The Association engages in the following activities in order to contribute to the development of analytical techniques and professional standards for those engaged in securities analysis and portfolio management:

• Research to develop analytical techniques/skills.
• Education and examination programs for those who are/will be engaged in securities analysis and portfolio management, and the award of the CMA (Chartered Member of the Security Analysts Association of Japan) designation to those who achieve a required level of professional competence.
• Promotion of the CIIA® (Certified International Investment Analyst) exams as well as review programs to those who hold the CMA designation.
• The sponsorship of programs such as company presentations, seminars/lectures on securities analysis, etc.
• The collection, publication, and dissemination of pertinent reference materials.
• The exchange of views and information with counterpart associations overseas.

Recent developments: The Security Analysts Association of Japan (SAAJ) was established in 1962 with the aim of developing recognized standards for investment professionals. As of 31 March 2007, individual and corporate/associate members, stood at 21,489 of which 20,859 were CMAs.

• In ongoing efforts to promote professional ethics for securities analysts, the “Practice Handbook for Standards of Professional Conduct” is reviewed and updated on a regular basis and distributed to members and also CMA examination candidates.
• Effective 1 January 2006, SAAJ transformed SAAJ Investment Performance Standards (SAAJ-IPS) to the Japanese Translation of the Global Investment Performance Standards (GIPS) so as to fully converge with the February 2005 version of GIPS. To update users of the standards and address practical applications, SAAJ organizes educational conferences on a regular basis: during 2006 two were held in January and December.
• Awards for Excellence in Corporate Disclosure for 2006 were presented to 13 companies representing 13 different industries (out of 15 being considered). This corporate disclosure evaluation and award system has been implemented annually since 1996 based on evaluation by the SAAJ Corporate Disclosure Study Group. The chemicals and iron, steel and nonferrous metals are considered to have already achieved a high level of corporate disclosure through this evaluation and award system. Following the year 2005, in addition to the awards above, SAAJ has started new corporate disclosure evaluation and awards system for emerging-stock markets companies. SAAJ also started the Awards for Excellence in Corporate Disclosure in the area of provision of information to the individual investors.
• The 19th SAAJ-CFA Institute/CFAJ Joint Seminar (March 2007) “Asset Management and Business Developments for Individual/High- Net-Worth Investors” attracted 99 participants including nine from Korea, Taiwan and the US.
• The 20th SAAJ-CFA Institute/CFAJ Joint Seminar “New Challenge in Fund Management” will be held in Tokyo for three days from 12 to 14 March, 2008.
• The 21st Security Analysts Conference (SAAJ annual conference) was held in Tokyo in October 2006 with 500 participants. The 22nd Conference will be held in Tokyo in October 2007.
  
• SAAJ has been playing a significant role in the establishment and consolidation of the CIIA® qualification which was launched worldwide on 20 June 2000. SAAJ is a Council member of the Association of Certified International Investment Analysts (ACIIA®) which is a not-for-profit organization registered in Switzerland. The SAAJ membership, including more than 20,000 CMAs, is a large pool of potential candidates for the CIIA® exam. SAAJ sees the CIIA® exam as one of the most important elements of continued education for CMAs. Thus, to help candidates prepare for the exam, Study Guide (comprising an explanation of the framework of the CIIA® scheme and examinations and a Japanese translation of the syllabus), Formulae Booklet, and examination questions and guideline answers, etc. have been distributed to all registered candidates since 2001. In addition, a review program for candidates, covering all subject areas of the exam, has been held by SAAJ in December/January since 2000.

There are three categories of membership:

Securities firms, investment trust management companies, trust banks, banks, life insurance companies, non-life insurance companies, research institutes, investment advisory companies, and other appropriate corporations/organizations as may be approved by the Board of Directors.

Securities firms, investment trust management companies, trust banks, banks, life insurance companies, non-life insurance companies, research institutes, investment advisory companies, and other appropriate corporations/organizations as may be approved by the Board of Directors.

Individual Members are either Chartered Members of SAAJ (CMAs) or General Members.

The CMA designation is granted to a person who has passed the Level II examination (see Education and Examinations) and:

1. has three or more years practical experience in securities analysis, investment management, or a related field; or
2. has sufficient knowledge and experience in the field of securities analysis and investment management.

General Member category is granted to:

1. an officer or employee of a corporate or associate member of SAAJ who has three or more years practical experience in securities analysis, investment management, or a related field;

or

2. a person who has sufficient professional knowledge and experience in the field of securities analysis and investment management.

Each application to become a General Member must be endorsed by at least three SAAJ members.
 

