annual report 2011eng

8/2/2019 Annual Report 2011eng

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Annual Report FY2010

14th Fl., Samsung Asset Management 36-1, Yeouido-Dong, Yeongdeungpo-Gu, Seoul, Korea

TEL: 82-2-3774-7600 FAX 82-2-3774-7633www.samsungfund.com

ANNUALREPORTFY2010

SAMSUNGASSETMANA

GEMENT


2/23

One Step Ahead for the Customers

In an industry known for unpredictable change

Asset Managements investment expertise

staff, systematic risk management, and advan

marketing have earned it a reputation as a lea

management company in Asia. Its superior

and services continue to prove it Korea

asset management company by delivering

investments and affording an affluent life for its c

In the quest towards a new vision to becom

Class Asset Management Company in Asia by

steadfast trust of its customers, at home and abro

it forward. Samsung Asset Management will kee

ahead of its competitors in the global market.

2015 Top-ClassAs

Management Company i

HISTORY

1998~1999

1998. 09 Founded Samsung Lie Investment Trust Management Co. (paid-in capital o

KRW 30 billion)

1999. 12 Acquired Samsung Investment Trust Management Co. (paid-in capital o KRW

63.2 billion, AUM o KRW 18.9 trillion)

2000~2002

2000. 03 Capital increase with consideration o KRW 30 billion (paid-in capital o KRW

93.2 billion)

Changed rom Samsung Lie Investment Trust Management Co. to Samsung

Investment Trust Management Co.

2001. 01 Ranked No. 1 in AUM

2001. 08 AUM reached KRW 20 trillion

2001. 11 Chosen to be lead und manager o the Investment Pool or Public Funds

2002. 10 KODEX 200 ETF listed on the Korea Exchange (KRX)

2003~2005



2005. 04 Established Asia Bond Fund (ABF); selected to be the Korean manager o ABF

2005. 11 Rechosen as lead manager o the Investment Pool or Public Funds

2006~2007

2006. 01 Brand slogan Stay Ahead created

2006. 06 Sector ETF (automobiles, semiconductors, banks) listed on KRX


2007. 09 KODEX China H ETF listed on KRX

2007. 11 KODEX 200 ETF listed on Tokyo Stock Exchange

Samsung Asset Management Ltd. established in Hong Kong

2008

2008. 02 KODEX Japan ETF listed on KRX

2008. 04 Samsung Asset Management Pte., Ltd. established in Singapore


KODEX ETFs (Samsung Group stocks, securities, shipbuilding) listed on KRX

2009

2009. 07 KODEX Treasury Bond ETF listed on KRX

2009. 09 KODEX Inverse ETF listed on KRX

Selected to be the Korean manager o Nomura Asset Managements Asia Fund

2009. 10 KODEX ETFs (energy & chemicals, steel, construction) listed on KRX

2009. 11 Reappointed as lead manager o the Investment Pool or Public Funds

2010

2010. 02 KODEX Leverage ETF listed on KRX

2010. 04 Changed company name rom Samsung Investment Trust Management Co. to

Samsung Asset Management Co.

2010. 10 KODEX gold utures ETF listed on KRX

2010. 11 Selected to be the Korean manager o the Japans Nikko Fund

2010. 12 Selected to be a manager o the Korea Investment Corporation (KIC)

2011

2011. 02 Signed an MOU or a joint venture with Xiangcai Securities o China

2011. 03 Selected to be the Korean manager o the China Investment Corporation (CIC)

2011. 05 Onshore Fund House in Korea by Asian Investor magazine

The sloganStay Aheadembodies the

determinationof Samsung Asset Management

tokeep one step ahead the competitionto its

customers benefit.


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CONTENTS

FY 2010 Financial Highlights

History

Profle

Vision 2015

CEOs Message

Board o Directors

Highlights

Review o Operation

Equity Investment Division

Long-term Equity Investment Division

Strategy Management Division

Fixed Income Investment Division

ETF Investment Division

Quantitative Investment Division

Global Investment Division

Overseas Branch Ofces

Public & Pension Funds Investment Division

Real Estate Investment Division

Retirement Pension

Compliance

Customer Satisaction

Social Contribution

Financial Statements

Independent Auditors Report

Internal Accounting Control System Review Report

Statements o Financial Position

Statements o Income

Statements o Appropriations o Retained Earnings

Statements o Cash Flows

Organization

Financial Network

01

02

04

06

08

16

17

18

19

20

21

22

23

24

25

26

27

28

30

34

35

36

37

38

39

40

41

FY 2010 FINANCIAL HIGHLIGH

Operating Revenue

Operating Expenses

Operating Income

Non-Operating Income

Non-Operating Expenses

Ordinary Income

Income Tax Expense

Net Income

Total Cash and Bank Deposits

Other Assets

Total Assets

Depository Liabilities

Other Liabilities

Total Liabilities

Total Shareholders Equity

Securities

MMF

Investment Advisory

Others

Total Assets Under Management

2011. 3

111,544

74,390

37,154

1,045

2,463

35,736

9,659

26,077

215,132

82,249

297,381

100,682

13,080

113,762

183,619

144,697

46,456

711,882

107,402

1,010,437

Total Assets

(Unit: KRW billion)

Total Assets under

Management (AUM)

(Unit: KRW trillion)

2009.3

365

2009.3

109.5

2010.3

229

2010.3

94.6

2011.3

297

2011.3

101.0


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StayAheadTM

02

SAMSUNG ASSET MANAGEMENT FY2010Annual Report

Emerging as a globally-competitive asset

management company in Asia

Samsung Asset Management has long been at

forefront of the Korean asset management industry. W

renaming the company in 2010, the focus for its vision became the transformation into a Top-Class A

Management Company in Asia by 2015. To that

smart, creative innovation is occurring in every area

business operations, from fund management and pro

development to marketing activities. Its stable, st

investment performance will solidify its asset manage

leadership in the Korean market. At the same time

company will continue to build up the Hong Kong

Singapore branch offices competencies with an a

position itself as a leading global asset manage

company.

