Total return

Total return on the Fund’s net assets in 2010 was 10.3 percent before commission costs and operating expenses. Return after expenses was 10.2 percent, equal to a net investment gain of SEK 20.5 billion. For 2009, return after expenses was 20.2 percent.

For the listed portion of the portfolio, which makes up 92.2 percent of the Fund’s net assets, return for 2010 was 10.7 percent before expenses. Alternative investments make up the remaining 7.8 percent of the portfolio and returned 19.3 percent for the same period.

Equities

Equity exposure at 31 December 2010 was equal to 60.3 percent of the Fund’s net assets. Return on the Fund’s equity investments was 14.6 percent before expenses, equal to a net investment gain of SEK 17.4 billion for 2010.

Fixed income

Exposure to fixed income was 32.5 percent, or SEK 71.1 billion of the total portfolio at year-end 2010. Return on the Fund’s fixed income investments was 4.8 percent, equal to a net investment gain of SEK 3.4 billion before expenses.

Foreign exchange

At year-end 2010 Första AP-fonden’s capital was invested in 40 different currencies, including the Swedish krona. Foreign exchange movements can contribute to positive, or negative, returns in various ways. Through the use of currency derivatives it is possible to wholly or partly protect the investments from the effects of exchange rate fluctuations (for more information visit www.ap1.se). The Fund’s open currency exposure, which consists mainly of USD, GBP and emerging market currencies, was 24,0 percent at 31 December 2010. Due to powerful appreciation of the Swedish krona during the year, the open currency exposure made a negative contribution of 1.1 percent to investment earnings.

Foreign exchange return in 2010

Currency	Return, %
Open currency position	-1.1
of which, developed countries	-1.0
of which, emerging markets	-0.1
Translation to SEK	-3.4
Currency hedges	2.4

Alternative investments

The Fund’s alternative investments consist mainly of holdings in unlisted real estate equities and private equity funds, but also include unlisted assets, hedge funds and opportunity investments. In 2010 this asset class returned 19.3 percent, equal to an investment gain of SEK 2.3 billion before expenses. Two thirds of the investment earnings come from the Fund’s real estate investments.

Five-year overview

At 31 December 2010 the Fund had net assets under management of SEK 218.8 billion. At year-end 2000 the Fund was assigned assets worth SEK 134.0 billion. The net contribution for the period from 2001 to 2010 was SEK 13.0 billion, including a total negative contribution of SEK 7.9 billion in the past two years (see Note 15). The total capital inflow thus amounts to SEK 147.0 billion.

Over the past five-year period from 2006 to 2010, the Fund’s investments have yielded an annualized return of 3.5 percent after expenses. Despite the positive result for 2010, the Fund did not meet the target of an annualized return of 5.5 percent for the past five years.

From the Fund’s inception in 2001 until year-end 2010, average annualized return was 3.9 percent after expenses. Cumulative investment income for the same period was SEK 71.8 billion.

Net investment income in 2010¹

		Contribution
	Investment gain, %	SEK bn	%-points
Equities, Sweden	27.6	8.2	4.1
Equities, North America, Europe, Pacific²	10.5	6.7	3.3
Equities, emerging markets	12.4	2.5	1.3
Fixed income	4.8	3.4	1.7
Asset allocation, cash and foreign exchange	-1.2	-2.4	-1.2
Total listed assets
Alternative investments	19.3	2.3	1.1
Total	10.3	20.7	10.3

¹Before expenses
²According to the definition used by the Fund, the Pacific region consists of Australia, New Zealand, Singapore, Hong Kong and Japan. In certain mandates, Japan is reported separately.

Portfolio return, % ¹

	2010	2009	2008	2007	2006	Annual return
Equities, Swedish	27.6	50.3	-40.0	-3.8	24.9	6.7
Equities, North America, Europe, Pacific³	10.5	24.1	-39.9	3.8	13.7	-0.6
Equities emerging markets	12.4	61.1	-41.5	30.6	12.5	9.2
Total equities	14.6	33.5	-40.1	4.7	16.1	2.2
Fixed income²	4.8	7.6	8.3	4.2	1.3	5.2
Total listed assets	10.7	21.4	-22.4	4.4	9.2	3.5
Alternative investments	19.3	-3.4	-3.5	18.6	38.4	12.8
Total return¹	10.3	20.4	-21.7	4.8	9.8	3.6

¹Before expenses.
²Currency-hedged return before expenses.
³According to the definition used by the Fund, the Pacific region consists of Australia, New Zealand, Singapore, Hong Kong and Japan. In certain mandates, Japan is reported separately.

Return by asset class, 2010

¹Currency-hedged return with the exception of equities in emerging markets, where return is reported without hedging due to a lack of hedge opportunities.

Total return 2006-2010

Annualized return by asset class 2006–2010

¹Currency hedged-return with the exception of equities in emerging markets, where return is reported without hedging due to a lack of hedge opportunities.