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.

If the amount of the current offer is not increased, the proportion of minority shareholders in Skandia will be significant. The Second Swedish National Pension Fund/AP2 is coordinating the activities of large minority shareholders during negotiations with Old Mutual plc (“Old Mutual”), concerning a joint ownership of Skandia Insurance Company Ltd (publ.) (“Skandia”) as an exchange-listed company. This is to ensure that clients of both Skandia and Skandia Liv shall continue to retain full confidence in these two companies and to enable minority shareholders to participate positively in Skandia’s ongoing development. There are three primary requirements:

– that no less than three of the eight members of the board of directors elected by the Annual General Meeting shall be nominated by the minority shareholders and approved by the principal owner. All members of the board shall satisfy the norms customarily imposed with respect to commitment, integrity and relevant knowledge.

– shareholders shall be provided with complete data on all future transactions between Old Mutual and Skandia; decisions shall be subject to approval by 90 percent of the votes at a general meeting.

– shareholders shall be provided with complete data on all significant future structural changes in Skandia; decisions shall be subject to approval by 90 percent of the votes at a general meeting.

“In the current situation, it is important to all minority shareholders, foreign and domestic institutional investors and small shareholders that the ground rules are clearly established,” says Petter Odhnoff, CIO, Second Swedish National Pension Fund.

For further details, please contact Petter Odhnoff, on +46 708 29 11 00, or Carl Rosén, head of Corporate Governance and Communications, on +46 31 704 29 29.

Eva Halvarsson joins the Fund from a position as Head of the Division for State Enterprises at the Swedish Ministry of Industry, Employment and Communications, where she has led the administration of the majority of state-owned companies since 2002. These companies have a current estimated market value of SEK 500 billion. As a member of the so-called Code Group, she has been involved in developing the Swedish Code of Conduct for Boards of Directors. She has earlier been investment manager for a number of Swedish state holdings, as well as holding a post at the Ministry of Transport and Communications. Prior to this, she worked for several years within the Swedish Tax Authority. She is a graduate of Gothenburg University’s School of Economics.

“We are extremely satisfied and pleased to have been able to recruit Eva Halvarsson as the new CEO of the Second Swedish National Pension Fund,” says Board Chairman Gunnar Larsson. “She has unique experience in the administration of state-owned companies and knows what is required in combining the need for a competitive return on investment with the responsible administration of public assets. She stands for committed and dynamic leadership, as well as having a close association with Gothenburg.”

“Managing the pension assets of the Swedish people is a highly important and responsible assignment. I look forward with pleasure and a sense of true commitment to shouldering my new role as CEO of the Second Swedish National Pension Fund,” says Eva Halvarsson, commenting on her appointment. “It feels particularly stimulating to join an administrative organisation that has established such a professional and innovative reputation. Although I myself come from Vansbro, and have lived in Stockholm for many years, Gothenburg is still like a second home to me. It is where I both studied and worked for no less than thirteen years!”

Eva Halvarsson takes up her new position in February.

For further details, please contact Board Chairman Gunnar Larsson,
+46 (0)702 79 79 40 (cell) or Eva Halvarsson, +46 (0)703 41 97 32 (cell).

The combined pension assets of the Second Swedish National Pension Fund/AP2 (hereafter named “the Second AP Fund”) totalled SEK 173.0 billion on June 30th 2005, an increase of SEK 14.9 billion, including inflows. The return on the Fund’s invested assets for the six months ending June 30th 2005 was 8.4 percent, excluding expenses. The result for the report period was SEK 13.2 billion.

• “We are proud of this result,” says CEO Lars Idermark, Second AP Fund. “The selection of benchmark portfolio and choice of index were key factors in achieving a satisfactory return on assets in 2005.”

• “We have also introduced a number of measures to further enhance the efficient management of invested assets. There has been a sharp reduction in the number of external managers and a greater proportion of the assets under management has been handled in-house,” states Lars Idermark.

For the first time, the Second AP Fund has published a separate Corporate Governance report.

Read the entire Half year report 2005 and the Corporate Governance report of June 2005.

For further details, please contact Lars Idermark or the Second AP Fund’s Head of Corporate Governance & Communications, Carl Rosén, on +46 (0)31 7042900

Lars Idermark leaves his post as CEO of Andra AP-fonden/The Second Swedish National Pension Fund in Gothenburg, on November 1st 2005, to take up his new position as CEO of Kooperativa Förbundet (KF), (Swedish Cooperative Union).

“Lars has built up the Fund since its foundation in 2000 and has done an excellent job. I quite understand that, after a period of five years, Lars is keen to accept new challenges, even though the Fund will be sorry to see him go. We shall now initiate a recruitment process to find a new CEO for the Fund,” says Gunnar Larsson, Chairman of Andra AP-fonden.

“It has been exciting to build up Andra AP-fonden, and I shall miss my colleagues. The Swedish national pension system, of which Andra AP-fonden is one of several ‘buffer’ funds, is an important cornerstone of Swedish society,” says Lars Idermark, commenting on his decision.

For further details, please call Gunnar Larsson, Chairman of the Board, on +46 (0)702-797940, Lars Idermark on +46 (0)706-723177 or AnCi Johannisson on +46 (0)702-797910.

The rate at which women are being recruited to the boards of Swedish publicly listed companies has declined, and the number of women on the executive management committees of these same companies is also falling.

This is clearly demonstrated by the Second AP Fund’s index of female representation on the boards and executive committees of Swedish exchange-listed companies. Since 2002, female representation on the boards of publicly listed companies has more than doubled, from 6.1 to 15.9 percent of these companies’ boards. During the same period, there has been a marginal increase in the number of women on executive management committees, from 11.1 to 11.6 percent.

“That the number of women in top corporate management has remained almost static since 2002 is cause for serious concern. It indicates that the recruiting base for board members with experience of corporate management is not expanding. The reasons behind this are many and various. Institutional shareholders, corporate managements, personnel departments, universities and university colleges, politicians and we ourselves, as private individuals, have a joint responsibility to utilise the potential represented by recruiting women to corporate managements and boards”, says Lars Idermark, CEO of the Second AP Fund.

A long-term institutional shareholder, the Second AP Fund is committed to the development of corporate governance techniques. The Second AP Fund has measured developments with respect to female representation on boards of directors and corporate managements continuously, since 2002.

“As a long-term asset manager, it is important to us that the companies in which we invest employ all their resources in the best possible way, not least when it comes to women with sought-after skills. The better the recruitment base, the better the boards and managements. These in turn create better companies, which generate enhanced shareholder value”, says Lars Idermark, CEO of the Second AP Fund.

Further details:
For additional information, contact Lars Idermark, CEO, or Carl Rosén, head of Corporate Governance and Communications, on +46 (0)31 704 29 00.