FYE 03/2002 2Q Financial Results FYE 03/2002 FYE 03/2002 FYE - - PowerPoint PPT Presentation

FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 FYE 03/2002 2Q Financial Results 2Q Financial Results 2Q Financial Results 2Q Financial Results 2Q Financial Results 2Q Financial Results 2Q Financial Results 2Q Financial Results

Forward-looking Statements Statements made at this presentation and in these materials include forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements are subject to various risks and uncertainties. These statements discuss future expectations and plans, identify strategies, contain projections of results of operations or of our financial condition

• r state other “forward-looking” information. Known and unknown risks, uncertainties and other factors could cause the actual results to differ

materially from those contained in any forward-looking statement. Potential risks and uncertainties include, without limitation, our ability to continue to attract and retain customers and their assets; our ability to make our operations profitable; changes in the demand for brokerage services in Japan; our ability to continue to expand and maintain our computers and electronic systems and avoid failures of these systems; and our ability to maintain our relationship with our founding shareholders.

October 2001

1

FY 3/2002 1Q Financial Summary FY 3/2002 1Q Financial Summary FY 3/2002 1Q Financial Summary FY 3/2002 1Q Financial Summary

I. Semi-annual Financial Result and Analysis

• II. Business Model and Strategy

• I. Semi-annual Financial Result and Analysis

3

FY 3/2002 Semi FY 3/2002 Semi FY 3/2002 Semi FY 3/2002 Semi-

• annual Financial Summary

annual Financial Summary annual Financial Summary annual Financial Summary

(million Yen） ） ） ）

FY 3/2001 FY3/2002 Semi-annual Semi-annual % chg

Operating Revenue 1,497 1,707 +14.0% (Commission Revenue） 1,472 1,679 +14.1% Operating Expense 1,863 2,156 +15.7% Operating Loss 365 449

• Ordinary Loss

474 416

• Net Loss

500 468

• * P/L of Saison Securities is not included in FY3/2002 Semi annual result.

(million Yen） ） ） ）

Total Assets 12,038 13,553 +12.6% Shareholders' Equity 10,197 11,152 +9.4% Capital Adequacy Ratio 1437.4% 1,044.2%

* Amotization of goodwill does not occur by making Saison Securities a subisidary and merging it after. 1.764 billion yen was amounted as a recapitalization. Current asset in hand as of Sep.30, 2001 was 9.168 billion yen

4

FY 3/2002 2Q Financial Summary FY 3/2002 2Q Financial Summary FY 3/2002 2Q Financial Summary FY 3/2002 2Q Financial Summary

(million Yen） ） ） ）

FY 3/2001 FY3/2002 2Q 2Q % chg

Operating Revenue 850 764

• 10.1%

(Commission Revenue） 835 756

• 9.5%

Operating Expense 1,015 1,182 +16.5% Operating Loss 164 417

• Ordinary Loss

230 414

• Net Loss

243 427

5

Operating Revenue vs. SG& A Operating Revenue vs. SG& A Operating Revenue vs. SG& A Operating Revenue vs. SG& A

FEY 03/2000 FEY 03/2001 1Q 2Q 3Q 4Q 1Q 2Q Operating Revenue (1) 647 850 748 752 942 764 SG and A (2) 848 1,015 923 891 974 1,182 (1) / (2) 76% 84% 81% 84% 97% 65%

Revenue Breakdown

90.7% 71.4% 77.8% 89.2% 84.4% 86.9% 5.7% 4.1% 6.9% 8.4% 6.0% 6.3% 19.8% 8.9% 12.6% 0.8% 1.3% 3.7% 2.6% 2.5% 3.7% 1.2% 2.8% 2.2%

FY01/1Q 2Q 3Q ４ ４ ４ ４Q FY02/1Q 2Q

Stock Brokarage Investment Trust Underwriting and Investment Banking Others

100%= 647 mio Yen 850 748 752 942 764

(million Yen) 647 850 748 752 942 764 201 164 175 139 417 848 1,015 923 891 974 1,182 31

200 400 600 800 1,000 1,200 1,400

FY01/1Q 2Ｑ 3Ｑ 4Ｑ FY02/1Q 2Ｑ

Operating Revenue Operating Loss Commission paid Communication and fright Information expenses Advertising Expense