The first CMA examination was conducted in 1978. The original education/examination program, which emphasized securities analysis, saw major revisions during the early 1990s which placed more emphasis on portfolio management.

Then, in 2004, SAAJ set up a working group, the New CMA Program Working Group, commissioned with further updating the program. The Working Group published a report in March 2005, and recommended the program be revised to 1) incorporate the latest academic and practical achievements, 2) establish a flexible program to cope with future changes, and 3) offer an easy-to-learn program.

As a consequence, based on the report’s recommendations, the Level I program was revised in 2006, and then the Level II program in 2007. Newly developing areas such as behavioral finance and credit risk models were fully incorporated.

The Program is divided into two parts, Level I and Level II, both consisting of orrespondence courses and examinations. Level I covers basic principles and tools needed in securities analysis and portfolio management, while Level II focuses on the integrated and practical application of such knowledge.

To take eaminations, candidates must enroll for correspondence courses. Those who pass both levels (candidates must successfully complete Level I before continuing on to Level II), have three or more years’ experience in financial and investment analysis and/or portfolio management, and meet other professional standards are awarded the CMA designation.

More than 100 academics and practitioners, including CMAs, prepare the correspondence texts and/or the exam questions under the guidance of the Curriculum Committee and/or Examinations Committee.

The Level I course is held for eight months between June and the following January. Candidates may enroll for as many subjects as they choose and in any sequence. Consequently, some candidates might take all three subjects at the same time, while others might enroll for one or two and then take the remaining subject(s) in following years.

Candidates receive correspondence texts for each subject on a bi-monthly basis, and are recommended to purchase some supplementary readings. Candidates are able to try multiple choice exercises and get answers and explanations via internet.

All three Level I course subjects must be undertaken within four years of initial registration for the Program. A candidate who does not pass a subject within the three years must re-register for that subject.

The Level II course is held for eight months between August and the following March. Unlike Level I, candidates have to study all four subjects at the same time since the Level II examination tests all in one exam paper. Candidates receive correspondence texts on a bi-monthly basis and are recommended to purchase some supplementary readings. There are no web exercises for Level II courses, but, explanatory materials and CDs of seminar lectures are sent to candidates.

The Level II course must be undertaken within three years from the year of successfully completing Level I examinations. A candidate who does not pass the Level II exam within three years must re-register for the Level II course.

2) Examinations

Level I examinations for each subject (total three) are held twice a year in April and October. All of the questions are objective (multiple-choice questions).

The Level II examination, a single comprehensive one covering all four subjects, is held once a year, in June. Exam questions involve analysis of a wide variety of cases, information, and data. Almost all are essay questions. Both Level I and Level II examinations are held in eight domestic exam centers and three overseas centers: New York, London, and Hong Kong.

Those who have the CMA® (Chartered Member of the Security Analysts Association of Japan) designation can directly sit for the Final Examination of the CIIA® (Certified International Investment Analyst) Program since SAAJ’s CMA examination program has been accredited by the ACIIA® (Association of Certified International Investment Analysts).

Since 2000 when the CIIA® designation award system was launched, SAAJ has effected the following on a regular basis for holders of the CMA designation to help them prepare for the CIIA® Final Exam:

• Published a registration/enrollment information brochure, CIIA® Exam Study Guide (consisting of an overview of the CIIA® Exam, syllabus and list of textbooks, etc.); a set of supplementary textbooks; CIIA® Exam Questions and Guideline Answers, and Formulae (all in Japanese).
• Conducted a CIIA® Review Course (five days, total 30 hours) in December and January. The interest of CMAs in the CIIA® Program has been keen and many registered and sat for thirteen CIIA® Final Exams held so far.
• Updated the CIIA syllabus F Three new topic areas are included in the syllabus in order to adjust it to the financial arena’s development in the practical world. They are i) International Accounting Standards, ii) Yield Curves, Term Structures and Credit, and iii) Asset/Liability Analysis and Management.
• New exemption scheme now available for CIIA holders to enable those aiming at becoming investment and research analysts, others in the broad investment community, and other interested parties to acquire the necessary knowledge and analytical skills, The Security Analysts Association of Japan (SAAJ) has been offering CMA® (Chartered Member of the SAAJ) correspondence courses and exams for almost thirty years since the first CMA exam in 1978. CMA holders currently number over 21,000.

The CMA designation is highly evaluated and widely recognized not only by the securities and financial industries but also by manufacturers, research institutes, CPA firms, universities, etc. And, since the activities of CMA holders have dramatically broadened in recent years, even the CIIA holders of foreign ACIIA member societies have found it very beneficial to earn the CMA for conducting business in Japan.

