"The Ethical Council's extractive industries project clearly shows that preventive initiatives are an effective way to exert influence," said Christina Hillesöy, Chairwoman of the Ethical Council.

"By highlighting strengths and weaknesses in corporate sustainability strategies, we have in multiple cases been able to drive change in areas where we have identified shortcomings. That is exactly what preventive measures can achieve: making a difference and encouraging companies in which the AP funds invest to move towards more responsible stewardship."

In 2012, two of the companies on the dialogue list – Rio Tinto and Goldcorp – took action in accordance with the Ethical Council's demands and met our initial objectives. Rio Tinto adopted a policy stating that riverine and shallow marine disposal of mining waste must be avoided at new mines. With regard to Goldcorp, the Ethical Council joined with a group of Canadian investors to demand that the company respect human rights in current and future projects. Goldcorp responded by commissioning an independent human rights impact assessment and subsequently implemented an action plan to address identified deficiencies.

Christina Hillesöy said: "The dialogue with Goldcorp is a prime example of how we can work with other stakeholder groups to spur companies to move in a positive direction. The discussions with Goldcorp have been constructive and the company has now implemented a range of measures. The company itself says that the dialogue has resulted in decisive changes in its Guatemalan operations and has helped to shape its work on sustainable stewardship. Goldcorp has also told us it has received inquiries from other mining companies keen to learn from its experiences."

For further information, please contact:
Christina Hillesöy, Ethical Council Chairwoman for 2013
Tel: +46 8555 17 123
Email: info@ethicalcouncil.com

Read the report (PDF-document, 6,6 MB)

About the Ethical Council: The First, Second, Third and Fourth Swedish National Pension (AP1, AP2, AP3 and AP)coordinate their work on environmental and social responsibility via the Ethical Council. The Ethical Council is the funds' joint platform for driving positive change in foreign companies implicated in non-compliance with international environmental and human rights conventions. Combining a preventive and reactive approach, the Ethical Council works to make a difference in the field of environmental and socially responsible stewardship. Preventive initiatives include actions to ensure that companies in which the funds invest operate in accordance with relevant ethical, social and environmental standards and have policies and operating and monitoring systems in place to enable responsible stewardship. Reactive measures include engaging in dialogue with companies that violate international conventions to encourage them to comply with those conventions and to take action to avoid any future non-compliance.

• The Second AP Fund's capital assets totalled SEK 241.5 (216.6) billion on December 31st 2012, against which net outflows to the national pension system were charged in an amount of SEK -3.8 (-1.2) billion.
• The Fund posted a net result for the year of SEK 28.6 (–4.6) billion.
• The Fund's return on the total portfolio was 13.5 (-1.9) percent, excluding commission costs and operating expenses. Including these costs, the portfolio generated a return of 13.3 (-2.1) percent.
• The relative return on the portfolio of quoted assets, excluding alternative investments and costs, amounted to 1.1 (-0.3) percent.
• Return on alternative investments was 13.9 (8.4) percent.
• In the past ten years, the Second AP Fund has generated an average annual return of 7.6 percent. Adjusted for inflation, this corresponds to an annual real return of 6.2 percent, as compared to the Fund's long-term targeted average of 5 percent.

"At the close of the year, we can state that the Second AP Fund's capital assets have never been greater. With a return of no less than 13.5 percent and fund capital amounting to SEK 241.5 billion, in spite of the continued turbulence on financial markets, we have demonstrated that our long-term strategy is working well," states CEO Eva Halvarsson, Second AP Fund.

The English version of the AP2 Annual Report 2012 will be available at www.ap2.se from the beginning of March.

For further details, contact CEO Eva Halvarsson, Second AP Fund, on 46 (0)31-704 29 00 or Ulrika Danielson, Head of Communications, on +46 (0)31-704 29 29.

AP2 has acquired 41 per cent of US Office Holdings, which is owned by NPS and Tishman Speyer's affiliate. In addition to three directly-owned properties, US Office Holdings is a co-owner with the Government of Singapore Investment Corporation of the property company, PPI (Prime Plus Investments Inc), which has 12 properties.

The total property portfolio comprises 15 well located office properties, totalling approximately 830 000 m². The market value of the US Office Holdings portfolio is over USD 1.8 billion. Seventy per cent of the portfolio value comprises properties on the east and west coasts of the USA, in New York, San Francisco, Seattle and Beverly Hills. Twenty per cent of the portfolio value comprises properties located in Chicago.

Through the investment, the AP2 fund acquires 41 per cent of the shares in US Office Holdings for USD 325 million.

"This investment enables us to invest in the American property market together with other long-term investors with extensive local knowledge and experience. Investing in the USA is also attractive since this is a mature and transparent market with potential for growth," says Eva Halvarsson, CEO of AP2.

For further information, please contact:
Eva Halvarsson, CEO AP2, telephone +46 (0)31-704 29 00
Ulrika Danielson, Head of Communications & HR AP2, telephone +46 (0)709-50 16 13

• The Second AP Fund's assets under management totalled SEK 227.3 (227.5) billion on June 30th 2012, against which net outflows to the national pension system were charged in an amount of SEK -1.7 billion.
• The Fund posted a first-half net result of SEK 12.3 (5.1) billion.
• The Fund's return on the total portfolio was 5.8 (2.4) percent, excluding commission costs and operating expenses. Including these costs, the portfolio generated a return of 5.7 (2.3) percent.
• The relative return on the portfolio of quoted assets, excluding alternative investments and costs, amounted to 0.5 (0.1) percent, corresponding to a net contribution of SEK 0.9 billion.
• Operating costs in terms of asset management costs remained low, totalling 0.08 percent for the period.
• Excluding net inflows from the national pension system, Fund capital has increased by SEK 82.9 billion since its start in 2001, corresponding to an average annual return of 3.9 percent, after costs.
• The Fund's level of currency exposure was 15 (18) percent.

"It is pleasing that the Fund's active return amounted to 0.5 percent, roughly equivalent to SEK 1 billion. The result for the first half is consistent with our long-term objective of generating an average annual real return of five percent," states CEO Eva Halvarsson, Second Swedish National Pension Fund.

The complete half-year report (pdf) will be published on the Fund's website at www.ap2.se

A Corporate Governance Report will be published separately in October.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Ulrika Danielson, Head of Corporate Communications, on +46 31 704 29 00.

"This year marks ten years since we started publishing the Women's Index, and there has been a positive development in the number of female board members and company managers in this time, even if numbers have occasionally fallen. The rate of change is nevertheless painstakingly slow. At the current pace, it would take 27 years before the share of female board members reached 50 per cent, and 52 years; that is, until 2064, before we would see women occupy 50 per cent of company management positions. We believe that it is important that as many as possible take action in order to achieve a more rapid pace of change. If not, we risk seeing a continued loss of expertise, which we believe would have a negative impact both on the competitive power of companies and on society as a whole," says Eva Halvarsson, CEO of AP2.

The larger companies listed on the Stockholm stock exchange employ the largest number of women, together with industries with a large number of female employees. The service and finance industries have the largest number of female board members while the media and health industries have the largest number of female employees in management positions. The commodities sector ranks bottom both when it comes to the number of female board and management group members. However, the number of women in company management positions has increased and men now occupy less than 90 per cent of these positions.

The number of women studying for degrees in fields that have historically been a source of recruitment for company management and board members has increased over the past 30 years; from just under 20 per cent to just over 40 per cent today. However, women tend to drop off in the transition from graduates to employees (almost a third), to managers (one fourth) and to Group management (one seventh).

Since 2003, AP2 has conducted an annual survey together with Nordic Investor Services to measure the number of women in middle management roles, in company management positions and on the boards of companies listed on the stock exchange. In addition, the number of women graduating from degree programmes that have traditionally served as a basis for recruitment to company management and boards has also been measured.