• Mgmt. And employees salary
• Equip. Furniture and Fixtres

Outsourcing Expense Other SG and A

million Yen

6

Number of Customers Number of Customers Number of Customers Number of Customers’ ’ ’ ’ Account Account Account Account

20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 1999/10 1999/11 1999/12 2000/01 2000/02 2000/03 2000/04 2000/05 2000/06 2000/07 2000/08 2000/09 2000/10 2000/11 2000/12 2001/01 2001/02 2001/03 2001/04 2001/05 2001/06 2001/07 2001/08 2001/09

7

Cost to Acquire Customers Cost to Acquire Customers Cost to Acquire Customers Cost to Acquire Customers’ ’ ’ ’ Account Account Account Account

Number of Customers' Account Acquired 5,000 10,000 15,000 20,000 25,000 FYE 03/2001 (Avg.） 2Q 4Q 2Q

Advertising Expense (thousand USD） ） ） ）

100 200 300 400 FYE 03/2001 (Avg.） FYE 03/2001 １Q 2Q 3Q 4Q FEY 03/2002 １Q 2Q USD/JPY@120.00

Advertising Expense per Account (USD/account)

5 10 15 20 25 FYE 03/2001 (Avg.） FYE 03/2001 １Q 2Q 3Q 4Q FYE 03/2002 １Q 2Q USD/JPY@120.00

44,270 44,270 accounts accounts transferred from Saison transferred from Saison Securities are not included Securities are not included in new account acquired in new account acquired for 1Q in FYE 03/2001. for 1Q in FYE 03/2001.

• Advertising cost has

Advertising cost has been maintained low been maintained low since the start of since the start of business. business.

• Much lower account

Much lower account acquiring cost acquiring cost compared to other compared to other

• n
• n-
• line brokers

line brokers

→ → → → To acquire

To acquire

• verwhelming
• verwhelming

number of accounts number of accounts with low cost with low cost

8

Break Break Break Break-

• Even Analysis

Even Analysis Even Analysis Even Analysis

• 1. Divide major items of SG & A into 2 categories (1) Variables (trade volume and number of accounts base) and (2) Fixed.

Some of the items are calculated based on partial variables and fixed cost. Outsourcing Expenses are divided into three categories after excluding one-time expense. (Outsourcing Expenses of this quarter is analized more realistically compared to that of until last quarter.

(million Yen)

FYE 03/2001 FYE 03/2002 After Revision

Major Items of SG and A

Variable / Fixed 1Q 2Q 3Q 4Q 1Q 2Q

A total ofUS$ 883,000

• f one time expenses

(labor and outsourcing expense ) is included here.

Commison Paid Variable (based on trading volume) 146 126 32 22 34 34 34 Exchange and Association fees Fixed 12 17 22 19 24 22 22 Communications and Freight Variable (based on trading volume) 66 76 69 59 75 79 79 Expense to acquire information Vairable (based on number of accounts) 57 81 67 72 78 79 79 Advertising Expense Fixed 23 42 23 6 16 17 17 Directors' remuneration Fixed 2 7 7 7 7 7 7 Employees salaries Fixed 95 107 109 103 93 143 131 Equipment, Furniture and Fixture Variable (based on number of accounts) 157 200 231 250 250 285 285 Outsourcing Expense (1) Fixed (30%) 71 78 80 82 83 97 97 Outsourcing Expense (2) Variable (20% of trading volume) 47 52 53 54 56 64 64 Outsourcing Expense (3) Variable (50% of number of accounts) 118 130 133 136 139 162 162 Outsourcing Expense (4) One-time Expense 79 Amortization of Goodwill Fixed 10 10 10 10 10 10 10 Variable Cost (based on trading volume) （A) 259 254 154 135 165 179 179 Variable Cost (based on # of accounts) （B) 332 411 431 458 467 527 527 Fixed Cost (+ one-time cost) （C) 213 261 251 227 233 377 286 Total SG and A (major items listed above) 803 926 835 820 865 1,085 993 Ratio to Totall SG and A (total of major item of SG and A/total SG and A) 95% 91% 90% 92% 88% 92% 91% ２． ２． ２． ２．Brokerage Commision takes major part in Operating Revenue Brokerage Commision 587 607 582 671 795 664 664 Operating Revenue 647 850 748 752 942 764 764 Brokerage Commision/Operating Revenue 91% 71% 78% 89% 84% 87% 87% ３． ３． ３． ３．Calculate Variable cost per trade Quarterly Trade Volume (Daily Trading Volume x Business Day in '000 trades) (D) 369 414 378 441 519 441 441 Average Commision / Trade (US$) 1,591 1,466 1,540 1,522 1,531 1,506 1,506 Variable (based on trading volume) / Trade （A）/（D) (円） 702 614 407 307 317 406 406 Average Commission per Trade - Variable (based on trading volume) per Trade (US$） 889 853 1,132 1,215 1,214 1,100 1,100 ４． ４． ４． ４．Calculation of estimated Break-Even point to cover both Fixed cost and Variable cost based on # of accounts Break-even Point Estimate (Quaterly) ('000 trades) 612 788 601 564 577 822 739 Break-even Point Estimate (Monthly) ('000 trades) 204 263 200 188 195 274 246

