SUPPLEMENTARY PENSION FUND

Supporting the future income of employees and their families

In 2003, the net equity of the Gerdau Group pension funds in Brazil (Gerdau Private Pension Fund and the Açominas Social Security Foundation - Aços) reached R$ 1.1 billion, an increase of R$ 251 million in comparison to the previous year.

The profitability of Gerdau Private Pension Fund assets reached 42% in 2003, a figure 187% higher than the actuarial commitment of 15% (National Consumer Price Index + 4% per year). The 19% actuarial commitment of the Aços Foundation (National Consumer Price Index + 6% per year) was exceeded by 25%, with an investment profitability of 24% recorded for 2003.

The net equity of these funds, sufficient to cover granted benefits and those to be granted, presented an accumulated surplus of R$ 121 million during the year. Over a 15-year period, the Group has granted a total of 12,577 benefits, including retirement funds, pensions, illness-assistance and monthly income assistance. Of this total, 418 benefits were granted in 2003. The Gerdau Pension Fund and the Aços Foundation paid a total of R$ 20 million in the form of monthly income, a value 24% higher than that recorded in the previous year.

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