Operations and results in 2007Fund performance

Net assets and earnings

At year-end 2007 the Fund had net assets under management of SEK 218,791 million (207,105), equal to an increase of SEK 11,686 million during the year.

The change is attributable to the Fund's net investment income of SEK 9,667 million (18,166) and net capital inflows within the pension system. These flows consisted partly of net pension contributions and disbursements of SEK 1,191 million and partly of costs for administration of the pension system which were charged to the Fund in an amount of SEK 200 million.

Internal equity management is divided between two mandates, one Swedish and one European. The goal of this management is to outperform index through a combination of stock selection within sectors and allocation between sectors. The equities unit consists of sector analysts with clearly defined management responsibility and specialized equity traders.

Added to this is SEK 1,028 million in assets transferred from Första AP-fonden's Liquidation Fund and AP4's Special Management Fund, both of which manage unlisted securities that must be liquidated in accordance with the current investment rules. The remaining assets in Första AP-fonden's Liquidation Fund were liquidated in the autumn of 2007.

Operating income

Operating income for the year reached SEK 9,831 million (18,319), of which realized and unrealized valued gains accounted for SEK 3,110 million (13,892). The majority of the Fund's assets are listed, which means that they are traded on an active market at quoted prices that represent actual and regularly occurring market transactions.

For close to 4% of the Fund's assets, mainly unlisted equities, there were no quoted market prices to available at year-end. For these, the Fund has instead used generally accepted methodologies for estimating fair market value at that time.

Of the realized and unrealized value losses/gains excluding foreign exchange effects, SEK 727 million (-1,399) was attributable to fixed income securities and SEK 3,109 million (18,562) to equities.

Net investment income for listed equities was charged with operating expenses of SEK 28 million (21) in the form of performance-based fees for external management. These expenses are recognized directly in net investment income in accordance with the accounting polices applied by the Fund.

Net investment income for unlisted equities totalled SEK 493 million (986), of which SEK 464 million (470) consisted of unrealized value gains.

Investments in derivatives gave rise to SEK -388 million (363) in realized and unrealized value gains. Net realized and unrealized foreign exchange effects, a result of the Fund's decision to maintain currency exposure, amounted to SEK -338 million (-3,634).

Net interest income for the full year 2007 was SEK 2,914 million (1,588). Net interest income also includes income from the Fund's securities lending, which amounted to SEK 81 million (50) for the full year 2007.

In addition, operating income was charged with fixed commission costs relating to fees for external management and custody services. These costs amounted to SEK 153 million (132) in 2007.

Operating expenses

Operating expenses totalled SEK 164 million (153). Measured in relation to the average value of net assets, this represents an annual expense ratio of 0.08% (0.08%). Including commission costs, the Fund's expense ratio is 0.15% (0.15%).

Development of net assets (including a net inflow of SEK 20.3 bn to the Fund in 2001-2007)

• Fixed-income
• Alternative investments
• Equities

Operating expenses

• Personnel costs
• Other operating expenses

Invesment income and net inflow

• Investment income
• Net inflow