9

Revised Break Revised Break Revised Break Revised Break-

• Even Analysis

Even Analysis Even Analysis Even Analysis – – – – Number of Trade Number of Trade Number of Trade Number of Trade Accepted a rise in fixed-cost and in one-time cost to concentrate investment for expanding an infrastructure for new services.

Infrastructure: Account Aggregation, ATM (to link with Postal Office/Credit Saison), Cash Management Account, mobile phone other than i-mode, and L, T-mode. Products: mini-stock. Services: New market information platform.

Revised Break-even Analysis

213 261 251 227 233 377 332 411 431 458 467 527 612 601 564 577 822 369 414 378 788 519 441 441 739 500 1,000 1,500 2,000

FY2001/3 １Q ２Q ３Q ４Q FY2002/3 １ Q 2

200 400 600 800 1,000

Fixed Cost Variables based on # of accounts Break-even # of Trade Acutal #of Trade done Break-even # of Trade after revison

# of Trade ('000） Cost （million Yen）

29% increase (Fixed + Variables based

• n # of accounts)

Decline in B/E due to excluding 2Q

• ne-time cost.

Breakdown of 29% increase in cost from 1Q to 2Q

3.9% 3.3% 2.1% 3.0% 11.5% 5.4% 0.0% 5.0% 10.0% 15.0%

Labor Cost・ One-time Cost and adjustment Labor Cost・ Business Expantion related Lease Expense・ For New Investment Lease Expense・ Business Expantion related Outsoursing Cost・ One-time Cost Outsoursing Cost・ Business Expantion related

One-time cost and adjustment 1Q cost = 100%

10

Stability of the Clients from Saison Securities Stability of the Clients from Saison Securities Stability of the Clients from Saison Securities Stability of the Clients from Saison Securities

Ex Ex-

• Saison Securities

Saison Securities’ ’ Customers Customers’ ’ Ratio in Number of Orders and Executed Deals (%: Weekly Average Ratio in Number of Orders and Executed Deals (%: Weekly Average) ) 2 4 6 8 10 12 14 16 4/2 4/16 4/30 5/14 5/28 6/11 6/25 7/9 7/23 8/6 8/20 9/3 9/17 10/1

Number or Orders Number of Executed Deal (partial fill is included before the merger but isn’t after the merger ) Number of Executed Deal before the merger (estimated figure excluding partial fill deal)

* *The ratio before merger is simply calculated from the figure of The ratio before merger is simply calculated from the figure of Monex and Saison Securities Monex and Saison Securities

June 30, 2001 a merger of Monex and Saison Securities

11

Revised Break Revised Break Revised Break Revised Break-

• Even Analysis

Even Analysis Even Analysis Even Analysis – – – – Executed Deal Ratio Executed Deal Ratio Executed Deal Ratio Executed Deal Ratio

Break-even of Executed Deal Ratio and Nikkei 225 Average

2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01

Nikkei 225 Averag

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%

Executed Deal Ratio

Nikkei 225 Average B/E ratio of Excecuted Deal Acutal number of Executed Deal Due to merger on Jun 30

(B/E of Executed Deal Ratio) = (B/E of Executed Deal) / (Number of Accounts) (Actual Executed Deal Ratio) = (Actual Executed Deal) / (Number of Account Acquired)

12

Correlation w ith Market Correlation w ith Market Correlation w ith Market Correlation w ith Market

Individual Trading Volume at TSE and Monex (index April 2000 =100)

20 40 60 80 100 120 140 160 180 200

Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01

Individual Trading Volume at TSE Monex, Inc.