VISION 2015

VISION

Ranked best in the

asset management

business in Korea

Competitive

global marketing

infrastructure

Smart, creative

innovation in work

processes

2015 Top-Class

Asset ManagementCompany in Asia

2015 Top-ClassAssetManagement Company in Asia


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We will make a concerted

effort to become a Top-Class

Asian Asset ManagementCompany by 2015.

CEOs MESSAGE

StayAheadTM

04


Respected Shareholders and Customers!

I would like to deliver my heartfelt gratitude for your unwavering

trust and support for Samsung Asset Management.

In 2010, Korea successfully recovered from the global financial

crisis on the strength of a 6% economic growth rate buoyed

by robust exports, the most successful rebound among the

OECD countries. The better-than-expected earnings by Korean

companies propped up the Korean stock market, which closed

the year surpassing a monumental 2,000 point mark. The funds

market, however, suffered contraction prompted by the rise-

averse investor sentiment in the aftermath of the financial crisis.

As a result, the industrys assets under management (AUM) size

declined by KRW 17 trillion, from KRW 332 trillion in December of

2009 to KRW 315 trillion in December of 2010. The total amount

in equity funds shrank 20% during 2010, from KRW 126 trillion in

2009 down to KRW 101 trillion.

As a consequence, the entire industry suffered from diminishing

AUM and profits over the year. Undaunted by adverse

circumstances and in pursuit of new markets, Samsung Asset

Management engaged in active product development and

marketing activities. Accordingly, operating income grew by KRW

7.1 billion (USD 6.4 million) on the previous year, to KRW 111.5

billion (USD 100.7 million). Net income posted a 20% year-on-

year growth to reach KRW 26.1 billion (USD 23.6 million), proving

the companys sound revenue structure and market strength. In

addition to these considerable financial achievements, we were

named the Korean Asset Manager of the Year by the investment

magazine Asian Investor, reaffirming our unmatched brand

capabilities, as Koreas leading asset management company.

Although the global economy has recovered, there are still

lingering market uncertainties due to the financial instability

in the European economies, sluggish real estate markets, and

growing concern over a possible rise in interest rates. In 2011,these uncertainties are projected to affect the funds market.

The competition in the financial market is predicted to intensify

with asset management agencies jumping in with an alternative

product, advisory wrap accounts.

In order to realize its mid-term goal desp

market environment, Samsung Asset Man

management policy for 2011 to preparin

growth platforms through enhanced equity

line with this goal, we set the following strate

First, Samsung Asset Management will

company-wide to reinforce its competitivene

business. We will focus on keeping the inve

of all investment divisions within the top

peers, while raising our equity fund market s

Second, we will reinforce our overseas op

up marketing campaigns aimed at prominen

as sovereign wealth funds and public fun

reinforcing the infrastructure of our overse

recruiting and retaining local talent.

Third, we plan to mount differentiated ma

the distribution channels. By increasing the

products, customized to the needs of each

we will boost mutual cooperation thereby i

AUM.

Finally, we will further enhance managemen

in unnecessary spending, we will focus on im

Based on these strategies, every employee

Management will make a concerted effort

goal of becoming an unmatched leader

management market. I humbly ask for you

and encouragement as we endeavor toward

Thank you.

President


6/23


7/23

StayAheadTM

08


Beyond the Financial Industry Bou

2015 Top-Class Asset MCompany in Asia

In addition to the overseas branch offic

Singapore (established in 2007 and20

Management further reinforced its glowhen it signed a memorandum of und

form a joint venture asset managemen

Moreover, the company was named

for several sovereign wealth funds

Korea Investment Corporation, and t

Corporation, as well as the Nomura

Nikko Securities. These names at

recognition of Samsung Asset Man

long-term performance. In the years

Asset Management will continue wo

global network and marketing compe

to become a leading asset manageme


8/23

Exceeding customer expectation

AUM Surpassing USD 90 billion

As of March 2011, the total assets under management

(AUM) of Samsung Asset Management exceeded KRW

100 trillion (USD 90 billion), reaffirming market leadership

in the Korean asset management industry. Industry-leading research capabilities, scientific investment system,

preemptive risk management, backed by differentiated

product portfolios and competent financial experts, enable

Samsung Asset Management to flexibly respond to the

fluctuations in the financial markets. Koreas Best is a

slogan that reflects the excellence it has achieved in both

business and services. While continuing to recruit globally

competent financial experts, the organization was realigned

to strengthen the equity investment business in 2011.

StayAheadTM

10



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StayAheadTM

12


Maximizing network synergies

Towards Challenging Asthe Strengths of the SamsGroup

In 2011, Samsung Asset Management

in its history. By the end of August, the

into the Samsung Groups office build

the heart of Seouls economic and f

the relocation, the company will be ab

of the synergies within the Samsung

Sharing the same building with other

of the group such as Samsung Life

Securities, and Samsung Fire & M

well as Samsung Card, the compan

more business opportunities. This m

determination and new look will be a s

company to take a big leap forward to

3 asset management company by 202


10/23

StayAheadTM

14


REVIEW OFOPERATION

Samsung Asset Management carried out a reorganization in March 2011. The integration of the equity,

ETF, Quant and Strategy teams in the investment division into the Equity Investment Division further

strengthened the companys competencies in both asset management and global operations. The new

organization is expected to realize stable rates of return, with improved portfolio management and

cross-selling competencies. As one of the leading global asset management companies, Samsung Asset

Management will always remain ahead of the competition in customer value creation and investment

performance.

GlobalInvestment

Division

EquityInvestment

Division

QuantitativeInvestment

Division

ETFInvestment

Division

Head of EquityInvestmentDivision

2015 Top-ClassAsset Management

Company in Asia


Long-Term Equity Investment D

Strategy Management Division

Fixed Income Investment Divis


Quantitative Investment Divisi


Overseas Branch Offices

Public & Pension Funds Investme

Real Estate Investment Division

Retirement Pension

Compliance

Customer Satisfaction

Social Contributions


11/23


Advanced system and processes realize a stable rate of returns.

