                                  |         |                                 |   |        

Goodwill
of $716.6 million was recognized as part of the Transactions on August 5, 2004 and was assigned to Derivative Brokerage & Clearing and Prime
Brokerage/Capital Markets in the amounts of $286.6 million and $430.0 million, respectively.

NOTE GIDENTIFIABLE INTANGIBLE ASSETS

The
Company's identifiable intangible assets are comprised of the following:

|                       |  | February 28, 2005 |         | February 29, 2004
|---------------------- |  | ----------------- | ------- | -----------------
|
|
|Customer relationships |  | $                 | 357,928 |                  
|Trade names            |  |                   | 231,752 |                  
|Technology             |  |                   | 1,027   |                  
|                       |  |                   |         |                  
|                       |  | $                 | 590,707 |                  
|                       |  |                   |         |                  

Of the $573.9 million intangible assets recognized on the Transactions, $232.2 million assigned to trade names is not subject to
amortization. The remaining $341.7 million intangible assets recognized have a weighted-average economic useful life of approximately 13 years, which is comprised of customer
relationships of $340.7 million with a 13-year estimated useful life and technology of $1.0 million with a three-year estimated useful life. The Predecessor basis of the Macfutures trade

F-23

---



name
of $0.5 million has been written off due to this trade name being discontinued on November 10, 2004.

The
amortization of identifiable intangible assets included in general, administrative and other expenses for the period from August 6, 2004 through February 28, 2005, the
period from March 1, 2004 through August 5, 2004 and the years ended February 29, 2004 and February 28, 2003 was $12.5 million, $1.0 million,
$3.6 million and $4.6 million, respectively.

The
estimated amortization expense, based on current identifiable intangible balances, for the next five fiscal years beginning March 1, 2005 is as follows (in thousands):

Fiscal year2006

$
21,4652007


21,6612008


21,3592009


20,8692010


20,172


NOTE HOTHER ASSETS

Other assets are generally less liquid, non-financial assets. The following table sets forth the Group's other assets by type:

February 28,
2005

February 29,
2004(in thousands)Equity-method investments(1)

$
77,461

$
65,504Investments(2)


55,574


32,241Deferred financing costs(3)


41,572


3,239Furniture, equipment and leasehold improvements(4)


43,871


44,351Miscellaneous receivables and other


56,731


25,262Total

$
275,209

$
170,597


Equity
method investments as of February 28, 2005 comprise:

|                           |  | Principal Activity                                              |  | Percentage
Owned |   | Country of
operation |  | Carrying
Value
|-------------------------- |  | --------------------------------------------------------------- |  | ---------------- | - | -------------------- |  | --------------
|
|Forex Capital Markets, LLC |  | Spot FX broker                                                  |  | 35               | % | United States        |  | $             
|Friedberg Mercantile Group |  | Investment dealer, futures commission merchant and fund manager |  | 50               | % | Canada               |  |               
|Refco Polaris Taiwan       |  | Futures broker                                                  |  | 20               | % | Taiwan               |  |               
|                           |  |                                                                 |  |                  |   |                      |  |               
|                           |  |                                                                 |  |                  |   |                      |  | $             
|                           |  |                                                                 |  |                  |   |                      |  |               

Under
the equity method of accounting, the Company's initial investment is recorded at cost and is subsequently increased to reflect the Company's share of the investees'
income and reduced to reflect

F-24

---



the
Company's share of the investees' losses or dividends received. The Company's income from equity investees was $16.6 million, $8.3 million, $11.5 million and
$1.7 million for the period from August 6, 2004 through February 28, 2005, the period from March 1, 2004 through August 5, 2004 and the years ended
February 29, 2004 and February 28, 2003, respectively.

As
part of its corporate strategy and in the normal course of its business, the Company makes investments in companies engaged in its core business and in companies engaged in closely
related market activities. As of February 28, 2005 and February 29, 2004, the value of such investments was $55.6 million and $32.2 million, respectively.

Investments
made in core activities consist primarily of investments made in international derivative and capital market brokerage operations. As of February 28, 2005 and
February 29, 2004, international derivative brokerage investments included HanMag Futures Corp., a derivative clearing company in Seoul, Korea, Sify-India, a derivative brokerage
operation in India, Cantor Index, a broker of over-the-counter index derivatives in London, England, and ACM, an online foreign exchange brokerage operation in Geneva,
Switzerland.

As
of February 28, 2005 and February 29, 2004, related market investments also included Xinhua Financial Inc., a market leader in providing financial and commodity
research and price information to financial market users in the People's Republic of China.

A
further category of investments are investments made in software providers considered strategically important to the Company's product delivery infrastructure in derivatives and prime
brokerage. As of February 28, 2005 and February 29, 2004, the Company had investments in Easy Solutions, a leading provider of front-end order entry software for global
derivatives markets, and QV Trading, the pricing platform upon which certain of the Company's fixed income prime brokerage operations are built.

As
of February 28, 2005, unamortized deferred financing costs incurred in connection with the issuance of the New Senior Credit Facility and the New Notes (See Note D) were
$41.6 million and are amortized over the life of the related long-term borrowing. As of February 29, 2004, unamortized deferred financing costs incurred in connections with
the secured syndicated senior notes with major financial institutions was $3.2 million.

The
Group's amortization of deferred financing costs for the period from August 6, 2004 through February 28, 2005, the period from March 1, 2004 through
August 5, 2004 and the years ended February 29, 2004 and February 28, 2003 was $3.9 million, $1.2 million, $3.2 million and $2.8 million, respectively.

F-25

---



|                        |  |   |         |  |   | February 28,
2005 |  | February 29,
2004
|----------------------- |  | - | ------- |  | - | ----------------- |  | -----------------
|
|
|Furniture and equipment |  | $ | 117,182 |  | $ | 85,577            |  | $                
|Leasehold improvements  |  |   | 29,351  |  |   | 17,085            |  |                  
|                        |  |   |         |  |   |                   |  |                  
|                        |  | $ | 146,533 |  | $ | 102,662           |  | $                
|                        |  |   |         |  |   |                   |  |                  

Depreciation
and amortization expense, included in general, administrative and other expenses, was $5.6 million, $8.7 million, $21.5 million and
$18.8 million for the period from August 6, 2004 through
February 28, 2005, the period from March 1, 2004 through August 5, 2004 and the years ended February 29, 2004 and February 28, 2003, respectively.

NOTE IACQUISITIONS

On September 1, 2004, the Group entered into a purchase agreement to acquire the customer accounts and related customer assets of Pioneer Futures, a
division of Pioneer Futures Inc., for approximately $17.2 million in cash. The full amount paid has been assigned to customer relationships. These customer relationships are amortized on
an accelerated basis over a weighted-average economic useful life of 13 years, based on a preliminary valuation analysis. Pioneer Futures Inc., a Futures Commission Merchant, provides clearing
services to professional floor traders and brokers in futures and options on futures contracts and acts as a clearing firm for certain introducing brokers.

NOTE JNET CAPITAL REQUIREMENT

The Group's subsidiary Refco Securities, LLC is subject to the uniform net capital requirements of the Securities and Exchange Commission ("SEC") under
Rule 15c3-1 (the "Rule"), which requires the maintenance of minimum net capital. Refco Securities, LLC computes its net capital requirements under the alternative method provided
for in the Rule, which requires that Refco Securities, LLC maintain net capital equal to the greater of $250,000 or 2% of aggregate customer related debit items, as defined in SEC
Rule 15c3-3. The net capital rule also provides that equity capital may not be withdrawn or cash dividends paid if resulting net capital would be less than 5% of aggregate debits.
As of February 28, 2005, Refco Securities, LLC had net capital of $82.0 million, which was 24.7% of aggregate debit balances and $75.4 million in excess of required net capital.

The
Group's subsidiary Refco, LLC is subject to the Commodity Futures Trading Commission's ("CFTC") minimum financial requirements, which require that the subsidiary maintain net
capital, as defined. The requirement is equal to the greater of 4% of customer funds required to be segregated/secured pursuant to the Commodity Exchange Act less the market value of certain commodity
options, all as defined, or the sum of 8% of the customer risk maintenance margin requirement plus 4% of the non-customer risk maintenance margin requirement. The net capital rule also
provides that Refco, LLC must maintain adjusted net capital in excess of an early warning level equal to 110% of its net capital requirement. Additionally, the subsidiary is subject to certain
restrictions in reductions in capital, as defined. As of February 28, 2005, Refco, LLC had net capital of $283.9 million, which was $95.0 million in excess of required net
capital.

F-26

---



NOTE KCOMMITMENTS AND CONTINGENCIES

Lease Commitments

The Group occupies offices in various locations under operating leases expiring through 2014. Future minimum rental payments required under significant leases for
premises, excluding any escalation adjustments, are as follows (in thousands):

Fiscal year2006

$
11,6622007


11,6312008


12,0732009


8,0512010


7,578Thereafter


19,674$
70,669


The
Group's rent expense for the period from August 6, 2004 through February 28, 2005, the period from March 1, 2004 through August 6, 2004
and the years ended February 29, 2004 and February 28, 2003 was $7.4 million, $6.1 million, $14.0 million and $12.1 million, respectively.

Purchase Commitments

On June 10, 2003, the Group acquired 50% of the shares of the Friedberg Mercantile Group ("FMG"), a registered broker/investment dealer. The Group has a
commitment to purchase the remaining 50% of FMG's shares at June 10, 2008 for a maximum price of $17.9 million.

