E*TRADE Securities Co., Ltd.
Financial Review
Fiscal Year Ended March 31, 2006

April 27, 2006
E*TRADE Securities Co., Ltd.
Stock code: 8701
The items in this document are provided by E*TRADE Securities asinformation related to its business strategy and not as an invitation toinvest in E*TRADE stock or securities. E*TRADE does not guarantee the completeness of this document in terms of information andfuture business strategy. The content of this document is subject to revision or cancellation without warning.

1. Performance Overview

Consolidated Performance, FY Ended March 31, 2006
(Unit: Million yen, %)2004(2004/4 to 2005/3)

2005(2005/4 to 2006/3)

Compared tosame period
in previous year

Operating revenue

27,17460,213+121.6

Net operating revenue

25,18056,317+123.7

Operating profit

11,11230,011+170.1

Ordinary profit

11,34330,077+165.2Current net profit

6,178

16,970+174.7

Note: E*TRADE Korea became a consolidated subsidiary of E*TRADE in March 2005, so the subsidiary's results are included in the consolidated
performance for the fiscal year ended March 31, 2006.

<3>

Consolidated Performance by Quarter FY Ended March 31, 2006
The recent fourth quarter (three month period) recorded
the highest ever revenue and profit.
(Unit: Million yen, %)
2005

2005

2005

2005

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter(2005/4 to 2005/6)

Compared toprevious quarter(2005/7 to 2005/9) (2005/10 to 2005/12) (2006/1 to 2006/3)

Operating revenue

10,257

13,837

16,494

19,623+19.0

Net operating revenue

9,558

12,425

15,711

18,621+18.5

Operating profit

4,229

6,568

8,682

10,531+21.3

Ordinary profit

4,381

6,565

8,594

10,536+22.6<4>

Performance of E*TRADE Korea Co., Ltd. FY Ended March 31, 2006
The accumulated loss was wiped away in the third quarter.
E*TRADE Korea recorded the highest ever revenue and profit in the fourth quarter.
(Unit: Million yen)
2005

2005

2005

2005

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter(2005/4 to 2005/6)(2005/7 to 2005/9) (2005/10 to 2005/12) (2006/1 to 2006/3)

2005
Full term(2005/4 to 2006/3)

Operating revenue

840

1,150

1,470

1,740

5,202

Net operating revenue

821

1,112

1,399

1,643

4,977

Operating profit

28

206

429

517

1,182

Ordinary profit

33

203

428

522

1,189
<5>

Consolidated Performance Highlights FY Ended March 31, 2006
1) Commission earnings: Up 115% compared to the previous period, expanding to 40.174 billion yen.
• Combined accounts: 1,167,778 (as of March 31, 2006) In 12 months, the number of accounts grew by 575,035 (47,919 accounts permonth).
• For FY 2005 full term, the share of brokerage turnover from individuals was 23.1%. This share continues to expand.

2) Financial revenue: Up 128% compared to the previous period, expanding to 13.23 billion yen.
• Margin trading accounts: 115,611 (as of March 31, 2006). In 12 months, the number of accounts grew by 54,967 (4,580 accounts permonth).
• Margin open interest: 570.686 billion yen (as of March 31, 2006), which is 1.9 times larger than the previous period.

3) Commissions from underwriting, public subscriptions, and secondary offerings:
Up 117% compared to the previous period, expanding to 2.002 billion yen.
• E*TRADE is the top IPO underwriter among online securities firms.

4) Profit from trading and other earnings:
Up 173% compared to the previous period, expanding to 4.805 billion yen.
• The sale of Mexican peso denominated securities grew favorably.
• Earnings from foreign exchange guarantee deposit trading grew favorably.

5) Sales and general management expenses• An increase in brokerage turnover gave rise to an increase in trade-related expenses. However, a volume discount effect kept these
expenses under control.

6) E*TRADE Korea Outlook• Profits were the highest ever, which wiped away accumulated losses.
Note: E*TRADE Korea became a consolidated subsidiary of E*TRADE in March 2005, so the subsidiary's results are included in the
consolidated performance for the fiscal year ended March 31, 2006.

<6>Performance Highlights

1) Consolidated Commission Earnings(Million yen)

45,00040,17440,00035,000115% increase

30,00025,00020,00018,68815,00010,0005,000
0FY 2004

FY 2005(2004/4 to 2005/3)(2005/4 to 2006/3)

Note: E*TRADE Korea became a consolidated subsidiary of E*TRADE in March 2005, so the subsidiary's results are included in the
consolidated performance for the fiscal year ended March 31, 2006.

<7>1) Commission Earnings

Account Comparison for Main Online Securities Companies
Accounts of five main online securities companies(Accounts)

1,200,000(Current from end of 2006/3)

1,167,778

1,100,000
1,000,000
900,000
800,000
700,000

631,548

600,000

552,816

517,521500,000
400,000
300,000
200,000
E*TRADE

Monex

RakutenMatsui

Account trends of five main online securities companies(2004/3 to 2006/3)(Accounts)

1,200,000
1,150,000
1,100,000
1,050,000
1,000,000
950,000
900,000
850,000
800,000
750,000
700,000
650,000
600,000
550,000
500,000
450,000
475,425 400,000
350,000
300,000
250,000
200,000
150,000
100,000
Kabu.comMar2004

E*TRADE: 1,167,778
Accounts increased by 2 times for the
12 months from 2005/4 to 2006/3. The
account gap with #2 Monex Securities
expanded by 1.8 times over one year.
Beginning from October, E*TRADE
acquired a record number of new
accounts for five consecutive months.
From October, E*TRADE acquired anaverage of 65,053 new accounts permonth, which is two times the monthly
average from April to September.
Monex: 631,548
Rakuten: 552,816
Matsui: 517,521
Kabu.com:
475,425

May

Jul

Sep

Nov

Jan
2005

Mar

May

Jul

Sep

Nov Jan2006

Source: Public documents from each company's website.
Monex Securities and Nikko Beans Securities are added together as Monex. Kabu.com Securities merged with MeNet Securities in January 2006.
.