The Equity Investment Division works towards active fund management for a stable rate

of returns with a focus on growth potential, stability in the market environments, and

differentiated investment ideas. With a wealth of experience and outstanding credentials,the fund managers on the Equity Portfolio Management 1, 2, and 3 teams together with

analysts at the Research Center carry out in-depth analysis and extensive discussions to

build optimal investment portfolios. The Research Center, staffed by researchers from all

fields, allows everyone at Samsung Asset Management to tap into Koreas best research

and experience.

In particular, the Equity Investment Division has established advanced decision-making

processes, which take a team approach to the investment decision-making process.

Under this process structure, the fund managers, analysts, and strategists contribute their

specialties to form synergies to generate top asset performances.

StayAheadTM

16


Long-Term Equity Investment Division

Systematic investment based on in-depth analysis and joint

management aims for stable profitability.

The Long-Term Equity Investment Division provides customized long-term investment

services to institutional investors. Leveraging its extensive research capabilities andthe outstanding personal competences of each researcher, the Division has a long track

record of outstanding performance.

The fund managers in the Division conduct due diligence on the companies they research,

and hold meetings with industrial experts to stay up to date to successfully navigate

volatile market trends. Through active research, they look for signs of change ahead of the

market, in order to develop original investment ideas. Based on its investment philosophy

and know-how, the Division is able to concentrate its resources to realize stable long-

term profitability, while distinguishing itself in the growing variable life insurance and

retirement pension fund markets.

Investment Expertise

Systematic Investment, Stable Performance

ProvenPerformance

Extensiveexperience

frommanagingseveral

institutional investors

assets

Industryleadingshort-and

long-termp erformance

Long-timeTeamwork

Tenyearsof team-workin

industry/company analysis,

modelportfolios,and

industriesof interest

Differential ResearchCompetencies

PortfolioManagerswho

takea morecomprehensive,

long-termapproachto

companyanalysisthan

analystsprovide

Team Process

MPi

Model Portfolio

Research Recommended

Samsung Investments Universe

Market Universe

Analysts

Fundamentals-driven, Research-driven, Bottom-up oriented,Team approach

PMs

IndividualInitiative

CIO

MP Committee,Team approach

Investment Philosophy

Active Fund Management for Stable, Profitable Return

Identify companies that promise stable income and growth but still lack market

recognition or a share price that fully reflects their potential Discover market

inefficiencies

Focus on Growth Potential and Stability as they relate

to the market environment and differentiated investment

ideas

InvestmentIdea

DifferenceEmbedded

Value

Market Value(Share Price)


12/23

Fixed Income Investment DivisionStrategy Management Division

Investment Process

Provideaneconomicforecast

andinterestrateprediction

Analyzerelativevalueon yield

curve

Analyzerelativevalueon sector

andcredit

Developnewproductsand

strategies

Differentiate management

styleaccordingtothefund

characteristics

Discretional management

Tailormanagementstyleto

individualclientsriskprofile

Manager iskscientifically

Monitorand reviewperformance

Reflectfeedbackininvestment

strategy

Research Monitoring Feedback

PortfolioConstruction

A customized product line-up and active fund management designed to

satisfy the diverse needs of investors.

The Strategy Management Division established an investment system tailored to private

equity funds (PEF) and wraps for institutional and high net worth individual (HNWI) clients.Its active portfolio management seeks out stocks with high potential in order to generate

a stable rate of return.

While actively communicating with the companys Research Center and outside analysts,

the Divisions researchers carry out extensive company analysis and due diligence to

identify stocks with high growth potential in order to design optimal portfolios for higher

performance.

The Division strives to develop the best products, catering to the ever-expanding needs of

investors, so as to realize stable, long-term performance.

StayAheadTM

18



Place priority on the analysis of factors affecting the development of interest rates over interest

rate forecasting.

Discover the loss factors in the fixed income market to realize profitable rates of return.

Extend the scope of the fixed income market.

Take a team approach based on specialized duties to realize outstanding performances.Investment Philosophy

Active portfolio management, identifying stocks with high growth

potential, for stable rates of return

Stocks with High Growth PotentialCompanies with high growth potential

to become market leaders

Groups of market-leading companies

with potential to increase their market

power

Stocks with Growth PotentialCompanies with growth potential as star

picks

Groups of companies with potential to

return to profitability thanks to market

developments or restructuring

Star Picks Super Star Picks

Non-StarPicks

Star Picks

Leading the market as a fixed income management specialist

The Fixed Income Investment Division is the largest-scale fixed income management

organization in Korea as it operates assets under management (AUM) of KRW 77.2

trillion. The investment philosophy is that teamwork based on specialized functions andextensive research can lead to informed investment decisions, which will realize industry-

leading performance. Under this philosophy, fund managers are assigned to one of the five

specialized research teamsDuration, Curve, Sector, Quant, and New Productto perform

specialized research and management of fixed incomes in their individual areas of expertise,

enabling Koreas largest dual system of research and management of fixed incomes.

Tapping the nations top in-house quantitative analysis capabilities in the field, the

Division tests and adopts diverse new financial econometrics techniques. In particular,

the in-house developed tools for the performance attribution analysis and quant trading

tools helped to solidify to the companys reputation as the market leader.

Such innovative efforts have led to the top rank in the Evaluation of Asset Management

Companies by the National Pension Service for a third year in a row. The Division is also

the only Korean manager of the Asian Bond Fund (ABF), launched by the Executives

Meeting of East Asia and Pacific Central Banks (EMEAP). The EMEAP included the Bank of

Korea, allowing members to invest in bonds issued by Asian sovereign issuers. The Fixed

Income Investment Division will continue working to extend its proud track record as a

world-class fixed income fund management group.