Correlation Coefficient=0.9334

Individual Trading Volume at TSE and Nikkei 225 Average （ （ （ （1986 =100）

） ） ）

50 100 150 200 1981 1981 1981 1981 1981 1981 1981 1981 Individual Trading Volume at TSE Nikkei 225 Avg.

* Closing Value for each year were ussed for Nikkei 225

13

Comparison w ith Other On Comparison w ith Other On Comparison w ith Other On Comparison w ith Other On-

• line Brokers

line Brokers line Brokers line Brokers

Movement of the Number of Executed Deal

(April 2001 = 100 index） ） ） ） 40 60 80 100 120 140 160 Apr May Jun Jul Aug Sep E*TRADE DLJ Matsui Sec. MONEX

90-Yen Commission Campaign started Cut in commission and an introduction of fixed- commission are announced

Movement of Customers' Asset in Custody

（ （ （ （June 2001 = 100 index） ） ） ）

100 95 95 90 100 93 89 85

100 92 80 72

100 94 85 77 60 70 80 90 100 110

Jun-2001 Jul-2001 Aug-2001 Sep-2001

MONEX

DLJ Nikkei 225 E*TRADE

Ratio of Margin Trade and Account （ （ （ （As of June 2001） ） ） ）

0% 20% 40% 60% 80% 100% Matsui（ （ （ （ Trade） ） ） ） Matsui (Account) DLJ（ （ （ （ Trade） ） ） ） DLJ （ （ （ （Account） ） ） ） E*Trade（ （ （ （ Trade） ） ） ） E*Trade （ （ （ （Account） ） ） ） Monex （ （ （ （ Trade） ） ） ） Monex （ （ （ （Account） ） ） ）

Marging Trade Margin Account

! !According to E*Trade According to E*Trade’ ’s semi s semi-

• annual financial

annual financial result, its number of order increased by 19% result, its number of order increased by 19% from 1Q to 2Q, however, its commission earnings from 1Q to 2Q, however, its commission earnings decreased by 9%. decreased by 9%. ! !Decrease in customers Decrease in customers’ ’ asset in custody at asset in custody at Monex this quarter is smaller compared to that Monex this quarter is smaller compared to that

• f other brokers and the stock market price.
• f other brokers and the stock market price.

! !Matsui has not disclosed the figure after 1Q Matsui has not disclosed the figure after 1Q

14

Shareholders Shareholders Shareholders Shareholders

Monex's Shareholder (as of April 1, 2001)

31.2% 17.3% 7.1% 4.0% 4.8% 4.6% 4.6% 2.6% 1.8% 22.4% 7.1%

0% 50% 100%

Ratio of shareholdings

Sony Oki Matsumoto JP Morgan Recruit Credit Saison Management and Employees Goldman Sachs Others IIJ Koichi Suzuki Potential stocks (Stock Option related)

100% = 1,505,977 shares

・ ・ ・ ・Latent Stock Total: 105,983 Shares Latent Stock Total: 105,983 Shares ・ ・ ・ ・Financial institutional and individual Financial institutional and individual investors investors （ （ （ （ （ （ （ （24.2% 24.2%） ） ） ） ） ） ） ） ・ ・ ・ ・Strategic Investors Strategic Investors （ （ （ （ （ （ （ （Domestic 11.9% Foreign 4.6% Domestic 11.9% Foreign 4.6%） ） ） ） ） ） ） ） ・ ・ ・ ・ ・ ・ ・ ・Management and Employees Management and Employees （ （ （ （ （ （ （ （excluding Oki Matsumoto excluding Oki Matsumoto）（ ）（ ）（ ）（ ）（ ）（ ）（ ）（4.0% 4.0%） ） ） ） ） ） ） ） ・ ・ ・ ・Lock Lock-