Contingencies

In the ordinary course of business, the Group has been named as a party to both litigation and administrative proceedings, certain of which are described below.

On
March 1, 2005, Trading Technologies International, Inc. ("Trading Technologies") filed an action against Refco Group Ltd., LLC, Refco, LLC and Refco
EasySolutions, LLC (collectively, the "Refco parties") in the U.S. District Court for the Northern District of Illinois, Eastern Division, alleging that the Refco parties infringed upon certain
patents owned by Trading Technologies relating to electronic trading software. In its complaint, Trading Technologies demanded a preliminary and permanent injunction against the Refco parties, as well
as unspecified damages and costs. The Refco parties filed certain counterclaims for breach of contract and attempted monopolization and an affirmative defense of patent misuse. On May 20, 2005,
Trading Technologies filed a motion to dismiss these counterclaims and affirmative defense. Trading Technologies has also announced that it has postponed its planned termination of certain licensing
agreements with the Refco parties until at least July 15, 2005.

Certain
of the Group's subsidiaries have been named in a legal proceeding in which the plaintiffs, two hedge funds and their investment managers, alleged that the subsidiaries breached a
customer agreement governing the plaintiffs' margin account when they required the plaintiffs to increase the value of collateral securing a margin loan from 60% to 100% in September 1998.

On
September 15, 2003, the Supreme Court of the State of New York granted the Group's motion for summary judgment on six of the seven claims and dismissed those claims with
prejudice. By Order

F-27

---



dated
March 16, 2004, the appellate court (Appellate Division, First Department) affirmed the trial court's decision. On May 11, 2004, the trial court granted the Group's motion to
bifurcate the trial of liability from any trial on damages. The remaining claim of liability was tried before a jury in June 2004.

On
June 17, 2004, the jury returned a verdict in favor of the plaintiffs' claim as to the Group's liability. The Group moved the trial court (a) for judgment in favor of
the Group as a matter of law, (b) to set aside the verdict and (c)(i) to direct entry of judgment for the Group as a matter of law, or (ii) in the alternative, to order a new
trial on plaintiffs' second cause of action. By memorandum decision and order dated March 3, 2005, the trial court granted the Group's post-trial motion to set aside the jury
verdict as against the weight of the evidence and ordered a new trial. Tradewinds has filed a notice of appeal of the order and the Group has filed a notice of cross appeal. The court scheduled a
pre-trial conference for August 12, 2005. If the parties' appeals have not been perfected by that date, the court will set a date for a new trial.

After
consultation with legal counsel, management believes that it is not probable that a material loss will result from the final verdict. The Group raised its margin requirements to
100% and/or terminated plaintiffs' financing on specific bonds and issued resulting margin calls to plaintiffs, who defaulted. The Appellate Division, First Department previously ruled that the Group
had the contractual right to terminate margin loans to plaintiffs and thus did not breach any express provision of the customer agreements. The Group believes the sole issue remaining for the jury to
determine was whether the Group breached the implied covenant of good faith and fair dealing when it exercised its contractual rights. The Group does not believe it breached the implied covenant when
it exercised its contractual rights. Upon retrial, the Group believes the plaintiff will not be able to sustain its burden. Accordingly, the Group has not recorded an accrual for any losses that might
arise from the final verdict.

In
2001, the Division of Enforcement of the SEC commenced an informal investigation into short sales of the stock of Sedona Corporation ("Sedona"). The SEC requested that the Group
produce documents relating to any of its accounts that traded in the stock of Sedona. In June 2001, the SEC issued a formal order of investigation into short sales of Sedona stock, as well as
other transactions. In 2002 and 2003, the Group received subpoenas from the SEC and a request for a written statement. Generally, the subpoenas and the request required the production of documents,
tapes and information regarding two of the Group's former brokers who handled the account of Amro International, S.A. ("Amro"), one of the Group's former customers which engaged in short sales of
Sedona stock, the Group's relationship with Amro and its two principals; other securities traded by Amro; and the Group's record keeping, supervisory and short sale policies and restrictions. In
October 2003, the Group received a subpoena from the United States Attorney's Office for the Southern District of New York, which called for the production of documents which had been provided
to the SEC.

In
addition to producing documents in response to the foregoing subpoenas, the Group has made their employees available to testify before the SEC and to be interviewed by the United
States Attorneys' office. The Group has been advised that it is not currently the subject of the United States Attorney's investigation. On May 16, 2005, the Group announced that its
subsidiary, Refco Securities, LLC, received a "Wells Notice" from the SEC arising out of the investigation. Under SEC procedures, Refco Securities, LLC has the opportunity to make a submission to the
SEC staff outlining why it believes any proposed enforcement action should not be brought. Refco Securities, LLC is currently

F-28

---



engaged
in discussions with the SEC staff regarding the Wells Notice and the possible resolution of this matter, and continues to cooperate fully with the SEC in respect of its investigation.

At
the present time, it is not possible to predict the ultimate outcome of the foregoing investigation with any certainty. Management has recorded a reserve for potential settlement and
related costs.

In
the opinion of management and where appropriate, in consultation with outside counsel, the resolution of these and other matters will not have a material adverse effect on the
consolidated financial condition and results of operations of the Group in future periods.

NOTE LRESTRICTED UNITS

On August 5, 2004, New Refco Group Ltd., LLC, the Company's parent, authorized 101.0 million Class A Units and issued 100.3 million
Class A Units and 7.0 million Class B Units and issued 4.4 million Class B Units, valued at $0.83 per unit, to the Group's employees. The Class A and Class B
units generally have identical rights and preferences, except the Class B Units are non-voting and have different rights as to certain distributions than the Class A Units.

One
half of the Class B Units (the "Non Performance-Based Units") will vest 25% on each of February 28, 2005, February 28, 2006, February 28, 2007 and
February 29, 2008. The other half of the Class B Units (the "Performance Units") will vest based upon the Company's achievement of EBITDA targets as defined in the agreements set forth
for each of the Company's fiscal years ended February 28, 2005, February 28, 2006, February 28, 2007 and February 29, 2008. Any unvested Performance Units will vest
automatically and immediately on the eighth anniversary date from the date of issuance if employees remain employed on a full-time basis.

On
October 31, 2004, New Refco Group Ltd., LLC declared a 202,551.721-for-one split of its Class A and Class B units (the "Unit Split"). The Unit Split entitled each
Unit holder to receive 202,550.721 units for every outstanding Class A and Class B unit held on that date. All units included in the accompanying consolidated financial statements for
all periods presented have been adjusted to retroactively reflect the Unit Split.

On
October 31, 2004, November 10, 2004 and November 19, 2004, New Refco Group Ltd., LLC issued 1,818,655.1, 40,000 and 20,000 additional Class B Units,
respectively, to the Company's employees and members of its board of managers. The units issued to the members of the Company's board of managers are all Non Performance-Based Units and will vest 25%
on each of February 28, 2005, February 28, 2006, February 28, 2007 and February 29, 2008. The fair value of the additional units is $1.32 per unit.

On
December 6, 2004, New Refco Group Ltd., LLC issued 690,000 Class B Units to its Chief Financial Officer pursuant to a restricted unit agreement. One half of the
Class B Units are Non-Performance-Based Units and the other half are Performance Units. Any unvested Performance Units will vest automatically and immediately on the eighth
anniversary date from the date of issuance if the employee remains employed on a full-time basis. The fair value of the additional units is $3.15 per unit.

Stock-based
compensation expense was $1.9 million for the period from August 6, 2004 through February 28, 2005. The fair value of the Class B Units was
calculated by a third party valuation firm

F-29

---



using
the average of the Black-Scholes option pricing model and Exit Scenarios Analysis for the initial and October valuations and the average of the Intrinsic Value and Exit Scenario Analysis for the
December valuation, with the following weighted average assumptions:

Weighted average assumptions for the initial and October valuations

|Black-Scholes option pricing model |  |            |  | Exit Scenarios Analysis |  |      |  
|---------------------------------- |  | ---------- |  | ----------------------- |  | ---- | -
|Risk-free interest rate            |  | 2.92%      |  | Exit EBITDA Multiple    |  | 8.0x |  
|                                   |  |            |  | Required rate of return |  | 30.0 | %
|Expected lives                     |  | 3.50 years |  | Capital structure       |  |      |  
|Expected volatility                |  | 21.67%     |  | Class A Units           |  | 96.0 | %
|Expected dividend rate             |  | 0.00%      |  | Class B Units           |  | 4.0  | %

For
the Class B Units issued on October 31, 2004, November 10, 2004 and November 19, 2004, a secondary exit scenario analysis was also
performed by the third party valuation firm using a required rate of return of 16.6%, and this was factored into the fair value of the Class B Units issued on these dates.

