Aiming to Become the “Premier House”

Evolution Built on Strength

Aiming to become the “Premier House”

Midland Premier Salon opened in March 2007.

6-2 Nihonbashi 3-chome, Chuo-ku, Tokyo 103-8275 Japan Company name etc.: Tokai Tokyo Securities Co., Ltd., Financial products trading business, Head of Kanto Local Finance Bureau (Financial Products) No. 118 Shares listed in: Tokyo, Osaka, Nagoya Memberships: Japan Securities Dealers Association, The Investment Trusts Association, Japan, The Financial Futures Association of Japan Securities code: 8616 A Premier Securities House in Japan with Core Strength in the Tokai Region

We are Tokai Tokyo Securities, a leading second-tier brokerage close on the heels of the top five domestic securities houses—Nomura Securities, Daiwa Securities, Mizuho Securities, Nikko Cordial Securities and Mitsubishi UFJ Securities. We enjoy a unique position in the industry, thanks to our dominant presence in the Tokai region. This status is substantiated by the fact that 36 of our 75 locations are located there and about ¥2 trillion, or roughly 50% of all assets under custody, have been entrusted to us from customers based in this geographical area. In addition, unlike the many securities houses belonging to banking groups, we are independent—free to formulate distinctive strategies that accentuate our capabilities for our own benefit and that of our customers. The investment environment in Japan is currently characterized by a major shift in the application of retail assets toward investments instead of savings. Capitalizing on this situation, we seek to be the premier securities house in Japan—a first-class company with key organizational strengths, notably high-level specialization, staff with excellent knowledge and customer-oriented skills, and an elite network of offices. The top five securities houses in Japan have spread themselves nationwide, but we have remained true to our roots, providing high-caliber services to individuals and corporations in the Tokai region. We will continue to distinguish ourselves from the rest of the securities industry through our independent network, centered on this region, and maximize a diverse lineup of products and services unrestricted by the exclusivity common to other financial institutions, such as big banks and asset management companies.

Tateaki Ishida President & CEO August 2008 The Growing Tokai Region

• Many of Japan’s largest manufacturers originated in the Tokai region. • The Tokai region tops the national average in the balance of securities held by individuals.

Balance of Financial Assets Held per Household

(Thousand yen) 20,000 National Tokai 17,200 17,710 400 490 2,750 15,000 2,690

4,120 3,900 10,000

Other Source: Compiled by Tokai Tokyo Securities from the 5,000 9,990 10,570 National Survey of Family Income and Expenditure, by Marketable securities the Statistics Bureau of the Ministry of Public Insurance Management, Home Affairs, Posts and 0 Deposits and savings Telecommunications FY’07

The Tokai region is home to a large number of Japan’s representative manufacturers, notably automaker Toyota Motor Corporation, makers of automobile-related products, such as Denso Corporation and Aisin Seiki Co., Ltd., and other well-known companies, including NGK Insulators, Ltd., and NGK Spark Plug Co., Ltd., which boast top shares in world markets. The local electronics industry has also shown noticeable success in recent years. Compared with manufacturing groups belonging to major corporations, the small and midsized businesses based in the Tokai region are often much more well-established, with histories that go back to pre-industrial times. Today, many of the small but excellent businesses in the region enjoy top shares in world markets. Another noteworthy fact about the Tokai region is that it surpasses the national average in terms of household financial assets held in securities, and the promising investment market continues to attract considerable attention.

1 TOKAI TOKYO SECURITIES CO., LTD. Building a Resilient Business Portfolio that Withstands Market Fluctuations

•We achieved solid year-on-year improvement—a 32% jump—in operating revenues in the first half of fiscal 2007. •We posted lower revenues and lower income in fiscal 2007, owing to the impact of worldwide market fluctuations. • Our diversified product menu, which emphasizes investment trusts, structured bonds and insurance, offset sluggish equity income.

