Stay Ahead · 2019-01-22 · 04 SASG ASS AAG Sustainability eport 05. 06 SAMSUNG ASSET MANAGEMENT...

2013 Sustainability Report

Stay AheadTogether

2 SAMSUNG ASSET MANAGEMENT

ContentsAbout This Report 2

Contents 3

Strategy & Governance 4

History 6

2012 Highlights 7

Company Profile 8

CEO Message 10

Corporate Governance 12

Sustainable Investments 16

Funds Management 18

Equity & Research 20

Multi-Asset Investments 22

Hedge Funds 24

Global Business 26

Overseas Subsidiaries 28

Passive investments 30

Fixed Income investments 32

Pension Funds 34

Responsible Investments 36

Sustainable Operations 40

Human Resources 42

Green Operations 48

Social Contribution 54

Risk Management & Compliance 60

Performance Outcomes 68

Separate Statements of Financial Position

Separate Statements of Comprehensive Income

Separate Statements of Changes in Shareholders' Equity 72

Separate Statements of Cash Flows 73

Consolidated Statements of Financial Position 75

Consolidated Statements of Comprehensive Income 76

Independent Auditors' Report 77

Internal Accounting Control System (IACS) Review Report 78

Appendix 79

Stakeholder Inclusiveness 80

Materiality Test 81

GRI Content Index 82

Independent Assurance Statement 86

Awards and Membership 88

Terminology 89

Organization 90

About This Report

This is the first sustainability report published by Samsung Asset Management.

Principle GuidelinesThis report is developed in accordance with the Global Reporting Initiative (GRI) G3.1

guidelines and the disclosure principles of the Financial Services Sector Supplement (FSSS)

sector-specific supplement. The 2013 report has been validated to meet the requirements

for the level A+ of the GRI G3.1 guidelines. For the GRI Index and reporting elements and

indicators of this report, please refer to Pages 82~85.

Report BoundarySamsung Asset Management operates its head office in the Republic of Korea, and two

overseas subsidiaries in Hong Kong and Singapore. Business data in this report are limited

to those collected from the business operations of the main office and the two subsidiaries

while environmental data are limited to only those collected from the operations of the

main office. Any data collected outside these boundaries are indicated with pertaining

standards.

Reporting PeriodAll descriptions of corporate activities in this report are based on data collected between

January 1 and December 31, 2012. Financial data in the report, however, are as of March

31, the date on which the Company’s fiscal year ends. Any data not applicable to this

guideline are indicated as such. The report also includes quantitative data from 2010 to

2012 to enable the readers to compare performances over the three years. The reporting

cycle for this report is one year.

Report CredibilityThe content and data of this report have been verified by the independent third-party

DNV. See Pages 86~87 for the results of the verification.

70

70

Strategy & Governance

History

2012 Highlights

Company Profile

CEO Message

Corporate Governance Seeding01

"The first… The largest… The best…. The only…. in Korea"

Always staying a step or two ahead of its peers, Samsung Asset Management has been leading Korea’s asset management industry.

Based on this, we are sowing the seeds of tomorrow, with an eye towards growing into a top-class asset manager in the Asian region driving the growth of the global economy.

For this, we will pursue balanced growth not only through sustainable customer wealth management but also through socially responsible investments and meaningful financial assistance, satisfying various stakeholder needs.

Growing into a top-class asset manager in the Asian region through expansive sustainable operational activities reflecting all stakeholder needs

04 05SAMSUNG ASSET MANAGEMENT 2013 Sustainability Report


History 2012 HighlightsStrategy & Governance History 2012 Highlights Company Profile CEO Message Corporate Governance

1998-19991998.09 Founded Samsung Life Investment Trust Management Co. (paid-in capital of KRW 30 billion)

1999.12 Acquired Samsung Investment Trust Management Co. (paid-in capital of KRW 63.2 billion, AUM of KRW 18.9 trillion)

2012 . 01Advanced investment system adoptedTo discourage the attitude of profit for profit's sake and promote synergy among business units, Samsung Asset Management adopted in January 2012 a fund management system that differentiates its funds operations in ac-cordance with their risk profiles.

2006-20072006.01 Created brand slogan, "Stay Ahead"

2007.11 Samsung Asset Management Ltd. established in Hong KongKODEX 200 ETF listed on the Tokyo Stock Exchange

2012 . 03Hedge funds under management exceeds KRW 100 billionIn March 2012, the Samsung H Club Equity Hedge and the Samsung H Club Multi Strat-egy, the Company's 1st and 2nd hedge funds, together exceeded KRW 100 billion in AUM. Since the emergence of the Korean hedge fund market at the end of 2011, the Company has successfully launched four funds, rank-ing No.1 in an annualized rate of returns as of year-end.

2012 . 10Funds information portal openedIn October 2012, the Company opened a portal that offers a variety of information and data on investing in funds. Named "Fund Story", this portal not only guides visitors through various funds offered by Samsung Asset Management but also features market forecasts and education materials on retire-ment investment.

2012 . 12Selected as the best asset managerIn December 2012, Samsung Asset Manage-ment received the best asset management award at the 2012 Korea Funds Awards or-ganized by the media agency Money Today and sponsored by the Financial Supervisory Services and the Financial Investment Asso-ciation.

2012 . 04KODEX MSCI Korea ETF listedSamsung Asset Management listed the KO-DEX MSCI Korea ETF, Korea's first ETF that fol-lows the MSCI Korea index, thus developing a new investment vehicles not only for domes-tic but foreign investors as well. As the leader of the ETF market, the Company has been rolling out a variety of ETFs since the invest-ment fund was introduced to Korea.

20112011.05 Selected as Korea's best asset manager by the Asian Investor

20122012.04KODEX MSCI Korea ETF listed for the first time

in Korea

2013AUM reached KRW 128.3 trillion as of June

2008-20092008.04 Samsung Asset Management Ltd. established in

Singapore

2009.09 KODEX Inverse ETF listed on KRX Selected as the Korean manager of Nomura Asset Management's Asia Fund

2009.11 Reappointed as lead manager of the National Pension Investment Pool for 12 consecutive years

20102010.02 KODEX Leverage ETF listed on KRX

2010.04 Changed name to Samsung Asset Management Co.

2010.11 Selected as the Korean manager of Japan's Nikko Fund

2010.12 Selected as the manager of the Korea Investment Corporation (KIC)

2000-20022000.03 Capital increased to KRW 30 billion (paid-in capital of KRW 93.2 billion)Changed from Samsung Life Investment Trust Management Co. to Samsung Investment Trust Management Co.

2001.11 Chosen to be lead fund manager of the Investment Pool of the National Pension Service

2002.10 KODEX 200 ETF listed on the Korea Exchange (KRX)

2003-20052004.12 AUM reached KRW 60 trillion

2005.04 Established the Asia Bond Fund (ABF)(Selected as the Korean manager of the ABF)

2005.11 Reappointed as lead manager of the Investment Pool of the National Pension Service

092013 Sustainability Report08 SAMSUNG ASSET MANAGEMENT

Company ProfileStrategy & Governance

Company Introduction

Since its founding in September 1998, Samsung Asset

Management has been leading Korea’s asset management and

discretionary investment advisory industries. As of December

2012, the Company’s total AUM stood at KRW 119.4 trillion,

the largest of its kind in the nation. The scale of AUM is a clear

indicator of the company's competencies which are not readily

quantifiable. Managing assets worth over KRW 100 trillion

requires sophisticated risk management, advanced financial

know-how, first-rate investment talents, and an extensive global

Assets Under Management (AUM)

Share Ownership (%)Ownership Structure & Major Changes

Samsung Asset Management is a non-listed company engaged

in collective investment, investment advisory, discretionary

investment, investment brokerage, and proprietary trading in

accordance with the Capital Market and Financial Investment Act.

As of March 2013, the number of shares issued and in circulation

was 18,686,000 (registered common shares] and no preferred

shares have been issued. In August 2011, the Company moved

its head office from Yoido to Taepyongro. In 2012, the Company

had no investor-related issues to report such as change in capital

or convertible bond issuance.

Assets Under Management (KRW in billion)

Investment advisory

Beneficiary certificate

Samsung Securities

Samsung Life Insurance

Samsung Heavy Industries

Samsung Dream Scholarship Fndn.

Industrial Bank of Korea

Samsung Fire & Marine Insurance

Employee stock ownership association

Others

2012

119,367

2011

105,087

2010

95,085

2009

82,428

2008

79,612

2007

72,743

2006

71,242

2005

65,304

2004

61,620

*No. of total shares issued: 18,686,000

Assets under management at Samsung Asset Management

stood at KRW 119 trillion at the end of 2012, a near double the

amount it had recorded in 2004. This impressive growth can

be attributed to the Company's advanced asset management

system and unrivaled research capability. The AUM have been

growing steadily over the last eight years in both areas of

funds and advisory investments. As a result, Samsung Asset

Management has been the industry's only company to maintain

AUM over KRW 100 trillion since 2011.

network, to name but a few. Samsung Asset Management's

advanced investment know-how translates into a steady stream

of best-in-class return rates not only in equity-type funds but

also in fixed-income, pension, exchange-traded, and hedge

funds. The Company always endeavors to stay ahead of its peers

in guiding customers through the intricacies of modern finance

towards their investment objectives. As of March 2013, Samsung

Asset Management recorded KRW 300.6 billion in total assets,

KRW 137.1 billion in sales, and KRW 32.4 billion in net income.

65.3

19.4

5.5

3.9

2.51.81.2

0.4

*As of years end

*As of March 2013

Total Assets (KRW in billion)

2013.03

300.6

2012.03

237.6

2011.03

297.4

Total Shareholders' Equity (KRW in billion)

2013.03

207.6

2012.03

198.5

2011.03

183.6

Operating Revenues (KRW in billion)

2013.03

137.1

2012.03

131.3

2011.03

111.5

Net Income (KRW in billion)

2013.03

32.4

2012.032011.03*Based on separate statements (K-IFRS)

History 2012 Highlights Company Profile CEO Message Corporate Governance

26.1

31.2

11FY2012 Sustainability Report 112013 Sustainability Report10 SAMSUNG ASSET MANAGEMENT

CEO MessageStrategy & Governance

Dear Valued Shareholders and Stakeholders,

It is my great pleasure to greet our valued shareholders and other

stakeholders through this sustainability report, the first of its kind

published by Samsung Asset Management.

Innovation and Growth Towards Global Top-class Standards

The year 2012 was a time of trials for the Korean financial industry

but that of many returns for Samsung Asset Management. In the

year, we posted KRW 119.4 trillion, the industry's largest assets

under management, and rolled out many innovative investment

products, setting industry trends and reaffirming our stature as

Korea's leading asset manager. In particular, we led the domestic

ETF market by listing short-term fixed income ETF, the MSCI Korea

ETF, and other innovative investment products. In recognition for

our unrivaled earnings performance, we were praised by a host

of respected industry journals and observers as Korea’s best asset

manager in a wide range of categories.

In 2013, we will continue dominating the domestic funds market

by strengthening our business competitiveness and enhancing

management efficiencies. By 2016, we will establish Samsung Asset

Management as the industry leader not only in scale but also in

profit, return rates, and other aspects that matter to stakeholders.

We will shift our marketing focus to highlighting the outstanding

features of our channels in an effort to make them more competitive.

We will build up our product development competency to roll out

products in step with market change ahead of our competitors.

We will also take steps to fortify our standing in the passive

investment market, enhance flagship funds, and increase assets

under management in our overseas business.

Laying a Foundation for Sustainable Operations

Sustainable operations hinge on internal systems progressing

forward in harmony with one another. Which is why we are

increasingly stepping up efforts to fully comply with all business

laws and industry guidelines, root out corruption, and foster a

decision-making mindset that puts compliance before profit. By

fostering a corporate culture where diligence, transparency, and

fairness matter, we will stay focused on sustainable operations.

Human resources make up a core asset as well as a competitive

edge in the financial services business. In fact, it is the talented

and dedicated individuals who can see a crisis form in the distance

amid the turmoil of market developments and take preparatory

actions to capitalize on the emerging opportunity. Hence, we

remain committed to developing human recourses and thus arm

ourselves with cutting-edge knowledge and techniques so that

we become the most proficient in asset management. To help our

people become the best in their professions and attract specialists

with proven track records, we will adopt ambitious HR training

programs, and improve the personnel system to global standards.

Social Responsibility in Asset Management

Since the last global financial crisis, calls demanding that financial

institutions take on bigger social responsibilities have grown

louder. Accordingly, after pondering the roles we should play as an

industry leader in pursuit of sustainable operations, we concluded

that leading the sustainable development of society through

socially responsible investments and meaningful financial support

should be the core of our social responsibility. Socially responsible

investments, in particular, are issues that are increasingly gaining

attention across the world. While basing our investment decisions

on the ethical, social, and environmental consequences they would

entail, we will continue to explore ways to develop new funds such

as water and new renewable energy funds that can contribute to

the prevention of climate changes and solving water shortage

problems around the world. Another issue high on our to-do list is

providing funding support to promising small and medium-sized

enterprises in need of operating capital.

Equipped with investment expertise, unsurpassed core competen-

cies, and sound possibilities for sustainable operations, we will

carry out social responsibilities to our best ability and give full

attention to the voices of our stakeholders. With a deep gratitude

for having made us what we are today, I look forward to your

continued support in the coming years.

Thank you,

Yongam Yoon

CEO

"We will create values together with

shareholders and other stakeholders

through sustainable growth, transparent

and ethical management, and socially

responsible investments."


12 13SAMSUNG ASSET MANAGEMENT FY2012 Sustainability Report12 13SAMSUNG ASSET MANAGEMENT 2013 Sustainability Report

Corporate Governance - Top Management Team

Yongam Yoon

CEO

Head of Marketing

Jeungwon Yang

Executive Managing Director

Institutional Marketing

Kyongwoo Kim

Managing Director

Business Administration

Yousang Kim

Managing Director

Non-executive Director

Inok Son

Fixed Income Investment

Doyoon Lee

Managing Director


Yunwon Hwang

Gyuho Jo

Auditor

Passive

Jaekyu Bae

Executive Managing Director

Hedge Fund Investment

Sangsoo Han

Managing Director


Cheonsik Yang

Head of Hong KongSubsidiary

Jason Yu

Managing Director

Marketing Strategy

Jeonghwan Iea

Managing Director


Youngsun Yoon

Global Business

Thomas Inho Choi

Managing Director

Equity Investment

Dongjoon Nam

Managing Director

Strategy & Governance History 2012 Highlights Company Profile CEO Message Corporate Governance


Corporate Governance - Board of Directors

Strategy & Governance

Date Main Topics Attendance

BoD 2012.04.20 Review of 2011 fiscal year business report, consolidated financial statements and one other case 100%

BoD 2012.05.16 Convocation of the 2011 General Shareholders Meeting, determination of agenda, and six other cases 100%

BoD 2012.06.26 Appointment of BoD Chairman and four other cases 100%

BoD 2012.09.21 Amendment of executive compensation guidelines and one other case 100%

BoD 2012.11.27 Adoption of 2013 management plan and five other cases 100%

BoD 2012.12.18 Liquidation of Singapore subsidiary and five other cases 100%

BoD 2013.01.28 Appointment of CEO and four other cases 100%

Audit Comm. 2012.05.16 Submission of audit report and two other cases 100%

Audit Comm. 2012.06.26 Appointment of Audit Committee Chairman 100%

Audit Comm. 2012.09.21 Review of regular business and compliance audits 100%

Audit Comm. 2012.12.18 Review of 2012 general and regular business audits 100%

Audit Comm. 2013.03.20 Review of regular business and compliance audits 100%

Nomination Comm. 2012.05.16 Nomination of candidates for non-executive director position 100%

Nomination Comm. 2013.01.28 Appointment of Chairman of the Non-executive Director Nomination Committee 100%

Executive CompensationIn 2012 the amount of executive compensation was approved at the general shareholders meeting in accordance with Company regula-

tions. The total amount of executive compensation paid in 2012 was KRW 2,044,080,747.

Number of Persons* Sum Paid Per Person** Payment Mode

Executive 6 1,770,174,073 295,029,012 100% cash

Non-executive 5 273,906,674 54,781,335 100% cash

Total 11 2,044,080,747 185,825,522 100% cash

Board of Directors

Samsung Asset Management has established a corporate govern-

ance structure with a Board of Directors at its center, practicing

transparent management and strategic decision making. The Board

of Directors is the Company's highest decision-making body with

the powers entrusted by shareholders in accordance with its ordi-

nance and articles of incorporation to appoint the Chief Executive

Officer and executive officers, decide on top-management compen-

sation matters, nominate candidates for the Board of Directors, and

audit accounting and performance reports. By ensuring the inde-

pendency, transparency, and efficiency of the Board, Samsung Asset

Management endeavors to maximize stakeholder values.

BoD CompositionThe Board of Directors comprises three executives and four non-

executive officers, with the latter forming the majority to ensure

the board’s independency and transparency in decision making.

The non-executive officers are persons of high moral standard with

professional expertise and competencies in finance, law, econom-

ics, management, accounting, and other areas relevant to corporate

management.

Director Appointment ProcessSamsung Asset Management has in place a system that ensures ob-

jectivity and fairness in selecting executive and non-executive offic-

ers for its Board of Directors. Non-executive candidates are nominat-

ed by the Non-executive Directors Nomination Committee based

on their work expertise, professional integrity, and social stature,

and approved by shareholders at a general shareholders meeting.

BoD Operations

The BoD of Samsung Asset Management convened seven times

between April 2012 and March 2013, deliberating on a total of 23

cases submitted for consideration and reviewing 10 major man-

agement issues with a 100 per cent attendance record during the

said period.