Assumptions for the December valuation

|Intrinsic Value   |  |       |  | Exit Scenario Analysis  |  |      |  
|----------------- |  | ----- |  | ----------------------- |  | ---- | -
|                  |  |       |  | Exit EBITDA Multiple    |  | 8.5x |  
|                  |  |       |  | Required rate of return |  | 30.0 | %
|Capital Structure |  |       |  | Capital Structure       |  |      |  
|Class A Units     |  | 94.3% |  | Class A Units           |  | 94.3 | %
|Class B Units     |  | 5.7%  |  | Class B Units           |  | 5.7  | %

The
values derived from these two approaches were calculated on the original grant date in August 2004, in October 2004 and in December 2004. These values derived under the two
approaches are as follows:

Fair Value per Class B UnitMethodology

Initial
Valuation

October
Valuation

December
ValuationBlack-Scholes/Intrinsic

$
0.84

$
0.79

$
1.32Exit Scenario Analysis

$
0.83

$
1.67

$
3.93


Change
in the Class B Units during the period from August 5, 2004 through February 28, 2005 is as follows:

|                                 |  | Number of Units |  
|-------------------------------- |  | --------------- | -
|
|Outstanding at August 5, 2004    |  |                |  
|Issued                           |  | 6,931           |  
|Exercised                        |  |                |  
|Forfeited                        |  | (702            | )
|                                 |  |                 |  
|Outstanding at February 28, 2005 |  | 6,229           |  
|                                 |  |                 |  

F-30

---



NOTE MVARIABLE INTEREST ENTITIES

An entity is subject to Interpretation 46 R and is called a VIE if it has (1) equity that is insufficient to permit the entity to finance its
activities without additional subordinated financial support from other parties, or (2) equity investors that cannot make significant decisions about the entity's operations, or that do not
absorb the expected losses or receive the expected returns of the entity. All other entities are evaluated for consolidation under SFAS No. 94,Consolidation of All
Majority-Owned Subsidiaries. A VIE is consolidated by its primary beneficiary, which is the party involved with the VIE that has a majority of the expected losses or a majority
of the expected residual returns or both. In addition to the VIEs that are consolidated in accordance with Interpretation 46 R, the Group has significant variable interests in certain other VIEs that
are not consolidated because the Company is not the primary beneficiary. As of February 28, 2005, the Group held variable interests in certain VIEs with respect to which the Group is deemed not
to be the primary beneficiary. Those VIEs include several managed futures funds with aggregate net asset value of approximately $481.9 million managed by several of the Company's subsidiaries
since April 1, 2003. Several of the Company's subsidiaries earn fixed investment management fees and, in certain cases, incentive fees and other fees from these managed funds. As of
February 28, 2005, the Group's maximum exposure to loss from the funds managed by these subsidiaries is not material.

NOTE NDERIVATIVE ACTIVITIES, OFF BALANCE SHEET AND CONCENTRATION OF
CREDIT RISK

In the normal course of its customer-driven operations, the Group enters into various contractual commitments, as principal, involving forward settlement. These
include exchange-traded futures, fixed income swaps, equity swaps, foreign currency forwards and option contracts. The Group generally enters into offsetting contracts to achieve economic hedges at
prices that result in a profit spread for the Group. The Group also enters into forward repurchase agreements. Customers and counterparties of the Group consist of entities in and outside the United
States.

The
Group records its contractual commitments at market or fair value. Therefore, resulting changes in market or fair value are recorded currently in income. The Group's exposure to
market risk is determined by a number of factors, including size, composition and diversification of positions held, market volatility and changes in interest and foreign exchange rates. The overall
level of market risk from financial instruments the Group is exposed to is often limited by other financial instruments recorded both on and off balance sheet. Management actively monitors its market
risk by reviewing the effectiveness of hedging strategies and setting market risk limits.

The
Group also enters into financing agreements, collateralized primarily by U.S. Government securities, in which it extends short-term credit to counterparties. The value
and adequacy of the collateral are continually monitored.

The
Group's business also includes clearing and executing futures contracts and options on futures contracts for the accounts of customers. As such, the Group guarantees to the
respective clearinghouse its customers' performance under these contracts. The Group provides clearing services of futures and options to introducing brokers. The Group may require introducing brokers
to deposit funds or pledge their exchange memberships, thereby reducing risks associated with the clearing of futures and options. Additionally, to reduce its risk, the Group requires customers to
meet, at a minimum, the margin requirements established by each of the exchanges at which the contract is traded. This margin is a good faith deposit from the customer, which reduces the risk to the
Group of failure on behalf of the

F-31

---



customer
to fulfill any obligation under the contract. To minimize its exposure to risk of loss due to market variation, the Group adjusts these margin requirements, as needed, due to daily
fluctuations in the values of the underlying positions. If necessary, certain positions may be liquidated to satisfy resulting changes in margin requirements.

The
Group is unable to develop an estimate of the maximum payout under these guarantees. However, its management believes that the margin deposits held at February 28, 2005 were
adequate to minimize the risk of material loss, which could be created by the positions held at that time, and it is unlikely the Group will have to make material payments under these arrangements.
The Group has applied the initial recognition and measurement provisions of FASB Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for
Guarantees,but has not recorded a liability for these guarantees because the estimated fair value of such guarantees was zero based on the Group's qualitative analysis.

NOTE OFAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107,Disclosures about Fair Value of Financial Instruments,requires the Group to report the fair
value of financial instruments, as defined.

Assets
and liabilities that are carried at fair value include all of the Group's securities, including derivative financial instruments used for trading purposes, which are recorded as
Securities owned and Securities sold but not yet purchased.

Assets
and liabilities, recorded at contractual amounts, that approximate market or fair value include cash, cash and securities segregated under federal and other regulations, deposits
with clearing organizations and others, short-term borrowings and payable to broker-dealers, clearing organizations and customers. The market values of such items are not materially sensitive to
shifts in market interest rates because of the limited term to maturity of these instruments and their variable interest rates.

The
Group's long-term borrowings are recorded at historical amounts, which could differ from fair value as a result of changes in market rates.

The
following table provides a summary of the fair value of the Group's long-term borrowings. The fair value of the Group's long-term borrowings was estimated
using either quoted market prices or discounted cash flow analyses based on the Group's current borrowing rates for similar types of borrowing arrangements.

|                                       |  | February 28,
2005 |           | February 29,
2004
|-------------------------------------- |  | ----------------- | --------- | -----------------
|
|Carrying value of long-term borrowings |  | $                 | 1,246,000 |                  
|Fair value of long-term borrowings     |  |                   | 1,298,927 |                  

The
Group carries its secured financing activities, including securities purchased under agreements to resell, securities borrowed, securities sold under agreements to
repurchase, securities loaned and other secured borrowings, at their original contract amount plus accrued interest. Because the majority of such financing activities are short-term in
nature, carrying value approximates fair value. Securities purchased under agreements to resell ("resale agreements") and Securities sold under agreements to

F-32

---



repurchase
("repurchase agreements") are treated as financing transactions and are carried at the amounts at which the securities will be reacquired or resold as specified in the respective agreements
plus accrued interest. The carrying amounts approximate their fair values. Where appropriate, resale and repurchase agreements with the same counterparty are reported on a net basis in accordance with
FASB Interpretation No. 41,Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements. The Group is required to
present the following table when repurchase agreements are 10% or greater of total assets.

NOTE PSECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

|                           |  | February 28, 2005
|-------------------------- |  | -----------------
|
|
|Security Type              |  |                  
|US Governments             |  | $                
|US Corporations            |  |                  
|Foreign Governments        |  |                  
|Foreign Corporations       |  |                  
|Emerging Market Government |  |                  
|Other                      |  |                  
|                           |  |                  
|                           |  | $                
|                           |  |                  

The
Group's policy is to take possession of securities purchased under resale agreements, which consist largely of securities issued by the U.S. Government. The Group
retains the right to re-pledge collateral received in secured financing transactions. As of February 28, 2005, substantially all of the collateral received had been
re-pledged in connection with these financing activities. The market value of the collateral the Group received as of February 28, 2005 and February 29, 2004 was
$201.2 billion and $124.4 billion, respectively. The Group continually monitors the market value of the underlying collateral received as compared with the related receivable, including
accrued interest, and requests additional collateral where deemed appropriate.

The
amount of risk under repurchase agreements that exceeds 10% of member's equity as of February 28, 2005 is as follows (in thousands):

Entity

Amount

Weighted average maturity
(in days)Credit Suisse First Boston

$
19,003

1.05Dresdner Bank AG


29,444

41.53JPMorgan Chase


31,767

34.26Deutsche Bank AG


15,840

1.53ING Baring


23,508

1.00Lehman Brothers Inc.


55,884

1.00Morgan Stanley & Co.


34,047

53.27UBS AG


20,059

1.00Canadian Imperial Bank of Commerce


58,114

6.82


F-33

---





NOTE QRELATED PARTY TRANSACTIONS

The Group may loan money to and may borrow money from its affiliates, members, affiliated companies and other related parties. Interest is generally charged at
prevailing market rates.

As
of February 29, 2004, the Group had a deposit with BAWAG Overseas, Inc., a third party financial institution who was a member, of $210.2 million. This balance was also
included in "Receivables from equity members" and was liquidated shortly after year-end.

Through
a joint venture with Putnam Investments, Thomas H. Lee Partners, L.P. has an indirect ownership interest in Currenex, Inc., which is a technology firm that has created an
electronic platform for trading currencies. For the period from August 6, 2004 through February 28, 2005, the period from March 1, 2004 through August 5, 2004 and the years
ended February 29, 2004 and February 28, 2003, the Company paid fees of $1.4 million, $0.3 million, $0.3 million and $0, respectively, to Currenex in connection with
the use of its platform.

NOTE RSEGMENT REPORTING

Operating segments are defined as components of an enterprise for which separate financial information is regularly available and evaluated by the chief operating
decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.