• up contract

up contract （ （ （ （ （ （ （ （54.5% 54.5%） ） ） ） ） ） ） ） for three years after IPO for three years after IPO （ （ （ （ （ （ （ （until August 2003 until August 2003） ） ） ） ） ） ） ） ・ ・ ・ ・Stock Options Schedule Stock Options Schedule ・ ・ ・ ・ ・ ・ ・ ・Exercisable from Dec. 2001 70,399 shares Exercisable from Dec. 2001 70,399 shares（ （ （ （ （ （ （ （strike strike： ： ： ： ： ： ： ：5,469 5,469円 円 円 円 円 円 円 円 ITM ITM） ） ） ） ） ） ） ） ・ ・ ・ ・ ・ ・ ・ ・Exercisable from May 2002 16,384 shares Exercisable from May 2002 16,384 shares（ （ （ （ （ （ （ （strike strike： ： ： ： ： ： ： ：39,064 39,064円 円 円 円 円 円 円 円 OTM OTM） ） ） ） ） ） ） ） ・ ・ ・ ・ ・ ・ ・ ・Exercisable from July 2002 19,200 shares Exercisable from July 2002 19,200 shares （ （ （ （ （ （ （ （strike strike： ： ： ： ： ： ： ：56,700 56,700円 円 円 円 円 円 円 円 OTM OTM） ） ） ） ） ） ） ）

15

Monex Share Price Monex Share Price Monex Share Price Monex Share Price vs vs vs vs Nikkei 225 Nikkei 225 Nikkei 225 Nikkei 225

20 40 60 80 100 120 140 160 180 200 2000/8/4 2000/8/18 2000/9/1 2000/9/15 2000/9/29 2000/10/13 2000/10/27 2000/11/10 2000/11/24 2000/12/8 2000/12/22 2001/1/5 2001/1/19 2001/2/2 2001/2/16 2001/3/2 2001/3/16 2001/3/30 2001/4/13 2001/4/27 2001/5/11 2001/5/25 2001/6/8 2001/6/22 2001/7/6 2001/7/20 2001/8/3 2001/8/17 2001/8/31 2001/9/14 2001/9/28

Monex index (Aug. 4, 2000 closing price:68,300 Yen＝ ＝ ＝ ＝100） ） ） ） Nikkei 225 average index （ （ （ （Aug. 4 2000 closing price:15,667 Yen =100） ） ） ） Monex IPO share Price:45,000 Yen

Monex Share Price v.s. Nikkei 225 Average Index (August 4, 20 Monex Share Price v.s. Nikkei 225 Average Index (August 4, 2000 as a base) 00 as a base)

• II. Business Model and Strategy

17

Preconditions for our Business Model Preconditions for our Business Model Preconditions for our Business Model Preconditions for our Business Model

10.6% 9.2% 11.9% 34.1% 31.6% 2.6% 54.9% 4.1% 2.4% 6.6% 28.0% 4.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% USA Japan Asset Allocation of Household (as of Dec.2000) ) ) ) Cash, Deposit Bond Investment Trust Stocks Insurance Others 47.1 million 87.2million 20 20 20 20 40 40 40 40 60 60 60 60 80 80 80 80 100 100 100 100 1997 1998 1999 2000 2005 Internet users in Japan （ （ （ （million people） ） ） ） （ （ （ （Year） ） ） ）

Following a major balance Following a major balance-

• sheet adjustment,

sheet adjustment, asset allocation of household in Japan is expected asset allocation of household in Japan is expected to follow US to follow US’ ’ footstep to shift more to direct footstep to shift more to direct financing. financing. With a decline trend in working population, With a decline trend in working population, more people inevitably become a constituent more people inevitably become a constituent

• f labor force in order to maintain GDP at
• f labor force in order to maintain GDP at

the favorable level. the favorable level. This implies an This implies an individual finance would shift from off individual finance would shift from off-

• line to

line to

• n
• n-
• line sooner than later.

line sooner than later.

Source： ： ： ： Bank of Japan Survey (March 30, 2001) Source: Correspondence and Communication White Paper 2001

18

Monex Monex Monex Monex’ ’ ’ ’s s s s Target Target Target Target

Monex targets Monex targets “ “Mass Mass-

• Market

Market” ”

Inter-net Users People trading Stocks and Investment Trust

Monex’s Target = “Mass-Market”

19

Targeting Map Targeting Map Targeting Map Targeting Map

Assets： ： ： ： Large Assets: Small Trade Activity ： ： ： ： high

Current traditional brokers’ customers Others’ target customers

Monex’s customers Current = Target ＞＞ ＞＞ ＞＞ ＞＞similar to clients of Post Office, Banks and Credit Card users