Prevention of Conflicts of InterestTo prevent conflicts of interest between the BoD and the Company,

the Directors are prohibited without prior approval from the BoD

from engaging directly or via a third party account in transactions

related to any business activities of the Company, functioning as a

general partner or a director at a corporation in the same field, or

holding more than two positions outside of their professions.

Committees under BoDThere are three committees--audit, management, and non-execu-

tive directors nomination--under the Board of Directors. The Audit

Committee conducts and evaluates the results of financial, compli-

ance, operation, and management audits, while the Management

Committee makes decisions on issues relegated by the BoD and

screens matters prior to BoD deliberation. The Non-executive Di-

rectors Nomination Committee searches for and nominates BoD

candidates to the General Shareholders Meeting for final approval.

From April 2012 to March 2013, the audit and nomination commit-

tees convened on five and two occasions, respectively.

Type Name Role Major Work ExperienceAffiliation with Major or Key Shareholders

Executive Ray Yoon CEO Former CIO of Samsung Life Insurance None

Executive Gyuho JoCollege of Law, Kyungpook Uni., Head of Compliance at the Board of Audit and Inspection

None

Non-executive Yousang KimBA in Economics, Seogang Uni., formerly Head of Indemnification Strategy at Samsung Fire Insurance

None

Non-executive Inok Son BoD Chairman BA in Business Administration, Seoul National Uni., Advisor at Law Firm Hwawoo None

Non-executive Cheonsik Yang BA in Economics, Vanderbilt Uni., Executive Advisor at Law Firm Kim & Chang None

Non-executive Yunwon HwangBA in Public Administration, Pittsburg Uni., Professor of Public Administration, Chung-Ang Uni.

None

Non-executive Youngsun Yoon BA in Public Policy, Wisconsin Uni. Vice Chairman at Samjung KPMG None

The Board of Directors

BoD Committees

BoD Actions Taken in FY2012

Committee Name Composition Terms of Reference

Audit Committee 1 Executive 2 Non-executive

• Conducts financial, business and compliance audits• Submits proposals or opinions to General Shareholders Meetings• Submits audit reports to BoD• Decides its own regulations

Management Committee 2 Executive • Defines regulations for efficient operation of the Management Committee• Makes decisions on BoD-relegated issues and other management-related matters• Screens management-related matters prior to BoD deliberation

Non-executive Director Nomination Committee

1 Executive 1 Non-executive

• Makes decisions necessary for forming, operating, exercising rights related to the committee responsible for nominating non-executive board of director candidates;

• Nominates non-executive BoD candidates to the General Shareholders Meeting for final approval

(KRW)

*As of June 2013

*From April 1, 2012 to March 31, 2013

*Including all executive officers active in 2012**The average payment figure is derived from the total amount paid divided by the number of executive officers.


Growing02

Building up customer wealth and trust with the industry's most advanced management system, largest research infrastructure, and best investment targets analysis approach

As air, water, light, and nutrients help saplings grow and bloom, Samsung Asset Management ensures the secure growth of customer assets even in a fast-evolving financial environment by using advanced finance techniques, first-class professionals, global marketing, and a systematic risk management system.

Taking it a step further, we promote balanced growth throughout society by fully reflecting ethical, social, and environmental factors in investment decision making, developing eco-friendly products, and funneling capital to promising SMEs.

Sustainable Investments

Funds Management

Equity & Research

Multi-Asset Investments

Hedge Funds

Global Business

Overseas Subsidiaries

Passive Investments

Fixed Income Investments

Pension Funds

Responsible Investments



Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds


Funds Management

Sustainable Investments

201220112010

105.1

95.1

119.4

AUM Growth (KRW in trillion)

Pursuing Sustainable Operations

BeneficiaryCertificatebyType(%)

54

8

8

15

15Equity

Hybrid

Fixed income

MMF

Real estate

Samsung Asset Management practices value investments using a scientific bottom-up

approach based on an investment decision-making process involving a team of experts

drawing on the best research infrastructure in Korea. By cultivating a corporate culture that

puts risk management before profit and equipped with a step-by-step risk management

system, we aim to realize benchmark-exceeding returns on customer assets consistently.

The Company's funds management philosophy is to generate sustainable returns through

scientific investment techniques and thorough risk management practices with a long-

term perspective.

AUM by Type(%)

21

70

9

Advisory assets

Pension funds

Beneficiary certificate

Pursuing sustainable operations by solidifying presence in the passive investment market, strengthening marketing channel competitiveness, cultivating flagship equity-type funds, and expanding overseas business incrementally

Pursuing value investments with a bottom-up methodology, scientific analysis based on Korea's best research competency, and an expertise-packed teamwork approach

Maintaining Sustainable Growth

Generating Sustainable Returns“Pursuing Higher-than-benchmark Returns on

Customer Assets in a Stable Manner”

Risk Management

Team Approach

Breed-apart investment approaches honed to perfection

Pursuit of benchmark-exceeding returns through a bottom-up approach

An advanced investment decision-making process centered on the collective competencies of area specialists

Scientific investment based on Korea's best research prowess

A corporate culture that thinks risk before returns

An all-dimensional risk management system

Value Investment

Moreover, the Company's total AUM grew 13.6% over the course of 2012, compared to the industry average of 10.6%.

Samsung Korea Flagship Fund remained a top performer in 2012 (top 3 per cent in the fund sector), while the Samsung SME Focus Fund established itself as a clear leader in the SEM category with an annual return rate of 11 per cent.

The ETF business, which successfully launched a short-term fixed income ETF in Feb. 2012, garnered over 50 per cent of the ETF market.

In managing the National Pension Investment Pool, the Company scored high in the evaluations of its funds allocation performance in 2012, thereby continuing to improve its standing in the evaluation standard.

In managing multi-asset investments, which include real estate, the Company's commercial property fund reported an ROE of 7.7 per cent, 1%p above the target rate it set at the outset of 2012.

The 2012 the Korean Economic Daily Korea Funds Awards - General Grand Prize

The 2011 Maeil Economic Daily Funds Awards - Grand Prize in asset manager category

The 2012 Morning Star Funds Awards - Best Equity-type Asset Manager, Best SME Fund

The 2013 Korea Economic Daily Dasan Financial Awards- Gold Award in asset management

The 2012 Economy Chosun/FN Guide Funds Awards - General Grand Prize

The 2012 Herald Economic Daily Funds Awards - Best Domestic Fund, Best Hedge Fund

The 2012 Money Today Funds Awards - Best Asset Manager

*As of years end *As of the end of 2012 *As of the end of 2012

Despite some improving economic indices, the Korean economy is not expected to improve

noticeably in 2013. Growing household debts and the lingering Eurozone crisis are more than

likely to keep the economy mired in the current doldrums. The stock market, however, is fore-

casted to recover as global economic uncertainty is anticipated to gradually recede. In response

to these unstable market conditions, domestic investors are increasingly turning to relatively

safe investments, including asset allocation-type products, and passive funds, hedge funds, and

other absolute return funds. In addition, as the National Pension Service continues to expand

its socially responsible investment program, responsible investment is certain to be the watch-

word among domestic asset managers. Against this backdrop, the Company will continue to

pursue sustainable growth by boosting its presence in the passive funds market, realigning its

products to evolving investor needs, shoring up its marketing channels, strengthening flagship

equity-type funds, and improving efficiencies in its infrastructure.


Equity & Research

Equity Investment Division 2012 Major Results

Research TeamSamsung Asset Management prides itself on its research and anal-

ysis prowess. Consisting of analysts with proven track records and

stellar reputations at home and abroad, the research team provides

first-rate analysis support to the equity and other investment units of

the Company. The research team practices a value-focused research

philosophy. With the belief that investments based on the intrinsic

values of select corporations will outperform the stock market in the

long run, the team focuses on identifying stocks that are either high

in growth potential or undervalued compared to their inner values

through a bottom-up analysis of one corporation at a time. Through

this unique approach, the team has played a crucial role in making the

Company Korea's top asset management institution, and will continue

the role in helping the Company grow into a global institution.

Investing based on a teamwork approach backed by bottom-up research while staying in line with emerging global trends.

The Samsung Korea Flagship Fund is ideal for investors pursuing higher-than-benchmark returns in the long run with expectations that Korea's leading corporations will continue to grow for the foreseeable future. Its basic strategy is to improve asset management efficiencies and minimize risk through a select-and-focus investment approach. Its investment targets include Korean business groups with dominant market positions at home and growing presences overseas as well as those with a high probability of joining the ranks of Korea industry leaders. Owing to its investment strategy carried out by first-rate managers, the fund boasts a 113.73 per cent rate of return since inception (based on A Class performance) and a three-year return rate of 39.80 per cent.

The Samsung SME Focus Fund targets small and medium-sized enterprises with high growth potential, which constitute the backbone of the Korean economy. With a primary focus on the equities of promising SMEs, the fund also invests in shares of large corporations when dictated by market changes. By investing in SME stocks, the fund also functions as a channel funneling capital to the business operations of its investment targets. Launched in September 2007, the fund attracted KRW 280 billion in 2012 alone. As of December 2012, the fund’s rate of return since inception stood at 67.15 per cent (based on A Class performance).

In 2012 the Company focused on stabilizing the performance of eq-

uity-type funds by strengthening its research and analysis capability

and improving the short-term market response mechanism. In addi-

tion, by strengthening channel competitiveness and publicizing per-

formance results, we strove to expand the market share of the funds.

As a result, equity-type (active) funds reached KRW 4.1 trillion in AUM,

which represents a market share of 6.9 per cent, up for the third year

in a row. Owing to uncertainties surrounding global stock markets,

investors increasingly prefer low risk to high returns, giving rise to

the view that the investment perspectives of average investors are

getting longer. In response to evolving investor preferences, we will

focus on building up the credibility of our brand and improving our

long-term profitability by continuously streamlining the asset man-

agement process and supporting our fund managers in their efforts

to strengthen their competencies.

The Samsung Korea Flagship Fund and the Samsung SME

Focus Fund are the two most successful funds of Samsung

Asset Management, amounting to KRW 1,400 billion and

KRW 280 billion, respectively, as of December 2012.

The Equity Investment Division invests in equities based on a

teamwork approach that emphasizes bottom-up research and

thorough risk minimization, with a focus on identifying com-

panies that are in line with major world trends.

FinancialTechNon-tech

Market StrategyIndustry Strategy

Bond StrategyInvestment Analysis

Research Specialists

Corporate Analysis

Fixed Income Strategy

Equity Strategy

Credit Analysis

Economists

Research Team Workflow

Equity-type Funds M/S (%)

*As of years end

The number of analysts: 12Average research experience:

11.67 years

>Samsung Korea Flagship Fund

>Samsung SME Focus Fund

Equity Investment Organization

>

>

Identifies and invests in corporations with strong sustainable growth possibilities. To identify such targets in a constantly evolving investment environment, the team conducts a comprehensive investment analysis evaluating external as well as internal corporate growth factors.

Growth Equity

Investment

Invests with a long-term perspective in stocks that reflect the future values of corporations. Employing a thorough bottom-up analysis approach, the team sifts through small and medium-sized enterprises with clear product competitiveness.

>Value

Equity Investment

Pursues stable benchmark-exceeding returns through active funds management with a focus on profit potential and stability based on unique market selection and investment strategy

Institutional Equity

Investment

Builds up a portfolio of industry-specific businesses by focusing on the core strengths of each corporation with little regard to the market evaluations of them. Specifically, the team looks into the likelihood of structural growth, a meaningful turnaround, an increase in market share, and other factors that could influence corporate value.

>Core

Equity Investment

Equity Investment Philosophy

Focus on corporate fundamentals and the competitiveness of business models

In-depth analysis through physical visits and on-site information gathering

Each investment division conducts its own research as a team based on trust and respect

Maximize competencies through active communication and consensus in direction

Investment with a focus on stable margins

Minimize volatility in funds management through a risk management approach that rejects aggressive betting

Focus on long-term investments

Invest in corporate or industrial structural changes in line with emerging global trends

"Pursuing stable benchmark-exceeding returns through active

funds management"

>

Bottom-up Research Method

>

Risk-Return Management

>

Team Approach

>

GlobalTrends

In January 2012, Samsung Asset Management reorganized its

equity investments division into four units named, "Growth",

"Core", "Value", and "Institutional", in accordance with the invest-

ment approach of each unit. The goal of the reorganization is to

execute the strategy of each unit more distinctively and thus be

clearer to investors and more able to gear product development

towards customer preferences. The segmentation has proved

more appealing to customers in that it allows customers to bet-

ter understand the characteristics of funds each unit offers.

2012

6.9

2011

6.7

2010

5.5

2009

5.4

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds

Responsible InvestmentsSustainable Investments



Multi-Asset Investment Philosophy

At the end of 2012, Samsung Asset Management report-

ed KRW 1.4 trillion in multi-assets under management. Its

absolute income funds generated stable rates of returns,

while dividend funds in general enjoyed earning rates

higher than those in the previous year.

Manages equity-type long-short funds pursuing absolute return and dividend-type investment and other style funds, and devises the investment systems of hybrid-type products catering to the needs of institutional investors

>Strategic

Investment Team

Pursues sustainable earnings performances rather than chases rates of return, based on the strategy of scientific investment and risk management, with an aim towards helping investors reach their investment goals in the safest and most sustainable way possible

>Quant

Investment Team

Multi-Asset Investment Division 2012 Major Results Samsung Asset Management operates Strategic Investment and

Quant Investment Teams under its Multi-Asset Investment Divi-

sion. The Strategic Investment Team pursues absolute returns

and interest rates-exceeding performance through investing in

marketable securities based on a long-short strategy. In addition

to dividend-type funds, the team manages investment schemes

that are geared towards private equity funds in an effort to offer

services customized to the investment needs of institutional and

individual investors. The Quant Investment Team seeks sustaina-

ble earnings performances rather than chasing after higher rates

of returns, based on scientific investment and risk management,

with an aim towards helping investors reach their investment

goals in the safest and most sustainable way possible.

Helping customers reach their ultimate investment objectives in the safest possible manner throughStrategic Investment and Quant Investment Teams

Strengthening the multi-asset/multi-strategy business based on a scientific investment strategy and building up the track records of equity funds seeking absolute return.

NameDate

LaunchedAmount

Samsung Multi-strategy Plus 2 (private) 2013.05.16 22.4

Samsung Emerald Alpha 2 (private) 2013.05.29 15.1

Samsung DualStar Plus 3 (private) 2013.05.31 14.4

Samsung AlphaClub Korea Long-short (public) 2013.06.12 12.5

New Absolute Return Funds (KRW in billion)

As low interest rates and high market volatility are likely to fuel investor demands for stable return instruments, we will increase our AUM through launching more absolute return funds.

Using equity-type long-short and style funds and other new investment strategies

Pursuing absolute/stable returns regardless of benchmarks

Scientific investment based on Korea's best quant research infrastructure

Pursuing stable benchmark-exceeding returns through a precision quant approach

"Helping customers reach their ultimate investment objectives in

the safest manner possible"

>

Strategic Investment

>

Quant Investment

*As of June 2013

Growth of Multi-Asset Investments (KRW in brillion)

Strategic investment

Quant investment

*As of years end** Inclusive of discretionary advisory, fixed income, bond derivatives, MMF,

third-party assets, discretionary assets of affiliates, assets of affiliates

20122011

884

492

577

541

1,425

1,069

Looking forward, the investments market is expected to

see a sharp increase in investors looking for absolute and

stable return instruments and continued expansion of in-

stitutional funds amid the protracted low interest rate en-

vironment and lack of a clear direction in risky assets. As

such, asset allocation and multi-strategy competencies,

rather than products that rely on thematic investing or spe-

cific asset classes, will be in greater demand, while the Pri-

vate Equity Fund (PEF) market is likely to continue feeding

on various investor needs. In anticipation of these projec-

tions, Samsung Asset Management will further strengthen

its multi-asset/multi-strategy business based on scientific

investment strategies while building up the track records

of its equity funds seeking absolute return.

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds



Hedge Funds

As of the end of 2012, hedge funds under management at Samsung Asset

Management amounted to KRW 183.7 billion, which equals to a 17.3 per

cent of the market. While the hedge funds of its peers mostly comprise

the assets of their affiliates and PB, the Company generates hedge funds

mostly through sales, which amounted to KRW 113.3 billion, including

KRW 60.6 billion from retail sales. In 2012, which was a difficult year for

the hedge fund industry in general, the Company came close to reaching

its target range of 8 to 10 per cent in annualized terms, while maintaining

volatility at a low 4-5 per cent range.

In 2013, the volatility of the stock market is expected to increase owing

to the sluggish economy and shrinking liquidity, which is likely to fuel

demand for absolute and stable return investment products. In addition,

as regulations governing hedge funds lessen, the market is projected to

grow at an accelerated rate, which in turn will give rise to the importance

of generating earnings in a consistent manner. Samsung Asset Manage-

ment will strengthen its customer base through pursuing stable return

rates while keeping volatility low, thereby maintaining sustainable growth

in an increasingly competitive market.

2012 Major Results

Samsung Asset Management actively invests with a long-term approach in Korea's hedge funds market which has been rapidly growing since its inception in 2011.