Click here to see the 2012 report. (PDF-document, 566 kB)

For further information, please contact:
Eva Halvarsson, CEO AP2, +46 (0)31 704 29 00
Ulrika Danielson, Communications Manager, +46 (0)709 50 16 13

Guided by the AP funds' AP mission and shared core values, the Ethical Council works both on a preventative and reactive basis to make a difference in environmental and ethical issues. Preventative initiatives are an increasingly important way to influence companies and industries towards responsible ownerships and in 2011 the Ethical Council started a special project focused on the mining industry. Other sustainability-related areas where the Ethical Council has launched preventative initiatives include anticorruption, climate change, labour conditions in the electronics industry and environmental impact in the oil sector.

"By taking a preventative approach to strengthening the companies' sustainability efforts it is possible to avoid serious incidents. The Ethical Council has screened some thirty mining companies to analyze their sustainability performance, and we will now move forward by addressing the shortcomings that have been identified," says Ulrika Danielson, Chairwoman of the Ethical Council.

In 2011 the Ethical Council conducted dialogues in various ethical and environmental areas with a total of 126 companies worldwide. Two companies on the dialogue list, Duke Energy and Bridgestone, took action in accordance with the Ethical Council's demands and these discussions can now be terminated.

"Through active dialogue with and monitoring of the companies in relation to well defined requirements, we can see that the Ethical Council is making a difference. At the same time, we are humble and know that there is still much to be done. But the progress we have seen for companies like Duke Energy and Bridgestone, as well as Goldcorp, where the Ethical Council has been pushing for a change since 2008, is a clear example of how we can exert an influence through active ownership," says Ulrika Danielson.

Read more about the Ethical Council's company dialogues and other activities in the annual report for 2011, which can be downloaded from the Ethical Council's website, www.ethicalcouncil.com

For more information contact: Ulrika Danielson, Chairwoman of the Ethical Council in 2012 Telephone: +46 31-704 29 29, E-mail: info@ethicalcouncil.com

• The Second AP Fund's assets under management totalled SEK 216.6 (222.5) billion on December 31st 2011, against which net outflows to the national pension system were charged in an amount of SEK -1.2 (-4.0) billion.
• The net result for the year amounted to SEK -4.6 (22.3) billion.
• The Fund's return on the total portfolio was -1.9 (11.2) percent, excluding commission fees and operating expenses. Including these expenses, the portfolio noted a return of -2.1 (11.0) percent.
• The relative return on the Fund's overall portfolio, excluding alternative investments and expenses, was -0.3 (0.8) percent, -0.16 percent of which is attributable to implementation effects.
• The most substantial contributions to ROI derived from alternative investments and fixed-income securities. The return on these asset classes was 8.4 (15.0) and 6.8 (0.5) percent respectively.
• During the spring, the Fund instituted a comprehensive reallocation of its portfolio assets, from Swedish equities and fixed-income securities to emerging market equities and government bonds.
• During 2011, the Fund established a joint real-estate company in association with the First Swedish National Pension Fund/AP1, focused on investment in European real estate. The Fund has also launched a joint venture with US pension fund TIAA-CREF, which will focus on investment in agricultural real estate in the US, Australia and Brazil.

"The European debt crisis and falling stock markets the world over have had an impact on much of the year – and on the result. In spite of this, we can report a limited decline in market worth than experienced by the major stock markets. This derives from our long-term commitment to diversify the portfolio," states CEO Eva Halvarsson, Second AP Fund.

The English version of the AP2 Annual Report 2011 will be available at www.ap2.se from the end of February.

For further details, contact CEO Eva Halvarsson, Second AP Fund, on 46 (0)31-704 29 00 or Ulrika Danielson, Head of Communication, on +46 (0)31-704 29 29.

Read the press release (PDF-document, 372 kB)

Read the report (PDF-document, 1,5 MB)

Winners

Read the complete report here. (PDF-document, 1,0 MB)

For further information, please contact:
Ulrika Danielson, Head of Communications, on +46 (0)31 704 29 29.

Recent years have seen a strong increase in investor interest in farmland. The Farmland Principles provide institutional investors with best practice guidelines for:

- Promoting environmental sustainability (Principle 1)

- Respecting labour and human rights (Principle 2)

- Respecting existing land and resource rights (Principle 3)

- Upholding high business and ethical standards (Principle 4)

- Reporting on activities and progress towards implementing and promoting the Principles (Principle 5)

The Farmland Principles were developed and are endorsed by AP2 (Sweden), ABP (Netherlands), APG (Netherlands), ATP (Denmark), BT Pension Scheme (UK), Hermes EOS (UK), PGGM (Netherlands) and TIAA-CREF (USA), all of whom are signatories to the UN-backed Principles for Responsible Investment (PRI). These institutions are committed to implementing the Farmland Principles in their investment policies and practices. Other institutional investors are invited to also endorse the Farmland Principles and use them as a framework for developing their own responsible farmland investment practices.

Jose M. Minaya, Head of Natural Resources & Infrastructure Investments at TIAA-CREF, said "As the world faces the challenge of feeding 9 billion people, it is critical that new investments into agriculture are made with sensitivity to their environmental and social impact. The Farmland Principles express a strong commitment by long-term oriented investors to practice responsible investment as we seek to create value for our clients."

Xander den Uyl, Vice-Chairman of the Board of Trustees of ABP, added, "Farmland operations that respect the environment, adhere to responsible labour practices and maintain positive stakeholder relations are better long-term investments – for the local communities, for host countries and for the pensioners we serve. We hope these principles will provide a reference point also for other investors' farmland investments."

Christina Olivecrona, Sustainability Analyst at AP2, said, "Environmental and ethical issues are an important part of our investment process. Having recently decided to invest in farmland, AP2 therefore actively supported the development of the Farmland Principles with the goal of improving sustainability and transparency in this asset class."

The Farmland Principles have been developed with respect to other best practice guidelines guiding the actions of financial institutions worldwide.

The institutions that launched the Farmland Principles are also part of a newly formed PRI investor working group that will develop implementation support and tools to further advance responsible investment in farmland. The institutions are planning to review the Farmland Principles based on implementation experience and stakeholder feedback.

More information is available on the PRI website at: www.unpri.org/commodities

Notes to editors

View the full text of the Farmland Principles by visiting: www.unpri.org/commodities

A condensed list is found below:

Principles for Responsible Investment in Farmland

Principle one: Promoting environmental sustainability
We will promote measures aimed at protecting the environment and contributing to the sustainability of specific crops and locations, for example by reducing soil erosion, protecting biodiversity, reducing chemical emissions, effectively managing water, and mitigating climate impacts.

We will require investment managers and operators acting on our behalf to conduct an environmental assessment identifying the relevant environmental impacts and risks of a planned investment.

Based on this environmental assessment, investment managers and operators will be expected to implement mitigation and management measures relevant and appropriate to the nature and scale of the proposed investment.

Principle two: Respecting labour and human rights
We will respect labour and human rights in our farmland investments. We will require investment managers and operators acting on our behalf to do the same and to avoid complicity in human rights abuses.

We will require investment managers and operators to identify relevant labour and human rights risks and impacts of a planned investment and to implement mitigation and management measures to address them appropriately.

Depending on the location and the nature of the investment we expect investment managers and operators to explicitly implement policies to respect rights such as those relating to indigenous peoples, vulnerable groups, unique cultural systems and values, local food security, labour and any other relevant rights in the scope of their risk assessment and mitigation measures.

Principle three: Respecting existing land and resource rights
We will respect the existing use of and ownership rights to land and other resources and we will require investment managers and operators acting on our behalf to do the same.