Despite an extremely favorable first half, full-year performance in fiscal 2007 reflected the significant impact left by the subprime mortgage crisis that erupted in the United States in the summer of 2007. Nevertheless, while many securities houses posted unavoidably huge revenue and income declines, ranging between 30% and 50% year on year, Tokai Tokyo Securities was able to minimize the extent to which revenue and income fell. This result was made possible through increased handling of new products, such as wrap accounts and derivatives, as well as enhanced investment banking operations and progress in management strategies, especially the formation of alliances designed to promote product and business diversification. We worked to limit our reliance on stocks while boosting the handling volume of such products as structured bonds, foreign bonds and variable insurance, to reinforce our income structure and build a resilient business portfolio better able to withstand market fluctuations. Our emphasis on flexible management strategies aimed at transcending market changes proved to be the right decision, as substantiated by results comparatively better than the industry’s top players.

Business Performance Indicators (Consolidated)

Operating Revenues Operating Income Selling, General and Administrative Expenses (Million yen) (Million yen) (Million yen) 80,000 32,000 60,000 71,776 70,000 28,000 26,543 52,500 63,765 63,152 46,931 44,272 44,403 60,000 24,000 45,000

50,000 47,025 20,000 37,500 36,438 17,997 34,634 40,951 40,000 16,000 30,000 14,073

30,000 12,000 22,500 9,752 20,000 8,000 15,000 5,387 10,000 4,000 7,500

0 0 0 FY’03 FY’04 FY’05 FY’06 FY’07 FY’03 FY’04 FY’05 FY’06 FY’07 FY’03 FY’04 FY’05 FY’06 FY’07

Net Income/Return on Equity (ROE) Net Income per Share Net Assets

(Million yen) (%) 79.1 (%) (Million yen) 24,000 22,085 40 80 160,000 (22.1) 21,000 35 70 140,000

18,000 30 60 120,000 108,273 103,898 106,481 15,000 25 50 100,000 91,879 11,696 42.3 10,668 81,785 12,000 (14.9) 20 40 80,000 (10.1) 9,025 34.0 39.7 (8.6) 9,000 15 30 60,000 6,000 (6.9) 6,000 10 20 40,000 21.3 3,000 5 10 20,000

0 0 0 FY’03 FY’04 FY’05 FY’06 FY’07 FY’03 FY’04 FY’05 FY’06 FY’07 FY’03 FY’04 FY’05 FY’06 FY’07

TOKAI TOKYO SECURITIES CO., LTD. 2 Three-Year Business Plan—Innovation Jump Up 5

Highlighting five reforms, including corporate governance Our “Premier House” objective is to be a superior securities house that customers always choose to do business with. To achieve this objective, we are pursuing reform in five areas, based on our three-year business plan Innovation Jump Up 5, which will conclude in March 2009. Efforts to enhance corporate governance at Tokai Tokyo Securities have been focused on the creation of a corporate culture in line with the tradition of rules required of companies in the securities and financial realms and the separation of management functions into oversight and execution to underpin internal controls. With enforcement of the Financial Instruments and Exchange Law and a heightened resolve to reinforce compliance status industrywide, we have established a structure that bolsters employee education programs and enhances customer-response capabilities. Efforts to reform our business model are aimed at strengthening the investment banking business by recruiting men and women with sophisticated financial know-how and by upgrading our information systems. As a complementary measure, we are working to improve fees and commissions by diversifying our product range beyond stocks to include such financial instruments as investment trusts, foreign equity and structured products. In information and marketing network reform, we recently added a local representative office in New York, which joins sister offices already in operation in Hong Kong and London. These offices will underpin a more global approach to information-gathering activities. In Asia, we formed a business alliance with Saigon Securities Inc., a major securities house in Vietnam, which complements business alliances already achieved with top-tier securities houses in China and South Korea. We will continue to expand our network in Asia, with a focus on opportunities in Singapore, Thailand and Malaysia. To respond quickly to changes in the market, we are also committed to upgrading our information systems and fine- tuning our risk management practices.