Mar

<8>

1) Commission Earnings

E*TRADE Account Trend
Average monthly account acquisition

4Q FY 2005
(monthly average over 3 months)

77,701(Accounts)

FY 2005 (monthly average over 12 months): 47,919

1,167,778
1,113,550
1,019,929

1,200,000
1,100,000

934,674
93,621 increase
867,745
FY 2004
900,000
85,255 increase
820,115(monthly average over 12 months)
777,455
20,066800,000
744,450
711,558
683,696700,000
653,913624,092
600,000
FY 2003592,743(monthly average over 12 months)

1,000,000

500,000

8,163

452,493

400,000

351,950
290,558
300,000 253,988

200,000
100,000
Mar Sep Mar Sep Mar Apr May Jun
FY 2003

FY 2004

FY 2005

Jul Aug Sep Oct Nov Dec Jan Feb Mar<9>1) Commission Earnings

Account Acquisition Comparison for Main Online Securities Companies
New accounts from 2005/4 to 2006/3(New accounts)

600,000

575,035
4Ｑ （2006 Jan to Mar）

500,000

3Ｑ （2005 Oct to Dec）

4Q
233,104

2Ｑ （2005 Jul to Sep）
1Q (2005 Apr to Jun)

400,000

300,000

303,594
3Q
157,219

98,691200,000

248,050
107,755

2Q
93,759242,260
Note

192,034

139,002

89,02888,99358,359100,000
1Q
90,95365,48637,191

58,59350,38944,74525,69629,12630,822
13,626

RakutenMatsuiKabu.comMonex

0

E*TRADE

48,436

Source: Public documents from each company’s website.
Note: Kabu.com Securities merged with MeNet Securities in January 2006.

<10>

1) Commission Earnings

Online Account Comparison for Three Major Securities Companies
Individual online account trends
Online accounts for
FY ended March 31, 2006

(2005/3 to 2006/3)(1000 accounts)

2,000
Nomura Securities: 1.969 million

1,500

Daiwa Securities: 1.487 million

E*TRADE Securities: 1.167 million
Nikko Cordial Securities: 1 million

1,000

500
Mar
2005

Jun

Sep

Oct

Nov

Dec

Jan
2006

Feb

Mar
Source: Public documents from each company.

<11>1) Commission Earnings

Brokerage Turnover for Main Online Securities Companies(Million yen)

Daily average turnover trend for five main online
securities companies(2004/1 to 2006/3)

FY 2005
Daily average turnover(Unit: Million yen)

500,000

400,000

E*TRADE: 383,062
300,000

200,000
Rakuten: 184,754
Matsui: 128,103

100,000

Monex: 96,451
Kabu.com: 82,007

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2004

2005

2006

Source: Public documents from each company's website.
Note: Monex Securities and Nikko Beans are totaled as Monex. Kabu.com Securities merged with MeNet Securities in January 2006.

<12>1) Commission Earnings

Brokerage Turnover for Main Online Securities Companies(Billion yen)

4Q FY 2005
Turnover

Brokerage turnover for 5 main online securities companies

30,000(1Q FY 2003 to 4Q FY 2005)
E*TRADE: 27,809

25,00020,00015,000
Rakuten: 13,373
Matsui: 10,752

10,000Monex: 8,154
Kabu.com: 6,340

5,000

0
1Q
2Q
FY 2003

3Q

4Q

1Q
2Q
FY 2004

3Q

4Q

1Q

2Q
FY 2005

3Q

4Q

Source: Public documents from each company's website.
Note: Monex Securities and Nikko Beans are totaled as Monex. Kabu.com Securities merged with MeNet Securities in January 2006.

<13>

1) Commission Earnings

Individual Brokerage Turnover Share for Main Online Securities Companies
Same period comparison over last 3 years (Term: April to March)
FY 2003(2003/4 to 2004/3)

Others50.9％

Five main
onlinesecurities
companies
49.1 ％FY 2005(2005/4 to 2006/3)

FY 2004(2004/4 to 2005/3)

Others40.4％

Five main
onlineSecurities
companies
59.6 ％

Others42.6％

Five main
onlineSecurities
companies
57.4％

E*TRADE

15.2％

E*TRADE

21.1％

E*TRADE

23.1％

Matsui Securities

12.2

Matsui Securities

13.1

Rakuten Securities

11.1

DLJ (Rakuten Securities)

9.5

Rakuten Securities

11.3

Matsui Securities

10.0

Monex

7.5

Monex

8.7

Monex

8.0

Kabu.com

4.6

Kabu.com

5.4

Kabu.com

5.2

Source: Tokyo Stock Exchange statistical data, JASDAQ statistical data, and public
documents from each company’s website.
Note: Individual brokerage turnover is totaled from three exchanges (sections one and two) and JASDAQ. Monex Securities and Nikko Beans aretotaled as Monex. Kabu.com Securities merged with MeNet Securities in January 2006.

<14>1) Commission Earnings

Brokerage Turnover Comparison for Big Three Securities Companies
Share of commissions
for the 4Q FY 2005

Brokerage turnover for each company(Billion yen)
30,000Total share
25,00028,371 (10.68%)

In 4th Quarter
Passes 10%!

