market report

N u m B E r 1 ✱ A p r I L 2 0 11 ✱ S K A G E N F U N D S . C O M

defied tragedies
and turmoil
2011 has so far given us natural disasters, unrest in the middle east and
north africa as well as inflation fears in the emerging markets. despite this
the global equity markets have pulled through and expectations of global
growth are still high.

read more in The porTFolio manaGerS’ reporT on paGe 18

6
Cleaning up
Japan pulls together after
the disaster.

12
against the tide
In turbulent times Brazilian
power company Eletrobras
often goes its own way.

15
next stop Switzerland
SKAGEN receives marketing
permission in a ninth
European country

5
Torkell eide
don’t buy
economic growth

T he a rT oF Common Se nSe
 2 Co n T e n T S

SK aGen FundS
marKeT reporT no. 1 2011
Contents
SK aGen Funds invests in under valued,
under-researched and unpopular compa-

12
nies all over the world. SKAGEN AS was
established in Stavanger in 1993 and is one of
Norway’s leading fund managers.

postal address:
SKAGEN AS
postbox 160
4001 Stavanger, Norway
www.skagenfunds.com

Telephone no.:
+47 51 21 38 58

editorial team:
parisa Lemaire, news editor
tore Bang, technical editor
trygve meyer, journalist
Samantha Skurtveit, journalist

SKAGEN seeks to the best of its ability to ensure

that all information given in this report is cor-
rect, however, makes reservations regarding
possible errors and omissions. Statements in
the report reflect the portfolio managers’ view-
point at a given time, and this viewpoint may
be changed without notice.
the report should not be perceived as an offer or
recommendation to buy or sell financial instru-
ments. SKAGEN does not assume responsibility
for direct or indirect loss or expenses incurred brazilian power company eletrobras succeeds going against tide.
through use or understanding of the report.
SKAGEN recommends that anyone wishing to

14 6
invest in our funds contacts a qualified custo-
mer adviser by telephone on +47 51 21 38 58 or
by email at contact@skagenfunds.com.

phoTo: bloomberG
Market Report
N U M B E R 1 ✱ A P R I L 2 0 11 ✱ S K A G E N F U N D S . C O M

Defied tragedies michiel Krauss took on the role of SKaGen’s managing extreme discipline is an advantage when it comes to the
and turmoil director in the netherlands in February clean-up work following the natural disaster in Japan, ac-
2011 has so far given us natural disasters, unrest in the Middle East and
North Africa as well as inflation fears in the emerging markets. Despite this
cording to portfolio manager Søren milo Christensen.
the global equity markets have pulled through and expectations of global
growth are still high.

READ MORE IN THE PORTFOLIO MANAGERS’ REPORT ON PAGE 18

3 SKaGen Funds – returns 14 new to the team

6

4 leader and Comment

Cleaning up
Japan pulls together after
the disaster.
15 Switzerland here we come
12

5 Comment: don’t buy economic growth

Against the tide

16 morningstar qualitative ratings

In turbulent times Brazilian
power company Eletrobras
often goes its own way.

15

6 Japan – a phoenix in the east

Next stop Switzerland
SKAGEN receives marketing

18 portfolio managers’ report

permission in a ninth
European country

8 earthquakes are no recipe for prosperity

5
31 Fixed income market
Torkell Eide
Don’t buy

10 a letter from arabia

economic growth

T HE A RT OF COMMON SE NSE
33 return and risk measurements
12 eletrobras – swimming against the tide
34 portfolios
photo: iStock photo
41 Financial statement

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
our funds 3

SKAGEN Funds -
Returns
The following tables show the returns for SKAGEN’s
funds versus their respective benchmarks in euro.
The figures are updated as of 31 March 2011.

Equit y fund SK AGEN vekst Equit y fund SK AGEN Global

Portfolio manager: Beate Bredesen Start: 1 December 1993 Portfolio manager: Kristian Falnes Start: 7 August 1997

Return past 12 months Average annual return since start Return past 12 months Average annual return since start
25 25 25 25

20 20 20 20
17.2 % 17.1 %
14.4 % 15.4 %
15 15 15 15
10.6 % 10.1 %
10 10 10 8.9 % 10

5 5 5 5
1.6 %
0 0 0 0
■ SKAGEN Vekst ■ OSEBX/MSCI AC (50/50) ■ SKAGEN Global ■ MSCI World Linked Index

Bond fund SK AGEN tellus Equit y fund SK AGEN kon-tiki

Portfolio manager: Torgeir Høien Start: 29 September 2006 Portfolio manager: Kristoffer Stensrud Start: 5 April 2002

Return past 12 months Average annual return since start Return past 12 months Average annual return since start
8 8 25 25
21.1 %
20 20
6 6
5.62 % 16.3 %
4.86 % 15 15
3.97 %
4 4 12.8 %
10.9 %
10 10
2.53 %
2 2
5 5

0 0 0 0
■ SKAGEN Tellus ■ Barclays Capital Global Treasury Index 3 - 5 years (euro) ■ SKAGEN Kon-Tiki ■ MSCI Emerging Markets Index (Daily Traded Net Total Return)

Unless otherwise stated all figures quoted in this report are in euro, except for the quarterly financial statement, which is in Norwegian kroner.

SKAGEN Funds only has authorisation to market its money market funds SKAGEN Høyrente and SKAGEN Høyrente Institusjon in Norway and SKAGEN
Krona in Sweden. SKAGEN Avkastning has a limited market area. Information regarding these funds is included in the official accounts but is
excluded elsewhere.

The quarterly financial statement was originally prepared in Norwegian. The translated version is published with reservations regarding possible
errors and omissions as well as erroneous translation. In case of conflict between the Norwegian accounts and the English translation, the former
shall prevail. The Norwegian version of the quarterly financial statement is available at www.skagenfondene.no.

