Annual Report 2004 PDF 4,38 MB

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Annual Report
CONTENTS
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2
Invitation to Electoral Meeting
3
Highlights/Equity funds' total costs
4
Board of directors' report
9
Ownership structure
2004
Another gratifying year –
all our unit holders with positive returns
10 Portfolio managers' report
24 Return and risk measurements
25 Fund ranking
26 Annual financial statment
27 SKAGEN Global
29 SKAGEN Vekst
31 SKAGEN Kon-Tiki
33 SKAGEN Høyrente
35 SKAGEN Avkastning
37 SKAGEN Høyrente Institusjon
38 Notes
40 Auditor’s report
41 Our employees
42 Activities in Sweden/Partner
banks
43 History highlights
44 Business concept and philosophy
2004 was another good year for SKAGEN Fondene. Our funds delivered
good returns to the unit holders and we had a strong influx of new clients
and capital. To maintain a high quality and service level, the organisation
was considerably strengthened.
Highlights page 3 and board of directors' report page 4 Click here!
Good results in a decent investment climate
As predicted in last year's annual report, 2004 was not another top year for the share
markets in general, but it did provide opportunities for “clever stock pickers”. The World
Index was only up 4.5 percent, measured in Norwegian kroner. Our three equity funds
achieved returns of between 25 and 32 percent.
Board of directors' report page 4 and portfolio managers' report page 10
Click here!
Falling risk premium in share market in 2005?
With continued low interest rates globally, 2005 could be the year when the relatively
high-risk premium in the share markets falls. The greatest uncertainty is related to the
still growing US twin deficits, as well as the direction of the oil price.
Portfolio managers' report page 10
SKAGEN Fondene
Stavanger Fondsforvaltning AS
Telephone Customer Service:: +47 04001
Faks +47 51 86 37 00
E-mail kundeservice@skagenfondene.no
www.skagenfondene.no
Click here!
Stavanger Skagen 3, Torgterrassen (6th. floor),
P.O. Box 160, 4001 Stavanger, Norway
Bergen Foreningsgaten 3, 5015 Bergen, Norway
Oslo Klingenberggt. 5, 0161 Oslo, Norway
Ålesund Myrabakken Næringssenter,
6010 Ålesund, Norway
Note! Branch staff outside Stavanger are often Trondheim Kongensgate 8, Merkursenteret,
out visiting customers. Therefore the branch 7011 Trondheim, Norway
offices are not always manned. It may be
Stockholm Kungsgatan 72A
smart to make an appointment in advance. 111 22 Stockholm, Sweden
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Stavanger, 31st January 2005
Invitation to election meeting SKAGEN Fondene's securities funds
We would like to welcome our unit holders in SKAGEN Vekst, SKAGEN Global, SKAGEN Kon-Tiki, SKAGEN
Høyrente, SKAGEN Høyrente Institusjon and SKAGEN Avkastning to an electoral meeting on Wednesday 16th
February in the Stavanger Konserthus from 6pm to 9pm.
After the official program our investment director Kristoffer Stensrud will tell us about the outlook for 2005. This year
as well we have the pleasure of having Christian Vennerød at the meeting to question our portfolio managers regarding
last year and what they believe the new year holds in store.
The election meeting will also be transmitted directly on our website, thereby allowing as many of our clients as possible
to take part.
The program includes the following:
1. Election of Chairman for the meeting and two unit holders to sign the protocol.
2. Report from the Board of Directors for SKAGEN Vekst, SKAGEN Avkastning, SKAGEN Global,
SKAGEN Høyrente, SKAGEN Kon-Tiki and SKAGEN Høyrente Institusjon.
3. Auditor's report.
4. Election to Nomination Committee (the Board nominates that Truls Holthe is elected until 2008).
5. Election of one board member to the Board of Stavanger Fondsforvaltning AS (Nomination Committee nominates
that Atle Strømme is re-elected as the unit holders' board member until 2007).
6. Registered questions from the unit holders.
In the election meeting one unit gives one vote. An authorised representative can vote on behalf of a unit holder.
No meeting participant can vote for more than 1/3 of the total votes represented in the meeting. Elections will be
decided by a simple majority of the votes represented at the meeting. Approved proxy forms are available on
www.skagenfondene.no or by contacting. Customer Service on telephone +47 04001.
A unit holder may raise questions during the meeting. Questions must be registered in writing with the Board at least
one week before the meeting. Apart from the above elections, the election meeting cannot make any decisions which
obligate or bind in any way the funds or the management company.
Panel debate with Christian Vennerød
Once the formal part of the proceedings is over we will repeat last year's success with a panel debate led by the founder
and previous partner in Dine Penger, Christian Vennerød. The panel will consist of our portfolio managers and
Managing Director, Harald Espedal. Vennerød wil also look at other forms of savings which compete with funds.
For more information and registration visit www.skagenfondene.no or contact Customer Service on +47 04001.
Registration deadline is 14rd February. Finger food and beverages will be served.
Best regards,
the Board of Directors, Stavanger Fondsforvaltning AS
Martin Gjelsvik
Chairman of the Board
Stavanger Skagen 3, Torgterrassen.
Oslo Klingenberggt. 5, 0161 Oslo.
Bergen Foreningsgaten 3, 5015 Bergen.
Trondheim Kongensgate 8, 7011 Trondheim.
Ålesund Myrabakken Næringssenter, 6010 Ålesund.
Stockholm Kungsgatan 72A, 111 22 Stockholm, Sverige.
Postboks 160, 4001 Stavanger
Telefon 04001. Telefaks 51 86 37 00.
Organisasjonsnummer: 867 462 732
kundeservice@skagenfondene.no
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Another gratifying year for unit holders and management company
Highlights
2004 was once more a year of considerable
progress for SKAGEN Fondene. The year
provided unit holders with an extremely
good return and saw a strong influx of new
clients and capital. To maintain a high level
of quality and service, the organisation was
considerably strengthened throughout the
year. 2004 can be summarised by the
following highlights:
• Our three equity funds provided a return of between 25
and 32 percent. SKAGEN Global and SKAGEN Kon-Tiki
outperformed their benchmark indices by 20 and 18
percent respectively. SKAGEN Vekst had a return which
was just under seven percent below the Oslo Stock
Exchange Benchmark Index - one of the world's best performing stock exchanges in 2004. The fund's Norwegian
portfolio performed a little better than the Oslo Stock
Exchange shares, whilst the fund's international portfolio
achieved a markedly better return than the World Index.
• The equity funds' return since inception is about 20
percent for all three funds. Even unit holders who joined
when the markets were extremely high in 2000 have received a return of between 10 and 13 percent on their money.
• Our long-term returns for our equity funds are world class.
SKAGEN Global is ranked number five of in all 997
funds with more than five years history, according to
Standard & Poor's (S&P) worldwide database. SKAGEN
Kon-Tiki has been, since its inception in the spring of
2002, the global emerging market fund which has
achieved the highest returns of the in total 455 emerging
market funds in S&P's database.
• The fixed interest fund SKAGEN Avkastning achieved a
5.7 percent return by placing most of its capital in
Norwegian interest instruments with short remaining
duration, and a lesser part in foreign government bonds
with longer duration. Measured in terms of risk per krone,
SKAGEN Avkastning achieved the best return of all the
SKAGEN funds in 2004.
• SKAGEN Høyrente performed better than the money
market interest rate in 2004, and beat interest rates in the
country's largest banks with a good margin. SKAGEN
Høyrente Institusjon provided the best return within its
fund category.
• Net subscription amounted to 4.1 billion kroner.
Subscription in equity funds exceeded the record year of
2003, whilst subscription in fixed income funds tripled to
one billion kroner.
• Our share of the equity fund market in Norway increased
from 15.8 to 18.5 percent during the course of the year,
whilst our share of the fixed income market increased from
Harald Espedal Managing Director
1.4 to 2.5 percent. We are now the second largest equity
fund manager in the country.
• We have distribution agreements for our funds with 23
banks throughout the country, the majority of agreements
came into force in 2004. In addition to strong subscription,
these agreements contributed to an increase in number of
clients from 54,000 to 63,000.
• We held 127 information meetings with 5000 participants
– a doubling in the number of participants from the
previous year.
• 2004 saw a breakthrough for us in defined contribution
pension plans, with the number of agreements and
employees with their pensions with us doubling. We also
showed that we are capable of winning deals with large
employers.
• We set up an office in Stockholm. The Swedish market
contributed for the first time with a considerable influx of
clients and capital.
• The organisation was strengthened in every function with
13 highly qualified employees. At the end of the year we
had a total of 51 employees.
The 2004 results have been achieved by emphasising the
same factors we have focused on since we started up in 1993:
Independence, quality in all we do, a value based investment
philosophy, a long-term outlook and focus on fund products.
We continue to be an organisation whose reason for existence
is based on doing a good job for our customers by delivering
the highest possible returns at the lowest possible risk,
combined with the best possible communication, service
and competent follow-up.
We thank you for the confidence you have shown in us in
2004, and hope that you with continue to be satisfied unit
holders with SKAGEN Fondene in the up and coming year,
2005.
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Equity funds' total costs
There is often a relationship between costs and
returns - but not necessarily so that high costs
mean low returns.
meaningless to only focus on costs without looking at the return
at the same time.
In fund data pages in many newspapers a new column has appeared showing the fund's total costs. SKAGEN Fondene has now
also started to report the total costs of its funds. You can find this
information at the back of this annual report under key figures for
the individual funds.
In newspapers, magazines and on the internet, where you can now
find information on funds' total costs, it is important to understand that the total cost of our equity funds is completely dependent on the return delivered by the fund the previous calendar
year. In other words, the total costs you now find in the papers are
related to results achieved by the funds in 2004. Let us use SKAGEN
Global as an example to see how total costs work in practice.
SKAGEN Fondene's three equity funds have both a fixed and a
variable management fee. Should our portfolio managers only
manage to deliver average results, you as a unit holder will only
pay a low annual management fee. When the managers do a good
job by delivering “extra good” returns, a small part of that extra
return goes to SKAGEN Fondene in the form of a variable fee.
The funds' total cost includes all costs that you as a unit holder
pay to your fund manager. For example, when the total cost one
year ends up at four percent, this means that you have paid in
total four percent in annual management fees, excluding transaction based costs like broker provisions and trustee charges. In
contrast to the rest of the industry, SKAGEN Fondene pays for
these costs itself on behalf of the unit holder.
For funds with variable management fees it is each individual
year's returns that are decisive for the total cost. It is therefore
Costs and results hand in hand
If SKAGEN Global one year does not manage to deliver higher
returns than the fund's benchmark index, then the total cost for
the unit holder is one percent.
Since the start up of SKAGEN Global in August 1997 the average
annual total cost has been 3.2 percent. This includes both the fixed
annual management fee of one percent and the variable management fee which is dependent on the returns of each individual
year in addition to trustee fees.
In the seven years since SKAGEN Global started, unit holders in
the fund have enjoyed an annual average net return of 21.86
percent since inception. The World Index has, in comparison,
provided an annual average return of 4.95 percent over the same
period.
Strong growth and extremely good results
Board of directors' report
2004 was another great year for SKAGEN Fondene.
Our funds delivered very good returns to the unit
holders. Net subscription to the funds reached a new
record, with in total 4.1 billion kroner. We had a
strong increase in market share, especially for the
equity funds. For the first time ever, Sweden represented a considerable part of the client and capital
influx to the funds. We set up an office in Stockholm
and the organisation was strengthened considerably
during the course of the year.
The positive economic development we saw globally in 2003 continued into 2004. Asia continued to grow strongly, with India, and
especially China, as the main driving forces in the region. USA also
had nice growth, but as in previous years this was partly based on
strong stimulants and a strengthening of the imbalances in the
economy. In Europe growth was on the increase, partly as a result
of the integration towards Eastern Europe. Growth continued
nevertheless to be held back by structural weaknesses in the economy
which restricted adequate productivity growth.
In total, as we predicted at the start of the year, this provided a
record strong drive for growth in the world economy which ended
up with a growth rate of four percent. The liveliest growth rate for
all of 23 years.
China the locomotive for raw materials and shipping
In terms of sectors Asia, led by China, was the main reason why raw
material based and transport oriented industries had great times.
Both the price and demand for oil were, at times, record high.
Demand for technological products, which had remained low after
Back row from left:
Ulrik Scheen, Tor Dagfinn Veen, Sigve Erland, Atle Strømme
Front row from left:
Wenche Skorge, Martin Gjelsvik, Anne Sophie K. Stensrud, Jan Erik Tveteraas
the bang in 2000, increased. Inflation is still low, as a result of the
increasingly cheaper imports from Asia.
There were fears of an overheating of the Chinese economy, but
these had been reduced considerably be the end of the year due to
selective cooling-down initiatives from the authorities' side.
Productivity growth in the US remained strong.
Little appetite for risk in the equity markets
Despite the strong momentum in the global economy last year,
developments in the various financial markets around the world varied
strongly. Lack of inflation and strong money availability kept both
short and long-term interest rates low, but in individual countries
like the USA and Great Britain, short-term interest increased a few
notches. Whilst alternative returns to equities were low, company
profits increased markedly as a result of the strong global growth.
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In spite of this, investors who last year put their money in the World
Index achieved a modest 4.5 percent, measured in Norwegian kroner.
In other words we saw a decreasing risk appetite for equities, combined with the fact that part of the growth in company profits was
discounted into the prices. International investors did not expose
themselves either to risk in other assets, for example bonds, real estate,
currency or raw material markets. The development of the share
markets was nevertheless complex. Some markets did remarkably
well, amongst them the Norwegian one which to a large extent is
dominated by raw material, transport and oil related companies.
Companies led the way to returns
The development in the market economy in 2004 was about as we
had expected at the beginning of the year. The combination of
continued low interest and increased risk premiums in the equities
market was, however, not our main scenario. Nevertheless our
equity funds achieved extremely good returns both compared with
the markets we invest in and comparable funds. Despite the fact
that the main focus of our funds' investments is in different
markets, the return differences between them were not large. Both
these conditions prove that our investment philosophy and its
implementation through the selection of companies mean more
than the development in the financial markets.
SKAGEN Kon-Tiki “won” on the finishing line
It is pleasing to see that the number of savings agreements increased
by over 60 percent in 2004. A savings agreement is a particularly
suitable form of saving for many of our clients because it reduces
the risk of strong value swings at the same time as return potential
is high.
Throughout the autumn of 2004 many of our clients redeemed
some of their units to use their considerable profits to purchase
other items such as cabins, cars, holiday apartments or new kitchens.
It is nice to get confirmation that saving in funds enables patient
savers to realise their savings objectives.
New subscription record
All in all 2004 set a new record for net subscription in our funds.
In total subscription was 4,104,2 million kroner, with 3,116.1
million in the equity funds and 988.1 million in the fixed income
funds.
Our equity funds' subscription was about on the same level as in
the record year of 2003, and represented 41 percent of net subscriptions for the entire industry in Norway. We grew in all market
segments, including private clients, institutions and pension funds.
Our total market share for equity funds increased from 15.8 to
18.5 percent.
After a good final spurt just before New Year SKAGEN Kon-Tiki
ended up being the best of our three equity funds in terms of
absolute return, with an increase of 32.4 percent last year. Morgan
Stanleys Emerging Markets Index was up 14.3 percent.
Net subscription in fixed income funds represented more than a
doubling of the 2003 level. We experienced growth in fixed income
funds in the institutional market, but the increase was especially
strong in the private clients market.
SKAGEN Global ended the year with a return of 24.6 percent, all
of 20 percent better than Morgan Stanleys World Index.
The total capital under management for our funds increased from
12.1 billion to 19.6 billion kroner. The number of clients increased
from 55,000 to 63,000. In addition there is a considerable number
of clients with savings in SKAGEN Fondene through various Unit
Link schemes. In the Swedish pension scheme (PPM) alone we
have over 30,000 client relationships.
SKAGEN Vekst was up 31.8 percent. The fund has a minimum of
50% invested in the Norwegian equities market, whilst the rest is
well diversified in the global equity markets. This reduces the special
Norwegian risk on the Oslo Stock Exchange, where last year's
winning sectors like energy, raw materials and shipping are heavily
exposed. The Oslo Stock Exchange ended up at the end of the
year on plus 38.5 percent. SKAGEN Vekst's Norwegian part had a
slightly better return than the Oslo Stock Exchange last year,
whilst the global part achieved a considerably higher extra return
compared to the World Index.
Fixed income funds delivered
2004 was also a good year for the fixed income funds. SKAGEN
Avkastning's objective is to not lose money over a six-month
horizon. In addition, the fund is to achieve a higher return than
SKAGEN Høyrente for investors with a time horizon of at least six
months. SKAGEN Avkastning achieved a return for the year of 5.7
percent, with extremely low value fluctuations throughout the year.
In fact this fund produced the best returns compared to risk of all
the funds in the SKAGEN family, as well as measured against their
benchmark indices.
SKAGEN Høyrente achieved a return of 2.1 percent, which was
higher than the money market interest rate and the best deposit
interest in the country's largest banks. The return for SKAGEN
Høyrente Institusjon was 2.2 percent, making it the best fund in its
class.
S&P upgraded Global and Kon-Tiki
The world-wide rating agency Standard & Poor's (S&A) upgraded
in 2004 both SKAGEN Global and SKAGEN Kon-Tiki from A to
AA rating. This means that S&P believes that the two funds
demonstrate extremely high standards in the investment process
and consistency in returns compared to comparable funds. In its
evaluations S&P places most weight on the quality of the management organisation, the investment philosophy and control over the
investment process.
Only 59 global equity funds have the same or a better ranking than
SKAGEN Global. Only 20 emerging market funds have the same
or a better ranking than SKAGEN Kon-Tiki. SKAGEN Vekst
retains its A rating.
20 percent annual returns
At the start of 2005 unit holders who had been in our equity funds
since start up could be happy about having achieved an annual
return of around 20 percent. Even unit holders who invested when
the equity markets were on top in 2000 have received an annual
return of 10 - 13 percent.
SKAGEN Fondene's organisation
The individual SKAGEN Fondene funds are managed by
Stavanger Fondsforvaltning AS, with Handelsbanken as trustee and
the Norwegian Registry of Securities as custodian of the unit holders' register. Risk in the securities funds comes from market developments, currency fluctuations, interest developments and economic and company specific conditions. The law sets out specific
requirements regarding portfolio diversification in terms of the
number of securities and the number of unlisted securities. These
requirements have been met throughout the year.
In its investment strategy the management company has requirements regarding sector balances and liquidity in the underlying
securities. These requirements have also been met during the course
of the year. The composition of the equity portfolios' investments
is a result of our investment strategy, which sets out requirements
regarding companies' valuations, product/market mixes, debt levels
and securities' liquidity.
Better access to information
The equity funds have wide geographical mandates. With investments outside the OECD area the main emphasis of the investments remains in the form of depository receipts, thereby reducing
settlement risk and simplifying settlement. In line with a long-term
trend towards stronger local securities markets the management
company is working actively to increase the share of locally listed
shares. In this way liquidity is increased and access to information
improved. As a leading global investment house in Norway we have
an independent responsibility for continually improving competence
internally, as well as improving access to all information sources
which affect our placements
Less demanding subscription
The subscription situation has been less demanding for the funds'
portfolio management than in previous years. The funds' capital has
a size and a diversification of client mass which makes it less influenced by the subscription and redemption situation. Subscriptions
were especially large in the first and fourth quarter, but there were
no obvious signs that this affected the management negatively. The
large subscriptions in our equity funds means however that we at all
times have to be extremely careful when setting prices for our portfolios, to avoid dilution or concentration for existing unit holders.
Our choice of companies has, this year as well, been the main contributor to our excess returns. On a global basis we have focused on
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finding companies with good operations, healthy balance sheets and
rational decision making processes. Price fluctuations, measured in
terms of standard deviation, have been decreasing for both our equity
funds and for the equity markets in general. If we break down price
fluctuations for our equity funds, we see that the funds decrease less
in value than the market in general during equity market downturns,
whilst we come back stronger than the market during upswings.
SKAGEN Vekst
SKAGEN Vekst is the oldest fund in the SKAGEN family, turning
eleven years old on the 1st December 2004. The fund's mandate is
to have at least 50 percent of its share portfolio in Norwegian companies; the remaining assets are placed well diversified on the global
market. In 2004 the fund achieved a return of 31.8 percent, compared to its benchmark index, Oslo Stock Exchange Benchmark
Index, which rose by 38.5 percent.
The Norwegian portfolio developed slightly better than the Oslo
Stock Exchange Benchmark Index, whilst the global part of the
portfolio had a considerably better return than the World Index.
The total return of the fund was lower than Oslo Stock Exchange's
due to the fact that the Norwegian equities market rose dramatically more than the global one.
At the turn of the year the fund's annual geometric return (including the effect of interest's interest) since start up was 19.3 percent.
In the same ten-year period the Oslo Stock Exchange had an annual
return of 9.4 percent. The dramatic effect of SKAGEN Vekst's
excess return for the unit holders can be illustrated by the following
example:
If you had invested 1000 kroner in SKAGEN Vekst on the 1st
December 1993 you would at the end of 2004 been pleased to see
that your 1000 kroner had increased sevenfold to 7,050 kroner.
The equivalent investment on the Oslo Stock Exchange (Benchmark
Index) at the same time would have only grown to 2,707 kroner
over the same period of time.
In 2004 once more the fund's price fluctuations were smaller than
those on the Oslo Stock Exchange Benchmark Index. This has
been the case since the fund started up, but the return has been
clearly better. This is because the fund has been managed in accordance with our value based investment philosophy. In addition it
has a mandate which means that risk can be reduced and quality
improved through placements on the global equity market as well.
SKAGEN Vekst has beaten its benchmark index in eight out of
eleven years.
At the turn of the year 6.8 percent of foreign investments in the
fund were hedged against currency fluctuations. The fund does not
take active currency positions beyond what is natural in relationship
to necessary working capital. Turnover for the fund's portfolio was
once again extremely low in 2004 - meaning that the fund has only
been charged very low transaction costs.
The fund has paid Stavanger Fondsforvaltning AS a fixed management fee equivalent to 1.0 percent per year of assets under management. The fee is calculated daily and settled with the management
company on a quarterly basis. The fund has also paid a variable
management fee equivalent to 1/10 of returns in excess of 6 percent
p.a., measured in Norwegian kroner. The fee is calculated daily
with the starting point being the excess or reduced returns created
by the fund's capital under management on the current day. The
fixed management fee and a provision for the variable management
fee are deducted from the fund price which is provided on a daily
basis. The variable management fee is settled with the management
company at the end of the year.
SKAGEN Global
SKAGEN Global is a global equity fund which invests exclusively
outside of Norway. The fund has an extremely broad geographic
mandate and invests in undervalued companies over the whole world.
Since its start up in 1997 the fund has achieved better returns than
the Morgan Stanley dividend adjusted World Index measured in
Norwegian kroner. Whilst SKAGEN Global has provided its unit
holders with an annual return of 21.9 percent since its start up,
those who had instead put their money in index funds which follow
the World Index had only received a return of 0.04 percent.
In 2004 the fund's return was 24.6 percent, compared to the benchmark index's 4.5 percent. Volatility has fallen throughout 2004. For
the year as a whole, price fluctuations were higher than the World
Index, but these can easily be justified based on the considerably
higher return. During downswings on the world's stock exchanges
the fund has historically fallen less than the World Index. In upswings the fund has increased much more.
At the turn of the year 5.2 percent of foreign investments in the
fund were hedged against currency fluctuations. The fund does not
take active currency positions beyond what is natural in relationship
to necessary working capital. Turnover in SKAGEN Global has also
been extremely low in 2004.
The fund has paid Stavanger Fondsforvaltning AS a fixed management fee equivalent to 1.0 percent per year of assets under management, calculated daily and settled quarterly. The fund has also paid
a variable management fee equivalent to 1/10 of excess returns compared to Morgan Stanley dividend adjusted World Index measured
in Norwegian kroner. The fee is calculated daily with the starting
point being the excess or reduced returns created by the fund's capital
under management on the current day. The fixed management fee
and a provision for the variable management fee are deducted from
the fund price which is provided on a daily basis. The variable
management fee is settled with the management company at the
end of the year.
SKAGEN Kon-Tiki
The fund shall invest at least 50 percent of its assets in so-called
emerging markets. These are markets which are not included in the
Morgan Stanley World Index. These are: Eastern Europe, Turkey,
Africa, Asia (excluding Japan, Singapore and Hong Kong), and the
whole of Latin-America including Mexico. In line with our requirement for a sensible sector balance, up to 50 percent of the fund's
assets can be invested in markets which are part of the Morgan
Stanley World Index. A condition however is that the companies
invested in must be registered in and/or have emerging markets as
their main area of activity.
The fund's annual return since start up on the 5th April 2002 has
been 26.0 percent, compared to Morgan Stanleys Emerging
Markets Index's 5.0 percent. In 2004 the fund's return was 32.4
percent, against the Emerging Markets Index's 14.3 percent.
SKAGEN Kon-Tiki had slightly higher price fluctuations than the
Emerging Markets Index in 2004. During downswings on the
emerging markets the fund has historically fallen slightly less than
the Emerging Markets Index. In upswings the fund has increased
much more.
At the turn of the year 8.0 percent of the fund's equity investments
were hedged against currency fluctuations. The fund does not take
active currency positions beyond what is natural in relationship to
necessary working capital. Turnover in the fund has been extremely
low in 2004.
The fund has paid Stavanger Fondsforvaltning AS a fixed management fee equivalent to 2.5 percent per year of assets under management, calculated daily and settled quarterly. The fund has also paid
a variable management fee equivalent to 1/10 of excess returns
compared to Morgan Stanleys Emerging Markets Index measured
in Norwegian kroner. This is based on daily calculations with the
starting point being the excess or reduced returns created by the
fund's capital under management on the current day. The fixed
management fee and a provision for the variable management fee
are deducted from the fund price which is provided on a daily basis.
The variable fee is limited in such a way that the sum of the fixed
and variable fee shall not be higher than 4.0 percent p.a. of the
average capital under management. In the same way, the variable
management fee can be negative, but is limited so that the sum of
the fixed and variable fee cannot be lower than 1.0 percent of the
average assets under management. The variable management fee
was settled with the management company at year-end.
Fixed Income Funds
2004 was characterised by relatively stable conditions in the
Norwegian interest market. The Central Bank of Norway's base
rate was 2.25 percent at the start of the year and 1.75 percent at
year-end. 10-year government bond interest fell from 4.65 to 4.07
percent, with a smaller top in May of 4.90 percent.
Against this background our fixed income funds achieved extremely
good returns considering the low risk. SKAGEN Høyrente provided
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2.1 percent “interest”. This was 1.23 percent better than high interest bank accounts for deposits over 50,000 kroner, and 0.68 percent better for deposits over 150,000 kroner, based on statistics
taken from the magazine Dine Penger. The money market rate (3month NIBOR), which the banks themselves loan at, was also
slightly lower than the return in SKAGEN Høyrente.
Excess returns for SKAGEN Høyrente compared to the banks are
achieved because collectively our unit holders can lend money at a
“wholesale price”, instead of going individually to the bank with
their savings. In addition we only charge a 0.3 percent management
fee. This is considerably lower than the banks' interest margin. The
fund's assets are placed in loans issued by the government, local
authorities, banking/finance, energy and solid industrial companies.
SKAGEN Høyrente Institusjon is a short interest fund with the
objective of providing a good risk adjusted return for institutional
unit holders compared to having money in other comparable fixed
income funds or in the bank. This objective was reached in 2004,
with a return of 2.2 percent compared to the benchmark index
(ST1X) and the 3-month NIBOR which both provided 2.0 percent.
SKAGEN Avkastning fulfilled its objective of achieving better returns
than SKAGEN Høyrente over a six-month time frame. The return
was 5.7 percent compared to the benchmark index's 5.5 percent. The
fund had well under half the fluctuations of the benchmark index.
Throughout the year foreign placements constituted on average 18
percent of the fund's capital. These assets were placed in government
bonds in countries which offered a better risk adjusted return than
sitting on Norwegian bonds. Foreign placements were partly hedged.
Total assets under management in the fixed income funds doubled
over the year and at year-end were 1,933 million kroner. The number of unit holders increased considerably in the widely marketed
funds SKAGEN Avkastning and SKAGEN Høyrente.
Saving in funds losing ground
Although we experienced an extremely good influx of capital from
Norwegian clients in 2004, the situation for the fund industry in
general is discouraging. Whilst gross financial saving in Norway
had quadrupled over the last ten years, savings in funds has actually
dropped considerably in the same period. Fund saving's share of
gross financial saving has fallen from 15 percent ten years ago to
two percent today. In spite of historically low interest rates, bank
deposits have increased in popularity. The same is true for fund
insurance (Unit Link), guaranteed products and property syndicates.
We maintain that fund instruments are very suitable for both short
and long-term saving. In the first place funds have a much longer
verifiable returns history, and in our case an extremely good one at
that. In addition, the fund manager is a guardian of the unit holder's
money, and invests it in value creating activities on behalf of the
client. With funds there is full transparency regarding the cost
structure and the current value of the units are published on a
continual basis. Moreover, one can redeem units for liquid settlement with just a few days notice. All these qualities are absent to a
varying degree with all the new savings alternatives. Securities funds
are also strictly regulated, subject to the Securities Trading Act and
under close scrutiny from The Banking, Insurance and Securities
Commission. This is in comparison to the new savings products
which are only partly, if at all, regulated.