20,000Nomura: 19,279 (7.26%)
15,000Overtake Nomura in 4Q FY 2004.
Matsui: 10,752 (4.05%)

10,000Daiwa SMBC: 9,440 (3.55%)
Nikko City: 7,509 (2.83%)
Daiwa: 6.184 (2.33%)

5,000

Nikko Cordial 2,623 (0.99%)
0
1Q
2Q
FY 2001

3Q

4Q

1Q
2Q
FY 2002

3Q

4Q

1Q

2Q
3Q
FY 2003

4Q

1Q

2Q
3Q
FY 2004

4Q

1Q

2Q
3Q
FY 2005

4Q(Unit: 1 billion yen. Figures in parentheses indicate each brokerage turnover share as a percentage of total turnover in the three markets.
Source: Figures are based on public documents from each securities company and the Tokyo Stock Exchange. (Figures for E*TRADE include orders from overseas investors.)<15>

1) Commission Earnings

Basis Comparison for Main Online Securities Companies
Basis comparison
for five main online securities companies(Basis)(FY ended March 31, 2006)

14(Brokerage commission / Brokerage turnover)

11.7
12

9.9
9.1

10

8

6

5.5

4.8

4

2

0

E*TRADE

Kabu.com

MBH

Matsui
Note

Rakuten
Note

Source: Prepared by SBI using settlement of account documents from each company.
Note: For Matsui and Rakuten, the fiscal year ends December 31, 2005.

<16>

1) Commission Earnings

Client Asset Trend (Reference)(100 million yen)Compared topreviousyear +95.8%

FY 2004 (end of March)

45,825FY 2005 (end of March)

50,000

縦棒 345,00040,00035,000Compared toprevious year
+49.4%

30,00025,00023,40022,487Compared toprevious year
+71.4%

19,37720,00015,05015,00011,303

10,000Compared toprevious year
+90.1%

13,7007,206Compared toprevious year
+114.5%

12,347
5,756

5,000
0
E*TRADE

Monex

MatsuiRakutenKabu.com

Source: Public documents from each company's website.
Note: Monex Securities and Nikko Beans are totaled as Monex. Kabu.com Securities merged with MeNet Securities in January 2006.
Figures for Matsui Securities are for the end of February in the FY ended March 31, 2006 (the end of March in the FY ended March 31, 2005).

<17>1) Commission Earnings

Certificate of Stock Receipt and Delivery (Reference)(100 million yen)

3,000

Amount of receipts and deliveries for FY ended March 31, 2006
Receipt
Delivery

2,692

2,500
2,000

1,548
1,500
1,000
500

404

428

0
FY 2004(2004/4 to 2005/3)

FY 2005(2005/4 to 2006/3)

With the lowest commission rates in the industry and the highest level of service, we received far moresecurities from other companies than we delivered.
Note: Calculated from E*TRADE’s processing day for receipt and delivery of securities.

<18>1) Commission Earnings

Futures Trading Expansion
Futures trading is a pillar of earning power and growing rapidly. We
expect it to expand even further in the future.
Futures accounts(Accounts)

Futures commissions

Compared to the end of the same period in theprevious year: Increased by 2.2 times

12000

11,168(1000 yen) Compared to the end of the same period in theprevious year: Increased by 3 times 385,916
400,000
350,000

10000

300,000

279,4728000
250,000

6000

200,000

140,450

150,000

4000

106,669
100,000

2000

50,0000

1Q

2006

FY 2005

12

10

8

6

4

12

10

8

2

2005

2

2004

6

4

0

2Q

3Q

4Q
<19>

Performance Highlights

2) Consolidated Financial Revenue(Million yen)

14,00013,00012,00011,00010,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

13,230

Revenue
Financial balance (Revenue - Expenses)

Financial revenue

9,334

128% increase

5,803
3,809

Financial balance
145% increase

FY 2004(2004/4 to 2005/3)

FY 2005(2005/4 to 2006/3)

Note: E*TRADE Korea became a consolidated subsidiary of E*TRADE in March 2005, so the subsidiary's results are included in the
consolidated performance for the fiscal year ended March 31, 2006.

<20>

2) Financial Revenue

Margin Trading Account Comparison for Main Online Securities Companies(Margin accounts)

120,000

115,611

Margin trading accounts of five online(Margin accounts)
securities companies(Current from end of 2006/3)

115,000

E*TRADE has 9.9% of total
accounts as of the end of
March (Matsui: 13.7%).
In the future, after gainingsome experience, we expect
more and more novice
investors
toestablish
margin accounts and to
begin trading.

100,000
95,00085,00080,00071,15475,00054,250E*TRADE: 115,611(2004/3 to 2006/3)

105,000

60,000Margin account comparison
with Matsui Securities

Matsui: 71,154

65,00042,55441,70040,00055,00045,00020,00035,000

2004

2005

M
ar

Ja
n

No
v

Se
p

Ju
l

Ju
l

M
ay

Monex

M
ar

Kabu.comJanRakutenNov

MatsuiSe
p

E*TRADE

M
ay

0

M
ar

25,0002006

Source: Public documents from each company's website.
Note: Monex Securities and Nikko Beans Securities are added together as Monex. Kabu.com Securities merged with MeNet Securities in January 2006.
<21>

2) Financial Revenue

Margin Open Interest Trend(Million yen)Margin open interest by quarter

600,000(Transaction balance at the end of the quarter)
General (unlimited) margin trading