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
 4 l e a d e r  Co m m e n T
leader
Timothy Warrington,
Head of International,
SKAGEN F unds
tcsw skagenfunds.com
In the histories of our age, the tragic death
of mohamed Bouazizi will be recorded as
a footnote in the events that have come to
be referred to as the ‘Arab Spring’. His self-
immolation in Sidi Bouzid, tunisia, sparked
off riots and unrest that have continued
along the mediterranean coast and even
further afield. the speed and frequency of
often unforeseen events have surprised. And
behind these momentous events are equally
significant developments in grand strategy. It
seems that Chinese abstention in the Security
Council debate over Libya and a no-fly zone
arose not from western political pressure, but
at the request of the African union. If this is
true then perhaps the world order really is in
a state of motion.
For a boutique like SKAGEN Funds, such
events are not to be avoided. political risk is
often hard to measure. Where it is evident
it can be a reason for not doing something;
where it is unexpected then it is part of the
background noise to long term investing. At
the time of writing our holdings in the regions
affected, companies like EFG Hermes in
no pushover
the refrain at the Bank Credit Analyst’s (BCA)
annual autumn conference in New York six
months ago was that there would be record
low bond yields for a sustained period of time.
deflation was the big danger. only one person
disagreed. Hedge fund manager Barton Biggs
was of the opinion that inflation would pick
up in the uS within one year and that the long
interest rates would soon start to climb.
Biggs was correct. three and a half months
after the conference the uS 10-year bond yield
had climbed from 2.5 percent to 3.75 per-
cent. Admittedly the long interest rates did
fall somewhat during the recent turbulence,
but not by much.
In the rest of the developed markets,
those who bet on permanent low interest
rates have been duly disappointed. the long
interest rates are on the rise. the German
10-year bond yield has not been higher for
S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
We live in interesting times
Egypt, have been impacted by general mar-
ket movements – dipping and then recove-
ring in part. For now we continue to see good
reason to hold them, reasons based on solid
valuations and strong fundamentals. Here
in SKAGEN we make investment decisions
based on what we know, not conjecture. the
latest views on the SKAGEN portfolios start
on page 18.
the catastrophic events that befell Japan
in march were equally surprising – even if
long predicted. While the local consequences
have been tragic and profound, it is a sad fact
that material losses in Japan do create opp-
ortunities elsewhere. Even for our Japanese
listed companies prices have quickly retur-
ned to pre-disaster levels – Kyocera, a large
holding in the SKAGEN Global portfolio, fell
from 8520¥ to below 7000¥ mid-march, and
has now returned to 8480¥. As with political
risk events, such catastrophes trigger over-
reaction in the financial markets, swiftly fol-
lowed by recovery as the facts are clarified
and uncertainty banished. there are a clutch
of excellent articles on events in Japan later
20 months.
Bond investors can take small comfort
from the fact that there has been no party
in the stock markets either. Still, the stock
markets have been remarkably resilient consi-
dering the formidable combination of turmoil
in the middle East, civil war in Libya, debt
fears in Southern Europe, record high com-
modity prices. Admittedly the inflation fears
and ensuing flight to safety caused investors
in the emerging markets to experience a slight
decline in value. But the developed markets
have come through almost unscathed.
Some of the credit for the recent stock
market developments must be given to the
deflation scaremongers. the vast amounts of
money that flowed into bond funds from 2009
until late 2010 are now finding their way into
the stock markets.
We are pleased to note that there is less
in this report, including an examination of
SKAGEN’s approach to investing in the region.
Internally within SKAGEN we have been
busy also. We have added portfolio manager
capacity to the SKAGEN Vekst team in the
shape of ole Søeberg – a long time friend of
SKAGEN. We’ve appointed michiel Krauss,
formerly a private banker and wealth manager
with our partner distributor Van Lanschot, to
head our business in the Netherlands where
we will be establishing a client-facing office
during this year. And we’ve been granted
permission to actively market our funds in
Switzerland where we have a slowly gro-
wing client base. more information on each
of these events comes later in this report.
For certain we live in interesting times, but
here at SKAGEN such times do not diminish
our unswerving belief in a company-focused
investment philosophy and process that
believes that valuations lie at the heart of
successful investing.
correlation in the stock markets this year
than was the case in 2010. this will allow
our unit holders to benefit even more from
the undervalued, unpopular and under-
researched stocks that we pick. At the end
of the quarter, SKAGEN Global and SKAGEN
Kon-tiki are outperforming their benchmark
indices by a good margin while SKAGEN Vekst
is slightly ahead.
CommenT
Tore bang
Technical editor,
tb skagenfunds.com
Co m m e n t 5

Don’t buy
economic growth
A recurring theme in the financial market relates to so-called top-down investments,
whereby the principal focus of equity investors is on developments in the real economy.
It is especially popular to focus on economic growth in a particular region or country,
writes portfolio manager Torkell Eide in a guest commentary in Norwegian business
magazine Kapital. Portfolio manager, Torkell Eide

The advantage of this type of investment phi-
losophy is that it is easy to come up with a
seemingly sensible analysis.
When deciding which company should be
included in a portfolio, however, the disad-
vantage of basing one’s analysis on econo-
mic growth is that you can quickly end up
with popular and relatively expensive shares.
Having as your fundamental guiding principle
that a country with high growth also gives
high returns in the stock market is not an
obvious recipe for success. If anything, the
reverse is true.
In 2010 MSCI Barra published a study
analysing the correlation between econo-
mic growth and stock market returns. The
conclusion was unambiguous: the correlation
between equity returns and GDP growth is
non-existent. As an example, between 1958
and 2008, annual economic growth in Japan –
the first Asian miracle – was around five per-
cent. The return in the stock market was two
percent. Switzerland on the other hand had
economic growth of just below 2.5 percent
in the same period, while the stock market
rose 3.5 percent.
As we see it, there are three important
reasons why economic growth is not (neces-
sarily) the path to economic nirvana for equity
investors:  and relatively weak economic growth, is a
Return on equity
The first reason has to do with return on
equity. Over the long run generating return
on the equity that shareholders have given
to a company is paramount to shareholders’
return. Globally attitudes widely differ as
regards the focus on capital efficiency and
shareholder remuneration. In countries like
Japan there has historically been less focus
on capital efficiency. Capital which could have
been paid out to shareholders in the form of
dividends appeared on the balance sheet in
the form of golf courses, cross ownership in
other businesses and cash. When you realise
that in the long term dividends account for
around 50 percent of the return for equities,
it is easy to see that an ineffective capital
structure goes a long way in explaining the
differences in equity returns between Japan
and the US for example.  go hand in hand with optimistic valuations of
A secondary effect, which is becoming
increasingly evident, is that large and stron-
gly growing economies, like China, attract a
lot of risk-willing capital. The result may be
weaker returns on capital than the growth
rate might indicate, with a negative impact
on the equity returns.
Globalisation
The fact that stock markets in countries like
Sweden and Switzerland have provided relati-
vely good returns despite small home markets
good illustration of the effects of globalisa-
tion. Value creation in companies such as
Nestlé, ABB and Atlas Copco is mainly fuel-
led by factors that are unrelated to economic
developments in Sweden and Switzerland. For
all three companies it is developments in the
emerging markets that are the driving force.
An example of how the reverse can be the
case is Brazilian oil company Petrobras. Here
the oil price and decisions regarding domestic
energy policy are more important to the price
development than economic developments in
the emerging market country of Brazil.
Valuation
The final and most important point that dis-
torts the correlation between growth and
equity returns is the valuation of companies.
Strong economic growth and general opti-
mism around the future of a country often
the stock market. Those who bought Chinese
stocks in 2007 with a top-down perspective
were correct about economic developments,
but wrong about valuation. As a consequence
they have lost almost half their money. 
As a top-down investor you often pay a
high price to be a shareholder in a company
listed in a country in which macroeconomic
prospects are exemplary. Also, there are far
more people analysing the economic deve-
lopment of a country than that of the compa-
nies in it, as is the case in India, you end up
with a top-down climate which we in SKAGEN
abbreviate to POO - Popular, Over-researched
and Overvalued.

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
 6 Theme
Japan
A phoenix in the east
The Japanese stock market took a nosedive after the country was struck by earthquake,
tsunami and nuclear disaster simultaneously. The market has since recovered somewhat.
Japanese companies are cheap measured by stock price to book value, but are still not
delivering returns to shareholders.
The human cost of the disaster in Japan on Fri-
day 11 March has been enormous. The most
recent estimates point towards more than
24,000 casualties with hundreds of thou-
sands of people having been made homeless
and an unsettled bill of between EUR 130
and 215 billion.
Unexpected and destructive events often
influence the stock markets, especially in
the immediately affected areas. In the case
of Japan, earthquakes are actually an expec-
ted event and something the country is well
prepared for. Both residential and commer-
cial properties are secured. Still, the ensu-
ing tsunami hit the north eastern port cities
hard. This was followed by the problems at
the Fukushima nuclear plant, which could
seemingly withstand an earthquake but not
the subsequent flood waters.
When the Japanese stock market botto-
med out, it had declined by 16 percent mea-
sured in yen. The steep decline prompted a
number of people – including investor legend
LOW VALUE OF JAPANESE Equit y capital
6,0x
5,0x
TOPIX
4,0x
3,0x
2,0x
1,0x
0,0x
80 82 84 86 88 90
Japanese companies are still a long way off their peak level in 1989, when investors paid five times book equity. Today
Japan limps after companies in the rest of the world.
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
Warren Buffett – to recommend buying shares
in Japanese companies.
“The steep drop was understandable. Full
or partial evacuation of Tokyo, which was a
real fear for a while, would have had far-reach-
ing consequences for Japan and would also
have hurt the global economy,” says SKAGEN
portfolio manager Søren Milo Christensen.
Cheap book
Historically natural disasters and other major
events have often provided a buying oppor-
tunity. Particularly in the developed markets,
where it is easier to rebuild than it is in less
developed countries, according to research
from 2010 by the economists Eduardo Cavallo
and Ilan Noy from the Inter-American Deve-
lopment Bank.
The Japanese stock market has somewhat
recovered as the nuclear threat against the
world’s most densely populated city, Tokyo,
has diminished. There may be good compa-
nies listed on the stock exchanges in Japan,
P/B
MSCI World
92 94 96 98 00 02 04 06 08 10
Source: Bloomberg
but given the size of the market we have rela-
tively few in the SKAGEN portfolios.
“There are many companies in Japan that
appear cheap if one looks only at the price
to book ratio. On more thorough evaluation
one also sees that they have low return on
equity,” says Søren Milo Christensen.
“When we analyse individual companies,
the initial investment case often evaporates
because we cannot find credible reasons for
the company’s management to change their
existing behaviour and increase the return on
equity, which is important if the shares are
not to remain undervalued,” he adds.
Søren Milo Christensen is the SKAGEN
portfolio manager with the deepest know-
ledge of Japan, both in terms of culture and
society. He has been to Japan more than 20
times and has met with numerous companies
over the years.
Japanese chips in China
Despite much talk about China becoming
the new economic super power, Japan is
still the third largest economy in the world.
The island still delivers many vital electronic
components to Chinese assembly lines. The
Chinese point to their achievements, but the
Japanese are still very reluctant to move core
production to China.
“The relationship between Japan and
China has not been based on the highest
degree of trust. Japan has kept critical pro-
duction of parts for electric cars and elec-
tronic components in domestic factories, for
example, even when setting up joint ventures
with Chinese companies,” says Søren Milo
Christensen.
Time will tell what will happen to the
Theme 7

