it is now called, is to ensure that the income from our oil and gas resources will also accrue to future generations. the fund is the nation ’ s family silver. it is no longer held in norges bank ’ s vault, as it was during the periods of the silver and gold standards. the fund is invested in fixed - income securities, equities and real estate across the world. when norges bank had finished collecting the silver tax around 1820, the bank ’ s silver holdings came to somewhat more than 50 grams per inhabitant, which is the equivalent of about one silver spoon. the value of the fund has just recently exceeded nok 5 trillion, or about nok 1 million per inhabitant. chart : return on fund accounts for one third of its total value the fund ’ s results have been favourable. since 1998, the cumulative return on the fund has been close to nok 1 800 billion, which is more than a third of the fund ’ s total value. so far, our nation has earned a solid return on its investments. quite paradoxically, low growth and low interest rates abroad are probably the main factors behind the solid performance of the fund over the past two to three years. chart : annual return on the gpfg since the end of the 1990s, a persistent fall in yields has driven up government bond prices. in recent years, the unconventional monetary policy measures of the world ’ s major central banks have contributed to even lower interest rates and higher prices for equities and other bis central bankers ’ speeches securities. this has resulted in above - normal returns on the fund ’ s investments. but today there is no longer room for a considerable fall in interest rates and equity prices have risen to fairly high levels. chart : return consists of two elements our measure of final return includes both capital gains and direct cash flows, which comprise dividend and interest income. the market value of the fund and its investment returns will therefore swing in tandem with equity and bond prices. this may draw a veil over the progression of the fund ’ s underlying earnings. in the long run, it is the fund ’ s cash flow that makes a permanent contribution to our national income. the fund ’ s cash flow is therefore a good cross - check for measured capital returns. chart : cash flow from the gpfg and petroleum revenue spending over the fiscal budget the cash flow presently matches the actual level of petroleum revenue spending over the fiscal budget – of about 3 percent of the

øystein olsen : management of the government pension fund global ( gpfg ) introductory statement by mr øystein olsen, governor of the norges bank ( central bank of norway ), before the storting ’ s standing committee on finance and economic affairs, oslo, 30 april 2013. * * * please note that the text below may differ from the actual presentation. charts in pdf i would like to thank the chairman and thank you for giving norges bank the opportunity again this year to report on the management of the government pension fund global ( gpfg ). chart : changing the regional allocation the investment strategy of the gpfg builds on its specific features, purpose and our perception of the functioning of financial markets. the gpfg is a large fund and features a long investment horizon. the objective of investment management is to preserve the longterm international purchasing power of the gpfg. in 2012, the investment strategy was changed. as a result, investments in emerging markets have increased. just over 10 percent of the overall portfolio is now invested in these markets. chart : increasing investments in real assets the allocation to equities was increased to 60 percent between 2007 and 2009. when the allocation to real estate reaches 5 percent further ahead, the gpfg's allocation to real assets will make up two - thirds of the overall portfolio. the long - term expected return on real assets is higher than on nominal bonds. the risk is also higher, but the long - term investment horizon puts us in a solid position to carry that risk. the key to realising the higher return is to adhere to the strategy also in times of heightened uncertainty, as we did through the financial crisis in 2008 and 2009. an official framework for rebalancing back to a set allocation to equities has now been established. this will help ensure that this strategy is carried out during the next period of high volatility in financial markets. chart : lower costs management costs for equities are higher than for fixed - income securities. the cost of managing many small shareholdings is higher than managing a few large ones, as is the cost of managing investments in emerging markets in relation to developed markets. overall management costs as a percentage of the gpfg have nonetheless fallen over time. we have exploited its size to realise economies of scale. in the past few years, costs have been reduced also in krone terms. this is partly due to reduced use of external managers. costs