500,000

567,988570,686

93,512

83,237

System margin trading

387,891

400,000
307,869

300,000

321,529 67,089

55,881 65,190
203,499

200,000

164,545 23,751

474,475 487,449

213,856 210,686

29,76235,946
320,801

112,925

100,000

108,488

78,53278,532251,987 256,339
164,545 179,747 184,093 174,739

112,925 108,488

0

6月

2003

9月

12月

3月

2004

6月

9月

12月

3月

2005

6月

9月

12月

3月

2006 <22>2) Financial Revenue

Margin Trading Comparison with Matsui Securities
E*TRADE's low commission system spurs active trading.
Brokerage turnover sharein individual margin trading

Margin open interest comparison
with Matsui Securities(Million yen)
800,000

E*TRADE(2005/4 to 2006/3)

700,000

679,096

Matsui

644,050
567,988 570,686

600,000
E*TRADE: 27.5%

500,000
Others: 58.1%

400,000

459,657
421,484 410,835
387,891
307,869321,529

Matsui Securities: 14.4%

300,000

200,000

100,000
Source: Tokyo Stock Exchange statistical data, JASDAQ statistical data, andpublic documents from each company's website.
Note: Brokerage turnover in individual margin trading is totaled from threeexchanges (sections one and two) and JASDAQ.

0

3月
2005

6月

9月

12月

3月
2006

<23>

2) Financial Revenue

Expanding Revenues from Stock Loan Business
The stock loan business is a new revenue source that will expand further in the future.
(Million yen) Stock loan balance at the end the month
53,79655,00050,000

Expanding Revenues from Stock Loan Business(Million yen)

209

200

45,00040,000150

13635,00030,00025,000100

22,60520,00015,00050
10,000
5,000

25

4,282

8

2,169

0

0

Jun
2005

Sep

Dec

Mar
2006

1Q
FY 2005

Note: Calculated using the market price at the end of the month.

2Q

3Q

4Q
<24>

Performance Highlights

3) Consolidated Commissions from Underwriting, Public Subscriptions, andSecondary Offerings(Million yen)

2,500

2,002

2,000
1,500
1,000

117% increase

922

500
0
FY 2004(2004/4 to 2005/3)

FY 2005(2005/4 to 2006/3)

Note: E*TRADE Korea became a consolidated subsidiary of E*TRADE in March 2005, so the subsidiary's results are included in the
consolidated performance for the fiscal year ended March 31, 2006.

<25>3) Underwriting and Other Commissions

IPO Underwriting Performance
E*TRADE Securities
IPO stock underwriting performance

Underwriting Comparison(Listing date base)(Underwritings)(Underwritings)

100

94
90

350

330

87

80

70

#1 Online
Securities
Company300(FY 2005)

250

257

60

202

50

200
42
38

40

38

162
150

30

23
20

100
10

8

50

0
FY 1999

FY 2000

FY 2001

FY 2002

FY 2003

FY 2004

FY 2005

E*TRADE

Monex

MatsuiRakutenSource: Public documents at each company. The data is from the first day of online trading for each company to March 31, 2006 (Listing date base).
Note: Figures do not include agency transactions and real estate investment trust.

<26>3) Underwriting and Other Commissions

Off-Floor Distribution Performance (Reference)
Performance on TSE, OSE, and JASDAQFY 2005 (2005/4 to 2006/3)

Companies with off-floor distributions(FY 2005)
handled by E*TRADE
Date implemented

Companies handled: 173 (FY 2004: 151)
Distribution total: 71 billion yen (FY 2004: 67.6 billion yen)
E*TRADE application total: 145.4 billion yen (FY 2004: 93.3 billion yen)Handling total: 14.7 billion yen (FY 2004: 13.1 billion yen)
E*TRADE handling share: 20.8% (FY 2004: 19.7%)

Company name2005/4/13

Met’s Corporation

Tokyo Mothers

2005/5/25

Kyoritsu Printing Co., Ltd.

JASDAQ

2005/6/28

Club iT Corporation

HC

2005/8/16

TransGenic Inc.

Tokyo Mothers

2005/8/23

CVS Bay Area Inc.

Tokyo Section 2

2005/9/20

Renaissance Inc.

Tokyo Section 1

2005/11/15

Met’s Corporation

Tokyo Mothers

2005/11/28

SIIX Corporation

Tokyo Section 1

2006/2/20

IRI-Ubiteq Inc.

HC

2006/2/22

ITX

HC

Note: Earnings from off-floor distributions include commissions.

E*TRADE application total(100 million yen)

1,454

1,500
1,000

E*TRADE handling total(100 million yen)
150

147
131

933
100

500
0

Stock exchange

50
0FY 2004
FY 2005(2004/4 to 2005/3) (2005/4 to 2006/3)

FY 2004(2004/4 to 2005/3)

FY 2005(2005/4 to 2006/3)<27>

Performance Highlights

4) Consolidated Trading Profits and Other Earnings(Million yen)

6,000

Other underwriting commissions, trading profits, and operating revenues

4,805

5,000
4,000

173% increase

3,000
2,000

1,760

1,000
0
FY 2004(2004/4 to 2005/3)

FY 2005(2005/4 to 2006/3)

Note: E*TRADE Korea became a consolidated subsidiary of E*TRADE in March 2005, so the subsidiary's results are included in the
consolidated performance for the fiscal year ended March 31, 2006.