The
Group has reported the results of operations related to Forstmann-Leff International Associates, LLC as discontinued operations (see Note C). Forstmann-Leff International
Associates, LLC was previously disclosed within the Asset Management segment. The Group's remaining operations include two operating segments: (1) Derivatives Brokerage & Clearing; and
(2) Prime Brokerage/Capital Markets. The Derivatives Brokerage & Clearing business operations consist of execution and clearing
services for global exchange-traded derivatives in electronic and open outcry markets. Prime Brokerage/Capital Markets is focused on offering a variety of securities products consisting of fixed
income, equities, foreign exchange and prime brokerage. The retained assets from the Asset Management segment, Refco Alternative Investments, have become part of our Derivatives Brokerage & Clearing
segment. Segment data has been reclassified to reflect the current segment structure.

For
financial reporting purposes, and to reconcile to the amounts reported in the consolidated financial statements, we have established a Corporate & Other
non-operating segment. Corporate administration costs are not allocated to the respective segments and are included in Corporate & Other. Eliminations consist of intersegment
interest income and interest expense derived in the Group's normal course of business from intercompany funding.

F-34

---



|                                                     |                                                                                                                                                                     | Derivatives
Brokerage &
Clearing |   | Prime
Brokerage/
Capital Markets |  | Corporate &
Other |            | Eliminations |   | Total    
|---------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | - | -------------------------------- |  | ----------------- | ---------- | ------------ | - | ---------
|
|Period from August 6, 2004 through
February 28, 2005 |                                                                                                                                                                     |                                  |   |                                  |  |                   |            |              |   |          
|                                                     | Interest revenue                                                                                                                                                    |                                  | $ | 121,358                          |  | $                 | 1,868,091  |              | $ | 5,082    
|                                                     | Total revenues                                                                                                                                                      |                                  |   | 629,051                          |  |                   | 2,036,260  |              |   | 8,434    
|                                                     | Interest expense                                                                                                                                                    |                                  |   | 66,826                           |  |                   | 1,801,977  |              |   | 73,844   
|                                                     | Depreciation and amortization                                                                                                                                       |                                  |   | 3,788                            |  |                   | 8,219      |              |   | 6,039    
|                                                     | Income (loss) before provision for income taxes, income from equity investees and member's interest in earnings (losses) of subsidiary                              |                                  |   | 74,677                           |  |                   | 70,771     |              |   | (94,217  
|                                                     | Total assets                                                                                                                                                        |                                  |   | 9,303,522                        |  |                   | 50,629,868 |              |   | 719,168  
|Period from March 1, 2004 through
August 5, 2004     |                                                                                                                                                                     |                                  |   |                                  |  |                   |            |              |   |          
|                                                     | Interest revenue                                                                                                                                                    |                                  | $ | 65,265                           |  | $                 | 794,982    |              | $ | 7,256    
|                                                     | Total revenues                                                                                                                                                      |                                  |   | 445,733                          |  |                   | 913,392    |              |   | 7,970    
|                                                     | Interest expense                                                                                                                                                    |                                  |   | 36,587                           |  |                   | 743,621    |              |   | 25,948   
|                                                     | Depreciation and amortization                                                                                                                                       |                                  |   | 4,801                            |  |                   | 937        |              |   | 6,255    
|                                                     | Income (loss) before provision for income taxes, income from equity investees, members' interest in earnings of subsidiary and discontinued operations              |                                  |   | 59,790                           |  |                   | 66,681     |              |   | (27,111  
|As of and for the year ended
February 29, 2004       |                                                                                                                                                                     |                                  |   |                                  |  |                   |            |              |   |          
|                                                     | Interest revenue                                                                                                                                                    |                                  | $ | 141,897                          |  | $                 | 1,084,204  |              | $ | 20,154   
|                                                     | Total revenues                                                                                                                                                      |                                  |   | 840,308                          |  |                   | 1,267,634  |              |   | 20,180   
|                                                     | Interest expense                                                                                                                                                    |                                  |   | 62,012                           |  |                   | 979,704    |              |   | 53,367   
|                                                     | Depreciation and amortization                                                                                                                                       |                                  |   | 10,284                           |  |                   | 1,311      |              |   | 14,566   
|                                                     | Income (loss) before provision for income taxes, income from equity investees, members' interest in earnings of subsidiary and discontinued operations              |                                  |   | 121,546                          |  |                   | 124,631    |              |   | (56,715  
|                                                     | Total assets                                                                                                                                                        |                                  |   | 7,275,399                        |  |                   | 31,763,273 |              |   | 863,307  
|As of and for the year ended
February 28, 2003       |                                                                                                                                                                     |                                  |   |                                  |  |                   |            |              |   |          
|                                                     | Interest revenue                                                                                                                                                    |                                  | $ | 141,934                          |  | $                 | 2,507,557  |              | $ | 53,688   
|                                                     | Total revenues                                                                                                                                                      |                                  |   | 746,026                          |  |                   | 2,608,850  |              |   | 58,682   
|                                                     | Interest expense                                                                                                                                                    |                                  |   | 72,065                           |  |                   | 2,365,181  |              |   | 62,741   
|                                                     | Depreciation and amortization                                                                                                                                       |                                  |   | 8,010                            |  |                   | 647        |              |   | 14,842   
|                                                     | Income (loss) before provision for income taxes, dividends on preferred securities issued by subsidiaries, income from equity investees and discontinued operations |                                  |   | 76,883                           |  |                   | 100,562    |              |   | (22,614  
|                                                     | Total assets                                                                                                                                                        |                                  |   | 6,054,415                        |  |                   | 20,505,353 |              |   | 1,195,988

F-35

---



Geographic Information

The Group conducts business in three countries that individually comprise greater than 10% of revenues and long-lived assets within the last three
years. The following information provides a reasonable representation of each region's contribution to the consolidated amounts:

Period from
August 6, 2004
through
February 28,
2005

Period from
March 1, 2004
through
August 5,
2004

Year Ended
February 29,
2004

Year Ended
February 28,
2003(in thousands)Total revenues:United States

$
2,049,027

$
941,010

$
1,272,622

$
2,455,450Bermuda


202,188


139,727


325,791


411,114United Kingdom


156,008


117,053


177,461


96,524Other


72,189


58,323


98,425


83,011Total

$
2,479,412

$
1,256,113

$
1,874,299

$
3,046,099


As of
February 28,
2005

As of
February 29,
2004(in thousands)Long-lived assets:United States

$
32,417

$
35,661Bermuda


1,318


1,900United Kingdom


4,979


2,004Other


5,157


4,786Total

$
43,871

$
44,351


No
single customer accounted for greater than 10% of total revenues in the seven months ended February 28, 2005, the five months ended August 5, 2004 and
the years ended February 29, 2004 and February 28, 2003.

For
segment reporting purposes, long lived assets comprise furniture, equipment and leasehold improvements.

F-36

---



NOTE SSUBSEQUENT EVENTS

On March 15, 2005, the Group amended its New Senior Credit Facility (the "Amended Credit Facility"). Under the Amended Credit Facility, the Secured term
loan bears interest at the Group's choice of Eurodollar Rate or Base Rate plus an applicable margin based on the Debt Ratings (as defined).

The
Company has issued 9% Senior Subordinated Notes due 2012 (the "Exchange Notes") in exchange for all New Notes, and has filed a Form S-4 exchange offer registration
statements whereby holders of the New Notes will receive Exchange Notes which have been registered under the Securities Act of 1933, as amended, having terms substantially identical in all material
aspects to the New Notes. The Form S-4 exchange offer registration statement was declared effective on April 8, 2005.

The following paragraphs are unaudited:

In
April 2005, the Group acquired the customer accounts and related business operations of The League Corp. for approximately $11.2 million with an additional contingent
payment based on performance to be made after the one year period ended January 31, 2006.

Refco
Trading Services (UK) Ltd., a wholly owned subsidiary of the Company, made a cash offer to the existing shareholders of EasyScreen plc ("EasyScreen") for £15.525 per
share. This offer values the entire share capital of EasyScreen at approximately £14.8 million. The offer closed on May 31, 2005, and as of that date, the Company owned 95.3%
of the outstanding ordinary share capital of EasyScreen.

In
June 2005, the Group entered into a definitive agreement to acquire the global brokerage operations of Cargill Investor Services for $208.0 million in cash and a future
contingent cash payment of between $67.0 million and $192.0 million, based on the performance of the acquired operations.

F-37

---



NOTE TCONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following information sets forth the Group condensed consolidating financial statements as of February 28, 2005 and February 29, 2004 and for
each of the three years in the period ended February 28, 2005.

