Access to the path xxx is denied

Hi,
I am new to IIS and have some questions.
I've put my application on IIS with a App Pool I newly created. The App pool setting is integrated and networkservice.
My application reads a local file from a local machine. When it tries to do that, I receive an exception saying that "Access to the path c:\..xxx is denied". Isn't the app using the credentials logged into the local machine?! 
 
doesn't "integrated and networkservices" mean.. use the credentials logged in to windows?
Thanks..
 
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