<28>

4) Consolidated Trading Profits and Other Earnings

Bond and Other Product Performance
Bond sales (Public and foreign)(Unit: Million yen)

18,000From saving to investing, E*TRADE is providing
government bond products that meet the needs ofindividuals for middle- to long-term investment portfolios.
Bond sales for the full term are up by 2.4 times
compared to the previous term.
16,284

Products that take advantage
of SBI Group Synergies

Products for global
investment• SBI Unlisted Stock Fund III• Mexican-peso
denominated bond• Softbank Group Stock Fund

Foreign bondYen bond

16,000

Providing original products
throughout the year

• Renminbi-yen linked
corporate bond

14,00012,325

7,044

12,000
9,563

10,000
8,000

8,583

7,101

7,493

6,070

6,000
5,116

2.4 times

6,199
9,240

4,000

Diverse and original products
based on customer needs

5,223

2,000
2,377

2,383

1-3月
2005

4-6月

3,493

E*TRADE offers a stable supply of
products to support the asset formationof individual investors.

0
7-9月

10-12月

1-3月
2006

<29>

4) Consolidated Trading Profits and Other Earnings

Expansion of Foreign Exchange Guarantee Deposit Trading
Growing as a pillar of earning power,
we expect trading to expand further in the future.
Accounts offoreign exchange guarantee deposit trading

Earnings offoreign exchange guarantee deposit trading(1000 yen)

(Accounts)
40,00036,617869,120

800,000

35,00030,000600,000

527,491

25,00020,000400,000

15,000235,417

10,000200,000

5,000
0
4 5 6 7 8 9 10 1112 1 2 3 4 5 6 7 8 9 10 1 112 1 2 3

2004

2005

2006

132,0220
FY 2004

FY 2004

FY 2005

FY 2005

1st half

2nd half

1st half

2nd half<30>Performance Highlights

5) Sales and General Management Expenses(Million yen)

30,000(Consolidated)

26,305(Non-consolidated)

25,00022,511

Trading

9,188
20,00015,0007,197
14,067

3,639
10,000

5,000

0

1,573
2,430
851
4,165
157
1,250
FY 2004(2004/4 to 2005/3)

Personnel

2,850

2,049

3,520
1,314

3,420
1,165

Real estate
Depreciation

Office

6,329

6,836

350
1,997

439
2,154

Taxes and public charges

Addition to loan loss
reserves and others

FY 2005(2005/4 to 2006/3)

Note: E*TRADE Korea became a consolidated subsidiary of E*TRADE in March 2005, so the subsidiary's results are included in the consolidated
performance for the fiscal year ended March 31, 2006.

<31>5) Sales and General Management Expenses

Comparison of Operating Revenue and Sales and Management Expenses(Index)Comparison index ofoperating revenue, sales expenses, and management expenses

220

222 (Consolidated)200

202 (Non-consolidated)
187 (Consolidated)

Operating revenue

180

160

160
140

Sales andmanagement expenses

120
100
80

(Non-consolidated)

100
FY 2004 (2004/4 to 2005/3)

FY 2005 (2005/4 to 2006/3)

Operating revenue expanded by two times (non-consolidated) compared to the same period in the previous
year, and sales and management expenses only grew by 1.6 times (non-consolidated). Helped by volume
discounts and cost cutting, the profit rate improved.
Note: E*TRADE Korea became a consolidated subsidiary of E*TRADE in March 2005, so the subsidiary's results are included in the
consolidated performance for the fiscal year ended March 31, 2006.

<32>

Performance Highlights

6) E*TRADE Korea Outlook
Outlook (Current from end of 2006/3)

Trading tools

Stock capitalization: 56 billion Korean won

HTS (Stock, futures, options, transaction program), web,automatic phone transaction, and mobile phone

Investment ratio: 87%

Main strengths
Employees: 101• The lowest online commission rate in Korea (Stock: 0.024%)
Accounts: 96,711• Online investment consulting (video, audio, chat)
Brokerage turnover: 46.4248 trillion won

Main trading products• There is good potential to acquire new accounts
through greater cooperation with banks and portal
services.

Stocks, application for publicly offeredstocks, futures, options, stock warrant,
Japanese stock trading, investment
trust, and securities-secured loan
Achieved the highest ever earnings and profit

In FY 2005, E*TRADE Korea wiped away its
accumulated losses and made preparations forlisting on the KOSDAQ market.

<33>

Business Model of Increasing Returns andOrdinary Profit Rate by Quarter
60

56.0％

E*TRADE ordinary profit rate

54.4 53.7
50.1 52.1

(％)

50

46.1
38.7

40

38.3

38.3

40.6

46.2 47.4
42.7

33.7
30.5

30
22.7

20
(Non-consolidated)

10

0
1Q

FY 2003

2Q

3Q

4Q

1Q

FY 2004

2Q

3Q

4Q

1Q
FY 2005

2Q

3Q

4Q

Note: Calculated using ordinary profit divided by operating revenue.

<34>

2. Main Business Tasks This Term

2. Main Business Tasks This Term

Items with no mark indicate a service release and items with an asterisks ("*") indicate
an intended or a cooperative release.

Main Business Tasks for FY 2005 (1)Implementationmonth

Task content

April• Launch Realtime trading tool: HYPER E*TRADE.

May• Launch Korean stock trading service.
* In cooperation with Japan Net Bank, solicit new accounts and launch operations.
* To support venture businesses, take an equity stake in funds established by Netage Capital.

June

Launch premium search engine for shareholders.

July

AugustSeptember

E*TRADE indicator
Total securities accounts
Top 600,000 accounts• Lower the commission rate on stocks traded over the Internet.

Total securities accounts• Foreign exchange guarantee deposit trading: Expand to 14 currency pairs.
• ATM card issuing launches (Cash card, E*TRADE JCB card).
• Cooperate with Seven Bank as a financial institution where the ATM card can be used.
• Invite subscriptions for SBI Unlisted Stock Fund III.