Condensed consolidating balance sheet

|                                                                                       |                                                                          | February 28, 2005                    
|-------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | -------------------------------------
|
|
|Cash and cash equivalents                                                              |                                                                          | $                                    
|Cash and securities segregated under federal and other regulations                     |                                                                          |                                      
|                                                                                       | Cash and cash equivalents                                                |                                      
|                                                                                       | Securities purchased under agreements to resell                          |                                      
|Securities purchased under agreements to resell                                        |                                                                          |                                      
|Deposits with clearing organizations and others                                        |                                                                          |                                      
|Receivables from securities borrowed                                                   |                                                                          |                                      
|Receivables from broker-dealers, clearing organizations and customers, net of reserves |                                                                          |                                      
|Securities owned, at market value or fair value                                        |                                                                          |                                      
|Investment in and advances to subsidiaries                                             |                                                                          |                                      
|Goodwill, identifiable intangible assets and other assets                              |                                                                          |                                      
|                                                                                       |                                                                          |                                      
|                                                                                       | Total assets                                                             |                                      
|                                                                                       |                                                                          |                                      
|Liabilities                                                                            |                                                                          |                                      
|                                                                                       | Short-term borrowings, including current portion of long-term borrowings |                                      
|                                                                                       | Securities sold under agreements to repurchase                           |                                      
|                                                                                       | Payable from securities loaned                                           |                                      
|                                                                                       | Payable to broker-dealers and clearing organizations                     |                                      
|                                                                                       | Payable to customers                                                     |                                      
|                                                                                       | Securities sold, not yet purchased, at market value or fair value        |                                      
|                                                                                       | Accounts payable, accrued expenses and other liabilities                 |                                      
|                                                                                       | Long-term borrowings                                                     |                                      
|                                                                                       | Subordinated debt                                                        |                                      
|                                                                                       |                                                                          |                                      
|                                                                                       |                                                                          | Total liabilities                    
|                                                                                       | Membership interests issued by subsidiary                                |                                      
|                                                                                       | Member's equity                                                          |                                      
|                                                                                       |                                                                          |                                      
|                                                                                       |                                                                          | Total liabilities and member's equity
|                                                                                       |                                                                          |                                      

F-38

---



Condensed consolidating balance sheet

|                                                                                       |                                                                          | February 29, 2004                    
|-------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | -------------------------------------
|
|
|Cash and cash equivalents                                                              |                                                                          | $                                    
|Cash and securities segregated under federal and other regulations                     |                                                                          |                                      
|                                                                                       | Cash and cash equivalents                                                |                                      
|                                                                                       | Securities purchased under agreements to resell                          |                                      
|Securities purchased under agreements to resell                                        |                                                                          |                                      
|Deposits with clearing organizations and others                                        |                                                                          |                                      
|Receivables from securities borrowed                                                   |                                                                          |                                      
|Receivables from broker-dealers, clearing organizations and customers, net of reserves |                                                                          |                                      
|Receivables from equity members                                                        |                                                                          |                                      
|Securities owned, at market value or fair value                                        |                                                                          |                                      
|Investment in and advances to subsidiaries                                             |                                                                          |                                      
|Assets of discontinued operations                                                      |                                                                          |                                      
|Goodwill, identifiable intangible assets and other assets                              |                                                                          |                                      
|                                                                                       |                                                                          |                                      
|                                                                                       |                                                                          | Total assets                         
|                                                                                       |                                                                          |                                      
|Liabilities                                                                            |                                                                          |                                      
|                                                                                       | Short-term borrowings, including current portion of long-term borrowings |                                      
|                                                                                       | Securities sold under agreements to repurchase                           |                                      
|                                                                                       | Payable from securities loaned                                           |                                      
|                                                                                       | Payable to broker-dealers and clearing organizations                     |                                      
|                                                                                       | Payable to customers                                                     |                                      
|                                                                                       | Securities sold, not yet purchased, at market value or fair value        |                                      
|                                                                                       | Liabilities of discontinued operations                                   |                                      
|                                                                                       | Accounts payable, accrued expenses and other liabilities                 |                                      
|Long-term borrowings                                                                   |                                                                          |                                      
|Subordinated debt                                                                      |                                                                          |                                      
|                                                                                       |                                                                          |                                      
|                                                                                       |                                                                          | Total liabilities                    
|Membership interests issued by subsidiary                                              |                                                                          |                                      
|Members' equity                                                                        |                                                                          |                                      
|                                                                                       |                                                                          |                                      
|                                                                                       |                                                                          | Total liabilities and members' equity
|                                                                                       |                                                                          |                                      

F-39

---





Condensed consolidating statement of income

|                                                     |                                                                                                                             | Period from August 6, 2004 through February 28, 2005 |        
|---------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | -------
|
|Revenues                                             |                                                                                                                             |                                                      |        
|                                                     | Commissions and brokerage                                                                                                   |                                                      | $      
|                                                     | Interest                                                                                                                    |                                                      |        
|                                                     | Principal transactions, net                                                                                                 |                                                      |        
|                                                     | Asset management and advisory fees                                                                                          |                                                      |        
|                                                     | Other                                                                                                                       |                                                      |        
|                                                     |                                                                                                                             |                                                      |        
|                                                     |                                                                                                                             | Total revenues                                       |        
|                                                     |                                                                                                                             |                                                      |        
|Expenses                                             |                                                                                                                             |                                                      |        
|                                                     | Commissions and order execution costs                                                                                       |                                                      |        
|                                                     | Interest                                                                                                                    |                                                      |        
|                                                     | Employee compensation and benefits                                                                                          |                                                      |        
|                                                     | General, administrative and other                                                                                           |                                                      |        
|                                                     |                                                                                                                             |                                                      |        
|                                                     |                                                                                                                             | Total expenses                                       |        
|                                                     |                                                                                                                             |                                                      |        
|Equity in net income (loss) of subsidiaries          |                                                                                                                             |                                                      | 164,381
|                                                     | Income (loss) before provision for income taxes, income from equity investees and member's interest in losses of subsidiary |                                                      |        
|(Benefit from) provision for income taxes            |                                                                                                                             |                                                      | (110   
|                                                     |                                                                                                                             |                                                      |        
|                                                     | Income (loss) before income from equity investees and member's interest in losses of subsidiary                             |                                                      |        
|Income from equity investees                         |                                                                                                                             |                                                      |       
|Member's interest in earnings (losses) of subsidiary |                                                                                                                             |                                                      |       
|                                                     |                                                                                                                             |                                                      |        
|                                                     |                                                                                                                             | Net income (loss)                                    |        
|                                                     |                                                                                                                             |                                                      |        

F-40

---



Condensed consolidating statement of income

|                                            |                                                                                                                                                        | Period from March 1, 2004 through August 5, 2004
|------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------
|
|
|Revenues                                    |                                                                                                                                                        |                                                 
|                                            | Commissions and brokerage                                                                                                                              |                                                 
|                                            | Interest                                                                                                                                               |                                                 
|                                            | Principal transactions, net                                                                                                                            |                                                 
|                                            | Asset management and advisory fees                                                                                                                     |                                                 
|                                            | Other                                                                                                                                                  |                                                 
|                                            |                                                                                                                                                        |                                                 
|                                            |                                                                                                                                                        | Total revenues                                  
|                                            |                                                                                                                                                        |                                                 
|Expenses                                    |                                                                                                                                                        |                                                 
|                                            | Commissions and order execution costs                                                                                                                  |                                                 
|                                            | Interest                                                                                                                                               |                                                 
|                                            | Employee compensation and benefits                                                                                                                     |                                                 
|                                            | General, administrative and other                                                                                                                      |                                                 
|                                            |                                                                                                                                                        |                                                 
|                                            |                                                                                                                                                        | Total expenses                                  
|                                            |                                                                                                                                                        |                                                 
|Equity in net income (loss) of subsidiaries |                                                                                                                                                        |                                                 
|                                            | Income (loss) before provision for income taxes, income from equity investees, members' interest in earnings of subsidiary and discontinued operations |                                                 
|Provision for income taxes                  |                                                                                                                                                        |                                                 
|                                            |                                                                                                                                                        |                                                 
|                                            | Income (loss) before income from equity investees, members' interest in earnings of subsidiary and discontinued operations                             |                                                 
|Income from equity investees                |                                                                                                                                                        |                                                 
|Members' interest in earnings of subsidiary |                                                                                                                                                        |                                                 
|                                            |                                                                                                                                                        |                                                 
|                                            | Income (loss) from continuing operations                                                                                                               |                                                 
|Discontinued operations:                    |                                                                                                                                                        |                                                 
|                                            | Income from discontinued operations                                                                                                                    |                                                 
|                                            | Applicable income tax expense                                                                                                                          |                                                 
|                                            |                                                                                                                                                        |                                                 
|                                            |                                                                                                                                                        | Net income (loss)                               
|                                            |                                                                                                                                                        |                                                 

F-41

---



Condensed consolidating statement of income

|                                            |                                       | Year Ended February 29, 2004                                                                                                                           |                  
|------------------------------------------- | ------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------
|
|
|Revenues                                    |                                       |                                                                                                                                                        |                  
|                                            | Commissions and brokerage             |                                                                                                                                                        | $                
|                                            | Interest                              |                                                                                                                                                        |                  
|                                            | Principal transactions, net           |                                                                                                                                                        |                  
|                                            | Asset management and advisory fees    |                                                                                                                                                        |                  
|                                            | Other                                 |                                                                                                                                                        |                  
|                                            |                                       |                                                                                                                                                        |                  
|                                            |                                       | Total revenues                                                                                                                                         |                  
|                                            |                                       |                                                                                                                                                        |                  
|Expenses                                    |                                       |                                                                                                                                                        |                  
|                                            | Commissions and order execution costs |                                                                                                                                                        |                  
|                                            | Interest                              |                                                                                                                                                        |                  
|                                            | Employee compensation and benefits    |                                                                                                                                                        |                  
|                                            | General, administrative and other     |                                                                                                                                                        |                  
|                                            |                                       |                                                                                                                                                        |                  
|                                            |                                       | Total expenses                                                                                                                                         |                  
|                                            |                                       |                                                                                                                                                        |                  
|Equity in net income (loss) of subsidiaries |                                       |                                                                                                                                                        | 236,015          
|                                            |                                       | Income (loss) before provision for income taxes, income from equity investees, members' interest in earnings of subsidiary and discontinued operations |                  
|Provision for income taxes                  |                                       |                                                                                                                                                        |                 
|                                            |                                       |                                                                                                                                                        |                  
|                                            |                                       | Income (loss) before income from equity investees, members' interest in earnings of subsidiary and discontinued operations                             |                  
|Income from equity investees                |                                       |                                                                                                                                                        |                 
|Members' interest in earnings of subsidiary |                                       |                                                                                                                                                        |                 
|                                            |                                       |                                                                                                                                                        |                  
|                                            |                                       | Income (loss) from continuing operations                                                                                                               |                  
|Discontinued operations:                    |                                       |                                                                                                                                                        |                  
|                                            |                                       | Loss from discontinued operations                                                                                                                      |                  
|                                            |                                       | Applicable income tax expense                                                                                                                          |                  
|                                            |                                       |                                                                                                                                                        |                  
|                                            |                                       |                                                                                                                                                        | Net income (loss)
|                                            |                                       |                                                                                                                                                        |                  