Other online brokers’ customers Materialized combining Materialized combining Materialized combining Materialized combining Materialized combining Materialized combining Materialized combining Materialized combining “ “VIRTUAL VIRTUAL VIRTUAL VIRTUAL VIRTUAL VIRTUAL VIRTUAL VIRTUAL” ” infrastructure infrastructure infrastructure infrastructure infrastructure infrastructure infrastructure infrastructure

• f online broker and a
• f online broker and a
• f online broker and a
• f online broker and a
• f online broker and a
• f online broker and a
• f online broker and a
• f online broker and a “

“REAL REAL REAL REAL REAL REAL REAL REAL” ” network of Credit network of Credit network of Credit network of Credit network of Credit network of Credit network of Credit network of Credit Card and ATM Card and ATM Card and ATM Card and ATM Card and ATM Card and ATM Card and ATM Card and ATM

Trade Activity ： ： ： ： low

20

Status Quo Status Quo Status Quo Status Quo

Movement in Number of Accounts at On-line Brokers

500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000

Nomoura Daiwa Monex E*Trade Nikko DLJ Matsui Nomura FundNet Others

Monex's Share in nominal accounts ７．４％ ７．４％ ７．４％ ７．４％

2.37 million Accounts 21.9% 6.0% 10.0% 10.1% 10.6% 14.3% 15.8% 21.6% 25.7% 31.3% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Others Matsui Nikko Beans Kabu.com DLJ Direct SFG Litera Clera E* Trade Nomura Monex Daiwa

Active Accounts (Plural answers） ） ） ）

A Population： ： ： ：1,143(Only those with an experience in Source: Myvoice.com Due to plural answers, Monex's share in active account is considered at 15.4% 9% 34% 0% 5% 10% 15% 20% 25% 30% 35% 3/1/2000 3/1/2001

Ratio of Individual investors in On-line trading

Source: JSDA

Source: Bloomberg Sep. 2001

A shift from A shift from indirect finance indirect finance to to direct finance direct finance has not has not taken place yet taken place yet But several measures such as smaller unit of share, But several measures such as smaller unit of share, Japanese 401k, and tax structural change has already been Japanese 401k, and tax structural change has already been discussed discussed

21

Business Model Business Model Business Model Business Model

Monex plans and materializes a new type of infrastructure for Monex plans and materializes a new type of infrastructure for individuals for coming new phase, replacing saving deposit at ba individuals for coming new phase, replacing saving deposit at banks nks

! !Not only a mere trading Not only a mere trading-

• engine, we provide an

engine, we provide an infrastructure for asset investment/management. infrastructure for asset investment/management. ! !To provide CMA (Cash Management Account) To provide CMA (Cash Management Account) and ATM Service and ATM Service ! !To provide Account Aggregation Tool To provide Account Aggregation Tool “ “ “ “ “ “ “ “Asset Gatherer Asset Gatherer Asset Gatherer Asset Gatherer Asset Gatherer Asset Gatherer Asset Gatherer Asset Gatherer ” ” ” ” ” ” ” ” “ “ “ “ “ “ “ “Over Over-

• all accounts

all accounts” ” ” ” ” ” ” ” “ “ “ “ “ “ “ “Finance Agent Finance Agent” ” ” ” ” ” ” ”

Concrete Plan Concrete Plan Monex aims at the followings in coming new phase: Monex aims at the followings in coming new phase:

! !Shift from Indirect to Direct Finance Shift from Indirect to Direct Finance ! !Shift from Off Shift from Off-

• line to On

line to On-

• line Trading

line Trading Changes for the precondition of our business model Changes for the precondition of our business model ! !Paradigm shift due to structural change Paradigm shift due to structural change ! !Concentration of individual account due to tax reform Concentration of individual account due to tax reform

22

ITS （ （ （ （Internet Trading System） ） ） ） ITS （ （ （ （Internet Trading System） ） ） ）

Image of Individual Account in New Financial System Image of Individual Account in New Financial System Image of Individual Account in New Financial System Image of Individual Account in New Financial System

Multilevel Terminal Platform

PC Browser PC Browser T-mode T-mode L-mode L-mode i-mode i-mode ezWeb ezWeb J-sky J-sky

Finance Agent Finance Platform

New Terminals in future New Terminals in future CMA

（ （ （ （Cash Manageme nt Service） ） ） ）

CMA

（ （ （ （Cash Manageme nt Service） ） ） ）

Tax Report Service Tax Report Service

AA

（ （ （ （Account Aggregation)