Three-Year Business Plan “Innovation Jump Up 5”

Reform Corporate Governance/Corporate Culture

Reform the Business Portfolio/the Business Model

Reform the Network

Reform Products and Services Premier House

Reform Employee Roles and Productivity

IT Strategy Alliance Strategy

Aiming to become the “Premier House”

1. Community House 2. Solution House 3. Products House Focusing on contributing No longer just providing Strong products are to the prosperity and brokerage services but essential for competing in welfare of our regional also optimal solutions for today's increasingly global community financial needs markets

Midland Premier Salon, catering exclusively to affluent customers with high net worth. This branch opened in March 2007 as the largest of its kind in Japan.

3 TOKAI TOKYO SECURITIES CO., LTD. Innovative, Ground-Breaking Alliance Strategy

•We established Japan’s first joint venture securities company between a securities house and a regional bank. •We will extend our business base beyond the Tokai region to other areas.

Number of Branches (As of July 10, 2008) Tokai Region 36 48% Kanto Region 21 28% Kansai Region 4 5% Others 14 19% Total 75 100%

September 2007 Tokai Tokyo–Sumishin Wealth Partners Consulting Co., Ltd., was launched through a joint venture with the Sumitomo Trust and Banking Corporation. The joint venture caters to clients with high net worth and business operators in the Tokai region, and provides consultations dealing with January 2008 asset management, inheritance, wills and property and business succession. We agreed to a joint investment proposal with the Bank of Yokohama to establish Hamagin Tokai Tokyo Securities Co., Ltd. Kanto The Bank of Yokohama is the Region largest regional bank in Japan, Chugoku with an overwhelming share of Region Tokai the market in Kanagawa Region Prefecture—one of the largest Kanagawa parts of the Tokyo metropolitan Prefecture area. The bank has a domestic network of 193 branches, as of July 31, 2008.

July 2007 We jointly invested in YM Securities Co., Ltd., with the Yamaguchi Financial Group. The Yamaguchi Financial Group is the largest regional financial group in the Chugoku region and was formed through the business integration of The Yamaguchi Bank, Ltd., with 158 domestic branches, and Momiji Holdings, Inc., which was later merged into the surviving corporation, Momiji Bank, Ltd., with 125 domestic branches, as of July 31, 2008.

Tokai Tokyo Securities achieved an industry first, teaming up with a regional bank in the establishment of a securities company—YM Securities. YM Securities currently maintains six offices in the Chugoku region but intends to expand its network to a total of 11 locations by the end of fiscal 2008. This quick rate of development is possible because we are an independent securities house, with no restrictions on our choice of alliance partners. In recent years, individuals have increasingly shifted their financial assets toward investments rather than savings. Consequently, the securities function—the ability to offer risk products and the required compliance know-how that banks do not possess—has become essential to retail banking. We have the products, including derivatives, and the proposals well-matched to customer needs. We have the securities function that enables us to respond to market risk. But we do not have an extensive branch network outside the Tokai and Kanto regions. Our alliance strategy is therefore to identify leading regional banks that have built long-standing relationships of trust with local customers as alliance partners, and then combine mutual strengths—namely, our product and proposal-making capabilities and their geographical reach—to maximize the major synergies that are sure to emerge.

TOKAI TOKYO SECURITIES CO., LTD. 4 Domestic Securities Company Performance Rankings (Consolidated)

Operating Revenue Ordinary Income (Million yen) (Million yen)