Top 700,000 accounts
Monthly brokerage turnover• Launch an order conditions service for trading in domestic stocks (excluding JASDAQ).

Monthly brokerage turnover• Launch lead-managing underwriter business for IPOs.

Over 4 trillion yen• Launch Japan's first ever peso-based interest-bearing bond.

Over 5 trillion yen• Launch foreign exchange guarantee deposit trading service
that uses mobile phones: MOBILE E*TRADE.
• Yahoo!: Launch securities brokerage service.

Monthly brokerage turnover
Over 6 trillion yen

Lower the commission rate on stocks traded over the Internet.
October• Launch securities brokerage service: Nexyz TRADE.
• Start handling stocks listed on the Sapporo Market.
• Start handling futures options through the MOBILE E*TRADE phone service.
• Launch a real estate auction service: Operator is IDU Co.
• Launch Japan's first renminbi-yen linked corporate bond: Nicknamed "E*CHINA."

Total securities accounts
Top 800,000 accounts<36>

2. Main Business Tasks This Term

Items with no mark indicate a service release and items with an asterisks ("*")
indicate an intended or a cooperative release.

Main Business Tasks for FY 2005 (2)Implementationmonth

November

DecemberTask content* Announce plan to merge underwriting business with SBI securities(starting from February).
* Cooperate with Hyakugo Bank in the market promotion business.

Monthly brokerage turnover* Reach a decision to increase capital through public offering(pay on 12/16) and to perform a stock split (take effect on 2/1).

Over 7 trillion yen• Launch the i-appli investment tool: HYPER MOBILE service(investment information only).
• Strengthen the online securities trading system to handle
1.5 million accounts.

Total securities accounts• Launch an investment trust/installment purchase service.
• Launch the i-appli trading tool: HYPER MOBILE (added trading feature) service.
• Add postal savings as a financial institution where the ATM card can be used.

January

E*TRADE indicator* In cooperation with SBI Mortgage, solicit new securities accounts
and launch operations.

Top 900,000 accounts
Monthly brokerage turnover
Over 10 trillion yen

Total securities accounts
Top 1,000,000 accounts* Begin to examine ways in which to cooperatewith Sumitomo Trust Bank.
February• Completely renew the MOBILE E*TRADE service
for mobile phone users.

March• Add a website search engine.

Total securities accounts
Top 1,100,000 accounts<37>

2. Main Business Tasks This Term

Gradual Reduction of Stock Commissions to the Lowest Level in the Industry
Standard plan

Commission (Yen)Commission reduction trend
Commission system reduced toa minimum of 2,000 yen.
Commission system reduced toa minimum of 800 yen.
Commission system reduced toa uniform 800 yen.
Commission system reduced to a minimumof 700 yen, fixed amount from 2,500 yen
and selection system introduced.

①

From 2000/3

Spot

②

From 2001/2

Spot

③

From 2001/4

Margin④

From 2001/9⑤

From 2002/1

MarginCommission system reduced to a uniform
600 yen, fixed amount up to 3 million yen
reduced to 2,000 yen.

⑥

From 2002/11

MarginMargin trading commission reduced toa uniform 550 yen.

2) Spot from 800 yen⑦

From 2005/7

Spot

Commission system reduced toa minimum of 500 yen.

3) Margin: 800 yen⑧

From 2005/10

rate reduction trend
Spot from 2,500 yen
1) Spot from 2,000 yen

SpotmarginSpotmarginCommission system reduced to a minimum of 450 yen.
Commission system reduced to a minimum of 250 yen.

4) Spot margin from 700 yen8) Spot: 450 yen
Margin: 250 yen

5) Margin: 600 yen
6) Margin: 550 yen7) Spot 500 yen

1999/Oct

2000/Mar 2001/Feb/Apr/Sep 2002/ Jan/Nov

2003

2004

Planned for 2006/Jun
Active plan minimum
commission: 0 yen

2005/ Jul/Oct<38>

2. Main Business Tasks This Term

Launch Investment Trust/Installment Purchase Service
Support stable asset management for the investment novice.

January
installment• Investor wants to invest a small
amount.
• It is difficult to select an investment
target.
• It is difficult to ascertain the investment
period.
• Customer is interested in long-term asset
formation.

Investors in their 20s and 30s
comprise nearly 50% of all accounts.
So E*TRADE tailors products to thiscustomer class who are interested
in asset formation.

Main features
Bonus• It is possible to invest a minimum of 10,000 yen per month.
• It is possible to freely set the investment day.

December• As an extra increment, it is possible to increase the investment amount up to twice a year.
November• It is possible to easily verify the trading conditions.
October
September• Offer seven exclusive funds that meet diverse customer needs. (Japanese stock, foreign
stock, sovereign bond of advanced country, foreign REIT, product index, and others)<39>

2. Main Business Tasks This Term

Mobile Service Expansion, Feature Enrichment, and Product Renewal
Greatly expand service and improve the convenience of mobile, on-the-go, trading.

As a desktop computer tool, enhance trading andinformation support features.

As a mobile version of the HYPER E*TRADE
service, support active spot and margin trading.

• Spot (including S stock) and margin
trading• IPO (only to verify application and lottery
result)• Spot and margin trading• Investment trust(constant value reference)• Foreign exchange guarantee deposit
trading• Futures option trading• Order conditions feature• Automatic stock priceupdate (every five seconds)• Execution notification• Account management, deposit/withdrawal
indication
I-mode, Vodafone live!, EZweb, AIR-EDGE PHONE

I-appli trading tool with automatic stock priceupdate feature<40>2. Main Business Tasks This Term

Expand ATM Card Service to Postal Saving ATMs
Offer individual investors an optimum investment environment.
Make the E*TRADE ATM card more convenient to use.

