In light of the Group's Corporate Principle focusing on human values, the Daiwa Securities Group is continuing its efforts to create a workplace that provides equal opportunities for everyone, and hence, better help female employees realize their full potential.

Human resources contribute to a company's competitiveness. The Daiwa Securities Group is building a personnel management system that reflects the Group's Corporate Principle of human values. In fiscal 2005, the Group implemented key initiatives welcoming disabled employees, improving employee training, and creating a workplace environment that is supportive of women employees.

Basic employee statistics (Daiwa Securities Group Inc.)

*The average annual salary includes bonuses and other forms
of additional remuneration.

*1Temporary employees are part-time hires; the figure shown here is the average number of such employees over the year. This class of employees is mostly made up of women.
*2 Includes regional career-track employees and specialist positions.

The Daiwa Securities Group has established recruitment guidelines that stipulate equal opportunity and fair treatment. The guidelines are clearly posted in the hiring section on the Group's website, and the staff responsible for recruitment are expected to fully apply these principles. The Group's policy for handling job applicants' personal information is also posted on the website.

The Group's hiring target for new graduates in fiscal 2007 has been greatly expanded, to a total of 1,400 people. In addition to large-scale recruitment seminars, the Group is also scheduling smaller scaled discussion groups to attract talent by responding to their concerns. Recruitment drives are being held both independently and jointly with other companies nationwide. The Group is also holding sessions for hiring people who want to find jobs in their hometowns or in another city.

*1. Regional career-track employees make up a class of career-track employees which was first established at Daiwa Securities Co. Ltd. in 1998. These employees stay in one region and are not subject to transfers that require a change of residence. Fullscale hiring of new graduates into this class began in April 2002.
*2. General employees make up a class that was created in April 2003 by combining the old general employee class with the old area general employee class.
*3. Financial advisors are employees who work in sales at Daiwa Securities Co. Ltd., under one-year contracts.

In response to the initiatives taken to support women employees in the workplace, as well as the push to hire female candidates of high caliber, the number of female employees hired by the Daiwa Securities Group has been increasing each year. In fact, a key reason for the Group's jump in popularity among jobseekers is its various programs to support female employees.

The group-wide employment rate for disabled persons is 1.85% as of March 31, 2006, higher than the government's guideline of 1.80%. However, since this represents a 0.04% drop from fiscal 2004, the Group is planning to take various measures to stabilize the employment of disabled persons. As part of these efforts, two employees have obtained the certification of Employment Counselor for People with Disabilities.

Employment rate for persons with disabilities (average across the nine principle group companies, as of the end of each fiscal year)

The Daiwa Securities Group is enriching its highly selective leadership and management training program to groom the next generation of business leaders. So far, 150 employees have graduated from the Daiwa Management Academy for developing general managers, and 415 have completed the Daiwa Leadership Program for the training of deputy general managers. The number of graduates from both these programs is steadily increasing.

The Consulting Skills Training has been enhanced to develop more proficient human resources. The Daiwa Securities Group introduced its Special Program for Improving the Skills of Junior Sales Staff, a course designed to train newly hired young salespeople. To build up the level of investment consulting skills, the fiscal 2005 training program was carried out for seven days on a selective basis, and a total of 409 employees completed the program.

Training for instructors responsible for junior sales staff.

The Daiwa Securities Group continues to improve its various training programs, including CSR training sessions and volunteering in joint training for new hires. Further, training related to information security in compliance with the Personal Information Protection Law is also offered.

The Daiwa Securities Group's internal recruiting system has been in place since fiscal 2000. This facilitates personnel transfer across the Group's companies, allowing employees the opportunity to explore different career options and realize their capabilities to the fullest. In the fall of 2005, nine out of 40 applicants were successful, while 10 of 38 made it in the spring of 2006. There have been a total of 572 applicants since 2000, with a total of 114 successful transfers.
　 The Group offers examinations for those in general positions or regional career-track jobs to move into a new career path.

In June 2005, the Group expanded its existing program for obtaining qualifications, and introduced the attainment of specified qualifications as a criterion for personnel promotion. There are set "qualification points" to obtain for the promotion to each managerial post or grade. The Group is therefore encouraging the acquisition of knowledge and credentials befitting an organization of professionals.

To achieve a fairer and hence more widely accepted framework for personnel evaluations, the Group carries out a "two-way evaluation system" between superiors and subordinates, as well as a "multi-directional evaluation system" which allow employees to be evaluated by those not necessarily in the same department, but with whom they work closely. Compliance objectives are also included in personnel evaluations and are used for determining personnel reassignments and promotions.

In order to establish a healthy and positive workplace for employees, the Daiwa Securities Group is continuing its efforts to improve awareness about the misuse of power and gender harassment through the group intranet and training videos. The Group has set up the Human Rights Awareness Promotion Committee, chaired by the Daiwa Security Group Inc. director in charge of personnel management, and holds training every year for all employees.