13/23

Quantitative Investment

Division


Oct. 2002 Listed KODEX 200 as the first ETF on the Korea Exchange

Sep. 2007 Started management consulting for the first Thai ETF, becoming the first Korean company tolend financial expertise abroad

Nov. 2007 Listed KODEX 200, the largest Korean ETF, on Tokyo Stock Exchange

Jul. 2009 Listed a KODEX Treasury Bond ETF, expanding the range of underlying assets to bonds

Sep. 2009 Listed KODEX Inverse on the market, the first ETF in Korea that pays investors the inverse

performance of the F-KOSPI 200

Feb. 2010 Listed KODEX Leverage, an ETF with a return that doubles the KOSPI 200 Index

Mar. 2011 Listed the commodity investment portfolios such as KODEX Copper Futures and KODEX

Bean Futures on the KRX (expanding the investment target for ETF to commodities)

Managing KRW 4 trillion (USD 3.6 billion) in 20 ETFs (as of Mar-end 2011)

Milestones

Offering the best product portfolio through optimal operation of Koreas

largest ETF

The ETF Investment Division develops and manages exchange-traded funds (ETFs) that

track domestic as well as overseas stock and bond indices. Its first product was theSamsung KODEX200, which was listed on the Korea Stock Exchange in 2002. Designed

to track index return rates on its underlying assets including banks, semiconductor

manufacturers and automobile businesses, the KODEX ETF offers various investment

vehicles that allow investors to easily and efficiently build an optimal portfolio to meet

their investment needs.

The Division was also the first Korean financial institution to lend its financial expertise

abroad in September of 2007, when it provided consulting services for the overall

management of Thailands first ETF. In November 2007, the Samsung KODEX200,

the largest Korean ETF, was listed on the Tokyo Stock Exchange (TSE). In addition, the

KODEX Leverage and KODEX Inverse ETFs were listed, a first for the industry, earning

the company a reputation as the pioneer of the ETF market.

Surging ahead as a leading quantitative investor through financial

engineering

The Quantitative Investment Division was established in 2010 with a management

philosophy of scientific investment. The scientific investment methodology matches themost efficient investment vehicles that fit the individual investment propensities and

purposes of its clients. In 2010, the introduction of the Smart Plan Fund led the new

smart investment trend in the asset management market. In 2011, the Division also

launched the Smart Plan Silver Fund for efficient retirement life planning.

The Quantitative Investment Division will capitalize on its world-class quantitative analysis

capabilities to develop robust investment strategies for the scientific management of its

clients wealth through world-class management techniques.

StayAheadTM

20


ETF Investment Teams

ETFInvestment 1

ETFInvestment 2

TheETFInvestment1Team developsand managesETFsthattrackdomesticand

overseas stocksand otherindices. Havingstartedwith anindustry-firstlisting

ofKODEX200 totheKRXin Octoberof2002,theTeamnowoperatesatotalof

14ETFswithAUMofKRW3trillion(USD2.7billion)asoftheendofMarch2011.

The ETF Investment 2 Team develops and manages the derivatives-based

ETFs that invest in exchange-traded derivatives (futures, options, etc.) and

over-the-counter (OTC) derivatives (swaps, etc.). It was the first in Korea to list

the Leverage ETF and the KODEX Gold Futures ETF on the KRX.

Consists of three teams: Index

Investment, Quantitative

Investment, and Structured

Products Investment

Structured to cover the entire

risk-return spectrum, from

index funds and active quant

to innovative new products

Provides a total solution for

portfolio design, derivatives

utilization, and risk

management

Division Structure

Management Philosophy of Quantitative and Index Investment Teams

Realize stable profitable returns based on quantitative

approaches

RiskManagement

QuantApproach

TeamApproach

Advanced investment

decision-making

processes that combine

multidisciplinary expertise

First to adopt in the industry,

now firmly in place

Investment based on the

best quantitative research

organization in the nation

Steady profitable return

realized by sophisticated

quantitative approach

Division culture that gives

higher priority to risk

management than rates of

return

Pre-, mid-, and post-

investment risk monitoring

and management


14/23

Overseas Branch Offices

Building up global competencies through business expansion into the

Asian asset management market

Samsung Asset Management established branches in Hong Kong and Singapore in

November 2007 and April 2008, respectively, to secure strategic points in the Asianfinancial markets.

The company is expanding its investments in China and India, which are anticipated

to emerge as the growth engines of the global economy for the coming 50 years. After

achieving the Qualified Foreign Institutional Investor Status (QFII) from the Chinese

authorities, Koreas largest China Mainland A-Stock Fund was launched twice, in

February of 2009 and October of 2010. In 2011, Samsung Asset Management entered into

an MOU for a joint venture with the Xiancai Securities, in preparation to advance into the

worlds largest market. The successful funds that the Division introduced include: the India

Fund in August of 2009 and the Asia Leaders Fund, which invests in blue-chip stocks in 10

Asian countries in October of 2009. As of the end of 2010, the Division holds a total AUM

of KRW 2 trillion.

Meanwhile, the overseas branch offices in Hong Kong and Singapore bolstered their

marketing competencies to promote in-bound business (attracting foreign investors to

Korean funds) as well as to conduct local-to-local business (managing local investors

wealth at the local level). Taking advantage of its outstanding performance over the past

three years, it has successfully attracted several global institutional investors includingthe Korea sovereign funds. Such impressive track records served to make the company

one of the leading global asset management companies in Asia.


Reinforcing the management competencies of offshore funds through

synergies with overseas branch offices

The Global Investment Division utilizes its accumulated experience in offshore funds

management to build up its capabilities in the management of global funds andinvestment styles. In 2002, the Division was the first in Korea to introduce funds of hedge

funds. Serving as the Korean manager for several sovereign funds and theme equity

funds, it has led the globalization of the Korean asset management market. For instance,

its advanced management capabilities and stability was globally recognized when it was

selected as the Korean manager of the Asian fund Nomura Asset Management in 2009

and the Nikko Fund in 2010. In 2011, the Division was also named the Korean manager of

the China Investment Corporation (CIC), one of the worlds five largest sovereign funds,

cementing its name as a world-class asset management company.

The Global Investment Division will collaborate closely with the Hong Kong and Singapore

branches to develop and provide new investment vehicles such as the Asia Absolute

Return Fund and All Asset Fund through aggressive overseas marketing activities. It is

also about to set up a joint venture in China, further expanding its global operations.

