Daiwa Securities Group Annual Report 2012 Retail Division In order to suit the varied investment styles and preferences of customers, the Retail Division offers two main courses for  products and services. The “Daiwa Consulting” course allows customers to obtain high value-added services and products  from experienced sales staff in face-to-face consultations, whereas the “Daiwa Direct” course allows customers to transact  their investments conveniently, via the Internet or telephone call centers. In addition to offering a multitude of investment  products covering stocks and bonds for domestic and overseas, mutual funds, pension insurance and wrap account services,  the Retail Division also offers securities-backed loans and good interest rates for both ordinary deposits and fixed-term deposits.  This portfolio of products and services allows the company to meet the varying needs of each individual customer. substantially. As a result, the company was able to limit the decline  in net operating revenues for the period to 3.9% year on year, to  ¥172.0 billion, while ordinary income fell by 7.2%, to ¥38.8 billion. The Retail Division has been concentrating its sales efforts on  mutual funds, and expanding its lineup of monthly dividend-type  funds, in order to address customers’ need for dividend income.  Daiwa Securities aggressively develops and introduces new funds  to reflect market trends and themes. Products such as the “Daiwa  Harris Global Selected Stock Fund” and “Daiwa ASEAN Domestic  Demand-Related Stock Fund” helped generate over ¥2 trillion in  mutual fund sales during FY2011, increasing Daiwa Securities’  share of the market to 9.1%. Investment trust sales commissions  rose 60% year on year, to ¥46.9 billion. A host of negative factors contributed to a harsh business climate  in FY2011, from the earthquake-related electric power shortages in  Japan and floods in Thailand to the debt crisis in Europe and the  credit downgrade on US treasuries, which elevated the yen against  other currencies. These factors caused Japanese stock prices to  fall steadily from the summer onward. At the end of December the  Nikkei 225 stood at a low 8,455. In early 2012, however, signs of  improving economic conditions in the US, measures to address the  debt crisis in Europe, and further monetary easing measures by the  Bank of Japan calmed market fears and stock prices began to  recover. By the end of FY2011 the Nikkei 225 had risen to 10,083.  Reflecting these conditions, Retail Division revenues from both  stocks and bonds declined steadily until the third quarter, although  they recovered in the fourth quarter. Meanwhile, sales of mutual  funds—a key product focused on by Daiwa Securities—increased  22 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 0 200 400 600 800 1,000 1,200 (¥ billion) GLYPH<H18549>  Equities  GLYPH<H18549>  SMA+Fund Wrap  GLYPH<H18549>  Pension insurance  GLYPH<H18549>  Domestic bonds  GLYPH<H18549>  Overseas bonds  GLYPH<H18549>  Mutual funds FY2010 FY2011 –100 0 100 200 300 400 500 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q (¥ billion) GLYPH<H18549>  Corporations  GLYPH<H18549>  Individuals FY2010 FY2011 Net Inflow of Assets (Daiwa Securities) Sales and Distribution Amount by Product Category (Daiwa Securities) Other Information Financial Section Management Systems & CSR Business Strategy Executive Messages Corporate Summary Action Plan for FY2012 Business Conditions and Earnings Results for FY2011 Key Events of FY2011 3. Strengthen service coverage of the middle markets 4. Raise revenue level by improving earning capacity  and productivity 1. Establish a unique business model creating synergy  between securities and banking services 2. Strengthen wealth management businesses