Saving in funds fiscally more profitable
The tax system is currently being reorganised. The full implication of
this on securities funds is not yet clear. There will also be a general
election in 2005, which will of course create some uncertainty regarding decisions affecting taxation policies. Nevertheless, some decisions
have already been made, and these clearly have a positive effect for
owners of securities funds. From 2005 securities funds will, together
with listed shares, only count as 65 percent - instead of 100 percent of market value with respect to taxable wealth. This reduces the taxation difference between securities funds and investments in property
and unlisted shares.
As of 2005 limited companies will be able to realise profits in equity
funds without having to pay tax on these profits. Profits will only
become taxable when they are taken out of the limited company as
dividends. This tax exemption has previously only applied to Unit
Link schemes. On the other hand, limited companies are not able to
offset losses in equity funds against tax. Taxation regulations for
securities funds as individual subjects of taxation are not ready yet,
but will be clarified before the new taxation system comes into effect
on the 1st January 2006.
Office established in Stockholm
In 2004 SKAGEN Fondene opened an office in Stockholm. The
office is organised as a Swedish branch of the management company.
Per Wennberg is employed as “managing director” whilst Jonas A.
Eriksson is employed to work with institutional clients and expand
our communication platform in Sweden. Both have long experience
working in the financial markets and with the fund industry.
Establishing the office in Stockholm is a natural progression of our
expansion into the Swedish market which started when we received
marketing approval at the end of 2001. By means of distribution
agreements and remote servicing we have gradually built up a client
and capital mass which made it natural to establish an office. We are
optimistic regarding potential growth in the Swedish fund market,
even if competition is hard, also from foreign actors. The Swedish
securities fund market is six times the size of the Norwegian one.
In the first place the population is larger, and secondly the Swedes
place more or their savings in funds, both free capital and pension
resources.
Our equity funds have international mandates and long return histories which are extremely competitive, globally as well. At the
same time our objective in Sweden, as in Norway, is to provide the
best service, communication and competent follow-up to our clients.
By means of co-operation agreements our funds are now available
in Sweden through Danica Forsäkring, Vital Link and Moderna
Forsäkringer. In addition we are available through the PPM-scheme,
which is an individualisation of the Swedish social security system
whereby Swedes can themselves invest part of their pension resources.
Net subscription from Swedish clients in 2004 was 374.7 million
Norwegian kroner. In the PPM-scheme alone we have 30,000 clients.
We hope that our efforts in Sweden will contribute to a more stable
subscription and redemption situation in the funds since the capital
flows will now come from two different geographic markets. In
addition the capital flow in Sweden is more stable. Moreover we
expect that our presence in the Swedish market will improve our
competence within communication and client consultancy - which
in turn will make us even better in these areas in Norway.
Noted on the Copenhagen Stock Exchange
Throughout 2004 we have been listed on Xmarkedet on the
Copenhagen Stock Exchange. The Danish tax regulations discriminate against foreign funds (this is currently being changed). This
has restricted turnover, but for us being noted on the stock exchange
is an important information channel for building up awareness of
our funds. In January 2005 the Danish SP-scheme, known as
“Følkebørsen” started up. This is very similar to the Swedish PPMscheme. We are also participating here.
Pensions in the spotlight
Pensions are a hot topic of debate at the moment. In Norway the
topic is especially in the spotlight due to the Pension Commission's
recommendation for compulsory occupational pensions. SKAGEN
Fondene offers occupational pensions directly to our corporate clients in the form of defined contribution pension plans. This means
that the employer's pension contribution is paid into our funds in
the individual employee's name.
Withdrawal of pension assets can start when the age of retirement
is reached. After many years of patiently cultivating the market we
are now noticing a considerable increase in interest for defined contribution pension plans. Slowly but surely the market is becoming
aware of SKAGEN Fondene as a supplier of defined contribution
pension plans. The number of employees with their pensions with
SKAGEN Fondene has more than doubled in the past year.
Strong increase in internet traffic
In 2004 the results of our increased focus on communication which
started in 2003 and continued into 2004 became even more positive.
The number of visitors to our web pages increased by 69 percent to
on average 44,149 unique visitors every month. There was considerable downloading of status reports for the funds, which are important in the continual dialogue with our unit holders. In 2004 we
organised 127 information meetings throughout Norway with in
total 5000 participants - more than a doubling from the year before.
We carried out a reader survey of our “Markedsrapporten”, which
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is issued seven times a year with a distribution of 60,000. The survey provided us with extremely positive feedback in total, but also
with important improvement ideas which we will bear in mind in
2005 when the publication will be lengthened with four additional
pages. In December the publication was issued for the first time
ever in Swedish, in electronic format.
In 2004 the board of directors set up an internal auditing function
in addition to our existing external auditor. This involves increased
examination of our operations by external partners, and is a natural
function of our strong growth. KPMG were selected as internal
auditor, whilst Pricewaterhouse Coopers continues as our external
auditor.
Use of the internet bank “My Account” increased in 2004, both in
terms of subscriptions and redemptions via the internet and in
obtaining information regarding the value development of fund
units. 36 percent of our transactions are now carried out electronically, compared with 32 percent last year.
Future Prospects
Wide partner bank network
SKAGEN Fondene has now set up co-operation agreements with
in total 23 banks spread over the entire country. We are now accessible to the savings market via a considerable bank network and are
optimistic regarding future co-operation with our new partners. In
2004 we also set up distribution agreements with Storebrand for
both Unit Link products and defined contribution pension plans
and with Danica for Unit Link.
From 38 to 51 employees
The number of employees in Stavanger Fondsforvaltning increased
in 2004 from 38 to 51. All functions in the organisation were
strengthened, that is to say portfolio management, communication,
asset management (customer service), accounting and administration. The increase is a result of the growth in capital and activity,
and also the desire to upgrade the organisation in terms of
competence.
After the establishment of the office in Stockholm we are now present in six towns and two countries. Our focus on competence
development has been increased through the establishment of the
position of competence manager. We have entered into an agreement with the Norwegian School of Economics and Business
Administration regarding employee development in various subjects
which are relevant for asset management. The frequency and scope
of our internal company training has been increased. In line with
the increase in the number of our employees we have also increased
the focus on cultural and value building activities.
The work environment is stimulating and demanding. Incentive
schemes stimulate the employees to achieve the best possible
returns for our clients. No incentive scheme is directly linked to
subscription results.
The board of directors would like to thank the employees for their
great efforts in a successful year.
Legal and ethical framework
The Finance Sector Union of Norway, the Norwegian Financial
Services Association, the Norwegian Savings Bank Association and
the Norwegian Mutual Fund Association set out at the beginning of
2004 a proposal for minimum competence requirements for financial advisors. The report also contains a proposal regarding advisory
ethics. The board of directors in the Norwegian Mutual Fund
Association, where SKAGEN Fondene is represented, is laying the
foundations for financial consultancy to also be subjected to stronger
regulation by the authorities when the so-called securities market
directive is implemented, most likely during the course of 2006.
Nine Norwegian organisations connected to the securities market,
including the Norwegian Mutual Fund Association, published in
December 2004 a revised version of the Norwegian recommendation
regarding corporate governance in listed companies.
SKAGEN Fondene has participated actively in the association in
connection with the revision of the recommendation. The board
has delegated power of ownership on behalf of the funds we manage
to the administration, which reports back to the board regarding
how this authority has been exercised. Power of attorney shall be
used with the goal of contributing to providing unit holders the
highest possible returns at the lowest possible risk.
In December 2004 the government published a pension report
which contained both suggestions for reforms of the national insurance scheme and alternative models for the introduction of occupational pension plans for all employees. The board of directors is
confident that the introduction of obligatory occupational pension
plans will lead to securities funds increasingly being used for pension
savings in the future.
In accordance with §3-3 of the Accounting Act the annual report
shall contain information regarding conditions for continued operations. After evaluation by the board this condition is considered
irrelevant for the funds' accounts, since the accounts are based on
actual values.
The recommendation for profit allocation and profit coverage is
included in each fund's accounts on page 17.
It is with great pleasure that we can confirm that our value based
investment philosophy has worked as well in 2004 as in the previous
eleven years, both in good and difficult markets. The philosophy
has remained unchanged since conception in 1993, and is just as
relevant today as it was then. In the future we will continue to
resist the many fads and fashions of the financial markets. Index
focus, both in its pure form and in the index near mentality,
continues to be prevalent on the investor side internationally. This
provides us with opportunities, since this index focus ignores a
company's fundamental values, in such a way that the share value
of the companies deviate from the fundamental value.
In 2005 we will continue to increase on the personell side. Three
appointments have already been made, coming into effect in 2005.
The portfolio department will be further strengthened by means of
the appointment of a new portfolio manager on the fixed
income side. New appointments throughout the year are planned
to strengthen the entire organisation.
Our communication platform will be further enhanced in 2005.
Our homepages www.skagenfondene.no will be thoroughly
upgraded throughout the year, and more complete Scandinavian
and English sites will be launched. The Markedsrapport will be
lengthened from 16 to 20 pages to increase the amount of material
adapted to a wide spectre of unit holders. Markedsrapport will also
be published in Swedish and English, with local adaptation of the
material.
We expect to enter into further co-operation agreements in
Sweden, and to see an increase in the number of Swedish clients.
The economic upswing is expected to continue in 2005, but at a
slower tempo than we have seen in the last year. We will probably
see a more differentiated interest rate situation worldwide. This due
to the fact that different parts of the world are at different stages in
their economic cycles and therefore require different monetary policies. The considerable risk premium we see in even solid companies
means that we are relatively optimistic in the new year as well.
The board would like to thank our unit holders for the confidence
they have shown in us this year as well. In return we promise that
our resources will be used to provide unit holders with the best
possible returns at the lowest possible risk and offer great communication, service and competent follow-up.
Stavanger 24th January 2005
Board of directors, Stavanger Fondsforvaltning
Tor Dagfinn Veen
Ulrik Scheen
Atle Strømme
Sigve Erland
Wenche Skorge
Jan Erik Tveteraas
Anne Sophie K. Stensrud
Martin Gjelsvik
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Ownership structure:
Stavanger Fondsforvaltning AS is owned by J. Kristoffer C. Stensrud (9.40 %),
T.D. Veen AS (35.25 %), Åge K. Westbø (9.40 %), Solbakken AS (25,85 %),
MCM Westbø AS (14.10 %) and Kristian Falnes (2,00 %),
Filip Weintraub (2,00 %) and Harald Espedal (2,00 %).
Representatives' units:
Name
Number of units
Martin Gjelsvik
5,119
Ulrik Scheen
5,744
Tor Dagfinn Veen
266,133
Atle Strømme
169
Sigve Erland
4,432
Jan Erik Tveteraas
0
Anne Sophie K. Stensrud 2,299
Wenche Skorge
3,039
Harald Espedal
12,129
J. Kristoffer C. Stensrud 814,000
Åge. K. Westbø
276,754
Kristian Falnes
Filip Weintraub
41,301
9,073
Function
Chairman
Board member
Board member and owner
Board member
Board member
Deputy board member
Deputy board member and
owner
Deputy board member
Managing Director
Investment Director and owner
Deputy Managing Director
and owner
Portfolio Manager and owner
Portfolio Manager and owner
Board
Chairman of the Board Martin Gjelsvik
is Dr. Oecon from NHH. He has experience from banking and finance and
insurance, and is currently research manager in Rogalandsforskning.
Shareholders' member Ulrik Scheen
works as a management consultant in his own company. He has a long
and varied background as a manager within trade, services and industry.
He graduated with a MSc in Business from the Norwegian Scholl of
Economics and Business Administration in 1968.
Shareholders' member Tor Dagfinn Veen
MSc in Business, has long experience from the securities market from
his time with Rogalandsbanken and Stafonds AS, and recently as portfolio advisor for private limited liability companies. Tor Dagfinn Veen is
managing director in Stavanger Forvaltning AS.
Unit holders' member Atle Strømme
is director for Astec Helicopter Services AS and has an MSc in Business.
Atle Strømme has sat on various boards of directors, and continues to
hold various board positions in connection to his current job.
Unit holders' member Sigve Erland
is a management consultant in Jærkonsult. He has previously been
director of the Bryne based company Serigstad AS and vice president
in the Confederation of Norwegian Business and Industry (NHO). Erland
has long experience from board work. He has a MSc in Business and is
a qualified engineer.
Share holders' deputy member Jan Erik Tveteraas
is a graduate of the Norwegian School of Economics and Business
Administration in Bergen. He is currently managing director in Sevan
Marine AS. He was previously finance director in Navis ASA and has
held various key positions in Transocean ASA, including that of finance
director.
Share holders' deputy member Anne Sophie K. Stensrud
has since the autumn of 2001 been studying business and journalism
at the Norwegian School of Management in Oslo. She has Examen
Philosophicum and Examen Facultatum from the University of Oslo.
Unit holders' deputy member Wenche Skorge
has more than 20 years experience from journalism and communication,
the majority as communication manager in various departments in
Statoil. Wenche Skorge is currently director for information and public
relations in Statoil.
Election Committee
The Election Committee was elected at the electoral meeting in 2004.
The Electoral Committee consists of Harald Sig Pedersen (chairman),
Truls Holthe and Britt S. U. Mikkelsen. Their task is to propose candidates for the positions as unit holders' members of the board in
Stavanger Fondsforvaltning AS.
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Good results in a decent investment climate
Portfolio managers’ report
As predicted in last year's annual report, 2004 did
not become a new top year for the general equity
markets, but it did provide opportunities for “clever
stock pickers”. True, the Oslo Stock Exchange
gained 38 percent, which made this small energy
heavy stock exchange one of the best in the world
in 2004. However, the general World Index only
gained 4.5 percent, measured in NOK. Our stockpicking gave very good results, both in absolute and
relative terms. The fixed income funds provided
the best risk adjusted returns in their classes.
With continued low interest rates globally, 2005 may be the year
when the relatively high risk premiums on the equity markets will
be falling. The greatest uncertainty is related to the still growing
US twin deficits, as well as the direction of the oil price.
Best growth since the oil crisis in 1973
The SKAGEN Fondene portfolio managers. Back row from left: Filip Weintraub,
J. Kristoffer C. Stensrud and Ross Porter.
Front row: Beate Bredesen and Kristian Falnes.
Is the appetite for risk increasing in the equity market?
Investor focus was increasingly directed at reducing the risk and
hunting for absolute returns. This strongly increased the interest
for property syndicates, private equity and hedge funds. In other
words, investments without requirements for daily price quotations
based on market prices. The money flow to these investments has
been strongly stimulated in part by extremely cheap debt capital.
2004 turned out to be one of the best years for global economic
growth since the oil crisis in 1973. By and large growth was high
in all regions. In spite of high commodity prices, global inflation
remained low, but there was a troubling growth of imbalances during
the year. In particular, the growing US current account deficit, due
to low private and public saving, gave a lot of people grey hair.
The above-mentioned “phenomenon” has contributed to the growing
imbalances on the capital markets, resulting in risk and return on
different investments being out of proportion. As the risk experienced in the equity markets is perceived to be lower (not everybody has
forgotten the IT bubble from the end of the millennium), we may
be facing a revaluation of equities and equity funds as investments.
Corporate profits were a positive surprise, due to better productivity
improvement and higher growth than expected. Low capital
spending and good cash flows provided for improved balance sheets,
and thus we saw a robust upgrading of corporate creditworthiness.
We did very well in a tough climate
Small price fluctuations on the whole
Generally, the capital markets remained calm during the past year.
Market level volatility was significantly lower than what we have
been used to during the past six years. However, during the second
quarter expectations for rising global interest rates resulted in a
slight increase in the risk premiums for doubtful borrowers. The
greatest reaction came on fixed interest securities in “peripheral”
markets. As the rate hikes by Fed Chairman Alan Greenspan in
the U.S. became more predictable, both the fixed interest and the
equity markets stabilised.
China's “wild” growth
In this investment climate, SKAGEN Fondene delivered particularly
good absolute returns. In addition, the global equity funds,
SKAGEN Global and SKAGEN Kon-Tiki, solidly outperformed
their benchmarks. SKAGEN Vekst, which has a Norwegian/
International mandate, underperformed its benchmark, the Oslo
Stock Exchange Benchmark Index – the main indicator for one of
the best performing markets last year. Both the Norwegian, and
especially the global, part of the portfolio achieved better returns
than their respective benchmarks.
The fixed income funds had a good year. SKAGEN Høyrente
achieved – by a solid margin – the target of delivering higher interest
rates to its unit holders than the rate available on capital accounts
in the major banks last year. The fund achieved a return in line
with 3 month NIBOR. The fund's risk was low. SKAGEN
Høyrente Institusjon was a winner in its fund category last year,
whereas SKAGEN Avkastning provided a more than "adequate
bond return", at a significantly lower risk.
Solid balance sheet and focus on values
During the past five years we have seen a shift from indexing,
specialisation, sector and area speculation to a more balanced and
fundamental appraisal among global equity investors. This has
resulted in greater focus on understandable business models and
undervalued companies, based on the long-term value creation they
provide their owners.
Thus we have seen a significant repricing of many of our companies,
which has been a main contributor to our investment results in the
past few years.
During this decade China's share of world manufacturing output (yellow) will correspond to the total output in the rest of Asia, Europe, U.S.A and the rest of the world.
Therefore, the competitive climate in which SKAGEN Fondene
must continue to create good relative performance for our unit
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Less tax stimulation in the U.S. in 2005
holders will be tougher in the time ahead. However, we still have
structural advantages in our generalist approach, our broad global,
risk damping mandates, our integrity in the form of communality
of interest with the fund investor - and our long experience in
handling global issues.
Global regional development
U.S.A.: Growth continues - but at a slower rate
At the start of the year, economic growth was at record highs,
whereas the labour market was relatively weak. Throughout 2004
this provided considerable growth in corporate earnings, at the
same time as the labour market improved. At the start of 2005 it
looks like the growth will continue, but at a slower rate than
experienced in 2004. This is a normal development in this part of
the business cycle.
After the IT bubble burst in the spring of 2000, the US Government
has stimulated the economy with big interest rate cuts and in part
significant tax cuts. It has been especially important to keep consumption, which represents 65 percent of the economy, up. In that
they have been successful. Now interest rates are on their way up, at
the same time as the tax cuts are being reversed. The U.S. economy
will therefore to a greater extent have to rely on itself.
No contradiction between growth imbalances
Real GDP Growth vs Current Account and Federal Deficits as % of GDP
The fall of the dollar throughout the year has made U.S. business
more competitive, but domestic corporate spending is still relatively
low. Interest rate increases and a tighter fiscal policy will also provide
fewer growth impulses for the economy than was the case in the
three preceding years. However, better global competitiveness
compensates for a financial policy with fewer incentives.
Worrying imbalances
Long term, the imbalances in the U.S. economy are worrying. They
result in growing private and public indebtedness. This increases the
sensitivity to unexpected interest rate increases and may contribute to
the destabilisation of the economic development. With the directions
signalled by the Federal Reserve regarding a more predictable interest
rate policy, developments in the interest rate market should be less
volatile this year than last year. Provided there are no surprising
upturns in inflation. If that does not happen, it looks like the equity
market will be relatively stable throughout 2005.
Positive surprises by the great elephants?
CURRENT ACCOUNT AS % OF GDP
FEDERAL DEFICIT AS % OF GDP
REAL GDP GROWTH
The U.S. imbalances are always greatest at the start of a recovery,
because the economy is stimulated with tax cuts at the same time as
consumption growth normally draws the external account solidly
into minus. And so it goes this time as well – the imbalances were
stable in 2003, and may improve somewhat in 2004 when global
economies improve.
Growth rate for Chinese industrial output again on the rise
Lower growth and a rising cost level means that companies with
significant overseas exposure will report major positive surprises
with respect to earnings. Mainly this pertains to the major multinationals, which have had a relatively weak performance over several
years.
Because of the weakening dollar, these companies are now valued
more attractively than for many years.
Europe:
A new spring with an easterly breeze?
2004 was a hallmark year for Europe. The eastward expansion has
resulted in new dynamics. At the same time, the low growth in the
major economies, such as Germany and France, has speeded up
sorely needed restructuring and cost adjustments. Stable monetary
policy has provided increasing growth in a number of countries,
such as Spain, France and Austria.
A lower dollar rate and moderate commodity prices will provide few
inflation incentives going into 2005, and the labour markets are
slowly improving. Better purchasing power and lower interest rates
will gradually provide increasing growth, as the countries in the Euro
zone have healthy external accounts and a high savings rate. Productivity growth will be strong. In contrast to the U.S., Europe is at an
early stage of the business cycle. This vouches for earnings surprises,
particularly from companies with Europe as their home market.
So far the fear of a hard landing in China seems unfounded. After a
successful selective cooling of the economy in 2004 (property/bank
loans) the rate of production in China is again on its way up. Which
also contributes to pulling commodity prices in the same direction.
The growth in Asia has been a good driving force for European
companies, and a large part of European exports are not very price
and competition sensitive. Generally speaking, European companies
have low valuations, and the above-mentioned corporate earnings
surprises, combined with restructuring, will make the investment
opportunities attractive.
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Inexpensive equities in a contrary UK
Falling inflation in Asia opens for stronger economic
stimulus
Ann%
Chg
Ann%
Chg
CHINA CPI:
TOTAL
NON-FOOD
4
4
2
2
0
0
-2
Economic progress in the UK has been different relative to the Euro
zone. The country did not experience any recession after the turn
of the millennium. As a result of many years with strongly increasing property prices, the Brits had to tighten their monetary policy
through several interest rate increases during 2004. Moderate inflation will result in interest rate cuts this year, and UK pension
funds, which have reduced their equity holdings in recent years,
may become buyers again.
-2
Ann%
Chg
Ann%
Chg
ASIA-8* CPI
8
8
6
6
4
4
2
2
© BCA Research 2005
1998
2000
2002
2004
*INCUDES: HONG KONG, TAIWAN, MALAYSIA, SINGAPORE, KOREA, PHILIPPINES,
INDONESIA AND THAILAND
Both in China and the rest of Asia inflation is falling, and this
opens the opportunity for stronger economic incentives. Particularly
in countries like Korea, where domestic consumption still is down,
and exports continue to be the great driver of the economy.
By international standards, UK equities are inexpensive, and the
pension funds have during the past 25 years traditionally been
among the biggest net buyers of European securities. This may
contribute to a shift in the equity markets in 2005.
Higher equity risk in Eastern Europe
In Eastern Europe the convergence process with the EU is now starting in earnest. Several of the countries, such as Hungary and
Poland, have in different ways tried to reduce economic imbalances
through a high interest rate level. This has resulted in undervalued
currencies. During 2005 and 2006 this will probably result in increasing friction on the capital markets, at the same time as the valuation
of companies is generally high.
The Yukos affair in Russia demonstrates that the road to capitalism
is not streamlined. Turkey looks especially promising for 2005. This
country can boast of nice growth, a recently implemented monetary
reform, stronger EU orientation as well as low company valuations.
Inflationary pressure will arrive in the U.S. …
Ann%
Chg
Ann%
Chg
CORE* CPI
2.4
2.4
2.0
2.0
1.6
1.6
1.2
1.2
%
%
NFIB** PLANNED PRICE CHANGES
30
30
25
25
20
20
15
15
Japan:
Cautious optimism
Japan experienced strong growth during the first half of 2004, primarily due to large exports to China. The growth fell off during
the second half of the year. However, the labour markets are improving and the effects of recent years' adjustments have lead to large
parts of the Japanese business sector experiencing strong earnings
improvements. The reform of the finance sector that has taken
place in recent years, gigantic private savings and a persistent zero
interest rate policy means that we are looking forward to 2005 with
cautious optimism.
2000
2002
There is good hope that the economy will be self-motored going
forward and not a victim of a continuation of the “stop-and-go”
policy we saw in the 1990s. If that is the case, this will provide a
good growth impetus for the rest of the world, as Japan in fact still
is the second biggest economy in the world. Corporate earnings
and historically low valuations mean that the country still appears
as attractive in a global investment context.
2004
*CORE EXCLUDES FOOD AND ENERGY
**SOURCE: NATIONAL FEDERATION OF INDEPENDENT BUSINESS
… but there is still little price pressure from a falling dollar
%
%
U.S. IMPORT PRICES: CAPITAL AND CONSUMER GOODS*
0
0
-2
-2
-4
-4
MODERATE GIVEN
EURO’S RISE
Ann%
Chg
GOODS FROM ASIA
GOODS FROM EURO AREA
Ann%
Chg
0
0
-4
-4
-8
1996
*
1998
ANNUAL GROWTH,
2000
2002
3-MONTH RATE OF CHANGE, ANNUALIZED
2004
-8
Rest of Asia:
China is still the locomotive – India is on its way
As in 2003, Asia outside Japan was one of the prime forces behind
the global recovery. It is still the developments in China that put
their mark on the world economy. The strong dynamics in the wake
of a gigantic industrial and infrastructure development marks the
development of the whole area.
In 2004 the Chinese government tried to dampen the pressure on
the economy by introducing lending restrictions to certain sectors
that were in the process of overheating. It looks like this has been
successful, as he growth during 2004 became more oriented towards
consumption than towards investments. The Chinese currency is still
pegged to the dollar, and this has provided a strong improvement of
global competitiveness towards the end of the year.
With a continued stimulating monetary policy, the growth in China
will continue to be high throughout 2005, but more balanced than
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what we have seen in the past three years. Inflation was decreasing
towards the end of 2004, and fiscal policy was tightened somewhat.
During 2005, and particularly in 2006, the finance sector will become
increasingly more market oriented. This means that uncertainty will
increase towards 2006.
Inflation under control
We therefore expect small changes in Chinese economic development in 2005. The authorities have so far demonstrated a steady
hand on the wheel, and the economy still has considerable scope
for rapid growth without inflation. As in 2004, this will have a significant impact on the rest of the world. The absence of an “expected” crash landing means less risk for the development of the world
economy in 2005 than in 2004.
This promises well for the development in the rest of Asia in 2005.
Lasting stimulation from China, and low inflation as a result of a
stronger currency during 2004, will result in increased consumption
in the region and a more balanced economic development than
what we have seen during the past five years. Also, the rebuilding
after the tsunami, much of which is financed from outside Asia,
will have an impact on growth in 2005.
A new factor during the past two years is India. The political elections
in 2004 lead to a growth and reform friendly government, which
indicates that this giant nation will have an increasingly strong
impact on both the Asian and the global economy. In contrast to
China, the growth in India is less oriented towards industrialisation,
which reduces the pressure on global commodity and capital resources.
Company valuations in Asia are at record lows, and that bodes well
for 2005.
Latin America:
The biggest surprise
Latin America was the major positive surprise in 2004. The demand
from China for raw materials had great impact on growth. Simultaneously, the effect of many years of prudent economic policy bore
fruit, so that inflation remained low and indebtedness kept falling.
In 2005 we will get the answer to whether this development was only
a flash in the pan, or whether the economic development in the
region finally is about to realise its great structural growth potential,
without the usual limitations. Critical aspects here will be the
development of inflation and interest rate levels, as well as currency
exchange rates.
2004 was a very good year for the equity markets in the region.
Especially in Brazil, which is a major market for us, the development was promising. Economic growth was a positive surprise. A
tightening of monetary policy to avoid inflation opens for a long
term structural fall in interest rates, a strong currency and revaluation
of high quality companies with low valuations in global terms.
However, the capital markets of the region are still very sensitive to
global changes in economic development expectations.
The Norwegian economy:
Offshore driven growth – still low inflation
In the wake of last year's interest rate cuts here at home, the activity
increased throughout the year and inflation remained low. A steady
interest rate policy resulted in falling inflation expectations, which
in turn lead to falling interest rates across the interest curve. The
growth impulses grew throughout the year, especially as the high
oil price increased the likelihood of another offshore lead capital
spending recovery. Traditionally, this has been a strong stimulant
for the Norwegian economy.
The falling exchange rate of the Norwegian krone during the first
half of the year resulted in increased price growth toward the end
of the year, but structural changes are still at work in both public
and private sector to ensure continued low inflation. The spread in
interest rates relative to foreign countries disappeared in 2004. In
2005, higher growth here at home than in Europe will again create
rising interest rates. However, we are unlikely to see any dramatic
interest rate hikes.
Tax reform, dividend tax and a possible change of government give
rise to special risks towards 2006.
Global interest development:
Increasing risk – U.S.A. and Asia are the wild cards
The interest rate hikes in the U.S. during the second half of 2004
stabilised global inflation expectations and contributed to a calmer
bond market going into 2005. The first half, however, was turbulent,
as there was uncertainty with respect to the pace of the U.S. rate
hikes. The Federal Reserve now seem to be determined to get the
interest rate level up at a neutral level. Strong fundamentals indicate
that this is the correct policy.
The problem, however, is the great increase in indebtedness since
1999, combined with an explosive property market, which makes it
difficult to determine where the equilibrium is. A weak dollar resulted in growing inflationary impulses, and foreign – particularly
Asian – financing of the country's gigantic current account deficit
is creating further uncertainty for 2005.
As a point of departure, however, we assume that the imbalances
will stabilise somewhat during the year. Primarily as a result of the
growth in the rest of the world recovering somewhat, reducing the
global imbalances. This opens for stabilisation of the interest rate
level towards the end of the year at a level that still provides for a
low global real rate of interest.
In Europe, a strengthening Euro and stable discount rates have lead
to falling bond yields. Greater growth throughout 2005 will probably
press the long-term interest rates upwards, as the difference in
growth rates among individual countries will be greater. The same
will be the result of a stronger dollar, provided that the global
imbalances are stabilised.