Investment managers and operators acting on our behalf will be required to implement processes for land acquisitions and related investments that are culturally appropriate and transparent, are monitored, ensure accountability and the engagement with relevant stakeholders.

For investments with potential significant adverse impacts on affected communities, the investment managers are expected to implement processes to ensure their free, prior and informed consultation and facilitate their informed participation as a means to establish whether a project has adequately incorporated affected communities' concerns.

Principle four: Upholding high business and ethical standards
We will promote high business and ethical standards in our farmland investments.

We will require that investment managers and operators acting on our behalf respect the rule of law even where it is poorly enforced. We will also require them to implement processes aimed at avoiding corruption in all its forms, including extortion and bribery, and to reflect an informed view of industry best-practice in their operations.

Principle five: Reporting on activities and progress towards implementing the Principles and promoting the Principles
We will report publicly on our activities and progress towards implementing the Farmland Principles, taking into account appropriate confidentiality considerations.

We will encourage other institutional investors to endorse and implement the Farmland Principles.

Media Contacts:

AP2: Ulrika Danielson (+46 709 50 16 13 / ulrika.danielson@ap2.se)

ABP: Jos van Dijk (+31 45 579 2911 / jos.van.dijk@abp.nl)

APG: Thijs Steger (+31 45 579 8100 / thijs.steger@apg.nl)

ATP: Kristjan Joergensen (+45 4820 3878 / krj@atp.dk)

BT Pension Scheme / Hermes EOS: Jean Dumas (+44 20 7680 2152 / j.dumas@hermes.co.uk) and Asmita Kapadia (+44 20 7680 2120 / a.kapadia@hermes.co.uk)

TIAA-CREF: John McCool (+1 212 916 6223 / jmccool@tiaa-cref.org

- The Second AP Fund's assets under management amounted to SEK 227.5 (204.8) billion as of June 30 2011.
- The Fund posted a first-half net result of SEK 5 (2.5) billion.
- The Fund's return on the total portfolio was 2.4 (1.3) percent, excluding commission costs and operating expenses. Including these costs, the portfolio generated a return of 2.3 (1.2) percent.
- The Fund achieved an active return of 0.2 (0.4) percent. The relative return for the portfolio of quoted assets, including implementation effects but excluding alternative investments, commission costs and operating expenses, was 0.1 (0.4) percent.
- The Fund's level of currency exposure was 18 percent.
- During the first half, the Fund implemented a significant reallocation of assets, from Swedish equities and fixed-income securities to equities and credit instruments on emerging markets.
- During the report period, the Fund has formed a joint real-estate company in association with the First AP Fund, focused on investment in European real estate. The Fund has also established a joint company with US pension fund TIAA-CREF, for investment in agricultural real estate in the US, Australia and Brazil.

"In July and August, the volatility experienced by financial markets has intensified. This has not caused us to make any new changes in our strategic portfolio. Nevertheless, we continue to implement the changes planned earlier, in line with the fundamental longterm strategy adopted for the management of our assets. This is especially important when the situation is so fluid and unpredictable", states Eva Halvarsson, CEO of the Second Swedish National Pension Fund/AP2.

The complete half-year report (pdf) is published on the Fund's website at www.ap2.se

A Corporate Governance Report will be published separately in October.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Ulrika Danielson, Head of Corporate Communications, on +46 31 704 29 00.

The newly formed company will focus on long-term investments in commercial
properties in prime locations in major cities in Europe. Per Sjöberg will be the
Managing Director of Cityhold Property. He hails most recently from his own property
company, Reiton AB, and was previously Managing Director of CLS Holdings plc i
London. Per Sjöberg possesses many years' experience in the international property
business.

Cityhold Property's other senior personnel comprise Andrew Smith, (Investment
Manager), Sir Julian Berney (Asset Manager, London), as well as Christophe Murciani,
(Asset Manager, Paris) and Robb Simpson (investment analyst). Recruitment of a few
additional key employees, for example on the German market, is underway.

"I am very proud to have been appointed to build up a diversified property portfolio
with stable cash flows on behalf of the First and Second Swedish National Pension
Funds. I'm also proud of the strong team of employees that we have put together,
possessing long and broad experience of the European markets," says Per Sjöberg,
Managing Director of Cityhold Property AB.

For more information, please contact:
Per Sjöberg, Managing Director, Cityhold Property AB, +46 8 463 33 08, +46 70 898 44 00

Rickard Backlund, Chairman of the Board, Cityhold Property AB, +46 70 655 99 60

Press contact:
Anne Rådestad, Head of Communications, Catella, +46 8 463 34 29, +46 73 654 74 50

Cityhold Property AB is owned in equal shares by the First and Second Swedish National Pension Funds.
The company will be operated in cooperation with Catella, which will assist the company with resources
and expertise under a long-term management agreement. Cityhold Property AB will have equity totalling
EUR 500 million. Catella is a European finance group operating within Corporate Finance and Asset
Management.

The Second AP Fund is to invest about USD 250 million in a newly formed company that will acquire and manage agricultural real estate in the USA, Australia and Brazil. TIAA-CREF will be the majority shareholder and administrator. The company will first and foremost invest in grain production.

This investment constitutes one element in the Second AP Fund's broader strategy of diversifying its total portfolio. The return on agricultural real estate is expected to be stable, with low covariance with the Second AP Fund's other investments, such as equities and bonds. This will serve further diversify the Fund's portfolio risk.

TIAA-CREF is a leading US retirement provider, with assets of more than USD 400 billion under management. TIAA-CREF has a well-developed platform for agricultural investment where environmental considerations and social responsibility are integrated. The Second AP Fund has carried out a comprehensive sustainability analysis of TIAA-CREF's guidelines, policies and processes and considers that they are of very high quality. Like the Second AP Fund, TIAA-CREF is a signatory to the UN's Principles for Responsible Investment (PRI).

"This chance to co-invest with TIAA-CREF presents the Second AP Fund with a highly attractive opportunity. Like us, TIAA-CREF is a long-term investor. The organization has considerable competence in and experience of this type of investment, while also sharing our values and principles. TIAA-CREF enjoys an excellent reputation, not least for its active and progressive work in corporate governance and sustainability. We anticipate that the newly established company's investments will promote productivity gains and long-term, well-managed and profitable agriculture that, in a sustainable manner, will help meet the growing global demand," says CEO Eva Halvarsson, Second AP Fund.

For further details:
Eva Halvarsson, CEO, AP2: phone +46 (0)31-704 29 00
Anders Strömblad, Head of External Management, AP2: phone +46 31-704 29 00
Ulrika Danielson, Head of Communications, AP2: phone +46 (0)31-704 29 29, mobile +46 (0)709-50 16 13 www.ap2.se

The Second Swedish National Pension Fund is one of five buffer funds within the Swedish national pension system. The fund are committed to investing Sweden's pension assets to maximum benefit for the national pension system and to generating a high return at low risk over the long term. At year-end 2010, the Second Swedish National Pension Funds had pension assets of around SEK 220 billion under management.

The report gives an account of the past year's developments in the Ethical Council's ongoing dialogues with portfolio companies that can be associated with violations of the ethical guidelines governing the four AP funds' investments. Significant advances have been made in several of the dialogues that the Ethical Council conducted throughout the year. One company, Vedanta Resources, has been removed from the dialogue list and dialogues have been started with three new companies, Alstom, Veolia and Motorola Solutions.

The progress made in these dialogues has strengthened the AP funds' belief in the importance of taking their responsibility as owners and acting according to the principles of commitment, action and change in order to make a difference. The principles and basis for the Ethical Council's commitment have been defined in the funds' core values, which were further developed during the year.