Seven Bank ATM
11,496 ATMs
(Current as of 2006/4/26)

Postal saving ATM
26,000 ATMs
(Current from end of 2005/3)• Using an ATM card, make it possible to directly deposit/withdraw money from a securities account.
• Make the service available throughout all 47 prefectures of Japan.

Make the securities account an essential account for daily life.

<41>2. Main Business Tasks This Term

Cooperate with Sumitomo Trust Bank
Expand new customer bases through synergies between Internet and real assets.
• Offer products and services not previously possible.
Retail• Work on developing new customer base in individual investors.
Investmentbanking• Expand investment banking (introduce underwriting targets) through market
promotion business.

2006/4/3: Make good use of the market promotion business to develop new opportunities.
Launch investment trust services that deal with STB Asset Management.

Sumitomo
Sumitomo Trust
Trust && Banking
Banking GroupGroup• Trust agreement agency• Offer deposit, loan, and real estate
products and services.
• Offer asset management consulting.

• Securities brokerage• Market promotion business• Business operations

Synergy• Offer diverse financial products based on
securities brokerage.
Note: Except for the market promotion business, all products and services are under planning.

<42>

3. Future Business Development

3. Future Business Development
1) Promote corporate business• Expand investment banking.
• Become an IPO lead managing underwriter.
• Strengthen collaboration with financial institutions.

2) Other future developments• Maintain the lowest commission rates in the industry.
• Reinforce the online securities trading system.
• Educate novice stock investors and provide them with information.
• Examine whether to permit underage accounts.
• Examine whether to expand bond services.
• Examine whether to establish an evening trading market.
• Examine whether to introduce an interactive voice response (IVR) system.
<44>1) Promote Corporate Business1) Promote Corporate Business

Expand Investment Banking
Serve as a bridge between primary markets and secondary markets.

Make good use of
all the advantages of
having an overwhelming

Offer attractive products.

Accounts

number of accounts.

Client assets

Turnover
Underwriter for top-class issues

IR support
Fair distribution through Internet lottery
Ensure liquidity
IPO,
secondary underwriting

Increase accounts
Increase trading volume

Dividend, stock split

Enterprise

Stock ownership

Individual investors<46>1) Promote Corporate Business

Become an IPO Lead Managing Underwriter
Using our overwhelming market share,take active steps to become a lead managing underwriter.
On 2006/5/29, E*TRADE is planning IPO proposal #2 for HI Technology, Co., Ltd.
This is E*TRADE's first listing proposal for Hercules on the Osaka Securities Exchange.

Issuing company
Increase individual shareholders.

Individual investors
Strive toward quality and volume as alead managing underwriter.

Ensure liquidity after listing.

Increase share allotment

Offer more attractive products.
Build and promote an underwriting
system.

• Expand corporate business through more proposals as a lead managing underwriter.
• As underwriting commissions increase, build a stable earnings base.
<47>1) Promote Corporate Business

Strengthen Collaboration with Financial Institutions
To improve profitability and the customer base, strengthen
collaboration with financial institutions.

Hyakugo Bank (2005/11)

Sumitomo Trust Bank (2006/4)

Chiba Kogyo Bank (2004/12)
Saikyo Bank (2005/2)
Note: E*TRADE is now cooperating with these four banks inthe market promotion business.

Market promotion business: Introduce IPO candidate companies.
Securities brokerage: Discover potential customers.
Fund management: Offer a variety of products as an institution involved withmanaging funds.

Strengthen development in both the retail business and the corporate business.

<48>2) Other Future Developments2) Other Future Developments

Maintain the Lowest Commission Rates in the Industry
Continue to pursue low commission rates,
which are already the lowest in the industry.
Active Plan (contract revision from 2006/6/1)

E*TRADE plans to sharply reduce
contract rates on 2006/6/1.

Spot and margin trading
Regardless of the number of trades during one day, thecommission rate is fixed based on the amount of a daily
total contract price.
Total amount ofdaily contract
price

100,000 yen
or below

300,000 yen
or below

E*TRADE will set its first free-price range.
Attributes of customers
who open a new account(FY 2005)

Currently 525 yen
Stockcommission(includes tax)

Inexperienced stock investors: 64.5%
Age group: 56.6% in 20s and 30s

0 yen

315 yenNote: Commission rate does not change for over 300,000 yen.
But a change schedule is being planned.

Support participation in securities
markets by inexperienced investors
through light commission rates for small
quantity trading.

Launch a campaign to further increase the number of new accounts.
<50>2) Other Future Developments

Reinforce Online Securities Trading System
As trading volume expands sharply, strengthen the system even further.
In December 2005, capacity was enhanced three times greater than the original systeminfrastructure introduced in July 2003.
By July 2006, capacity will be further enhanced to handle two million accounts (fourtimes greater than the original system). There is already ample leeway to enable a stress-free
trading environment.
Total securities accounts and system capacity(Accounts)

2006/5
1.75-million
account capacity

2,000,000
1,800,000

2006/72-million
account capacity

1,600,000
2005/121.5-million
account capacity

1,400,000
1,200,000
1,000,000

2004/12
1-million
account capacity

1,167,778
Note: The account growth arrow is a forecast.

