2003 Annual Report on Pension Fund Management

C o n t e n t s

1. National Pension Fund Composition and Investment Environment
1.1. Fund Composition and Management 2
1.2. Fund Investment Environment 9

2. Fund Management Results
2.1. National Pension Fund Management Results 14
2.2. Financial Management Performance by Asset Class 19

3. Investment Policy and Strategy
3.1. Fund Management Goals and Direction 42
3.2. Investment Principles 44
3.3. Asset Allocation 48
3.4. Stock Market Investment Regulations 50
3.5. Bond Market Investment Regulations 54
3.6. Other Financial Market Investment Regulations 59
3.7. Regulations on Outsourcing Pension Fund 62
3.8. Risk Management 64
3.9. Performance Evaluation & Analysis 66

4. Fund Management System
4.1. Fund Operation System and Processes 70
4.2. Fund Management Committee and Practical Business Affairs Evaluation Committee 74
4.3. Ministry of Health & Welfare 79
4.4. National Pension Corporation 81
4.5. Fund Management Headquarters 85
4.6. National Pension Research Center 91

5. National Pension Fund and Public Capital Management Funds

6. National Pension Welfare Activities
6.1. Direct Activities 99
6.2. Indirect Activities 101
6.3. Facility Establishment and Operation Activities 102
6.4. Welfare-Related Investment Status 103

7. Fund Management Policy Modifications
7.1. Pursuit of Standing Fund Management Committee 106
7.2. Formation of Mid to Long-Term Fund Management Master Plan 107
7.3. Initiation of Investment Diversification via Alternative Investments 108

8. Financial Information
8.1. Special Accounting for National Pension Fund 112
8.2. Financial Statements 115
8.3. Audit Report 119

9. Appendices