The Second AP Fund has confirmed its position concerning Wal-Mart’s alleged infringement of human rights in working life. Wal-Mart, which is the world’s largest retailer, posted sales of USD 285 billion in 2005.

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.

For the second year in succession, the Second AP Fund is publishing a separate corporate governance report. The report addresses the Fund’s role in connection with the Skandia takeover and the spinning-off of Husqvarna, and describes action taken by the Fund at a number of AGMs during the spring. The report concludes with a summary of the Second AP Fund’s efforts with respect to corporate ethics and the environment.

“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.

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.

The Fund’s capital assets amounted to SEK 194.8 billion as per June 30th 2006, corresponding to an increase since January 1st of SEK 4.3 billion, including inflows. This means that the Fund posted a return of 1.9 percent in the first half of 2006, excluding expenses. The result for the report period was SEK 3.5 billion.

“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.

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.

As of July 1st 2006, part of the Second Swedish National Pension Fund/AP2’s North American equity portfolio will be managed with fundamental indexation. Fundamental indexation aims to increase future return on investment in relation to portfolio risk.

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.

Poul Winslöw has been appointed Chief Investment Officer (CIO) and Tomas Franzén Chief Investment Strategist (CIS) of the Second Swedish National Pension Fund/AP2. Both are appointed members of the Fund’s executive management.

Poul Winslöw, former Head of Equities, has been Acting CIO for day-to-day operations since April of this year.

Tomas Franzén has previously held the post of Head of Asset Allocation at the Second Swedish National Pension Fund/AP2.

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

The Second Swedish National Pension Fund/AP2 and some 30 other major investment managers have signed the United Nations’ Principles for Responsible Investment (PRI). Other Swedish signatories are Banco and Folksam.

Since 2004, AP2 has cooperated with Swiss investment manager SAM (Sustainable Asset Management), with a view to integrating ethics and environmental issues as part of the fund management process. Analytical reports produced by SAM have also formed the basis for conducting a dialogue with the Fund’s largest Swedish shareholdings. AP2 is a participant in the Carbon Disclosure Project, where some 100 fund and investment managers have challenged the world’s largest companies to state their views on climate change and on the business activities in which their companies are engaged. The Fund is also a joint sponsor of Göteborgs Stora Miljöpris (City of Göteborg International Environment Prize).

“Our signature of the PRI document should be seen as a declaration of intent. We believe environmental and ethical issues are important, and should form an integral part of the investment process. At the same time, it is also important to remember that we are only at the start of a long process, a process during which these issues will acquire growing significance,” says CEO Eva Halvarsson, Second Swedish National Pension Fund.

For further details, please call Carl Rosén, Head of Corporate Governance & Communications, Second Swedish National Pension Fund, at +46 (0)739 40 10 10.

Check the PRI website at http://www.unpri.org for a photo of the official signing ceremony.

The Second Swedish National Pension Fund/AP2 is the third largest shareholder in Electrolux and has submitted its own proposal for consideration by the Annual General Meeting concerning a spin-off of Husqvarna. This means that shareholders in Electrolux will need to consider two alternative proposals concerning dividends paid by Husqvarna. On the one hand is the board of directors’ proposal, which recommends that Husqvarna should have the same mix of A and B-class shares as Electrolux. On the other hand, AP2 proposes a single class of shares. AP2 is positive to the distribution of Husqvarna shares among all shareholders.

AP2’s corporate governance policy clearly endorses the principle “one share – one vote”. This should also serve as a guiding principle when spinning off a subsidiary. Distributing different shares in a subsidiary company according to whether the shareholder has A or B-class shares in Electrolux also raises the risk that Electrolux shareholders will receive dividends of different values. All shareholders have equal rights to the company’s assets. For this reason, when a company distributes such assets, all shareholders shall be treated equally. By awarding certain shareholders A-class shares, which often command a higher market value, while others are awarded B-class shares, shareholders in Electrolux are treated differently, without any justification.

“Other Swedish and foreign investors have expressed great interest in this issue, and we are counting on considerable support at the Annual General Meeting,” says Eva Halvarsson, CEO, Second Swedish National Pension Fund/AP2.

Please refer any questions to Carl Rosén, Head of Corporate Governance & Communications/AP2 on +46 (0)739 40 10 10.

Petter Odhnoff, CIO of the Second Swedish National Pension Fund/AP2, leaves his post following discussions with the Fund’s CEO and Board of Directors.

This decision is the consequence of an audit conducted by the Swedish Tax Authorities, indicating that Petter Odhnoff has been engaged in a number of transactions connected with an account in a foreign bank, as well as certain shareholdings. These transactions have not previously been declared for tax purposes. Nor have these transactions been reported in compliance with the Fund’s guidelines on share transactions.

“I understand that confidence in me will have been undermined by my actions, especially in view of my responsible position as a senior manager in charge of other personnel. As a result, and in consultation with the CEO and the Board of Directors, I have designed to resign my post.”

