Yngve Slyngstad

NBIM presented the fund’s annual report for 2008 when stock markets bottomed out in March last year. Many people questioned our investment strategy at the time. We seek to safeguard the fund and build wealth for future generations. The fund’s size and investment horizon
are substantially greater than for most other investors, so it is important to stick with our long-term strategy  even in periods of setbacks. This was demonstrated last year when the fund returned a record 25.6 percent. This was 4.1 percentage points higher than the return on the
benchmark portfolio and better than we could have expected given our investment strategy. Much of it was due to a reversal of the fixed income portfolio’s negative results in 2007 and 2008.

The fund’s market value rose to 2 640 billion kroner at the end of 2009. The return on investments was 613 billion kroner, while capital inflows of 169 billion kroner were the lowest since 2004. NBIM reached a target of 60 percent in equity investments in June, after two years
and 1 010 billion kroner in stock purchases. The long transition period was favourable as we were able to exploit falling equity prices during the financial crisis.

The fund has stakes in more than 8 300 companies. NBIM uses its ownership rights to protect these investments, promote shareholder rights and encourage better social and environmental standards at companies. We continued to develop our ownership work in 2009, using
new methods and adopting a strategy with two new focus areas. Well-functioning financial markets became  such an area after the collapse of fixed income markets in 2008. Better water management at companies was the other new focus.

NBIM has emerged from the financial crisis stronger. We continued the extensive reorganisation that started in 2008, with a new governance model and organisation structure. We recruited many talented employees, including a new management team with broad international
experience. The organisation has gained valuable experience, particularly in crisis and risk management, strengthening its competence and structure.

Investment is about looking ahead. The purpose of the fund is to ensure that future generations get a share of today’s petroleum wealth through solid long-term returns.

The fund´s investments will always be exposed to the 5 risk of changing conditions. We learned some important lessons in the past two years and we look enthusiastically forward to further developing a world-class investment management organisation.

NBIM aims to provide open and detailed information about its fund management. We have seen that expectations of openness, transparency and accountability are particularly high in challenging times. We hope that this annual report will give readers a broad picture of the
fund’s management over the past year and provide useful information about how we have discharged the important task we have been entrusted with.

Oslo, 5 March 2010

Yngve Slyngstad
Executive Director NBIM