Taking into consideration the above, SAAJ has decided to introduce a new educational course and exam scheme (both available only in Japanese) especially for CIIA holders (of other ACIIA member societies) who intend to sit for CMA exams. The scheme will only cover areas recognized by the SAAJ as national specific topic areas and/or the desired level of knowledge relating to Japanese financial practices, markets, regulations, and the economy, i.e., candidates are exempted from the regular CMA correspondence educational courses and exams relating to common knowledge and skill requirements for the CMA, which are reasonably considered to have already been mastered by CIIA holders, both in breadth and depth.

3. NEW EDUCATION PROGRAMS

For the purpose of providing opportunities to learn finance for a broader range of people working in the investment management and banking industries as well as university students interested in finance, the SAAJ introduced a new correspondence course, “Primary Education Program” in FY2004. This program, which covers core elements of the CMA program at elementary levels so that graduates from the course will be familiar with basics of finance, has drawn strong interest from potential trainees and more than 4,000 have applied for it.

At the same time, the SAAJ started the CCMA scheme for CMA candidates who have finished Level I. Those candidates, who have completed self/learning and achievement test on Ethics are eligible to be registered for the scheme to receive a variety of services and information related to investment practice and finance theory. The scheme is aimed to encourage/ help registered candidates in terms of their preparing for the Level II examination and hence the CMA qualification.

In addition to the above, the SAAJ started a new classroom teaching course (16 hours), “Introduction to quantitative analysis,” in April 2005. It is aimed to help CMA candidates and others get familiar with basic tools for quantitative analysis as well as relevant mathematics. The SAAJ expanded the course into a continuously available one so as to familiarize its present and future membership with financial engineering.

The SAAJ sponsored the following:

The seminar has been held every year since 1989, led by prominent Japanese and foreign practitioners/academics as instructors.

SAAJ SPECIAL SEMINAR

TOPIC PRESENTATIONS

Some 70 presentations by Japanese and foreign specialists on various topics concerning investment theory, economics, and financial, industrial, and scientific technology, etc, were given during April 2006-March 2007.

SAAJ ANNUAL CONFERENCE

The 21st Security Analysts Conference (SAAJ Annual Conference) was successfully held in Tokyo on 6 October 2006 with 480 attending. The program was as follows:

The 22nd Security Analysts Conference will be held in Tokyo on 12 October, 2007.

SAAJ–IR CLUB

SAAJ has started “IR Club” from April 2005. IR club members are able to browse summaries of company presentations and attend seminars organized by SAAJ at the member rate. The IR club is open to public and currently 54 members are registered as of 31 March, 2007.

COMPANY PRESENTATIONS

Company presentations in which the chairman/ executives of listed companies or those shortly to be listed discuss their current business situation and future outlook. Some 40-150 members attend each time. During April 2006 - March 2007, there were 849 presentations/factory visits with a total 32,308 members attending.

The Security Analysts Journal is a monthly bulletin which includes monographs focusing on investment theories and practices and other related topics and reports on the Association’s activities. The Security Analysts Journal Editing Committee, consisting of 30 practitioners and academics, is responsible for editing each issue. Total circulation is nearly 23,000. Members receive the Journal gratis.

In addition, SAAJ produces educational publications covering various subjects related to the investment decision-making process, some of which are incorporated in the texts of the CMA Program.

The SAAJ Professional Ethics Committee issues position papers and guidance to promote and enhance the implementation of professional ethics for securities analysts. As part of such ongoing efforts, the “Practice Handbook for Standards of Professional Conduct”, which provides commentaries on SAAJ Standards of Professional Conduct for Securities Analysts with practical cases, is reviewed and updated on a regular basis so as to incorporate new developments in ethical issues and regulations. The Handbook is distributed to all SAAJ members and is also used as the CMA Level II textbook for the subject of Ethics and Professional Standards.

As a result, a new governance structure was established in 2006 including the GIPS Executive Committee as the decision-making body and a GIPS Council consisting of GIPS Country Sponsors. Several subcommittees and working groups were also organized and have been active in making recommendations/proposals for further improvement of the standards and governance. A member of SAAJ’s Investment Performance Standards Committee was appointed as one of nine members of the GIPS Executive Committee and SAAJ sends representatives to the GIPS Council and subcommittees/working groups. SAAJ is also an active member of the Asia-Pacific Regional Investment Performance Subcommittee of the GIPS Council.

SAAJ organized a conference in Tokyo on 18 December 2006 to address practical applications of the GIPS standards, including those on real estate and private equity, with related issues in the industry in Japan, attracting 200 participants.