The Ethical Council's resources and network were strengthened during 2010 and John Howchin was appointed as Secretary General. This reinforcement will enable the Ethical Council to work more proactively by leading and participating in investor initiatives aimed a influencing companies to increase their transparency, act more responsibly and address important issues in the ethical and environmental area.

- The progress we see in the companies with which we are engaged in dialogue has reaffirmed our conviction that the Ethical Council's guiding principles to act on the basis of commitment, action and change in order to make a difference is the right approach for us as a responsible, long-term investors," says Nadine Viel Lamare, Chairwoman of the Ethical Council.

- It can sometimes take time to gain a hearing for our views, but experience shows that we do more good as owners by making demands on the companies than by selling our holdings. A sale generally doesn't solve the problem in the company and we therefore do our utmost to urge the companies to make a change. The sale of a holding can be a last resort when no other means of influence is effective," she adds.

Read more about company dialogues and the Ethical Council's other activities in the annual report for 2010, available for download at www.ethicalcouncil.com.

For further information, please contact:
Nadine Viel Lamare, Chairwoman of the Ethical Council in 2011
Telephone: +46 8-566 20 270
E-mail: info[at]ethicalcouncil.com

The First and Second Swedish National Pension Funds will be joint and equal (50/50) owners of the new real estate investment company, which will have a total equity capital of EUR 500 million. During the initial phase, the First and Second Swedish National Pension Funds have collaborated with Catella, a European finance group. Furthermore, the two funds have signed an agreement with Catella, securing its support in terms of resources, competence and expertise during the build-up phase of the new company.

Rickard Backlund has been appointed to chair the new real estate company. Among previous positions, Rickard Backlund was CEO of Aberdeen Property Investors. The work of appointing the other members of the board and the recruitment of a CEO has already started.

"These investments in real estate can provide us with a solid return relative to the level of risk. As long-term investors, this presents us with a promising opportunity to complement our other real estate investments in Sweden and elsewhere with a number of well chosen properties in Europe. This offers a rapid and cost-efficient means of building up a real estate company that through its investments can utilize knowledge of the local markets," states Johan Magnusson, CEO of Första AP-fonden (First National Swedish Pension Fund/AP1).

"This company will now enable us to complement our current real estate investments in Sweden, Denmark and Germany, broadening our European portfolio. It will enhance the Fund's overall investment focus and is expected to generate a robust and stable return over the long term. The form of collaboration chosen provides us with a tailored investment solution which, among other things, is grounded in a shared long-term investment objective and joint requirement of cost-efficient portfolio management," states Eva Halvarsson, CEO of Andra AP-fonden (Second National Swedish Pension Fund/AP2).

"The initiative adopted by the First and Second Swedish National Pension Funds represents a new form of direct investment in foreign real estate. It unites the capacity and financial competence of these institutions with Catella's market know-how and market proximity, with a view to creating long-term value. We are proud of the confidence expressed by the First and Second Swedish National Pension Funds in entrusting Catella with this mission," states Johan Ericsson, CEO of Catella AB.

For further details:

Första AP-fonden
Johan Magnusson , CEO Första AP-fonden: phone +46 (0)8-566 20 200
Ossian Ekdahl, Head of Communications, Första AP-fonden: phone +46 (0)8-566 20 209,
mobile +46 (0)709-681 209
www.ap1.se

Andra AP-fonden
Eva Halvarsson, CEO Andra AP-fonden: phone +46 (0)31-704 29 00
Ulrika Danielson, Head of Communications, Andra AP-fonden: phone +46 (0)31-704 29 29,
mobile +46 (0)709-50 16 13
www.ap2.se

The First and Second Swedish National Pension Funds are two of five buffer funds within the Swedish national pension system. These funds are committed to investing Sweden's pension assets to maximum benefit for the national pension system and to generating a high return at low risk over the long term. At year-end 2010, the First and Second Swedish National Pension Funds had pension assets of around SEK 440 billion under management.

"For the second year in succession, the Second AP Fund has been able to generate a solid result, achieving a growth in the worth of its market assets in excess of the five percent target. Equally pleasing is the fact that the active management of our assets has in two years contributed a total of SEK 2.6 billion," states Eva Halvarsson, CEO of the Second Swedish National Pension Fund/AP2.

The English-language version of the AP2 Annual Report 2010 will be available at www.ap2.se from the end of February.

For further details, please contact the Second AP Fund's CEO, Eva Halvarsson, at +46 (0)31-704 29 00, or the Head of Communications, Ulrika Danielson, at +46 (0)709-50 16 13.

The decision has been made on the basis that these tenders are considered to be the most economically advantageous based on the established criteria in the request for proposal. The assessment of the criteria was made based on the material included in the offer and then confirmed, clarified or deepened by meeting or teleconference, or in contact with references.

• Quality, competence and experience have been assessed according to the specifications of the areas listed.
• Experience in working with organizations such as the AP funds and the Ethical Council has been assessed from what has been stated in the tenders.
• Prices have been assessed according to what has been presented by the tenders.

Framework agreements covering all services addressed in the request for proposal will be signed with Ethix SRI Advisors, GES Investment Services and Sustainalytics. The framework agreement with Northwest and Ethical Investments will be signed solely on part 4 covering advice and support with dialogs.
According to the law on public procurement there will be no signing of agreements until ten days has passed from the date given in this decision.

 
For more information contact:
Ulrika Danielson, Head of Communications
Telephone +46(0)31 704 29 00

Read the complete report here.

For further information, please contact:
Eva Halvarsson, CEO Second Swedish National Pension Fund/AP2, on +46 (0)31 704 29 00
Ulrika Danielson, Head of Communications, on +46 (0)31 704 29 29.

• The Second AP Fund’s assets under management amounted to SEK 204.8 (182.5) billion as of June 30 2010.
• The Fund posted a first-half net result of SEK 2.5 (10.9) billion. Net outflows to the pension system amounting to SEK -2.0 (-1.7) billion were charged against the net result.
• The Fund’s return on the total portfolio was 1.3 (6.4) percent, excluding commission costs and operating expenses. Including these costs, the portfolio generated a return of 1.2 (6.3) percent.
• The Fund noted a relative return of 0.4 (0.1) percent including implementation effects for the strategic benchmark portfolio, but excluding alternative investments, commission costs and operating expenses.
• The Fund’s level of currency exposure was 9 percent.
• In June, the Fund decided to make its first investment in an agricultural fund (Teays River, a US fund).
• The assets under management outperformed their benchmark indices in all asset classes. The Second AP Fund’s portfolio, which continues to feature a high proportion of equities, has benefited from the favourable performance of the Swedish equities market. This trend has been sustained during the first six months of this year. The return generated on Swedish equities during the first half amounted to 7.2 percent, 0.3 percent improvement against the benchmark index, states Eva Halvarsson, CEO of the Second Swedish National Pension Fund/AP2.

Read the half-year report 2010 (pdf).

A Corporate Governance Report will be published separately in October.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Ulrika Danielson, head of Corporate Communications, on +46 31 704 29 00.

Compared to the preceding year, the proportion of female representatives on company boards has risen from 19.1 percent to 22.2 percent. This said, the positive trend shown by the study since 2005, concerning the number of women on the executives of publicly quoted companies, has been broken. Compared to last year, female representation on corporate executives has declined from 14.3 percent to 13.8 percent. The disparity in female representation on corporate executives and on company boards has thereby increased from 4.8 percent to 8.4 percent.

“It is pleasing that the proportion of women on company boards is on the increase. It also demonstrates that efforts to promote increased female representation have had an impact. It is nevertheless slightly worrying that this year we see a decline in the proportion of women in executive positions, given the fact that this represents a crucial source in the recruitment of representatives to company boards,” states Eva Halvarsson, CEO of the Second Swedish National Pension Fund.