800,000
777,455

600,000
400,000

592,743
452,493

200,000
9月
2004

3月
2005

9月

3月
2006

6月

9月
<51>

2) Other Future Developments

Educate Novice Stock Investors
Provide novice investors who are just getting started
with appropriate knowledge and information.
Provide more
content for
noviceinvestors.

Offer online
seminars fornovices.

Investment experience of customers
who open an account with E*TRADE(2005/4 to 2006/3)

Provide more investment
information.

Have noexperience
64.5%

Have
experience
35.5%

Electronically distribute news from Kabushiki Shimbun for free
(HYPER E*TRADE main website).

Add information necessary for an individual customer tomake an investment decision and actively support trading by
individuals.
<52>2) Other Future Developments

Examine Whether to Permit Underage Accounts
Permitting underage accounts would bring in even more customers.
New accounts by age
100%

80%

60%

9.50%

8.60%

8.60%

9.00%

Over 60

15.3%

14.5%

14.5%

15.4%

50s

20.3%

18.7%

19.0%

22.3%

40%
39.0%

40s

38.4%

36.8%

34.9%

There is greater need for new
accounts by young customers
who want to participate insecurities markets.
So
E*TRADEisexaminingwhether to permit new accounts
by underage customers.
Bring in young customers thathave up to now not been targeted.

30s• Contribute to future earnings.

20%

20s

13.9% 18.1%• Examine the impact of investment
education.

21.4% 21.7%

0%
FY 2002 FY 2003 FY 2004 FY 2005

The rate of new accounts by customers in their
20s is increasing.
<53>2) Other Future Developments

Examine Whether to Expand Bond Services
Actively sale popular bonds.
Directly underwrite foreign bonds
E*TRADE is the first Japanese securities company
to directly underwrite foreign bonds.
Issuer(Example: World Bank)

It is now possible to package
products that meet individual
investor needs better than
before.

Secondary trading of bonds• With the sharp increase in bondhandling, secondary trading demands
have grown rapidly.
• Increase value even further through
E*TRADE bond dealings.

Product package
Sales agency

Becomedeeplyinvolvedinproduct
packagingasanunderwriting and sales company.
Dealing overthe Internet
Actively offer foreign bonds, which
are in great demand.

<54>2) Other Future Developments

Examine Whether to Establish an Evening Trading Market
With trading volume increasing, E*TRADE is examining whether
to establish a new trading market for individual investors.
Morning session

Afternoon session

It is difficult for individual investors to deal
in realtime during the daytime.

Evening trading

E*TRADE would like to establish
a market in which individuals cantrade in realtime.

Company employee share of E*TRADE accounts(Current from end of 2006/3)

Others42.5%

Company
employee
57.5%This would also provide companies
with an additional market in which toraise funds.
The opening times and other details are now under examination.
<55>2) Other Future Developments

Examine Whether to Introduce an IVR System
To improve convenience, E*TRADE is examining whether to introduce
stock price inquiries and stock ordering over the telephone.
Introduce an automatic response system so customers caninquire about stock prices and receive information.
• As transaction channels increase, E*TRADE must find ways tocorral diverse investor types.
• Functional support for young people who like to deal online from a
website and for customers who have a difficult time reading
information from a mobile site.

Through the phone• Placing orders around-the-clock is possible.

• Stock price inquiry• An evening session would also serve as a backup and as atransaction channel in case of emergency.

• Place orders

Current information and transaction channels available• Websites• HYPER E*TRADE trading tool
• MOBILE E*TRADE, HYPER MOBILE• Call center
E*TRADE will now examine when to introduce evening trading and other details.

<56>

4. Stock Split and Capital Increase
through Public Subscription

4. Stock Split and Capital Increase

Details and Objectives
Capital increase through public subscription• 2005/12/16 payment date: Issue 66,000 common stocks.
• 2006/1/16 payment date: Distribute 6,000 common shares to third party due to over allotment.
• Fund raising amount: 49 billion yen (including allocation of shares to third party).
• Purpose of funds: E*TRADE is increasing its net tangible worth to expand its underwriting and margin tradingbusinesses. E*TRADE plans to allocate operating capital toward expanding its Internet margin trading business.

Regulatory capital ratio• More actively develop the underwriting business.
• In margin trading, promote self-financing and stocklending businesses.

2005/9 end

2006/3 end

335.5％

577.9％

Stock split• Overview: Implement a 3-for-1 stock split.
• Schedule: 2006/2/1 effectuation date.
• Objective: To ensure stock liquidity and to create a trading environment in which individual
shareholders can easily make transactions.
Number of shareholders: 20,962 as of the end of March 2005 and 95,014 as of the end of March 2006.
Number of issued shares: 956,856 as of the end of March 2005 and 3,143,817 as of the end of March 2006.

<58>

5. Return of Profits to Stockholders

5. Return of Profits to Stockholders

End of Term Dividend
E*TRADE plans to have a dividend of 1,600 yen per common stock, after taking
account of a three-for-one stock split that took effect on February 1, 2006. Before
taking account of the stock split, the dividend is 4,800 yen, which is over two times
the previous dividend of 2,300 yen (including commemorative dividend). The
increase is over three times larger than the ordinary dividend of the previous term.
FY 2005

FY 2004(Previous term)(Current term)
Per share(After taking
account of split)
Ordinary dividend

1,600 yen

IPO commemorative
dividend−

Total

1,600 yen×３

×３

(Before taking
account of split)

Per share

4,800 yen

1,500 yen−

800 yen

4,800 yen

2,300 yen

Note: On February 1, 2006, E*TRADE executed a three-for-one common stock split.

<60>http://www.etrade.ne.jp