Thus interest risk will increase. However, it is encouraging that
2004 demonstrated that it is possible with different rate developments in the individual economic areas, based on fundamentals.
We should not forget that market pricing of interest rates, inflation
targets and transparent central banks are still new global phenomena.
Very low and stable risk premium
The excess returns fixed interest investors received for having bought
debt securities with a higher risk than government guaranteed securities fell considerably during the second half of 2004. In other
words, the risk premiums fell. In the corporate sector this fall was
due to a strongly improved cash flow combined with low corporate
spending, and until the last quarter – low acquisition activity.
The in part strong fall in risk premiums we experienced last year,
and particularly in the emerging markets, was due to big borrowers,
countries such as Korea, Brazil and Russia, turning out to be significantly more robust than in the 1990s. Additionally, domestic
capital formation is now significantly stronger than it was then.
In 2005 we estimate a stable to falling development for risk premiums, as the formerly indebted emerging market countries now
are in a new situation as lenders on the world market. The best
example of this is China's role as an exporter of capital.
Companies have yet to speed up the acquisition tempo. Cash flows
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Europe and Japan cheaper than the U.S.
EMU MINUS U.S.:
12-MONTH FORWARD P/E RATIO*
2
2
0
0
-2
-2
JAPAN MINUS U.S.:
12-MONTH FORWARD P/E RATIO*
-4
US deficits and the oil price
Global risks increased throughout 2004. Primarily because the U.S.
deficits have increased. However, our view is that this is a result of
the stimulation of the U.S. economy during the period 2001-2003
with very heavy incentives – and that the global response, with
China as the honourable exception, has been subdued so far. If the
growth in the rest of the world does not rebound in 2005, and
U.S. growth accelerates in spite of interest rate hikes, this will lead
to greater deficits.
20
20
0
0
1996
*SOURCE: IBES
1998
2000
2002
2004
Valuations are still more attractive in Japan and Europe than in
the U.S. Europe should also have better earnings growth in 2005.
The fall of the dollar is putting downward pressure on
inflationary expectations and the European interest rate level
US$/
EURO
%
EURO VS US$ (LS)
EURO AREA:
10-YEAR GOVERNMENT BOND YIELD* (RS)
1.36
Major risks in 2005:
40
-4
40
will remain strong, so global corporate financial strength will
improve. The hunt for high yielding alternatives is intensifying. Also
increasing is the appetite for risk among investors – in correlation
with the fading of unhappy memories from the start of the millennium.
4.4
1.32
Again, this will lead to increased risk on the global capital markets.
However, as described above, we do not think this is the most likely
scenario.
2004 provided significant surprises on the commodity markets,
which is negative for consumers and positive for producers. The oil
price was particularly strong, and for the first time in 40 years there
was demand side pressure that pushed the prices way up. If the third
of the world's population today living in China and India are in the
process of achieving a standard of living on par with the industrialised
world, this will put the global supply system for commodities and
energy under continuous pressure for a number of years ahead.
4.2
1.28
4.0
1.24
3.8
1.20
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
In 2004 we experienced continually increasing prices on industrial
raw materials, but the price of the major food raw materials fell.
This will improve the global inflation picture in 2005. Moreover,
we see that the strong development of basic industry in China is
leading to significantly increased global capacity for important
input materials, such as steel, aluminium and copper.
High energy prices to continue in 2005
While the Euro has strengthened significantly versus the dollar,
yields on ten-year bonds have fallen to new lows. With interest rates
well below four for the coming decade, there are not many investors
in the fixed interest market that fear that inflation will run wild any
time soon.
The lack of a “risk premium” in the fixed interest markets
may generate more interest in equities
Overall, commodity prices will remain high in 2005, but the picture
will be significantly better differentiated than in 2004. The most
difficult sector to forecast is the energy sector. OPEC's determination
to produce is present, the resources – despite the prophets of doom
– are present, at least in our life times. Besides, since the turn of the
year, the OPEC production discipline has turned out to be better
than it has been for a long time. This means that, in spite of normalisation of inventories and record production levels, we will
experience high energy prices also in 2005.
3,00
USA, kredittspread
selskapsobligasjoner
2,75
(30-årig BAA mot Stat)
2,50
2,25
2,00
1,75
1,50
1,25
The underestimation of consumption growth in the past few years
is a reason for disquiet, leading to increased risk in 2005. Prior
experience is still that unexpectedly high energy prices have a destabilising effect on global expectations, and thus a negative impact on
economic growth.
Confidence in the Chinese growth miracle
Last year we considered developments in China as a specific risk.
However, the handling of the strongly increasing growth in 2003
and during the first part of 2004 is inspiring confidence. The
country's economic targets and economic policy seem predictable
and firm.
1,00
96
97
98
99
00
01
02
03
04
Since the end of 2002, the risk premiums in the fixed interest
market, here represented by the U.S. market, have fallen drastically.
Today the spread is small between safe government bonds and less
safe corporate bonds. Based on corporate earnings, the equity markets are now carrying a relatively high risk premium - which ought
to lead to increased interest from investors seeking higher returns.
The fact that China had learned its political and economic lessons
from previous mistakes means that, going forward, we have renewed
confidence in the Chinese (and Indian) growth adventure, and
consider it a significantly smaller risk than last year. However, the
risk level will be increasing from 2006 onward as a result of the
increasing liberalisation of the economy, the finance system and
general politics.
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Equity market risk has been low during the last year
Individual sectors:
30
Good industry balance – selective opportunities
It is an indication of a healthy global equity market that there are few
specific expectations associated with industries or sectors. In other words,
the degree of “speculation, hope, faith and love” is low. In 2004 we
also experienced sensible movements between individual sectors.
% DJ Stoxx Stocks Moving By
5% Either Way Each Day (1M
Moving Average)
25
20
15
10
5
0
92
93
94
95
96
97
98
99
00
01
02
03
04
Source: Smith Barney and Datastream.
During the years around and after the turn of the millennium, there
have been in part great fluctuations in the equity markets, and in the
daily valuation of the companies. Here represented by the 50 largest
European companies. However, since mid-2003 price fluctuations
have been historically low, which also has contributed to increase the
interest in equities. As we all know, the memory of the equity markets is not famous for being very retentive, and thus there are more
and more investors who have erased the IT crash in 2000 and the
subsequent three years from their memory.
Corporate profits in the Euro zone have been a positive
surprise because productivity growth has been good
Produkctivity
4.0
2.0
0.0
Commodity producers still sitting pretty
-2.0
Q1 92
Q1 94
Q1 96
Q1 98
Q1 00
Q1 02
Q1 04
Source: Datastream.
With cost being pressured from all sides, the tough times of recent
years for European industry has resulted in cost – with wages and
social benefits leading the way – falling. At the same time, productivity
has improved. Many companies have therefore reported good profits.
Expectations are on their way down in the emerging markets, but
corporate earnings are on the rise – and valuations are still low
EMERGIN MARKET STOCK PRICES*
340
280
220
160
%
THE RALLY
IS NOT OVER
YET
RETURN ON EQUITY**
12
10
8
6
%
50
This opens for good selective opportunities going forward, and is
also illustrative of the low general participation in the equity markets
in the past year. An unhealthy equity market is primarily characterised by unrealistic expectations, massive general interest in the
equity market and sentiments such as “this time the world is
different”. We see few such indications at the start of 2005.
The valuation of e.g. tank ship shares is at a historically high level.
However, based on our belief that we for some years ahead will
have an uncommon market balance in this industry, the pricing is
not discouraging. The general valuation of the energy sector does
not reflect the significant cost associated with the recapture of the
oil companies' resource base and the capital equipment of the oil
service companies.
6.0
Unit Labour Costs
In spite of very favourable framework conditions, the energy sector
was not a subject of “wild” speculation. Neither were the transport
or commodity sectors. So far, market players have behaved soberly.
Technology, which got a giant lift in 2003, had a much more selective
development in 2004. Overall the sector ended up as the marginal
loser. Greater economic uncertainty towards the end of the year
should have meant that stable industries, such as pharmaceuticals
and food, should perform better – but they ended up as the definitive losing sectors of the year.
RISING...
340
280
220
160
%
12
10
8
6
EXPECTED EARNINGS GROWTH IN 12 MONTHS***
...BUT
EXPECTATIONS
ARE LOW
30
10
%
50
30
10
1990
1992
1994
1996
* S&P/IFC INVESTABLE INDEX
** SHOWN AS 12-MONTH MOVING AVERAGE
*** SOURCE: IBES
1998
2000
2002
2004
2004
©BCA Research 2004
Even though the emerging markets have performed well in both
absolute and relative terms compared to the industrialised equity
markets in recent years, today's price level is no higher than it was
back during the Asia crisis in 1997, or in 1994. In spite of rising
prices, the return to investors from the companies' earnings (P/E on
its head) is rising. However, expectations of corporate earnings going
forward are falling. Our view of the development of the business
cycle is however, more positive due to the continued strong impetus
provided by China in the region.
In general, commodity companies performed well last year, but
more selectively than in 2003. Chinese development of processing
capacity, with new technology and low production cost, does not
bode well for integrated companies in 2005. However, the primary
suppliers of commodities seem to be sitting pretty for some time
yet, and the valuations of these companies did not change significantly in the past year. On this basis, we kept companies such as
Grupo Mexico and Antofagasta, who are both sitting on big, valuable reserves, whereas we became considerably more cautious with
respect to steel producers, such as Rautarukki.
The pulp and paper sector performed poorly. The cyclical lift we
had expected only took place for the pulp segment. We still believe
in “new” lifts, and have increased exposure on a selective basis
towards late cycle companies, particularly within printing paper.
In the energy sector we sharpened our focus on companies with
great new resource potential, that are reasonably priced and not
receiving much investor attention. Within oil service the U.S. rig
companies came more into play. Local investors focus on current
earnings, and they are still low. The value of the underlying assets is
however, increasing rapidly, and this will provide opportunities for
revaluations in 2005.
Winner with unpopular medication
Also in 2004 the “low risk” companies within pharmaceuticals,
food and consumer staples were the underperformers. Earnings
development was disappointing, competition increasing, the price
of raw materials increased and the price of finished goods fell.
Expiration of patents and claims for damages for lack of information
regarding side effects was the agenda for the “pill throwers”.
For the first time since the early 1990s the pharmaceutical sector was
traded at a discount. We have increased the exposure to the sector
on a selective basis during the past year, with due emphasis on the
companies that seem to have the least risk on the product side.
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Banking and finance was a good sector in 2004. The fall in risk
premiums, steep interest rate curves and falling loan loss provisions
provided for good profit development. However, the pricing of the
companies kept falling throughout the year. 2005 will also be a good
year for finance. Flatter interest rate curves and a greater perceived
risk by a globally heated property market may however, increase
investor risk appreciation.
Internet – the world's most important means of
communication
As mentioned, technology was the winning sector in 2003, after a
three-year dramatic downturn. 2004 was the year that separated the
good from the bad, and performance was highly selective. 2004
was an important breakthrough for the sector – the Internet grew
in importance to become perhaps the most important global communications channel.
Mobile communications developed from being talking tools to
become complete, portable terminals. Broadband went from being
something owned only by the especially interested, to become common property. The same story holds for pioneering products such
as flat screen monitors and digital two-way communications.
Holding on to Samsung
In 2005, several of these trends will accelerate. Combined with the
downgrading of the technology sector in 2004, this creates good
investment opportunities on a selective basis. In particular, the consumer oriented companies stand out, such as our long-term love,
Samsung Electronics. The company is in a unique situation, with
low and falling cost. At the same time, Samsung is in the possession
of cutting edge technology and its brand is showing growing
strength – which makes the company less price sensitive.
This development also strengthens the media sector. The tremendous
supply of technical capacity will increase the demand for content
next year. Structurally, global media consumption is increasing, and
also in the coming years content providers will represent one of the
few global sectors benefiting from rising prices. At the same time,
investors are becoming more conscious of lower industry risk. In
addition, the valuation of stable cash flows in a low interest rate
climate means that ever more investors will cast their eyes on the
industry – with the subsequent price revival.
Telecom was one of the global industry winners in 2004, as it was
in 2003. We expect continued good performance in 2005. On the
global emerging markets, where we have a large part of our investments, the market coverage continues to increase, at the same time
as the price of new technology is falling. This provides for good
operating economics and improving earnings for the operators.
Valuations are still moderate.
Global emerging markets:
From debtor to creditor – the companies in focus
The global emerging markets, Latin America, Asia outside Japan,
Hong Kong and Singapore, Eastern Europe and Africa, represent
85 percent of the world's population. They represent a third of the
world's value creation, but only a little over five percent of the
world's equity values. The emerging markets have always received
the attention of SKAGEN Fondene. After seven years with weak
performance from 1994, both in absolute and relative terms, the
emerging markets turned the corner in the late autumn of 2001.
Since then these markets have performed better than the “old”
industrialised markets (the World Index).
That is why we started the emerging market fund SKAGEN KonTiki in April of 2002.
Its performance during the past three years has been very encouraging.
The global emerging markets are taking over an ever-increasing
share of the world's production of industrial output and simpler
services. The social structure in most of the countries has gone
from dictatorship to democracy, at the same time as the market
economy – and thus the pricing of assets – has been liberalised.
The transition to democracy and a market economy has definitely
not been painless, but the processes are well underway.
Since the 1970s this group of countries has been the world's biggest borrowers. However, after the Asia crisis and the bankruptcy of
Argentina, this geographic area has been transformed to be among
the world's creditors, and many industrialised countries – primarily
the U.S. – have become borrowers. This gives us a new perspective
for evaluating this area in macro economic terms.
Many of the macro economic and political risks we saw ten years
ago have since been significantly reduced. Now, as in the “good old
days”, it is again company valuations that count. From concentrating on large creditor-financed prestige projects of the 1990s, we
are now seeing that the companies focus on return on equity.
With lower risk premiums and lower macro economic risk, the
stage is therefore set for a continuous revaluation of emerging market
companies. A favourable business cycle situation means that emerging
market equities and bonds will continue to perform better than the
world average in 2005.
SKAGEN Global
Among the best in the world
With a return of 24.6 percent, 2004 was a good year for SKAGEN
Global. This is a respectable return in absolute terms, and it was
clearly better than the 4.5 percent returned by the World Index.
Of Standard & Poor's worldwide database of 1955 global equity
funds, SKAGEN Global achieved the sixth best return in 2004.
Over the last three years, SKAGEN Global is ranked number two
out of 1672 global equity funds.
These numbers are a result of the good performance turned in by
the companies we have invested in. In addition we have avoided
major losses on investments that have not performed as expected.
There was good geographic and industry dispersion of the major
performance contributors in 2004.
Measured in NOK, the best contributors were CMB (+195 million),
Bank Austria (+142 million), Hyundai Merchant Marine (+89
million), Christian Hansen (+79 million) and Total Access (+72
million). The biggest detractors from performance in 2004 were
Volkswagen (-38 million), Harmony Gold (-36 million), Ssangyong
Motors (-16 million), Nutreco (-14 million) and J. Sainsbury (-11
million).
The total value created on behalf of the fund's unit holders in 2004
was almost NOK 1.2 billion!
Shipping steamed ahead for SKAGEN Global
In terms of sectors, the big winner was capital goods, where primarily shipping was a strong contributor. Industrial companies, such
as Kone Oyj, also contributed nicely. The price of each company
rose in this sector during the period. Finance was also a fantastic
sector for the fund. In contrast to the general performance of the
finance sector, we benefited strongly from several European restructuring cases, such as Depfa Bank and IVG, plus in insurance with
Hannover Re. The clear winner in this sector however, was Bank
Austria.
Telecom, the third best sector for the fund, delivered a nice contribution through a potent mix of the Indonesian telecom companies
Telkom Indonesia and Indosat. The companies have long been part
of the portfolio and are happily making very good money on the
16
Back to page one
fact that the country's telecom sector is in a phase of “hyper
growth”. Newcomers Bharti Telekom and Teledanmark were also
solid contributors.
Record production output should put a lid on oil prices
US$/
Bbl
US$/
Bbl
50
50
GLOBAL OIL PRICES*
40
40
30
30
20
20
10
10
Ann%
Chg
Ann%
Chg
GLOBAL OIL PRODUCTION
6
6
4
4
2
2
0
0
-2
-2
98
99
2000
01
02
03
04
05
*AVERAGE OF WTI, BRENT AND OPEC BASKET.
NOTE: BOTH SERIES ARE SHOWN SMOOTHED.
The steep hikes in the price of oil that we experienced during the
autumn of 2004 were not just due to the actual physical supply and
demand for oil. They were amplified by both fear and speculation.
Hedge funds are significant players in the latter category. However,
oil production has increased steadily since 2002, and that should
have a damping effect on the oil price going forward. Uncertainty
regarding both the inventory situation and the demand, primarily
from China, does however, increase the risk.
After the technology bubble burst in the spring of 2000, the
global industry balance has become more harmonised
Others
90 %
80%
Energy
Financials
60 %
50 %
Cyclicals
30 %
20 %
10 %
Information technology was positive in absolute terms, and Samsung
Electronics was a good contributor, although not at the same level as
the rest of the portfolio. The third sector with positive, but relatively
weak performance, was defensive consumer goods. The sector turned out to be a minefield globally, with many great disappointments.
In spite of these disappointments, as well as weak performance
from fish farming (Nutreco), we have to be satisfied overall. The
greatest positive contributions were from UIE and Aarhus United,
which have been restructured. The Japanese soy sauce manufacturer,
Kikkoman, also turned in a nice performance.
Strategic triggers played an important part
Last year we experienced that one or several so-called strategic price
triggers were activated in a total of 14 companies. The triggers were
in the form of mergers, demergers and other restructuring measures.
The total contribution from these companies amounted to approximately NOK 350 million. Some of them were either bought or
sold out of the portfolio.
Have made good money in Europe – sniffing at the U.S.
Traditional
40 %
All sectors made positive contributions to the fund's performance
during the year. The poorest contributor was the discretionary consumer products sector. Our investments in the automotive sector,
Volkswagen and Ssangyong Motors, were the worst. With respect
to Volkswagen, we realise in hindsight that we went in too early in
the company's change process. Product renewal also took longer
than expected. In addition, the demand for cars and other consumer products has been weak in Europe.
Going into 2005 we have positions in those companies we still
believe are attractively priced, with the necessary potential triggers
for a price recovery, and in certain special cases. The German tour
operator TUI and the British food retailer J. Sainsbury are part of
the latter category. These companies will probably change structure
during the next two years.
100%
70 %
Too early for Volkswagen
Telecom
Technology
0%
Since the 1970s, the global equity market has experienced three large
bubbles. The first was the oil bubble of the 70s, where at its peak
energy stocks constituted 60 percent of the values of the largest
companies in the World Index. Towards the end of the 1980s, finance
stocks – particularly Japanese – were blown up to new heights, with
the nearly bursting Japanese equity market as the major contributor.
Then the bubble blowing first culminated for companies with stable
earnings in 1997-98, followed by the technology hype at the turn of
the millennium. At its worst, technology related stocks represented
around 70 percent of the largest companies in the World Index.
Today the world of equities is looking quite normal, and each
industry's share of the World Index is in quite good harmony with
the value created by the industries. This is an indication that the
global level of speculation is quite low.
The geographic balance of SKAGEN Global has provided good performance for us during the past couple of years. Europe has constituted around 50 percent of the portfolio, whereas the weighting of
the U.S. – which represents 50 percent of the World Index – has
been low. The impact was particularly telling during the last months
of last year.
But, it is well known that we do not buy regions – it is our stock
picking that directs the returns.
Ironically, as the market has begun to heat up in Europe, we have, in
classic SKAGEN style, started to find more attractive companies on
the “other side”, in the U.S.A. However, we are being very disciplined
in our incursion of the U.S. market, and are taking it one step at the
time. Compared to a year ago, the U.S. share has increased from
five to ten percent. Our purchases will (hopefully) show that it is
now possible to buy undervalued companies in the world's most
efficient markets.
However, we emphasise that the European part of the portfolio is
still large, both in absolute and relative terms. In our opinion it is
still here we find the best opportunities on the world's mature equity
markets. The pricing of many companies indicates low expectations
to future earnings. There may several positive surprises in this area.
Small cap has beaten large cap
A marked trend over the past few years have been that small cap
companies have had a systematically better price performance than
large cap companies. This after having been “shot by association” in
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Three good and harmonic equity years before threat of new bubble?
the bear markets of 2000-2002 – in spite of few scandals and relatively few disappointments reporting wise.
We have benefited from this development, not least because this
group of companies was over represented in terms of attractive
companies with low valuations. Many of these companies have
experienced a, in part, dramatic growth in both earnings and return
on capital, based on just marginal changes in the development of
the global economy (high gearing of operations).
Shipping is a good example of an industry that has gone from
being the ugly duckling to the king of the hill – in the course of
barely two years.
Pendulum shift towards large cap
Will we, like during the years 1995-97, when industries were in
balance on the global equity market, experience three stable, good
years during 2005-2007 – before a new bubble threatens the good
mood?
Norwegian equities back to normal?
115
NORWEGIAN EQUITIES VS GLOBAL
110
(local currency)
105
100
95
90
85
80
75
With respect to the relationship between large and small cap companies in the portfolio, we have started to shift the pendulum more
towards large cap companies. We have started to sell down small
cap companies, after good price performance in both absolute and
relative terms, and slowly but surely increased the share of large cap
companies. In the latter category, it is particularly within the pharmaceutical and media industries we have found attractive purchases.
Of the larger increases of holdings in “old” companies in the portfolio, we would like to mention Petrobas and SCA, where we still
see significant added value based on both current fundamentals and
future earnings. New positions include the energy company Forest
Oil, pulp and paper manufacturer Louisiana-Pacific, the Japanese
glass manufacturer Asahi Glass (for LCD-monitors, among other
things), IT infrastructure equipment manufacturer Komatsu, elevator
manufacturer Kone, pharmaceutical giant Pfizer and fertiliser
manufacturer Kemira Growhow.
The fund's ten largest investments now constitute 37 percent of the
portfolio, which are well diversified with respect to geography and
industry.
70
65
60
96
97
98
99
00
01
02
03
04
After the distinctively Norwegian equity bear market in 1998, the
Oslo Stock Exchange trailed behind the rest of the western equity
markets. Since the market hit bottom in the spring of 2003, our
domestic stock exchange has outperformed the world markets. Even
though the Oslo Stock Exchange passed a new all time high at the
end of 2004, the All-share Index has barely passed the 1997 level.
Big decline results in big recovery for the Oslo Stock Exchange
OSE (total return adjusted for inflation)
+205%
+66%
+133% 285
190
+144%
-38%
+282%
127
-51%
84
+201%
-53%
-44%
56
38
-54%
25
79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
Historically, when it has declined more than 50 percent, the Oslo
Stock Exchange has rebounded strongly by more than 200 percent –
this provides opportunities for further recovery.
Attractive key ratios
The pricing of the fund is attractive - based on key ratios for the 16
largest fund assets (approx. 49 percent) - with a P/E of 13.9, price/
book of 1.8 and direct dividend yield of 2.7 percent. In relation to
the world market this constitutes a discount of 25-30 percent.
SKAGEN Vekst
Beaten by the Oslo Stock Exchange– but with
lower risk
The objective of SKAGEN Vekst is to be a quality-enhanced
Norwegian share portfolio, with a higher risk adjusted return than
the Norwegian equity market. Minimum 50 percent of the fund
must be invested in Norwegian shares. The remaining portion is
invested globally, in order to reduce the fund's risk through a better
balance of industries than is possible at the Oslo Stock Exchange.
The global market is also used to invest in competitors of
Norwegian listed companies, if these have a lower valuation and
represent better quality than their Norwegian counterparts.
In 2004 the return of SKAGEN Vekst was 31.7 percent, compared
to 38.4 percent on the Oslo Stock Exchange Benchmark Index. Even
though 2004 became one of the “exceptional years”, when the fund
did not manage to beat its benchmark, it should be noted that the
return on the fund's portfolio of Norwegian equities was better
than that achieved by the Oslo Stock Exchange, and that the fund's
global portfolio performed significantly better than the World Index.
Better than the Oslo Stock Exchange in eight out
of eleven years
Since the inception of SKAGEN Vekst in December 1993, the fund
has achieved a higher return than the Oslo Stock Exchange in eight
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out of eleven years. The fund's risk level, measured by price fluctuations (standard deviation), has systematically been lower than the
Oslo Stock Exchange OBX Index/All-share Index during these years.
Balanced industry distribution
SKAGEN Vekst has a more balanced industry composition than
what is normally found in pure Norwegian funds. For example, in
2004 the energy sector constituted approx. 22-23 percent of the
fund, whereas at the Oslo Stock Exchange this sector constitutes
approx. 50 percent of the value of all listed companies.
In terms of sectors, it was capital goods, services and transportation
that were the major contributors to the fund's performance in 2004.
First and foremost it was given a boost by its shipping investments.
There were few disappointments last year, but lower salmon prices
than expected resulted in a weak price performance for our main fish
farming investment, the Dutch company Nutreco. This contributed
to making the defensive consumer goods sector the biggest detractor
from performance last year.
Within energy, the oil troika of Norsk Hydro, Anadarko Petroleum
and Petrobras have been the fund's largest investments. Even though
prices rose satisfactorily throughout last year, the companies still stand
out with the lowest valuations with respect to earnings, resources and
growth opportunities.
Oil service – a winner in 2005?
The oil service sector will undoubtedly have better framework
conditions, higher capacity utilisation and better profitability in
2005 than we have witnessed for many years. This is a result of
the oil companies finally having realised that, after several years
with a low rate of replacement of “lost reserves”, they now have to
compensate with a significant increase in capital spending.
The fund's major investments in the oil service sector are the seismology companies C G Geophysique and TGS Nopec, the supply
ship companies DOF, Solstad Offshore and Farstad Shipping, as
well as the U.S. rig companies Transocean and Pride Int. In addition
we have relative large holdings of Smedvig and the Fred. Olsen
twins Ganger Rolf and Bonheur – who are all benefiting from the
significant increase seen in rig rates.
It is difficult to see that increased supply will spoil the good market
for the capital-intensive rig companies in the next few years, as
both lack of shipyard capacity and continued low investment
intent among most rig companies ensure a tight market.
Yara delivered – Norske Skog disappointed
Within commodities, the newcomer Yara, which was demerged
from Norsk Hydro, was in a class of its own as the best contributor.
On the opposite end of the scale we find Norske Skog, whose performance was rather disappointing, primarily because the expected
price increase for printing paper is long overdue.
We expect that the price of printing paper will recover during
2005, and result in better earnings from Norske Skog. Higher
capacity utilisation among manufacturers in 2004 has resulted in
the strong cards in the price negotiations now having passed from
the customers to the manufacturers.
Yara threatened from the east – we are reducing
For Yara the big question is how long the currently good fertiliser
market will hold up. As long as the U.S. manufacturers suffer
from high gas prices for their fertiliser production, Yara is well
positioned on the cost curve. The long-term threat will come from
Russia and countries in the Middle East, who have lower gas prices
and access to abundant resources.
Yara's earnings will probably be good also in 2005. The formidable
price increase since the IPO, combined with the long term threat
scenario, however, made us start to reduce our holding towards the
end of last year.
Three cheers for shipping also in SKAGEN Vekst –
selective sales
In 2004, SKAGEN Vekst, as our other equity funds, achieved
high returns on its shipping holdings. As a consequence of the
enormous price ascent and formidable return on capital, several
shipping companies have become stock exchange darlings – with
the inherent high expectations of the future.
In SKAGEN Vekst we have chosen to reduce the exposure to
those shipping companies that are most vulnerable to supply side
over-investment. In spite of increased popularity, so far we have
chosen to limit our exposure to the most niche oriented industrial
part of the shipping sector.
Kongsberg rockets without any go
One of the disappointments last year was Kongsberggruppen,
where in particular the development of NSM missiles generated
poor results for the defence division. The company's low valuation,
combined with good market positions for several product areas in
the civilian part of the company, has meant that we still have kept
the company as a significant part of the portfolio.
A new company in the portfolio last year was Tomra, a manufacturer of container recycling equipment. After having been a price
casualty on the Oslo Stock Exchange for four years, the company
finally arrived at an attractive valuation for a value investor like us.
Market players' resignation regarding German politicians, as well
as tougher competition in the market, forced the valuation down
to levels where success in Germany no longer is decisive for a good
investment result.
Continued faith in “Norway's best tourism product”
Within the discretionary consumer goods sector, the coastal steamer
company OVDS is still the major investment. 2004 was a turbulent
year for the company. The year culminated with a management
change due to the verdict in the so-called “ferry case”. OVDS was
directed to pay large compensatory damages and fines.
The profit on the sale of its 50 percent stake in Nor-Cargo nevertheless makes the company well equipped to continue to create
value through further development of what in our opinion is
Norway's best tourism product – the Coastal Steamer service.
Other investments in consumer goods at the start of 2005 were
the electronics retailers Dixon Group (owns Elkjøp among others)
and Expert. Both benefit from new product generations within
different types of electronics, at the same time as they have low
valuations relative to their earnings.
The fund's holding of Rica Hotels was doubled last year. We
expect continued improvement for travel and tourism in 2005,
and with it, better capacity utilisation, higher prices and better
company earnings. Rica's low valuation, combined with the company's good market position, means we have great expectations for
a positive development of the company's market capitalisation.
Will the fish bite in 2005?
Nutreco and Lerøy Seafood Group are still the fund's major
investments in defensive consumer goods. Even though both companies must be considered among the winners in the business,
continued high production growth has put pressure on the profitability of the fish farming industry.