The large-cap companies and industries with a high proportion of female employees note the highest levels of female representation. The service and consumer goods industries enjoy the highest levels of female representation on their boards, while the healthcare and financial sectors boast the highest proportion of female executives.

In the past 30 years, the proportion of women graduating in disciplines from which company executives and board members have traditionally been recruited has increased from less than 20 percent to more than 40 percent today. However, the proportion of women then declines in stages, from new graduate to employee (almost one in three), to management (one in four) and to senior executive (one in seven).

“A more equitable balance with respect to gender is decisive in ensuring the effective composition of a board. At the same time, it is important that we, as shareholders, should also pursue the issue of increased diversity in terms of age, background, experience and competence,” notes Eva Halvarsson.

Since 2003, the Second Swedish National Pension Fund has conducted an annual study in association with Nordic Investor Services to determine the proportion of women at mid-management level and on the executives and boards of publicly quoted companies. Furthermore, the study determines the proportion of women who have graduated in disciplines from which company executives and board members are traditionally recruited.

For further details, please contact:
Eva Halvarsson, CEO, Second Swedish National Pension Fund, on +46 (0)31-704 29 00
Ulrika Danielson, Head of Communications and HR, on +46 (0)709-50 16 13

The Council uses dialogue and cooperation as its main tools for influencing companies to act responsibly. The discussions have two aims: encouraging companies to address violations of international conventions and to implement proper systems to prevent future abuses. In 2009, the Council concluded four dialogues after achieving its objectives. The four companies involved were Grupo Ferrovial, PetroChina, Thales and Yahoo. These discussions were ongoing for a couple of years and resulted in satisfactory improvements in each case.

The Ethical Council also takes an active role in investor initiatives aimed at encouraging companies to raise their level of transparency, to act more responsibly and to address major ethical and environmental issues. In 2009 the Council developed its work and processes with other investors to improve its ability to influence companies. Initiatives included the joint proposal with a Dutch and an American pension fund of a resolution to the general meeting of the US mining company Freeport McMoran.

In spite of numerous successful dialogues and initiatives, the Ethical Council has in the first quarter of 2010 recommended the  AP funds to exclude the company Elbit Systems Ltd from their portfolios due to the fact that dialogue between the Council and the company has not produced the intended results. All the AP funds have decided to follow this recommendation. The Ethical Council recommended that Elbit Systems Ltd should be excluded from each portfolio because it deems that the company can be linked to violations of fundamental conventions and norms through its active development, delivery and maintenance of a custom-made monitoring system for certain parts of the separation barrier being built on the West Bank. The Council has noted that both the European Union and the Swedish government consider the part of the separation barrier being built on West Bank to be illegal under international law. This position is also supported by the advisory opinion from 2004 by the International Court of Justice regarding the separation barrier.

 Annika Andersson, Chair of the Ethical Council in 2010, said: “The work of the Ethical Council is based on a rigorous process where dialogues with companies are our main tool. Staying on as a shareholder to continue the dialogue produces visible results, but it also requires resources and patience. As a last resort, the Ethical Council may recommend each fund to exclude the company if the dialogue fails to produce the desired result. This is now the case with Elbit Systems Ltd.”

Read more about company dialogues and the Ethical Council’s other activities in the annual report for 2009, available for download at www.ethicalcouncil.com

For further information, please contact:
Annika Andersson, Chair of the Ethical Council 2010
Tel: +46 8 787 75 69

Hans Fahlin is a member of the Scientific Advisory Committee at the Institute for Financial Research (SIFR), as well as Chairman of Inquire Europe. Both organizations are engaged in building bridges between financial research and business practice within the financial industry. Hans is also a member of Riksbankens Jubileumsfond and Polar Music Prize Investment Committees.

“Our portfolio has enjoyed a very strong recovery. We achieved an absolute return of 20.6 percent, or SEK 34.9 billion, the highest net result since the Fund’s start in 2001,” states Eva Halvarsson, CEO of the Second Swedish National Pension Fund/AP2.

Read the Annual Report 2009.

The First, Second, Third and Fourth AP funds’ investment profit in 2009 was SEK 134 billion

• The First, Second, Third and Fourth AP fund, recorded a net profit of SEK 133.8 billion in 2009, corresponding to an average return of 19.4 percent.
   
• Total fund capital at year-end stood at SEK 808.8 billion, an increase of SEK 118.2 billion from the start of the year. 
   
• In 2009 the net balance between pension system inflows and outflows was negative, resulting in the four AP funds having to pay SEK 15.6 billion during the year to cover the deficit.
  ___________________________________________________________
  For further details, please contact the Second AP Fund’s CEO, Eva Halvarsson, at +46 (0)31-704 29 00, or the Head of Communications, Ulrika Danielson, at +46 (0)709-50 16 13.

As well as presenting the Fund’s governance activities, the Report contains feature articles on topics ranging from the estimated carbon footprint for the Fund’s portfolio companies and guidelines on sustainability issues for the private equity sector to how the Fund’s real estate interests address environmental concerns.

“Corporate governance issues have attracted considerable attention in the past year, both in the media and as part of the ongoing political debate. The Second AP Fund considers its participation in such discussions entirely natural, both with respect to individual issues as well as more general matters of principle,” states CEO Eva Halvarsson, Second AP Fund.

Download the report here!

For further details, contact CEO Eva Halvarsson, Second AP Fund, on +46 (0)31 704 29 00, or Ulrika Danielson, Head of Communications, on +46 (0)709 50 16 13.

”This recognition of our work makes us very proud. Our work within the Ethical Council is built upon a systematic work process where dialogues with companies to encourage them to act responsibly, collaboration with other investors and transparent reporting are important parts”, says Christina Hillesöy, AP3s representative and Chairwoman of the Ethical Council.

• The Fund posted a return of 6.4 percent on its total portfolio, excluding costs. Return after commission costs and operating expenses amounted to 6.3 percent.
• The Fund’s capital assets amounted to SEK 182.5 billion as per June 30th 2009, the net profit for the period being SEK 10.9 billion.
• Combined relative return on the Fund’s market quoted assets was +0.1 percent. This favourable result was primarily attributable to the active in-house management of Swedish equities, foreign fixed-income securities and foreign exchange.
• The allocation to corporate credits has been increased.
• During the first half, the Second AP Fund has participated in a number of new share issues on the Swedish equities market, thereby contributing some SEK 700 million to Swedish companies. These investments have had a positive impact on both total and relative return.

“Our strategy of maintaining the portfolio’s high share of equities has been a key factor in its recovery. Our fundamental approach therefore remains unchanged. We believe a large share of equities is essential if we are to achieve the goal prescribed for us within the Swedish national pension system”, says Eva Halvarsson, CEO of the Second AP Fund.

Read the half-year report 2009 (pdf)

A Corporate Governance Report will be published separately in September.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Ulrika Danielson, head of Corporate Communications,
on +46 (0)31 704 29 00.

“This is enormously satisfying and a source of encouragement for our work in the Ethical Council, where we can see that our talks with the companies are truly effective,” says Christina Kusoffsky Hillesöy, Chairman of the Ethical Council.

In each of these cases a representative for the Ethical Council has met with the corporate managements at their head offices in Madrid, Beijing and Paris, a practice that demonstrates the seriousness with which the Ethical Council regards these problems. The Council’s face-to-face talks with the managements in question have pushed the dialogues in a positive direction, and the fact that the companies have subsequently taken measures is proof that investors can exert a real influence through dialogue.

Grupo Ferrovial S.A., through its subsidiary Budimex, was in the process of building a road through a nature reserve in Poland, contrary to the UN Convention on Biological Diversity. Construction has now been stopped and Grupo Ferrovial S.A. has developed its sustainability policy and risk analyses for assessment of environmental risks in connection with infrastructure projects. Together with other investors, the Ethical Council has held constructive talks with Grupo Ferrovial S.A. and expressed its support of the company’s improved sustainability efforts and risk management.