Hedge Funds Investment Philosophy

"Pursuing absolute return through hedge funds"

>

Long-short, event-driven positioning

strategy

>Leverage,

volatility, risk management

> Alpha strategy less immune to

market volatility

Expanding the customer base through stable rates of return and maintaining sustainable growth through differentiated strategies in an increasingly competitive market

*As of the end of 2012

*As of years end

Name Date Launched Return Rates

since Inception

Equity Hedge 2011.12.26 7.39

Multi Strategy 2012.02.17 3.81

Opportunity 2012.05.23 4.02

2011 2012 YoY

Equity 43.0 173.7 130.7

Fixed income - 10.0 10.0

Total 43.0 183.7 139.8

17.3

82.7

Samsung Asset Management

Others


AUM of Hedge Funds (KRW in brillion)

Hedge Funds M/S (%)

Earning Rates of Hedge Funds (%)

Hedge Fund Investment DivisionSince December 2011 when seven asset management firms

were allowed by the government to run hedge funds in Korea,

the hedge funds market has grown, reaching one trillion won

(KRW) milestone in one year into operation. As such, running

hedge funds is a new business that requires a mid-to-long-term

investment approach.

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds



Global Business

Samsung Asset Management is increasing the global business

by bolstering its global investment competencies with region-

al expertise and thereby expanding its overseas investment

platform.

In August 2012, the Company integrated its global investment

division with its global marketing team to create a Global Busi-

ness Division in an effort to create synergy between invest-

ment and marketing. In the following December, the Com-

pany integrated its two overseas subsidiaries in an effort to

make overseas business and investment decisions in a more

prompt and effective manner. With its global business units

streamlined and consolidated, the Company has been able

to clarify the role and accountability of each unit and improve

efficiencies in communicating with its overseas outposts and

coordinating joint business operations, thereby laying a firm

foundation for growing global funds.

Expanding the overseas investment platform through a newly established Global Business Division and bolstering global investment competencies with regional expertise

Global Business Division 2012 Major Results

Category Equity Hybrid Other AUM Net Assets

Global G2, Financial - Global Reits 33 26

Developed U.S., N-Japan N-Japan J-Reits 239 196

Asia China (mainland), ASEAN, India China (mainland), India - 723 633

Emerging Latin & Emerging Latin & Emerging - 18 16

Sector/Theme Water, Alt. Energy Water, Alt. Energy - 116 87

AUM 1,021 18 90 1,129 -

Net Assets 884 17 57 - 958

In 2012 the financial markets of both developed and developing

countries showed signs of improvement. In particular, market

improvements among ASEAN members, Turkey, and Egypt

were more pronounced as their financial markets had suffered

greater falls in the previous year. In addition, the nascent global

interest in emerging markets which was triggered by the BRICS

is shifting towards ASEAN countries and China where growth

rates are higher than in any other places. Having anticipated

this global trend, the Company has long prepared itself to

emerge as an asset management specialist of these two

regions. It has acquired the QFII, the government license to

conduct investment activity in Mainland China and has since

launched China A Share funds three times. The Company also

has launched a fund in India and a dividend-type fund that

diversifies investments into the six members of ASEAN. This

fund, launched in February 2010, improved 25 per cent in its

return rate (based on A Class performance) over the course of

2012, garnering the Money Today's best overseas equity-type

fund award.

In 2012, Samsung Asset Management directed funds outwards

more than inwards: out-bound and in-bound AUM were KRW

1,255.2 billion (including KRW 116.7 billion from overseas

subsidiaries) and KRW 69.9 billion, respectively. Through the

newly created Global Business Division, the Company stepped

up efforts to reach, inform, and subscribe more customers to its

overseas funds: it expanded its domestic marketing programs

promoting its out-bound funds, published regular issue

reports, and held overseas investment seminars. As for the

in-bound business, which involves raising funds overseas for

investing in Korea, the Company has been reporting a superior

and stable rate performance despite the relatively small scale

of the business. To further enhance its name recognition

and presence in global funds markets, the Company will

develop products that address the investment preferences

of institutional investors in Japan, the Middle East, and other

regions, and explore diverse marketing options to reach these

investors.

Global Investments by Region and Type (KRW in billion)

*As of the end of 2012**Based on sole or subsidiary funds, REITS included in Other

Growing into an asset manager specializing in the Asian region as global investment interest is redirecting its focus towards China and the ASEAN countries

Developing products that meet global investor needs and exploring diverse marketing options to expand the presence and enhance the name recognition of Samsung Asset Management in the global funds markets

Global Investment Mission

Overseas Investment

>

Expand investment

opportunities

>Improve

investment efficiencies

> Generate benchmark-exceeding earnings

One Stop Service

Inve

stm

ent S

olut

ion

Team Outsourcing

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds




Status of Overseas Subsidiaries Organization of Overseas Subsidiaries

2012 Major Results

In addition to raising funds from local investors through these subsidiaries, Samsung Asset Management invests domestically raised funds in the region by leveraging their local networks and knowledge.

Overseas SubsidiariesDespite their initial difficulties compounded by the global

financial crisis, the two subsidiaries have since been increasing

assets under management and revenues, gradually improving

their balance sheets. The Hong Kong subsidiary, in particular,

has built up a track record considered impressive for a foreign

entity by accumulating outstanding results over the past five

years. In 2012, by bringing onboard top-notch analysts, the

subsidiary strengthened its research competency. As for the

Singapore subsidiary, the process of integrating it with the

Hong Kong subsidiary began in December 2012, and was

completed by the end of February 2013. The expanded Hong

Kong subsidiary will focus on streamlining the internal work

process, realigning the business operations to the market

environment, and further strengthening the research unit, all in

an effort to meet expectations that both its AUM and profit will

increase substantially.

Looking forward, Samsung Asset Management will spur

its in-bound business as well as local-to-local business,

which involves local funding and investing, by diversifying

the product lineup of the subsidiary and expanding local

marketing.

Fund Name Assets** Date Launched BM

Samsung China Equity (equity) 88.9 2008.06.23 MSCI Golden Dragon Index (KRW)*100%

Samsung Great China Equity (equity) 16.1 2010.04.13 MSCI Zhong Hua (KRW)*100%

Samsung China2 Equity (equity) 187.5 2009.02.27 CSI 300 Index (KRW)*100%

Samsung China Flagship Equity Investment (equity) 135.1 2010.10.08 Call Interest*5% + CSI 300 Index (KRW)*95%

Samsung China Consumer (equity) 11.4 2010.09.28 Call Interest*5% + Hang Seng Composite Consumer Good Index (KRW)*95%

Samsung ASEAN Equity Investment Trust (equity) 32.0 2007.04.02 MSCI AC South East Asia USD Index (KRW)*100%

Samsung India Equity Investment Trust (equity) 27.0 2009.08.25 S&P CNX Nifty Index (KRW)*100%

*As of the end of 2012**Based on the NAV of the subsidiary’s consigned assets

Fund Performance of the Hong Kong Subsidiary (KRW in billion, %)

Spurring the in-bound business as well as the local-to-local business by diversifying the product lineup of the Hong Kong subsidiary and expanding local marketing

Samsung Asset Management established subsidiaries in Hong

Kong in November 2007 and in Singapore in April 2008 to run

business portfolios right in the center of the Asian region which

has been driving the growth of the global economy in recent

years. In addition to raising funds from local investors through

these subsidiaries, the Company invests domestically raised

funds in the region by leveraging their local networks and

knowledge, with an eye towards growing the subsidiaries into

bases for global investment and sales operations.

Samsung Asset Management (Hong Kong) Limited.

>

Managing Director

CIO COO

Portfolio Management

ResearchOperations /Back-office

Country of business base: Hong Kong

Date established: Nov. 2007

Share of ownership: 100 per cent

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds



Passive Investments

Domestic ETF Asset Growth & M/S (KRW in trillion, %)

Passive Division 2012MajorResults Passive Investment AUM (KRW in trillion, %)

*Deutsch Bank 'Weekly ETF Market Review'

The KODEX200 is Korea's leading ETF that follows the performance of the KOSPI, the major index of the Korean stock market. Korea's first listed ETF, the KODEX200 boasts the biggest net assets (KRW 4.6 trillion as of the end of 2012) among listed ETFs. The KODEX Leverage is an ETF that allows even small-scale investors to enjoy leverage effects as the product pursues a rate of returns double that of the KOSPI 200. The KODEX Inverse, on the other hand, is designed to perform as a 100% inverse of the KOSPI200's daily return rate, thus enabling investors to profit in a bear market. These three ETFs not only offer the effect of diversified investments as they follow the broad-ranged index, but also make their investment inclinations easy for investors to understand as they are linked to the most recognized index in the nation.

>

The Samsung Group Value Index Fund invests in the value and growth of Samsung Group, which has been driving the Korean economy for the last three decades. According to a WiseFN figure, as of the end of 2012, the index fund recorded 38.2% in cumulative rate of return over the past five years, a stark contrast to KOSPI's -1.86% for the same period. In investing in Samsung Electronics, Samsung Electrics, and the other 17 Samsung companies, the fund analyzes over 50 indexes of inner value in an effort to derive the optimal value index for investing in Samsung Group companies.

>

In 2012, Samsung Asset Management integrated its ETF and in-

dex units to create a Passive Division in order to take full advan-

tage of an emerging investment trend—passive investing. The

Passive Division relies on scientific management and risk-return

profile-based product development, rather than on forecasts or

market judgments, in its pursuit of stable returns. In particular,

the division employs a systemic financial engineering approach

that requires a long-term investment perspective, arming its

portfolio with the latest in risk, expense, and return rate manage-

ment and thus shielding it against fallible human judgments.

In 2012, Samsung Asset Management reported KRW 12.4 trillion in

AUM from its passive investment operations, 30.5 per cent higher

than the previous year. The KODEX ETF, which was launched in 2002,

reached KRW 8 trillion in 2012, a 40-fold increase from its initial capi-

tal of KRW 200 billion 10 years ago. To draw investor attention to this

ETF product, the Company has explored many marketing tools, in-

cluding running a full-scale TV commercial. By developing one in-

novative product after another, the Company is fortifying its domi-

nance of the domestic ETF market.

The Company's ETF business is led by the KODEX200, the industry's

largest ETF in terms of net assets, the KODEX Leverage, an ETF with

the highest turnover rate* in the Asia-Pacific region, and the KODEX

Samsung Group Equity, Korea’s first ETF with a group equity theme.

Other prominent funds include the KODEX FTSE China A and the KO-

DEX Short-term Fixed Income, all of which constitute the backbone

of the Company's ETF market dominance.

The world ETF market has grown at an annualized rate of 29.7 per

cent for the past 10 years, while the domestic market, which report-

ed KRW 14.7 trillion in total assets in 2012, has grown approximately

49 folds during the same period. Samsung Asset Management is Ko-

rea's biggest ETF player, garnering 55 per cent of the market as of the

end of 2012. The market is expected to continue its robust growth

for some time.

The shift in the investment paradigm of institutional and individual

investors from active to passive investing is unmistakable. The pas-

sive funds market in Korea has high growth potential as its share of

total domestic funds is well below that of the world passive funds

market. In fact, low interest rates and the overall sluggish perfor-

mance of active funds will likely drive more investors towards passive

funds in the foreseeable future. In response to the paradigm shift,

Samsung Asset Management will step up efforts to create synergy

between its ETF and index operations and thereby regain its stature

as a power house of index funds. Moreover, by incrementally making

inroads into overseas ETF markets, particularly those in Asia where

growth potential is high, the Company will build up its profit base.

Flagship Products

KODEX ETFSamsung Group

Value Index Fund

Passive Investment Philosophy

"Growing into a Premier Passive Investment Company"

>

Establishing KODEX

Ecosystem

>Globalizing

KODEX

>Building

Status as Index Power House

Asia’s 3rd by 2015

Completing growth platform by 2013

*As of years end 201220112010

ETF net assets

Index AUM

8.1

5.5

3.34.03.8

4.3

*As of years end

Domestic ETF

Samsung Asset Management ETF

M/S

100.0

57.1 60.0

75.068.8

58.3 54.1 55.6

1.4

2002

0.3 0.3

2003

0.7 0.4 0.5

2004

0.30.8

2005

0.6

1.6

2006

1.1

2.4

2007

1.4

3.4

2008

41.2

3.8

2009

1.8

47.4

6.1

2010

3.3

9.9

2011

5.5

14.7

2012

8.1

55.1

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds




FixedIncomeInvestmentPhilosophy

Fixed Income Investment Division 2012MajorResults

Fixed income investment AUM increased on the strengths of growing funds and improving customer service at affiliates.

"Securing a vantage position that stands out and

leading market change"

>

Research Base

>

Lead Market Change

>Generate

Benchmark-exceeding

Earning Rates

>

Thoroughly Segment

Functions

Samsung Asset Management’s Fixed Income Investment Divi-

sion builds up and manages a portfolio based on management

styles that befit customer risk profiles and on the in-depth analy-

sis of macroeconomic indicators, interest rate forecasts, credit rel-

ative value, and other related indicators. In addition, the division

closely keeps track of performance factors through systematic

risk management practices and a thorough post-performance

analysis.

Securing a vantage point in competition with asset managers of advanced countries and thus leading the change of the fixed income market by offering stable benchmark-exceeding rates of returns year after year

Fixed Income Investment Process

ResearchMonitoring Feedbacks

Portfolio Construction

Economic and interest rate forecastYield curve relative value analysisSector and credit relative value analysisNew product/strategy development

Investment style differentiation by fund characteristics -discretionary management by styleManagement in line with customer

risk profiles

Systematic risk managementAnalysis of performance factorsReflection of investment strategy

evaluation results

Fixed Income Investment AUM (KRW in trillion)

201220112009 20102008

*As of years end** Inclusive of discretionary advisory, fixed income, bond derivatives, MMF

86.5

73.769.7

58.7

52.7

In 2012, the Company recorded KRW 86.5 trillion in fixed income AUM.

The increase is attributed to a rise in funds allotted by institutional in-

vestors and to improved customer service at affiliates.

In investment performance, the Company reports return rates exceed-

ing benchmarks in almost all fixed income sectors it engaged in and

performed well in rankings in comparison to its peers. In 2012, the

Company actively developed and launched new products including

a hybrid-type fund that blends in fixed income and ELS/DLS products

and a swap spread fund. In addition, in response to growing customer

demands for high-yield MMF products, the Company introduced an

income-type MMF. Demand for income-type MMFs is likely to grow as

insurance companies and other non-banking companies are increas-

ingly promoting them.

In 2013, fixed income-related markets are forecasted to remain slug-

gish owing to their poor performance compared to bank savings

plans, while investors are increasingly keeping fixed income securities

in their personal possession. Nevertheless, the growth potential is still

real as discretionary outsourcing expands and derivatives-type market

sectors that pursue absolute interest rates are expected to grow on the

back of institutional investors seeking stable returns. In response to

such projections, Samsung Asset Management will focus on modify-

ing the research process, developing high-yield products, and explor-

ing overseas business options.

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds



2012 Major Results

Public institutions first select a sub-fund(s) and investment duration in accordance with their asset characteristics, and then deposit their assets in the National Pension Investment Pool lead-managed by Samsung Asset Management.

Investment Pool

Management Committee*

Lead Manager

A B D FC E GManagers

Fund Management-

related Institutions

Consolidated Investment Trust Fund

Fund C Fund DFund A Fund B>

>

> DepositoryAdministrationFund evaluation

>

*The Investment Pool Management Committee sets basic direction, writes/revises regulations, selects asset management firms, and conducts other related activity.

Fixed income

Hybrid

Equity

MMF

NPS Trust Fund by Type (%)

Funds Management Process

Samsung Asset Management reflects the risk/return profiles of partici-

pating institutions in its management of the National Pension Invest-

ment Pool. By diversifying the pooled assets into various private funds

with proven track records, the Company minimizes risks to the trust

fund and, by allocating assets to different sub-funds using a style analy-

sis, it seeks to generate higher rates of returns. As a result, the MMF has

been consistently outperforming most industry benchmarks every

year, while other sub-funds followed suit majority of the time. In cumu-

lative performance, all sub-funds have been delivering stable bench-

mark-exceeding rates of returns.

As the pool is a public fund, the Ministry of Strategy & Finance evaluates

and conducts audits annually. Samsung Asset Management has been

constantly fine-tuning its internal monitoring and evaluation systems

in an effort to raise the level of transparency in fund management. In

regard to the areas that need to be improved as indicated in the 2012

audit, the Company is actively taking measures to improve them.

Samsung Asset Management lead-manages the National Pension In-

vestment Pool, which was established to promote the expertise, trans-

parency, and independency of firms managing the pool and other

public institutions' funds. As most public funds in Korea lack an asset

management arm of their own, the government has created an invest-

ment pool, or a trust fund, in which these institutions place their funds,

and designates a professional asset management company to lead-

manage the pool. Samsung Asset Management has been selected as

the lead manager three times in a row since the investment pool system

was adopted in 2001, a testimony to its asset management leadership.

The National Pension Investment Pool is basically a fund-of-funds,

comprising a number of subordinate funds which are managed by

various asset managers. Each participating pension institution selects

subordinate fund(s) and investment duration in accordance with

its asset characteristics and deposits assets in the consolidated in-

vestment trust fund. As the lead manager of the fund, Samsung Asset

Management channels through its Public & Pension Funds Investment

Division the collected assets into the subordinate funds according to

terms set by each participating institution. The responsibility of the lead

manager also includes forming investment strategies, monitoring and

evaluating the performance of each sub-fund managing company, and

risk-managing the overall trust fund. Moreover, the Company provides

consulting and educational support services to other public institutions

interested in investing through the fund.