CORPORATE DISCLOSURE

The objective of the Corporate Disclosure Study Group is to promote the quality and promptness of corporate disclosure from the viewpoint of securities analysts. To achieve this goal, since 1995 the Group has implemented a corporate disclosure evaluation and award system. The Group, consisting of 13 industry sub-groups, formulates corporate disclosure review criteria (score sheets) for each industry by modifying standard criteria to incorporate industry-specific features. All industry-specific criteria attach greater importance to voluntary and positive disclosure rather than mandatory disclosure. The score sheets are marked by some 439 research analysts (who are conversant with about 199 companies), collected, and carefully analyzed/ evaluated by each sub-group, and then the Study Group selects companies exhibiting superior disclosure in each industry.

For fiscal 2005/2006, Awards for Excellence in Corporate Disclosure were presented to Daito Trust Construction Co., Ltd.(construction), ASAHI BREWERIES, LTD. (foods), Eisai Co., Ltd. (pharmaceutical), Komatsu Ltd. (machine), Matsushita Electric Industrial Co., Ltd. (electronics), YAMAHA MOTOR Co., LTD. (automobiles), TOKYO GAS Co.,Ltd. (electric Power & Gas), East Japan Railway Company(transportation), KDDI Corporation(communication), Mitsubishi Corporation (Trading), LAWSON, INC.(retailing/ supermarket industries), The Sumitomo Trust and Banking Co., Ltd.(banking), and Nomura Research Institute(computer soft).

Newly implemented corporate disclosure evaluation and award for emerging stock markets [such as JASDAQ and Mothers (Market of the highgrowth and emerging stocks) etc.] companies were presented to TELEWAVE INC., CyberAgent, Inc. and en-japan inc.. Fifty evaluated companies were selected with due consideration of their market capitalizations and the number of analysts covering research of the companies.

Corporate disclosure evaluation awards were presented to Mitsubishi Corporation, CyberAgent, Inc. and The Sumitomo Trust and Banking Co., Ltd. Total of 30 companies were evaluated comprising of top three companies from 13 different industry categories plus one company from the emergingstock markets companies.

Corporate Accounting Study Group follows the developments of corporate accounting rules and regulations in order to present opinions from the viewpoint of securities analysts who are the main users of financial statements.

The Group held 3 committee meetings during fiscal 2006, and submitted the following comments to the International Accounting Standards Board (IASB) and the Accounting Standards Board of Japan (ASBJ).

July 12th 2006
“Exposure Draft of Proposed Amendments to IAS 1 Presentation of Financial Statements: A Revised Presentation” (IASB)

August 25th 2006
“Exposure Draft of Proposed Amendments to Accounting Standard for Lease Transactions and its Implementation Guidance” (ASBJ)

December 25th 2006
“Exposure Draft of Accounting Standard for Quarterly Financial Reporting and its Implementation Guidance” (ASBJ)

The Group sponsored a study session on IAS 1 ED, inviting ASBJ staff as speakers in order to reflect opinions of certified members of SAAJ to standard setters. About 100 members participated in the session and replied to the ED questionnaire.

Also, in June 2006, a Senior Vice President of SAAJ participated in the meetings between the Analysts Representative Group and IASB in London. And in January 2007, a Senior Vice President of SAAJ participated in a Conceptual Framework -Measurement Roundtable Discussions in Hong Kong promoted by IASB and the Financial Accounting Standards Board (FASB) as a part of joint project which will update, complete and converge their respective frameworks.

SAAJ regularly attends ASAF and ACIIA® meetings and sends delegations to ASAF and CFA Institute annual conferences. During fiscal 2007, SAAJ participated in the following:

• ASAF Executive Committee May 2007, Kuala Lumpur, Malaysia.
• ASAF Conference: November 2007, New Delhi, India.
• ASAF Executive/Education/Communications/ Advocacy committee meetings, Advocacy Seminar, and the Annual General meeting: November 2007, New Delhi, India
• ACIIA® Council Meeting and Annual General Meeting: June 2007, Berlin
• ACIIA® Council Meeting: November 2007, Taipei.
• ICIA meeting, May 2007, New York, USA (Mr. Kiyoto Hagiwara, President and CEO of SAAJ, regularly attends ICIA meetings as an elected representative of ASAF).
• CFA Institute Annual Conference: May 2007, New York, USA.

The following articles received the 2006 Security Analysts Journal Prizes:

• Dividend Policy that Boosts Shareholder Value Takashi Suwabe(CMA)
• Effect and Firm Size – new relationship with the value effect Kengo Okada (CMA)