However, the market is better balanced than it has been for several
years, and improved discipline by producers should enable the
positive market trends we see to continue into 2005. The solvency
of the companies is good, they have low valuations and may represent a really big positive earnings surprise in 2005.
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Still a while to go until the Oslo Stock Exchange becomes overvalued
120
NORWAY, TOTAL RETURN ON EQUITIES
RELATIVE TO
GOVERNMENT BONDS
110
100
Most unpopular in an unpopular industry
90
The world's largest pharmaceutical company, Pfizer, was taken in as
a new company after having become ever more unpopular in an
unpopular industry – particularly after increased focus on the possible
and impossible side effects of its products. Based on earnings, the
company is being traded at a significant discount relative to the
general valuation of U.S. companies. Pfizer is, with its significant
non-dollar revenues, also a company that benefits from the weak
U.S. currency in 2004.
80
70
60
50
40
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
Relative to government bonds Oslo Stock Exchange still has a while
to go before it is “correctly” priced.
Positive backdrop for equity market performance in 2005
%
G7 Yields: Stable
%
8
G7 10-YEAR GOVERNMENT BOND YIELD:
7
8
7
EQUALLY-WEIGHTED YIELD
200-DAY MOVING AVERAGE
6
6
5
5
4
4
%
%
GDP-WEIGHTED YIELD
200-DAY MOVING AVERAGE
7
7
6
6
5
5
4
4
3
3
94
96
98
2000
02
04
Bond yields on a low, stable level in the world's major economies
make a positive backdrop for lower risk premiums in the equity
markets, and with that, rising share prices in 2005.
Emerging markets in 2004
• Egypt
• Colombia
• Hungary
• Prague
• Austria
• Peru
• Poland
• Mexico
• Norway
• South-Africa
• Turkey
•Pakistan
•Indonesia
•Chile
•Brazil
•Korea
•Argentina
105%
97%
65%
64%
54%
47%
47%
37%
37%
31%
28%
22%
20%
18%
17%
16%
15%
• Emerging market index 14%
• Philippines
14%
• Israel
14%
• Singapore
11%
• Morocco
11%
• India
8%
• Malaysia
4%
• Israel
4%
• World Index
4%
• Venezuela
3%
• India
1%
• Taiwan
2%
• Russia
-1%
• China Enterprise HK -14%
• Thailand
-20%
• China (local)
-23%
Even though pharmaceuticals was one of the big sector disappointments in 2004, the performance of SKAGEN Vekst's investments
in this “loser industry” was rewarding. The major investment,
Danish company Chr. Hansen Holding, more than doubled its
price during the year, after more people discovered the positive
performance by the allergy drugs made by its subsidiary AlkAlbello.
Within banking and finance we received an acquisition offer at the
tail end of last year for our major Norwegian investment, Bolig og
Næringsbanken (BNbank). After the bidder, Islandsbanki, raised the
offer price, we chose to accept the offer – even though we of course
would have liked to see greater competition for the bank. A new
company in the sector last year was the Finnish property company
Sponda, which is being traded at a discount relative to value adjusted equity due to the ownership by the Finnish government.
Within information technology, Samsung Electronics is still the fund's
major investment. Tandberg Television is the biggest Norwegian
holding. In spite of formidable price appreciation during our ownership, the company still appears attractively valued relative to expected
earnings. This is thanks to the strong market position the company
has in products in the convergence area between Internet, TV and
telephony.
The loudest dialling tone is still found in the
emerging markets
Within telecommunications the major theme is still low valuation
of companies with a good position in the emerging markets.
Relatively high valuation after positive price performance has
nevertheless resulted in us selling out Vimpelcom completely
during the year, as well as reducing the holdings in Telenor and
Telkom Indonesia significantly.
A new company in the portfolio is Danish company TDC, which
became very unpopular among investors due to its high proportion
of revenue from fixed line telephony- and thus received a low
valuation relative to earnings, cash flow and dividend yield.
Within utilities, Eletrobras is the major investment. The company
is Brazil's largest electric power company, in which the Brazilian
government is the main shareholder. In terms of price performance
the company has not quite met with expectations, as many were
disappointed by the low prices achieved by the company in the
power auctions in Brazil towards the end of the year. However, the
most important point is that the liberalisation of the power market
in Brazil is well under way. It is only a question of time before the
utilisation of existing capacity is so high that the electric power
companies' investments will provide acceptable returns.
The current valuation of Eletrobras is under a third of the company's
book value, dividend yield is eight percent and the P/E ratio is
eight. When power prices in Brazil are “forced” up over time in
order to justify new, necessary investments in power generation,
we are sure that the company will provide the unit holders of
SKAGEN Vekst with good returns also in the year to come.
Continued belief in last year’s winners
At the start of 2005, SKAGEN Vekst is invested in companies that
we, in spite of good price performance last year, think still are
undervalued based on fundamentals. There is good potential for
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further price appreciation. However, the key ratios are not quite as
attractive as they used to be, and the level of undervaluation is
therefore somewhat lower.
As at the start of last year, SKAGEN Vekst is, in terms of industries,
oriented towards companies that will benefit from the following
developments:
• Continued positive development in international markets (raw
materials and transportation).
• Asia continues to be the driver of global growth (high share of
the portfolio in companies oriented towards Asia).
• Long period of underinvestment from the large oil companies
(oil service/rig and oil companies that have invested in increased
reserves)
• Telecommunications directed at emerging markets with low
penetration, lowly valued companies with the best qualifications,
in terms of capital and organisation, to become “winners” of the
future.
Same as last year, the fund has a relatively small share in companies
whose valuation has been hit by increased inflationary expectations,
and their associated higher bond yields. Examples of companies
that will be vulnerable under such a scenario are traditional banks,
companies with stable revenues and companies with expected earnings that stretch far into the future.
SKAGEN Kon-Tiki
Significantly better than emerging markets in general
As in 2003, in 2004 SKAGEN Kon-Tiki delivered significant outperformance relative to its benchmark, Morgan Stanley Capital
International Daily Total Return Net Dividend Emerging Markets
Free. The return for SKAGEN Kon-Tiki was 32.4 percent, versus
14.3 percent for the Emerging Market Index.
The solid performance is primarily due to our extreme focus on the
companies, and continued scant attention to the markets as such.
We are overweight in markets that have not been particularly good
in the past year, but which have still provided us with good returns.
With the exception of transportation – which was a giant contributor
– it is a pleasure to see that the major holdings in most sectors were
among the global industry winners. This is evidence of consistency
in company and risk evaluations in the past year.
The return in 2004 was all of 17 percentage points better than the
benchmark, but the risk level was, due to a more concentrated
portfolio, also somewhat higher. Risk-adjusted returns were still
significantly better than the benchmark, which enabled SKAGEN
Kon-Tiki to maintain its position as one of the world's best emerging
market funds.
One theme in 2005 will continue to be the ability to find global
winners in a limited company universe. At the turn of the year, the
portfolio was well balanced between countries, regions and industries,
however with large overweights in Brazil and Korea – countries that
for historical reasons have companies with structurally low valuations.
Will Petrobas hit back in 2005?
In the energy sector the major investment is still Petrobas. In 2004
the company took a rest in its strong production growth, which has
been continuous since 1999. At the same time the uncertainty
increased regarding the pricing policies of the partly government
owned oil company. Will Petrobas become a pawn in the country's
anti-inflation policy? This uncertainty held back the share price last
year. Adjustment to market prices towards the end of 2004, production growth of close to 40 percent over the next three years, a
dynamic home market and low valuation bodes well for continued
revaluation during years to come.
China Oilfield Services was one of the performance disappointments.
The company delivered significantly better profits than expected,
but the focus of the equity market was mostly on companies that
reaped immediate benefits from the strongly increasing oil price.
The financial situation of China Oilfield Services was excellent at
the turn of the year, growth ambitions are higher and the relative
valuation is very low. More ambition, increased investments and a
dramatically better market bode well for good performance in
2005. However, questions may still be raised over the company's
corporate governance, which will be a major topic in 2005.
Brazilian cellulose keeps up the pace
The major investment within pulp and paper is still Votorantim
Cellulose, which performed well in 2004. At the end of the year,
the company strengthened its position as a major player in global
pulp and paper through the takeover of the Brazilian company
Ripasa. In spite of a stronger Brazilian currency, the country's
manufacturers remained world leaders in 2004. Low production
cost, strong finances, a high level of ambition and good management are key parameters of competitiveness.
Our focus on commodity producers was increased through the purchase of Vale Rio Doce, the world's cheapest, most effective and
fastest growing producer of iron ore and aluminium oxide. Grupo
Mexico, which during the last year was one of the fund's core
investments, announced the separation of its U.S. listed subsidiary,
Southern Peru. In 2005 this will make the company's giant reserves
visible, and show the added values of the railway network controlled
by the company. Last year's good profits reduced the debt load and
risk associated with the company.
South African gold hit by the currency
South African company Harmony Gold was a disappointment in
2004. We expect that continued low interest rates will stimulate the
interest in gold as a global security instrument. However, the
appreciation of the South African currency, the Rand, completely
destroyed the operating economics of the company, at the same
time as a badly timed offer for the Gold Fields company increased
the company's risk premium considerably. We reduced our shareholding significantly, at a loss.
Transportation represented a scarce third of the value creation in the
fund during 2004. The Frontline system was a major contributor.
We realised significant gains in a fabulous year that, for the tanker
market, we have to go all the way back to the early 1970s to find
its like. The Korean shipping company Hyundai Merchant Marine
was the biggest contributor to the performance of SKAGEN KonTiki last year. At the turn of the year we held a significant holding
in the company, as we find it still strongly undervalued – due to it
being part of a corporate group (weak corporate governance) and
old sins.
We believe in shipping also in 2005
We have strong faith in the global transportation market also in 2005.
The supply of new tonnage will indeed be significant, but lower
than in 2004. China's increased competitiveness versus the rest of
the world provides an additional driver for the export of finished
goods, which means good times for the owners of container ships.
At the same time the ravages of time is reducing the size of the tanker and big bulk fleet, which will deliver good earnings in 2005.
Structurally, one of the major topics regarding the world economy
is division of labour, which increases the focus on transportation.
As a global marginal player in the industry for the past 30 years, we
see 2005 as a year when we potentially will get a revaluation of the
industry.
Won on Indian tractors – lost on
Korean boulevard racers
We had both the global winner and the global loser in discretionary
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consumer goods. The former was the Indian tractor and SUV
manufacturer Mahindra&Mahindra, the latter the Korean SUV
manufacturer Ssangyong Motors.
After the disappointments last year, 2005 looks to be a better year
for Ssangyong Motors. The company is renewing the platform for
cheap SUV's. Equally important is the fact that exports exploded
as a consequence of the takeover of the majority shareholding by
Chinese company Shanghai Motors – from paralysed creditor
banks. Ssangyong has low valuation, based both on earnings and
underlying values. In 2005 we will sharpen the focus on media
companies, such as Independent News & Media – a company long
held by SKAGEN Global.
Defensive consumer goods was a good contributor in 2004. We
received a particularly good contribution from the Danish company
United Plantations Group, who was well paid for improving its
strategic focus. In 2005 we set great store with the Turkish conglomerate Yatzicilar Holding. The brewery also bottles Coca-Cola and
runs Mc Donald's concessions in its home country, as well as in
great parts of Russia and the new eastern republics of the former
Soviet Union.
The “Balkan leader”, Pivovarna Lasko, and the food manufacturer
Prodravka, may also be winners in 2005.
Cheap Korean pharmaceuticals and brokerage
One of last year's best contributors was the Korean company Hanmi
Pharmaceuticals. Pharmaceuticals has been a low focus industry
in Korea for many years, but it was revalued in 2004. We supplemented with LG Life Sciences, and have our eyes open for other
opportunities that may pop up in 2005. Globally, pharmaceuticals
has been a poorly performing industry for three years, so all prior
overvaluations of the industry have now largely been corrected.
Within banking and finance we managed to pick two of the global
industry winners, Bank Austria and BanColombia. New companies
are primarily the Korean brokerage company Daewoo Securities.
Well-run brokerages in depressed equity markets are normally
good investments when we can buy them at half of book value.
Continued faith in Samsung
Information technology was the industry with the greatest divergence
in 2004. Our anchor company during the past seven years has been
Samsung Electronics. The company's performance did not disappoint in 2004 either. Kon-Tiki only owns preference shares in the
company, and benefited therefore from the change in the company's
dividend policy. By the end of 2004, the company was once again
the fund's biggest investment.
Today, Samsung Electronics is the world's most cost efficient
manufacturer of memory chips and LCD monitors. During the
year, the company was acknowledged for its design. That means
Samsung has a competitive advantage, with less price sensitivity
than its competitors.
Top year for our Asian telephone operators
Our South Asian telephone operators, Thai TAC, Indian Bharti
Televentures and Indonesian Indosat, all had an exceptionally good
year in 2004. All were substantial contributors to the fund's performance. In 2005, these companies will step up their activities considerably, at the same time as return on capital is rising. This should
generate good investment returns in the year ahead. Many of the
companies have not been very visible for global investors, and are
therefore traded at low prices.
In 2004 we shifted focus in the Indonesian telecom market, from
Telekom Indonesia to Indosat. The reason is Indosat's greater competitiveness in a more competitive market. We sold ourselves out of
Russia's Vimpelcom, which has been a solid contributor to our
investment performance during the past five years.
Utilities is an interesting area in the global emerging markets. The
need for good services, liberalisation of markets and political limitations create a minefield of opportunities and threats.
The overfocus on the threats has resulted in many companies being
systematically undervalued.
Eletrobras disappointed - we bought more
The major investment in 2004 was the Brazilian energy company
Eletrobras, whose performance was disappointing. The transition to
market pricing in the Brazilian electric power system is continuing
to provide exceptional revaluation opportunities, as we have seen in
the Nordic region during the past ten years. We therefore increased
our exposure dramatically towards the end of last year, even though
the price the company receives for its power in the short term, after
price auctions, was disappointing.
We have purchased a minor holding in the Russian company
Unified Energy Systems. The uncertainty regarding the future of
the Russian energy supply system is still significant, but the valuation
of the company is low. In addition, the negative regulatory surprises
are probably behind us.
Going for increased consumption
Focus in 2005 is on how we may benefit from an expected upswing
of consumption in the global emerging markets. Our focus on the
regions' natural competitiveness within commodities and transportation has resulted in good performance. In 2005 we will prioritise
stronger consumer oriented companies. Examples of these are IDT
International, Convenience Retail Asia, local airlines and the
owners of global brands, who are starting to be acceptably priced.
At the turn of the year, the ten largest holdings of the fund constituted scarcely 50 percent of assets. Holdings constituting more
than two percent constituted in aggregate 75 percent of the fund's
assets. In other words, we have maintained a high degree of concentration in the portfolio. A little over ten percent of the fund was
currency hedged, primarily against U.S. dollar.
Number one of 455 funds
Based on return, in 2004 SKAGEN Kon-Tiki was ranked as the
number three fund of a total of 528 funds worldwide. Measured
since its inception in April of 2002 we are number one among total
of 455 funds with an equally long or longer history. Total value
creation (after cost) was NOK 741 million.
The manager of SKAGEN Kon-Tiki promises that this year, as last
year, no stone shall remain unturned, and no idea shall remain
unconsidered. The target is still at least 15 percent outperformance
– in 2005 too.
SKAGEN Høyrente
Shall beat the bank and NIBOR
SKAGEN Høyrente is a money market fund designed to be an
alternative to saving by depositing money in a capital account in a
bank. The fund will not speculate in movements in interest rates,
but always maintains the lowest possible rate sensitivity and lowest
possible volatility.
The target is to achieve a higher return than the average 3-month
NIBOR, the Norwegian Interbank Offered Rate, as well as the best
deposit rates offered by the country's largest banks. In 2004, the
return after cost was 2.1 percent, versus an average 3 month
NIBOR of 2.0 percent.
Since its inception in 1998, the fund has always delivered better
returns than 3-month NIBOR. The fund is suitable for short-term
and long-term saving in the bank market.
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SKAGEN Høyrente Institusjon
For larger private and institutional investors
SKAGEN Høyrente Institusjon is a money market fund consisting
of securities with short remaining maturity (interest rate sensitivity/
duration) directed at larger private and institutional investors. The
fund endeavours at all times to have an as optimal interest rate
sensitivity as possible, in order to possibly achieve rate gains at the
short end of the interest rate curve.
In 2004 we varied the interest rate sensitivity with between five and
15 weeks, with good results. The fund achieved a return of 2.2
percent, versus 2.0 percent for the benchmark. SKAGEN Høyrente
Institusjon was ranked as the best fund in the group "Short low
risk money market funds".
The fund is suitable for municipalities, banks, companies and pension funds for investment of excess liquidity requiring low risk, as
well as for general saving in the money market. With respect to
investors who are concerned about capital adequacy requirements
in their investment management, SKAGEN Høyrente Institusjon is
in compliance with a so-called BIS risk weighting of 20 percent.
5.7 percent return in 2004
Last year the fund returned 5.7 percent, which, adjusted for its low
risk, was very satisfactory. In 2004, unit holders were subject to
small price fluctuations. The fund also has a mandate to place some
of its assets in foreign government bonds. The share for foreign
investments last year constituted an average of 18 percent of the
fund. The brunt of the fund's assets is safely and well invested in
Norwegian government and finance securities with short maturities,
which in 2004 provided a return of 2.4 percent. The return on the
foreign portion was 20.9 percent.
Mexican government bonds – this year's winner?
We are particularly satisfied with the return achieved in Hungary,
Poland, South Africa and Sweden. For the year ahead we believe in
continued good return opportunities in Hungary and South Africa,
whereas the investment in Mexican government bonds may become
the “investment case of the year”. For the time being we see little
value in the Norwegian bond market, and we therefore choose to
maintain an equally low interest sensitivity as SKAGEN Høyrente
for the Norwegian portion of the portfolio.
Stavanger, 22nd January 2005
SKAGEN Avkastning
Flexible bond fund with low interest rate risk
SKAGEN Avkastning is a flexible bond fund with a generally low
interest rate risk. The fund may take somewhat higher risks than
SKAGEN Høyrente, and thus has a higher expected return.
In order to realise this excess return, the fund's unit holders must
have an investment horizon for the assets of at least six months.
The objective of the fund is indeed to deliver higher returns than
SKAGEN Høyrente, with a time horizon of at least six months.
J. Kristoffer C. Stensrud
Kristian Falnes
Filip Weintraub
Ross Porter
Beate Bredesen
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Return and risk measurements
All returns beyond 12 months have been annualised (geometric return)
Returns as of 31.12.2004
12 måneder
SKAGEN Vekst
31,75 %
OSE Benchmark Index
38,45 %
SKAGEN Global
24,55 %
Morgan Stanley World Index (NOK)
4,46 %
SKAGEN Kon-Tiki
32,35 %
Morgan Stanley Emerging Markets Index (NOK)* 14,33 %
SKAGEN Avkastning
5,72 %
(BRIX until 31.12.02)/OSE ST4X Bond Index
5,49 %
SKAGEN Høyrente
2,08 %
OSE State Bond Index 0.5
2,17 %
2,23 %
1,95 %
24 måneder
48,00 %
43,34 %
42,41 %
15,65 %
63,88 %
30,90 %
5,93 %
8,28 %
3,45 %
3,84 %
36 måneder
19,59 %
12,29 %
15,91 %
-6,03 %
6,20 %
8,22 %
4,57 %
4,81 %
6,19 %
8,07 %
5,31 %
5,49 %
6,17 %
7,36 %
5,48 %
5,60 %
-6,69 %
20,09 %
18,02 %
0,22 %
-0,09 %
0,28 %
4,66 %
26,75 %
32,98 %
-2,34 %
-0,39 %
7,30 %
21,95 %
9,73 %
19,16 %
7,49 %
15,25 %
-2,02 %
-0,24 %
-1,88 %
-0,19 %
-1,19 %
-0,12 %
14,10
16,63
15,90
11,08
20,70
18,61
1,24
2,55
0,10
0,20
0,12
0,10
16,48
19,30
18,61
13,97
23,60
20,22
1,25
3,04
0,47
0,63
19,75
22,26
20,60
17,14
21,80
23,40
24,30
17,15
21,10
22,00
23,08
16,14
1,73
2,98
0,62
0,73
2,03
2,80
0,65
0,72
1,94
2,66
0,60
0,67
Relative volatility as of 31.12.2004
SKAGEN Vekst
SKAGEN Global
SKAGEN Kon-Tiki
SKAGEN Avkastning
SKAGEN Høyrente
7,32
7,20
6,26
1,90
0,14
0,05
8,14
8,23
10,06
2,24
0,27
7,38
8,51
7,13
11,25
7,99
11,33
0,31
0,28
0,26
Sharpe Index as of 31.12.2004
SKAGEN Vekst
OSE Benchmark Index
SKAGEN Global
SKAGEN Kon-Tiki
Morgan Stanley Emerging Markets Index (NOK)*
SKAGEN Avkastning
SKAGEN Høyrente
2,07
2,12
1,31
0,05
1,37
0,36
3,01
1,37
1,23
1,04
2,36
0,00
2,64
1,97
1,99
0,61
2,42
1,07
2,06
1,63
0,16
0,74
0,76
0,33
0,52
-0,72
0,42
0,01
0,21
-0,88
0,24
-0,05
0,07
-0,89
0,91
1,19
0,11
0,41
0,43
0,96
0,13
0,37
0,39
0,75
0,07
0,26
-0,91
2,79
2,88
0,12
-0,61
5,60
0,57
3,25
3,28
-1,05
-1,46
0,99
2,58
1,36
1,70
0,94
1,35
-0,76
-0,66
-0,48
Differential Return as of 31.12.2004
SKAGEN Vekst
SKAGEN Global
SKAGEN Kon-Tiki
SKAGEN Avkastning
SKAGEN Høyrente
Standard Deviation as of 31.12.2004
SKAGEN Vekst
OSE Benchmark Index
SKAGEN Global
SKAGEN Kon-Tiki
Morgan Stanley Emerging Markets Index (NOK)*
SKAGEN Avkastning
SKAGEN Høyrente
Information Ratio (IR) as of 31.12.2004
SKAGEN Vekst
SKAGEN Global
SKAGEN Kon-Tiki
SKAGEN Avkastning
SKAGEN Høyrente
The standard deviation provides us with a measure of the fluctuation of the return of the fund/index over a given period. Each
monthly return is compared with the average return for the period
(the last 12, 24, 36, 48 and 60 months). The higher the standard
deviation, the higher the average fluctuation for the fund/index,
which indicates higher risk. For you, as a shareholder, a low standard
deviation means that the probability of losing money on the investment is lower.
The Sharpe Index compares the return of the fund/index and the
standard deviation with risk free return, and provides a picture of
the risk adjusted return of the fund/index. Since both the historical
return and the risk are important factors that should be considered
before making an investment in a fund, the Sharpe Index is an
important key figure for comparing different funds. The higher the
Sharpe Index, the higher the risk adjusted return for the fund/index.
The Information Ratio (IR) is an alternative measure of risk
adjusted return. As opposed to the Sharpe Index, the return of the
48 måneder
13,98 %
4,25 %
10,51 %
-8,65 %
60 måneder
10,53 %
3,04 %
7,30 %
-7,96 %
Siden start
19,26 %
9,40 %
21,86 %
0,04 %
26,00 %
4,95 %
7,17 %
7,71 %
5,75 %
5,78 %
3,16 %
3,05 %
fund is deducted the return of a benchmark (this is called outperformance) with a measure of how much the fund fluctuates in relation
to the benchmark (this is called relative volatility). In other words, it
is not only the performance of the fund that influences the IR, but
also the performance of the benchmark. The higher the IR, the
higher the relative risk adjusted return is for the fund/index.
IR as a measure of risk adjusted return is most appropriate if you are
concerned with relative risk (i.e. danger of achieving a lower risk than
the benchmark). At SKAGEN Fondene we are more concerned
about absolute risk (i.e. the risk of losing money) and are therefore
of the opinion that Sharpe provides a better picture of risk adjusted
return. Per definition, the IR is not calculated for indices.
*The benchmark index for SKAGEN Kon-Tiki was the World
Index until 31.12.2003 and the Emerging Markets Index thereafter.
Return statistics for the benchmark index are therefore a combination of these indices
24
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Fund ranking
Fund ranking
Morningstar (5 = Best rating)
(Source: : Morningstar.no, 31st Dec. 2004)
SKAGEN
Global
SKAGEN
Vekst
SKAGEN
Avkastning
SKAGEN
Høyrente
★★★★★
★★★★★
★
★★★
✪✪✪✪✪
✪✪✪✪✪
✪✪✪✪
✪✪✪✪
AA
A
1,82
1,31
SKAGEN
Kon-Tiki
Wassum (5 = Best rating)
(Source: Wassum, 31st Dec. 2004)
Standard & Poor's Stjerner (5 = Best)
(Source: Standard & Poor’s, 31st Dec. 2004)
Standard & Poor’s rating
(Source: Standard & Poor’s, 31st Dec. 2004)
AA
Dine penger (DP Index)
DP Index / Return last 12 months
(Nr 11. 2004)
5,54 %
2,24 %
1,59
Fondsbarometeret
(Source: Stavanger Aftenblad, 31st Dec. 2004)
Empty fields means that ratings have not been carried out for this fund.
Historical returns are no guarantee for future returns. Future return will, among other things, depend on market developments, the skill of the
manager, the fund’s risk profile as well as expenses associated with subscription, management and redemption. The investment return may become negative as a result of negative price developments. Investments in foreign currencies are not hedged.
Subscription fee: Max. 0.7%. Redemption fee: 0%. Annual management fee is 1% + variable management fee: Returns above 6% in SKAGEN
Vekst are shared 90/10 between unit holders and the management company. For SKAGEN Global the variable part comes into play when the
return exceeds the benchmark, Morgan Stanley Daily Net $ World Index, measured in NOK. The management fee for SKAGEN Kon-Tiki is
2.5% p.a. plus/minus a variable management fee: The accumulated return exceeding Morgan Stanley Daily Net $ Emerging Markets (in NOK) is
shared 90/10 between the unit holders and the management company. However, the total annual management fee has an upper ceiling of 4% of
average net asset value. In case of a lower return than the world index, the loss is similarly shared 90/10. However, the reduction of the annual
management fee is limited so that it is a minimum of 1% of average net asset value. Thus, SKAGEN Global and SKAGEN Kon-Tiki may be
charged a variable management fee even if the fund’s return has been negative, as long as the fund has outperformed the benchmark. In the
opposite case, the fund may have a positive return without being charged a variable management fee, as long as there is no outperformance of the
benchmark. The fixed management fee is calculated daily and is charged on a quarterly basis. The variable management fee is calculated daily and
charged on the 31st December.
For SKAGEN Avkastning and SKAGEN Høyrente there are no costs associated with the purchase and sale of units. Neither are there any withdrawal limits. The annual management fee is 0.5% for SKAGEN Avkastning, 0.3% for SKAGEN Høyrente, and 0.25% for SKAGEN Høyrente
Institusjon.
Please refer to the product sheets and prospectuses for a detailed description of the cost, etc. They are available upon request from SKAGEN
Fondene.