Photo: POLFOTO
Japan has a massive task ahead of it following the earthquake, tsunami and nuclear disaster.

Japanese companies that withstood the
earthquakes and were not engulfed by the
tsunami. The coming months will show if
evacuations from the nuclear disaster, lack
of electricity and other disruptions will create
lasting problems for industrial production.
The Japanese electricity grid is divided into
an eastern and western part, and the two are
based on different technology. This means
that there is no countrywide grid. One will
therefore have to expect a summer with
restrictions on the use of electricity.
the products.
“Samsung Electronics has understood that
design, user-friendliness and marketing are
essential for creating global consumer brands.
The Japanese have historically been more into
technologically advanced solutions,” says
Søren Milo Christensen.
Japanese corporate governance
For a European or American investor it is asto-
nishing that managers of Japanese companies
are able to hold on to their jobs despite a lack
of return on equity and dividends and con-
tinuing decline in valuations. According to
Søren Milo Christensen the explanation is in
the Japanese mentality.
“If anything is to change, domestic inves-
tors have to put pressure on the management
of the companies. But they don’t. This comes
down to their culture. One would be percei-
ved as doing the bidding of foreign investors,
something that is looked down upon. The

Engineering-focused business LOWER return on equit y IN JAPAN

SKAGEN’s three equity funds have been much ROE

18%
more invested in Korean companies than in 16% MSCI World
Japanese ones. The SKAGEN evergreen, Sam- 14%
sung Electronics, has been in the portfolios 12%
10%
since 1997, providing good gains for our 8%
unitholders. 6%
The engineering-focused and technology- 4% TOPIX
2%
fixated Japanese companies have been at the 0%
forefront of many of the innovations within 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10

consumer electronics such as flat screen Source: Bloomberg

TVs and 3G mobile phones. Still, once the

innovation has taken place other companies Japanese companies have consistently lower return on equity than companies in the rest of the world. This helps support
have tended to run off with the market for lower valuation of these companies.

