Investment EnvironmentAt the beginning of fiscal 2012, the yield on 10-year Japanese Government Bonds (JGBs)—the prime indicator of domestic long-term interest rates—stood at 1.01%. Those yields fell to as low as 0.72% in July 2012. Flight primarily from a rekindling of the European Debt crisis, and a consequent dimming of the global economic outlook, drove investors to buy more JGBs and bid up the prices.Following that, long-term interest rates rose incrementally when investors grew alarmed that the government may call on the Bank of Japan to increase the issuance of JGBs in order to fund fiscal stimulus measures on a large scale. However, the yield dropped further through the end of the fiscal year, as greater monetary easing by the Bank of Japan was observed. The yield ended the fiscal year at 0.56%, a level not seen since June of 2003.In the domestic stock market, the Nikkei 225 Average started fiscal 2012 at ¥10,161, and then softened to as low as ¥8,238, reflecting uncertainty about the direction of the global economy. Following the change in the Government in December, stock prices reacted to corrections to the appreciating yen and to speculation about stronger monetary easing, rising further through the end of the fiscal year on expectations of an economic recovery. The stock index ended the fiscal year at ¥12,397.On the foreign exchange markets, the yen stood at ¥82.85/$1 at the start of fiscal 2012. The yen began strengthening from then on concerns about the U.S. economy, and by September had reached the ¥77 range with the implementation of additional monetary easing by the U.S. Subsequently, the yen weakened, in part due to rising expectations for redoubled monetary easing by the Bank of Japan, and ended the fiscal year at ¥94.05 against the dollar.March 31, 2012March 31, 2013Long-term interest rates (10-year JGB yield)0.98%0.56%Stock market (Nikkei 225 Average)¥10,083.56¥12,397.91Foreign exchange market (¥/$ rate)¥82.19¥94.05JGB: Japanese Government BondInvestment PolicyThe majority of Zenkyoren’s investments of funds are in long-term, fixed-income financial products. In view of these circumstances, we have adopted a medium- to long-term approach to investment in accordance with accounting standards and characteristics of liability, centered on bonds meeting the requirements for liability reserve, with the aim of securing stable earnings over the long term.Specifically, we invest mainly in yen-denominated bonds to secure and enhance stable earnings over the long term, while investing also in equities and foreign bonds to improve the profitability of our earnings base.Working Assets (¥ Trillion)Breakdown of Working AssetsASSET MANAGEMENT Highlights of Investment in Fiscal 2012604515300Fiscal Year200820092010201141.242.744.045.748.52012n Securities93.4% n Public and corporate bonds86.9% n Foreign securities3.5% n Equities2.1% n Other securities0.9%n Loans receivable3.9%n Cash, bank deposits, and call loans0.6%n Real estate investments0.7%n Miscellaneous items1.4%ANNUAL REPORT 201310