In its discussions with PetroChina Company Limited, the Ethical Council has demanded that the company  strengthen its safety and environmental routines and provide an account of environmental and social issues in its sustainability reporting. These steps have been part of an effort to achieve the aims of a dialogue that started after an accident caused a chemical spill in China’s Songhua River.

The Ethical Council, together with another investor in the final phase, has conducted dialogue with Thales SA following accusations that the company had bribed officials in several countries, contrary to the UN Convention Against Corruption. The company has now centralised its sales organisation, developed a robust anti-corruption program and produced a manual to help its employees handle corruption. Thales has also taken a leading role in the European defence industry’s joint initiative against corruption and bribery. Read more about the Ethical Council’s dialogues in the annual report for 2008, which can be downloaded from www.etikradetapfonderna.se.

For more information contact

Christina Kusoffsky Hillesöy, Chairman of the Ethical Council in 2009
E-mail: info@ethicalcouncil.com
Tel: +46 (0)8-555 17 123

About the Ethical Council

The First to Fourth AP Funds (AP1-AP4) are buffer funds in the Swedish national pension system. The four competing AP Funds have a common mission: to invest Sweden’s pension capital so as to achieve the greatest possible benefit for the pension system and generate high long-term returns with a low level of risk. In doing so, the Funds must take ethical and environmental consideration without compromising the overall objective of attaining a high return.

At the beginning of 2007 the Ethical Council was formed to coordinate SRI analysis of environmental and ethical compliance in the foreign companies where the Funds have holdings. The ethical and environmental policies of the Funds are therefore based on the core values of the Swedish Government as expressed through its foreign policy and signing of international conventions. The purpose of the Ethical Council is to combine the four funds’ resources and votes for greater leverage in influencing the foreign companies in which they invest to conduct their operations without violating the Funds’ ethical guidelines for investment.

The breaches of conventions identified by the Ethical Council are often indications that a company has not acknowledged its responsibility for incidents or taken an adequately proactive approach to environmental and social issues. In 2008 the Ethical Council met face-to-face the majority of companies it is currently in dialogue with around the world and discussed the various cases of violations which the Ethical Council has called attention to. The companies have shown a serious interest in the Ethical Council’s views and most have taken steps to address the problems quickly.

One of many indications that the Council’s efforts are making a difference is the case of France-based Sodexo, which after contact with the Ethical Council quickly formulated and implemented a human rights policy following an incident at a refugee detention centre in the UK.

The company dialogues pursued by the Ethical Council are part of a systematic process used by the Council to identify breaches against the AP Funds’ ethical guidelines for investment. In talks with a few of the companies, the Council has chosen to cooperate with other investors to increase its leverage and the opportunities to exert an influence. The Ethical Council also supports a number of international initiatives aimed at achieving greater transparency in corporate reporting and promoting corporate social responsibility.

”It is satisfying to see that our dialogues with the companies are effective and that the companies can be persuaded to take action. This approach to bringing about changes and improvements requires patience and the establishment of mutual respect and trust, and is a strategy that is well suited to the long-term nature of the four Funds’ investments and professional relationships,” says Christina Kusoffsky Hillesöy, Chairwoman of the Ethical Council.

Read more about the Ethical Council’s company dialogues and activities in the past in the annual report for 2008, which can be downloaded from www.ethicalcouncil.com.

For more information contact:

Christina Kusoffsky Hillesöy, Chairman of the Ethical Council in 2009
E-mail: ethicalcouncil@ges-invest.com, Tel: +46 (0)8-555 17 123

About Ethical Council

The First to Fourth AP Funds (AP1-AP4) are buffer funds in the Swedish national pension system. The four competing AP Funds have a common mission: to invest Sweden’s pension capital so as to achieve the greatest possible benefit for the pension system and generate high long-term returns with a low level of risk. In doing so, the Funds must take ethical and environmental consideration without compromising the overall objective of attaining a high return.

At the beginning of 2007 the Ethical Council was formed to coordinate SRI analysis of environmental and ethical compliance in the foreign companies where the Funds have holdings. The ethical and environmental policies of the Funds are therefore based on the core values of the Swedish Government as expressed through its foreign policy and signing of international conventions. The purpose of the Ethical Council is to combine the four funds’ resources and votes for greater leverage in influencing the foreign companies in which they invest to conduct their operations without violating the Funds’ ethical guidelines for investment.

• The Fund’s capital assets totalled SEK 173.3 billion as per December 31st 2008, a decline of SEK 54.2 billion compared with the preceding year. During the year, the Fund reported a net inflow of SEK 0.9 billion. The net result for the year was SEK -55.1 billion. This sharp decline in capital assets is primarily attributable to the sharp decline of the world’s stock markets in 2008.

• The Fund posted a return of -24.0 percent on the total portfolio.

• The Fund posted a relative return of -1.8 percent for market-quoted assets, excluding commission fees and operating expenses. This weak result is attributable to a number of the Fund’s different equity mandates and some OTC-products that were poorly positioned in the period of extreme turbulence experienced by the financial market during the autumn. Furthermore, as a result of the financial crisis, almost all active investment mandates, in-house and external, underperformed simultaneously.

• The Fund’s return on unquoted holdings was -1.9 percent, of which real estate +0.7 percent and private equity funds -9.1 percent.

• AP-fastigheter, in which the Second AP Fund has a 25-percent interest, acquired Vasakronan in the autumn. This acquisition represents an important part of the long-term development of the Second AP Fund’s portfolio of unquoted real-estate assets. This increased the Fund’s exposure in real estate by 2 percentage points. The new company, which has assumed the name Vasakronan, is far and away Sweden’s largest real-estate company.

“This is without doubt one of the most serious financial crises since the 1930s,” says Eva Halvarsson, CEO of the Second AP Fund. “In spite of deciding to reduce risk in the equity portfolios under in-house management, to reduce the scale of our positions in fixed-income and exchange-market securities and to cancel a number of investment strategies completely, the decline in market worth was still substantial.”

The decline in market worth of the Fund’s portfolio of equities is the factor that has had the greatest impact on the net result. When seen in the context of the pension system as a whole, the significance of the Fund’s equity holdings is limited. The Fund accounts for only 3 percent of the Swedish pension system’s total capital assets, of which equities comprise a mere 7 percent.

“This means that we can adopt a long-term strategic approach, and we have chosen to retain a high proportion of equities. This ensures that we are well positioned to benefit when the market stages a recovery. It is important to remember that our mission as a fund manager extends over a very long period,” says Eva Halvarsson.

The English language version of the 2008 annual report will be published on our website, www.ap2.se, towards the end of February.

For further details, please contact the Second AP Fund’s CEO, Eva Halvarsson, on +46 (0)31 704 29 00, or the Fund’s head of Corporate Governance & Information, Carl Rosén, on +46 (0)739 40 10 10.

In May 2007 the Ethical Council called attention to systematic human rights abuses at Harmondsworth Immigration Removal Center in London, which is managed by Sodexo’s subsidiary Kalyx.
"Sodexo has shown a serious commitment to correcting these problems and our discussions with them have been constructive. In a short span of time, the company has both addressed conditions at the detainee centre and adopted a human rights policy that is now being implemented throughout the organization. This is proof that it is fully possible for us as shareholders to influence the companies we invest in to respect the conventions signed by the Swedish Government. It also underlines the soundness of the Ethical Council’s decision to intensify the dialogue by visiting the companies for face-to-face discussions", says Carl Rosén, Chairman of the Ethical Council.

