Half-year report Second Swedish National Pension Fund/AP2
January 1st - June 30th 2002
Financial uncertainty demands a long-term and focused approach
The return on the Fund's invested assets for the six months ending June
30th, adjusted for inflow, amounted to -9.3%, in line with the Fund's
reference index. Combined pension assets under the Fund's management
amounted to SEK 124.3 billion at the close of this period. At the start
of the year, the worth of these assets was estimated at SEK 133.5
billion. This decline in value is largely unrealised. Value growth in
the various classes of asset varies sharply, reflecting the development
on global capital markets. Fixed-income instruments have demonstrated
the best overall performance. The Fund has surpassed its reference index
with respect to foreign equities, hedged as well as non-hedged. The
performance of the Swedish equities portfolio, however, was below
· The Fund's fixed-income portfolio developed in parity with the
market and generated a return of 2.5%. Its estimated worth, including
liquidity, amounted to SEK 47.1 billion on June 30th 2002.
· The hedged portfolio of global equities generated a negative
return of -11.3%, amounting to SEK 39.5 billion by the end of the
period. During the same period, the non-hedged portfolio noted a
negative return of -19.6%, with an allocated exposure of SEK 9.6
billion. The difference derives from the increase in the value of the
krona during the first half.
· The return on the portfolio of Swedish equities amounted to -
22.9%. By the close of the first six months, the portfolio of Swedish
equities was worth SEK 23.5 billion. In the telecom sector, the decline
in the value of the Ericsson share has played a particularly decisive
role in exacerbating this negative trend.
· The Second Swedish National Pension Fund/AP2's investments in
unlisted real estate holdings, consisting of a 25-percent stake in AP-
Fastigheter and a 33-percent stake in Norrporten, have performed well.
Their combined worth is estimated at SEK 4.5 billion, including a
convertible subordinated loan.
· Business area Alternative Investments (unlisted equities
managed via funds) is still in the build-up phase, and several
investment opportunities are currently being evaluated. As at June 30th
2002, these assets were valued at SEK 73 million.
· As a significant institutional investor, the Second Swedish
National Pension Fund/AP2 reviews its corporate governance policy on a
continuous basis, to focus and clarify the Fund's position and response
in relation to corporate governance issues.
· During the spring, the Fund has partially revised its
investment strategy. Among other things, this creates opportunities to
increase the Fund's relative holdings in small and medium-sized
companies, mainly in Sweden but also on the global market. The current
portfolio will be adjusted gradually in compliance with this new