F-42

---



Condensed consolidating statement of income

|                                                       |                                       | Year Ended February 28, 2003                                                                                                                                       
|------------------------------------------------------ | ------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|Revenues                                               |                                       |                                                                                                                                                                    
|                                                       | Commissions and brokerage             |                                                                                                                                                                    
|                                                       | Interest                              |                                                                                                                                                                    
|                                                       | Principal transactions, net           |                                                                                                                                                                    
|                                                       | Asset management and advisory fees    |                                                                                                                                                                    
|                                                       | Other                                 |                                                                                                                                                                    
|                                                       |                                       |                                                                                                                                                                    
|                                                       |                                       | Total revenues                                                                                                                                                     
|                                                       |                                       |                                                                                                                                                                    
|Expenses                                               |                                       |                                                                                                                                                                    
|                                                       | Commissions and order execution costs |                                                                                                                                                                    
|                                                       | Interest                              |                                                                                                                                                                    
|                                                       | Employee compensation and benefits    |                                                                                                                                                                    
|                                                       | General, administrative and other     |                                                                                                                                                                    
|                                                       |                                       |                                                                                                                                                                    
|                                                       |                                       | Total expenses                                                                                                                                                     
|                                                       |                                       |                                                                                                                                                                    
|Equity in net income (loss) of subsidiaries            |                                       |                                                                                                                                                                    
|                                                       |                                       | Income (loss) before provision for income taxes, dividends on preferred securities issued by subsidiaries, income from equity investees and discontinued operations
|Provision for income taxes                             |                                       |                                                                                                                                                                    
|                                                       |                                       |                                                                                                                                                                    
|                                                       |                                       | Income (loss) before dividends on preferred securities issued by subsidiaries, income from equity investees and discontinued operations                            
|Dividends on preferred securities issued by subsidiary |                                       |                                                                                                                                                                    
|Income from equity investees                           |                                       |                                                                                                                                                                    
|                                                       |                                       |                                                                                                                                                                    
|                                                       |                                       | Income (loss) from continuing operations                                                                                                                           
|Discontinued operations:                               |                                       |                                                                                                                                                                    
|                                                       |                                       | Income from discontinued operations                                                                                                                                
|                                                       |                                       | Applicable income tax expense                                                                                                                                      
|                                                       |                                       |                                                                                                                                                                    
|                                                       |                                       |                                                                                                                                                                    
|                                                       |                                       |                                                                                                                                                                    

F-43

---



Condensed consolidating statement of cash flows

|                                               |                                                                   | Period from August 6, 2004 through February 28, 2005 |        
|---------------------------------------------- | ----------------------------------------------------------------- | ---------------------------------------------------- | -------
|
|
|Net cash generated from operating activities   |                                                                   | $                                                    | 122,637
|Cash flows from investing activities           |                                                                   |                                                      |        
|                                               | Payment of acquisition fees                                       |                                                      |        
|                                               | Acquisition of businesses, net of cash acquired                   |                                                      |        
|                                               |                                                                   |                                                      |        
|                                               | Net cash used in investing activities                             |                                                      |        
|                                               |                                                                   |                                                      |        
|                                               | Cash flows from financing activities                              |                                                      |        
|                                               |                                                                   | Proceeds from new borrowings                         |        
|                                               |                                                                   | Repayment of long-term borrowings                    |        
|                                               |                                                                   | Payment to former shareholders                       |        
|                                               | Payment to former shareholder for sale of interest in predecessor |                                                      |        
|                                               | Payment of deferred financing costs                               |                                                      |        
|                                               | Withdrawals of interests by members of subsidiary                 |                                                      |        
|                                               | Capital withdrawals                                               |                                                      |        
|                                               |                                                                   |                                                      |        
|                                               | Net cash used in financing activities                             |                                                      |        
|                                               |                                                                   |                                                      |        
|                                               | Net increase in cash and cash equivalents                         |                                                      |        
|Cash and cash equivalents, beginning of period |                                                                   |                                                      |       
|                                               |                                                                   |                                                      |        
|Cash and cash equivalents, end of period       |                                                                   | $                                                    |       
|                                               |                                                                   |                                                      |        

F-44

---



|                                                       |                                                   | Period from March 1, 2004 through August 5, 2004  |        
|------------------------------------------------------ | ------------------------------------------------- | ------------------------------------------------- | -------
|
|
|Net cash generated from (used in) operating activities |                                                   | $                                                 | 590,536
|Cash flows from investing activities                   |                                                   |                                                   |        
|                                                       | Distribution of cash in Asset Management business |                                                   |        
|                                                       | Payment of acquisition fees                       |                                                   |        
|                                                       |                                                   |                                                   |        
|                                                       | Net cash used in investing activities             |                                                   |        
|                                                       |                                                   |                                                   |        
|Cash flows from financing activities                   |                                                   |                                                   |        
|                                                       |                                                   | Repayment of long-term borrowings                 |        
|                                                       |                                                   | Distribution of cash                              |        
|                                                       |                                                   | Withdrawals of interests by members of subsidiary |        
|                                                       |                                                   |                                                   |        
|                                                       |                                                   | Net cash used in financing activities             |        
|                                                       |                                                   |                                                   |        
|                                                       |                                                   | Net cash used in discontinued operations          |        
|                                                       |                                                   |                                                   |        
|                                                       |                                                   | Net decrease in cash and cash equivalents         |        
|Cash and cash equivalents, beginning of period         |                                                   |                                                   |       
|                                                       |                                                   |                                                   |        
|Cash and cash equivalents, end of period               |                                                   | $                                                 |       
|                                                       |                                                   |                                                   |        

F-45

---



|                                             |                                                                       | Year Ended February 29, 2004 |                                          
|-------------------------------------------- | --------------------------------------------------------------------- | ---------------------------- | -----------------------------------------
|
|
|Net cash generated from operating activities |                                                                       | $                            | 387,774                                  
|Cash flows from investing activities         |                                                                       |                              |                                          
|                                             | Acquisition of businesses, net of cash acquired                       |                              |                                          
|                                             |                                                                       |                              |                                          
|                                             | Net cash used in investing activities                                 |                              |                                          
|Cash flows from financing activities         |                                                                       |                              |                                          
|                                             | Repayment of long-term borrowings                                     |                              |                                          
|                                             | Payment for redemption of preferred securities issued by subsidiaries |                              |                                          
|                                             | Net contributions to membership interest issued by subsidiary         |                              |                                          
|                                             | Capital withdrawals                                                   |                              |                                          
|                                             |                                                                       |                              |                                          
|                                             |                                                                       |                              | Net cash used in financing activities    
|                                             |                                                                       |                              |                                          
|                                             |                                                                       |                              | Net cash used in discontinued operations 
|                                             |                                                                       |                              |                                          
|                                             |                                                                       |                              | Net increase in cash and cash equivalents
|Cash and cash equivalents, beginning of year |                                                                       |                              |                                         
|                                             |                                                                       |                              |                                          
|Cash and cash equivalents, end of year       |                                                                       | $                            |                                         
|                                             |                                                                       |                              |                                          

|                                                       |                                                 | Year Ended February 28, 2003 |                                             
|------------------------------------------------------ | ----------------------------------------------- | ---------------------------- | --------------------------------------------
|
|
|Net cash (used in) generated from operating activities |                                                 | $                            | (54,500                                     
|Cash flows from investing activities                   |                                                 |                              |                                             
|                                                       | Acquisition of businesses, net of cash acquired |                              |                                             
|                                                       |                                                 |                              |                                             
|                                                       | Net cash used in investing activities           |                              |                                             
|Cash flows from financing activities                   |                                                 |                              |                                             
|                                                       | Issuance of long-term debt                      |                              |                                             
|                                                       | Repayment of long-term borrowings               |                              |                                             
|                                                       | Capital withdrawals                             |                              |                                             
|                                                       |                                                 |                              |                                             
|                                                       |                                                 |                              | Net cash generated from financing activities
|                                                       |                                                 |                              |                                             
|                                                       |                                                 |                              | Net cash used in discontinued operations    
|                                                       |                                                 |                              |                                             
|                                                       |                                                 |                              | Net increase in cash and cash equivalents   
|Cash and cash equivalents, beginning of year           |                                                 |                              |                                            
|                                                       |                                                 |                              |                                             
|Cash and cash equivalents, end of year                 |                                                 | $                            |                                            
|                                                       |                                                 |                              |                                             

F-46

---



NOTE UQUARTERLY SUPPLEMENTAL INFORMATION

The following represents the Group's unaudited quarterly results for the years ended February 28, 2005 and February 29, 2004. These quarterly
results were prepared in accordance with U.S. generally accepted accounting principles and reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair
statement of the results.