StayAheadTM

22


Sep. 2009

Selected to be the Korean manager of the Asia Funds for Nomura Asset Management

Nov.2010

Selected to be the Korean manager for Nikko Funds

Mar. 2011

Selected to be the Korean manager for China Investment Corporation (CIC)

Major Achievements

Milestones

2002

Launched fund of hedge funds and offshore fund of funds, enabling domestic investors to invest

in offshore funds

2006

Launched N-Japan Fund, Southeast Asia Fund, and Latin America Fund through local asset

management companies (satisfying the domestic needs for direct investment in overseas stocks)

2007

Launched and managed the Global Water Fund and Alternative Energy Fund (enhancing the

management capabilities of theme funds related to ecological and energy issues)

2008Initiated direct management of funds such as China 2.0, China 2.0 Mainland, India 2.0, and GB

Southeast Asia through overseas branch offices

2011

Plans to launch the Asia Absolute Return Fund that invests in Korean and Asian stocks, fixed

incomes, ETFs, and exchange-traded derivatives and the All Asset Fund that aims at excess return

through diversified portfolio management

Hong Kong Branch Office

Nov.2007

Established

June 2008

Launched the Samsung China Fund

Feb. 2009

Launched the Samsung China 2.0 Mainland

Fund

Oct. 2010

Launched the Samsung China Mainland

Leaders Fund

Singapore Branch Office

Apr. 2008

Established

Aug. 2009

Launched the Samsung India Fund

Oct. 2009

Launched the Samsung Asia Leaders Fund

Feb. 2010

Launched the Samsung ASEAN Fund

Aug. 2010

Launched the Samsung Indonesia Dynamic

Fund


15/23

Public & Pension Funds Investment

Division

Real Estate Investment

Division

Koreas top real estate experts contribute their specialties to successful

real estate investments.

The Real Estate Investment Division boasts the nations best expertise in real estate

investment and management. Based on the t hree core strategies of taking advantageouspositions in potential markets, enhancing the value of investment assets and generating

stable cash flows, the Division applies multi-faceted efforts to realize a stable stream of

profitable return on its clients assets. The Division has real estate experts with extensive

expertise in the acquisition, development, leasing, management, and sales of office

buildings, residential properties, hospitals, retirement homes, and logistics facilities.

In the future, the Division plans to further expand its competencies in the inbound

investment (attracting foreign investors to Korean real estate investments) and outbound

investments (attracting domestic investors to overseas real estate investments).

StayAheadTM

24



Realize stable profitable returns on the public and pension

funds through systematic risk management and fund of funds

management that reflect the individual needs of clients

Fund of FundsInvestmentPrinciples

RiskManagement

Reflectionof customerneeds

Fund management that caters

to the individual needs of

clients

Pre-, mid-, and post-

investment comprehensive

risk monitoring and

management system

Minimize risks through

diversified portfolio investing

in high-performance funds

Investment Process

Define strategy

Managementphilosophy

Mid-andlong-term

strategy

Deal Sourcing/Funding

Targetrealestateanalysis

Qualification assessment

Funding

Fundsestabl ishment/Registration

Operating/Exit

Operatingstrategyperfund

Monthlyriskmonitoring

Performance review

Exittimingdecision

Investment Process

Fund A Fund B Fund C Fund DInvestment PoolManagement Council

Lead Manager

Manager

Fund

Management

Agencies

Custodian

Administrator

Evaluator

Public Funds Investment PoolIntegrated Fund

A B C D E F G

The fund of funds that realize stable long-term excess returns by assigning

capital to the optimal distribution plan based on the qualitative and quantitative

analysis of each asset management company, selected through due diligence

Nineequityfundmanagementcompanies,15fixedincomemanagementcompanies,sixMMF management

companies(asof March2011)

Investment Principles

1

2

3

4

5

Avoid short-sighted decision-making swayed by current market conditions, determine

the mid- and long-term intrinsic value of a property.

Make forward-looking decisions based on scientific analysis of information and market

cycles.

Set up a resale strategy in consideration of the inherent liquidity risk in real estate.

Seek opinions from professionals in different fields, to develop diverse investment

opportunities.

Uphold the highest legal and ethical standards to fulfill corporate social responsibility.

Advanced investment and risk management techniques enhanced the

investment returns for pension funds and public funds.

The Public & Pension Funds Investment Division has expertly managed the Investment

Pool for Public Funds for stable profitability since 2001. Under the investment philosophyof realizing stable rates of return on the public and pension funds, it has maintained

exceptional performance, surpassing the benchmark set for it. Notably, it was chosen as

the lead manager of the Investment Pool for Public Funds for the third consecutive year in

2009, proving its stable and efficient investment and management competencies for the

past decade.

The Division will continue to develop and provide new products tailored to the specific

needs of public and pension funds and providing consulting and training services to

them as a solution provider. As a fiduciary manager for the stable long-term growth

and development of the Investment Pool for Public Funds, it will serve as an investment

manager, to realize stable rates of return.


16/23

Retirement Pension Compliance

The industrys best compliance audit organization operates a strict

compliance monitoring system.

Client trust and confidence is the basis of the companys business. Operating compliance

supervisory system began well before such monitoring became mandatory. In order toencourage a self-regulated corporate culture, the control self-assessment system, to

assist employees with regular self-checks of their compliance with legal and the internal

control standards was adopted.

In addition, systematic monitoring systems to all potential risks associated with each

stage from initial planning to the final launch, through to the management of each product

are applied. Strict controls and a comprehensive monitoring system also prevent the

provision of misleading information to the client. In the process of investing and managing

clients asset portfolios, a three-step monitoring system, encompassing the pre-, real-

time, and post-investment to prevent violations of bylaws, fiduciary duties or internal

guidelines is applied.

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26


Prepared for the emerging retirement pension market to secure

investors retirement

For several years, Samsung Asset Management has been exhaustively preparing to enter

the retirement pension fund market, and is ready to grow as the leader of this fast-growingmarket. With advanced techniques to develop products to secure the retirement life of

its clients and designed to allow differentiated customer service, the company will soon

hold the reputation as Koreas top asset management company in the retirement pension

fund market. In order to diversify the DC-concentrated market structure, the company

cooperated with major sales companies to help clients redesign their portfolio, and

provide them with wealth management training. As for the corporate clients who chose

the DB plan, the company offered to craft their portfolios with structured, low volatility

products.