Contact

Carl Rosén, 2008 Chairman of the Ethical Council
E-mail: ethicalcouncil@ges-invest.com
Mobile: +46 (0)73-940 10 10

About the Ethical Council

The First to Fourth AP Funds (AP1-AP4) are buffer funds in the Swedish national pension system. The four competing funds have a common mission: to invest Sweden’s pension capital so as to achieve the greatest possible benefit for the pension system and generate high long-term returns with a low level of risk. In doing so, the Funds must take ethical and environmental consideration without compromising the overall objective of attaining a high return.

At the beginning of 2007 the Ethical Council was formed to coordinate SRI analysis of environmental and ethical compliance in the foreign companies where the funds have holdings. The purpose of the Ethical Council is to combine the four funds’ resources and votes for greater leverage in influencing the foreign companies in which they invest to conduct their operations without violating the international conventions signed by the Swedish government.

Read the complete Corporate Governance Report.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, on +46 (0)31 704 29 00, or Carl Rosén, head of Corporate Governance & Communications, on +46 (0)739 40 10 10.

In its analysis, the  Ethical Council has determined that the business operations of these companies contravene the convention. It has therefore recommended that the First to Fourth Swedish National Pension Funds should exclude these companies from their portfolios.

The companies to be excluded are:

• Alliant Techsystems (USA)
• GenCorp (USA)
• General Dynamics (USA)
• Hanwha Corporation (South Korea)
• L-3 Communications (USA)
• Lockheed Martin (USA)
• Poongsan (South Korea)
• Raytheon  (USA)
• Textron (USA)

“The  Ethical Council has carried out an exhaustive analysis of a large number of defence contractors and has concluded that these companies should be excluded as objects for investment by the First to Fourth Swedish National Pension Funds. The issue concerns inhuman weapons that often injure innocent civilians, an issue that demands action which now has the support of a convention that bans such weapons,” states Carl Rosén, who chairs the Ethical Council of the Swedish National Pension Funds.

For further details, please contact Carl Rosén, Chairman of the  Ethical Council of the Swedish National Pension Funds, on +46 (0)31-704 29 00.

“It’s been a tough first half, which has been severely affected by concern over the state of the US financial market and its consequences,” says CEO Eva Halvarsson, Second Swedish National Pension Fund/AP2.

Read the full half-year report (pdf). 

A Corporate Governance Report will be published separately in September.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Carl Rosén, head of Corporate Governance & Communications, on +46 (0)31 704 29 00.

"This dialogue is the Ethical Council’s most important tool for encouraging companies to act responsibly. Our discussions are aimed not only at pressuring the companies in question to address documented violations. As long-term investors we also want to see them implement preventative systems to avoid similar violations in the future", says Carl Rosén, Chairman of the Ethical Council.

The infringements of conventions identified by the Ethical Council are often indications that a company has not acknowledged its responsibility for incidents or taken an adequately proactive approach to environmental and social issues.

Pursuing a process of this type demands both discipline and a large portion of patience. Although the Ethical Council prefers to see continuous progress, there is an awareness that it can take time to achieve results. It is therefore a particularly satisfying that already during the Ethical Council’s first year, one of the targeted companies has taken the necessary action and subsequently been removed from the list.

"We are convinced that when companies take their responsibility and make these issues an integral part of their day-to-day business, they are a better investment for us and ultimately also for Sweden’s pensioners", says Carl Rosén.

Read more about the Ethical Council’s working methods and first year of activity in the attached annual report (pdf).

Read the presentation from the press conference.

Download  the pictures: Dialogues, Map, The funnel, Work process

Contact

Carl Rosén, 2008 Chairman of the Ethical Council
E-mail: ethicalcouncil@ges-invest.com
Mobile: +46 (0)73-940 10 10

About the Ethical Council

The First to Fourth AP Funds (AP1-AP4) are buffer funds in the Swedish national pension system. The four competing funds have a common mission: to invest Sweden’s pension capital so as to achieve the greatest possible benefit for the pension system and generate high long-term returns with a low level of risk. In doing so, the Funds must take ethical and environmental consideration without compromising the overall objective of attaining a high return.

At the beginning of 2007 the Ethical Council was formed to coordinate SRI analysis of environmental and ethical compliance in the foreign companies where the funds have holdings. The purpose of the Ethical Council is to combine the four funds’ resources and votes for greater leverage in influencing the foreign companies in which they invest to conduct their operations without violating the international conventions signed by the Swedish government.

The Fund noted a return of 4.2 percent on its total portfolio, before commission and operating expenses. Net return, less expenses, was 4.0 percent.

Since its inception, and including the 2007 result, the Second AP Fund has maintained an average return of 6 percent per annum. This means that the Fund’s result is consistent with the average targeted return deemed necessary for the Fund to fulfil its responsibilities within the Swedish national pension system.

For the twelve months ending December 31st 2007, the Fund posted a relative return of -0.4 percent on quoted assets, before commission and operating expenses. This was largely attributable to rebalancing effects deriving from high market volatility. A new rebalancing procedure has been initiated.

Return on alternative investments was 13.4 percent.

The growth in the Fund’s capital is primarily attributable to the strong performance of global equities, where the Fund’s investments in emerging and Asian markets, excluding Japan, have posted high returns. The Fund’s relatively limited exposure in foreign exchange (11 percent), especially in US dollars, where the degree of exchange hedging is high, has limited the impact of a weak dollar during the year on absolute return.

“The past year is likely to go down in history as one of exceptional turbulence on financial markets. Even so, the Second AP Fund is able to report a favourable return for the fifth year in succession,” notes CEO Eva Halvarsson, Second AP Fund.

Read the Annual Report 2007.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund/AP2 on +46 (0)31-704 29 00, or Carl Rosén, head of Corporate Governance & Communications, on +46 (0)739 40 10 10.

- We are sorry that Poul leaves AP2 and wish him the best of luck, comments Eva Halvarsson, CEO at AP2.

The search process for a new CIO has already started.

For further details, please contact Eva Halvarsson, CEO of the Second AP Fund, or Carl Rosén, Head of Corporate Governance & Communication, on +46 (0)31 704 29 00.

“Interest in and pressure on us as investors is growing all the time. Our ‘customers’ – Sweden’s future pensioners, our politicians, companies, the media, pressure groups and many others – are extremely interested in what we do, and we have often been bad at explaining how our processes work and about our role as investors,” says Eva Halvarsson, CEO of the Second AP Fund.

Download the Corporate Governance Report (pdf).

For further details, please contact Eva Halvarsson, CEO of the Second AP Fund, or Carl Rosén, Head of Corporate Governance & Communication, on +46 (0)31 704 29 00.

“The Fund’s selection of strategic portfolio and its portfolio of Swedish equities, which outperformed index, have been the key factors in its strong performance during the first half of 2007,” states Eva Halvarsson, CEO of the Second Swedish National Pension Fund.

“Our determination to enhance efficiency with respect to the major portion of the portfolio under in-house management is now starting to bear fruit, resulting in a solid relative return and comparatively low costs compared to similar fund managers.”

Read the full half-year report (pdf). 

In the spring of 2007, the UN agency UNEPFI (The United Nations Environment Programme Finance Initiative) cited the Second AP Fund as a leading role model for sustainability issues within the finance sector. A Corporate Governance Report will be published separately. The English-language version will be available at the website from mid-September.

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Carl Rosén, head of Corporate Governance & Communications, on +46 (0)31 704 29 00.

The United Nations Environment Programme Finance Initiative (UNEP FI) and the United Kingdom Social Investment Forum (UKSIF) have published a book in which a number of international pension funds are presented as leading role models for sustainability issues within the finance sector. The Second AP Fund has been selected as the sole Swedish representative.