25
26
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Annual Financial Statement
OPERATING STATEMENT
Notes
(all figures in 1,000)
Portfolio revenue and cost
Interest revenue/cost
Dividends received
Realized gains/losses
Change in unrealized price gains/losses
Underwriting commission
Broker provisions
Currency exchange gain/loss
Portfolio profit/loss
8
5
Asset management revenue and cost
Fee revenue from sale and redemption
of shares
Management fee - fixed
Management fee - variable
Asset management profit/loss
7
9
9
Profit before taxes
Taxes
Annual profit/loss
4,12
SKAGEN Vekst
2004
2003
2 291
11 679
127 263
103 054
453 615
6 061
931 581 1 492 332
70
53
-5 631
-4 965
37 258
14 111
1 546 446 1 622 325
SKAGEN Global
2004
2003
SKAGEN Kon-Tiki
2004
2003
SKAGEN Avkastning
2004
2003
SKAGEN Høyrente
2004
2003
SKAGEN
Høyrente Institusjon
2004 14.3.-31.12.03
2 493
164 571
427 348
776 640
-9 562
9 718
1 371 207
8 147
76 610
-20 896
1 461 157
-3 781
5 320
1 526 557
335
69 048
232 630
434 960
-7 849
8 622
737 747
1 963
19 122
35 004
435 225
200
-3 711
20 660
508 462
22 512
4 158
5 036
100
31 806
8 157
2 502
633
-620
10 671
28 871
-1 723
-583
26 565
37 209
-429
-497
36 284
5 701
-469
-499
4 733
5 940
-82
-15
5 843
2
-50 631
-127 762
-178 391
2 712
-28 518
-147 338
-173 145
3
-57 149
-112 160
-169 306
3 503
-29 107
-82 634
-108 237
-1
-60 780
-36 468
-97 248
2 388
-15 211
-9 127
-21 950
-1 592
-1 592
-689
-689
-3 493
-3 493
-1 676
-1 676
-519
-519
-267
-267
1 368 056
1 449 180
1 201 901
1 418 320
640 499
486 512
30 215
9 982
23 072
34 608
4 214
5 576
-6 890
-3 052
-17 469
-7 522
1 361 166 1 446 128 1 184 432 1 410 797
-4 065
636 434
-5 739
480 773
30 215
9 982
23 072
34 608
4 214
5 576
For which provisions are made as follows
Transfer to/from retained earnings
1 361 166
Allocated for distribution to shareholders
Total
1 361 166
1 446 128
1 446 128
1 184 432
1 184 432
1 410 797
1 410 797
636 434
636 434
480 773
480 773
5 036
25 179
30 215
633
9 349
9 982
-583
23 655
23 072
-497
35 105
34 608
-499
4 713
4 214
-15
5 591
5 576
31.12.04
31.12.03
31.12.04
31.12.03
31.12.04
31.12.03
31.12.04
31.12.03
31.12.04
31.12.03
31.12.04
31.12.03
3,8
3,8
8
8
2 022 105
2 012 826
1 661 122
5 696 053
1 543 029
1 661 426
729 541
3 933 995
5 483 539
1 382 942
6 866 481
3 607 731
606 302
4 214 033
87 682
2 261 675
754 387
3 103 743
1 298 169
319 427
1 617 595
463 873
78 148
6 432
6 508
554 961
125 719
9 667
1 396
700
137 482
1 118 051
-284
5 701
1 123 468
616 567
299
6 559
623 425
197 545
-514
1 637
198 669
164 276
-15
1 280
165 541
Accrued dividends
Tax receivable on dividends
Accrued income, not received
Accounts receivable - brokers
Accounts receivalbe - management company
Other receivables
Total other receivables
Bank deposits
Total assets
10 736
2 676
13 412
8 795
93
8 887
146 050
5 864 403
8 408
1 289
9 696
4 116
113
4 229
492 219
4 440 140
20 371
8 135
28 505
0
76
3 090
3 166
254 243
7 152 395
8 997
5 830
14 827
55
244
300
314 941
4 544 101
20 596
514
21 110
45
45
198 509
3 323 408
4 387
12
4 400
9
28
38
159 375
1 781 408
17 621
80
17 701
28 500
601 162
13
13
7 325
144 819
9
25 984
25 994
31 225
1 180 687
24
24
41 298
664 747
7 064
1
7 065
205 734
5
5
1 832
167 379
Equity capital
Share capital at face value
Premium
Paid-up equity capital
Retained earnings
Total equity capital
810 314
1 716 305
2 526 619
3 184 880
5 711 498
795 174
1 635 587
2 430 761
1 823 714
4 254 475
1 609 613
3 138 126
4 747 740
2 210 548
6 958 288
1 269 470
2 110 809
3 380 280
1 026 116
4 406 396
1 711 656
513 275
2 224 931
1 001 736
3 226 667
1 219 278
144 532
1 363 810
365 302
1 729 111
459 830
90 224
550 054
6 457
556 512
113 283
20 626
133 909
1 362
135 271
1 144 678
11 684
1 156 362
-271
1 156 091
621 515
6 006
627 522
372
627 894
195 365
23
195 388
-514
194 874
161 733
-37
161 695
-15
161 680
Liablilities
Allocated for distribution to unit holders
Bank overdraft
Accounts payable - brokers
Accounts payable - mangaement company
Other debt
Total other liabilities
Total liabilities and equity capital
7 065
142 264
3 576
152 904
5 864 403
22 655
157 633
5 377
185 665
4 440 140
19 621
129 274
45 212
194 107
7 152 395
31 781
93 531
12 393
137 705
4 544 101
18 359
54 731
23 651
96 741
3 323 408
20 509
18 195
13 593
52 297
1 781 408
25 179
17 127
607
1 738
19 472
601 162
9 349
167
32
199
144 819
23 655
941
941
1 180 687
35 105
468
1 280
1 748
664 747
4 713
6 012
134
6 146
205 734
5 591
106
1
108
167 379
Number of units outstanding
Redemption price per unit
8 103 141
704,99
7 951 740 16 096 132 12 694 704 17 116 562 12 192 780
535,08
432,31
347,09
188,49
142,42
4 598 299
126,46
1 132 831 11 446 783
127,69
103,12
6 215 154
106,73
1 953 652
102,16
1 617 325
103,45
BALANCE SHEET
Assests
Norwegian securities at cost
Foreign securities at cost
Unrealized appreciation
Accured interest
Total securities portfolio
10
10
10
Cach flow statment
Liquid assets as of 1.1.
492 219
4 807
314 941
34 695
159 375
-23 248
7 325
8 213
41 298
72 132
1 832
-
Inflows
Net subscriptions (Incl. subscription
and redemption fees)
Net realized gains
Interest and dividends received
(after tax)
Total inflows
+/+/-
95 859
453 615
666 890
6 061
1 367 462
427 348
819 707
-20 896
861 121
232 630
1 006 704
35 004
416 145
4 158
23 703
2 502
528 840
-1 723
138 594
-429
33 692
-469
161 695
-82
+/=
154 360
703 835
120 879
793 830
149 750
1 944 560
78 773
877 584
66 092
1 159 843
32 494
1 074 203
22 612
442 915
7 537
33 742
28 871
555 988
37 209
175 375
5 701
38 924
5 940
167 553
Application
Net purchases of securities
Change in unsettled items
Operating expenses
Net distribution to unit holders
Total allocation
Liquid assets as of 31.12.
+/-830 476
+/-41 134
-178 392
= -1 050 003
=
146 050
-529 807 -1 051 188
44 210
27 726
-111 741
-97 247
-597 338 -1 120 709
314 941
198 509
-916 961
49 721
-24 338
-891 579
159 375
-406 634
-4 224
-1 592
-9 290
-421 740
28 500
-20 886
-6 311
-689
-6 743
-34 629
7 325
-501 484
-25 919
-3 493
-35 165
-566 061
31 225
-178 697
6 043
-1 676
-31 880
-206 210
41 298
-33 269
-7 390
-519
-5 591
-46 769
-6 012
-164 276
-1 178
-267
-165 721
1 832
-298 599 -1 875 808
168 036
39 859
-175 856
-169 309
-306 419 -2 005 258
492 219
254 243
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SKAGEN Global
The SKAGEN Global equity fund invests in stocks worldwide – except Norway. As with the other equity funds, the investment philosophy is to achieve
the highest possible return at the lowest possible risk, through investment in undervalued companies, industries or countries. The fund seeks to maintain
a balanced industry exposure. The requirement that the companies must be of high quality and have low valuations is absolute. At the same time
company risk and market risk must be balanced with the performance opportunities.
SKAGEN Global is regarded by independent agencies, such as the international rating agencies Standard & Poor’s and Morningstar, as well as magazines
such as “Dine Penger”, to be one of the very best global equity funds on the market.
SKAGEN Global is suitable for investors who want an equity fund which invests over the whole world and is therefore diversified both geographically
and by industry. The fund is also suitable for those who already have exposure towards the Norwegian equity market, but who wish to strengthen their
portfolio and reduce risk with a cultivated global fund.
Fund start date
Return since start
8th August 1997
332.31 %
21.86 %
(until 31st Dec 2004)
Average annual return
S&P’s quantitative rating
✪✪✪✪✪
6,958 MNOK
35,971
0,0 – 0,7 % (dependent on amount)
0%
1.0 % p.a. + 10 % of the return exceeding the return of the benchmark
One-time subscription NOK 1,000, savings agreement NOK 250
IPA, Unit Link
Norway, Sweden and Denmark
MSCI Daily Net $ World Index measured in NOK
Yes
Filip Weintraub
(Only valid for Norwegian market)
Net asset value
Number of unit holders
Subscription fee
Redemption fee
Management fee
Minimum subscription amount
Tax schemes
Authorised for marketing in
Benchmark
UCITS fund
Portfolio Manager
Year
Return on Benchmark
investment
2004
2003
2002
2001
2000
1999
1998
1997**
24,55 %
62,82 %
-23,20 %
-4,24 %
- 4,65 %
113,41 %
47,16 %
-3,08 %
4,46 %
28,04 %
-37,97 %
-16,07 %
-5,12 %
30,73 %
26,52 %
-8,21 %
Net asset
value*
Number of
unitholders
Total
cost
6 958
4 387
2 176
2 660
2 863
2 092
237
32
35 971
28 772
26 465
24 767
22 093
9 983
1 017
24
2,96 %
3,84 %
3,61 %
2,57 %
1,79 %
6,37 %
2,60 %
2,84 %
* MNOK
**The fund was established during the year
Historic development
Annual return
120 %
SKAGEN Global
World Index (NOK)
20% annual geometrie return
400
100 %
NAV SKAGEN Global
80 %
300
60 %
40 %
200
20 %
0%
-20 %
100
1997* 1998
1999
2000
2001
2002
2003 2004
*) The fund was established during the year
70
1998
1999
2000
2001
2002
2003
2004
Geographical distribution SKAGEN Global
Sector
distribution
SKAGEN
Global
Sector distribution
SKAGEN
Global
Cash
Utilities
Telecom
Information Technology
Financials
Healt Care
Consumer staples
Consumer discretionary
Industials
Raw materials
Energy
0%
Cash
1,6 %
1,8 %
9,7 %
9,5 %
9,3 %
Core EU
26,7 %
Japan
18,1 %
8,9 %
8%
10 %
12 % 14 %
% of net assets under management
9,2 %
EMEA
12,5 %
6%
18,2 %
h America
8,1 %
8,0 %
7,6 %
4%
10,3 %
riphery EU
14,2 %
2%
1,6 %
h America
2,9 %
xcl. Japan
16 %
18 %
20 %
21,7 %
0%
5%
10 %
15 %
20 %
25 %
30 %
35 %
27
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SKAGEN Global Note 8. Securities portfolio as of 31st December 2004.
Security
Energy
PETROBRAS PREF. ADR
FOREST OIL CORP
TRANSOCEAN
PRIDE INTERNATIONAL
REPSOL YPF S.A.
MINOR ITEMS
Total Energy
Raw materials
SVENSKA CELLULOSA B
LOUISIANA-PACIFIC
ALCAN
ANTOFAGASTA
VOTORANTIM CELLULOSE ADR
LONGVIEW FIBRE
GRUPO MEXICO SA B
BOLIDEN
KEMIRA GROWHOW
ERAMET
HARMONY GOLD MINING ADR
HANSOL PAPER
MINOR ITEMS
Total Raw materials
Industrials
HYUNDAI MERCHANT MARINE
EXMAR
EURONAV SA
CMB
KONE OYJ
BUNGE LIMITED
ASAHI GLASS
FINNLINES OYJ
KOMATSU LIMITED
A P MOLLER - MAERSK A
FURUKAWA ELECTRIC
AIR FRANCE KLM
FINNAIR
BUCHER INDUSTRIES
PENINSULAR & ORIENTAL STEAM
STOLT NILSEN ADR
BROSTRØM B
MINOR ITEMS
Total Industrials
TUI AG
VOLKSWAGEN
INDEPENDENT NEWS & MEDIA
VOLKSWAGEN PREF.
SHANGRI-LA ASIA
GRUPO ELEKTRA ADR
SSANGYONG MOTOR CO.
LI & FUNG
DANUBIUS HOTELS
MINOR ITEMS
Total Consumer discretionary
Consumer staples
J SAINSBURY
NUTRECO HOLDING
KIKKOMAN CORP
AARHUS UNITED A/S
UNITED INTL ENTERPRISES
BRYGGERIGRUPPEN
YATZICILAR HOLDINGS
HK-RUOKATALO
MINOR ITEMS
Total Consumer staples
Health Care
EISAI CO LTD
CHRISTIAN HANSEN HOLDING B
GIDEON RICHTER GDR
PFIZER
LG LIFE SCIENCES
GIDEON RICHTER
NEUROSEARCH
MINOR ITEMS
Total Health Care
Financials
BANK AUSTRIA CREDITANSTALT
HANNOVER RUECKVERSICHERUNG
KINNEVIK INV AB, SER B
KOREAN REINSURANCE
IVG IMMOBILIEN AG
AAREAL BANK
BANCOLOMBIA
WELLINGTON UNDERWRITING PLC
YAPI KREDI BANK
MINOR ITEMS
Total Financials
SAMSUNG ELECTRONICS GDR
KYOCERA
SAMSUNG ELECTRONICS PREF.
SAMSUNG ELECTRONICS PREF. GDR
HEWLETT-PACKARD
SAMSUNG SDI GDR
KYOCERA ADR
NINOR ITEMS
Total Information Technology
Telecom
TELEKOMUNIK INDONESIA ADR
TOTAL ACCESS TELECOMMUNICATION
TDC
BHARTI TELEVENTURES PART.CERT. SSB
INDOSAT ADR
UNITED COMMUNICATION INDUSTRY
MINOR ITEMS
Total Telecom
Utilities
ELETROBRAS PREFERED
Total Utilities
Total equity portfolio
Disposable liquidity
Total share capital
Basis price pr. 31.12.2004
Acquisition
value NOK
Marketprice
Marketvalue NOK
Unrealised
profit/loss
Percent
distribution
Share in
company
Stockexchange
1 468 800
434 800
298 200
540 431
303 000
257 532 035
79 104 655
55 668 134
71 782 497
42 594 166
9 589 242
516 270 729
36,21
31,72
42,39
20,54
19,16
USD
USD
USD
USD
EUR
322 834 455
83 716 566
76 729 037
67 379 748
47 808 128
18 460 020
616 927 954
65 302 421
4 611 911
21 060 903
-4 402 749
5 213 961
8 870 778
100 657 225
4,63 %
1,20 %
1,10 %
0,97 %
0,69 %
0,26 %
8,85 %
0,32 %
0,73 %
0,09 %
0,40 %
0,02 %
New York
New York
New York
New York
Madrid
1 108 050
463 500
220 672
499 939
640 500
534 050
1 848 040
2 097 500
1 004 780
74 948
629 000
375 000
269 750 266
283,50
73 649 912
26,74
66 864 940
58,80
36 572 513
11,21
48 770 812
16,20
41 540 303
18,14
29 694 831
56,40
53 427 961
28,40
44 717 557
5,63
29 064 288
66,20
66 451 245
9,27
18 771 924 10 300,00
4 565 292
783 841 843
SEK
USD
CAD
GBP
USD
USD
MXN
SEK
EUR
EUR
USD
KRW
287 116 808
78 172 747
65 633 050
65 290 284
62 982 927
58 804 139
56 805 054
54 446 066
46 584 665
40 858 427
35 393 138
22 672 875
8 050 404
882 810 583
17 366 542
4 522 835
-1 231 890
28 717 770
14 212 115
17 263 836
27 110 223
1 018 105
1 867 109
11 794 139
-31 058 106
3 900 951
3 485 112
98 968 739
4,12 %
1,12 %
0,94 %
0,94 %
0,90 %
0,84 %
0,81 %
0,78 %
0,67 %
0,59 %
0,51 %
0,33 %
0,12 %
12,67 %
0,57 %
0,38 %
0,06 %
0,25 %
0,75 %
1,05 %
0,21 %
0,83 %
1,76 %
0,29 %
0,16 %
0,86 %
Stockholm
New York
Toronto
London
New York
New York
Mexico
Stockholm
Helsinki
Paris
New York
Seol
2 863 610
324 449
675 108
562 590
176 300
231 350
1 104 100
651 600
1 602 000
1 341
1 484 000
331 407
835 600
26 369
976 867
188 300
225 200
153 158 775 15 000,00
60 964 835
43,90
16 601 378
19,10
31 720 085
20,55
74 018 778
57,09
55 881 389
57,01
71 996 759 1 130,00
66 848 698
12,80
65 582 499
717,00
38 023 571 44 900,00
69 753 989
568,00
28 926 358
14,02
32 444 698
5,56
31 018 639
253,00
33 621 231
2,97
21 853 345
28,54
7 000 117
98,75
859 415 142
KRW
EUR
EUR
EUR
EUR
USD
JPY
EUR
JPY
DKK
JPY
EUR
EUR
CHF
GBP
USD
SEK
252 140 860
117 293 667
106 186 725
95 206 684
82 885 003
80 058 829
73 859 874
68 683 853
67 999 133
66 683 572
49 900 390
38 262 496
38 259 283
35 567 006
33 856 989
32 620 678
20 325 989
1 178 307
1 260 969 337
98 982 086
56 328 832
89 585 346
63 486 599
8 866 226
24 177 441
1 863 115
1 835 154
2 416 634
28 660 001
-19 853 598
9 336 138
5 814 585
4 548 367
235 758
10 767 333
13 325 872
1 178 307
401 554 195
3,62 %
1,68 %
1,52 %
1,37 %
1,19 %
1,15 %
1,06 %
0,99 %
0,98 %
0,96 %
0,72 %
0,55 %
0,55 %
0,51 %
0,49 %
0,47 %
0,29 %
0,02 %
18,09 %
2,78 %
4,41 %
1,61 %
1,61 %
0,33 %
0,21 %
0,09 %
1,63 %
0,16 %
0,06 %
0,23 %
0,12 %
0,99 %
1,86 %
0,13 %
0,30 %
0,83 %
Korea
Brüssels
Brüssels
Brüssels
Helsinki
New York
Tokyo
Helsinki
Tokyo
København
Tokyo
Amsterdam
Helsinki
Zürich
London
NASDAQ
Stockholm
689 000
337 000
4 464 070
290 000
6 138 207
217 200
903 900
2 145 000
98 897
89 401 044
132 926 796
57 485 495
67 453 784
50 433 194
29 155 017
26 187 095
27 264 077
11 728 576
14 507 610
506 542 688
17,42
33,35
2,32
24,41
11,15
37,24
6 000,00
13,10
5 380,00
EUR
EUR
EUR
EUR
HKD
USD
KRW
HKD
HUF
98 839 599
92 552 753
85 286 950
58 294 741
53 383 986
49 097 365
31 835 358
21 917 610
17 850 810
19 898 884
528 958 057
9 438 556
-40 374 043
27 801 455
-9 159 043
2 950 793
19 942 348
5 648 263
-5 346 467
6 122 234
5 391 274
22 415 369
1,42 %
1,33 %
1,22 %
0,84 %
0,77 %
0,70 %
0,46 %
0,31 %
0,26 %
0,29 %
7,59 %
0,39 %
0,11 %
0,60 %
0,28 %
0,26 %
0,37 %
0,75 %
0,07 %
1,19 %
Frankfurt
Frankfurt
London
Frankfurt
Hong Kong
New York
Korea
Hong Kong
Budapest
4 573 547
774 697
1 278 700
88 430
176 074
92 000
215 429
377 534
164 701 714
160 280 366
63 072 412
21 479 179
20 082 647
31 588 687
26 796 346
17 988 872
14 302 856
520 293 079
2,70
20,23
977,00
560,00
245,00
381,00
23,10
7,36
GBP
EUR
JPY
DKK
DKK
DKK
USD
EUR
144 127 330
129 059 911
73 957 962
54 844 286
47 775 479
38 820 090
30 206 808
22 882 185
14 279 608
555 953 659
-20 574 384
-31 220 455
10 885 550
33 365 107
27 692 831
7 231 403
3 410 462
4 893 313
-23 247
35 660 580
2,07 %
1,85 %
1,06 %
0,79 %
0,69 %
0,56 %
0,43 %
0,33 %
0,20 %
7,98 %
0,27 %
2,25 %
0,65 %
2,21 %
3,42 %
1,40 %
1,05 %
1,30 %
London
Amsterdam
Tokyo
København
København
København
Istanbul
Helsinki
204 336 629 3 370,00
58 132 146
643,00
46 341 537
124,00
73 369 325
26,89
46 210 634 35 300,00
21 862 187 22 700,00
17 629 207
235,00
12 069 812
479 951 477
JPY
DKK
USD
USD
KRW
HUF
DKK
182 945 168
140 857 830
67 590 664
67 084 365
49 709 919
22 466 757
19 519 687
16 971 505
567 145 897
-21 391 461
82 725 684
21 249 127
-6 284 960
3 499 285
604 570
1 890 481
4 901 694
87 194 420
2,62 %
2,02 %
0,97 %
0,96 %
0,71 %
0,32 %
0,28 %
0,24 %
8,14 %
0,31 %
2,15 %
0,48 %
0,01 %
1,45 %
0,16 %
0,97 %
Tokyo
København
London Int.
New York
Seol
Budapest
København
192 842 587
191 738 646
91 467 225
33 879 883
34 424 438
26 301 093
8 411 591
34 238 936
59 751 570
6 426 350
679 482 317
66,50
28,85
70,75
4 695,00
11,95
24,38
14,12
0,89
3,16
EUR
EUR
SEK
KRW
EUR
EUR
USD
GBP
USD
370 756 413
225 434 673
146 713 086
59 117 654
41 770 759
40 475 091
37 214 587
35 231 240
27 045 492
8 181 212
991 940 208
177 913 826
33 696 027
55 245 861
25 237 772
7 346 322
14 173 998
28 802 996
992 304
-32 706 078
1 754 863
312 457 891
5,32 %
3,23 %
2,10 %
0,85 %
0,60 %
0,58 %
0,53 %
0,51 %
0,39 %
0,12 %
14,23 %
0,46 %
0,79 %
1,06 %
1,95 %
0,37 %
0,52 %
0,97 %
0,69 %
0,19 %
Wien
Frankfurt
Stockholm
Korea
Frankfurt
Frankfurt
New York
London
London Int.
142 726 572
219,00
228 399 231 7 890,00
64 249 096 298 500,00
43 502 963
145,00
50 251 332
20,97
24 746 117
27,25
36 161 344
76,98
26 443 628
616 480 283
USD
JPY
KRW
USD
USD
USD
USD
249 735 910
163 013 712
82 545 906
47 968 175
44 321 647
38 461 379
17 943 114
17 284 409
661 274 252
107 009 338
-65 385 519
18 296 810
4 465 212
-5 929 686
13 715 262
-18 218 230
-9 159 219
44 793 969
3,58 %
2,34 %
1,18 %
0,69 %
0,64 %
0,55 %
0,26 %
0,25 %
9,49 %
0,06 %
0,18 %
0,21 %
0,12 %
0,01 %
0,13 %
0,02 %
London Int.
Tokyo
Korea
London Int.
New York
London Int.
New York
1 680 950
6 379 800
406 089
3 167 262
481 200
2 000 000
111 824 602
84 241 125
87 425 627
69 968 151
35 172 305
18 422 000
9 323 239
416 377 049
21,02
3,54
231,75
5,00
31,18
69,50
USD
USD
DKK
USD
USD
THB
214 474 764
137 087 866
104 228 072
96 126 402
91 073 163
21 680 525
13 295 576
677 966 368
102 650 161
52 846 741
16 802 444
26 158 251
55 900 858
3 258 525
3 972 337
261 589 319
3,08 %
1,97 %
1,50 %
1,38 %
1,31 %
0,31 %
0,19 %
9,73 %
0,33 %
1,34 %
0,19 %
0,17 %
0,46 %
0,46 %
New York
Singapore
København
London Int.
New York
Bangkok
1 368 000
104 884 327
104 884 327
39,20
BRL
122 534 496
122 534 496
17 650 169
17 650 169
1,76 %
1,76 %
0,25 %
Sao Paulo
6 866 480 811
91 806 935
6 958 287 746
1 382 941 876
98,51 %
1,49 %
100,00 %
Number
917 000
197 800
89 800
411 000
239 900
29 500
75 000
677 023
948 880
2 268 800
2 145 080
424 464
201 600
434 200
3 388 393
1 410 000
187 866
349 000
47 110
54 500
348 200
232 525
38 400
5 483 538 936
432.3135
Currency
28
Back to page one
SKAGEN Vekst
A minimum of 50% of the assets of the SKAGEN Vekst equity fund will at all times be invested in Norway. The rest will be invested in the global equity
market. Studies made by the magazine Dine Penger and by Morningstar place SKAGEN Vekst among the best performing equity funds in terms of
returns relative to risk. The fund’s risk profile is, seen in isolation, among the lowest in its “class”.
Reduced risk is achieved through thorough analyses of the individual companies as well as of the main trends in Norwegian and international business.
In addition, significant parts of the fund’s assets are invested outside of Norway. This means that the fund may partake in the value created by companies
in industries or markets not represented on the Oslo Stock Exchange. We look for companies that are solid but under priced, and that are listed in
markets that are undervalued.
SKAGEN Vekst is suitable for investors who want an equity fund with a good balance between Norwegian and global companies. The fund has a broad
mandate which gives it the freedom to invest in a number of companies, industries and regions.
Fund start date
Return since start
1st December 1993
604.99 %
19.26 %
Net asset value
Subscription fee
Redemption fee
Management fee
Tax schemes
Benchmark
UCITS fund
Portfolio Manager
Year
Return on Benchmark
investment
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
31,75 %
66,25 %
-21,91 %
-1,33 %
- 2,25 %
76,98 %
- 6,47 %
29,23 %
39,09 %
14,72 %
19,13 %
38,45 %
48,40 %
-31,09 %
-16,57 %
-1,68 %
45,54 %
-26,65 %
31,60 %
32,03 %
11,60 %
7,13 %
✪✪✪✪✪
5,712 MNOK
51,781
0,0 – 0,7 % (dependent on amount)
0%
1.0 % p.a. + 10 % of the return exceeding 6% p.a.
IPA, Unit Link
Oslo Stock Exchange Benchmark Index
Yes
Kristian Falnes
Net asset
value*
Number of
unitholders
Total
cost
5 712
4 238
2 146
2 594
2 650
2 361
988
895
472
200
125
51 781
47 334
46 153
46 283
44 619
38 167
19 568
13 036
6 873
4 149
1 760
3,52 %
6,17 %
1,00 %
1,47 %
2,18 %
7,31 %
2,46 %
3,74 %
4,01 %
2,95 %
1,78 %
* MNOK
Annual return
NAV SKAGEN Vekst
100 %
SKAGEN Vekst
World Index (NOK)
600
500
80 %
60 %
400
40 %
300
20 %
0%
200
-20 %
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
100
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Geographical
distribution
SKAGEN Vekst
Geographical distribution
SKAGEN Vekst
Sector
distribution
Vekst
Sector distribution
SKAGENSKAGEN
Vekst
Cash
Utilities
Telecom
Financials
Healt Care
Consumer staples
Industials
Raw materials
Energy
0%
Cash 0,2 %
0,2 %
1,0 %
9,9 %
Periphery EU
9,9 %
11,9 %
53,1 %
North America
3,9 %
6,8 %
Core EU
6,0 %
5,8 %
10,8 %
Japan
22,1 %
10 %
15 %
20 %
22,6 %
25 %
2,2 %
EMEA
12,4 %
5%
3,6 %
South America
4,2 %
0,6 %
Asia excl. Japan
30 %
12,4 %
0%
10 %
20 %
30 %
40 %
50 %
60 %
29
Back to page one
SKAGEN Vekst Note 8. Securities portfolio as of 31st December 2004.
Security
Energy
NORSK HYDRO
SOLSTAD OFFSHORE
CIE GENERALE DE GEOPHYSIQUE
ANADARKO PETROLEUM
TRANSOCEAN
PETROBRAS PREF. ADR
BONHEUR
DOF
PRIDE INTERNATIONAL
TGS NOPEC GEOPHYSICAL CO
SMEDVIG B
GANGER ROLF
FARSTAD SHIPPING
PETROBRAS ORD. ADR
FRED OLSEN ENERGY
FMC TECHNOLOGIES
MINOR ITEMS
Total Energy
Raw materials
NORSKE SKOGINDUSTRIER
YARA INTERNATIONAL
BOLIDEN
KOREA ZINC
ALCAN
CREW GOLD CORPORATION
GRUPO MEXICO SA B
HANSOL PAPER
RAUTARUUKKI
MINOR ITEMS
Total Raw materials
Industrials
STOLT-NIELSEN
WILH WILHELMSEN LTD A
KONGSBERG GRUPPEN
TOMRA SYSTEMS
HANJIN SHIPPING
BROSTRØM B
CONCORDIA MARITIME B
FURUKAWA ELECTRIC
PENINSULAR & ORIENTAL STEAM
KOREA LINE
I.M. SKAUGEN KONVERTIBEL OBLIGASJON
I.M. SKAUGEN
KVERNELAND
ODFJELL A
SOLVANG
SAS
PREMUDA
FINNAIR
TTS MARINE
BUCHER INDUSTRIES
BERGESEN DY B
KOREAN AIR CO. LTD.
A P MOLLER - MAERSK A
MINOR ITEMS
Total Industrials
OFOTEN & VESTERÅLEN D/S
DIXONS GROUP
RICA HOTELS
SCHIBSTED
EXPERT
VOLKSWAGEN PREF.
NORGES HANDELS OG SJØFATRSTIDENDE
DANUBIUS HOTELS
SSANGYONG MOTOR CO.