Committed to a secure retirement life for its clients through successful management of

their pension funds, Samsung Asset Management will continue to develop and provide

innovative products and services based on solid client and market research, as well as

through sustained client communication.

Publications

Vol. 1

Prepare a Rosy Retirement

Guidelines on preparing for a

happy and wealthy retirement

life

Vol. 3

Demeters Wise Choice

Basic principles of economics

and financial industry for

your kids

Vol. 5

Now is the Best Timing for

Life Cycle Financial Planning

The faster you start, the more

affluent your life will become

Vol. 2

Wealth Management for

Prepared Retirement

A to Z guide from fund

investment experts

Vol. 4

Get Ready for Thirty Post-

Retirement Years

An economists solution for

life beginning at 60

Compliance Supervision

Establishinginternalcontrol

practices

Managinglegalrisks and

operationalrisks

Integratingcompliancepracticesinto businessactivities

Realizingtransparentcorporateculture

Completing a self-regulated

internal control system

Preview, consultation,

and establishment of all

work process for efficient

management of legal andoperational risks

Review of compliance

issues at each business

level and trouble-shooting

support, control, and

management

Prepare a code of ethics to

promote the employees

awareness of a transparent

corporate culture

Internal Control System

Firmdeterminationofthe topmanagementtowards

transparentcorporatecultureandinternalcontrol

system

Theindustry-topinfrastructureandhuman

resourcesforinternalcontrolsystems

Information & Communication

Producingreportsbasedon timely

informationcollectionandresearch

activities

Establishinga systematic

communicationalchanneltoprovide

stakeholdersinformation

Self-checking and Monitoring

ControlSelf-AssessmentSystem

forindividual-andteam-levelself-

monitoring

Industry-leadingasset

managementmonitoringsystemfor

comprehensivereviewofinvestment

activities

Segmentingtheriskmanagementorganizationby

risktypeandcomprehensivemanagementofrisks

throughacompany-wideriskcontrolsystem

Linkingcompensationschemeswiththerisk

assessmentresultsandperformanceevaluations

Working-level Organization

Efficientcontrolthroughseparating

legalcompliance,RM,andaudit

functions

Maximizingworkefficiency

throughclosecollaborationamong

departmentsrelatedtointernal

controlsystem

E nv ir on me nt & C ul tu re R is k M an ag em en t & Ev al ua ti on

Internal Control System


17/23

Customer SatDifferentiated Services Realizes

Customer Satisfaction

All business activities at Samsung Asset Managemen

commitment to customer value. Customer needs are cons

and reflected to satisfy customers beyond their expectati

Investment Briefing with Music

Departing from the formal, conventional format of investment

Asset Management briefs clients on its performances with class

by first-class performers. The Investment Briefing with Classica

held every two months, since March of 2010. The first part pre

outlook and investment information, followed by classical mu

class musicians. This unique combination of information and ar

appeals to clients aesthetic taste, as well as their need for useful

Reader-Friendly Fund Management Reports

Fund management reports contain essential information for clie

they are notoriously full of financial jargon, which clients can find h

as laymen to the industry. Therefore, Samsung Asset Manageme

new guidelines for the language used in the management reportclient, a first in the industry, making it easier for readers to under

Services for Children

Children are also clients, and will grow into future clients. Theref

of services for the kids is offered, especially for the Samsung K

group of families, selected by lottery, among the Samsung Kid

invited to Family English Camp programs, where they can have a

games and participating in recreation activities in English. T

Classical Concert comes with commentary and gives children t

play musical instruments.

The Samsung Kids Volunteer Corps offers children the chance to vo

help the underprivileged. The blog, Samsung Kids Play & Study (k

com), offers various educational and entertainment content exclus

as essay-writing, Chinese Characters, English learning, economi

and animations, as well as useful information for parents about w

and fund investment.

StayAheadTM

28



18/23

Samsung Asset Management practices diverse soci

programs, such as sponsoring children and juvenile

extending a helping hand to family farms. A responsible c

the company is dedicated to building a happier and brigh

Sharing Minds

Samsung Asset Management sponsors children and juvenile chari

as its representative social contribution programs. Having enter

with orphanages, afterschool programs, and charities for kids

flower gardens at orphanages, attend charity events, make kimch

go on picnics with children. Every June and October, employee fam

villages to lend a helping hand with the farming. Other activities in

and charity funding events.

Caring Minds

Employees are encouraged to practice social contribution activ

lives, to weave social contribution into corporate culture. Every

monthly donations to charity funding and volunteers for various sprograms. In 2010, the employees collectively spent 3,612 hours in

activities, 18 hours per person. We remain committed to buildin

through various social contribution activities.

Social ConEnvisioning a Better World

for Everyone

StayAheadTM

30


No. of Participants & Participation Rate

2000

25

22.7%

2001

26

21.7%

2002

28

21.5%

2003

62

44.3%

2004

149

96.1%

2005

151

97.4%

2006

158

98.8%

2007

204

96.2

200

20

91.3ParticipationRate

No.ofParticipants


19/23

FINANCIAL STATEMENTS

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32


Samsung Asset Management practices transparent

management with integrity, and is committed to

enhancing customer value.

Independent Auditors Report

Internal Accounting Control Sy

Review Report

Statements of Financial Positio

Statements of Income

Statements of Appropriations

Retained Earnings

Statements of Cash Flows

2015 Top-ClassAsset Management

Company in Asia


20/23

INDEPENDENTAUDITORS REPORTEnglish Translation of a Report Originally Issued in Korean

INTERNAL ACCOUNTING CONTROL SYSTEM REVIEEnglish Translation of a Report Origin

To the Shareholders and Board of Directors of

Samsung Asset Management Co., Ltd.:

We have audited the accompanying statements of financial position of Samsung Asset Management Co., Ltd. (the Company) as of

March 31, 2011 and 2010, and the related statements of income, appropriations of retained earnings, changes in shareholders equity and

cash flows for the years then ended, all expressed in Korean won. These financial statements are the responsibility of the Companys

management. Our responsibility is to express an opinion on these 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 financial statements referred to above present fairly, in all material respects, the financial position of the Company as

of March 31, 2011 and 2010, and the results of its operations, changes in its retained earnings and its shareholders equity, and its cash

flows for the years then ended in conformity with accounting principles generally accepted in the Republic of Korea (see Note 2).

