The return on the Government Pension Fund – Global was 7.9 per cent measured in international currency. In 2006, it was 10 years since the Ministry of Finance made the first transfer to what was then called the Government Petroleum Fund. Starting with capital of close to NOK 2 billion, the Fund has increased to NOK 1 784 billion at end-2006.  The Fund’s average annual real return, after management costs is close to 4.6 per cent.

The return on the Pension Fund was 0.15 percentage point higher than the return on the benchmark portfolio defined by the Ministry of Finance. This is the ninth consecutive year that NBIM has outperformed the benchmark since equities were included in the portfolio in 1998. The average annual excess return has been 0.48 per cent, equivalent to close to NOK 29 billion in total during this period.

For Norges Bank’s foreign exchange reserves, with a long time horizon and with a portfolio consisting of both equities and bonds, the return was 7.3 per cent in 2006. The return on the Government Petroleum Insurance Fund was 2.2 per cent. This Fund is only invested in fixed income instruments.

The total market value of the portfolios managed by Norges Bank Investment Management was NOK 2 047 billion at end-2006, of which long-term foreign exchange reserves accounted for NOK 225 billion and the Petroleum Insurance Fund for NOK 15 billion.

During 2006, NBIM has intensified its corporate governance activities. NBIM has voted on more than 26 000 items in close to 3 000 companies and the activity has been expanded to include, for example working in networks with other investors, direct contact with companies and expressing viewpoints and attitudes in various fora. In 2006, NBIM has developed strategies that set out how corporate governance shall be prioritised and conducted over the next few years. There are four areas of priority concerning fundamental ownership rights. Priority will also be given to the following two areas for future social and environmental sustainability: Children’s rights within the value chain of multinationals, and companies’ actions in relation to national and supranational authorities in questions relating to long-term environmental challenges.

In 2006, Norges Bank’s Executive Board appointed an advisory council of internationally recognised experts in order to strengthen the Board’s supervision of investment management. The four members of the council are: Alan Hodson, former Global Head of Equities in UBS Investment Bank, Jean Frijns, former CEO of ABP Investments, Kenneth G. Lay, Vice President and Treasurer of the World Bank and Tony Watson, former CEO of Hermes Asset Management.

The Annual Report is published on www.nbim.no.