MINOR ITEMS
Consumer staples
NUTRECO HOLDING
LERØY SEAFOOD GROUP
RIEBER & SØN
NATUZZI
SEABOARD
J SAINSBURY
MINOR ITEMS
Health Care
CHRISTIAN HANSEN HOLDING B
PFIZER
AXIS-SHIELD
AXIS-SHIELD (LONDON)
MINOR ITEMS
Total Health Care
Financials
BOLIG- OG NAERINGSBANKEN
OLAV THON EIENDOMSSELSKAP
KINNEVIK INV AB, SER B
KOREAN REINSURANCE
BANCO BRADESCO SA, ADR
AAREAL BANK
SPONDA OYJ
ABG SUNDAL COLLIER ASA
MINOR ITEMS
Total Financials
SAMSUNG ELECTRONICS GDR
KYOCERA
TANDBERG TELEVISION
NERA
SAMSUNG SDI GDR
SUN MICROSYSTEMS
Q-FREE
VMETRO
KYOCERA ADR
GLOBAL IP SOUND
TELESTE
MINOR ITEMS
Telecom
TELEKOMUNIK INDONESIA ADR
TDC
CATCH COMMUNICATION
MINOR ITEMS
Total Telecom
Utilities
ELETROBRAS PREFERED
MINOR ITEMS
Total Utilities
Total share capital
Acqyisition
value NOK
Marketsprice
Marketsvalue NOK
Unrealised
profit/loss
Persented
distribution
Share in
company
Stcokexchange
631 000
1 656 000
240 000
230 000
350 000
400 000
307 250
3 760 000
531 100
340 000
600 000
193 500
550 000
100 000
200 000
75 000
197 095 890
60 383 287
66 952 656
74 012 919
51 374 876
57 037 370
58 933 662
33 687 850
67 134 907
24 074 261
25 184 097
35 155 155
30 170 968
19 309 783
5 407 162
11 768 094
34 633 603
852 316 540
477,00
68,00
50,65
64,85
42,33
36,40
272,00
20,20
20,05
155,00
82,25
242,00
76,00
40,02
87,50
32,22
NOK
NOK
EUR
USD
USD
USD
NOK
NOK
USD
NOK
NOK
NOK
NOK
USD
NOK
USD
300 987 000
112 608 000
100 135 050
89 999 336
89 395 942
87 854 268
83 572 000
75 952 000
64 252 816
52 700 000
49 350 000
46 827 000
41 800 000
24 147 856
17 500 000
14 581 033
38 075 129
1 289 737 430
103 891 110
52 224 713
33 182 394
15 986 417
38 021 066
30 816 898
24 638 338
42 264 150
-2 882 091
28 625 739
24 165 903
11 671 845
11 629 032
4 838 073
12 092 838
2 812 939
3 441 526
437 420 889
5,27 %
1,97 %
1,75 %
1,58 %
1,57 %
1,54 %
1,46 %
1,33 %
1,13 %
0,92 %
0,86 %
0,82 %
0,73 %
0,42 %
0,31 %
0,26 %
0,67 %
22,59 %
0,24 %
4,38 %
2,05 %
0,09 %
0,11 %
0,09 %
3,00 %
4,90 %
0,39 %
1,35 %
2,15 %
2,13 %
1,41 %
0,02 %
0,33 %
0,11 %
Oslo Børs
Oslo Børs
Paris
New York
New York
New York
Oslo Børs
Oslo Børs
New York
Oslo Børs
Oslo Børs
Oslo Børs
Oslo Børs
New York
Oslo Børs
New York
2 190 000
2 250 938
2 500 000
200 000
100 131
4 250 000
750 000
300 000
205 800
252 272 010
131,00
94 118 455
79,75
51 216 726
28,40
29 227 316 31 800,00
30 420 851
58,68
20 075 640
6,00
13 019 954
56,72
15 301 982 10 300,00
9 280 991
8,74
23 454 773
538 388 697
NOK
NOK
SEK
KRW
CAD
NOK
MXN
KRW
EUR
286 890 000
179 512 305
64 850 115
36 621 198
29 372 874
25 500 000
22 979 316
17 792 375
14 816 725
31 394 492
709 729 401
34 617 990
85 393 851
13 633 389
7 393 882
-1 047 977
5 424 360
9 959 362
2 490 393
5 535 735
7 939 718
171 340 703
5,02 %
3,14 %
1,14 %
0,64 %
0,51 %
0,45 %
0,40 %
0,31 %
0,26 %
0,55 %
12,43 %
1,64 %
0,70 %
0,99 %
1,06 %
0,03 %
3,06 %
0,09 %
0,69 %
0,15 %
Oslo Børs
Oslo Børs
Stockholm
Korea
Toronto
Oslo Børs
Mexico
Seol
Helsinki
950 000
920 000
958 650
1 800 000
400 000
600 800
600 000
1 553 500
1 500 000
1 416 083
200 000
14 500 000
240 045
460 694
140 000
1 044 000
478 300
2 300 000
505 000
1 100 000
15 000
104 085
150 000
300
92 959 565
41 061 113
81 819 349
47 471 887
25 364 610
29 393 056
29 982 121
29 395 919
38 864 845
38 386 151
11 785 642
14 598 958
8 778 746
39 302 205
6 102 715
17 130 352
36 305 565
17 704 172
21 915 117
19 866 500
15 742 017
10 427 884
13 896 563
10 508 941
73 406 491
772 170 482
174,00
157,00
99,00
33,30
24 000,00
98,75
15 000,00
35,80
568,00
2,98
35 400,00
255,00
154,00
79,50
212,00
26,00
56,75
1,37
5,56
18,70
253,00
168,00
18 850,00
44 900,00
NOK
NOK
NOK
NOK
KRW
SEK
KRW
SEK
JPY
GBP
KRW
NOK
NOK
NOK
NOK
NOK
NOK
EUR
EUR
NOK
CHF
NOK
KRW
DKK
165 300 000
144 440 000
94 906 350
59 940 000
55 277 280
54 190 035
51 822 450
50 798 008
50 170 557
49 141 898
40 766 994
37 980 068
36 966 930
36 625 173
29 680 000
27 144 000
27 143 525
25 880 578
23 129 253
20 570 000
20 262 905
17 486 280
16 280 886
14 916 732
110 248 792
1 261 068 694
72 340 435
103 378 887
13 087 001
12 468 113
29 912 670
24 796 979
21 840 329
21 402 090
11 305 712
10 755 747
28 981 352
23 381 110
28 188 184
-2 677 032
23 577 285
10 013 648
-9 162 040
8 176 406
1 214 135
703 500
4 520 889
7 058 396
2 384 324
4 407 791
36 842 301
488 898 212
2,90 %
2,53 %
1,66 %
1,05 %
0,97 %
0,95 %
0,91 %
0,89 %
0,88 %
0,86 %
0,71 %
0,67 %
0,65 %
0,64 %
0,52 %
0,48 %
0,48 %
0,45 %
0,41 %
0,36 %
0,35 %
0,31 %
0,29 %
0,26 %
1,93 %
22,09 %
1,52 %
2,50 %
3,20 %
1,01 %
0,56 %
2,22 %
0,58 %
3,55 %
0,23 %
0,19 %
2,00 %
11,69 %
4,08 %
3,72 %
0,43 %
4,23 %
1,10 %
1,70 %
0,60 %
7,41 %
1,06 %
0,60 %
0,21 %
0,01 %
Oslo Børs
Oslo Børs
Oslo Børs
Oslo Børs
Korea
Stockholm
Korea
Stockholm
Tokyo
London
Korea
Oslo Børs
Oslo Børs
Oslo Børs
Oslo Børs
Oslo Børs
Oslo Børs
Milano
Helsinki
Oslo Børs
Zürich
Unotert
Korea
København
950 615
2 750 000
1 286 700
239 000
590 000
150 000
32 022
110 000
517 940
53 694 099
47 287 622
40 425 051
27 457 379
22 808 062
35 465 993
19 984 619
12 305 514
21 409 178
13 391 864
294 229 381
55,00
1,52
33,50
172,00
57,75
24,41
850,00
5 380,00
6 000,00
NOK
GBP
NOK
NOK
NOK
EUR
NOK
HUF
KRW
52 283 825
48 676 936
43 104 450
41 108 000
34 072 500
30 161 606
27 218 700
19 830 330
17 893 947
16 759 070
331 109 364
-1 410 274
1 389 314
2 679 399
13 650 621
11 264 438
-5 304 387
7 234 081
7 524 816
-3 515 232
3 367 206
36 879 983
0,92 %
0,85 %
0,75 %
0,72 %
0,60 %
0,53 %
0,48 %
0,35 %
0,31 %
0,29 %
5,80 %
8,14 %
0,14 %
5,36 %
0,35 %
1,84 %
0,14 %
2,75 %
1,33 %
0,43 %
Unotert
London
Oslo Børs
Oslo Børs
Oslo Børs
Frankfurt
Unotert
Budapest
Korea
652 500
1 825 200
117 200
430 000
277 000
2 800
465 426
127 475 442
45 275 859
19 254 228
22 625 863
19 844 617
4 728 875
16 731 659
57 353 600
313 290 143
20,30
36,60
245,00
56,00
11,10
1 030,25
2,72
EUR
NOK
DKK
NOK
USD
USD
GBP
109 111 866
66 802 320
31 797 998
24 080 000
18 552 577
17 406 127
14 742 342
57 985 110
340 478 341
-18 363 576
21 526 461
12 543 770
1 454 137
-1 292 040
12 677 252
-1 989 317
631 510
27 188 198
1,91 %
1,17 %
0,56 %
0,42 %
0,32 %
0,30 %
0,26 %
1,02 %
5,96 %
1,89 %
5,32 %
2,28 %
0,54 %
0,51 %
0,22 %
0,03 %
Amsterdam
Oslo Børs
København
Oslo Børs
New York
AMEX
London
75 000
250 000
950 300
600 000
26 106 266
44 580 178
22 068 384
20 637 642
82 757 373
196 149 844
643,00
27,01
29,30
2,44
DKK
USD
NOK
GBP
53 404 558
40 744 227
27 843 790
17 048 573
83 455 180
222 496 328
27 298 292
-3 835 951
5 775 406
-3 589 069
697 807
26 346 484
0,94 %
0,71 %
0,49 %
0,30 %
1,46 %
3,90 %
0,81 %
0,00 %
1,96 %
1,24 %
København
New York
Oslo Børs
London
550 000
416 667
210 000
100 000
776 300
1 545 000
243 600
150 000
400 000
2 000 000
103 422 890
83 408 420
37 405 845
24 529 284
14 680 228
19 777 305
25 049 406
16 240 247
22 077 360
8 518 890
69 331 871
424 441 745
339,00
28,75
406,00
66,50
70,75
4 695,00
25,01
24,38
7,18
7,39
NOK
EUR
NOK
EUR
SEK
KRW
USD
EUR
EUR
NOK
186 450 000
98 678 464
85 260 000
54 779 375
50 165 880
41 767 599
36 761 436
30 124 538
23 658 100
14 780 000
58 830 852
681 256 243
83 027 110
15 270 045
47 854 155
30 250 091
35 485 651
21 990 295
11 712 030
13 884 291
1 580 740
6 261 109
-10 501 020
256 814 498
3,27 %
1,73 %
1,49 %
0,96 %
0,88 %
0,73 %
0,64 %
0,53 %
0,41 %
0,26 %
1,03 %
11,93 %
5,64 %
0,35 %
1,96 %
0,07 %
0,36 %
1,41 %
0,10 %
0,39 %
0,51 %
0,75 %
Oslo Børs
Frankfurt
Oslo Børs
Wien
Stockholm
Korea
New York
Frankfurt
Helsinki
Oslo Børs
70 000
100 000
120 000
1 000 100
3 505 900
205 280
1 000 000
1 600 000
804 000
40 000
2 600 077
303 950
27 597 220
52 366 563
86 707 798
13 314 314
65 521 679
21 556 895
31 980 538
22 681 592
14 871 273
33 644 757
7 921 890
16 010 740
68 549 647
462 724 908
216,50
144,00
7 890,00
52,75
14,50
27,25
5,42
16,20
28,50
76,55
6,50
6,02
USD
USD
JPY
NOK
NOK
USD
USD
NOK
NOK
USD
NOK
EUR
91 444 467
86 888 837
55 752 914
52 755 275
50 835 550
33 753 175
32 703 993
25 920 000
22 914 000
18 475 946
16 900 500
15 072 805
59 658 781
563 076 242
63 847 247
34 522 274
-30 954 884
39 440 961
-14 686 129
12 196 280
723 454
3 238 408
8 042 727
-15 168 812
8 978 611
-937 935
-8 890 866
100 351 335
1,60 %
1,52 %
0,98 %
0,92 %
0,89 %
0,59 %
0,57 %
0,45 %
0,40 %
0,32 %
0,30 %
0,26 %
1,04 %
9,86 %
0,02 %
0,22 %
0,06 %
1,63 %
2,84 %
0,11 %
0,03 %
3,16 %
3,50 %
0,02 %
6,11 %
1,75 %
London Int.
London Int.
Tokyo
Oslo Børs
Oslo Børs
London Int.
NASDAQ
Oslo Børs
Oslo Børs
New York
Unotert
Helsinki
725 000
210 000
2 000 000
796 000
40 385 359
44 242 459
8 863 830
13 775 250
29 178 473
136 445 372
20,78
231,75
3,54
22,90
USD
DKK
USD
NOK
90 904 428
53 894 584
42 720 345
18 228 400
36 234 014
241 981 771
50 519 069
9 652 125
33 856 515
4 453 150
7 055 541
105 536 400
1,59 %
0,94 %
0,75 %
0,32 %
0,63 %
4,24 %
0,14 %
0,10 %
0,42 %
2,91 %
New York
København
Singapore
Oslo Børs
600 000
43 312 282
1 461 299
44 773 581
4 034 930 693
39,20
BRL
53 479 259
1 639 975
55 119 233
5 696 053 047
15 445 402
5 711 498 449
10 166 977
178 675
10 345 652
1 661 122 354
0,94 %
0,03 %
0,97 %
99,76 %
0,24 %
100,00 %
0,11 %
Sao Paulo
Number
704.9854
Corrency
30
Back to page one
31
SKAGEN Kon-Tiki
Like our two other equity funds, SKAGEN Vekst and SKAGEN Global, SKAGEN Kon-Tiki has as its overall objective to achieve the highest possible
return with the lowest possible risk.
The fund will invest at least 50% of its assets in so-called emerging markets. These are markets that are not included in the Morgan Stanley World Index.
They are: Eastern Europe, Turkey, Africa, Asia (except Japan, Singapore and Hong Kong) as well as all of Latin America including Mexico.
Following from our requirement to have a reasonable industry balance, 50% of the fund’s assets may be invested in markets that are included in the
Morgan Stanley World Index. However, the condition is that these companies must be registered in and/or have emerging markets as their primary
business area. SKAGEN Kon-Tiki is a company oriented fund focusing on geographical areas with high growth and companies with low valuations.
Like our other equity funds, the focus of the investments of the SKAGEN Kon-Tiki fund is directed at individual companies, independent of markets and
industries. A balanced industry exposure is sought, however. This fund does also have strong cash flow and/or low gearing as important choice criteria for
investment objects. Likewise, the three “SKAGEN U’s”: Undervalued, Under-analysed and Unpopular.
SKAGEN Kon-Tiki is suitable for an investor who wants to benefit from the value creation taking place in the world’s emerging markets. The fund
offers the opportunity of extraordinary returns by investing in geographic areas with huge growth potential. But at a higher risk that with a global/
Norwegian equity fund.
Fund start date
Return since start
5th April 2002
Net asset value
Subscription fee
Redemption fee
Management fee
Tax schemes
Benchmark
UCITS fund
Portfolio Manager
88.49 %
26.00 %
AA
3,227 MNOK
16,259
0.0 – 0.7 % (dependent on amount)
0%
2.5% p.a. plus/minus variable management fee
IPA, Unit Link
MSCI Daily Net $ World Index measured in NOK
Yes
Year
Net asset
value*
Number of
unitholders
Total
cost
3 227
1 711
250
16 259
9 835
4 190
4,00 %
4,00 %
4,00 %
2004
2003
2002
Return on Benchmark
investment
32,35 %
102,93 %
-29,82 %
14,33 %
50,41 %
-33,41 %
NAV SKAGEN Kon-Tiki
*MNOK
**The figures for SKAGEN Kon-Tiki are from start-up on 05.04.2002 until 31.12.2002.
200
180
160
140
Annual return
120 %
SKAGEN Kon-Tiki
World Index (NOK)
100 %
80 %
120
60 %
100
40 %
20 %
80
0%
-20 %
60
april juli okt jan april juli okt
jan april juli okt
2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004
Sector
distribution
SKAGEN
Kon-Tiki
Sector distribution
SKAGEN
Kon-Tiki
Cash
Interest bearing instruments
Utilities
Telecom
Financials
Healt Care
Consumer staples
Industials
Raw materials
Energy
0%
4,1 %
0,9 %
6,1 %
8,7 %
8,4 %
12,1%
5,8 %
6,8%
9,0 %
14,5 %
13,2 %
10,5 %
2%
4%
6%
8%
10 %
12 %
14 % 16 %
18 %
20 %
-40 %
*2002
2003
2004
*) Fund was established during the year
Geographical
distribution SKAGEN Kon-Tiki
g p
Cash
4,1 %
South America
Periphery EU
2,1 %
Oceania 0,1 %
Norway
3,4 %
North America
1,8 %
Core EU
6,1 %
Japan 0,2 %
EMEA
11,7 %
Asia excl. Japan
0%
5%
10 % 15 %
25,7 %
20 % 25 % 30 % 35 %
40 %
44,7 %
45 % 50 %
Back to page one
SKAGEN Kon-Tiki Note 8. Securities portfolio as of 31st December 2004.
Marketsvalue NOK
Unrealised
profit/loss
Persented
distribution
Share in
company
USD
HKD
USD
191 221 389
101 887 500
42 390 452
3 788 779
339 288 120
26 523 843
-25 864 614
670 526
435 436
1 765 191
5,91 %
3,15 %
1,31 %
0,12 %
10,49 %
0,19 %
3,58 %
0,25 %
New York
Hong Kong
New York
16,20
56,40
131,00
24,38
3,55
11,21
6,00
USD
MXN
NOK
USD
USD
GBP
NOK
132 726 316
115 267 500
48 895 750
42 916 114
34 532 376
33 955 090
10 200 000
6 950 010
425 443 157
31 535 748
66 883 936
288 397
16 101 724
1 673 241
576 992
2 449 732
-8 163 097
111 346 671
4,10 %
3,56 %
1,51 %
1,33 %
1,07 %
1,05 %
0,32 %
0,21 %
13,15 %
1,57 %
0,43 %
0,28 %
0,07 %
0,96 %
0,13 %
1,23 %
New York
Mexico
Oslo Børs
New York
Istanbul
London
Oslo Børs
131 339 620
35 791 117
45 839 827
11 373 969
19 950 054
13 720 869
16 108 236
15 466 166
8 479 644
2 957 980
2 935 790
303 963 272
15 000,00
24 000,00
18 850,00
174,00
269,50
20,52
44,36
1,51
43,90
35 400,00
KRW
KRW
KRW
NOK
NOK
USD
USD
HKD
EUR
KRW
226 970 007
84 523 774
51 588 116
21 750 000
16 170 000
15 914 986
13 624 819
11 778 000
10 909 483
10 389 900
6 910 240
470 529 325
95 630 387
48 732 657
5 748 290
10 376 031
-3 780 054
2 194 117
-2 483 417
-3 688 166
2 429 839
7 431 920
3 974 450
166 566 053
7,01 %
2,61 %
1,59 %
0,67 %
0,50 %
0,49 %
0,42 %
0,36 %
0,34 %
0,32 %
0,21 %
14,54 %
2,50 %
0,84 %
0,65 %
0,20 %
0,08 %
0,17 %
0,07 %
0,48 %
0,41 %
0,50 %
Korea
Korea
Korea
Oslo Børs
Oslo Børs
New York
New York
Hong Kong
Brüssels
Korea
1 180 000
8 100 731
2 000 000
105 000
100 000
500 000
44 225 063
53 425 333
88 695 747
12 816 589
11 483 516
9 242 005
8 483 080
228 371 333
12,58
11,15
6 000,00
37,24
5 380,00
2,32
USD
HKD
KRW
USD
HUF
EUR
90 105 508
70 452 058
70 440 000
23 734 914
18 049 900
9 552 600
10 051 511
292 386 491
45 880 445
17 026 725
-18 255 747
10 918 325
6 566 384
310 595
1 568 431
64 015 157
2,78 %
2,18 %
2,18 %
0,73 %
0,56 %
0,30 %
0,31 %
9,04 %
1,02 %
0,34 %
1,66 %
0,18 %
1,21 %
0,07 %
London Int.
Hong Kong
Korea
New York
Budapest
London
Consumer staples
YATZICILAR HOLDINGS
PIVOVARNA LASKO
PODRAVKA
BRYGGERIGRUPPEN
AARHUS UNITED A/S
532 554
216 414
145 903
47 800
30 000
60 000
58 687 027
54 985 522
29 647 551
16 380 705
9 795 808
8 509 583
178 006 195
23,10
7 149,00
239,00
381,00
560,00
245,00
USD
SIT
HRK
DKK
DKK
DKK
74 673 124
53 221 743
37 590 741
20 169 568
18 606 000
16 280 250
220 541 426
15 986 098
-1 763 779
7 943 190
3 788 863
8 810 192
7 770 667
42 535 232
2,31 %
1,64 %
1,16 %
0,62 %
0,58 %
0,50 %
6,82 %
2,60 %
2,47 %
2,79 %
0,73 %
0,75 %
1,17 %
Istanbul
Ljubljana
Zagreb
København
København
København
Health Care
HANMI PHARMACEUTICAL CO LTD
GIDEON RICHTER
LG LIFE SCIENCES
GIDEON RICHTER GDR
Total Health Care
235 445
70 000
150 000
38 790
38 255 104 52 900,00
51 097 655 22 700,00
25 272 468 35 300,00
26 496 379
124,00
141 121 605
KRW
HUF
KRW
USD
73 111 069
53 310 950
31 081 650
29 196 457
186 700 126
34 855 965
2 213 295
5 809 182
2 700 078
45 578 521
2,26 %
1,65 %
0,96 %
0,90 %
5,77 %
3,12 %
0,38 %
0,90 %
0,21 %
Korea
Budapest
Seol
London Int.
71 652 328
39 326 637
41 542 406
22 143 566
26 549 877
28 674 947
3 846 269
10 807 330
3 764 023
248 307 382
66,50
14,12
28,85
4 695,00
5 370,00
3,16
30,10
0,33
EUR
USD
EUR
KRW
KRW
USD
USD
GBP
131 430 600
85 708 400
43 952 254
42 579 659
39 402 375
24 935 560
9 135 350
9 034 575
3 639 847
389 818 620
59 778 272
46 381 763
2 409 848
20 436 093
12 852 498
-3 739 387
5 289 081
-1 772 755
-124 176
141 511 238
4,06 %
2,65 %
1,36 %
1,32 %
1,22 %
0,77 %
0,28 %
0,28 %
0,11 %
12,05 %
0,16 %
2,24 %
0,15 %
1,41 %
0,66 %
0,17 %
0,02 %
0,64 %
Wien
New York
Frankfurt
Korea
Korea
London Int.
Bombay
London
171 704 421
145,00
34 362 594 298 500,00
10 230 319 1 480,00
6 159 388
222 456 722
USD
KRW
HRK
206 835 250
35 043 900
23 931 600
4 914 000
270 724 750
35 130 829
681 306
13 701 281
-1 245 388
48 268 028
6,39 %
1,08 %
0,74 %
0,15 %
8,37 %
0,51 %
0,09 %
1,13 %
London Int.
Korea
Zagreb
5 100 000
3 000 000
300 800
94 155 827
22 998 142
29 858 587
2 718 037
149 730 594
5,00
3,54
31,18
USD
USD
USD
154 785 000
64 463 400
56 930 190
4 506 975
280 685 565
60 629 173
41 465 258
27 071 603
1 788 938
130 954 971
4,78 %
1,99 %
1,76 %
0,14 %
8,68 %
0,28 %
0,63 %
0,28 %
London Int.
Singapore
New York
Utilities
ELETROBRAS PREFERED
UNIFIED ENERGY SYSTEMS REG GDR
Total Utilities
1 962 700
125 000
165 903 763
27 431 493
193 335 257
39,20
28,40
BRL
USD
175 802 964
21 548 500
197 351 464
9 899 201
-5 882 993
4 016 208
5,43 %
0,67 %
6,10 %
0,37 %
0,03 %
Sao Paulo
London Int.
Interest bearing instruments
ARGENTINSK STAT
Total Interest bearing instruments
15 000 000
32 444 576
32 444 576
33,25
USD
30 274 125
30 274 125
-2 170 451
-2 170 451
0,94 %
0,94 %
0,05 %
OTC
3 103 743 170
122 923 854
3 226 667 024
754 386 820
95,93 %
4,07 %
100,00 %
Security
Energy
PETROBRAS PREF. ADR
CHINA OILFIELD SERVICES
PRIDE INTERNATIONAL
MINOR ITTEMS
Total Energy
Raw materials
VOTORANTIM CELLULOSE ADR
GRUPO MEXICO SA B
NORSKE SKOGINDUSTRIER
VALE RIO DEL DOCE ADR PREF
AKCANSA CIMENTO
ANTOFAGASTA
CREW GOLD CORPORATION
MINOR ITTEMS
Total Raw materials
Industrials
HANJIN SHIPPING
KOREAN AIR CO. LTD.
STOLT-NIELSEN
FRONTLINE
SHIP FINANCE INTL
FRONTLINE LTD
IDT INTERNATIONAL
EXMAR
KOREA LINE
MINOR ITTEMS
Total Industrials
MAHINDRA & MAHINDRA LTD GDR
SHANGRI-LA ASIA
SSANGYONG MOTOR CO.
GRUPO ELEKTRA ADR
DANUBIUS HOTELS
INDEPENDENT NEWS & MEDIA
MINOR ITTEMS
Financials
BANCOLOMBIA
KOREAN REINSURANCE
DAEWOO SECURITIES
YAPI KREDI BANK
STATE BANK OF INDIA
SVB HOLDINGS
MINOR ITTEMS
Total Financials
SAMSUNG ELECTRONICS PREF.
ERICSSON NIKOLA TESLA
MINOR ITTEMS
Telecom
BHARTI TELEVENTURES PART.CERT. SSB
INDOSAT ADR
MINOR ITTEMS
Total Telecom
Dispoable liquidity
Total share capital
Acqyisition
value NOK
Marketsprice
870 000
55 000 000
340 000
164 697 546
127 752 114
41 719 926
3 353 343
337 522 929
36,21
2,37
20,54
1 349 750
3 750 000
373 250
290 000
1 602 542
260 000
1 700 000
101 190 568
48 383 564
48 607 353
26 814 390
32 859 135
33 378 098
7 750 268
15 113 107
314 096 485
2 577 740
599 970
466 230
125 000
60 000
127 773
50 600
10 000 000
30 177
50 000
Number
240 000
1 000 000
185 000
1 545 000
1 250 000
1 300 000
50 000
2 350 000
235 000
20 000
15 000
2 349 356 350
188.4873
Corrency
Stcokexchange
32
Back to page one
SKAGEN Høyrente
SKAGEN Høyrente is a good alternative to a high interest account in a bank. The fund has low costs, which contributes to higher returns for the fund’s
unit holders. The return follows the money market interest rates, which are normally higher than the best interest rates on offer in the bank market.
Saving in SKAGEN Høyrente is suitable for investors with a short time horizon for their savings, and for investors with a longer investment horizon who
want minimum risk.
SKAGEN Høyrente is a money market fund that invests in certificates and bonds with a remaining duration of less than one year, as well as bank deposits.
The fund only lends money to the safest issuers in the banking, power generation and manufacturing sectors. The fund seeks to provide the best possible
return in the shortest end of the interest market. The fund has an international investment mandate, but has so far only been invested in Norway.
The fund may be compared with a high interest account in a bank, but since the money is invested in securities where the rates are determined by the
market, the value of these securities may fluctuate somewhat.
Fund start date
Return since start
18th September 1998
42.18 %
5.75 %
✪✪✪✪
1,174 MNOK
5,086
0%
0%
0.3 % p.a.
One-time subscription NOK 1,000, savings agreement NOK 1,000
IPA, Unit Link
Norway
Oslo Stock Exchange State Bond Index 0.5
No
Ross Porter
Net asset value
Subscription fee
Redemption fee
Management fee
Tax schemes
Benchmark
UCITS fund
Portfolio Manager
Year
Return on
investment
2004
2003
2002
2001
2000
1999
1998**
2,08 %
4,23 %
6,86 %
7,54 %
6,17 %
6,59 %
2,16 %
Benchmark
Net asset
value*
Number of
unitholders
1 174
661
517
206
114
73
20
5086
3741
2498
1263
707
273
64
2,17 %
4,92 %
6,77 %
7,57 %
6,04 %
6,29 %
2,00 %
*MNOK
Historic price development
SKAGEN Høyrente
NAV SKAGEN Høyrente
150
140
130
120
110
100
1999
2000
2001
2002
2003
2004
Annual return
8%
7%
6%
5%
4%
3%
2%
1%
0%
1998*
1999
2000
2001
2002
2003
2004
33
34
Back to page one
SKAGEN Høyrente Note 8. Securities portfolio as of 31st December 2004.