|               |  | Year Ended February 28, 2005
|-------------- |  | ----------------------------
|
|
|Total revenues |  | $                           
|Net income     |  |                             

|               |  | Year Ended February 29, 2004
|-------------- |  | ----------------------------
|
|
|Total revenues |  | $                           
|Net income     |  |                             

---

F-47

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Member ofRefco Group Ltd., LLC

We
have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) the consolidated financial statements of Refco Group Ltd., LLC
(the "Successor") and subsidiaries and the consolidated financial statements of Refco Group Ltd., LLC (the "Predecessor") and subsidiaries referred to in our respective reports dated
May 24, 2005, which are included in the Prospectus constituting Part I of this Registration Statement. Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedules I and II listed in Item 16 are presented for purposes of additional analysis and are not a required part of the basic financial
statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

GRANT
THORNTON LLP

New
York, New York
May 24, 2005

---



Schedule I

Condensed Financial Information of Refco Group Ltd., LLC

REFCO GROUP LTD., LLC  CONDENSED BALANCE SHEETS  (Parent Company Only)

|                                                                      |                                                                          | Successor
February 28,
2005           |           | Predecessor
February 29,
2004
|--------------------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------- | --------- | -----------------------------
|
|Receivables from broker-dealers, clearing organizations and customers |                                                                          | $                                     | 125,796   |                              
|Investment in and advances to subsidiaries                            |                                                                          |                                       | 2,472,182 |                              
|Other assets                                                          |                                                                          |                                       | 95,352    |                              
|                                                                      |                                                                          |                                       |           |                              
|                                                                      |                                                                          | Total assets                          |           | $                            
|                                                                      |                                                                          |                                       |           |                              
|Liabilities                                                           |                                                                          |                                       |           |                              
|                                                                      | Short-term borrowings, including current portion of long-term borrowings |                                       | $         | 8,000                        
|                                                                      | Payable to customers                                                     |                                       |           | 1,237,776                    
|                                                                      | Accounts payable, accrued expenses and other liabilities                 |                                       |           | 56,804                       
|Long-term borrowings                                                  |                                                                          |                                       | 1,238,000 |                              
|Subordinated debt                                                     |                                                                          |                                       |          |                              
|                                                                      |                                                                          |                                       |           |                              
|                                                                      |                                                                          | Total liabilities                     |           |                              
|Members' equity                                                       |                                                                          |                                       | 152,750   |                              
|                                                                      |                                                                          |                                       |           |                              
|                                                                      |                                                                          | Total liabilities and members' equity |           | $                            
|                                                                      |                                                                          |                                       |           |                              

The
accompanying notes are an integral part of these financial statements.

---



REFCO GROUP LTD., LLC  CONDENSED STATEMENTS OF INCOME  (Parent Company Only)

|                                     |                                    | Successor                                |         | Predecessor
|------------------------------------ | ---------------------------------- | ---------------------------------------- | ------- | -----------
|
|
|
|
|Revenues                             |                                    |                                          |         |            
|                                     | Interest                           |                                          | $       | 3,115      
|                                     | Other                              |                                          |         | 3,348      
|                                     |                                    |                                          |         |            
|                                     |                                    | Total revenues                           |         |            
|                                     |                                    |                                          |         |            
|Expenses                             |                                    |                                          |         |            
|                                     | Interest                           |                                          |         | 63,471     
|                                     | Employee compensation and benefits |                                          |         | 9,537      
|                                     | General, administrative and other  |                                          |         | 19,638     
|                                     |                                    |                                          |         |            
|                                     |                                    | Total expenses                           |         |            
|                                     |                                    |                                          |         |            
|Equity in net income of subsidiaries |                                    |                                          | 164,381 |            
|                                     |                                    | Income before provision for income taxes |         |            
|Provision for income taxes           |                                    |                                          | (110    | )          
|                                     |                                    |                                          |         |            
|Net income                           |                                    | $                                        | 78,308  |            
|                                     |                                    |                                          |         |            

The
accompanying notes are an integral part of these financial statements.

---



REFCO GROUP LTD., LLC  CONDENSED STATEMENTS OF CASH FLOWS  (Parent Company Only)

|                                                       |                                                                       |                                                     |         | Predecessor |        
|------------------------------------------------------ | --------------------------------------------------------------------- | --------------------------------------------------- | ------- | ----------- | -------
|
|
|
|Net cash generated from (used in) operating activities |                                                                       | $                                                   | 122,637 |             | $      
|Cash flows from investing activities                   |                                                                       |                                                     |         |             |        
|                                                       | Payment of acquisition fees                                           |                                                     |         | (46,989     | )      
|                                                       |                                                                       |                                                     |         |             |        
|                                                       |                                                                       | Net cash used in investing activities               |         |             | (46,989
|                                                       |                                                                       |                                                     |         |             |        
|Cash flows from financing activities                   |                                                                       |                                                     |         |             |        
|                                                       | Proceeds from long-term borrowings                                    |                                                     |         | 1,400,000   |        
|                                                       | Repayment of long-term borrowings                                     |                                                     |         | (539,436    | )      
|                                                       | Payment to former shareholders                                        |                                                     |         | (19,815     | )      
|                                                       | Payment to former shareholders for sale of interest in predecessor    |                                                     |         | (861,749    | )      
|                                                       | Payment of deferred financing costs                                   |                                                     |         | (43,648     | )      
|                                                       | Payment for redemption of preferred securities issued by subsidiaries |                                                     |         |            |        
|                                                       | Distribution of cash                                                  |                                                     |         |            |        
|                                                       | Capital withdrawals                                                   |                                                     |         | (11,000     | )      
|                                                       |                                                                       |                                                     |         |             |        
|                                                       |                                                                       | Net cash (used in) provided by financing activities |         |             | (75,648
|                                                       |                                                                       |                                                     |         |             |        
|                                                       |                                                                       | Net increase in cash and cash equivalents           |         |             |       
|Cash and cash equivalents, beginning of period         |                                                                       |                                                     |        |             |        
|                                                       |                                                                       |                                                     |         |             |        
|Cash and cash equivalents, end of period               |                                                                       | $                                                   |        |             | $      
|                                                       |                                                                       |                                                     |         |             |        

The
accompanying notes are an integral part of these financial statements.

---



REFCO GROUP LTD., LLC  NOTES TO CONDENSED FINANCIAL STATEMENTS  (Parent Company Only)

NOTE ASUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The condensed unconsolidated financial statements of Refco Group Ltd., LLC (the "Parent Company") should be read in conjunction with the consolidated
financial statements Refco Group Ltd., LLC and subsidiaries (collectively the "Consolidated Company") and the notes thereto. Equity in net assets of subsidiaries (investments in affiliates) is
accounted for in accordance with the equity method of accounting.

For
purposes of identification and description, Refco Group Ltd., LLC is referred to as the "Predecessor" for the period prior to the Transactions, and the "Successor" for the
period subsequent to the Transactions.

The Transactions

On June 8, 2004, THL Refco Acquisition Partners entered into an equity purchase and merger agreement with the Parent Company, Refco Group
Holdings, Inc. ("RGHI") and certain other parties, which was amended on July 9, 2004 (the "Purchase Agreement"). The Purchase Agreement provided for a series of transactions that
resulted in New Refco Group Ltd., LLC ("New Refco") becoming the Parent Company's parent and THL Refco Acquisition Partners and its affiliates and co-investors acquiring a 56.7%
interest in New Refco, based on a valuation of New Refco of $2.3 billion, following the closing of the Transactions on August 5, 2004. THL Refco Acquisition Partners and its affiliates
are affiliates of Thomas H. Lee Partners, L.P. Thomas H. Lee Partners, L.P. is a leading private equity firm focused on identifying and acquiring substantial ownership stakes in mid-to
large-cap growth companies.

For
information on other significant accounting policies, refer to the notes to the consolidated financial statements of the Consolidated Company.

NOTE BSHORT-TERM BORROWINGS, LONG-TERM BORROWINGS AND OTHER BORROWINGS

Short-term borrowings

Short-term borrowings represent the portion of long-term borrowings maturing within one year and certain long-term borrowings
that may be payable within one year at the option of the holder. The carrying value of these short-term obligations approximates fair value due to their short-term nature.

Bank
loans are generally from major money center banks and are primarily payable on demand. Interest is paid at prevailing short-term market rates. The Parent Company enters
into loan agreements with banks, which may be collateralized by letters of credit or other forms of collateral. Generally, the amounts pledged represent the underlying collateral for the Parent
Company's receivables from customers.

Short-term
borrowings at year end are set forth below:

February 28, 2005

February 29, 2004(in thousands)Bank loans

$


$
20,890Current portion of long-term borrowings


8,000


68,000Total

$
8,000

$
88,890


---



Long-term borrowings

Long-term borrowings of $1,246.0 million and $383.5 million for 2005 and 2004, respectively, represents unsecured syndicated senior
notes with major financial institutions. Long-term borrowings consist of the following loans:

February 28, 2005

February 29, 2004(in thousands)New Senior Credit Facility:Secured Term Loan

$
646,000

$
Secured Revolving Loan





9% Senior Subordinated Notes, due August 1, 2012


600,000


Old Senior Notes:Series A Senior Notes 2004





17,000Senior Notes 2005





74,000Series B Senior Notes 2006





14,000Senior Notes 2007





56,000Series A Senior Notes 2007





100,000Series B Senior Notes 2009





122,500$
1,246,000

$
383,500


Predecessor:

The long-term borrowings represent unsecured syndicated senior notes with major financial institutions. These borrowings were subject to acceleration
in the event of a change in control and were repaid in full in connection with the Transactions on August 5, 2004.