Public & Pension Funds Investment Division

NPS Pool Investment Philosophy

"Pursuing benchmark-exceeding returns on public pension funds

in a stable manner"

>

Reflect Customer

Characteristics in Investment

>

Minimize Risks

> Leverage the Fund-of-

funds Operation System

Managing the National Pension Investment Pool and helping improve the expertise, transparency, and independency of Korea's asset management industry

59.6

25.4

0.3

14.7


Pension Funds

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds



Samsung Asset Management earns customer trust by constantly im-

proving its SRI competency and maintaining reliable management pro-

cesses. In recognition of these, an increasing number of leading institu-

tional investors in Korea turn to Samsung Asset Management to make

socially responsible investments on their behalf. The Samsung SRI Fund,

the Company's flagship SRI product, reported KRW 229.5 billion in AUM

at the end of 2012, while other SRI products, including alternative en-

ergy, water, and SME Focus, reported KRW 394.4 billion.

Securing long-term rates of return and thus fostering a healthy investment culture by evaluating investees' social and environmental contributions as well as their financial performances

An increasing number of leading institutional investors are relying on Samsung Asset Management to make socially responsible investments on their behalf.

SRI Management Process

SRI Products (KRW in billion)

*As of dates on which products were launched**As of the end of 2012

Category Fund Name Investment Target Companies Date Launched* Amount**

SRI Samsung SRI Domestic corporations with sustainable growth and strong commitment to SRI

2007.4.12 229.5

Environ-ment

Samsung Global Alternative EnergyGlobal corporations with extensive alternative energy investmentsand strong commitment to SRI

2007.6.25 34.8

Samsung Global Water Global corporations active in the area of water 2007.4.12 81.2

SME Samsung SME Focus Sound SMEs with strong growth potential 2007.9.10 278.4

Effects of Responsible Investments

Samsung Asset Management pursues long-term rates of returns

by ensuring that corporations in which it invests have not only

healthy balance sheets but also superior track records in the

environmental, human rights, ethical, and social contribution

areas. Moreover, the Company carries out environment-friendly

and socially responsible investments in an effort to promote a

sound investment culture and thus contribute to sustainable social

development.

Samsung Asset Management has established an SRI management

process so as to systematically assess the quality and possibilities

of its investees' social responsibility programs and thus keep its SRI

objectives intact. In addition, the process ensures that financial

products that are developed for the purposes of SRI are managed

in accordance with their original intentions. The Samsung SRI Fund

is one such product, while environmentally-friendly funds are sub-

ject to another process for their unique product characteristics.

Conduct initial screening of target investees through the use of the Company's own CheckESG and Intangible Value Assessment, a leading industry index.

>

1. Selecting

Investment Targets

Inform corporations with healthy balance sheets but weak ESG indicators of their status and advise them to improve accordingly, while putting those with high ESG points but weak balance sheets on a watch list.

>2.Communication

After establishing investment target groups and a list of risk assessment categories, monitor the progress of the target companies as they improve their weaknesses and adjust its SRI portfolio accordingly.

>3.Monitoring

Share with investors and investment target companies information on the progress the companies make in their social responsibility and balance sheets, thereby promoting mutual development.

>4.

Sharing Results

Publicize the societal role and results of SRI through corporate communications and the media, thereby helping corporations active in SRI improve their corporate value and capital bases and promoting the virtuous cycle of capital markets in SRI involvement.

>5.

Publicizing Results

Higher share prices and corporate value

Enhanced image as responsible corporate citizens

Sustainable corporate management due to ESG risk management

Improved social responsibility role of capital markets

Stable long-term rates of returns in equity investments

Fulfilling role as trustee through ESG risk assessment

Leading a healthy investment culture by ensuring sustainable investment performance

Improved transparency in corporate governance

Development of corporate customers, affiliates, and local communities

Improved transparency in corporate governance

"Sound long-term rates of returns and a healthy investment culture"

>

Investees

>


>

Beneficiary

>

Social Role

Developing an SRI

management process

in order to accurately

assess investees' social

contributions and growth

possibilities


2012 Major Results

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds


38 39SAMSUNG ASSET MANAGEMENT FY2012 Sustainability Report38 39SAMSUNG ASSET MANAGEMENT 2013 Sustainability Report38 39SAMSUNG ASSET MANAGEMENT 2013 Sustainability Report

*Ratings by Samsung Asset Management's research team based on investment target companies' ecological, social, and governing aspects**Based on the Intangible Value Assessment system of agencies specializing in assessing corporations' social responsibility and sustainability***Final decision on Investment portion of socially responsible companies

Portfolio Building Process of SRI Funds

Adjust investment weight of socially responsible funds

40% 20%

40%

80%

Check ESG*(Samsung Asset

Management Research)

Financial Factor***

(Samsung Asset Management

Research)

IVA Rating**

ESG Factor

%+ \

*Amount: As of the end of May, 2013 **Date Launched: based on first institutional investors consigned

Date Launched

2007.04.12

Amount (KRW bn)

248.2

Samsung SRI FundSamsung Asset Management manages the Samsung SRI Fund in an effort to meet the needs of institutional investors interested in investing in SRI-related compa-nies and thus contributes to promoting public inter-est. In keeping with the principles of SRI, the Company invests the fund's assets in domestic corporations that excel in social activity and thus remain viable and in-creasingly profitable in the long run.

The Samsung SRI Fund follows the SRI management process comprising five phases, and

through this, practices a dynamic and participatory SRI fund management that encom-

passes communication and performance sharing. The fund utilizes a core-satellite port-

folio strategy, filling 70~80 per cent of its portfolio with SRI corporate equities and the

remaining portion with undervalued blue-chip stocks. By layering SRI items with under-

valued stocks, which have the benefit of being linked to the KOSPI, the benchmark index,

the fund diversifies its market risk. There also is the possibility of an overlap between the

SRI group and the undervalued group thereby creating a common area.

Investment System and Strategy

Featured Fund 01

Funds Management


Equity &Research

Hedge Funds

Global Business


Passive Investments


Pension Funds


Pursuing sustainable operations from the customer, shareholder, employee, social, and environmental perspectives and increasing values for all stakeholders

As beautiful flowers delight everyone around them, Samsung Asset Management warms the hearts of all stakeholders with better values.

Enhancing employee value with various reward systems and benefits and taking an active part in global environmental campaigns through developing various eco-friendly products and programs, we endeavor to make community activism an integral part of our corporate culture. Moreover, by putting compliance and consumer protection before growth and profit, we pursue effective internal controls.

Sustainable Operations

Human Resources

Green Operations

Social Contribution

Risk Management & Compliance Blooming03



Securing Outstanding Human ResourcesHuman Resources

Human Resources Hiring Policy

To identify talents with integrity, perseverance, and other key human traits, Samsung Asset

Management hires new employees among those who have gone through a 8-week summer

internship program. Interns are selected from a pool of applicants, including those with MBA

or PhD degrees from major overseas universities. In addition, by keeping track of high per-

formers in the industry and taking an active part in financial groups' recruitment projects, the

Company builds up a talent pool in order to staff its overseas fixed income, passive investing,

multi-asset management, and other core operations whenever a staffing need rises.

Workforce Composition and Roles

Manage equity or fixed income investments, involve in investment decision making, research and analyze, manage risks, provide market support

Devise marketing strategies, carry out PR and ad activity, develop products, conduct institutional and retail sales

Play the role of backbone in the bottom-up approach management system through corporate value analysis

Manage credit, market, and other risks to the Company's investment portfolio

Conduct compliance and ensure transparent and ethical management

Marketing/Sales


Risk Management

ComplianceFund

ManagerAnalyst

Samsung Asset Management spares no effort to help its employees stay true to the basics of customer service and devote themselves to putting customer interest first.

Samsung Asset Management firmly believes

the key to success in asset management lies in

the caliber of people running the business and

thus makes its utmost effort to recruit and retain

the best talent available. In addition to a profit-

sharing system based on fair and transparent

performance evaluation, the Company provides

employees with opportunities to develop

themselves to their best ability, all in an effort to

grow into a global asset management institution

where the only best want to come and pursue

their career goals.

Professional Manpower (In persons)

114787888

Fund Investment Consultants

Equity Investment Consultants

Derivatives Investment Consultants

Investment Asset Managers

*As of March 2013

Sustainable Operations Human Resources Social Contribution Risk Management & ComplianceGreen Operations


Evaluation and Compensation

Education and Training

Employee Statistics

2010 2011 2012

Total Number* 240 240 222

New Hires 24 21 26

Male 170 166 153

Female 70 74 69

20~30 Age Bracket 38 36 41

30~40 Age Bracket 127 115 98

40~50 Age Bracket 65 73 71

Over 50 10 16 12

In Korea 236 235 217

Stationed Overseas 4 5 5

Local Hires 16 21 22

Turnover Rate** 11.3% 8.8% 21.6%

*Inclusive of standing executives and non-registered executives; exclusive of local hires**Not including employees transferred to subsidiaries or affiliates

Samsung Asset Management conducts a variety of employee education programs to de-

velop quality human resources. To strengthen employee job competencies, the Company

offers its employees a variety of training opportunities, including professional courses run

by trade organizations, certification programs, and overseas OJT. In particular, it actively

supports its employees taking part in job-related certification programs, including those

administered by the Korea Banking Institute. The cyber training center, which is open to

all employees of Samsung financial affiliates, offers courses on financial services business,

financial expertise, leadership, and other related subjects. Also available are online classes

for self-development and job competency improvement, and "Project Team Building" for

helping employees develop a sense of unity and build teamwork. In 2012, expenses on

employee education and training totaled KRW 404 million, while the number of hours

spent on training and education averaged 75 per employee.

Compensation System

Samsung Asset Management has in place performance and competency evaluation sys-

tems to improve individual competency and thus achieve performance results that are

in line with its strategy and vision. The annual performance evaluation is conducted on

all employees except the newly hired or those who have been with the Company for less

than six months. To ensure fairness and objectivity in the evaluation process, the Company

educates its employees on how to evaluate performance twice a year, operates a program

that analyzes the appropriateness of evaluation results, and maintain a channel through

which complaints can be addressed. In performance evaluation, the Company emphasizes

medium to long-term performance and risk management, thereby giving weight rather to

substance than to form. In addition, by practicing its operation philosophy of "Generating

Benchmark-exceeding Returns on Customer Assets," the Company endeavors to develop

the evaluation system into a way of enhancing customer trust.

In addition to the conventional salary system, Samsung Asset Management practices a

performance-based profit-sharing system that values job importance, competency, and

performance more than ranks and seniority. In the second half of 2012, the Company

realigned its compensation system more closely to the characteristics of the asset man-

agement business. The reformed system is designed to gradually increase performance

compensation in proportion to base salaries and thus reward high performers more prom-

inently. By bolstering the objectivity of its evaluation system with rational performance

indicators, the Company is fostering a progressive and dynamic corporate culture that can

attract dedicated and talented people.

Compensation System

Basic Pay Benefits Profit-sharingDevelopment

Education Support System

Basic asset management courses, OJT, legal education

Basic education on asset management

Specialist courses by trade associations, core license acqusition support, overseas training support

In-depth asset management

education

Common courses for each level, cultural classes, cyber education support

Basic knowledge education

Performance Evaluation Process

Evaluator and evalu-atee agree on annual goals to meet

Both parties review the progress of the set goals and discuss ways to improve, if necessary

Both parties review and confirm final evaluaiton results

SetAnnualGoals

InterimReview

Review and Confirm

Performance

Samsung Asset Management improves on its dynamic corporate culture through a fair and transparent compensation system that takes into consideration both employee competency and performance.

Evaluation System



Organizational Culture

No. of Call-in-sick days

*No. of calls-in sick including other reasons

2010 2011 2012

Call-in-sick days 1 0 2

Samsung Asset Management champions the dignity and diversity of individuals. In respect

to basic human rights, the Company does not condone forced labor, wage exploitation,

or child labor under any circumstances. As its management principles make clear to all of

its stakeholders, it does not discriminate people based on their nationality, race, gender,

or religion, and every year conducts employee education programs on human rights and

sexual harassment prevention. In addition, a grievance committee is operated within the

labor-management council to address any human rights-related complaints or violations.

Upon receiving a complaint, the committee is required to inform the reporter of its find-

ings and actions it will undertake. In addition to the committee, the Company runs an

online bulletin system through which employees can report basic human rights violations

anonymously.

As a champion of human rights, Samsung Asset Management offers equal employment

opportunities to female, the handicapped, and war veterans and their immediate family

members. The Company has established various programs designed to support its female

employees in the areas of child bearing and rearing. As a result, the number of female

employees has been steadily increasing, hovering around 30 per cent. As for hiring the

handicapped, the Company gives priority to those with government recommendations

and qualifications. As of the end of 2012, the ratio of physically challenged employees at

the Company stood at 2.3 per cent, nearing the government-mandated minimum ratio

of 2.5 per cent. As for war veterans and their decedents, the Company assigns them addi-

tional points in accordance with the law when hiring new employees. Over the past three

years, there have been no reports of incidents involving gender or place-of-origin discrimi-

nation. To maintain this zero-discrimination record, the Company will continue building up

a corporate culture where diversity is respected and encouraged.

Samsung Asset Management neither has a labor union nor maintains labor-management

relationships based on collective bargaining. Instead of a labor union, it has a Transparency

& Communication (T&C) Committee which convenes once every three months. Attended

by the equivalent number of representatives between three and ten from each side, the

committee deliberates on employee complaints and benefit issues, and ways to improve

personnel and labor management systems. In addition to the regular quarterly meeting,

the committee convenes whenever a major issue arises. To help the committee carry out

its duties, the Company provides the committee with a place to convene and operating

expenses, and holds a workshop once a year to share resolution results and ways for

improvement.

In addition to the T&C committee, the Company operates the "T&C Members Bulletin

Board" and "Anonymous Bulletin Board" on the company intranet and holds regular and

ad-hoc discussion sessions, all in an effort to promote fluid communication between labor

and management.

With a firm belief that employee satisfaction leads to customer satisfaction, the Company

endeavors to offer the best of employee benefits in an effort to create a "workplace where

working becomes fun." By establishing various financial assistance programs, the Com-

pany attempts to help its employees with education expenses for self-development as

well as educating their children. In addition, to help them revitalize themselves through

rest and relaxation, the Company provides financial assistance to employees using leisure

or recreation facilities and runs a mileage system through which employees can build up

Samsung Asset Management communicates with its employees with respect and pursues the best of employee benefits, all in an effort to foster an organization culture in which working becomes fun.

Respect for Human Rights and Diversity

Labor-Management Relations

Benefits and Health Promotion

points that can be converted into cash for their leisure, self-development, sports, and other

related activities. Moreover, the Company has adopted the flexible work hour, maternity

leave, and "family-time" systems, and created a place within the workplace for breast-feed-

ing, leading the industry in the areas of employer support for child-bearing and rearing

and maternity protection.

Samsung Asset Management is also keen on helping employees deal with stress at work

and maintain good health. By holding mandatory health exams via clinic on a regular ba-

sis, the Company helps them stay informed of their health conditions and take remedial

actions, if necessary, against any illness at the earliest stage possible. In addition, by pro-

viding a comprehensive medical insurance coverage to employees and their immediate

family members, it enables them to focus on overcoming illnesses without worrying about

medical expenses. Aware of its high-stress business nature, the Company runs a psychol-

ogy counseling program through which a psychology counselor holds a one-on-one ses-

sion once a week on its premises. In addition, to help employees deal with stress at work

and improve their health at the same time, the Company operates a leisure/sports center

and maintains membership at many sports centers.

Female Employees (%)

Handicapped Employees (%)

2012

2.3

2011

1.7

2010

0.8

2012

31.1

2011

30.8

2010

29.2



Green Operations

Samsung Asset Management is taking part in the worldwide effort to combat environmental crises by reducing energy consumption, greenhouse gas emissions, and using disposable goods.

Green Office

Energy Consumed (kwh, m3)

Greenhouse Gas Emissions (tCO2e)

Use of Eco Cups

Samsung Asset Management makes concerted efforts together with its employees to re-

duce its energy consumption and greenhouse gas emissions. In winter when energy con-

sumption peaks, the Company runs an energy-saving campaign and solicits active par-

ticipation from its employees. In particular, the recent unusually cold winters, which are

widely believed to be a sign of climate change, set a new record in the amount of energy

used in Korea. As a nuclear power station was forced to shut down a couple of its plants

in 2012, concerns over energy shortage have multiplied. To help tackle the issue of great

potential social, political and economic impacts, last winter the Company launched an in-

tensive energy saving campaign. The campaign centered on educating employees on the

seriousness of the energy problem facing the nation and on the amount of energy that can

be saved with seemingly insignificant steps. When the office temperature was lowered to

20 degrees Celsius, the Company responded by distributing lap blankets and employees

utilized thermal clothing.

* Based on domestic business sites (HQ). The Company occupies four office floors as its business premises, and energy consumption was calculated based on the total energy use of the building divided by the ratio of the of-fice space it occupies to the total space of the building.

* Based on domestic business sites (HQ). Greenhouse gas emissions were calculated based on the Company's energy use in accordance with the national greenhouse gas energy target management guideline.

As deforestation has become a global issue of late, a movement is taking off across the

world against the use of paper cups and other disposal products made of trees. Samsung

Asset Management has been taking part in this worldwide conservation movement by

actively encouraging the use of environmentally-friendly cups on company premises. In a

2012 employee survey, 86.1 per cent of the participants responded positively to the idea

of using environmentally conscious cups, and in response to this overwhelming response,

the Company ordered 500 "eco cups" bearing the company logo and distributed them to

those who had applied for such cups.

Energy Conservation Campaign

Samsung Asset Management stays committed

to reducing environmental impacts such as

greenhouse gas and automobile emissions,

effluents and waste and other bi-products of

business operations by practicing green operations.