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
 8 Theme
A man contemplates the tsunami damage in the Myagi harbour in Japan.
companies are therefore able to continue hol-
ding large amounts of cash without putting the
assets to use,” says Søren Milo Christensen.
Another challenge for shareholders is that
Japanese companies are notoriously bad at
shedding operations that are not creating
value. These are operations that would do
better under different owners and that should
therefore be spun off.
“The myth that Japanese companies are
fully restructured and super efficient does not
hold true. If it were true then return on equity
would not be half what it is in the rest of the
world. They stick to the rules and are environ-
mentally friendly, but creating shareholder
value is clearly not high on the agenda,” he
adds.
Disenchanted portfolio managers
Over the past fifteen years countless global
portfolio managers have watched and wai-
ted, hoping to see rising share prices in Japan.
The returns have never materialised. Japanese
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
stocks were highly overvalued at the end of the
1980s and the decline has been continuous
ever since.
For SKAGEN there has never been any doubt
that the majority of Japanese companies meet
our screening criteria of being undervalued
and unpopular. Although they may sometimes
be well researched, much of this work is igno-
red by disenchanted international investors.
The question then remains: where do we find
the undervalued companies?
“We analyse Japanese companies
thoroughly to see where there are sharehol-
der friendly movements,” says Søren Milo
Christensen.
It is a mistake to believe that the inclination
to seek consensus prevents Japanese compa-
nies from renewing themselves, according to
Søren Milo Christensen. Change takes time,
but when consensus shifts then everyone
moves forward in the same direction so as
not to stand out.
The changes must hail from within in order
to be credible, and should not be motivated by
external shareholders or funds. One of Japan’s
largest pension providers, Tokio Marine Asset
Management, has this year set up a fund to
engage with companies on reforms. We believe
that more of this type of initiative may bring
about renewal in Japanese companies.
Many have predicted that the disasters
this year will bring about change and renew
Japan. For us this is a bit too optimistic, but
we will monitor the situation closely to try to
detect changes in corporate governance that
will make more of the cheap Japanese compa-
nies relevant for our portfolios.
Christian Jessen
cje  skagenfunds.com
Theme
Portfolio manager Torgeir Høien
In fact, ever since the famous British econo-
mist J.M. Keynes endorsed “pyramid buil-
ding, earthquakes and wars” as catalysts
for prosperity in his 1936 treatise, a legion
of economists have uttered views similar to
those of Professor Summers. Ruins as the
foundation for prosperity, in other words. It
sounds ludicrous, and it is.
Greater public expenditure
When J.M. Keynes first put forward his theory,
his focus was on what governments could
do to promote growth when the economy is
in deep recession due to lack of demand - a
lack of demand so deep that the economy’s
supply side is nowhere in sight. And what
Keynes in fact argued in favour of was greater
public expenditure on useful investment pro-
jects. Should a lack of understanding stand
in the way of loose fiscal policy, however, he
thought that natural or man-made calamities
might be able to do the job for politicians.
Macroeconomics has advanced somewhat
since Keynes wrote his then revolutionary
work. And one thing that most economists
now agree on is that if monetary policy is
used efficiently, a recession will bring about
low enough interest rates to stimulate both
investment and consumption so that the
gap between demand and supply closes. Of
course, if a slump is severe enough, the lower
zero limit on nominal interest rates might be
binding. And then there is indeed a case to
make for timely and targeted, i.e. producti-
vity enhancing, public investment projects.
More imports, fewer exports
The economy has just gone through such a
slump, and some countries, including Japan,
were probably in a so-called liquidity trap
between the autumn of 2008 and the autumn
of 2009. Since then, however, the global eco-
nomy has been through a strong, if not full,
Earthquakes are no
recipe for prosperity
Are natural disasters actually good for the economy? Soon after the 8.9-magnitude
earthquake and the tsunami hit Japan, Larry Summers, Harvard professor and former
Treasury Secretary, told CNBC viewers that the natural disaster would boost Japan’s GDP
through the rebuilding of infrastructure.
recovery. Japan’s GDP has grown 6.5 percent
since the bottom in Q1 2009. Perhaps Japan’s
economy could have grown even faster, but it
is highly doubtful that the problem is lack of
aggregate demand. Except for in deep reces-
sions, it is the supply side that constrains
economic growth. Hence, spending more
does not result in more goods and services;
it only increases imports and curbs exports.
Aside from the effect on increased aggre-
gate demand in the aftermath of a natural
disaster, what Larry Summers and his kind
overlook is the fact that the calamity that
befell Japan naturally has a negative impact
on Japan’s capital stock. An earthquake
causes material damage which decreases
the capital stock. When it comes to natio-
nal accounting this means that even if Gross
Domestic Product does not fall substantially
from Q4 2010 to Q1 2011, the Net Domestic
Product surely has. The difference between
the two concepts is that the latter takes into
account capital depreciation. (Exactly how
much capital was destroyed is too soon to
say.) It is Net Domestic Product, rather than
its more familiar Gross counterpart, that gives
the better indication about how much a nation
can consume without reducing its capacity to
consume in the future.
Since both savings and time are needed
to replenish capital stock, for the time being
Japan will have less capital available for the
production of goods and services. Less labour
too, of course, since according to official data
the earthquake and tsunami killed at least
24 000. In addition supply chains have been
broken up, and businesses need to figure out
new ways to produce and transport goods.
In short, Japan’s economy will suffer. In the
short term via a sharp drop in Net Domestic
Product, and over the medium term with a
Gross Domestic Product that is lower than
it could have been. We will probably see at
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
9
least two quarters of negative growth in Gross
Domestic Product, and GDP for 2011 might
well come in lower than for 2010.
Small comfort
A mitigating factor is that some businesses
were insured overseas. Hence transfers to
Japan from abroad will increase over the
coming quarters, so Japan’s disposable
income will not fall as much as its Net Domes-
tic Product.
Japan also has substantial foreign savings.
Since it is unlikely that Japanese consumption
will be cut back enough to finance all the new
investment undertakings, Japan might be a
net importer of capital for some quarters. This
means somewhat less net foreign income,
but helps to increase income produced on
domestic soil.
On the positive side one could also
argue that the economy gets a boost from
the increased work effort in the aftermath of
disasters. Even apart from rescue operations,
humanitarian aid and the increased hours
that businessmen and the self-employed
have to put in in order to avoid ruin, there
may also be a more general willingness to
increase work efforts in the aftermath of a
disaster.
Natural disasters can hardly be said to
increase well-being, however. Leisure too is a
consumer good, even though it is not counted
as such in national accounts. As an analogy,
if governments were to outlaw vacations for
a year, output would certainly rise, but we
would not therefore conclude that we were
better off.
Just a couple of years ago a very Keyne-
sian senior figure in the Japanese Ministry
of Finance told the Financial Times that what
Japan needed was a huge earthquake. I won-
der whether the tsunami washed away that
dubious thought.
10 Theme
A Letter From Arabia
Midhat Syed works in the International department of SKAGEN Funds. She grew up in Saudi Arabia until leaving for university in the UK
in 2003, returning for short annual visits. In this travel letter from Jeddah in March 2011, she offers us a glimpse into a region currently
dominating news headlines.
Following unrest in Arab states there has
been a substantial increase in interest in the
Middle Eastern region of late. This region is
a major global supplier of both energy and
capital.
My visit home to Jeddah is slightly diffe-
rent this time. As well as meeting friends and
family, I am also working, trying to view the
place where I grew up from an outsider’s per-
spective – capture every quirk that I would
have otherwise missed and give you a glimpse
into a region dominating the headlines.
Whenever I come back, I am amazed at
how many new structures have gone up in
the space of just one year – a new mega mall
(one of the biggest in the Middle East), a few
office buildings, an underpass, and a bridge
to name but a few. 4x4s, luxury saloons and
taxis chaotically hurtle around roundabouts
of epic proportions housing open-air art pro-
jects, horns blaring at the Audi too slow to
react when the traffic light turns green.
The unique Jeddah blend
If your mind is starting to wander to images of
Dubai at this point, let me pull you back from
a vision of a city on steroids.
The origins of Saudi Arabia’s second lar-
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
gest city are humble. From starting out as a
sleepy fishing village, it has grown to a city
of around four million with a broad mix of
ethnicities. Visitors to Jeddah find a unique
blend of the conservative and the cosmopo-
litan in the people who live here. This is a key
commercial town and a gateway for Muslim
pilgrims. Across the country to the East lie
the main oil-drilling and industrial towns,
while in the centre of the Kingdom you find
the capital of Riyadh.
So what challenges does the Kingdom face?
The most commonly-mentioned problems
here relate to the “disaffected youth” of Saudi
Arabia and high unemployment, currently
running over 10%. However, there are great
class divides. While there is a shortage of
skills among some of the youth from the lower
classes, typical middle class families increa-
singly enrol their children in higher educa-
tion programs abroad (normally the US or
Europe). This has to some extent initiated a
“brain drain”. Everyone, however, feels entit-
led to well-paying jobs with status attached.
This, combined with a steady flow of cheap
skilled and unskilled labour from South and
South-East Asia, contributes to the problem.
The government’s bid to combat the issue
involves promoting “Saudisation” (industry
quotas to hire a minimum percentage of Sau-
dis), leading to labour market inefficiencies
and social resentment.
There are some economic issues brewing
as well. These include a shortage in hou-
sing for the steadily expanding indigenous
population, a culture more geared to spen-
ding than saving, and historically largely
government-driven economic projects. Still,
for every issue, there are some opportunities.
While parts of the economy have appeared
stagnant for the past decade or so, there has
been notable growth in mining, telecoms,
and construction. Recently, the government
has started pushing for more public-private
partnership projects and these have proved
very successful, drawing foreign capital as
well. Further, the economy is very open for
trade, making local businesses quite com-
petitive and improving the supply chain for
consumer goods.
Social value to provide
Women’s rights are also a hot topic. Basic
rights, such as being allowed to drive, nor-
mally make quite conservative women (never
mind feminists) hot under the collar. The
discussion has been opened up for parlia-
mentary debate and a decision is currently
awaited. A move by the king two years ago to
introduce the first female minister (the deputy
minister of female education) was lauded glo-
bally as a step towards granting women more
rights and power, but little else has followed.
This, however, overlooks the social values
instilled in men from childhood who take
seriously their responsibility to provide for
their mothers, sisters, wives and daughters.
There was some public unease about
infrastructure following floods in Jeddah in
January. Infrastructure, while mostly newish
and rapidly developing, still suffers from
bureaucracy when it comes to maintenance
and repairs. In fact, most aspects of com-
merce involve going through a layer of offi-
cial procedure which requires personal con-
tacts and influences. Still, doing business
in Saudi Arabia is easier than it is in Sweden
and France, according to the World Bank (one
should bear in mind the more restrictive legis-
lations that these countries have in place).
Decisions through consensus
People also tend to ask about local politics,
a topic generally conducted behind a heavy
veil. In this region, religion and politics, all
wrapped within the context of a tribal society,
have moved hand-in-hand for centuries. As
the home of two of the most holy sites for
Muslims, it is not hard to see why.
Theme
large-scale demonstrations have become an everyday occurrence in many arab countries, such as the one pictured here in Cairo. in Saudi arabia, a lack of direct unified opposition and no
viable alternative to the current monarchy means that an uprising is less unlikely, says midhat Syed.
the presiding political system is an abso-
lute monarchy, and monarchist systems have
governed this region for centuries. the royal
family numbers in the thousands and a suc-
cessor is chosen according to the Basic Law
of Saudi Arabia. In 2007, the Crown prince
was elected by members of the royal family
representing each line of succession from
Abdul Aziz Al Saud (father of the current king).
decisions of national importance are made
through consensus in the family and consul-
tation with major local business families and
religious clerics (via a pseudo-parliament
formed of key representatives from society,
called majlis Ash-Shura).
For people to rise up and protest against
the current monarch, there has to be a viable
alternative. It is difficult to envisage a full
upheaval of the monarchy given the lack of
direct unified opposition. the current king is
well-liked for his progressive policies towards
infrastructure, higher education, the progres-
sion of women’s rights, limiting the power of
clerics, and opening up the country. But the
pace of development is glacial.
low cost of living
the Saudi economy is very competitive – with
low fiscal taxes, low customs duties and an
open international trade policy. Both local
and foreign businesses enjoy a level playing
field. this leads to a liberal supply chain,
which in turn keeps the general cost of living
low. Further, basic goods such as gasoline,
food and water are heavily subsidised by the
government. You can buy a packet of bread or
small bottle of water for 1 Saudi riyal (about
Eur 0.19). A litre of petrol is 0.60 Saudi riyals
(just Eur 0.11).
Saudis are very charitable as a social
norm so there is little visible poverty. occa-
sionally you will see someone meandering
between cars at intersections when the traf-
fic lights turn red, but this typically tends to
be someone selling flowers, chewing gum,
water, toys or some other knick-knack, rather
than begging. As most basic social needs are
met – something that was lacking in some of
the newly revolutionised Arab states – there
is one less reason to revolt here.
other parts of the Kingdom
reading this, you must bear in mind that Jed-
S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
11
dah is just one city in Saudi Arabia, and argu-
ably the most liberal one. the pulse taken
here doesn’t represent religious resentment
in the Shia’a-dominant East, which may be
particularly strong following the military sup-
port provided by Saudi Arabia to the Bahraini
royal family, or in the centre, where hard-line
religious police can stop you from whatever
else you are doing at prayer time to send you
to a mosque or ask your wife to cover herself
more thoroughly. resentments there may
still brew and the unruly few may yet unite
to throw the country into turmoil.
abouT The auThor
midhat Syed is of Indian-pakistani origin
and grew up in Saudi Arabia. She has a
financial education and holds economics
and finance degrees from the universities
of York (BSc) and Warwick (mSc). Syed
works in SKAGEN Fund’s International de-
partment. this travelogue represents the
writer’s own views on the developments in
the middle East and Saudi Arabia.
12 Co m pa n y c a s e