Accounting principles and auditing standards and their application in practice vary among countries. The accompanying financial

statements are not intended to present the financial position, results of operations, changes in shareholders equity and cash flows in

accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the

procedures and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally accepted

and applied in other countries. Accordingly, this report and the accompanying financial statements are for use by those knowledgeable

about Korean accounting procedures and auditing standards and their application in practice.

Deloitte Anjin LLC

May20, 2011

To the Chief Executive Officer of

Samsung Asset Management Co., Ltd.:

We have reviewed the report of managements assessment of internal accounting control system (IACS) of Samsung A

Co., Ltd. (the Company), as of March 31, 2011. In accordance with Article 2-2 of the Act on External Audit for Sto

External Audit Law) of the Republic of Korea, the Companys management is responsible for assessing the design an

IACS. Our responsibility is to review managements assessment and issue a report based on our review. The Comp

stated in the managements report that based on the assessment of the IACS as of March 31, 2011, the Company

appropriately designed and is operating effectively as of March 31, 2011, in all material aspects, in accordance with th

We conducted our review in accordance with the IACS Review Standards. Those standards require that we plan and

the objective of which is to obtain a lower level of assurance than an audit, of the managements report in all material

includes obtaining an understanding of the Companys IACS and making inquiries regarding the managements report a

necessary, performing a limited inspection of underlying documents and other limited procedures. With the Comp

unlisted mid-sized company, the IACS management report regarding the operating effectiveness of the IACS can be

strict manner in accordance with Chapter 5 of the IACS Framework - Applications to Mid-sized Companies. Therefore, w

the review in accordance with the IACS Review Standards No. 14 - Review of Mid-sized Companies.

The Companys IACS represents internal accounting policies and a system to manage and operate such policies to p

assurance regarding the reliability of financial statements prepared, in accordance with accounting principles genera

Republic of Korea, for the purpose of preparing and disclosing reliable accounting information. Because of its inhere

may not prevent or detect a material misstatement of the financial statements. Also, projections of any evaluation

IACS to future periods are subject to the risk that controls may become inadequate because of changes in conditions

of compliance with the policies or procedures may deteriorate.

Based on our review, no material weakness in the design or operations of the Companys IACS under Chapter 5 of the

Applications to Mid-sized Companies has come to our attention.

This report applies to the Companys IACS in existence as of March 31, 2011. We did not review the Companys IACS su

31, 2011. This report has been prepared for Korean regulatory purposes, pursuant to the External Audit Law, and may

for other purposes or for other users.

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34


Thisreportis effectiveas ofMay 20,2011,theauditorsreportdate. Certainsubsequenteventsorcircumstancesmayhaveoccurredbetweentheauditorsreportdateandthe

timetheauditorsreportisread. Sucheventsorcircumstancescouldsignificantlyaffectthe accompanyingfinancialstatementsandmayresultinmodificationsto theauditors

report.

This report is annexed in relation to the audit of the financial statements as of March 31, 2011, and the review of internal accounting contro

Article 2-3 of the Act on External Audit for Stock Companies of the Republic of Korea.


21/23

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36


ASSETS

CASH AND DEPOSITS

SECURITIES

LOAN RECEIVABLES

TANGIBLE ASSETS

Vehicles

Computer equipment

Furniture and equipment

Leasehold improvements

Less: Accumulated depreciation

Total tangible assets

OTHER ASSETS

Accounts receivable-other

Accrued income

Advance payments

Prepaid expenses

Guarantee deposits

Intangible assets

Deferred income tax assets

Others

Total other assets

TOTAL ASSETS

LIABILITIES AND SHAREHOLDERS EQUITY

DEPOSITORY LIABILITIES

Customers deposits for beneficiary

Total depository liabilities

OTHER LIABILITIES

Accounts payable-other

Accrued expenses

Income tax payable

Withholdings

Accrued severance benefits

Deferred income tax liabilities

Total other liabilities

Total liabilities

SHAREHOLDERS EQUITY

Capital stock

Capital surplus

Accumulated other comprehensive income

Retained earnings

Total shareholders equity

Total liabilities and shareholders equity

OPERATING REVENUES

Operating fees

Management fees on wrap account and

asset management

Interest income

Gain on foreign currency

OPERATING EXPENSES

Commission expense

Loss on securities

Interest expenses

Loss on foreign currency

General and administrative expenses

Other operating expenses

OPERATING INCOME

NON-OPERATING INCOME (EXPENSES)

Loss on disposal of tangible assets, net

Gain on disposal of other assets, net

Investment gain on retirement pension

plan asset

Loss on valuation of investment securities

accounted for using the equity method

Donations

Other, net

INCOME BEFORE INCOME TAX

INCOME TAX EXPENSE

NET INCOME

EARNINGS PER SHARE

$ 134,206,958

27,634,428

4,358,869

402,081

2,061,847

2,439,621

2,856,670

7,760,219

(5,792,149)

1,968,070

126,078

17,099,684

247,793

2,970,476

16,843,176

1,155,416

146,969

2,258

38,591,850

$ 206,760,175

$ 37,490,926

37,490,926

167,873

3,723,404

4,085,865

910,000

1,167,903

10,055,045

47,545,971

84,384,032

34,711

2,302,442

72,493,019

159,214,204

$ 206,760,175

$ 194,302,939

31,968,649

4,537,741

680,929

1,907,690

2,490,656

2,912,130

7,991,405

(6,312,376)

1,679,029

11,912

20,235,536

2,287,648

12,368,634

1,193,860

2,257

36,099,847

$ 268,588,205

$ 90,933,635

90,933,635

179,194

4,528,288

4,795,455

901,556

1,344,010

65,424

11,813,927

102,747,562

84,384,032

34,711

2,253,265

79,168,635

165,840,643

$ 268,588,205

$ 70,551,842

23,265,317

6,825,971

101,097

100,744,227

7,471,549

2,258,288

55,061

57,375,716

26,678

67,187,292

33,556,935

12,961

105,805

205,998

(2,014,072)

