Please note that the text below may differ from the actual presentation.

Norges Bank manages the Government Pension Fund Global (GPFG) with the objective of achieving the highest possible return over time with an acceptable risk. The Executive Board is satisfied that the return both in 2017 and over time has been good, and higher than the return on the benchmark index set by the Ministry of Finance.

It is important to adhere to this investment objective. Limitations and mandates that disregard the trade-off between return and risk will limit the fund's potential to achieve solid performance over time.

The key measures that are decisive for the fund's long-term performance have been set by the Ministry of Finance and endorsed by the Storting. For its part, Norges Bank's investment management has evolved as the fund has grown and in line with the mandate from its owner. Norges Bank pursues a variety of investment management strategies. These strategies can be grouped into fund allocation, security selection and asset management. The strategies complement each other. Not all strategies are expected to yield excess returns at all times. The aim is for them in the aggregate and over time to produce excess returns.

In 2017, the return measured in terms of the fund's currency basket was 13.7 percent before management costs. The return was all of 0.7 percentage point higher than on the benchmark index. Over the entire 20-year period beginning in 1998, the annual return on the fund measured in the same way has been 6.1 percent, or 0.3 percentage point higher than on the benchmark index.

In recent years, the fund's management costs have been 0.06 percent of the value of the fund. The fund is large, and even though management costs account for a small share of the fund's value, the amounts in NOK terms are substantial.

Norges Bank aims for the highest possible return after costs. The fund shall be responsibly and effectively managed within an adequate control and risk framework. The Executive Board's three-year strategic plan describes how Norges Bank seeks to attain this objective.

The strategic plan for 2017-2019 envisages increasing the share of externally managed emerging market and small cap equities. This will result in somewhat higher management costs, but so far, the fund's income has been shown to increase more. The strategy also includes a needed further development of the fund's investment platform. A new and more secure model for the provision of IT services will entail higher costs in the short term, but more secure and effective management of the fund over time.

Norges Bank will be a global leader in responsible investment, which is an integral part of fund management and includes the exercise of ownership rights and ethics-based exclusions. This work is described in the annual report on the management of the Government Pension Fund Global and in a separate publication on responsible investment.

In its management of the fund, Norges Bank has both a right and a duty to provide advice on the most important choices facing the management of the fund. This is an important part of Norges Bank's role as manager, and this year's white paper on the GPFG cites advice that the Executive Board gave the Ministry of Finance through 2017

In last year's white paper, the Ministry of Finance envisaged increasing the equity allocation in the benchmark index from 62.5 to 70 percent. A higher equity allocation was in line with advice from Norges Bank, among others. The Storting endorsed the change and in collaboration with Norges Bank, the Ministry has adopted a plan for phasing in the higher equity allocation.

Broad-based equity investing enables the fund to benefit from worldwide economic growth and wealth creation. Based on historical experience, it can be assumed that equities will make substantial contributions to returns over time. At the same time, we must be prepared to deal with volatility in the fund's value in the coming years.