Eletrobras
– swimming against the tide
Patience is a virtue for an active manager. A good example of this is our long-term invest-
ment in Brazilian power company Eletrobras, which for a long time has been the company in
SKAGEN’s equity funds with both the lowest valuation and the highest price target.

Eletrobras has for many years played a stabi-
lising role in the portfolios of SKAGEN’s three
equity funds. In turbulent years Eletrobas has
tended to go against the tide, and this has
also been the case this year. After the first
quarter the share price is up nine percent,
whilst the emerging markets are down four
percent, measured in EUR.
Eletrobras’s share price was given a boost
when the natural disaster in Japan clearly
highlighted the risks associated with nuclear
energy. With the nuclear reactors in Japan
now out of control, many countries have put
a temporary halt on the construction of new
nuclear plants, particularly in China. What
the longer term effect will be is hard to say.
However, it seems obvious that hydroelec-
tric power, which is a more environmen-
tally friendly and less risky alternative, will
become more attractive.
The curtailed construction of new nuclear
plants is one of several triggers that could
push Eletrobras towards our price target of
65-70 Brazilian real (BRL). This is more than
twice the share price level at the beginning
of the second quarter.
The most important price trigger for Eletro-
bras, however, is a higher return on equity.
Largest in Kon-Tiki
Ten years ago portfolio manager Kristoffer
Stensrud bought his first shares in what was
at that time a particularly Unpopular, Under-
valued and Under-researched Brazilian power
company, Eletrobras.
Over the last seven years Eletrobras has
been amongst the largest holdings in SKA-
GEN Kon-Tiki, accounting for 6.5 percent of
the fund at the end of March. As of this date
Eletrobras was also the third largest holding
in both SKAGEN Global and SKAGEN Vekst.
Our investment in Eletrobras has provided
a satisfactory return of approximately 19 per-
cent annually since 2004, measured in EUR.
Yet the share is still priced at only 0.4 times
book value. This makes the holding a good
contributor to the overall relatively low price
to book (P/B) ratio in our portfolio, both in
absolute and relative terms.
There is nevertheless a good reason why
state dominated power companies like Eletro-
bras have a low price tag. Return on equity for
these companies has only been five percent
over the past five years.
Pulled down by currency
“A return on equity of only five percent in a
country where the interest rate is 11 percent is
of course not good,” admits Kristoffer Stens-
rud, portfolio manager in SKAGEN Kon-Tiki.
Over the past seven years the Brazilian
real has doubled in value against the US dol-
lar. Since Eletrobras has large outstanding
claims in dollars, this has had a negative
impact on the accounts, and on the return
on equity. If we use a rough cash flow con-
cept, like earnings before interest, taxes,
depreciation and amortization (EBITDA), the
picture is somewhat different. In this case
Eletrobras is trading at 6-7 times cash flow,
which corresponds to a return on equity of
14-15 percent.
Rising electricity prices and profitability
Brazil is a socially democratic country with
widespread poverty, and the government
would like electricity to be available to as
many people as possible, as quickly as pos-

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
Co m pa n y c a s e
sible. This means that there are strict rules
when it comes to the pricing of electricity.
With new licences the return on contract
prices for electricity is pre-agreed and is part of
the licensing conditions for new investments.
The contract price is based on a minimum
quantity. For any production over and above
this quantity there is a well functioning spot
market which is more profitable, albeit within
the geographical limitations.
The power market in Brazil was liberalised
in 2004. This was one of the reasons why SKA-
GEN bought into Eletrobras. Since then the
contract prices for electricity have increased
by 60-70 percent, to 80-90 reais/MWh.
“The contract prices for new projects, for
example the world’s third largest hydro power
plant Belo Monte, are around 70 reais/MWh for
70 percent of the minimum volume. The spot
price is in the range of 90 to 125 reais/MWh.
Over time the average price will converge on
the spot price, so that earnings at older plants
will increase,” explains Kristoffer.
Much to gain on the cost side
“Eletrobras has a great deal of upside in terms
of costs. There also seems to be a political wil-
lingness to act here”, says Kristoffer. Initially
the government will look to optimise earnings.
As is the case in Norway, there are huge geo-
graphical differences in both the price and
availability of electricity. This will encourage
the development of a good transmission net-
work.
Vast power resources
Eletrobras has vast power resources and
further development will substantially increase
the supply of electricity. Investments of this
scale require foreign capital, which is in turn
dependent on a more predictable revenue
(lower political risk) and the potential for a
higher return on equity.
“Making it more attractive to invest in Brazil
is one of the many objectives of the new politi-
cal leadership, led by President Dilma Rouseff.
Power shortages are starting to become evi-
dent. It is therefore reassuring to see that large
projects started three to four years ago are
keeping to budget and schedule”, says Kristof-
fer who adds that 2011 is the year when con-
cessions granted in the 1970s and 1980s will
be renegotiated. The market is still at a loss
as to how to price these. However Eletrobras
is indicating relatively good terms, precisely
to attract long term capital.
Could be a new Petrobras
SKAGEN Kon-Tiki and SKAGEN Global had a
fantastic value development in the oil com-
pany Petrobras after they first bought into the
The world’s largest: Eletrobras owns 50 percent of the world’s largest hydroelectric plant, Itaipu Binacional, on the border
between Brazil and Paraguay.
company at the beginning of 2000. Kristoffer is
hoping for a similar outcome as a shareholder
in Eletrobras.
“In terms of value development I estimate
that we are about five to seven years behind
Petrobras. From a global perspective the valu-
ation of Eletrobras’s hydroelectric activities is
extremely low. The first steps were taken in
2004, followed by the ensuing contract pro-
cess. The next step will be this year’s renewal
of concessions, which could have the same
positive effect on the share price that the allo-
cation of licences had on the Petrobras share
price in 2004-2006”, says Kristoffer.
Catalysts for doubling
According to Kristoffer triggers that could
push Eletrobras towards SKAGEN Kon-Tiki’s
price target of 70 reais include higher contract
prices, increased production, new and more
profitable investments and less capital tied up
in claims against other electricity producers.
“All of this could boost return on equity,
and hopefully lift the share price,” concludes
a patient and optimistic Kristoffer Stensrud.
A 20-40 billion dollar dam
Much of the complexity and value in Eletrobras
is tied up in Itaipu Binacional (see picture), the
world’s largest hydropower plant in terms of
production.
The dam lies on the border between Brazil
and Paraguay. Due to this geographical loca-
tion there is a special set of rules governing
all aspects of the hydropower plant and dam.
The company Itaipu Binacional is listed as the
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
13
official owner, with Eletrobras owning 50 per-
cent of the shares.
Itaipu today supplies 20 percent of Brazil’s
electricity, and 95 percent of Paraguay’s requi-
rements. There is 14 GW of installed capa-
city whilst the annual production amounts to
slightly over 90 TWh. By way of comparison,
the world’s sixth largest producer of hydroelec-
tric power, Norway, produces approximately
130 TWh annually.
There is a lot of regulatory uncertainty
associated with the power sector, and it is
difficult to put a concrete price on Eletrobras’s
ownership in Itaipu. Portfolio manager Torkell
Eide, who recently visited Eletrobras in Brazil,
believes that a valuation of between 20 and 40
billion dollars for the entire Itaipu plant is not
unreasonable. At the end of March Eletrobras
was valued at 21 billion dollars.
Price triggers
• Greater market liberalisation and
higher electricity prices in Brazil
• Increased production
• New profitable investments
• Reduction of capital tied up in claims
against other electricity producers
Greatest risk factors
• Unpredictability of leading politicians
• Continued unfocused leadership
• Poor corporate governance
14 NE W S

New Managing director

in the Netherlands
Michiel Krauss has been appointed Managing Director SKAGEN Netherlands and assu-
med the position on 1 February 2011. The Netherlands is an important and growing
market for SKAGEN.