Successor:

In connection with the Transactions on August 5, 2004, the Parent Company entered into a new Senior Credit Facility (the "New Senior Credit Facility") and
issued 9% Senior Subordinated Notes, a portion the proceeds from which was used to repay the outstanding amounts under the old senior notes and the old subordinated loan from a member.

The
New Senior Credit Facility provides for a $75.0 million revolving credit facility in revolving credit loans and letters of credit. The revolving credit facility matures on
August 5, 2010. The New Senior Credit Facility also provides for an $800.0 million secured term loan facility. The secured term loan facility matures on August 5, 2011.

The
secured term loan facility was fully drawn immediately after the closing of the Transactions on August 5, 2004. None of the revolving credit facility had been drawn as of this
date. This facility will meet the Group's future needs for working capital and general corporate purposes.

The
New Senior Credit Facility bears interest, at the Group's option, at either the Eurodollar Rate or the Base Rate (both as defined), plus an applicable interest rate margin. The
applicable margins

---



under
the term loan facility and the revolving credit facility are determined based upon the Leverage Ratio (as defined), as set forth in the following table:

|  |  |                     |  | Applicable Rate |  
|- |  | ------------------- |  | --------------- | -
|
|
|1 |  | >5.00:1             |  | 2.75            | %
|2 |  | >4.50:1 but £5.00:1 |  | 2.75            | %
|3 |  | >4.00:1 but £4.50:1 |  | 2.75            | %
|4 |  | £4.00:1             |  | 2.75            | %

The
weighted average interest rate per annum in effect as of February 28, 2005 for the secured term loan facility was 4.79%. The interest rate payable under the New Senior Credit
Facility will increase by 2.00% per annum during the continuance of any payment or bankruptcy event of default.

The
New Senior Credit Facility is also secured by, among other things:



In
addition, the New Senior Credit Facility is guaranteed by New Refco and the Parent Company's non-regulated restricted domestic subsidiaries.

On
August 5, 2004, the Parent Company completed a financing, which consisted of the sale of $600.0 million of 9% Senior Subordinated Notes due 2012 (the "New Notes")
pursuant to a private offering. The New Notes bear interest at the rate of 9% per annum, which is payable semi-annually in cash in arrears on February 1 and August 1. The New
Notes mature on August 1, 2012. The payment of the principal of, premium, if any, and interest on the New Notes and the payment of any Subsidiary Guaranty will be subordinate in right of
payment to the prior payment in full of all Senior Indebtedness of the Issuers or the relevant Subsidiary Guarantor, as the case may
be. The Parent Company has issued 9% Senior Subordinated Notes due 2012 (the "Exchange Notes") in exchange for all New Notes, pursuant to an exchange offer whereby holders of the New Notes will
receive Exchange Notes that have been registered under the Securities Act of 1933, as amended, having terms substantially identical in all material aspects to the New Notes, except that the Exchange
Notes will not contain terms with respect to transfer restrictions.

At
any time prior to August 1, 2007, the Parent Company may redeem up to 35% of the aggregate principal amount of the New Notes at a price of 109.000% in connection with a
Designated Offering, as defined. With the exception of a Designated Offering, the New Notes are redeemable at the option of the Parent Company beginning August 1, 2008 at prices decreasing from
104.500% of the principal amount thereof to par on August 1, 2010 and thereafter. Prior to August 1, 2008, the Parent Company has the option to redeem all, but not less than all, of the
New Notes at a redemption price equal to 100% of the principal amount of the New Notes, plus an Applicable Premium, as defined, plus accrued and unpaid interest to the redemption date. The Parent
Company is not required to make mandatory redemption or sinking fund payments with respect to the New Notes.

---



The
indenture for the New Notes requires the Parent Company and its subsidiaries to comply with certain restrictive covenants, including a restriction on dividends; and limitations on
the incurrence of indebtedness, certain payments and distributions and sales of the Parent Company's assets and stock. The Parent Company was in compliance with all contractual debt commitments as of
February 28, 2005 and February 29, 2004, respectively.

The
New Notes are fully and unconditionally guaranteed on an unsecured, senior subordinated basis by all of the Parent Company's active domestic non-regulated subsidiaries.

The
table below sets out the maturities of the Parent Company's long-term borrowings.

Year EndedFebruary 28,
2005

February 29,
2004(in thousands)2005

$


$
68,0002006


8,000


51,0002007


8,000


28,0002008


8,000


114,0002009


8,000


2010


8,000


122,5002011 and thereafter


1,206,000


Total Senior Note Liabilities

$
1,246,000

$
383,500Less:Portion included within short-term borrowings


8,000


68,000Total Long-term Senior Note Liabilities

$
1,238,000

$
315,500


The
Parent Company's interest expense from long-term borrowings for the period from August 6, 2004 through February 28, 2005 and for the period
from March 1, 2004 through August 5, 2004 was $52.6 million and $11.7 million, respectively. For the years ended February 29, 2004 and February 28, 2003,
interest expense from long-term borrowings was $31.1 million and $27.2 million, respectively.

Other borrowings

Subordinated debt of $16.0 million for the year ended February 29, 2004, included in the condensed balance sheets, consists of a subordinated loan
from a member. The subordinated debt outstanding at February 29, 2004 bears interest at the prime rate and matures June 1, 2005. For the year ended February 29, 2004, the
weighted-average interest rate on the subordinated debt was 4.08%. Subordinated debt is subordinated to the claims of present and future general creditors. The subordinated debt was repaid in full in
connection with the Transactions on August 5, 2004.

Contractual debt commitments

The Parent Company's contractual debt commitments are governed by certain agreements which require that the Consolidated Company maintain specified levels of
liquidity, net worth, funded debt to cash flow and cash flow to interest coverage.

NOTE CRESTRICTED UNITS

On August 5, 2004, New Refco authorized 101.0 million Class A Units and issued 100.3 million Class A Units and
7.0 million Class B Units and issued 4.4 million Class B Units, valued at $0.83 per unit, to the Consolidated Company's employees. The Class A and Class B
units generally have identical rights and preferences, except the Class B Units are non-voting and have different rights as to certain distributions than the Class A Units.

One
half of the Class B Units (the "Non Performance-Based Units") will vest 25% on each of February 28, 2005, February 28, 2006, February 28, 2007 and
February 29, 2008. The other half of the Class B Units (the "Performance Units") will vest based upon the Consolidated Company's

---



achievement
of EBITDA targets as defined in the agreements set forth for each of the Consolidated Company's fiscal years ended February 28, 2005, February 28, 2006, February 28,
2007 and February 29, 2008. Any unvested Performance Units will vest automatically and immediately on the eighth anniversary date from the date of issuance if employees remain employed on a
full-time basis.

On
October 31, 2004, New Refco declared a 202,551.721-for-one split of its Class A and Class B units (the "Unit Split"'). The Unit Split
entitled each Unit holder to receive an additional 202,550.721 units for every outstanding Class A and Class B unit held on that date. All units included in the accompanying consolidated
financial statements for all periods presented have been adjusted to retroactively reflect the Unit Split.

On
October 31, 2004, November 10, 2004 and November 19, 2004, New Refco issued 1,818,655.1, 40,000 and 20,000 additional Class B Units, respectively, to the
Consolidated Company's employees and members of its board of managers. The units issued to the members of the Parent Company's board of managers are all Non Performance-Based Units and will vest 25%
on each of February 28, 2005,
February 28, 2006, February 28, 2007 and February 29, 2008. The fair value of the additional units is $1.32 per unit.

On
December 6, 2004, New Refco issued 690,000 Class B Units to its Chief Financial Officer pursuant to a restricted unit agreement. One half of the Class B Units are
Non-Performance-Based Units and the other half are Performance Units. Any unvested Performance Units will vest automatically and immediately on the eighth anniversary date from the date of
issuance if the employee remains employed on a full-time basis. The fair value of the additional units is $3.15 per unit.

NOTE DFAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards ("SFAS") No. 107,Disclosures about Fair Value of Financial
Instruments, requires the Parent Company to report the fair value of financial instruments, as defined.

Assets
and liabilities, recorded at contractual amounts, that approximate market or fair value include short-term borrowings and payable to customers. The market values of such items are
not materially sensitive to shifts in market interest rates because of the limited term to maturity of these instruments and their variable interest rates.

The
Parent Company's long-term debt is recorded at historical amounts which could differ from fair value as a result of changes in the Parent Company's market rates.

The
following table provides a summary of the fair value of the Parent Company's long-term borrowings. The fair value of the Parent Company's long-term borrowings
was estimated using either quoted market prices or discounted cash flow analyses based on the Parent Company's current borrowing rates for similar types of borrowing arrangements.

February 28, 2005

February 29, 2004(in thousands)Carrying value of long-term borrowings

$
1,246,000

$
383,500Fair value of long-term borrowings


1,298,927


399,990


All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore, have been omitted.

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Schedule II

Refco Group Ltd., LLC  Valuation and Qualifying Accounts and Reserves

|                                        |  | Reserve against Receivables from Customers
|--------------------------------------- |  | ------------------------------------------
|
|
|For the year ended February 28, 2005(1) |  | $                                         
|                                        |  |                                           
|For the year ended February 29, 2004    |  | $                                         
|                                        |  |                                           
|For the year ended February 28, 2003    |  | $                                         
|                                        |  |                                           

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Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing
provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrants will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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