Though asset management contributes to

these environmental impacts far less than other

industries, as a corporate member of the global

village, the Company is fully aware of its share of

social responsibility, and accordingly, will continue

to improve its green operation practices, helping

preserve the delicate balance of the eco-system and

thus building sustainable growth.

Scope 1

Scope 2

2012

2012

829,690

54.7

386.3

2011

2011

712,276

43.8

327.5

2010

2010

656,075

38.7

309.3

24,673

19,76417,452

Electricity

LNG

441.0

347.0371.3



35

Industry goods

Utilities

IT

Other

Investment Ratio by Industry (%)


26

14

25

Investment Ratio by Region (%)

USA

Europe

Asia/Emerging


27

26

47

37

18

kwh

Samsung Global Alternative Energy Fund

tCO2eO2

Fueled by growing needs for new energy in the face of dwindling oil supplies, the alternative en-

ergy, renewable energy, and other industries similar in kind have been enjoying robust growth,

in which growing investor interest has played no small role. Despite these robust industry growth

and strong investor interest, however, the alternative energy market has been in the doldrums

of late owing mainly to the ongoing Eurozone debt crisis and a resulting wave of corporate re-

structurings, thereby dragging down the performance of industry-specific investment funds, in-

cluding the Samsung Global Alternative Energy Fund. But thanks to its cost competitiveness and

measured selection of items with relatively superior market positions, the fund has been able to

outperform its peers over the past three years. Looking ahead, Samsung Asset Management will

continue to focus on identifying undervalued alternative energy corporations through compre-

hensive analysis of the business strategies, fundamentals, competition structure, and other re-

lated factors of target corporations, thus pursuing consistent benchmark-topping performance.

*BM index: MSCI World Hedged*90% + call interest rate*10%

Fund Performance

35

Efficiency

Wind power

Solar power

Waste incineration

Other

Investment Ratio by Sector (%)


10

8

2737

18

Featured Fund 02

Sustainable Operations

In response to growing concerns over climate change and energy resources depletion, Samsung Asset Man-agement funds the business operations of corpora-tions actively engaged in solar energy, wind power, energy efficiency improvement, and other alternative energy-related areas.

Human Resources Social Contribution Risk Management & ComplianceGreen Operations

*Amount: As of the end of May, 2013

Date Launched

2007.06.25

Amount (KRW bn)

30.7



Industry goods

Utilities

Other

35

26

39

Investment Ratio by Industry (%)


Water supply

Water treatment

Waster water treatment

46

33

21

Investment Ratio by Sector (%)


Date Launched

2007.04.11

Amount (KRW bn)

75.1

The ongoing water shortage problem worldwide is ex-pected to worsen, leading many experts to forecast that one-third of the world's population will have suffered from water shortage by 2030. What's worse, water-rich regions are so far apart from those in need of water that transporting would be prohibitively expensive for the latter, which comprises mostly the poor, thereby making the social and political impacts of the short-age problem all the more dire. This problem, which is potentially more dangerous to the world peace than the current oil problem, can only be reduced by the growth of the water industry. By building dams, laying in waterworks, upgrading water-supply infrastructure facilities, and better treating industrial and household effluents, the water industry can increase the availa-bility of water in general, lowering the gap between water-rich and poor regions, and improve the quality of water in many areas.

Samsung Global Water Fund

The water sector has been generating return rates that have exceeded the overall market

index since 2000, reflecting growing investor interest in the development of water infra-

structure and the robust growth of the industry. The Samsung Global Water Fund, in par-

ticular, has turned in impressive rate performances since the Company started to manage

the fund in December 2010, recording a cumulative rate of 28.6 per cent returns since the

direct management, 18.1 percentage points higher than the benchmark. Upbeat about

the future performance of the fund, the Company will shift its focus to the long-term fun-

damentals of water-related industries and invest in water supply and treatment industries

with high growth potential.

*Water index: S&P Global Water Index, overall market index, MSCI Word Index, BM index, MSCI World Hedged*90% + call interest rate*10%

Fund Performance


Asia/Emerging

North America

Europe

37

19

Investment Ratio by Region (%)

44

Featured Fund 03 ℃

H2O



An Industry Leader Practicing "Love Your Neighbors"

Social Contribution

Initiatives for Multicultural Families

Samsung Asset Management sponsors initiatives that support children from the most

marginalized and disadvantaged communities by partnering with a wide range of insti-

tutions such as childcare centers, after-school study programs, and community centers.

Since 2004, we have been partnering with the Bundo Study Room project which provides

after-school enclaves for children of low-income families, and running science experiment

classes. Our employees volunteer as teachers to lead a class of 30 students in an effort

to nurture the creativity of the children and form long-lasting emotional bonds. We also

started sponsoring the House of Isac orphanage from 2000 to provide orphans with ac-

cess to cultural venues and activities. For instance, last year, our marathon club members

went on an outing with 40 children of the orphanage to a popular water park. In 2005, our

employees and children with disabilities from the Ever Green Tree Welfare Center, another

partner of ours, went on an excursion to the theme park Everland.

At the end of each year, our employees participate in 'kimchi' makings at our partner day-

care centers and share the 'kimchi' with organizations we sponsor. In May 2012, we do-

nated KRW 100 million for the construction of a Children's Rehabilitation Hospital with our

Company spokesmodel, actor Cha In Pyo. We have continued to expand our CSR programs

for orphans and other marginalized children to support their development and growth as

productive social participants.

Since 2012, we have partnered with the Multicultural Family Support Center in Hannam-

dong, Yongsan-gu to support the multicultural families' smooth integration into Korean

society. Established to support the adaptation of multicultural families from the Philip-

pines, Vietnam, and Pakistan, the Yongsan Multicultural Family Support Center offers pro-

grams introducing children to Korean culture and networks with members of the local

community. In particular, the Center offers Korean language programs, cooking classes,

and after-school classes for the children. In 2012, members of our cooking club and wine

tasting club participated in the Multicultural Family Cooking Competition. In 2013, we plan

to expand the scope of the volunteer activities to include gardening and warehouse clean-

ing and encourage more employees to participate.

Over 90 per cent of our employees take part in a monthly donation drive and the number of hours they volunteered for community service activities reached 1,795, making Samsung Asset Management an industry leader practicing teachings on loving one's neighbors.

Initiatives for Children and Teenagers

To build a happier and more prosperous society

for all, Samsung Asset Management is taking the

lead in supporting a wide range of CSR initiatives

for children, multi-cultural families, and rural

communities. Employee participation in CSR

activities is part of our organizational culture and

our employees voluntarily take part in various

activities to contribute to mutual prosperity.

Going forward, we will continue to carry out

our social responsibility and explore all options

available to us to promote shared value.

Bundo Study Room

House of Isac

Ever Green Tree Welfare

Center

Gwangsuk Farm

Shinpyung Agricultural Cooperative

Partners for CSR Activities


MulticulturalFamily

Support Center


By partnering with the Shinpyung Agricultural Cooperative located in Dangjin-si, Chun-

gcheongnam-do, we have run the Rural Communities Experience Program since 2007 to

support local farmers during busy seasons and revitalize the rural economy. Every June

and October, our employees and their families help the farmers with harvesting potatoes

and pears then donate the agricultural produce bought on site to childcare-centers and

other partner organizations.

Initiatives for Rural Communities

9.3

25 26 28

80.8

Social Contribution Program Volunteers and Trend (In persons, %)

2000

22.7

2001

21.7

2002

21.5

2003

62

44.3

2004

149

96.1

2005

151

97.4

2006

158

98.8

2007

204

96.2

2008

208

91.3

2009

234

96.2

2010

224

93.3

2011

216

96.9

2012

172

No. of volunteers

Ratio of participation

Social Contribution Expenses (KRW in million)

*Employee donations made through a bank account opened by the Company** In 2010, employees donated their stipend for unused annual leave which amounted to KRW 20 million for the expansion

after-school facilities.

201220112010

25.8

35.5**

27.9

10.69.3

25.1


Donation-exclusive account*

1

2

4

3

1. Rural Communities Experience

Program

2. A year-end Kimchi making at a

children center

3. A youth center including study

rooms and day-care facilities

4. Company volunteers at work in

the countryside



Most employees in Korea dip into their severance pay before their retirement; therefore, severance pay alone is too often not enough to secure a comfortable retire-ment lifestyle for many. Also, there is a wide gap be-tween the actual pension benefit that retirees receive and the annual income that they expect, thereby mak-ing it more difficult to fully plan for their life after re-tirement. By managing a wide range of pension funds that cater to the needs of the customers, Samsung As-set Management stands by our customers as a strong business partner. Of these funds, the Samsung Classic Pension Fund is gaining popularity as an installment-type long-term investment vehicle for its autonomy owing to its umbrella fund style as well as its focus on stability and profitability.

Samsung Classic Pension Fund

Fund Composition

Fixed Income

Low Risk Medium Risk High Risk Very High Risk

Domestic Fixed Income/Equity Hybrid Domestic Equity Overseas Equity

Korea Fixed

Income

30 Fixed Income Hybrid

60 Equity Hybrid

Korea Equity Index

Korea Equity Active

SME Equity

Asean Equity

China Equity

GreatChina Equity

Return Rates since Inception

AmountDate of

Inception

Samsung Classic Pension Securities Conversion-type1 (fixed income) 64.02 16.4 2001.02.07

Samsung Classic Pension Securities Conversion-type1 (equity) 116.20 30.8 2008.12.30

Samsung Classic 30 Pension Securities Conversion-type1 (hybrid fixed income) 36.92 6.8 2008.12.23

Samsung Classic Index Pension Securities Conversion-type Investment Trust 1 (equity) 50.69 120.4 2006.01.10

Samsung Korea SME Securities Investment Trust (equity) 28.97 4.3 2012.05.16

Samsung Asean Securities 2 (equity) 176.98 98.0 2007.04.02

Samsung China Securities 1 (equity) 57.10 78.7 2008.06.23

Samsung China2.0 Mainland Securities 1(equity) 29.03 273.6 2009.02.27

Samsung-for-You Samsung Group Value Index Securities Fund 1 (equity) 53.83 379.2 2009.05.29

Fund Performance (%, KRW in billion)

*As of the end of May, 2013


Date Launched

2001.02.07

Amount (KRW bn)

1,008.2

The Samsung Classic Pension Fund comprises nine product groups including domestic

fixed income, hybrids of domestic fixed income/equity, domestic equity, and overseas eq-

uity types. Being an umbrella fund, it allows customers to move their investments around

among the products without additional transfer fees and within a daily limit and thus to

respond to change either in the market environment or in their investment objectives.

Investment System & Strategy

Featured Fund 04

58 SAMSUNG ASSET MANAGEMENT 2013 Sustainability Report 59



Management PrinciplesRisk Management & Compliance

Samsung Group has established management principles and codes of conduct, which

serve as guidelines for the business decisions and actions all employees should take, in

order for its subsidiaries to comply with all legal, ethical, and social obligations of a model

corporate citizen. As a member of the group, Samsung Asset Management practices the

principles on a daily basis. Specifically, the Management Principles Execution Committee

sees to it that all executives follow the principles and codes of conduct, and steers the

Company towards becoming an institution in which ethics, transparency, and trust are an

integral part of everyday business vocabulary.

Samsung Asset Management practices ethical management in all of its business operations by observing the management principles of Samsung Group which set mental and physical guidelines for all employees.

Samsung Asset Management complies with all

business laws and industry regulations, condones

no unethical conducts, and carries out business

operations in a honest and fair manner based on its

high ethical and moral standards. In making business

decisions, the Company considers laws, regulations,

and internal control standards before estimating

AUM growth and rates of returns, all in an effort to

build up a reputation as the most ethical institution

that all stakeholders respect. Complying with laws and ethics

• We respect dignity and diversity of individuals.• We compete in a fair manner obeying law and

business ethics.• We ensure accounting transparency with accurate

accounting records.• We take a neutral stance distancing ourselves

from interfering in politics.

1. Law & Ethics

Maintaining a sound organizational culture

• We create a strict division between private and public spheres in all activities.

• We protect and guarantee intellectual property (IP) of the Company and others.

• We create a sound organizational culture.

2. Clean Culture

Respecting customers, shareholders, and employees

• We always provide customers with the best service.• We purse shareholder-oriented management.• We try to improve the quality of employees’ lives.

3. SAMSUNG

People

Valuing the environment, safety, and health

• We pursue environmentally friendly management.• We value safety and health of human beings.

Fulfilling social responsibility as global corporation

• We fulfill our basic responsibility as a corporate citizen.• We respect the social and cultural characteristics of

the local community and contribute to improvement in the quality of local citizens' lives.

• We establish a relationship for mutual prosperity with our partners.

4. Environment,

Safety & Health

5. Social

Responsibility



Compliance

At the start of every year, all executives of the Company are required to pledge their com-

pliance with internal control standards through a written oath, while all employees and

units conduct their control self assessment every quarter. The Company, for its part, closely

monitors for violations of laws, trust contract terms, or guidelines in the management of

customer assets. In addition, the Company heightens the importance of compliance and

trust-based business by educating employees on compliance and graft prevention via on-

line channels. The Company also reflect employees’ ethics and extent compliance in their

competency and performance evaluation, respectively, in an effort to have ethical man-

agement as the foundation.

By establishing a"whistleblower channel" on its website ([email protected]), the

Company encourages employees to report all violations of internal control standards,

codes of conduct, and business regulations. These violations include embezzlement of

funds, bribery, unbecoming conduct of senior managers, demanding or offering of money

or undue gifts or entertainment, inappropriate holding of the shares of unlisted business

affiliates, double employment of executive officers, sexual harassment or related distur-

bances of work, and other morally apprehensive incidents involving the rank and file of

the Company. All reports are real name-based to ensure the authenticity of reports, but

are handled confidentially to protect the identities of reporters. If a report is related to the

internal control standards, the Chief Compliance Office reports it to the Audit Committee

which, after deliberation, informs the officer of its decisions and, if necessary, passes them

on to the Personnel Committee.

As a result of these efforts, no violation has taken place nor report made with respect to

corruption or wrongful conduct.

Internal Control Standard Violation Prevention

Samsung Asset Management has been enforcing compliance even before it officially became

an industry mandate, with a view that customer trust is the foundation of business manage-

ment. To comply with government ordinance, manage assets in a sound manner, and protect

investor rights, the Company has established internal control standards which define the basic

work procedures for all employees to follow in their management of customer assets. In ad-

dition, by instituting a "control self assessment" system, the Company assists employees in

assessing their compliance with industry ordinance and internal control standards.

In overseeing internal controls, the Company has defined clear roles for the BoD, top manage-

ment, and compliance officers. For effective compliance oversight, the Chief Compliance Offic-

er is selected by the BoD and thus given complete independence in its job execution. Financial,

management, compliance, operation, and IT audits are conducted annually by independent

third parties in accordance with Audit Committee guidelines. All matters and areas of improve-

ment brought about by the audits are thoroughly reviewed and addressed accordingly.

Internal Controls

Internal Control Flow Chart

• Verify reasonableness of internal controls

• Verify suitability of results of self-evaluation

• Perform Audit Committee duties

• Measure and manage by risk type

• Review performance, credit, atypical and product risks

• Set up a company-wide contingency plan

• Early warning system• 24/7 Risk index monitoring• Compliance check system• Pre-allocation manage-

ment system

• Manage compliance officer selection and reports

• Review product materials • Control outbound

documents • Manage legal and opera-

tional risks

By unit

• Business laws/industry regulations

• Internal control matters• Company rules/policies

By individual

• Internal control standard matters

BoD

CEOAudit Committee

Audit Team

Audit Activity

RM

RM ActivityAsset

Management Inspection

Monitoring of Whole Asset Management

Process

Compliance

Internal Controls

Compliance Monitoring

Self-diagnose System

Remedial Actions Taken in 2012

Dates of Action Taken Reason Action Taken

2012.11.23 Irrational computation of derivatives risk evaluation value Admonition

Viewing compliance as an integral part of business management, we enforce strict internal control standards and anticorruption guidelines.



In the event of a risk limit breach, the Company promptly takes steps to eliminate risk fac-

tors according to the clearly defined contingency plan, analyzes the event in detail, and

updates its asset management guidelines accordingly so as to prevent a reoccurrence of

such a breach.

Risk Management

As risk management is the other side of asset management, the Company spares no effort to manage risks to its utmost and thus grow customer assets in the safest manner possible.

Risk Factor Definitions & Control Indexes

Samsung Asset Management strives for an equilibrium of control and cooperation be-

tween its asset and risk management with the help of advanced risk management sys-

tems and top-notch experts. The Company sets tolerable risk limits, pursues the maximum

earnings possible with pre-defined limits, and seeks best-in-class performance through its

long-running stable track record. For this, it sets investment guidelines such a way as to

enable thorough risk management and ensures that the guidelines are strictly followed by

all of its asset managers.

The Risk Management Committee is the top-most body in the area of risk management,

reviewing and assessing all risk-related matters and making decisions in accordance with

guidelines set by the Board of Directors. Though all risks are monitored and controlled by

one central unit, for the purpose of managing each type of risk in line with the objective

and strategy defined for each business area, each risk factor is clearly defined and man-

aged by a dedicated unit.

Samsung Asset Management runs a systemic risk management system against all risks

that can arise during the product designing, launching, and managing stages. The com-

prehensive risk management system systematically manages performance risk, credit-

concentration risk, non-conforming product risk, other risk types that can be developed

during asset management. By clearly defining risk management guidelines, principles,

and asset management guidelines, with an emphasis on preemptive risk management,

the Company assesses strategy risk in the product development process and ensures that

products are managed in accordance with established guidelines.