Michiel comes to SKAGEN from Wilton Invest-
ment Services where he was Managing Direc-
tor. Prior to this he worked 18 years for Van
Lanschot Bankiers where he held various
senior management roles in the Nether-
lands, Luxembourg and Switzerland within
private banking, investment advisory and
wealth management. Altogether Michiel has
25 years experience in the industry, including
previous positions at Robeco Group and IS
Nederland.
In his new role Michiel will focus on pro-
viding the best possible service and com-
munication to our existing Dutch clients. He
will also contribute to the careful and mea-
sured growth of a balanced client base in
the Netherlands and reinforce SKAGEN’s
reputation as a well regarded boutique fund
manager.
SKAGEN received approval to market our
funds in the Netherlands in 2006. Since then
we have had good traction in the market and
currently have approximately 1 billion euro
under management, predominantly from
retail and HNW clients.
To further strengthen our presence and
commitment in the Netherlands, SKAGEN
will be opening an office in Amsterdam over
the summer. The Amsterdam office will be
SKAGEN’s eleventh office – in addition to the
six in Norway, and our offices in Stockholm,
Copenhagen, Gothenburg and London. Local
personnel in the Netherlands are currently
being recruited. In the meantime the exis-
ting client facing team from the International
department in Stavanger will support Michiel.

Ole Søeberg new

portfolio manager
Ole Søeberg is to join SKAGEN Funds as a portfolio manager to further strengthen the
global and Norwegian equity fund SKAGEN Vekst.

Ole Søeberg will be responsible for analysing
existing and potential investments alongside
a team comprising 9 fund managers.
Ole Søeberg has extensive experience
in both global and Danish capital markets.
He joins SKAGEN from his position as Mana-
ging Director of the insurance company Tryg
where he was responsible for Investor Rela-
tions since 2006. Previously, Søeberg was
director of Investor Relations at TDC A/S, follo-
wing positions at Alfred Berg and Carnegie in
Denmark where he built up broad experience
analysing global equities. He began his career
at Copenhagen-based research firm, Dansk
Aktie Analyse. For the past four years Søeberg
has been a member of the Board of Directors
of SKAGEN AS. He has stepped down from the
Board to assume his new position.
“With his experience of capital markets,
Ole Søeberg will be an excellent addition to
the portfolio managers that already make up
the SKAGEN Vekst team. We are very pleased
that he has accepted the position of portfolio
manager,” says Kristian Falnes, Investment
Director at SKAGEN.
Ole Søeberg will take up his new role at
SKAGEN in the first half of 2011.

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
neWS 15

Switzerland here we come

SKaGen Funds has received permission from the Swiss Financial market Supervisory
authority (Finma) to market its funds SKaGen Global, SKaGen Kon-Tiki, SKaGen vekst
and SKaGen Tellus in Switzerland.

In addition to its home markets in the Nordic
countries, SKAGEN currently markets its
funds in Luxembourg, the Netherlands and
the uK. the decision to expand operations
into Switzerland was based on a growing
interest and demand from Swiss investors.
“thanks to strong returns for our existing
clients and excellent ratings for our funds, we
have experienced increasing interest from the
Swiss market over the past few years. We are
delighted to now have the necessary permis-
sion in place to be able to actively respond
to these enquiries, and hope to slowly start
building up our activities in Switzerland,”
says tim Warrington, Head of International
in SKAGEN.
the defining ambition of SKAGEN is to
provide clients with the best possible risk
adjusted return at the same time as offering
the best possible client service and commu-
nication. Asset gathering has never been,
and never will be, a goal for SKAGEN. As
has previously been done in other interna-
tional markets, SKAGEN plans to develop its
footprint in Switzerland in a controlled and
measured manner. Initially a team of three
SKAGEN employees will service Switzerland
remotely from our International office based
in Stavanger, Norway, responding to client
enquiries and following up existing clients
as required.
“We look forward to learning more about
Switzerland and to meeting interesting
clients, partners and prospects,” says tim
Warrington. “With its long tradition of excel-
lence in financial services, we are confident
that we can learn a lot from the Swiss market;
lessons that we can recycle to the benefit of
all our clients.”

inFormaTion For inveSTorS

in SWiTZerland

Acolin Fund Services AG, Stadelho-

ferstrasse 18, CH-8001 Zürich, is the
representative of the above funds in
Switzerland. Frankfurter Bankgesells-
chaft (Schweiz) AG, Börsenstrasse 16,
8001 Zürich, is the paying Agent in Swit-
zerland. the prospectuses, the simpli-
fied prospectuses and the semi-annual
and annual reports may be obtained,
free of charge, from the representative.

Team Switzerland (from left to right): Samantha Skurtveit, barbara Willoughby, Stein haben, midhat Syed.

a great place to work

SKAGEN is one of the best places to work
in Norway according to a survey carried out
by the Great place to Work Institute. Each
year the Institute carries out a survey among
employees and ranks companies on how
satisfied people are with their workplace.
the Great place to Work survey is repu-
ted to be the largest employee survey world-
wide. Following this year’s survey, SKAGEN is
ranked number 9 of 68 companies in Norway
in the category 50-250 employees.
What distinguishes SKAGEN is that it is
a founder company, although it has gradu-
ally grown to employ over 150 people and
has offices in several European countries.
the organisation is in a period of growth
and development and has gone from being
a Scandinavian to a European fund manager
and is now a multicultural workplace.
the awards ceremony this year took place
in oslo on 9 march.

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
16 neWS

morningstar qualitative ratings

for SKaGen’s equity funds
internationally renowned fund research firm morningstar has for the past two years
produced qualitative ratings on our equity funds SKaGen Kon-Tiki, SKaGen Global and
SKaGen vekst. We are now making the reports available to our clients.

the morningstar fund evaluation is based the scale. Also in this report, morningstar
on the research firm’s own principles, which spends time evaluating the portfolio mana-
it believes to be predictive of future perfor- gers. Beate Bredesen and ross porter, who
mance. the research approach only partially manage SKAGEN Vekst, took over the fund a
puts weight on past performance and back- year ago when Falnes moved on to SKAGEN
ward-looking risk measures. more important Global. morningstar notes that “this fund’s
is an assessment of the fund’s portfolio mana- good parent and process are key strengths, nal investors,” according to the independent
ger team and processes, coupled with an eva- but we would like to see more from the new Chicago-based company’s documentation
luation of the parent company behind the managers.” about the reports.
fund. the reports contain views on strengths morningstar’s qualitative research aims the morningstar reports on SKAGEN’s
and weaknesses based on assessments of “to help investors determine a fund’s over- equity funds can be downloaded from our
people, parent, process, performance and all investment merit to help them construct website where they can be found in the right
price associated with the funds. diversified portfolios and achieve their hand column of the respective fund pages.
the morningstar qualitative rating sys- goals.” the reports can thereby “be used the Standard & poor’s ratings for the funds
tem has five levels. the lowest is “Impai- within an investment decision making pro- are also available here. Alternatively, go to
red” and the highest is “Elite”. According to cess by individuals, advisers, and institutio- the ratings page of our web site.
morningstar, the highest rating is awarded
to those funds believed to be capable of out-
performing their peers in the long run.
SKAGEN Kon-tiki has been assigned an
“Elite” rating in the four page morningstar
report for the fund. the report states that
“the managers have executed SKAGEN’s firm
wide investment process skilfully” and that
the fund is “one of the best emerging market
funds available.”
SKAGEN Global has been assigned a
“Superior,” which is the ranking just below
“Elite” on the scale. “Superior” means that
the fund is above average and capable of
outperforming its peers. the morningstar
report for SKAGEN Global evaluates the new
portfolio managers of the fund following the
change in management that took place a year
ago. the report highlights portfolio manager
Kristian Falnes’s long experience and con-
cludes that “there’s a lot to like” about this
global equity fund.
our third equity fund, SKAGEN Vekst, has
been assigned a “Standard” rating, which
is the middle rating of the five levels on