Security
Maturity
Interest
adjustment
Coupon
point
Face value
Cost price
Effective
Inerest
Interest
rate sensitivity**
Market
price
Accrued
interest
Market
value
Market value
incl. accrued
interest
Unrealised
gain/loss
Share of
the fund
FLOATING RATE SECURITIES
Financial
BLAKER SPAREBANK
SPAREBANKEN NORD-NORGE
ANKENES SPAREBANK
ENTER CARD AS
FINANSBANKEN ASA
HELGELAND SPAREBANK
HØNEFOSS SPAREBANK
HOLLA SPAREBANK
HARSTAD SPAREBANK
HAUGESUND SPAREBANK
KLEPP SPAREBANK
KRAGERØ SPAREBANK
KVINNHERAD SPAREBANK
MELHUS SPAREBANK
NORDLANDSBANKEN
PRIVATBANKEN
SR BANK
SAUDA SPAREBANK
SPAREBANKEN OST
SPAREBANKEN RANA
SOKNEDAL SPAREBANK
18-05-05
27-04-05
17-06-05
24-01-05
27-09-05
23-02-05
12-08-05
28-02-05
01-03-05
02-03-05
06-04-05
10-02-05
02-02-05
19-01-05
29-03-05
24-08-05
21-09-05
16-03-05
14-12-05
17-01-05
14-06-05
2,26 %
3,40 %
2,26 %
2,61 %
3,36 %
2,08 %
2,30 %
2,27 %
2,06 %
3,48 %
2,12 %
2,19 %
2,19 %
2,21 %
3,39 %
2,24 %
3,29 %
2,29 %
3,24 %
2,22 %
2,31 %
15-02-05
27-01-05
21-03-05
24-01-05
29-03-05
23-02-05
14-02-05
28-02-05
01-03-05
02-03-05
06-01-05
10-02-05
02-02-05
19-01-05
29-03-05
24-02-05
16-03-05
16-03-05
14-03-05
17-01-05
14-03-05
22 000 000
18 500 000
23 000 000
17 000 000
5 000 000
30 000 000
15 000 000
10 000 000
6 000 000
3 500 000
35 000 000
10 000 000
25 000 000
25 000 000
5 000 000
30 000 000
10 000 000
5 000 000
15 000 000
27 000 000
5 000 000
22 019 032
18 601 400
23 023 000
17 021 800
5 036 700
29 943 890
15 019 200
10 018 000
5 999 400
3 517 500
34 996 200
10 000 000
24 995 000
25 005 625
5 024 650
29 988 410
10 085 940
5 002 835
15 125 350
27 015 165
5 005 425
2,04
2,27
2,06
2,04
2,30
2,06
2,05
2,04
2,04
2,48
2,00
2,03
2,02
2,01
2,22
2,16
2,27
2,05
2,27
1,93
2,06
0,20
0,17
0,16
0,16
0,17
0,14
0,12
0,20
0,23
0,25
0,18
0,25
0,22
0,11
0,17
0,21
0,09
0,23
0,15
0,20
0,25
100,09 %
100,35 %
100,10 %
100,03 %
100,77 %
100,00 %
100,14 %
100,03 %
100,01 %
100,18 %
99,99 %
100,01 %
100,01 %
100,00 %
100,30 %
100,06 %
100,73 %
100,06 %
100,91 %
100,00 %
100,12 %
63 531
113 569
15 883
82 577
1 867
65 867
46 958
20 178
10 300
9 812
177 256
31 025
89 729
112 035
942
69 067
14 622
5 089
22 950
123 210
5 454
22 019 360
18 564 380
23 022 310
17 004 420
5 038 750
29 999 700
15 021 300
10 003 200
6 000 600
3 506 195
34 996 500
10 001 100
25 001 750
25 000 000
5 014 800
30 019 200
10 073 200
5 002 900
15 136 650
27 000 810
5 006 000
22 082 891
18 677 949
23 038 193
17 086 997
5 040 617
30 065 567
15 068 258
10 023 378
6 010 900
3 516 007
35 173 756
10 032 125
25 091 479
25 112 035
5 015 742
30 088 267
10 087 822
5 007 989
15 159 600
27 124 020
5 011 454
328
-37 020
-690
-17 380
2 050
55 810
2 100
-14 800
1 200
-11 305
300
1 100
6 750
-5 625
-9 850
30 790
-12 740
65
11 300
-14 355
575
1,91 %
1,62 %
2,00 %
1,48 %
0,44 %
2,61 %
1,31 %
0,87 %
0,52 %
0,30 %
3,05 %
0,87 %
2,18 %
2,18 %
0,43 %
2,61 %
0,87 %
0,43 %
1,31 %
2,35 %
0,43 %
Industrial
STEEN & STRØM
WILH WILHELMSEN LTD
WILH WILHELMSEN LTD
ENTRA EIENDOM
30-09-05
10-02-05
11-04-05
01-07-05
2,23 %
2,46 %
2,74 %
2,10 %
30-03-05
10-02-05
11-01-05
03-01-05
25 000 000
60 000 000
20 000 000
35 000 000
25 000 000
60 053 500
20 070 000
35 000 400
2,10
2,15
2,18
2,02
0,25
0,18
0,22
0,23
100,14 %
100,03 %
100,14 %
100,01 %
1 549
209 100
123 300
185 792
25 035 000
60 016 200
20 028 800
35 003 850
25 036 549
60 225 300
20 152 100
35 189 642
35 000
-37 300
-41 200
3 450
2,17 %
5,22 %
1,75 %
3,05 %
Power generation
HAFSLUND ASA
VARDAR
21-09-05
14-02-05
2,79 %
2,25 %
16-03-05
14-02-05
40 000 000
45 000 000
40 221 773
45 009 730
2,09
2,04
0,19
0,11
100,51 %
100,02 %
49 600
129 375
40 203 200
45 008 550
40 252 800
45 137 925
-18 573
-1 180
3,49 %
3,91 %
Financial
NORDLANDSBANKEN
SPAREBANKEN NORD NORGE
SPAREBANKEN RANA
VOSS VEKSEL OG LANDMANDSBANK
29-03-05
29-06-05
09-02-05
14-02-05
8,05 %
8,38 %
2,25 %
2,20 %
21 500 000
3 000 000
10 000 000
5 000 000
22 003 100
3 124 500
10 000 000
5 000 270
2,26
2,34
2,03
2,03
0,26
0,53
0,11
0,12
101,36 %
102,90 %
100,02 %
100,02 %
1 313 473
127 422
88 767
42 192
21 792 400
3 087 060
10 002 100
5 000 900
23 105 873
3 214 482
10 090 867
5 043 092
-210 700
-37 440
2 100
630
2,00 %
0,28 %
0,87 %
0,44 %
Industrial
DNO ASA
DNO ASA
KONGSBERGGRUPPEN
KONGSBERGGRUPPEN
KONGSBERGGRUPPEN
NORGESGRUPPEN
NORSK KJOTT
OCEAN RIG
REITAN HANDEL
SMEDVIG ASA
SMEDVIG ASA
STEEN & STRØM
03-05-05
03-11-05
20-01-05
07-03-05
18-01-05
04-02-05
28-01-05
25-05-05
19-01-05
22-03-05
24-02-05
10-03-05
5,04 %
5,20 %
2,02 %
2,15 %
2,16 %
2,13 %
2,12 %
11,00 %
2,24 %
2,30 %
2,30 %
2,15 %
15 000 000
5 000 000
15 000 000
20 000 000
10 000 000
60 000 000
20 000 000
8 000 000
25 000 000
40 000 000
20 000 000
20 000 000
15 000 000
5 000 000
14 993 100
19 998 740
9 999 420
60 005 340
19 997 520
8 142 068
25 000 000
39 999 040
19 999 000
20 000 500
5,08
5,18
2,02
2,05
2,02
2,03
2,03
6,82
2,02
2,27
2,26
2,11
0,34
0,84
0,06
0,18
0,05
0,09
0,08
0,43
0,05
0,22
0,15
0,19
100,00 %
100,00 %
100,00 %
100,02 %
100,01 %
100,01 %
100,01 %
101,50 %
100,01 %
100,01 %
100,01 %
100,01 %
120 132
41 315
84 674
65 973
43 792
304 619
73 184
530 411
253 151
22 685
46 630
24 740
15 000 000
5 000 000
14 999 700
20 003 800
10 000 600
60 004 800
20 001 200
8 119 920
25 002 000
40 003 600
20 001 600
20 002 200
15 120 132
5 041 315
15 084 374
20 069 773
10 044 392
60 309 419
20 074 384
8 650 331
25 255 151
40 026 285
20 048 230
20 026 940
0
0
6 600
5 060
1 180
-540
3 680
-22 148
2 000
4 560
2 600
1 700
1,31 %
0,44 %
1,31 %
1,74 %
0,87 %
5,23 %
1,74 %
0,75 %
2,19 %
3,47 %
1,74 %
1,74 %
Power generation
FREDRIKSTAD ENERGI
HAFSLUND ASA
ISTAD KRAFT
SOGN OG FJORDANE ENERGI
SUNNHORDALAND KRAFT
TAFJORD KRAFT
TAFJORD KRAFT
TUSSA KRAFT
VALDRES ENERGIVERK
VESTNES ENERGI
16-03-05
17-01-05
28-02-05
10-05-05
17-01-05
20-01-05
18-03-05
23-03-05
04-02-05
17-01-05
2,13 %
2,10 %
2,21 %
2,08 %
1,95 %
2,10 %
2,05 %
2,00 %
2,46 %
2,20 %
60 000 000
25 000 000
30 000 000
15 000 000
20 000 000
36 000 000
30 000 000
25 000 000
4 000 000
7 000 000
60 000 720
24 999 600
30 003 690
14 998 140
19 998 840
36 000 828
29 992 500
24 992 590
4 002 104
6 999 650
2,06
2,02
2,05
2,10
2,02
2,02
2,06
2,06
2,03
2,07
0,21
0,05
0,16
0,36
0,05
0,06
0,21
0,23
0,09
0,05
100,02 %
100,00 %
100,03 %
100,00 %
100,00 %
100,00 %
100,00 %
99,99 %
100,04 %
100,00 %
52 521
110 753
56 310
11 967
16 027
149 129
156 699
135 616
15 367
32 488
60 010 200
25 000 500
30 008 100
14 999 700
19 999 400
36 001 080
29 999 400
24 996 500
4 001 600
7 000 350
60 062 721
25 111 253
30 064 410
15 011 667
20 015 427
36 150 209
30 156 099
25 132 116
4 016 967
7 032 838
9 480
900
4 410
1 560
560
252
6 900
3 910
-504
700
5,21 %
2,18 %
2,61 %
1,30 %
1,74 %
3,13 %
2,61 %
2,18 %
0,35 %
0,61 %
NOTES
1 118 051 185
TOTAL
Portfolio key figures
Effective underlying return
Effective return to clients*
Interest rate sensitivity**
1 117 767 435
56 278 162
1 123 468 109
56 278 162
5 700 674 1 174 045 597 1 179 746 271
2.22 %
1.92 %
0.13
* Effective underlying return adjusted for management fee
** Interest rate sensitivity is a simplified expression of how much the price of the security will change if the interest rate changes by 1 percentage point
All securities are traded on the Norwegian market
Effective interest is the average annual return on an interest bearing security until maturity
Share price as of 31.12.2004
5 700 674
103.1182
-283 750
-283 750
97,40 %
2,60 %
100,00 %
Back to page one
SKAGEN Avkastning
SKAGEN Avkastning is a bond fund which only invests in issues with low default risk, i.e. government bonds, government guaranteed loans, loans to
financial institutions and bank deposits. The fund has an international investment mandate, which in reality is not used very much. The investments are
primarily made in Norway.
By balancing investments between interest bearing securities with short and long maturities, the fund should over a period of six months seek to achieve
the best possible return in the fixed income market. The starting point is that the fund should only assume interest risk if this is expected to provide a
reasonable excess return compared to risk free investments. This entails, for example, that the fund, during periods when the interest level is expected to
increase more than what is discounted by the market, may have a duration (the remaining time to maturity for the loans) much like a money market fund.
We limit the price risk for unitholders when we regard this as necessary. This flexibility makes SKAGEN Avkastning a good alternative for investors who
do not wish, or do not have the resources, to monitor the fixed income markets all the time for active allocation of their interest bearing assets.
Fund start date
Return since start
16th September 1994
104.10 %
7.17 %
✪✪✪
575 MNOK
2,363
0%
0%
0.5 % p.a.
One-time subscription NOK 1,000, savings agreement NOK 1,000
IPA, Unit Link
Oslo Stock Exchange ST4X Bond Index
Yes
Ross Porter
Net asset value
Subscription fee
Redemption fee
Management fee
Tax schemes
Benchmark
UCITS fund
Portfolio Manager
Year
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994 **
Return on
investment
Benchmark
5,72 %
6,15 %
6,74 %
6,17 %
6,06 %
4,57 %
3,63 %
3,66 %
9,77 %
16,11 %
5,71 %
5,49 %
11,13 %
8,10 %
7,65 %
4,55 %
5,49 %
2,86 %
6,05 %
8,73 %
14,07 %
5,53 %
Net asset
value*
Number of
unitholders
575
144
120
60
38
36
21
72
60
34
5
2 363
937
568
343
261
194
154
185
131
54
18
*MNOK
Annual return
18 %
16 %
14 %
12 %
10 %
8%
6%
4%
2%
0%
1994*
1995
1996
1997
1998
1999
2000
2001
2002
2003 2004
35
36
Back to page one
SKAGEN Avkastning Note 8. Securities portfolio as of 31st December 2004.
Security
Maturity
Interest
adjustment
Coupon
point
Interest
rate sensitivity**
Market
price
Accrued
interest
Market value
incl. accrued Unrealised
interest gain/loss
Face value
Cost price
Effective
Inerest
Market
value
Share of
the fund
10 000 000
5 000 000
9 000 000
10 000 000
5 000 000
5 000 000
10 000 000
16 000 000
5 000 000
30 000 000
10 000 000
10 000 000
5 000 000
10 000 000
5 000 000
6 000 000
5 000 000
15 000 000
10 000 000
5 000 000
13 000 000
5 000 000
20 000 000
10 000 000
5 000 000
6 000 000
10 000 000
5 000 000
10 000 000
4 000 000
7 500 000
3 000 000
15 000 000
5 000 000
5 000 000
10 000 000
5 000 000
5 000 000
15 000 000
10 000 000
5 000 000
5 000 000
9 996 000
5 010 500
9 031 500
10 007 690
4 998 500
4 999 000
10 011 000
16 046 400
5 000 000
30 150 500
10 000 000
10 028 000
4 995 500
10 058 000
5 004 500
5 997 000
5 008 000
14 994 000
10 000 000
5 000 000
13 021 600
5 003 100
20 000 000
10 000 000
4 992 500
6 000 000
9 999 220
5 000 000
10 020 600
3 995 600
7 623 300
2 999 100
15 026 000
4 994 000
4 997 000
10 035 000
5 008 500
4 994 500
15 051 000
10 241 000
5 000 000
4 995 500
2,10
2,13
2,11
2,03
2,10
2,11
2,14
2,11
2,06
2,09
2,11
2,08
2,09
2,10
2,09
2,11
2,06
2,22
2,06
2,10
2,11
2,05
2,49
1,96
2,30
2,11
2,06
2,12
2,10
2,01
2,12
2,05
2,17
2,08
2,11
2,11
2,14
2,03
2,11
2,06
2,06
2,01
0,33
0,17
0,08
0,25
0,10
0,22
0,12
0,11
0,16
0,07
0,25
0,25
0,15
0,14
0,23
0,13
0,03
0,20
0,25
0,20
0,22
0,09
0,25
0,23
0,24
0,15
0,25
0,09
0,25
0,07
0,16
0,20
0,11
0,24
0,04
0,25
0,13
0,20
0,24
0,01
100,34 %
100,52 %
99,88 %
100,08 %
100,52 %
100,38 %
100,35 %
100,33 %
100,10 %
100,45 %
100,40 %
100,37 %
100,42 %
100,60 %
100,24 %
100,34 %
100,13 %
99,57 %
100,10 %
100,16 %
100,31 %
100,07 %
100,13 %
100,85 %
100,03 %
100,31 %
100,02 %
100,38 %
100,28 %
100,19 %
101,96 %
100,10 %
100,32 %
100,30 %
100,37 %
100,29 %
100,05 %
100,03 %
100,33 %
101,88 %
100,28 %
99,99 %
48 553
10 311
0
28 494
20 737
5 222
57 633
16 782
5 360
20 800
10 311
44 481
9 264
44 550
10 089
26 743
9 867
81 521
8 828
4 833
13 520
11 357
5 578
9 511
14 056
6 240
8 667
1 306
46 044
22 244
11 137
7 157
15 800
21 775
16 362
9 583
0
13 353
15 733
173 293
27 507
18 250
10 034 300
5 026 250
8 989 650
10 007 800
5 026 250
5 019 000
10 035 200
16 052 640
5 005 200
30 136 500
10 039 800
10 036 700
5 021 050
10 060 200
5 011 800
6 020 220
5 006 300
14 934 900
10 010 400
5 007 800
13 039 780
5 003 750
20 025 600
10 085 000
5 001 500
6 018 480
10 001 800
5 019 200
10 027 900
4 007 520
7 646 700
3 002 880
15 048 600
5 015 150
5 018 750
10 029 500
5 002 650
5 001 350
15 049 350
10 188 200
5 013 850
4 999 700
10 082 853
5 036 561
8 989 650
10 036 294
5 046 987
5 024 222
10 092 833
16 069 422
5 010 560
30 157 300
10 050 111
10 081 181
5 030 314
10 104 750
5 021 889
6 046 963
5 016 167
15 016 421
10 019 228
5 012 633
13 053 300
5 015 107
20 031 178
10 094 511
5 015 556
6 024 720
10 010 467
5 020 506
10 073 944
4 029 764
7 657 837
3 010 037
15 064 400
5 036 925
5 035 112
10 039 083
5 002 650
5 014 703
15 065 083
10 361 493
5 041 357
5 017 950
38 300
15 750
-41 850
110
27 750
20 000
24 200
6 240
5 200
-14 000
39 800
8 700
25 550
2 200
7 300
23 220
-1 700
-59 100
10 400
7 800
18 180
650
25 600
85 000
9 000
18 480
2 580
19 200
7 300
11 920
23 400
3 780
22 600
21 150
21 750
-5 500
-5 850
6 850
-1 650
-52 800
13 850
4 200
1,73 %
0,87 %
1,55 %
1,73 %
0,87 %
0,86 %
1,74 %
2,76 %
0,86 %
5,18 %
1,73 %
1,73 %
0,86 %
1,74 %
0,86 %
1,04 %
0,86 %
2,58 %
1,72 %
0,86 %
2,24 %
0,86 %
3,44 %
1,74 %
0,86 %
1,04 %
1,72 %
0,86 %
1,73 %
0,69 %
1,32 %
0,52 %
2,59 %
0,87 %
0,87 %
1,73 %
0,86 %
0,86 %
2,59 %
1,78 %
0,87 %
0,86 %
113,25 %
564 658
0
564 658
0
0,10 %
Financial
ANKENES SPAREBANK
ARENDAL OG OMEGN SPAREKASSE
ARENDAL OG OMEGN SPAREKASSE
ASKIM SPAREBANK
AURSKOG SPAREBANK
AURSKOG SPAREBANK
AURSKOG SPAREBANK
BERG SPAREBANK
DRANGEDAL OG TØRDAL SPAREBANK
GJERPEN OG SOLUM
HØNEFOSS SPAREBANK
HJELMELAND SPAREBANK
HØLAND SPAREBANK
INDRE SOGN SPAREBANK
KLEPP SPAREBANK
KRAGERØ SPAREBANK
KREDITTFORENING FOR SPAREBANKER
KVINESDAL SPAREBANK
LILLESTRØM SPAREBANK
MARKER SPAREBANK
MODUM SPAREBANK
PRIVATBANKEN
ROGALAND FYLKESKOMMUNE
RINDAL SPAREBANK
SPAREBANKEN 1 HALLINGDAL
SPAREBANKEN 1 HALLINGDAL
SPAREBANKEN HARDANGER
SKUDENES OG AAKRA SPAREBANK
SPAREBANKEN GRENLAND
STOREBRAND
STRØMMEN SPAREBANK
STRØMMEN SPAREBANK
TIME SPAREBANK
TIME SPAREBANK
TIME SPAREBANK
TOLGA OS SPAREBANK
TOTEN SPAREBANK
TROGSTAD SPAREBANK
VEST-AGDER ENERGIVERK
VOLDA ØRSTA SPAREBANK
NØTTERØ SPAREBANK
15-04-07
27-05-07
21-06-06
13-05-05
30-01-07
21-06-06
01-07-08
15-03-06
16-06-05
20-09-06
21-06-06
25-04-06
02-04-07
26-01-07
27-02-06
22-10-07
29-08-05
01-10-09
17-06-05
16-12-05
15-03-06
24-05-05
27-03-08
17-06-09
17-02-09
19-03-06
16-06-05
27-06-06
16-04-07
01-04-06
11-12-07
23-05-05
21-06-06
25-04-06
10-02-07
16-06-06
15-06-07
13-05-05
15-03-06
29-08-05
07-04-06
11-01-05
2,27 %
2,32 %
2,23 %
2,37 %
2,35 %
2,28 %
2,36 %
2,27 %
2,34 %
2,32 %
2,39 %
2,30 %
2,43 %
2,27 %
2,26 %
2,22 %
2,15 %
2,27 %
2,32 %
2,34 %
2,21 %
2,51 %
2,14 %
2,30 %
2,34 %
2,08 %
2,35 %
2,24 %
2,20 %
2,97 %
2,26 %
2,37 %
2,34 %
2,31 %
2,30 %
2,09 %
2,36 %
5,02 %
2,33 %
2,19 %
15-02-05
27-02-05
21-06-06
14-02-05
31-01-05
16-03-05
03-01-05
16-03-05
14-03-05
16-03-05
16-03-05
25-01-05
02-03-05
26-01-05
28-02-05
21-01-05
28-02-05
03-01-05
17-03-05
16-03-05
16-03-05
24-02-05
29-03-05
16-03-05
17-02-05
16-03-05
16-03-05
29-03-05
17-01-05
03-01-05
11-03-05
23-02-05
16-03-05
25-01-05
10-02-05
16-03-05
15-06-07
14-02-05
16-03-05
29-08-05
07-01-05
11-01-05
Government bonds
NORSKE STAT
16-05-11
6,00 %
0
0
3,59
-
Foreign government bonds***
HUNGARIAN GOVERNMENT***
MEXICAN GOVERNMENT***
SOUTH AFRICAN GOVERNMENT***
12-02-13 6,75 %
01-01-14 8,00 %
31-08-10 13,00 %
1 100 000 000
70 000 000
10 000 000
32 224 284
33 356 281
12 567 426
7,15
9,73
6,50
6,29
5,75
5,34
97,40 % 2 195 699
89,44 % 1 537 716
123,60 %
465 341
35 901 007
33 819 677
13 236 695
38 096 706 3 676 723
35 357 393
463 396
13 702 036
669 269
6,55 %
6,08 %
2,36 %
Financial bonds
SPAREBANKEN MØRE
KOMMUNALBANKEN
SPAREBANKEN PLUSS
CHRISTIANIA BANK
CHRISTIANIA BANK
NORDLANDSBANKEN
SANDNES SPAREBANK
RYGGE VAALER SPAREBANK
SANDNES SPAREBANK
23-06-05
17-03-06
06-10-05
30-05-05
28-04-06
10-03-05
13-06-06
11-10-06
06-03-06
5,65 %
-
1 000 000
10 000 000
7 250 000
3 000 000
2 000 000
19 292 000
1 450 000
1 000 000
1 840 000
819 400
10 365 000
7 055 971
2 515 000
1 595 000
19 001 115
1 391 035
948 500
1 765 872
2,37
2,52
2,17
2,12
2,47
2,07
2,55
2,83
2,35
0,47
1,24
0,74
0,41
1,27
0,19
1,38
1,67
1,14
98,89 %
103,66 %
98,37 %
99,14 %
96,82 %
99,61 %
96,41 %
95,15 %
97,30 %
0
447 356
0
0
0
0
0
0
0
988 910
10 366 500
7 131 680
2 974 230
1 936 320
19 217 533
1 398 003
951 490
1 790 265
988 910
10 813 856
7 131 680
2 974 230
1 936 320
19 217 533
1 398 003
951 490
1 790 265
169 510
1 500
75 709
459 230
341 320
216 418
6 968
2 990
24 393
0,17 %
1,86 %
1,23 %
0,51 %
0,33 %
3,30 %
0,24 %
0,16 %
0,31 %
Government notes
NORSKE STAT
16-03-05
-
23 000 000
22 874 720
1,64
0,21
99,67 %
0
22 923 180
22 923 180
48 460
3,94 %
Local government notes
NORD TRONDELAG FYLKESKOMMUNE
15-04-05
6,94 %
3 000 000
3 135 000
1,93
0,31
101,41 %
148 307
3 042 270
3 190 577
-92 730
0,55 %
Financial notes
BN BANK
NORDEA
STOREBRAND BANK
21-12-05
04-04-05
24-08-05
2,11 %
5,60 %
2,28 %
15 000 000
5 000 000
7 000 000
14 994 120
5 071 760
7 006 580
2,15
1,91
2,14
0,96
0,27
0,63
99,96 %
100,93 %
100,08 %
8 671
207 890
0
14 993 700
5 046 400
7 005 670
15 002 371
5 254 290
7 005 670
-420
-25 360
-910
2,58 %
0,90 %
1,20 %
6 508 490
548 452 700
26 728 994
575 181 694
BONDS
NOTES
TOTAL SHARE CAPITAL
542 020 674
6 508 490
3.02 %
2.52 %
1.05
*** With the exception of Hungarian government bonds all securities are traded on the Norwegian market. The Hungarian government bonds are traded in Budapest in Hungarian forents (HUF)
126.4580
554 961 190 6 432 026 95,40 %
26 728 994
4,60 %
581 690 184 6 432 026 100,00 %
37
Back to page one
SKAGEN Høyrente is a money market fund which only invests in money market instruments within finance and government. Up to 20 percent can be
invested in bonds with floating interest rates with a maturity over one year. The fund can have varying interest rate sensitivity, but this cannot exceed
0.33. The fund satisfies a BIS risk weighting of 20 percent because it does not invest in industry certificates.
The fund in the main consists of certificates in quality banks which have been thoroughly researched and analysed by the fund. The minimum subscription is 1 million NOK, and the fund is most suitable for institutions which want a secure return in the money market which is higher than the money
market interest rate and than the interest rate available in high interest bank accounts. There is no restriction on the number of withdrawals during the
year, and there are no transaction costs.
Fund start date
Return since start
14th March 2003
Net asset value
Subscription fee
Redemption fee
Management fee
Tax schemes
Benchmark
UCITS fund
Portfolio Manager
5.76 %
3.16 %
Not ranked
198 MNOK
29
0%
0%
0.25 % p.a.
1,000,000 NOK
None
Norway
No
Ross Porter
Years
Return on
investment
Benchmark
Net asset
value*
Number of
unitholders
2004
2003**
2,23 %
3,45 %
1,95 %
3,55 %
198
167
29
20
*MNOK
SKAGEN Høyrente Institusjon. Note 8. Securities portfolio as of 31st December 2004.