The Company also checks its asset managers' compliance with established guidelines and

management indices on a daily basis. In addition, it monitors 24/7 fund duration compli-

ance, asset transactions, risk limits compliance, and liquidity status by establishing the core

control index for each risk factor within investment guidelines.

Risk Management Policy

Risk Management Units and Committees

Risk Management System

Category Definition Assement Index/Tool

Market Risk

Risk associated with the uncertainty of future asset value due to change in stock prices, interest rates, exchange rates, and other market-related factors

• BM tracking error• Pre-tracking error• Standard deviation, beta • Scenario analysis• Sector & item transfer limit

Credit Risk

Expected or unexpected losses that could result from the investee of collective investments or a counterparty being unable to honor its payment obiligation

• Financial ratios• Credit rating• Same-person exposure

Liquidity Risk

The risk of being unable to meet financial obligations arising from maturity mismatch and unexpected demand or supply of funds

• Liquid to illiquid asset ratio • Transfer ratio of

low-liquidity assets • Ratio of liquid assets trade

volumes

Operation Risk

All financial and non-financial risks arising in the course of business operations due to an inadequate operation system or human errors, intentional or not, which may adversely affect the investor's capital

• Operation process

Investment Guideline Operation

• Equity : Stock Universe and model Portfolio operation

• Fixed income : Credit Universe, duration limits

Credit Risk Management System

• Credit rating standards, exposures• Strategy risk prior to product

development

Risk Monitoring

• Equity : control transfer fees by item and sector, Track errors

• Fixed income : check duration, credit changes, liquidity

Daily Check

• Check for violation of guidelines

Risk Dissolution Process

• Clarify range, duration, other elements for gradual alleviation in event of risk escalation

• Systemic reporting :Team leader→Division head→RM committee feedback

• Cause analysis • Sep up and report prevention plan

Risk Management Process

Post-management

Risk Management Units

Monitors market, credit, liquidity risks

Oversees compliance with legal and operating risks as well as internal control standards and monitors the overall asset management process

RM Team

Compliance/Audit

Pre-management

Interim Management

No. of Times Risk Management Committee Convened

20122011

13

2010

15

13



Financial Products & Information Dissemination

Initiatives Taken to Protect Customer Information

Practicing management by principle by putting customer interest first Samsung Asset Management does its best to keep the personal infor-mation of its customers from being used for any unauthorized purposes.

Samsung Asset Management adheres to sound financial management by basing its sales

on good faith, focusing on qualitative growth rather than quantitative growth. We pursue

a Win-Win strategy aimed both at corporate growth and at customer satisfaction by gen-

erating profits in a stable manner through robust business operations instead of pushing

for more sales on consignment. We do not sell or manage funds with risks that are not in

line with our investment objectives. We also rigorously review all such materials provided

to customers as investment guidelines to prevent errors or misunderstandings in advance.

Samsung Asset Management conducts collective investment through securities compa-

nies, banks, and insurance companies, while limiting its management of the National Pen-

sion Investment Pool to individual and select institutional investors. As such, our client

database is limited to the National Pension Service and nine corporations with no personal

information on the individual investors. We currently use Koscom's PowerBase system to

manage our customer information. Since the enactment of the Privacy Act in September

2011, we have established and implemented plans to manage personal information. Ac-

cordingly, the compliance officer oversees the personal information protection process

with support of two individuals designated to handling and safe-keeping customer infor-

mation. In addition, a comprehensive system is in place to secure the protection of person-

al information, conduct regular audits, and educate employees on protecting individual

information online.

Samsung Asset Management operates on its website fund guidebook programs for

funds sellers. This guidebook contains a collection of key knowledge and consult-

ing methods proven effective in selling various funds to prospective investors. The

knowledge and methods suggested in the book are selected from opinions of many

experts in various fields and arranged by topic and situation.

The Fund management report is the most direct communication channel through which we

reach customers; nevertheless, many readers have acknowledged that the financial jargon

used in the reports make it difficult for the general public to understand. Samsung Asset

Management has released guidelines for recommended terminology in its fund manage-

ment reports, a first in the industry, to publish reports that are more accessible to average

customers. As a result, we won a grand prize at the "1st Easy-to-understand Fund Manage-

ment Report" contest conducted by the Korea Investors Protection Foundation in July 2011.

After changing the website design to make it more accessible to people with disabilities,

we obtained the Web Accessibility Certification Mark in May 2013. The Web Accessibility

& Usability Product Valuation of Korea grants certification marks to websites whose infor-

mation and functionality features are accessible to all users regardless of age or disability.

Having revamped the website, we now focus on providing access to all users with ease

and convenience. All videos are captioned for hard-of-hearing users while images are pro-

vided with detail textual descriptions to allow visually impaired users to use screen readers

for a more complete understanding of the content. For those who have difficulty using

the mouse, the website can be navigated with simple strokes of a few keys. In addition,

the mobile website has been upgraded for users of smart phones or tablet PCs. We will

continue to reach out to more citizens with different disabilities by reflecting their various

needs in the management of the website.

Investment Principle-driven SalesInitiatives Taken to Protect Customer Information

Easy-to-understand Fund Management Reports

Initiatives to Improve Web Accessibility for People with Disabilities

Fund types, tax benefits, and other basic knowledge sellers should know

Investment propensity analysis, investment planning, and other topics proven effective methods

1. Basics of Fund Consulting

2. How to Recommend Fund

Subscription

Categorization of funds according to risk/return profiles and description of core characteristics by fund

Fund selection, fund subscription documentation, calculation of fund returns, and other topics to be covered prior to fund investment consulting

3. Key Points in Describing Funds

by Type

4. Preparation for Sale of Funds

Information and criteria useful in selecting funds appropriate for prospective fund investors

How to respond and manage effectively when funds perform below or above expectations

5. How to Select "Good" Funds

6. How to Manage Funds According to

Market Change

Fund Guidebook

Composition of the Fund Guidebook

Easy-to-understand Fund Report

Certificate for Website Outstanding in Accessibility


Pursuing sustainable growth with patience together with all stakeholders based on best-in-class performances, award-winning products and services, and market dominance

Assets under management which have nearly doubled over the past eight years to the industry's largest total; consistent earnings performances not only in equity-type funds but also in fixed income, pension, exchange-traded, and hedge funds led to the successful growth of innovative investment products and award-receiving services. These are just a few of the best and fruitful outcomes harvested by Samsung Asset Management in FY2012. As it takes great care and patience to nurture and grow a seed until it bears fruits for the delight of many, we will continue to pursue sustainable growth with a long-term perspective together with all stakeholders.

Performance Outcomes

Separate Statements of Financial Position

Separate Statements of Comprehensive Income

Separate Statements of Changes in Shareholders' Equity

Separate Statements of Cash Flows

Consolidated Statements of Financial Position

Consolidated Statements of Comprehensive Income

Independent Auditors' Report

Internal Accounting Control System (IACS) Review Report

Harvesting04



Separate Statements of Comprehensive IncomeSeparate Statements of Financial Position

(KRW) (KRW)Samsung Asset Management Co., Ltd. Samsung Asset Management Co., Ltd.


2013 2012

Assets

Ⅰ.Cash and cash equivalents 3,211,172,549 1,304,312,999

Ⅱ.AFS financial assets 300,000,000 300,000,000

Ⅲ.Held-to-maturity financial assets - 10,000,000,000

Ⅳ.Loans and receivables 265,794,967,632 193,118,691,456

Ⅴ.Investments in subsidiaries 8,297,265,111 11,596,397,070

Ⅵ.Property, plant and equipment 4,351,567,437 5,737,711,370

Ⅶ.Intangible assets 11,656,135,432 12,093,653,909

Ⅷ.Deferred tax assets 3,435,555,802 121,584,486

Ⅸ.Other assets 3,533,047,187 3,285,671,727

Total assets 300,579,711,150 237,558,023,017

Liabilities

Ⅰ.Customers' deposits for beneficiary 76,846,893,490 22,933,629,959

Ⅱ.Other financial liabilities 6,687,150,315 4,698,113,585

Ⅲ.Provisions 609,012,688 585,583,120

Ⅳ.Retirement benefit obligation 983,565,183 972,586,639

Ⅴ.Income tax payable 6,762,748,445 8,252,941,000

Ⅵ.Other liabilities 1,067,675,776 1,578,320,711

Total liabilities 92,957,045,897 39,021,175,014

Shareholders' Equity

Ⅰ.Capital stock 93,430,000,000 93,430,000,000

Ⅱ.Other contributed capital 38,431,670 38,431,670

Ⅲ.Retained earnings 114,154,233,583 105,068,416,333

Total shareholders' equity 207,622,665,253 198,536,848,003

Total liabilities and shareholders' equity 300,579,711,150 237,558,023,017

2013 2012

Ⅰ.Operating revenue 137,092,897,562 131,266,700,512

1. Fee revenue 127,576,674,949 121,560,797,187

2. Interest income 9,446,179,287 8,971,741,460

3. Gain on foreign currency 70,043,326 62,631,672

4. Other income - 671,530,193

Ⅱ.Operating expenses 90,960,752,630 81,545,459,420

1. Commission expense 10,534,391,124 8,467,930,713

2. Interest expenses 3,385,052,175 2,984,098,479

3. Loss on foreign currency 37,055,305 108,391,813

4. Selling expenses 11,385,965,057 9,085,965,526

5. Maintenance expense 65,594,859,401 60,880,833,379

6. Other operating expense 23,429,568 18,239,510

Ⅲ.Profit from operating activities 46,132,144,932 49,721,241,092

Ⅳ.Non-operating revenue and expenses (1,060,630,810) (283,786,694)

1. Non-operating revenue 109,231,920 64,320,400

2. Non-operating expenses 1,169,862,730 348,107,094

Ⅴ.Impairment profit and loss on investments in subsidiaries (3,299,131,959) (5,783,721,940)

1. Impairment loss on investments in subsidiaries 3,299,131,959 5,783,721,940

Ⅵ.Income before income tax 41,772,382,163 43,653,732,458

Ⅶ.Income tax expense 9,329,064,913 12,439,792,128

Ⅷ.Net income 32,443,317,250 31,213,940,330

Ⅸ.Other comprehensive income - -

Ⅹ.Total comprehensive income 32,443,317,250 31,213,940,330

XI.Earnings per share

1. Basic earnings per share 1,736 1,671

As of March 31, 2013 and 2012 For the years ended March 31, 2013 and 2012

*Based on separate statements (K-IFRS) *Based on separate statements (K-IFRS)

Separate Statements of

Financial Position


Comprehensive Income


Changes in Shareholders' Equity


Cash Flows

Consolidated Statements of

Financial Position



Independent Auditors'

Report

Internal Accounting Control System (IACS)

Review Report


Separate Statements of Cash FlowsSeparate Statements of Changes in Shareholders' Equity

Samsung Asset Management Co., Ltd.

*Based on separate statements (K-IFRS)

Performance OutcomesSeparate

Statements of Financial Position






Cash Flows


Financial Position




Report


Review Report

(KRW)

For the years ended March 31, 2013 and 2012

Capital Stock Other Contributed Capital Retained Earnings Total

Balance at April 1, 2011 93,430,000,000 38,431,670 92,540,476,003 186,008,907,673

Dividends - - (18,686,000,000) (18,686,000,000)

Total other comprehensive income - - 31,213,940,330 31,213,940,330

Net income - - 31,213,940,330 31,213,940,330

Balance at March 31, 2012 93,430,000,000 38,431,670 105,068,416,333 198,536,848,003

Balance at April 1, 2012 93,430,000,000 38,431,670 105,068,416,333 198,536,848,003

Dividends - - (23,357,500,000) (23,357,500,000)

Total other comprehensive income - - 32,443,317,250 32,443,317,250

Net income - - 32,443,317,250 32,443,317,250

Balance at March 31, 2013 93,430,000,000 38,431,670 114,154,233,583 207,622,665,253

(KRW)Samsung Asset Management Co., Ltd.


2013 2012

Ⅰ.Cash flows from operating activities 37,382,649,278 38,691,724,664

1. Cash generated from operations 45,038,324,055 36,649,027,854

Net income 32,443,317,250 31,213,940,330

Retirement benefits 2,277,321,549 1,862,090,715

Depreciation 1,971,523,879 1,492,501,214

Amortization of intangible assets 576,149,711 572,673,498

Impairment loss on intangible assets 863,267,550 -

Loss on foreign exchange translation 22,917,886 9,998,152

Provisions for restoration 23,429,568 18,239,510

Income tax expense 9,329,064,913 5,783,721,940

Interest expenses 3,385,052,175 2,984,098,479

Impairment loss on loans and receivable assets - 42,921,501

Loss on disposal of property, plant and equipment 13,431,396 237,510,635

Impairment loss on investments in subsidiaries 3,299,131,959 5,783,721,940

Gain on foreign exchange translation (87,976) (830,934)

Interest income (9,446,179,287) (8,971,741,460)

Gain on disposal of property, plant and equipment (39,730,276) (43,000,000)

Reversal of provision for restoration - (35,166,557)

Changes in operating assets and liabilities 319,713,758 (4,301,651,109)

Decrease (increase) in loans and receivable assets (52,659,932,435) 74,196,881,669

Decrease (increase) in other assets (223,134,419) 1,002,466,631

Increase (decrease) in customers' deposits for beneficiary 53,913,263,531 (77,748,091,219)

Increase (decrease) in other financial liabilities 2,066,505,021 (523,192,062)

Increase in provisions - 367,685,707

Increase (decrease) other liabilities (510,644,935) 580,117,620

Payments of severance benefits (5,006,001,920) (4,285,924,790)

Succession of severance benefits from affiliates 1,114,750,000 3,029,600,000

Decrease in retirement pension plan assets 2,705,934,543 542,494,255

Succession of retirement pension from affiliates (1,081,025,628) (1,463,688,920)

2. Interest received 9,962,992,359 8,137,824,137

3. Interest paid (3,485,438,352) (3,032,853,177)

4. Income tax paid (14,133,228,784) (3,062,274,150)

752013 Sustainability Report74 SAMSUNG ASSET MANAGEMENT74 SAMSUNG ASSET MANAGEMENT

(KRW)Samsung Asset Management Co., Ltd.

*Based on separate statements (K-IFRS)


Consolidated Statements of Financial Position

(KRW)Samsung Asset Management Co., Ltd. and its Subsidiaries

2013 2012

Ⅱ.Cash flows from investing activities (12,118,289,728) (31,142,905,338)

1. Cash inflows from investing activities 170,258,608,063 120,356,888,479

Decrease in term deposits 157,000,000,000 107,000,000,000

Proceeds from disposal of held-to-maturity investments 10,000,000,000 10,000,000,000

Decrease in loans and receivable assets 1,314,679,122 1,363,807,679

Decrease in deposits 1,250,000,000 1,801,291,400

Disposal of property 151,279,941 43,000,000

Disposal of intangible assets 542,649,000 148,789,400

2. Cash outflows for investing activities (182,376,897,791) (151,499,793,817)

Increase in term deposits 179,000,000,000 134,000,000,000

Increase in loans and receivable assets 744,000,000 1,171,097,210

Increase in deposits 377,989,000 9,928,146,000

Acquisition of property 710,361,007 5,573,600,727

Acquisition of intangible assets 1,544,547,784 826,949,880

Ⅲ.Cash flows from financing activities (23,357,500,000) (18,686,000,000)

1. Cash inflows from financing activities - -

2. Cash outflows for financing activities (23,357,500,000) (18,686,000,000)

Payment of cash dividends 23,357,500,000 18,686,000,000

Ⅳ.Net increase (decrease) in cash and cash equivalents(I + II + III) 1,906,859,550 (11,137,180,674)

Ⅴ.Cash and cash equivalents, beginning of year 1,304,312,999 12,441,493,673

Ⅵ.Cash and cash equivalents, end of year 3,211,172,549 1,304,312,999

2013 2012

Assets

Ⅰ.Cash and cash equivalents 7,076,765,211 2,395,570,728

Ⅱ.AFS financial assets 300,000,000 300,000,000

Ⅲ.Held-to-maturity financial assets - 10,000,000,000

Ⅳ.Loans and receivables 267,880,892,638 201,174,675,155

Ⅴ.Property, plant and equipment 4,466,685,556 5,920,663,541

Ⅵ.Intangible assets 11,975,605,232 12,415,624,259

Ⅶ.Deferred tax assets 3,435,555,802 1,090,822,657

Ⅷ.Other assets 3,688,597,236 3,515,646,008

Total assets 298,824,101,675 236,813,002,348

Liabilities

Ⅰ.Customers' deposits for beneficiary 76,846,893,490 22,933,629,959

Ⅱ.Other financial liabilities 6,459,634,553 3,953,092,916

Ⅲ.Provisions 609,012,688 585,583,120

Ⅳ.Retirement benefit obligation 983,565,183 972,586,639

Ⅴ.Income tax payable 6,762,748,445 8,252,941,000

Ⅵ.Other liabilities 1,067,675,776 1,578,320,711

Total liabilities 92,729,530,135 38,276,154,345

Shareholders' equity

Ⅰ.Capital stock 93,430,000,000 93,430,000,000

Ⅱ.Other contributed capital 38,431,670 38,431,670

Ⅲ.Components of other capital 145,987,741 314,116,183

Ⅳ.Retained earnings 112,480,152,129 104,754,300,150

Total shareholders' equity 206,094,571,540 198,536,848,003

Total liabilities and shareholders' equity 298,824,101,675 236,813,002,348

As of March 31, 2013 and 2012


Financial Position






Cash Flows


Financial Position




Report


Review Report

77FY2012 Sustainability Report 772013 Sustainability Report76 SAMSUNG ASSET MANAGEMENT

Independent Auditors' Report

To the Shareholders and Board of Directors of

Samsung Asset Management Co., Ltd.:

We have audited the accompanying separate financial statements of Samsung Asset Management Co., Ltd. (the

"Company"). The financial statements consist of the separate statements of financial position as of March 31, 2013

and 2012, and the related separate statements of comprehensive income, separate statements of changes in share-

holders' equity and separate statements of cash flows, all expressed in Korean won (KRW), for the years ended March

31, 2013 and 2012. The Company's management is responsible for the preparation and fair presentation of the sepa-

rate financial statements and our responsibility is to express an opinion on these separate financial statements based

on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used

and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the separate financial statements referred to above present fairly, in all material respects, the financial

position of the Company as of March 31, 2013 and 2012, and the results of its operations and its cash flows for the years

ended March 31, 2013 and 2012, in conformity with Korean International Financial Reporting Standards ("K-IFRS").