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
NE W S
Our investment philosophy
Beate Bredesen Kristian Falnes Elisabeth A. Gausel
Chris-Tommy Simonsen Ola Sjöstrand Kristoffer Stensrud
The companies show the way
The objective of SKAGEN Funds is to provide
our unitholders with the best possible return
on the risk they assume. We subscribe to a
value based management philosophy and
have a broad mandate, which means that
our managers may freely choose shares in
companies on stock exchanges worldwide.
Risk is reduced by investing in a number
of companies in different industries world-
wide. SKAGEN Funds focuses on values. We
search for companies that are Undervalued,
Underresearched and Unpopular. Thoroughly
researched and popular companies tend to be
overvalued, with an equally high downside
potential when the share goes out of fashion.
Historically speaking, SKAGEN Funds’ mana-
gement philosophy, combined with our focus
on values, has produced good returns. We
have competent managers who are faithful
to the investment philosophy.
Rewarded for risk-taking
One of the portfolio managers’ tasks is to
balance the risk in the securities markets on
behalf of the unitholders. As a unit owner,
you should therefore be interested in being
PORTFOLIO MANAGERS
Søren Milo Christensen Torgeir Høien
Jane Sirevåg Tvedt Cathrine Gether
rewarded as handsomely as possible for the
risk assumed. Two funds with equal returns
may in fact have completely different risk pro-
files. In that case, the fund with the lowest
absolute risk is clearly best. That way, you get
the highest risk-adjusted return.
Avoiding bubbles
As opposed to many other managers, who
invest in companies because they are repre-
sented in an index, we buy the companies
we think are the most attractive, regardless
of indices. That way, we avoid being led into
index temptation – which at times results in
popular industries and shares achieving a far
too high price relative to what they can defend
with respect to values and earnings. Bubbles
form, and sooner or later burst. Such bubble
periods create a good climate for us active
managers to find Undervalued, Unpopular
and Under-researched companies. Over time,
however, it is always corporate values and
value creation that form the basis for stock
exchange pricing.
Thorough analysis reduces risk
Behind everything we do there is thorough
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
17
Knut Harald Nilsson Ross Porter
Torkell Eide
analysis. That reduces the risk. One important
element in our research is ethics. In the long
term, it does not pay to invest in companies
that are unethical, whether we are talking
about environmental sinners, companies
benefiting from illegal child labour or other
illegalities.SKAGEN Funds also carefully con-
siders political and other risks. We are atten-
tive to industry imbalances and too narrow
geographic diversification, and we keep a
close watch on corporate leverage.
Belief in common sense
In recent years we have visited – or been visi-
ted by – hundreds of companies at home and
abroad, in order to gather first hand infor-
mation. The financial strength, price and
profit development are thoroughly analysed
before decisions are made. We put more stock
in our own analysis than in others, and are
confident that our own research contributes
to us always knowing something extra about
our investments.
We don’t believe in rumours and whims.
Rather we rely on common sense and hard
work – without disregarding the sound intui-
tion you gain with experience.
18 p o r tf o l i o m a n a g e r s r e p o r t

Equity markets show strength

G
 lobal equity markets have
managed surprisingly well in a
quarter characterised by disaster
in Japan, unrest in the Middle
East and North Africa, as well as
inflation fear in the emerging
markets.

 E xpectations of global economic

growth are still at a high level,
and long bond yields continue to

PHOTO: Bloomberg
tick up.

 L ittle debt and a lot of cash in

Massive destruction: the earthquake in Japan and ensuing tsunami caused wide-scale damage and resulted in one of the
companies have led to increased worst nuclear accidents ever. Parts of the energy supply in Japan are out of action with significant immediate consequences
for the country’s industry.
dividend payments to sharehol-
ders, share buy-back and greater
M&A activity.

 uring the first quarter there

D
were bids on three of our
portfolio companies – Pride
International, Parmalat and
Kim Eng Holding. All bids were
well above market price.

 E quities are priced in line with

historic averages, and there are
PHOTO: Bloomberg

PHOTO: Bloomberg
still expectations of strong
growth in company earnings.
Uprising: As a result of the unrest and uprising in several countries in the Middle East and North Africa, the UN undertook
military intervention in Libya while the Egyptian president Hosni Mubarak was forced to abdicate. The country’s stock ex-
C
 ompanies’ share prices have change was closed for almost two months.

this year developed in a way

that is less governed by and
synchronised with macroecono-
mic events than was the case
in 2010. That is positive for
value based stockpickers like
SKAGEN.

 e therefore believe that our

W
investment philosophy will be a
good tool for creating good
PHOTO: Bloomberg

absolute and relative return for

our unitholders in 2011.
Stock market winner: Despite the accidents, turmoil and inflation fears that characterized the first quarter, the global equi-
ty markets have held their own. The winning sector was energy. On the company side Gazprom was high up the list. The
Russian gas giant joined the portfolios of SKAGEN Kon-Tiki and SKAGEN Global last autumn.

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
p o r tf o l i o m a n a g e r s r e p o r t 19

Financial markets weathered the storm

INVESTORS SCARED OFF BY INFLATION
Global equities did well in fending off the
tragic earthquake in Japan, the unrest in the Billion USD

120
Middle East and inflation worries in the first 96
100
quarter 2011. The MSCI All Country Index 80
83

fell by 1.1 percent measured in euro. Unsur- 60 54

prisingly the sector winner was the energy 40 33 34

20 16
sector which gained 7 percent. It was the only 7 0
8
0
sector with meaningful positive return. -20
-3 -4 -4
Among the larger markets, energy-inten- -40
-24

sive Russia, up 9 percent, was the winner, -60 -49

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
while the stock market in Egypt lost almost Source: MDSW, EPFR Global - 30 March 2011
one third of its value after the market reope-
ned following an almost two-month closure. Rapid mood swings: USD 96 billion flowed into emerging markets funds in 2010. Inflation fears led to USD 24 billion finding its
way out again in the first quarter. The flow of money has changed direction again over the past few weeks.
Japan lost 12 percent amid fears of the impact
of the earthquake while India fell 10 percent
on fragile valuations. Most markets in Eastern GROWTH SLOWED DOWN SOMEWHAT IN 2011
Europe performed relatively well after weak
returns in 2010. China 8,7 %
9,4 %
10,3 %

Despite a flurry of political and macroeco- Asia ex. Japan 4,6 %

6,0 %
7,5 %
9,1 %

Emerging economies
nomic news, long term yields in the US were 1,0 %
4,3 %
7,2 %

Latin-America 6,1 %
slightly up throughout the first quarter. In the Emerging Europe
-2,9 %
4,1 %
4,3 %
-5,0 %
Eurozone, however, the ECB set a hawkish Japan -5,2 %
0,9 %
4,0 %
2,9 %
tone after its March meeting, and the market’s US -2,4 %
2,3 %
2,8 % 2011e
Developed economies
expectations for the overnight interest rate -3,4 %
2,5 %
2,2 %
2010