AA

（ （ （ （Account Aggregation)

Rese- rving fund service Rese- rving fund service

Client Platform Built during 2Q of FYE 2002 Collaboration with Credit Saison

ATM

(Saison and Postal)

ATM

(Saison and Postal)

Information Platform Transaction Platform Life Life Non-Life Non-Life Bank Bank Saison Card Saison Card

Financial Advice Financial Advice

Had built by the past quarter Plans for future

Enable a concentrated asset management

23

Asset Gatherer Asset Gatherer Asset Gatherer Asset Gatherer – – – – Movement in Customers Movement in Customers Movement in Customers Movement in Customers’ ’ ’ ’ Asset in Custody Asset in Custody Asset in Custody Asset in Custody

Transfer from Saison Securities on June 30, 2001 Transfer from Saison Securities on June 30, 2001 91.4 billion Yen (Stocks 65 billion Yen) 91.4 billion Yen (Stocks 65 billion Yen) MRF Outstanding as of September 30, 2001 MRF Outstanding as of September 30, 2001 66 billion Yen 66 billion Yen Receipt of money from customers has always exceeded outflow sinc Receipt of money from customers has always exceeded outflow since the first day of business e the first day of business (excluding only 1 day.) (excluding only 1 day.)

2,745 1,306 1,938 2,459 2,459 2,459 2,459 2,451 2,451 2,451 2,451 2,919 2,919 2,919 2,919 4,184 4,184 4,184 4,184 3,745 3,745 3,745 3,745 3,185 1,911 1,924 1,510 1,021 2,226 1,000 2,000 3,000 4,000

2000 Mar. Jun. Sep. Dec. 2001 Mar. Jun. Sep.

Stocks IT (excl. MRF) MRF Others

Nikkei 225 Avg. （ （ （ （Yen） ） ） ） Billion Yen 10,000 12,000 14,000 16,000 18,000 20,000

MRF (quasi- cash) and Investment Trust

refer to p.13 for comparison with other brokers refer to p.13 for comparison with other brokers

24

Asset Gatherer Asset Gatherer Asset Gatherer Asset Gatherer – – – – Investment Trust, Monthly Purchase and MRF Investment Trust, Monthly Purchase and MRF Investment Trust, Monthly Purchase and MRF Investment Trust, Monthly Purchase and MRF

7.6 8.2 11.6 11.0 10.3 9.5 8.2

421 307 405 760 792 839 470 13.0 13.9 14.6 31.0 30.5 30.0 28.7 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

2001/3 2001/4 2001/5 2001/6 2001/7 2001/8 2001/9

100 200 300 400 500 600 700 800 900 1,000

Domestic stock Investment Trust Domestic Bond Investment Trust Foreign Investment Trust Number of order for IT per day

Number of accounts Outstanding (billion Yen）

Monex, Inc (End of Sep. 2001) 178,415 accounts 28.7 billion Yen 66 billion Yen (MRF) Nomura FundNet （ （ （ （End of Aug. 2001) 60,000 accounts 71 billion Yen ー ー ー ー Japan Net Bank （ （ （ （Sep. 24, 2001） ） ） ） 387,000 accounts ー ー ー ー 63.5 billion Yen (biggest

• n-line bank)

Number of Accounts : Investment Trust Outstanding : Saving Outstanding :

Jul. Aug. Sep.

Monthly fixed amount purchase Number of order

1,685 1,956 2,147

Direct withdrawal from MRF Monthly (million Yen)

33 38 41

Card de JIDO Tsumitate Number of order

4,134 4,761 4,720

Withdrawal from bank account Monthly (million Yen)

113 96 89

Source: Nikkin Source: Nikkei Industrial News

25

Future Development: Stock Brokerage Business Future Development: Stock Brokerage Business Future Development: Stock Brokerage Business Future Development: Stock Brokerage Business

! !Monex Speed Monex Speed Streaming real-time stock price update ! !Second Second-

• phase information

phase information Substantial series of charts such as daily chart, various oscillator charts ・ ・ ・ ・ Platform Platform relative charts / Market commentaries (foreign and domestic market)/ Various rankings/ Stock Screening/ Searchable data-base containing 15.000 articles on Japanese companies ! !Ｑｕｉｃｋ Ｑｕｉｃｋ Ｑｕｉｃｋ Ｑｕｉｃｋ Ｑｕｉｃｋ Ｑｕｉｃｋ Ｑｕｉｃｋ Ｑｕｉｃｋ Research Research-

