Contents

1. National Pension Fund 2007 Highlights

1.1. The Management of the National Pension Fund 8

1.2. The Climate of the Fund Management 12

2. The National Pension and its Fund

2.1. The National Pension in a Nutshell 16

2.2. Financial Projections 20

2.3. The Role of the National Pension Fund 22

3. The Financing and Management of the National Pension Fund

3.1. Financing and Management 24

3.2. Investment Environment 29

4. The Management System of the National Pension Fund

4.1. Fund Management System and Work Flow 40

4.2. Fund Management Committee and Evaluation Committee 44

4.3. Expert Council of the Fund Management Committee 47

4.4. Ministry of Health, Welfare, and Family Affairs  48

4.5. National Pension Service 50

4.6. National Pension Fund Management Center 53

4.7. National Pension Research Institute 59

5. Investment Management of the National Pension Fund

5.1. The Objective of Fund Management 62

5.2. The Principles of Fund Management 63

5.3. Guidelines 64

5.4. Asset Allocation Strategy 72

5.5. Risk Management System 74

5.6. Issues and Changes in Fund Management 77

6. The Performance of the National Pension Fund

6.1. Overall Performance 84

6.2. Financial Sector 88

6.2.1. Bonds

6.2.2. Equities

6.2.3 Other Financial Sectors

6.3. Welfare Sector 108

7. Finance and Accounts

7.1. National Pension Special Accounting 112

7.2. Financial Statements 116

7.3. Auditor’s Report 121

8. Statistics

[Table] Reserved Fund of the National Pension 124

[Table] Yearly Revenue & Expenditure of the Fund 125

[Table] Yearly Asset Allocation of the Fund (Market Value) 126

[Table] Yearly Asset Allocation of the Fund (Book Value) 128

[Table] Yearly Rate of Return on Investment 131

[Table] Results of the Management Committee and
         the Evaluation Committee Meetings Held in 2007 133

[Table] Yearly Number of Workplaces and Number of
         Insured Persons 135

[Table] History of the National Pension Scheme
         in Terms of Coverage Expansion 135

[Table] Payments by Type and by Year 136