Ranking Company FY’07 Ranking Company FY’07

1 Nomura Holdings, Inc.＊ 1,593,722 1 Daiwa Securities Group Inc. 90,143

2 Daiwa Securities Group Inc. 825,422 2 Nikko Cordial Securities Inc. 51,182

3 Mitsubishi UFJ Securities Co., Ltd. 534,093 3 SBI E*Trade Securities Co., Ltd. 22,405

4 Mizuho Securities Co., Ltd. 223,677 4 Matsui Securities Co., Ltd. 20,744

5 Nikko Cordial Securities Inc. 222,810 5 SMBC Friend Securities Co., Ltd. 19,096

6 Shinko Securities Co., Ltd. 146,514 6 Tokai Tokyo Securities Co., Ltd. 14,919

7 Okasan Holdings, Inc. 72,314 7 Okasan Holdings, Inc. 14,848

8 SBI E*Trade Securities Co., Ltd. 64,499 8 Shinko Securities Co., Ltd. 14,633

9 Mizuho Investors Securities Co., Ltd. 64,064 9 Monex Beans Holdings, Inc. 12,811

10 Tokai Tokyo Securities Co., Ltd. 63,152 10 Mitsubishi UFJ Securities Co., Ltd. 11,016

11 SMBC Friend Securities Co., Ltd. 60,571 11 kabu.com Securities Co., Ltd. (non-consolidated) 9,955

12 Matsui Securities Co., Ltd. 39,915 12 Mizuho Investors Securities Co., Ltd. 7,712

13 Monex Beans Holdings, Inc. 30,497 13 Rakuten Securities, Inc. 6,843

14 Rakuten Securities, Inc. 28,691 14 Toyo Securities Co., Ltd. 6,594

15 Toyo Securities Co., Ltd. 22,984 15 Marusan Securities Co., Ltd. 3,692

＊ US GAAP is applied to Nomura Holdings = Online broker = Online broker Net Income Comparison of ROE of Securities Firms (Million yen) (%)

Ranking Company FY’07 Company FY’07

1 Daiwa Securities Group Inc. 46,411 Tokai Tokyo Securities Co., Ltd. 8.6 2 Nikko Cordial Securities Inc. 23,890 Nomura Holdings, Inc. (3.3) 3 Matsui Securities Co., Ltd. 12,781

4 SBI E*Trade Securities Co., Ltd. 11,923 Daiwa Securities Group Inc. 5.3 5 SMBC Friend Securities Co., Ltd. 11,270 Shinko Securities Co., Ltd. 3.4 6 Shinko Securities Co., Ltd. 9,404

7 Tokai Tokyo Securities Co., Ltd. 9,025 Okasan Holdings, Inc. 5.4 8 Mitsubishi UFJ Securities Co., Ltd. 8,137 Mizuho Investors Securities Co., Ltd. 4.7 9 Monex Beans Holdings, Inc. 7,206

10 kabu.com Securities Co., Ltd. (non-consolidated) 6,006 Ichiyoshi Securities Co., Ltd. 2.9 11 Okasan Holdings, Inc. 5,620 Mito Securities Co., Ltd. 4.1 12 Mizuho Investors Securities Co., Ltd. 5,264

13 Toyo Securities Co., Ltd. 3,236 Marusan Securities Co., Ltd. 3.2 14 Kyokuto Securities Co., Ltd. 1,766 Toyo Securities Co., Ltd. 8.2 15 Marusan Securities Co., Ltd. 1,658

= Online broker

5 TOKAI TOKYO SECURITIES CO., LTD. Shareholder Information

Stock Information (As of March 31, 2008) Major Shareholders (As of March 31, 2008)

Shares held Ratio of Voting Number of shares authorized 972,730,000 Shareholder name (thousands) Rights (%) (As of March 31, 2008) Number of shares issued 285,582,115 1 Mitsui Sumitomo Insurance Co., Ltd. 28,507 9.98

Number of shareholders 24,478 Japan Trustee Services Bank, Ltd. 2 16,572 5.80 (Trust Account)

3 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 12,016 4.21

Ownership and Distribution of Shares (As of March 31, 2008) The Master Trust Bank of Japan, Ltd. 4 10,046 3.52 (Trust Account)

Japanese securities firms 5 Meiji Yasuda Life Insurance Company 5,000 1.75 Ownership and 1.86% distribution of shares Credit Suisse Securities (USA) LLC , 6 4,880 1.71 7.05% Special for Excel Bene Foreign institutions The Chuo Mitsui Trust and Banking 7 4,800 1.68 and individuals Japanese individuals Company, Ltd. and others 9.76% The Nomura Trust and Banking Co., Ltd. 8 3,508 1.23 Other domestic 29.82% (Investment Trust Account) corporations Japan Trustee Services Bank, Ltd. (Trust Account for 9.38% 9 The Sumitomo Trust and Banking Co., Ltd. retirement 3,461 1.21 benefit trust account for Toyota Motor Corporation)