(210,630)

619,444

(1,280,494)

32,276,441

8,724,019

$ 23,552,422

$ 1.26

\ 148,593,944

30,596,839

4,826,140

445,184

2,282,877

2,701,148

3,162,905

8,592,114

(6,413,067)

2,179,047

139,594

18,932,770

274,356

3,288,911

18,648,764

1,279,277

162,724

2,500

42,728,896

\ 228,924,866

\ 41,509,953

41,509,953

185,869

4,122,553

4,523,870

1,007,552

1,293,102

11,132,946

52,642,899

93,430,000

38,432

2,549,264

80,264,271

176,281,967

\ 228,924,866

\ 75,163,871

22,057,494

7,012,437

176,215

104,410,017

8,783,340

545

1,404,260

21,699

59,931,624

11,117

70,152,585

34,257,432

(8,989)

267,097

(3,061,727)

(206,700)

34,511

(2,975,808)

31,281,624

9,549,239

\ 21,732,385

\ 1,163

\ 215,132,215

35,395,688

5,024,187

753,925

2,112,194

2,757,654

3,224,310

8,848,083

(6,989,063)

1,859,020

13,189

22,404,786

2,532,884

13,694,550

1,321,842

2,500

39,969,751

\ 297,380,861

\ 100,681,721

100,681,721

198,404

5,013,720

5,309,528

998,203

1,488,088

72,437

13,080,380

113,762,101

93,430,000

38,432

2,494,815

87,655,513

183,618,760

\ 297,380,861

\ 78,114,999

25,759,359

7,557,715

111,935

111,544,008

8,272,499

2,500,377

60,964

63,526,393

29,538

74,389,771

37,154,237

14,350

117,147

228,081

(2,229,981)

(233,210)

685,852

(1,417,761)

35,736,476

9,659,234

\ 26,077,242

\ 1,396

Korean won (Inthousands)2011 2010

Translation into U. S. Dollar2011 2010

STATEMENTS OFFINANCIAL POSITIONAs of march 31, 2011 and 2010

STATEMENTS For the years ended marc

Korean won (Inthousandsexceptpershareamounts)2011 2010

Translation into U2011

The exchange rate as of March 31, 2011: 1107.20won per dollar



22/23

STATEMENTS OFCAFor the years ended marc

StayAheadTM

38


CASH FLOWS FROM OPERATING ACTIVITIES:

CASH FLOWS FROM INVESTING ACTIVITIES:

CASH FLOWS FROM FINANCING ACTIVITIES:

NET INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS, END OF YEAR

RETAINED EARNINGS BEFORE

APPROPRIATIONS:

Unappropriated retained earnings

carried over from prior years

Net income

APPROPRIATIONS:

Legal reserve

Dividends

Voluntary reserve

UNAPPROPRIATED RETAINED EARNINGS

TO BE CARRIED FORWARD TO

SUBSEQUENT YEAR

$ 3,817

19,628,238

19,632,055

1,687,681

16,876,806

1,065,751

19,630,238

$ 1,817

16,828,425

(3,233,318)

(16,876,806)

(3,281,699)

14,518,597

$ 11,236,898

$ 1,817

23,552,422

23,554,239

1,687,681

16,876,806

4,985,549

23,550,036

$ 4,203

40,664,308

(12,416,993)

(18,686,000)

9,561,315

6,513,676

\ 16,074,991

\ 4,226

21,732,385

21,736,611

1,868,600

18,686,000

1,180,000

21,734,600

\ 2,011

18,632,432

(3,579,929)

(18,686,000)

(3,633,497)

16,074,991

\ 12,441,494

\ 2,011

26,077,242

26,079,253

1,868,600

18,686,000

5,520,000

26,074,600

\ 4,653


Translation into U. S. Dollar2011 2010


Translation into U2011

STATEMENTS OFAPPROPRIATIONS OF RETAINED EARNINGSFor the years ended march 31, 2011 and 2010




23/23

ORGANIZATION

FINANCIALNETWORK

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40

SAMSUNG ASSET MANAGEMENT

Samsung Asset Management promises to li

the trust and expectations placed on it with

class competencies.

Marketing Management

Product Development

Marketing Communication

Public Relations

Channel Sales 1

Channel Sales 2

Pension Consulting

Channel Sales 3

Channel Sales 4

Channel Sales 5

Institutional Sales1



Real Estate Investment 1

Real Estate Investment 2

Real Estate PortfolioManagement

Global Sales

Boardof

Directors

Public&PensionFundsInvestment

DivisionInvestment Pool

Planning

Investment PoolManagement

Long-TermEquityInvestment

Long-Term EquityInvestment 1

Long-Term EquityInvestment 2

BusinessSu pport

Risk Management

Human Resources

Business Administration

Fund Accounting

Information Strategy

Compliance

Compliance & Legal

President& CEO

BODSecretariat

RM

Committee

InvestmentStrategyTeam

Trading & InvestmentSupport

Research Center

EquityPortfolioManagement 1



Strategy Management

Quantitative Investment

Index Investment

Structured ProductsInvestment

QuantitativeInvestment

ETF Investment 1

ETF Investment 2

ETF Investment

Global InvestmentManagement

Global Investment

GlobalInvestment

EquityInvestment

Division

Fixed Income PortfolioManagement 1




FixedIncomeInvestment

Fixed Income Strategy

Credit Research

Long-Term Fixed IncomeInvestment

Separate Account

LTFixedIncomeInvestment

FixedIncomeInvestment

Division

RealEstateInvestment

RealEstate

InvestmentDivision

MarketingStra tegy

RetailChannelSales1

RetailChannelSales2

Institutional Sales

GlobalSales

MarketingDivision

AuditTeam

Corporate

AuditorCommittee

HongKongOffice

SingaporeOffice

OverseasBranch

Office

annual report 2011eng

Documents