Security
Maturity
Coupon
Interest
adjustment
point
Face value
Cost price
15.02.05
14.02.05
16.03.05
16.03.05
16.03.05
25.01.05
28.02.05
16.03.05
26.01.05
06.01.05
10.02.05
28.02.05
10.01.05
16.03.05
16.03.05
18.02.05
10.05.07
16.03.05
14.03.05
16.03.05
11.02.05
14.03.05
11.01.05
8 000 000
5 000 000
5 000 000
5 000 000
5 000 000
4 000 000
5 000 000
5 000 000
5 000 000
10 000 000
5 000 000
5 000 000
5 000 000
6 000 000
5 000 000
5 000 000
5 000 000
8 000 000
5 000 000
8 000 000
5 000 000
10 000 000
10 000 000
8 004 328
5 007 000
4 975 000
5 000 000
5 017 500
4 000 720
5 004 850
5 000 500
5 003 950
10 000 000
5 000 000
5 006 125
4 997 250
6 010 200
5 003 500
5 006 500
5 014 500
8 000 000
5 004 500
8 017 432
5 003 000
10 014 240
9 997 500
2,04
2,03
2,11
2,14
2,11
2,08
2,04
2,11
2,10
2,00
2,03
2,06
2,11
2,11
2,10
2,07
2,12
2,42
2,06
2,17
2,07
2,08
2,01
Effective
Inerest
Interest
rate sensitivity**
Market value
Marketincl. accrued Unrealised Share of
value interest gain/loss
the fund
Market
price
Accrued
interest
0,19
0,19
0,02
0,25
0,22
0,21
0,26
0,11
0,22
0,25
0,09
0,14
0,11
0,16
0,11
0,04
0,06
0,11
0,06
0,13
0,14
0,23
100,09 %
100,08 %
100,33 %
100,53 %
100,40 %
100,37 %
100,03 %
100,29 %
100,60 %
99,99 %
100,01 %
100,13 %
100,23 %
100,27 %
100,16 %
100,13 %
100,45 %
100,21 %
100,12 %
100,32 %
100,17 %
100,12 %
99,99 %
23 102
14 247
5 244
4 896
5 156
17 792
10 089
4 792
22 275
50 644
15 512
9 867
24 975
6 160
4 833
13 318
16 504
8 333
5 454
8 427
15 903
11 200
36 500
8 007 040
5 003 900
5 016 450
5 026 750
5 019 900
4 014 680
5 001 600
5 014 750
5 030 100
9 999 000
5 000 550
5 006 300
5 011 750
6 016 260
5 007 800
5 006 750
5 022 650
8 017 200
5 006 000
8 025 920
5 008 700
10 012 400
9 999 400
8 030 142
5 018 147
5 021 694
5 031 646
5 025 056
4 032 472
5 011 689
5 019 542
5 052 375
10 049 644
5 016 062
5 016 167
5 036 725
6 022 420
5 012 633
5 020 068
5 039 154
8 025 533
5 011 454
8 034 347
5 024 603
10 023 600
10 035 900
2 712
-3 100
41 450
26 750
2 400
13 960
-3 250
14 250
26 150
-1 000
550
175
14 500
6 060
4 300
250
8 150
17 200
1 500
8 488
5 700
-1 840
1 900
4,02 %
2,51 %
2,52 %
2,52 %
2,52 %
2,02 %
2,51 %
2,51 %
2,53 %
5,04 %
2,51 %
2,51 %
2,52 %
3,02 %
2,51 %
2,52 %
2,52 %
4,02 %
2,51 %
4,03 %
2,52 %
5,02 %
5,03 %
Financial
BLAKER SPAREBANK
ASKIM SPAREBANK
BERG SPAREBANK
ETNE SPAREBANK
HØNEFOSS SPAREBANK
HJELMELAND SPAREBANK
HOLLA SPAREBANK
HOLLA SPAREBANK
KLEPP SPAREBANK
KRAGERØ SPAREBANK
KRAGERØ SPAREBANK
KVINNHERAD SPAREBANK
LARVIKBANKEN
LILLESTRØM SPAREBANK
NARVIK SPAREBANK
OPDAL SPAREBANK
PRIVATBANKEN
SOKNEDAL SPAREBANK
STRØMMEN SPAREBANK
SUNNDAL SPAREBANK
TOLGA OS SPAREBANK
NØTTERØ SPAREBANK
18-05-05
13-05-05
15-03-06
18-06-07
21-06-06
25-04-06
28-02-05
16-06-06
26-01-07
06-04-05
10-02-05
29-08-05
09-07-07
15-03-06
16-12-05
18-11-05
10-05-07
16-03-07
14-06-05
21-06-06
11-11-05
13-09-05
11-01-05
2,26 %
2,23 %
2,36 %
2,35 %
2,32 %
2,39 %
2,27 %
2,30 %
2,43 %
2,12 %
2,19 %
2,22 %
2,22 %
2,31 %
2,32 %
2,23 %
2,33 %
2,50 %
2,31 %
2,37 %
2,29 %
2,24 %
2,19 %
Local government
NORDTRØNDELAG FYLKESKOMMUNE
15-04-05
6,94 %
7 000 000
7 315 000
1,93
0,31
101,41 %
346 049
7 098 630
7 444 679
-216 370
3,73 %
Financial
DEN NORSKE BANK
FINANSBANKEN
NORDLANDSBANKEN
SPAREBANK KREDITT
AASEN SPAREBANK
SPAREBANKEN ØST
SPAREBANKEN SØR
STOREBRAND BANK
VOSS VEKSEL OG LANDMANDSBANK
15-07-05
03-05-05
10-03-05
15-03-05
02-12-05
22-03-05
03-03-05
24-08-05
14-02-05
5,85 %
2,29 %
6,95 %
1,80 %
2,28 %
2,20 %
1 000 000
400 000
5 100 000
10 000 000
9 000 000
10 000 000
7 000 000
3 000 000
5 000 000
977 700
396 360
5 063 066
10 314 930
9 001 332
10 412 500
6 975 234
3 000 555
5 000 000
2,00
2,30
2,07
2,06
2,28
1,90
1,89
2,14
2,03
0,53
0,33
0,19
0,21
0,91
0,24
0,18
0,68
0,12
98,94 %
99,23 %
99,61 %
100,78 %
100,00 %
101,09 %
99,98 %
100,08 %
100,02 %
0
0
0
171 493
16 375
540 767
104 597
80 581
42 192
989 400
396 940
5 080 314
10 078 500
9 000 090
10 109 500
6 998 740
3 002 430
5 000 900
989 400
396 940
5 080 314
10 249 993
9 016 465
10 650 267
7 103 337
3 083 011
5 043 092
11 700
580
17 248
-236 430
-1 242
-303 000
23 506
1 875
900
0,50 %
0,20 %
2,55 %
5,14 %
4,52 %
5,34 %
3,56 %
1,54 %
2,53 %
1 637 277
197 031 294
918 782
197 950 076
198 668 571
918 782
199 587 353
-513 978
99,54 %
0,46 %
100,00 %
NOTES
Total secutities portfolio
Disosable liquidity
TOTAL SHARE CAPITAL
197 545 272
1 637 277
2.11 %
1.86 %
0.20
All securities are traded on the Norwegian market
102.1623
-513 978
Back to page one
General notes
Note 1 : Accounting principles
Financial Instruments
All financial instruments, such as shares, bonds and certificates, are valued at fair value (market value).
Determination of fair value:
Securities listed in markets where trading had not closed are valued at market prices as of 30.12.2004 and 31.12.2004. Bonds and notes, for which there are no "marketmaker" prices, are at all times valued against the applicable yield curve. Unlisted equities are valued according to the latest trading price, value adjustments made by brokers and internal valuations.
Currency exchange rates:
Securities and bank deposits/overdrafts in foreign currency are valued at the prevailing exchange rate at the time of pricing 31.12.2004.
Treatment of transaction cost:
Transaction cost in the form of commission to brokers accrues at the time of the transaction.
Allocated for distribution to unit holders:
All distributions to unit holders in fixed income funds are treated as allocations of profits in accordance with the regulation for annual financial statements for securities
funds. Distributions from fixed income funds are entered by entering reinvestments as new units in the fund during the financial year.
Adjustment of acquisition cost:
For the equity funds, the average acquisition value has been used to arrive at the realised gain/loss on the sale of shares. For the fixed income funds, the FIFO principle
has been used to calculate realised gain/loss on sale.
Note 2 : Financial derivatives
The funds have not held financial derivatives during the year.
Note 3 : Financial market risk
The balance sheets in the annual financial statement for the funds reflect market value on the last stock market day of the year expressed in Norwegian kroner. Through investment in Norwegian and foreign businesses, the equity funds are exposed to share price and exchange risks. The fixed income funds are exposed to interest and credit risks.
Note 4 : Tax calculation
Tax costs are associated with withholding tax on foreign dividends as well as calculated tax on taxable income.
Gain/loss on realisation of equities in securities funds are not taxable/deductible.
Note 5 : Custodian cost
The funds are not charged custodian cost.
Note 6 : Velocity
Velocity is measured by the size of the trading volume adjusted by subscriptions and redemptions of shares. The velocity is calculated as the sum of all purchases and sales of
securities divided by 2, with a deduction of net subscriptions to the fund and then divided by the average net assets during the period. The velocity of the funds during 2004 was:
SKAGEN Vekst
SKAGEN Global
SKAGEN Kon Tiki
SKAGEN Avkastning
SKAGEN Høyrente
Note 7: Subscription fee equity funds
Subscription fee:
0.27
0.11
0.26
1.61
2.32
1.07
NOK 0 499,999
NOK 500,000 999,999
NOK 1,000.000 - 4.999,999
NOK 5,000.000 -
0.7 % of the subscribed amount
Redemption fee:
0.0 % of the redemption proceeds
0.0 percentage points of the above mentioned fees is credited the fund in the case of both subscription and redemption.
Notes to SKAGEN Global
Note 8. See page 27.
Note 9. Management fee
The management fee constitutes 1% of average daily net asset value in addition to the variable management
fee: 1/10 of the return above the Morgan Stanley Daily Net $ World Index expressed in Norwegian kroner.
Note 10. Equity reconciliation
Equity capital as of 1.1.2004
Issue of units
Redemption of units
Annual profit/loss
Unit capital
1 269 469
834 623
-494 480
1 609 613
Premium
2 110 809
2 454 388
-1 427 071
3 138 126
Retained earnings
1 026 116
1 184 432
2 210 548
Total
4 406 396
3 289 011
-1 921 551
1 184 432
6 958 288
Notes to SKAGEN Vekst
The management fee constitutes 1% of average daily net asset value in addition to the variable management
fee: 1/10 of the return above 6 %.
Unit capital
Premium
Retained earnings
Total
795 174
1 635 587
1 823 714
4 254 475
Issue of units
345 094
1 746 825
2 091 919
Redemption of units
-329 954
-1 666 108
-1 996 062
Annual profit/loss
1 361 166
1 361 166
810 314
1 716 305
3 184 880
5 711 498
Note 11. Risk amount
RISK amount determined for
1994: -0.35
1995: -0.37
1996: 3.28
1997: -0.50
1998: 1.73
1999: 1.26
RISK amount determined for 2000:
3.62
3.77
0.51
2.03
3.10
38
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Notes to SKAGEN Kon-Tiki
The management fee constitutes 2.5% of average daily net asset value in addition to the variable management
fee: 1/10 of the return above/under the Morgan Stanley Capital International Daily Total Return Net Dividends $
Emerging Markets Index expressed in Norwegian kroner. It is, however, limited upwards and downwards in such
a way that the total management fee does not exceed 4% p.a. and cannot be lower than 1% p.a. of the average
net asset value.
From 01.01.2004 the benchmark index for the fund was changed from the Morgan Stanley Daily Net $ World
Index to the Morgan Stanley Capital International Daily Total Return Net Dividends $ Emerging Markets Index.
Unit capital
Premium
Retained earnings
Total
1 219 279
144 532
365 302
1 729 111
Issue of units
1 635 761
1 032 104
2 667 864
Redemption of units
-1 143 382
-663 360
-1 806 743
Annual profit/loss
636 434
636 434
1 711 656
513 275
1 001 736
3 226 667
Note 11. Risk amounts
RISK amount determined for 01.01.2003: 3.26
RISK amount determined for 01.01.2004 1.80
Note 12. Taxes
Interest
Dividend
Fee income
Currency exchange gain/loss
Total taxable cost
2004
335 498
69 048 046
-781
8 622 393
78 005 156
2003
2 045 985
19 121 915
2 388 178
20 659 925
44 216 004
Management fee
Total deductible cost
97 248 181
97 248 181
24 338 372
24 338 372
Net taxable income
-19 243 026
19 877 631
Change in temporary differences (B)
0
10 447 717
Basis for calculation of taxes payable (A)
0
30 325 348
4 065 408
0
0
4 065 408
8 491 098
-2 925 361
173 087
5 738 824
Operating statement tax cost
Tax payable (A x 28%)
Change in deferred taxes (B x 28%)
Insufficient tax provisions 2002
Total tax cost
Taxes payable are part of other debt.
*For 2004 only tax at source is included.
Notes to SKAGEN Avkastning
The management fee constitutes 0.5% of average daily net asset value. No subscription fee is charged.
Share capital
Premium
Retained earnings
Total
113 283
20 626
1 362
135 271
Issue of units
521 144
110 501
631 645
Redemption of units
-174 597
-40 903
-215 500
Allocated for distribution to participants
-25 179
-25 179
Correction of prior years’ provisions
for distributions to shareholders
59
59
Annual profit/loss
30 215
30 215
459 830
90 224
6 457
556 512
Notes to SKAGEN Høyrente
Share capital
Premium
Retained earnings
Total
621 516
6 006
372
627 894
Issue of units
3 003 604
57 946
3 061 549
Redemption of units
-2 480 441
-52 268
-2 532 709
-23 655
-23 655
Correction of prior years’ provisions
for distributions to shareholders
-60
-60
Annual profit/loss
23 072
23 072
1 144 680
11 684
-271
1 156 091
Notes to SKAGEN Høyrente Institusjon
Share capital
Premium
Retained earnings
Total
161 733
-37
-15
161 680
Issue of units
164 439
1 013
165 452
Redemption of units
-130 806
-954
-131 760
-4 713
-4 713
Annual profit/loss
4 214
4 214
Equity capital as of31.12.2004
195 365
23
-514
194 874
39
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PricewaterhouseCoopers AS
Forus Atrium
Postboks 8017
N-4068 Stavanger
Telephone +47 02316
Auditor’s report for 2004
We have audited the annual financial statements of the mutual funds as of December 31, 2004, showing the following results:
SKAGEN Vekst
SKAGEN Global
SKAGEN Kon-Tiki
SKAGEN Avkastning
SKAGEN Høyrente
NOK 1 361 166 126
NOK 1 184 431 932
NOK 636 433 791
NOK 30 214 706
NOK 23 072 050
NOK
4 214 434
We have also audited the information in the directors' report concerning the financial statements, the going concern
assumption, and the proposal for the allocation of the profit. The financial statements comprise the balance sheet, the
statements of income and cash flows and the accompanying notes. These financial statements are the responsibility of the
Fund Management Company’s Board of Directors and Managing Director. Our responsibility is to express an opinion on
these financial statements and on other information according to the requirements of the Norwegian Act on Auditing and
Auditors.
We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and auditing standards and
practices generally accepted in Norway. Those standards and practices require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. To the extent required by law and auditing standards an audit also comprises a review of the
management of the mutual funds financial affairs and accounting and internal control systems. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion,
x the financial statements have been prepared in accordance with the law and regulations for mutual funds and present the
financial position of the mutual funds as of December 31, 2004, and the results of operations and cash flows for the year
then ended, in accordance with accounting standards, principles and practices generally accepted in Norway
x the management has fulfilled its duty to produce a proper and clearly set out registration and documentation of
accounting information as required by law and accounting standards, principles and practices generally accepted in
Norway
x the information given in the directors' report concerning the financial statements, the going concern assumption, and the
proposal for the allocation of the profit in each mutual fund is consistent with the financial statements and comply with
the law and regulations.
Stavanger, January 24, 2005
PricewaterhouseCoopers AS
Gunnar Slettebø
State Authorised Public Accountant (Norway)
Note: This translation from Norwegian has been prepared for information purposes only.
Offices: Oslo Arendal Bergen Drammen Fredrikstad Førde Hamar Kristiansand Mandal Mo i Rana Stavanger Tromsø Trondheim Tønsberg Ålesund
PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization
Members of Den norske Revisorforening | Foretaksregisteret: NO 987 009 713
www.pwc.no
40
Back to page one
Our employees
Anne S. Langhelle
Lise Holm Jacobsen
Stein Haben
Jan Kjetil Nystrøm
Samantha Dean Skurtveit
communication manager
investment director
Nicolai Martin Stærfeldt
asset manager
financial director
Asbjørn Vagle
asset manager
Kristian Falnes
Synnøve Fjeld
accounting
Harald Espedal
managing director
Ross Porter
Signe Vaula
Beate Bredesen
portfolio manager
Lisen Dybdahl
Ellen K. Ersland
Åge K. Westbø
asset manager
Helge B. Rutgersen
board secretary
head of asset managment
portfolio manager
portfolio manager
deputy managing director
Trond Svela
May Silje Bjørkhaug
Helge Braaten
Mette Helgevold Årstad
Trond Østrådt
IT manager
back office employee
Marianne Gillies
Eva Marie Sollie
Sølvi Marie Tonning
Kristen Kvame
Leiv Erik Nes
market analyst
customer host
asset manager
Synnøve Hellestø Ramslie
asset manager
Hans Petter Hammernes
asset manager, Trondheim
Tom Gamlem
asset manager, Trondheim
accounting
customer host
asset manager
Anne Grete Løvås
Eli G. Anda
Berly Sleire
Filip Weintraub
Sølve Rasmussen
Christian Bethuelsen
Torgeir Høien
Jonas A. Eriksson
Truls Langballe
Anne Ludvigsen Rønning
asset manager
portfolio manager
Janniken Støldal
Pål Kjeldsen
Arild Rødal
asset manager, Ålesund
Johan Frisvold
asset manager, Ålesund
human resources
IT consultant
Richard Haugland
asset manager, Bergen
Dag Straume
asset manager, Bergen
asset manager
portfolio manager
asset manager, Oslo
Fredrik Astrup
asset manager, Oslo
accounting
asset manager
Stockholm
Stian Ikdal
project assistant
Marit Østhus
financial assistant
Per Wennberg
MD, Stockholm
Tore Bang
manager pensions, Oslo
asset manager, Oslo
Henning Aas
Vibeke Monsen Langaard
asset manager, Oslo
asset manager, Oslo
41
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SKAGEN Fondene opens
office in Sweden
In order to take care of the increasing interest for
our funds, also across borders, SKAGEN
Fondene opened a branch office in Stockholm on
the 2nd August 2004. The objective is to further
strengthen relationships with our existing clients
in Sweden and to actively work towards securing
potential new clients. This is in line with our fundamental belief in staying close to our markets
ment of our branch office in Stockholm is the first step along the
way. Our initial objective is to achieve 1% market share of equity
funds in Sweden by 2007. This may not sound so ambitious, but
based on the fact that the Swedish equity fund market is much
larger than the Norwegian one, this represents good business.”
Over 30,000 client relationships
Net subscriptions from Swedish clients in 2004 was 375 million
kroner. Through the Swedish pension system, PPM, we have over
30,000 client relationships. The total capital under management
in Sweden is almost 600 million kroner.
The office in Sweden is managed by Per Wennberg, who is a
graduate of King's College, University of London. He has previously worked as mutual funds advisor and stockbroker for ABB
Fondförvaltning/ABB Investment and Enskilda Securities respectively.
The office in Sweden is managed by Per Wennberg, who is a graduate of King's College at the University of London. He has previously worked as mutual funds advisor and stockbroker for ABB
Fondförvaltning/ABB Investment and Enskilda Securities respectively
Huge potential
With regards share of market objectives in perhaps the toughest
funds market in the world, Sweden, managing director in
SKAGEN Fondene, Harald Espedal, has the following to say:
“Our goal is to become a Nordic fund provider, and the establish-
Jonas A. Eriksson (left) and Per Wennberg.
Swede Filip Weintraub receives a multitude of Swedish stars
Portfolio manager for SKAGEN Global, Filip
Weintraub, has received in 2004 - and
previous years as well - various accolades in
the Swedish press for his brilliant management
of the fund. He can now boast the following titles:
★ Späroversikt's Global Manager
of the Year
★ Dagens Industri and Morningstar's
Star Manager of the Year
★ Privata Affärer's Foreign Fund
of the Year
SKAGEN Fondene with 23 partner banks
SKAGEN Fondene has now signed distribution agreements with in
total 23 independent banks throughout the whole country. These
are banks which share our philosophy regarding closeness to the
client, service and competent follow-up – based on whatever is best
for the individual client.
Our partner banks have a wide coverage in their marketing regions.
They also have a long tradition for strong and long-term relationships with their clients.
• Flekkefjord Sparebank
• Spareskillingsbanken
• Finanshuset Ringerike
(previously Hønefoss Kapital)
• Voss Veksel- og Landmandsbank
• Skudenes & Aakra Sparebank
• Haugesund Sparebank
• Kvinnherad Sparebank
•
•
•
•
•
•
•
•
The main role of the banks vis á vis SKAGEN Fondene is two-fold.
Firstly the banks will follow up and provide service to existing
SKAGEN Fondene clients. Secondly they will provide information
and sell fund units to potential new clients.
For information about and/or to purchase or redeem funds
managed by SKAGEN Fondene you can contact the following
partner banks:
Sauda Sparebank
Sparebanken Volda Ørsta
Sparebanken Bien
Sparebanken Hardanger
Etne Sparebank
Romsdals Fellesbank
Lillesands Sparebank
Harstad Sparebank
•
•
•
•
•
•
•
•
Narvik Sparebank
Fana Sparebank
Sparebanken Sogn og Fjordane
Sparebanken Sør
Luster Sparebank
Sparebanken Rana
Klæbu Sparebank
Hegra Sparebank
42
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History Highlights
Number of clients
80 000
70 000
1993
Stavanger Fondsforvaltning AS receives approval from
the Financial Supervisory Authority of Norway to
manage securities funds
• Equity fund SKAGEN Vekst started 1st December
• 448 clients
• Assets under management: 20 MNOK
•
1994
•
•
•
•
•
•
Bond fund SKAGEN Avkastning launched
14th September
SKAGEN Vekst as best AMS-fund of the year out of
22 funds
Return SKAGEN Vekst: 19.1 %.
Oslo Stock Exchange Benchmark Index: 7.1 %
Return SKAGEN Avkastning: 5.7 %.
Bond index BRIX: 5.5 %
2,438 clients
Assets under management: 130 MNOK
1995
• SKAGEN Avkastning as best bond fund of the year
• SKAGEN Vekst number 5 of in total 25 AMS-funds
• Return SKAGEN Vekst: 14.7 %. Oslo Stock Exchange
Benchmark Index: 11.6 %
• Return SKAGEN Avkastning: 16.1 %. BRIX: 14.1 %
• 4,087 clients
1996
• SKAGEN Avkastning best bond fund of the year
• SKAGEN Vekst number 8 of in total 28 AMS-funds
• 6,527 clients
1997
• SKAGEN Vekst voted as best AMS-fund by the media
as a result of good returns and low risk
• SKAGEN Global launched 8th August
• Office established in Ålesund
Benchmark Index 31.6 %
• Return SKAGEN Global: -3.1 %. Morgan Stanley
World Index (MSWI): -8.2 %
• 12,160 clients
• Assets under management: one billion NOK
1998
• SKAGEN Vekst once again best AMS-fund in the market
• SKAGEN Global becomes best fund for investors outside of Norway
• Money market fund SKAGEN Høyrente launched
18th September
• Office established in Oslo
• Return SKAGEN Vekst: -6.5 %. Oslo Stock Exchange
Benchmark Index -26.7 %
• Return SKAGEN Global: 47.2 %. MSWI 26.5 %
• 21,411 clients
• Assets under management: 1,171 MNOK
1999
• SKAGEN Vekst 6th best AMS-fund
• SKAGEN Global number one in its class
• SKAGEN Høyrente number seven amongst money
market funds
• SKAGEN Fondene third largest in terms of new
subscriptions in Norway
• Return SKAGEN Global: 113.4 %. MSWI: 31.7 %
• Return SKAGEN Høyrente: 6.6 %.
State Bond Index: 6.3 %
• 39,074 clients
2000
Benchmark Index: -1.7 %
• Return SKAGEN Global: -4.7 %. MSWI: -5.1 %
• 49,018 clients
2001
• Return SKAGEN Avkastning: 7.5 %.
• Office established in Bergen and Trondheim
• 51,260 clients
• Assets under management: 5 billion NOK
2002
• *Return SKAGEN Kon-Tiki: -29.8 %. MSWI: -35.5 %
• Return SKAGEN Avkastning; 6.7 %. BRIX: 8.1 %
• SKAGEN Kon-Tiki launched 5th April
• Our funds approved for sales in Sweden and Denmark
• 51,925 clients
*Return from 5th April.
2003
• Return SKAGEN Global: 62.8 %. MSWI: 28.0 %
• Return SKAGEN Kon-Tiki: 102.9 %. MSWI: 28.0 %
• Return SKAGEN Avkastning: 6.2 %. ST4X: 11.1%
• SKAGEN Høyrente Institusjon launched 14th March
• All of our three equity funds receive A-rating from
Standard & Poor’s
• 53,911 clients
2004
• Return SKAGEN Vekst: 31.8%, Oslo Stock Exchange
Benchmark Index: 38.5%
• Return SKAGEN Global: 24.6%, MSWI: 4.5%
• Return SKAGEN Kon-Tiki: 32.4%, MSEMWI: 14.3%
• SKAGEN Avkastning: 5.7%, ST4X: 5.5%
• SKAGEN Høyrente: 2.1%, State Bond Index 0.5: 2.2%
• SKAGEN Høyrente Institusjon: 2.2%, State Bond
Index 0.25: 2.0%
• SKAGEN Global and SKAGEN Kon-Tiki upgraded
to AA rating by Standard & Poor's
• We are second largest equity fund manager in Norway
63,049 clients
• Office opened in Stockholm
60 000
50 000
40 000
30 000
20 000
10 000
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Assets under management (MNOK)
20 000
17 500
15 000
12 500
10 000
7 500
5 000
2 500
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Number of employees
60
50
40
30
20
10
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Market Share 1995 – 2004
18
16
14
12
10
8
6
4
2
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Total
Equity funds
Fixed income funds
43
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SKAGEN Fondene's business concept and philosophy
SKAGEN Fondene is an integrated management company with the overall goal
of creating for clients the highest possible returns at the lowest possible risk – in
addition to providing the best possible communication, service and competent
follow up. By having portfolio management, client communication and client
advising in the same organisation we ensure that the interests of the clients are
taken care of in the best possible way.
SKAGEN Fondene offers clients six funds, making it easy to choose
– three equity funds and three fixed income funds. With this clear
and simple product range we are able to meet the investment product demands of all our clients.
• We have the freedom to choose what is best for
our clients
The advice we give to our clients will be based on each individual’s
risk profile and time horizon for his/her investment. Thanks to
our broad investment mandate we ensure that our clients’ money
is invested where it can earn the highest returns at the lowest
possible risk. Based on the client’s requirements, our clear goal is
to provide correct advice which results in a profitable investment
for the client, and therefore for us.
• We hate to lose money
We started with the management of our own assets: We then assumed responsibility for ensuring the best possible return on the
savings of friends and family. By the time the public was invited to
participate, we had long since developed risk aversion. We are used
to being able to look our clients in the eyes – and we intend to be
able to do that in the future as well.
It is the following unique aspects of the organisation which enable
SKAGEN Fondene to pursue its distinctive investment style:
• The management company behind SKAGEN Fondene is
privately owned by five key employees and one board member
We are free to focus on the long-term management of clients’ money.
We are not distracted by short-term requirements, for example the
next quarter results. This means than we can focus 100 percent on
achieving the best long-term management of client assets.
• SKAGEN Fondene focuses on what we do best
Our strength lies in long-term value based investments and active
investment philosophy. We only have the one investment style in
our organisation. We do not take part in trading activities,”corporate
finance”, property management or other financial activities.
• SKAGEN Fondene does not follow fashions and fads
In spite of the popularity of sector funds and index funds we have
never offered them. We believe that the best long-term management results come from selecting equities within a broad mandate,
where the focus is on the pricing of companies rather than their
index value.
• SKAGEN Fondene is only involved in securities funds
Securities funds are a practical way of managing capital. All unit
holders in the securities funds are treated the same. Integrity,
equality, independence and variable management fees mean that
we have a unique shared interest with the unit holder.
• The better the returns for the client, the more
we earn
Our focus on highest possible return at lowest possible risk means
that the client receives the most optimal product based on his/her
time horizon and risk profile. In line with this our remuneration is
based on how well we do our job.
With SKAGEN Vekst, SKAGEN Global and SKAGEN Kon-Tiki
a part of our management fee is linked to the return we manage to
achieve for our clients. This means that the unit holders and the
management company have a shared goal of highest possible
returns. We would nevertheless like to point out that the goal of
highest possible returns will not tempt us to assume higher risk.
• We find undervalued, high quality companies
SKAGEN Fondene focuses on companies. We spread risk over a
large number of companies in different parts of the world and in
various industries. In comparison to many other investment
managers who invest in a company because it is represented in an
index, index representation is not an investment criteria for
SKAGEN Fondene. On the contrary, we exploit the distortions in
company valuations which index management implies to invest
in low valued companies which, over time, will provide a high
fundamental return combined with low risk.
Our investment strategy is oriented towards value. Our value creation will come primarily from investment in undervalued companies with high quality. The companies’ growth and earnings,
combined with a reasonable starting point, as well as the management’s ability to create and willingness to share added value, will
primarily provide investment results in the long term.
• Thorough analysis reduces risk
We spend a lot of time on thorough research of each individual
company and of the main trends in Norwegian and international
business. This is necessary in order to reduce risk. We put more
faith in our own analysts' judgement than in others. We strive to
create excess return by picking up on and weighing what other
investors can not or will not consider. SKAGEN Fondene also
carefully considers political and other risk elements, is attentive to
sector imbalances and too narrow geographic spreads and closely
watches the companies’ debt exposure.
• Own-account trading and business ethics
Employee trading in the funds is not allowed if it conflicts with
the funds’ investments. Investments in SKAGEN Vekst, SKAGEN
Global, SKAGEN Kon-Tiki and SKAGEN Avkastning can not be
redeemed until at least one week after the subscription date for the
entire amount in the relevant fund. There is no lock-in period for
SKAGEN Høyrente. The managing director can suspend access to
own-account trading in the funds.
Other securities trading is not allowed if it conflicts with the interests of the funds or existing laws and regulations. Securities outside
of fund units can only be acquired with prior approval of the
managing director, and can not be traded until at least one year
after acquisition. Employees with insight in portfolio management
are subject to harsher rules regarding own-account trading. These
restrictions are also applicable for the employees’ immediate family
and associates.
• Ethical norms and guidelines for placement of
our unit holders’ assets
SKAGEN Fondene’s management activities will avoid economic
risk by not investing in companies with activities which can result
in considerable liabilities and losses through damage to health,
changes in law or environmental encroachment. SKAGEN
Fondene will not accept investments in companies who willingly
and knowingly harm the local population, environment or elected
government. These factors are evaluated before we go into a new
company. A company’s intentions are more important than its history in such an evaluation.
SKAGEN Fondene will only take objective and substantiated
facts into consideration, and will not react to mood swings or
rumours.
If it should become apparent that SKAGEN Fondene has invested
in companies which, in spite of its declared intentions, break our
ethical regulations, disposal of our equity interest will be evaluated.
Any disposition will be made in a way which conserves value for
our unit holders.
From the top floor of Torgterrassen in
Stavanger we keep a watchful eye over
the Norwegian and international
equity markets – 24 hours a day.
SKAGEN Fondene
Telephone Customer Service +47 04001
E-mail customerservice@skagenfondene.no
Fax +47 51 86 37 00
Stavanger
Skagen 3, Torgterrassen (5th floor),
P.O. Box 160, 4001 Stavanger
Ålesund
Myrabakken Næringssenter, 6010 Ålesund
Oslo
Klingenberggt. 5, 0161 Oslo
Bergen
Foreningsgaten 3, 5015 Bergen
Trondheim
Kongensgate 8, Mercursenteret, 7011 Trondheim
Stockholm
Kungsgatan 72A, 111 22 Stockholm, Sweden
NB! Employees at our branch offices
outside of Stavanger are often out visiting
customers. This means that the offices are
not always manned. We kindly ask you
therefore to arrange meetings in advance.
44

Annual Report 2004 PDF 4,38 MB

Transcription

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