This report is effective 29, 2013, the auditors' report date. Certain subsequent events or circumstances may have occurred between the auditors' report date and the time the auditors' report is read. Such events or circumstances could significantly affect the separate financial statements and may result in modifications to the auditors' report.

Jaesool Lee

CEO of Anjin Deloitte LLC

Consolidated Statements of Comprehensive Income

(KRW)Samsung Asset Management Co., Ltd. and its Subsidiaries


May 29, 2013


2013 2012

Ⅰ.Operating revenue 137,531,253,980 131,352,967,956

1. Fee revenue 127,966,370,368 121,557,745,977

2. Interest income 9,493,604,019 9,053,258,372

3. Gain on foreign currency 71,279,593 70,433,414

4. Other income - 671,530,193

Ⅱ.Operating expenses 95,106,149,246 84,910,142,009

1. Commission expense 6,211,224,057 3,841,554,764

2. Interest expenses 3,385,052,175 2,984,098,479

3. Loss on foreign currency 48,174,339 115,217,923

4. Selling expenses 11,396,910,951 9,097,543,894

5. Maintenance expense 74,041,358,156 68,853,487,439

6. Other operating expense 23,429,568 18,239,510

Ⅲ.Profit from operating activities 42,425,104,734 46,442,825,947

Ⅳ.Non-operating revenue and expenses (1,051,400,570) (246,322,664)

1. Non-operating revenue 118,462,160 69,359,749

2. Non-operating expenses 1,169,862,730 315,682,413

Ⅴ.Income before income tax 41,373,704,164 46,196,503,283

Ⅵ.Income tax expense 10,290,352,185 13,066,697,763

Ⅶ.Net income 31,083,351,979 33,129,805,520

Ⅷ.Other comprehensive income (168,128,442) 368,565,484

1. Gain (loss) on foreign operation translation, net (168,128,442) 368,565,484

2. Deferred tax - -

Ⅸ.Total comprehensive income 30,915,223,537 33,498,371,004

Ⅹ.Income attributable 31,083,351,979 33,129,805,520

1. Owners of the parent company 31,083,351,979 33,129,805,520

2. Non-controlling interests - -

XI.Total comprehensive income attributable 30,915,223,537 33,498,371,004

1. Owners of the parent company 30,915,223,537 33,498,371,004

2. Non-controlling interests - -

XII.Earnings per share

1. Basic earnings per share 1,663 1,773


Financial Position






Cash Flows


Financial Position




Report


Review Report

78 SAMSUNG ASSET MANAGEMENT78 SAMSUNG ASSET MANAGEMENT

Appendix

Stakeholder Inclusiveness

Materiality Test

GRI Content Index

Independent Assurance Statement

Awards and Membership

Terminology

OrganizationAppendix05Internal Accounting Control System (IACS) Review Report

To the Representative Director of

Samsung Asset Management Co., Ltd.:

We have reviewed the Report on the Management’s Assessment of IACS (the "Management's Report") of Samsung Asset Management Co.,

Ltd. (the "Company"), as of March 31, 2013. The Management's Report and the design and operation of IACS are the responsibility of the

Company's management. Our responsibility is to review the Management's Report and issue a review report based on our procedures.

The Company's management stated in the Management's Report that based on the assessment of the IACS as of March 31, 2013, the

Company's IACS has been appropriately designed and is operating effectively as of March 31, 2013, in all material respects, in accordance

with the IACS Framework.

We conducted our review in accordance with the IACS Review Standards established by the Korean Institute of Certified Public Account-

ants. Those standards require that we plan and perform a review, the objective of which is to obtain a lower level of assurance than an

audit, of the Management’s Report, in all material respects. A review includes obtaining an understanding of the Company's IACS and

making inquiries regarding the Management's Report and, when deemed necessary, performing a limited inspection of underlying docu-

ments and other limited procedures. Since the Company is an unlisted enterprise, the Management’s Report, and the design and operat-

ing of IACS are conducted in accordance with IACS Framework No. 5 ('Application to small & medium enterprise'), which is much less strict

than IACS Framework for listed enterprises. Therefore, we conducted our review in accordance with IACS review standard No. 14 ('Special

review procedures for small & medium enterprise').

The Company's IACS represents internal accounting policies and a system to manage and operate such policies to provide reasonable

assurance regarding the reliability of financial statements prepared, in accordance with Accounting Standards for Non-Public Entities in

the Republic of Korea, for the purpose of preparing and disclosing reliable accounting information. Because of its inherent limitations,

IACS may not prevent or detect a material misstatement of the financial statements. Also, projections of any evaluation of effectiveness of

IACS to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree

of compliance with the policies or procedures may deteriorate.

Based on our review, nothing has come to our attention that causes us to believe that the Management's Report referred to above is not

fairly stated, in all material respects, in accordance with the IACS Framework No. 5 ('Application to small & medium enterprise') established

by the Korea Listed Companies Association.

Our review is based on the Company's IACS as of March 31, 2013, and we did not review its IACS subsequent to March 31, 2013. This report

has been prepared pursuant to the Acts on External Audit for Stock Companies in the Republic of Korea and may not be appropriate for

other purposes or for other users.


Jaesool Lee

CEO of Anjin Deloitte LLC

May 29, 2013

2013 Sustainability Report 79


Materiality Test

This sustainability report complies with the GRI-recommended technical protocols created to provide guidance on setting the report boundary and disclosure content. For this, the Company first compiled a pool of sustainable development topics such as company vision, strategy, international standards, industry issues, media and stakeholder opinions, and other related matters, and consolidated them through materiality test to final topics to be included in the report. The test of materiality took into account the business relevance of the topics and their social impacts on the Company and its stakeholders.

Strategic RelevanceSamsung Asset Management pursues the realization of bench-

mark-exceeding returns on customer assets in a stable manner with

an emphasis not on short-term but on mid-to-long-term earnings

and risk management based on its differentiated competitiveness

in funds management. As such, the Company assessed the materi-

ality of all topics in terms of their relevance to its business strategy.

International StandardsThe Company has considered all indicators suggested in the GRI

guidelines and the Financial Services Sector Supplement as well

as those deemed worthy based on the ISO26000, DJSI, and other

respected initiatives and standards.

Sector IssuesAs change and interest in domestic and overseas financial markets

have direct and indirect impact on its sustainable operations, the

Company first identified the priority of issues facing domestic and

global financial institutions and then assessed their relevance.

Media ExposureThe Company assessed major business and sustainable growth

issues based on 245 newspaper articles selected from a total of

1,622 media articles covering the Company in 2012. The selection

was based on key words other than "stock", "promotion", and other

related words or phrases.

Shareholder OpinionsThe Company collected shareholder opinions through labor-man-

agement dialogue, the intranet, shareholders meetings, and other

various channels through which its business units reach their cus-

tomers and government authorities. Based on these opinions, the

Company analyzed how they viewed and what they expect from the

Company and assessed their relevance to its sustainable operations.

Materiality Test Chart

The business activity of Samsung Asset Management has no direct

connection with raw materials, bio-diversity, child/forced labor, and

other issues commonly related to the manufacturing sector. As the

Company's business activity impacts mostly financial markets, environ-

mentally-friendly financial product development, legal and regulation

compliance, and other issues that are closely related to funds manage-

ment in terms of how they affect asset management businesses car-

rying out their social and environmental responsibility are considered

critical to the Company and its stakeholders. Samsung Asset Manage-

ment also pursues sustainable operations through green management

and other areas and discloses a portion of our efforts in this report.

The Company has prioritized topics based on their business rel-

evance and social impacts and selected the final six topics to be

reported through discussions between top management and the

team in charge of publishing the report.

1) Financial performance2) Market presence12) Employment15) Education and training36) Product portfolio

High

Relevance

Impact

Low High

3) Indirect economic impacts & public benefit investment support

9) Environment-friendly products and services 28) Corruption30) Anti-competitive behavior31) Compliance & observance of laws33) Product and service leveling

Stakeholder Inclusiveness

Samsung Asset Management strives to reflect stakeholder opinions in the management of its daily business operations through various ways of collecting stakeholder opinions. Through active communication with and participation of stakeholders, the Company can better understand and thus effectively manage major issues that lie in its pursuit of sustainable growth. The Company defines as its stakeholders shareholders, customers, executive staff and employees, and government/financial authorities according to the boundary and type of groups that either have great influence on the Company or are greatly affected by the business operations of the Company. By developing better ways to reach its diverse stakeholders and listen to their voices, the Company continues to improve on its ways of communicating with them and thus achieve sustainable growth.

Stakeholder Communication Channels and Major Issues

Samsung Asset

ManagementShareholder

Customers

Executive Staff & Employees

Government/Financial

Authorities

Major Stakeholders (Organization/Individuals)

Communication Channels

General Shareholders Meeting

National Pension Service

Institutional Sales

Institutional Sales

Institutional Sales

Retail

Ongoing

Ongoing

Ongoing

Ongoing

Ongoing

Ongoing

Ongoing

Ongoing

Ongoing

Ministry of Labor

Ministry of Strategy & Finance

T&C Committee Regular conference

National Pension Service

Once every quarter

Korea Post

Financial Supervisory Service

T&C Committee spot conference

Compliance

Retail

KRX

In-house intranet

Passive

Regular/temporary

Business expansion, increase of income opportunities

Operating funds procurement and securement

Labor grievance, benefit enhancement, personnel system improvement

Any issues that need to be discussed with top management

Related to informa-tion sharing, benefits, personnel, work

Reselection of lead fund manager

Regulation and audit

Product consultation

Frequency of Communication

Major Issues Put Forth

Appendix

Sustainable Operation Issue Analysis Topic Selection

4) Materials6) Water7) Biodiversity10) Transportation

impact on the environment

11) Environmental expense

14) Occupational health and safety

21) Child labor

22) Forced labor 24) Indigenous rights25) Human rights

supervision & effect evaluation

29) Public policy32) Customer health

and safety35) Customer

information protection

5) Energy8) Emissions, effluents,

waste13) Labor-management

relations16) Diversity and equal

opportunity 17) Gender-equal wages18) Investment and

procurement practices

19) Non-discrimination20) Freedom of associa-

tion and collective bargaining

23) Security practices26) Complaints and

grievance practices27) Business effect on

local community and access to financial services

34) Marketing communications

37) Audits to assess implementation of environmental and social policies

38) Active ownership

Stakeholder Inclusiveness Materiality Test GRI Content Index Independent Assurance Statement Awards and Membership Terminology Organization


Environmental DMA: p.48

Indicator Description Reported Page / Direct Answer

EN1 Materials used by weight or volume N/M No major materials used owing to the nature of asset management.

EN2 Percentage of materials used that are recycled input materials N/A Same as above

EN3 Direct energy consumption by primary energy source ● 49

EN4 Indirect energy consumption by primary source ● 49

EN5 Energy saved due to conservation and efficiency improvements ○

EN6Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives

◐ 50-51

EN7 Initiatives to reduce indirect energy consumption and reductions achieved ◐ 49

EN8 Total water withdrawal by source N/A

The Company occupies four office floors as its business premises, and only tap water is used for consumption. The amount of water used cannot be determined with fair and measurable accuracy.

EN9 Water sources significantly affected by withdrawal of water ●As only tap water is used for consumption, no major water resources are affected by the busi-ness activity of the Company.

EN10 Percentage and total volume of water recycled and reused ● No use of water is recycled or reused.

EN11Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

●Business premises are in a downtown area that has little or no impact on biodiversity.

EN12Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

●Little or no impact of activities, products, or services on biodiversity

EN13 Habitats protected or restored ● None

EN14 Strategies, current actions, and future plans for managing impacts on biodiversity ● None

EN15Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk

● None

EN16 Total direct and indirect greenhouse gas emissions by weight ● 49

EN17 Other relevant indirect greenhouse gas emissions by weight N/M Insignificant amount of indirect greenhouse gas emissions due to organization scale

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved ○

EN19 Emissions of ozone-depleting substances by weight N/M No ozone-depleting substances have been found within business sphere.

EN20 NOx, SOx, and other significant air emissions by type and weight N/M No significant emissions of air pollutants have been found within business sphere.

EN21 Total water discharge by quality and destination N/M No significant waste water other than ordinary sewage has been discharged.

EN22 Total weight of waste by type and disposal method N/AAs the Company occupies only four, the amount of waste discharges cannot be determined with fair and measurable accuracy.

EN23 Total number and volume of significant spills ●No spills of any kind due to the business nature of asset management.

EN24Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally

●

No transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex have been found within business sphere

EN25Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water and runoff

●No water bodies or related habitats significantly affected by the Company's discharges of water or runoff.

EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation ● 36-37, 50-53

EN27 Percentage of products sold and their packaging materials that are reclaimed by category N/M No products have been sold that use packing materials.

EN28Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

●No non-compliance cases occurred during the report period

EN29Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce

○

EN30 Total environmental protection expenditures and investments by type ○


EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation N/MMinimal spending on locally-based suppliers at the Company's three operations located in Korea, Hong Kong, and Singapore

EC7Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation

◐ 44

EC8Development and impact of infrastructure investments and services provided primarily for public benefitthrough commercial in-kind, or pro bono engagement

● 36-37, 54-57

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts ○

GRI Content Index

Appendix

Profile

Economic DMA : p.10-11, 42, 54


1.1 CEO message ● 10-11

1.2 Opportunities and challenges ● 10-11

2.1 Corporation name ● Samsung Asset Management

2.2 Major products and brands ● 18-37

2.3 Operational structure ● 90

2.4 Location of main office ● 55 Sejong-daero, Jung-gu, Seoul

2.5 Country where major business place is located ● 2

2.6 Ownership structure and legal format ● 9

2.7 Sales market ● 2, 9

2.8 Corporation volume ● 8-9, 44

2.9 Major changes of corporation volume, organization structure, and ownership structure ● 9

2.10 Awards ● 88

3.1 Report period ● 2

3.2 Recent report date ● 2

3.3 Report cycle ● 2

3.4 Contact for questions related to the report ● 91

3.5 Process for determining report matters ● 80-81

3.6 Report boundaries ● 2

3.7 Limiting reporting scope and boundaries ● 2

3.8 Report boundaries that can have significant effect on comparability of information ● 2

3.9 Data measurement technologies and ground for calculation ● 2

3.10 Readjusting information provided in the previous report ● 2

3.11 Major changes of report scope, boundaries or measuring method etc. ● 2

3.12 GRI Content Index ● 82-85

3.13 Policies on independent assurance and recent practices ● 2, 86-87

4.1 Corporate governance structure ● 12-15

4.2 Whether CEO and chairman of BOD can be the same person ● 14

4.3 Structure of BOD ● 12-15

4.4 Mechanism where shareholders and employees can present opinions in the BOD ● 14-15

4.5 Connecting corporate performance and compensation to executives and management ● 15

4.6 Process at the BOD level to avoid conflict among stakeholders ● 14

4.7 Process for determining professionalism of executives leading economic, environmental, social strategies ● 14

4.8 Management principles ● 61

4.9 Procedures that BOD use in supervising the economic, environmental, social performances ● 14-15

4.10 Processes for evaluating performances of BOD, especially, economy, environmental, and social performances ● 14-15

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization ● 10-11

4.12Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses

● None

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organizations ● 88

4.14 List of stakeholder groups engaged by the organization ● 80

4.15 Basis for identification and selection of stakeholders with whom to engage ● 80

4.16Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group

● 80

4.17Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns

● 80-81


EC1 Direct economic value generated and distributed ● 70-76

EC2 Financial implications and other risks and opportunities for the organization's activities due to climate change ● 10-11, 48-51

EC3 Coverage of the organization's defined benefit plan obligations ●100% support with defined contribution or defined benefit type

EC4 Significant financial assistance received from government ● None

EC5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation ○

● : Fully, ◐ : Partially, ○ : Not, N/M : Not Material, N/A : Not Available



Product Responsibility DMA: 64, 66-67

Product and Service Impact DMA: p.36-37


FS1 Policies with specific environmental and social components applied to business lines ● 36-37

FS2 Procedures for assessing and screening environmental and social risks in business lines ● 36-37

FS3Processes for monitoring clients' implementation of and compliance with environmental and social requirements included in agreements or transactions

● 36-37

FS4Process(es) for improving staff competency to implement the environmental and social policies and procedures as applied to business lines

●Environmental/social investment process is limited to the management of SRI funds and no relevant internal education programs are in place.