In May 2005, Daiwa Securities Group Inc. instituted a mandatory 10 p.m. "lights out curfew" for its headquarters building, in a bid to reduce overtime hours and achieve better time management. In December 2005, the "lights out curfew" was moved forward to 9:30 p.m., to obtain even better operations efficiency. In addition to having a full-time physician at headquarters, a psychiatrist and clinical psychologist also provide in-house counseling once a week to employees when needed.

Working hours and paid vacation usage rate
(Daiwa Securities Group Inc., Daiwa Securities Co. Ltd., and Daiwa Securities SMBC Co. Ltd.)

As part of efforts to build a flexible and understanding workplace, as well as to encourage work methods to incorporate the welfare of the employee, the Daiwa Securities Group expanded its childcare and family-care leave and subsidy program in October 2005. The Group initially offered its employees two years of childcare leave, exceeding the legally mandatory one and a half years. The Group has now extended this period to three years. Further, it introduced a childcare cost assistance scheme to help cover expenses (to a specified limit) incurred by employees who send their children under the age of three to nurseries.
　 With regards to family care, employees are eligible for up to 365 days of leave, far beyond the legal requirement. In the event of an employee whose spouse is in need of daily care due to an illness or disability, a grant is available to cover home-helper expenses for up to sixty days. Although these programs are in place, they are hardly utilized, so the Group will endeavor to make them more widely known among its staff.

The Daiwa Securities Group recognizes the importance of direct feedback from employees. Therefore, it has instituted employee interviews by the Personnel Department and a semi-annual selfassessment questionnaire. The Group is striving for open communication with its employees by assigning counseling personnel and establishing alternative means of conveying employees' opinions to the company. Furthermore, the Group is in constant contact with the members of the Daiwa Securities Group Employees' Union through annual labor negotiations and a twice-a-year union-member questionnaire. These efforts have gone a long way to promoting better relations between employees and management.

The Daiwa Securities Group is planning to move its headquarters to the Grand Tokyo North Tower (currently under construction in Chiyoda-ku, Tokyo) in November 2007. Consequently, the headquarters relocation project has been launched, and an employee questionnaire concerning desirable workplace features was distributed. Many opinions were received regarding features that would help relieve employee fatigue, including windows and informal meeting spaces to make the office environment more pleasant. The Group will continue its investigations as it prepares for the move.

Opinions from the relocation project questionnaire

Which of the following is important to you in our new workplace (multiple responses)?

The Daiwa Securities Group wants to provide more support to its female employees, not just from a CSR perspective, but also as part of its corporate strategy.
　 Of the 727 employees hired in April 2006 for career-track and regional career-track positions, women accounted for 326 persons or 44.8%. Furthermore, women are actively being promoted to management positions after joining the company. As of March 31, 2006, there were 97 female managers at group company offices in Japan, including 4 branch managers. This represents 2.7% of the total management positions in the Group, an increase over the end of the previous fiscal year.

Childcare Support Guidebook.

In order to provide female employees the support needed to fulfill both work and family obligations, the Daiwa Securities Group introduced a Female Employee Support Plan in October 2005. The Group has been televising in-house satellite programs and distributing the Childcare Support Guidebook, to raise workplace awareness and encourage more women to take advantage of the plan.
　 These efforts have been recognized outside the Group. In June 2006, Daiwa Securities Group Inc., Daiwa Securities Co. Ltd., and Daiwa Securities SMBC Co. Ltd. received the Tokyo Labor Bureau Chief Award of Excellence in the Corporate Equal Opportunity Awards sponsored by the Ministry of Health, Labour and Welfare.

Female Employee Support Plan

Daiwa Securities Group's female employee and manager rates in Japan

In April 2006, the revised Law concerning Stabilization of Employment of Older Persons went into effect. This amended law is the result of the predicted shortage of workers due to Japan's declining birthrate, as well as the increased desire of senior citizens to work following the reform of the pension system. In 2000, the Daiwa Securities Group introduced the Daiwa Elder System for the re-employment of employees who had retired under the mandatory retirement scheme. The Group later introduced the Daiwa Master System in April 2006 to allow mandatory retirees that have achieved a certain level the choice to stay until age 65. For employees 55 years of age or more, there is the new Home Base Declaration, which allows employees to be posted as close to their desired retirement home as possible. There is also the Voluntary Retirement system, and the Second Career Support Leave. The latter provides a two-month period of leave for the preparation of reemployment or independent activities.

Usage of the Daiwa Elder System
(Daiwa Securities Group Inc., Daiwa Securities Co. Ltd. and Daiwa Securities SMBC Co., Ltd. as the end of each fiscal year)