UNEP FI and UKSIF have gathered examples of concrete and practical strategies employed by some of the world’s leading pension funds and presented them in this joint publication. These examples are intended to give other fund managers ideas as to how sustainability issues can best be integrated as part of the investment process.

More than 25 pension funds were initially considered for inclusion, 15 of which were selected for the published report. Examples range from the California Public Employees Retirement System (CalPERS) to the employees pension fund of Banco do Brasil (PREVI) and Fonds de Réserve pour les Retraites (FRR), France’s equivalent to Sweden’s "AP Funds". The report presents a large number of strategies, featuring varying degrees of implementation, from Brazil, Canada, France, Norway, Sweden, Switzerland, Thailand, Holland, the USA and Great Britain. The Second AP Fund and Norska Statens Pensionsfond (Norway’s former Petroleum Fund) are the only Nordic examples included in the report. The report is available in its entirety on the Web at http://www.unepfi.org/fileadmin/documents/infocus.pdf

For further details, please contact Carl Rosén, head of Corporate Governance & Communications, Second Swedish National Pension Fund/AP2, on +46 (0)739 40 10 10.

The Fund posted a return of 13.0 percent on the total portfolio, before commission fees and operating expenses. If these expenses are included, the portfolio generated a return of 12.8 percent.

The Fund noted a relative return of 0.2 percent for market-listed assets, before commission fees and operating expenses, for 2006. All asset classes noted a positive relative return. This positive return derived largely from successful in-house and external management of foreign equities.

The vigorous growth in capital assets is primarily attributable to the high proportion of equities in the Fund’s portfolio and a low level of currency exposure. The level of currency exposure as per December 31st 2006 was 11.7 percent.

The proportion of the Fund’s total portfolio managed according to quantitative models has grown from 11 to 31 percent.

A Joint Ethical Committee has been established in collaboration with the First, Third and Fourth AP Funds, to monitor interests in foreign companies with respect to environmental and ethical issues.

Since its inception, and including net investment income for the twelve months ending December 31st 2006, the Second AP Fund has sustained an annual average return on investment (ROI) of 6.3 percent. This exceeds the ROI average considered essential for the Fund to fulfil its long-term responsibilities within the Swedish pension system.

“We are proud of this result. The total return on investment is good and all asset classes have noted a positive relative return,” says CEO Eva Halvarsson, Second AP Fund. 

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund/AP2 on +46 (0)31-704 29 00, or Carl Rosén, head of Corporate Governance & Communications, on +46 (0)739 40 10 10.

A total of around 3,500 companies will be reviewed, which, based on earlier experience, typically leads to the identification of some twenty candidates for more in-depth assessment. Every year, the ambition is to conduct an active dialogue with around ten companies that can be associated with infringement of international conventions in areas related to the environment, human rights and labour rights. Coordination of the AP funds’ activities will give international investors a powerful partner in Sweden with an active commitment to the ethical and environmental aspects of corporate social responsibility.

“Within the framework of our common mission, we see good opportunities to cooperate in this area. By joining forces we will enable us to avoid redundant efforts and concentrate our resources on the most urgent areas for improvement,” says AP1’s Nadine Viel Lamare, who will be the Ethical Council’s first Chairman.

“Together the funds have net assets under management of around SEK 800 billion, which in itself provides greater scope to influence individual companies than if each fund were to act independently, and we will also be able to conduct more parallel discussions. Furthermore, by coordinating our activities we will facilitate collaboration with other international stakeholders who are actively committed to ethical and environmental compliance,” she adds.

AP1 has previously cooperated with other investors in a number of successful dialogues with multinational corporations which have changed their routines and policies in response to pressure from the Fund. Most recently, the US-based Marriott hotel chain was persuaded to revise its human rights policies with a focus on combating child sex tourism.

The Ethical Council’s is made up of one representative from each of the AP funds. Chairmanship of the Ethical Council, which is initially held by AP1’s representative Nadine Viel Lamare, will be alternated between the funds.

Decisions to exclude companies from the investment portfolio will be made by the individual funds.

For more information contact
Nadine Viel Lamare, Chairman, Ethical Council
Tel: +46 8-566 20 270
Mobil: 0+46 709-681 270
E-mail: nadine.viel.lamare@ap1.se

“The Second AP Fund’s involvement in corporate governance issues is designed to enhance the value of its capital investment. Active ownership and the Fund’s commitment to governance issues are intended to improve prospects of a higher long-term return on assets under management,” says Eva Halvarsson, CEO, Second AP Fund.

Read the full Corporate Governance Report in (PDF format).

For further details, please contact Eva Halvarsson, CEO, Second AP Fund; or Carl Rosén, Head of Corporate Governance and Communications, on +46 (0)31 704 29 00.

Dating from 2003, the Second AP Fund has written letters, exercised its voting rights at AGMs and participated in an investor group to influence the company, but the company has failed to indicate any change in its attitude to employee rights.

Norska Etikkrådet (the Norwegian Council on Ethics), which acts as an advisor to the Norwegian State Pension Fund “Utland” (formerly known as the Petroleum Fund), has gathered extensive evidence to demonstrate how Wal-Mart, in a serious and systematic manner, has infringed internationally accepted ethical norms.

“Wal-Mart has so many documented incidents concerning the infringement of norms, both within its own operations and throughout its supply chain that, in our opinion, the existence of an inherently unethical system is placed beyond all reasonable doubt,” says Eva Halvarsson, CEO, Second AP Fund.

The Second AP Fund has disposed of its interest in Wal-Mart and Wal-Mart Mexico, which was held in the form of shares and bonds.

For further details, please contact Eva Halvarsson, CEO, Second AP Fund; or Carl Rosén, Head of Corporate Governance and Communications,
on +46 (0)31 704 29 00.

“This is a good result, in light of the difficult market conditions experienced during the first half,” says Eva Halvarsson, CEO of the Second Swedish National Pension Fund/AP2. “This favourable outcome may primarily be attributed to our selection of a benchmark portfolio featuring low currency exposure and the Fund’s own choice of indexes.”

 “The task of making the Fund still more efficient continues. In recent years, the number of mandates under external management has been reduced, and 75 percent of total assets are now under in-house management,” says Eva Halvarsson.

Read the full half-year report (pdf). 

For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Carl Rosén, head of Corporate Governance & Communications, on +46 (0)31 704 29 00.

Fundamental indexation replaces conventional capital-weighted portfolios. In capital-weighted portfolios, the market pricing of individual securities has a significant impact on the relative weighting of equities within the portfolio. In fundamentally weighted portfolios, the basic portfolio structure is determined according to the actual size of individual companies within the “real” economy. In practice, this means a reduction of fairly highly valued equities (that are consequently priced for relatively low future returns) in the portfolio, while simultaneously ensuring a greater proportion of conservatively valued equities. Experience has shown that this type of fundamentally indexed portfolio yields a higher return at a lower risk compared to conventional capital-weighted indexes as the return drag of capital-weighting is avoided. This difference has proved particularly decisive in periods when markets have been highly speculative and stock valuations greatly inflated, as at the start of the new millennium.

As an investment strategy, fundamental indexation is “passive” by nature, applied to only a part of AP2’s strategic portfolio. Fundamental indexation also provides a complement to conventional “active” management strategies. Initially, USD 600 million of the Fund’s portfolio of North American equities will be managed with Research Affiliates Fundamental Index (RAFI), as a strategic benchmark index. This implementation of fundamental indexation is a further example of the importance attached to using more efficient basic portfolios in managing Fund assets.

For further details, please contact Tomas Franzén, Chief Investment Strategist (CIS), Second Swedish National Pension Fund/AP2, or Carl Rosén, Head of Corporate Governance and Communications, on +46 (0)31 704 29 00.