• net

net Carry the latest report on over 1,000 stocks/ Quick Consensus (indexed-average figure of rating on stocks published by many securities houses) / Searchable by key words ! !JP Morgan Research JP Morgan Research Providing those analyst reports for institutional investors without editing Already provided almost 700 kinds (1,300 papers) in 4 months since the start of this service in June 2001

Basic Strategy Basic Strategy： ： ： ： ： ： ： ：

・ ・ ・ ・ ・ ・ ・ ・Acquiring overwhelming number of customers Acquiring overwhelming number of customers’ ’ account at low cost in order to account at low cost in order to generate profit even with a low rate of orders from customers generate profit even with a low rate of orders from customers

As for information services, materialized the content to satisf As for information services, materialized the content to satisfy even the most active y even the most active traders by collaborating with partner traders by collaborating with partner-

• companies at low cost due to advanced technology.

companies at low cost due to advanced technology.

26

Future Development: Investment Trust Business Future Development: Investment Trust Business Future Development: Investment Trust Business Future Development: Investment Trust Business

To reinforce our top To reinforce our top-

• ranked position among the on

ranked position among the on-

• line securities firms

line securities firms

（ （ （ （Concrete Plan） ） ） ）

• Reinforcement and promotion of monthly fixed amount purchase as well as ‘Card

de Tsumitate’

• Reviewing the possibility to enter into Japanese 401k business
• Making sales commission ‘no-load’

・ ・ ・ ・Make the sales commission of 3 funds（ （ （ （total outstanding: 1.9 billion yen base price basis) free of charge from October 15, 2001 ・ ・ ・ ・Coincide with Monex’s philosophy ・ ・ ・ ・Expect an increase in profit in mid to long term.

• Strengthening the collaboration with Vanguard

27

Future Development: Future Development: Future Development: Future Development: Underw riting Business Underw riting Business Underw riting Business Underw riting Business

Expanding profit while maintaining the low cost is the main the Expanding profit while maintaining the low cost is the main theme for coming quarter. me for coming quarter. → → → → → → → → Aiming more earning by raising underwriting share, not by increa Aiming more earning by raising underwriting share, not by increasing the number of deals sing the number of deals

Number of Deal

16 5 22 18 13 37

10 20 30 40

MONEX E*TRADE Japan DLJ

2000 2001

①：Actual Number as of Oct 4,2001 for the figure 2001. ②：Lead Manager Ranking was surveyed by Tokyo IPO on January 30, 2001

Lead Manager Ranking

MONEX

E*TRADE DLJ 2 5 6

Source： www.tokyoipo.com

Acutal Number of deal for 2Q FYE 2001

20 2 10 20 30

Executed

・ ・ ・ ・Postponed due to Market condition. ・ ・ ・ ・One of which, Monex is co- manager (10% of share)

Postponed

28

Partnership Partnership Partnership Partnership

Materializing strategies efficiently by collaborating with Partn Materializing strategies efficiently by collaborating with Partners ers

Most Important Partners： ： ： ： ! !Credit Saison Credit Saison About 13 million card About 13 million card-

• holders

holders （ （ （ （ （ （ （ （10% of population 10% of population、 、 、 、 、 、 、 、24% of household penetration 24% of household penetration） ） ） ） ） ） ） ） Mailing monthly bill Mailing monthly bill-

• statement to about 6 million people.

statement to about 6 million people. → → → → → → → →Realization of CMA and ATM network, as well as a strong marketin Realization of CMA and ATM network, as well as a strong marketing g-

• platform

platform ! !JP Morgan JP Morgan One of the most prominent investment banks in the world One of the most prominent investment banks in the world → → → → → → → →Succeeding in practical outsourcing its highly reputed research Succeeding in practical outsourcing its highly reputed research division division ! !Vanguard Vanguard One of the world One of the world-

• largest investment trust companies with index and pension fund

largest investment trust companies with index and pension fund → → → → → → → →Know Know-

• how and branding on investment trust business especially 401k bu

how and branding on investment trust business especially 401k business siness

http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/ http://www.monex.co.jp/