Eva Halvarsson, CEO of the Second Swedish National Pension Fund/AP2, regrets that this situation has arisen, but stresses that the decision is mutual.

“It is disappointing, especially as Petter has been with us from the very start and, with his excellent input, has contributed to building the Fund from the ground up,” says Eva Halvarsson. “Nevertheless, I and the Fund’s Board of Directors feel that Petter Odhnoff, in the light of what has happened, must resign his post.”

“It is first and foremost a matter of trust. We have a comprehensive set of regulations, but this will naturally require that I, as new CEO of the Fund, shall have to review our report routines and regulations,” Eva Halvarsson adds.

Tomas Franzén, Head of Asset Allocation, and Poul Winslöw, Head of Equities, will take over Petter Odhnoff’s responsibilities within the Fund’s executive management. Poul Winslöw has been appointed acting head of day-to-day portfolio management.

Questions should be referred to Eva Halvarsson, CEO of the Second Swedish National Pension Fund/AP2 on +46 (0)31-7042909, or Petter Odhnoff, on +46 (0)708-291100.

The Second Swedish National Pension Fund/AP2 has posted its best result and net return on invested assets since its foundation in 2001. This means that the Fund, in the five years since its inauguration, has posted a return on investment in line with its established goal, generating an annual average return of 5.1 percent, thereby fulfilling its role in the Swedish National Pension System.

Financially, 2005 was a good year. Return on investment was 18.7 percent, capital assets increased by SEK 32.5 billion and the Fund’s net profit for the year was SEK 29.6 billion. Since the Fund was established, its capital assets have increased by SEK 56.6 billion, including inflows of SEK 16.6 billion.

The solid growth in Fund capital may be attributed primarily to the maintenance of a high allocation of equities, fully in line with long-term investment strategy.

• The capital assets of the Second Swedish National Pension Fund/AP2 totalled SEK 190.6 billion as per December 31st 2005, an increase of SEK 32.5 billion compared with the preceding year. During the year, the Fund reported a net inflow of SEK 2.9 billion. Net profit for the year totalled SEK 29.6 billion.
• The Fund posted a return of 18.7 percent on the total portfolio, before commission fees and operating expenses. If these expenses are included, the portfolio generated a return of 18.5 percent.
• The Fund posted a positive relative return of 0.2 percent for market-listed assets, before commission fees and operating expenses, for 2005. This positive return is primarily attributable to the success of its tactical allocation during the year.
• The level of exposure in foreign currency was 11 percent at year-end 2005. As a result of this limited degree of exposure, the weakness of the Swedish krona had a negative impact on Fund earnings.
• During the year, the Fund capitalized mandates in tactical asset allocation and the management of international bonds and credits.
• The return generated on Swedish and foreign equities amounted to 36.6 and 22.9 percent respectively. Fixed-income assets posted a return of 4.3 percent, while alternative investments posted a return of 30.1 percent.
• Restructuring of the Fund’s portfolio management activities was completed in 2005, whereby mandates awarded were classified according to the level of risk accepted. Most equities were managed according to strategies based on low active risk. In addition to these, a number of more specialised mandates were awarded, involving higher levels of risk and offering higher potential returns. A large portion of the Fund’s low-risk equity management has been taken over by its in-house quantitative management group, established in 2004.

For further details, please contact Gunnar Larsson, Chairman of the Second Swedish National Pension Fund/AP2, or Carl Rosén, head of Corporate Governance & Communications, on +46 (0)31 704 29 00.

The Second Swedish National Pension Fund/AP2 has today decided to relinquish its interest in Skandia. Now that Old Mutual has secured a controlling interest in the company, Skandia can no longer remain independent.

The option to retain a minority interest remains. However, since the Second Swedish National Pension Fund/AP2 lacks confidence in Old Mutual’s leadership and ability to make the most of Skandia’s intrinsic qualities, the Fund sees no reason to retain its interest in Skandia.

During the negotiations concerning Skandia’s future, it has also been made abundantly clear that Old Mutual has no intention of addressing the interests of minority shareholders to any reasonable extent.

Inadequate protection of the minority rights of shareholders in Swedish insurance companies is an additional factor that has contributed to the Second Swedish National Pension Fund/AP2’s decision. For example, minority shareholders are unable to appoint a minority auditor or accountant.

As a consequence of the fact that the Second Swedish National Pension Fund/AP2 will cease to retain its interest in Skandia, the Fund will no longer be represented on Skandia’s election committee.

“An independent Skandia, with an unchanged business strategy, has been the Fund’s consistent objective in the drawn-out battle for control of the company,” says Petter Odhnoff, CIO, Second Swedish National Pension Fund/AP2.

For further details, please contact Petter Odhnoff, or the Second Swedish National Pension Fund/AP2’s head of Corporate Governance & Communications, Carl Rosén, on +46 (0)31 704 29 00.