Japanese financial 10 The Chukyo Bank, Ltd. 3,258 1.14 institutions 42.14% Total 92,050 32.23 Note: The above table does not include treasury stocks (20,142,000 shares/7.05%). Stock Price Range and Volume of Stock Trade

Stock Prices on the Tokyo Stock Exchange (Yen) 1,000 900 800 700 600 500 400 300 200 100

Average Daily Volume of Stock Traded, by Month (Millions of shares) 10.0 7.5 5.0 2.5 0 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 Indicators

(Yen) (%) FY’03 FY’04 FY’05 FY’06 FY’07 500 25 EPS (after adjustment/yen) 42.2 21.3 79.0 39.7 34.0 22.1

BPS (yen) 318.7 332.0 394.0 390.5 399.2 399.2 400 390.5 20 ROE (%) 14.9 6.9 22.1 10.1 8.6 332.0 Dividend per share (yen) 10.0 10.0 25.0 17.5 15.0 318.7 Payout ratio (%) 23.6 46.9 31.6 44.1 44.1 300 394.0 15 14.9 DOE (%) 3.1 3.0 6.9 4.5 3.8 Dividend yield (%)* 2.8 2.8 2.9 2.5 4.5 200 8.6 10 *based on the closing stock price on the final day of each fiscal year 10.1

Analyst Coverage 6.9 100 79.0 5 42.2 39.7 34.0 21.3 Muraki, Masao Daiwa Institute of Research Ltd. 0 0 FY’03 FY’04 FY’05 FY’06 FY’07 Please note that any opinions, estimates, or forecasts regarding the Company’s EPS BPS ROE performance made by the equity analyst is his alone and does not represent opinions, estimates or forecasts of the Company. The Company does not, by its reference above or distribution, imply its endorsement of or concurrence with such information, conclusions or recommendations.

TOKAI TOKYO SECURITIES CO., LTD. 6 Evolution Built on Strength Corporate Directory (As of March 31, 2008)

Registered Corporate Name Tokai Tokyo Shoken Kabushiki Kaisha English Name Tokai Tokyo Securities Co., Ltd. Date Established June 19, 1929 Paid-in Capital ¥36,000,000,000 Total Employees 2,107 (as of March 31, 2008) Number of Branches 75

Tokai Group Affiliates (As of March 31, 2008)

Utsunomiya Securities Co., Ltd. Tokai Tokyo Research Center Co., Ltd. Tokai Tokyo Services Co., Ltd. Tokai Tokyo Investment Management Co., Ltd. Tokai Tokyo Finance & Real Estate Co., Ltd. Tokai Tokyo Investment Co., Ltd. Tokai Tokyo-Sumishin Wealth Partners & Consulting Co., Ltd. Tokai Tokyo Securities (Asia) LTD. Tokai Tokyo Securities Europe Limited YM Securities Co., Ltd. Tokai Tokyo Securities (USA), Inc.

Investment Risk When investing in financial products, you may be required to pay a prescribed commission (for stock trading, from a minimum of 2,625 yen, including consumption tax, to a maximum of 1.2075% of the contract price, including consumption tax; for an investment trust, a sale commission and expenses including the trust fee prescribed for each issue). Investments in financial products may produce losses associated with the market risk caused by changes in stock market prices and interest rates, the credit risk as a result of changes in the business and financial conditions of the issuers of financial products, the exchange fluctuation risk in association with foreign securities, etc. Financial products with stock subscription rights have time limits for the exercise of the rights. When you carry out margin transactions or derivatives transactions, losses could exceed the deposit or margin that you have lodged. Each financial product has different commissions and risks. We advise you to carefully read the documentation that you will receive prior to entering into any investment agreement. *The objective of the document is to provide information on the Company’s recent business results and not to solicit investment in securities issued by the Company.

Web site: http://www.tokaitokyo.co.jp/english/en/index.html