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3Q 2004 Quarterly report

In the third quarter of 2004, the return on the Government Petroleum Fund, including the Environmental Fund, was 1.42 per cent measured in terms of the currency basket that corresponds to the composition of the Fund’s benchmark portfolio. The overall return in the first three quarters of 2004 was 4.23 per cent.

The return on the equity portfolio in the third quarter was -0.99 per cent measured in terms of the benchmark portfolio’s currency basket. This reflects a fall in share prices through the quarter in the three main markets, the US, Europe and Japan in particular. The return on the fixed income portfolio was 3.12 per cent measured in terms of the currency basket following interest rate reductions in the US as well as in the euro area and Japan.

 The return on the Petroleum Fund’s ordinary portfolio in the third quarter of 2004 was 0.02 percentage point lower than the return on the benchmark portfolio defined by the Ministry of Finance. The actual return for the first three quarters as a whole was 0.30 percentage point higher than the benchmark return.

The third quarter return on the Environmental Fund was -1.59 per cent measured in terms of the benchmark portfolio currency basket and -3.59 per cent measured in NOK. The return for the first three quarters as a whole was 3.97 per cent measured in terms of the currency basket and 4.48 per cent measured in NOK.

The Petroleum Fund’s market value was NOK 988.1 billion at the end of the third quarter, which is an increase of NOK 45.8 billion since the beginning of the quarter and an increase of NOK 142.8 billion since year-end 2003.

 The increase in market value in the third quarter is a result of both positive returns measured in international currency and the transfer of new capital. NOK 52.1 billion in new capital was transferred to the Fund, while the return on invested capital, measured in international currencies, amounted to roughly NOK 13.5 billion. A stronger krone in relation to the currencies in which the Petroleum Fund is invested reduced the value of the Fund by NOK 19.8 billion during the quarter. Changes in the krone exchange rate have no effect on the Fund’s international purchasing power.

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