FS5Interactions with clients/investees/business partners regarding environmental and social risks and opportunities

● 37

FS6 Percentage of the portfolio for business lines by specific region, size (e.g. micro/SME/large) and by sector ● 19, 27

FS7 Monetary value of products and services designed to deliver a specific social benefit ● 37

FS8 Monetary value of products and services designed to deliver a specific environmental benefit ● 37

FS9Coverage and frequency of audits to assess implementation of environmental and social policies and risk assessment procedures

◐ 37

FS10Percentage and number of companies held in the institution's portfolio with which the reporting organization has interacted on environmental or social issues

●

0%. The management of SRI funds involves item selection and monitoring according to ESG evaluation results, but no direct engagement with respect to investment targets.

FS11 Percentage of assets subject to positive and negative environmental or social screening ◐ 36-37

FS12Voting polic(ies) applied to environmental or social issues for shares over which the reporting organization holds the right to vote shares or advises on voting

●

None. The management of SRI funds involves item selection and monitoring according to ESG evaluation results, but the Company exercises no shareholder rights on the investees.


FS15 Policies on fair designing and sales of financial products and services ●Management fees are set in accordance with guidelines set by financial authorities

PR1Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures

N/A No products or services are made that would cause harm to customer health or safety

PR2Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services

N/A No products or services are made that would cause harm to customer health or safety

PR3Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements

◐100%. All products and services of the Company meet official requirements.

PR4Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling

●No cases of violation occurred during the report period

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction ○

PR6Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship

●In compliance with rules set by financial industry authorities

PR7Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications


PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data ◐No personal information on individual investors is kept by the Company

PR9Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services


Appendix

Labor DMA: p.42


LA1 Total workforce by employment type, employment contract, and region ● 44

LA2 Total number and rate of employee turnover by age group, gender, and region ● 44

LA3Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations

● 46-47

LA15 Return to work and retention rates after parental leave, by gender ●Of a total of 72 employees who are qualified for maternity/paternity leave, two took the leave in 2012 and one returned.

LA4 Percentage of employees covered by collective bargaining agreements ● 47

LA5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements ●No specific notice period though major issues are deliberated on at the T&C Committee.

LA6Percentage of total workforce represented in formal joint management-worker health andsafety committees that help monitor and advise on occupational health and safety programs

○

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region ● 47

LA8Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases

● 47

LA9 Health and safety topics covered in formal agreements with trade unions ○

LA10 Average hours of training per year per employee by employee category ● 44

LA11Programs for skills management and lifelong learning that support the continued employabilityof employees and assist them in managing career endings

N/M Not applicable as specialist group due to business nature

LA12 Percentage of employees receiving regular performance and career development reviews ● 45

LA13Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity

● 12-13, 44, 46

LA14 Ratio of basic salary of men to women by employee category N/A Sensitive trade information due to business nature

Human Rights DMA: p.46


HR1Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening

●0%. No investment agreements that include human rights clauses or that have undergone human rights screening.

HR2Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken

● 0%

HR3Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

◐ 46

HR4 Total number of incidents of discrimination and actions taken ● 46

HR5Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights

●"T&C Committee" is in place of a labor union and no major business activities that interfere with freedom of association.

HR6Operations identified as having significant risk for incidents of child labor, and measures takento contribute to the elimination of child labor

● 46

HR7Operations identified as having significant risk for incidents of forced or compulsory labor andmeasures to contribute to the elimination of forced or compulsory labor

● 46

HR8Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations

○

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken ○

HR10Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments

● 46

HR11 Number of human rights related complaints raised through official complaint delivery mechanisms ● 0

Society DMA: p.60


SO1Any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting

N/M No business expansion or advances in the last three years that would infringe on local communities

FS13 Access points in low-populated or economically disadvantaged areas by type N/A No retail financial services operations exist

FS14 Initiatives to improve access to financial services for disadvantaged people N/A No retail financial services operations exist

SO9 Operations with significant potential or actual negative impacts on local communities ● No cases of negative effects found

SO10Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities

● No cases of negative effects found

SO2 Percentage and total number of business units analyzed for risks related to corruption ● 62


SO3 Percentage of employees trained in organization's anti-corruption policies and procedures ◐ 63

SO4 Actions taken in response to incidents of corruption ● 63

SO5 Public policy positions and participation in public policy development and lobbying ● 61

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country ● No political donations made

SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes ● No cases of unfair or monopoly activities found

SO8Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations

● 63



Stakeholder Inclusivity:

SAMSUNG ASSET MANAGEMENT has engaged with a wide range of stakeholders. Stakeholder communication channels are stated in

detail in the Report. 4 Stakeholder groups which are Shareholder, Customer, Employee and Government/Financial regulator are identified.

SAMSUNG ASSET MANAGEMENT identifies the interest of stakeholders by engaging them with various ways. Stakeholder engagement is

conducted independently.

Materiality:

SAMSUNG ASSET MANAGEMENT has derived material issues and performance indicators from the materiality determination process. The

international standards, industry issues, media research result and stakeholder concerns are input to the process. The output of the pro-

cess clearly brings out material issues. The Report generally provides an account of performance on the issues that are most significant to

SAMSUNG ASSET MANAGEMENT and which are most relevant to its stakeholders.

Completeness:

The scope and boundary of the Report cover all operations of SAMSUNG ASSET MANAGEMENT. Most material issues and performance

indicators are presented in the Report.

Principle of Report Quality

Data and information presented in the report are generally reliable. Presentation through graphics and charts for the purpose of com-

parison is adequate. However, internal assessment of data and information need to be implemented in order to improve the data quality.

Opportunities for ImprovementThe following is an excerpt from the observations and opportunities reported to SAMSUNG ASSET MANAGEMENT's management. How-

ever, these do not affect our conclusions on the Report and are provided to encourage continual improvement.

• Set up the objectives for sustainability vision and strategy so that the progress of achievement can be at least annually measured

and reported.

• Promote the social responsibility of the companies in which SAMSUNG ASSET MANAGEMENT invests by enhancing socially re-

sponsible investment policy and practice

Statement of Competence and Independence

DNV is a leading provider of sustainability services, including the verification of sustainability reports. Our environmental and social assur-

ance specialists operate in over 100 countries. DNV was not involved in the preparation of any statements or data included in the Report

except for this Assurance Statement. DNV maintains complete impartiality toward stakeholders interviewed during the verification pro-

cess. DNV expressly disclaims any liability or co-responsibility for any decision a person or an entity may make based on this Assurance

Statement.

Inkyoon Ahn

Country Manager

Independent Assurance Statement

IntroductionDet Norske Veritas Certification Ltd. (hereinafter referred to as 'DNV') is commissioned to carry out the verification on SAMSUNG ASSET

MANAGEMENT CO. LTD. (hereinafter referred to as 'SAMSUNG ASSEST MANAGEMENT') 2013 Sustainability Report (hereinafter referred to

as 'the Report'). SAMSUNG ASSET MANAGEMENT is responsible for the collection, analysis, aggregation and presentation of all information

within the Report. DNV's responsibility in performing the work commissioned is solely to the management of SAMSUNG ASSET MANAGE-

MENT, in accordance with terms of reference and scope of work agreed. SAMSUNG ASSET MANAGEMENT's stakeholders are the intended

recipients of the assurance statement.

Scope of AssuranceThis Assurance Engagement covers data and information from the calendar year 2012. The scope of DNV's Assurance Engagement, as

agreed with SAMSUNG ASSET MANAGEMENT includes the verification of:

• Data and activities related to the environment, health and safety management, social aspects, and corporate governance issues

that refer to the period between January 2012 and December 2012 as contained in the Report.

• Evaluation of the reporting principles for defining the sustainability report content and the quality as expressed in the Sustain-

ability Reporting Guidelines GRI G3.1 and check of GRI Application level.

• As for the financial data, our work is limited to verify that the financial data are correctly derived from SAMSUNG ASSET MANAGE-

MENT's audited separate financial statements.

LimitationsThe audit is conducted at the head office of SAMSUNG ASSET MANAGEMENT in a manner to verify data and information made available

by SAMSUNG ASSET MANAGEMENT. The verification is conducted on the data and information compiled for the auditors' review and

verification of baseline data is not included in the scope. The 3rd party's sustainability management, performance and reporting practice,

economic prospect and market forecast addressed in the Report are not included in the verification scope. Any financial information from

SAMSUNG ASSET MANAGEMENT's annual report and company reporting on operations in 2012 or other sources is not included in the

scope of the Assurance. Economic performances based on the financial data are cross-checked with internal documents and the audited

financial statements. The assurance engagement is based on the assumption that the data and information provided to us is complete,

sufficient and authentic. Hence, our conclusion is based on the discussion with management of SAMSUNG ASSET MANAGEMENT and our

review of sampled documents provided by SAMSUNG ASSET MANAGEMENT.

Verification MethodologyThis Assurance Engagement is planned and carried out in accordance with DNV Verification Protocol. As part of the verification, we exam-

ine and review documents, data and other information made available to DNV by SAMSUNG ASSET MANAGEMENT. We perform sample-

based audits with the moderate level of assurance. Our verification is carried out in June and July 2013.

ConclusionsIn DNV's opinion, and based on the scope of this Assurance Engagement, nothing has come to our attention to suggest that the Report is

not fairly stated. DNV confirms that the Report meets GRI G3.1 Application level'A+'. Further conclusions and observations on the adoption

of reporting principles are made below;

Appendix

Note: Assurance engagement was conducted based on the Report written in Korean. In the event of ambiguity or contradiction in the Report between English version and Korean version, Korean one shall be given precedent.

July 2013, Seoul, Korea



Terminology

Terminology Definition

GRIThe Global Reporting Initiative (GRI) is a non-profit organization that promotes economic, environmental and social sustainability. GRI provides all companies and organizations with a comprehensive sustainability reporting framework that is widely used around the world.

Institutional InvestorsInstitutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets. They can also include operating companies which decide to invest their profits to some degree in these types of assets.

Leverage leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives.

Internal Control internal control is defined as a process affected by an organization's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives.

ETF

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds as-sets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. ETFs are the most popular type of exchange-traded product.

Net Present Value The net present value is defined as the sum of the present values (PVs) of the individual cash flows of the same entity.

Greenhouse GasA greenhouse gas (GHG) is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone.

Stakeholder

A corporate stakeholder is that which can affect or be affected by the actions of the business as a whole. First defined in 1963, stakeholders can include groups of individuals such as employees, shareholders, or customers, or organizations such as institutional investors, affiliates, or government agencies, or those groups without whose support the organization would cease to exist.

Index Fund An index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions.

Return on EquityReturn on equity (ROE) measures the rate of return on the ownership interest of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity. ROE shows how well a company uses investment funds to generate earnings growth.

KOSPI

The Korea Composite Stock Price Index or KOSPI is the index of all common stocks traded on the Stock Market Division-previously, Korea Stock Exchange-of the Korea Exchange. It's the representative stock market index of South Korea, like the Dow Jones Industrial Average or S&P 500 in the U.S. KOSPI was introduced in 1983 with the base value of 100 as of January 4, 1980. It's calculated based on market capitalization.

KOSPI200 The index composed of listed companies in the top 200 in terms of market value

Portfolio The term portfolio refers to any collection of financial assets such as stocks, bonds, and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions.

MMF A money market fund is a short-term fund that invests in short-term high-return debt securities such as commercial paper, RP, and CD.

HedgeA hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. In simple language, a hedge is used to reduce any substantial losses/gains suffered by an individual or an organization.

Awards and Membership

Association Name Description

Financial Investment Association Pursues business order and fare trade in the financial industry

Korea Securities Society Conducts academic research on finance and banking through academic conferences, symposiums, seminars

Korea Fair Competition Federation Promotes fair trade among corporations and arranges communications between government and businesses on fair trade policy

Korea Chamber of Commerce Compiles and disseminates information on overall economic activities through domestic and global business networks

2013.03 KG Zeroin Chairman Award at the Zeroin Korea Funds Awards(Best SME Equity, Best Equity Fund Manager, Best Chinese Equity)

2013.03 Best Fund Award at the Asian Economic Daily Funds Awards(Samsung For You Korea Leading Group]

2013.02 Most Outstanding Award at e-daily Financial Industry Awards (Samsung ABFKorea Index)

2013.02 Outstanding Asset Manager Award at Maeil Economic Daily Korea Funds Awards (Index Equity Type)

2013.02 Best Overseas Equity Fund Award at Korea Economic Daily Korea Funds Awards (Samsung Asean Fund)

2013.01 Gold Award in asset management category at Korea Economic Daily Dasan Financial Awards

2012.12 Best Asset Manager at Money Today 2012 Funds Awards(Overseas Equity Fund - Asean Equity Investment Trust2)

2012.11 Most Outstanding Domestic Fund at Herald Economic Daily Funds Awards (Korea Flagship, Most Outstanding Hedge Fund - H Club Hedge Fund)

2012.11 Grand Prize in asset management category at Aju Economic Securities Awards

2012.11 General Grand Prize at Economy Chosun, FN Guide Funds Awards

2012.03 Best Asset Manager, Best SME Fund at Morning Star Funds Awards

2012.02 Outstanding Listed Index Fund at Asian Economic Asian Funds Awards

2012.02 Grand prize at e-daily 2012 Korea Funds Awards

2012.02 Grand prize in asset manager category at Maeil Economic 2011 Funds Awards

2012.02 General grand prize at Korea Economic Korea Funds Awards

2011.12 ETF Grand Prize at eToday Market Leaders Awards

2011.12 Most Popular Fund at Money Today-Morning Star Funds Awards (SEM Focus Fund)

2011.12 Grand Prize at Herald Economic Funds Awards

2011.11 Grand Prize in asset manager category at Seoul Economic Korea Securities Awards

Awards2010.11 Best Individual Fund Manager

at Seoul Economic 2010 Korea Securities Awards

2010.11 Specialty Award at Herald Economic Funds Awards (ETF Division)

2009.12 Frontier Awards at Money Today Morning Star Funds Awards (Samsung CHINA2.0 Fund)

2009.11 Most Outstanding in customer satisfaction at 6th Seoul Economic Capital Markets Awards

2009.04 Grand Prize in asset management at 2009 Herald Economic Capital Markets Awards

2009.02 Outstanding Asset Manager at Korea Funds Awards (Index Fund)

2008.11 Grand Prize in asset manager category at 2008 Seoul Economic Korea Securities Awards

2008.10 Grand Prize in asset management category at Money Today Financial Innovation Awards (KODEX ETF)

2008.07 Grand Prize in financial/trust operation at Korea Economic Consumer Awards (Samsung For You Korea Flagship)

2007.02 Outstanding Rookie Fund at Maeil Economic Zeroin Korea Funds Awards (Research Fund)

2007.01 Outstanding Asset Manager at Maeil Economic Securities Man Awards

2007.11 Grand Prizes at Seoul Economic Korea Securities Awards (Samsung Trust Management for Customer Satisfaction Management Award, and ETF Investment Team for Fund Manager Award)

2006.02 Outstanding Fund at Maeil Economic Korea Funds Awards (Index Plus)

2006.11 Financial Ad Grand Prizes by Maeil, Korea, Seoul Economic Dailies

2006.11 Hit-of-the-Year Award by Herald Economic

2005.02 Outstanding Fund at Maile Economic Korea Funds Awards (Index Plus Derivatives)

Appendix

Membership


90 SAMSUNG ASSET MANAGEMENT

This report is available for download at the Samsung Asset Manage-ment website. If you have any questions or comments about the re-port or sustainable operation of Samsung Asset Management, please write or call us.

Business Administration TeamSamsung Asset Management55 Sejong-daero, Jung-gu, Seoulhttp://www.samsungfund.comemail: [email protected]: +82 (0)2 3774 7573

Organization

Appendix

As of June 2013

Marketing

Business Administration

Division

Audit

CEO

• Audit Team

• Compliance Planning Team

• Compliance Management Team

• Investment Solution Team• Risk Management Team• Fund Accounting Team

• Strategic Planning Team• AI Investment Team

• Business Administration Team• Human Resources Team• General Affairs Team• Information Strategy Team

• Fixed Income Investment Team• Long-Term Fixed Income Investment Team• Money Market Investment Team• Separate Account Fixed Income Team• Credit Research Team

• ETF Investment Team• Index Investment Team• Passive Planning Team• Passive Marketing Team

• Strategic Investment Team• Quantitative Investment Team

• Investment Pool Planning Team• Investment Pool Investment Team

• Research Team• Value Equity Investment Team• Growth Equity Investment Team• Core Equity Investment Team• Institutional Equity Investment• Equity Investment Support Team

• Institutional Marketing Team 1• Institutional Marketing Team 2• Institutional Marketing Team 3

• Marketing Planning Team• Product Development Team• Marketing Communication Team• Sales Promotion Team

• Retail Marketing Team 1• Retail Marketing Team 2

• IFP Business Team

• Global Investment Team• Global Marketing Team• Hongkong Subsidiary• Singapore Subsidiary

Marketing StrategyDivision

Retail Marketing

Division

Institutional Marketing

Division

Public & Pension

Funds Investment

Division

Equity Investment

Division

Multi-Asset Investment

Division

Global Business Division

PassiveDivision

Hedge Fund Investment

Division

Fixed Income

Investment Division

Risk Management

Division

New Business Division

Compliance Division

http://www.samsungfund.com

This report has been printed on an environmental-friendly paper in soybean oil-based ink. The paper on which the report is printed is made of pulp free of elemental chlorine and has received the Forest Stewardship Council mark, a recognition given to products made of trees grown in an environmentally friendly area. Meanwhile, soybean oil-based ink is more environmentally friendly than regular oil-based inks.

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