Eurozone 1,7 % 2009

in the euro money market doubled from 0.7
-4,0 %

per cent. Long term yields too have risen in
the Eurozone, with the benchmark German
10 year bond yield up from 3.0 percent to
3.4 percent.
While 2010 was characterised by record
flows into emerging markets funds of USD
96bn, inflation fears have reversed this trend
in 2011 and there have been large outflows.
At the same time global equity mandates
received inflows amounting to USD 18bn.
Emerging markets equities have under-
performed developed market equities by 4.5
percentage points since the relative peak in
November and by 2.5 percentage points since
the beginning of the year, after making up for
some of the lag recently.
Good in relative though not absolute terms
For our equity funds, both SKAGEN Global
and SKAGEN Kon-Tiki delivered solid relative,
albeit not satisfactory absolute returns. SKA-
GEN Global gained 1.9 percent, three percen-
tage points more than its benchmark index,
while SKAGEN Kon-Tiki was down 0.2 percent
bringing it 3.4 percentage points ahead of
the index. SKAGEN Vekst fell 0.1 percent,
slightly ahead of the 0.3 percent loss for its
benchmark index.
Our bond fund SKAGEN Tellus has intentio-
nally kept a short duration, amid expectations
of a yield expansion at the long end of the
yield curve. SKAGEN Tellus also performed
better than its benchmark index, ending the
quarter 29 basis points ahead of the latter.
-7 % -5 %
The major drivers decelerated: While the global economy experienced economic growth of 4.8 percent last year, growth is now
expected to be around 4 percent. It is primarily tightening in the large emerging markets drivers of China, India and Brazil that are
pulling down. Among developed countries only disaster-struck Japan is experiencing a significant fall in growth.
Surprised on the upside again
Results for the last quarter of 2010 were again
solid with all regions reporting in line or bet-
ter than expected results. US companies beat
net profit expectations by 5 percent to deli-
ver earnings growth of 39 percent. This was
driven by a strong recovery for financials.
Earnings excluding financials grew 19 per-
cent which was also ahead of expectations.
In Europe, results grew rapidly but were in
line with expectations. In emerging markets,
Asia delivered results above consensus fore-
casts. In Latin America, Brazil surprised on
the upside while earnings for Mexico were
below expectations.
Political unrest in MENA
The world is an uncertain place. Motivated
by the opposition which resulted in the fall
of the 30-year Mubarak regime in Egypt, we
have seen a wave of opposition to the ruling
regimes in other Middle Eastern and African
countries. The unrest will obviously impact
near term economic growth negatively but
democratisation may improve the long term
growth prospects of the MENA region.
The recent war in Libya has further sup-
ported the oil price which spiked from USD
-3 % -1 % 1% 3% 5% 7% 9% 11 %
Source: JP Morgan
95 per barrel at the end of 2010 to USD 117;
its highest level since August 2008. Libya pro-
duced 1.6m barrels of oil per day, equivalent
to 2 percent of the global supply, before the
upheaval. At present production is running
at only 300k, but with very limited, if any,
shipment out of the country. The unrest in
the region has not yet impacted oil supply in
other countries.
Not so bad – for the economy
The tragic earthquake in Japan sent a new
wave of worries over the financial markets
in mid-March. A near term negative impact
on the Japanese economy is inevitable, but
the Kobe disaster in 1995 proved that the
impact should be short lived. It is also worth
mentioning that the impact on world econo-
mic growth should be negligible as Japan
has contributed only 3-4 per cent to global
growth in the past five years.
Japan is a supplier of a number of key com-
ponents for the automotive, engineering and
electronics industries. In most cases, there
are alternative suppliers that can ramp up
production, but some companies will still
feel the near term effects of the damaged
manufacturing capacity in Japan. We have

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
20 porTFolio manaGerS reporT

Cotton prices skyrocket: A sharp increase in cotton prices is having a strong negative impact on clothing retailers.

reviewed the supply chain for our core hol- of the shortfall will need to be replaced by poor CounTrieS hardeST hiT by
dings and believe that any impact on our com- liquefied natural gas, LNG. hiGher
enerGy Food
Share oFpriCeS
inFlaTion index
panies should be negligible and short lived, Food Share oF enerGy Share oF
apart from toyota Industries (1.3 percent of Global economic growth set to moderate CounTry inFlaTion index inFlaTion index
SKAGEN Global). the Korean auto makers Global Gdp growth reached 4.8 percent emerGinG marKeTS
Combined 31.4 6.0
and Samsung Electronics could benefit from in 2010 driven by emerging countries. In India 46.2 6.4
supply problems among Japanese competi- 2011, growth is expected to fall slightly to China 33.6 5.7
tors, although to what extent is as yet unclear. four percent with a deceleration of growth thailand 33.0 5.1
russia 32.2 2.4
the impact on energy supply is critical. in emerging markets where the tightening
Brazil 30.0 6.3
Nuclear power represents 25 percent of cycle in Brazil and a number of other markets turkey 27.6 7.7
energy demand in Japan and about a third is set to slow growth to six percent. China poland 24.6 15.4

of its capacity – or 8 percent of total energy and India, the two growth drivers in Em, are Hungary 23.0 9.9
Indonesia 19.6 5.9
supply – is out of production. rebuilding expected to deliver growth of nine and eight
mexico 19.0 7.9
capacity will likely be a long process and most percent respectively. Compared to three South Korea 14.0 4.4
months ago, global growth expectations
Source: Morgan Stanley
are only marginally down. We have seen a

more expenSive CoTTon, Silver and GaSoline

Cotton 39 %
Silver 22 %
Gasoline 21 %
Corn 10 %
Live cattle 9%
Coffee 9%
Lean hogs 9%
Nickel 5%
Aluminium 5%
Gold 1%
Soybeans -1 %
Natural gas -3 %
Copper -3 %
Sugar -6 %
Wheat -6 %

-10 % 0% 10 % 20 % 30 % 40 % 50 %

Source: Bache Commodity Index

Falling wheat prices: prices for food commodities such as Sharp price increase: during the first quarter of this year prices of several soft and hard commodities have risen substan-
wheat and sugar fell in the first quarter. that is music to tially. the price of gold is only just in positive territory while the price of food commodities such as sugar and wheat has
the ears of consumers in emerging markets. actually fallen six percent.

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
p o r tf o l i o m a n a g e r s r e p o r t 21

MERGER AND ACQUISITIONS PICK UP SPEED com sector to be in focus, as organic growth
is low and balance sheets are healthy. The
Mill. USD
1600 000 de-rated pharmaceutical sector is also as
1400 000 an obvious candidate for industry consoli-
1200 000 dation.
1000 000 In our equity funds, we have seen three
800 000 full or partial takeovers this year. These are, in
600 000
order of importance, Pride International, Par-
400 000
malat and Kim Eng Holding and have resulted
200 000
in a combined transaction value of EUR 736
0
million for our equity funds.
1. qtr. 95

3. qtr.95

1. qtr.96

3. qtr.96

1. qtr.97

3. qtr.97

1. qtr.98

3. qtr.98

1. qtr.99

3. qtr.99

1. qtr.00

3. qtr.00

1. qtr.01

3. qtr.01

1. qtr.02

3. qtr.02

1. qtr.03

3. qtr.03

1. qtr.04

3. qtr.04

1. qtr.05

3. qtr.05

1. qtr.06

3. qtr.06

1. qtr.07

3. qtr.07

1. qtr.08

3. qtr.08

1. qtr.09

3. qtr.09

1. qtr.10

3. qtr.10

1. qtr.11
Source: Dealogic, Goldman Sachs
Equities remain good value
Still some way off the peak: Following a period of moderate activity, merger and acquisition activity is now picking up
With stock prices more or less where they
speed again but is still some way off pre financial crisis levels. were at year-end and only marginal changes
to earnings expectations and government
LOWER PRICED EMERGING MARKETS bond yields, the appeal of equities conti-
nues to hold. Global equities now trade at
P/E
35x a P/E of 12.6 times consensus estimates for
MSCI EM MSCI World
2011 with an expected earnings growth of
30x
15%. Valuation is thus at the bottom end of
25x
its two year range and in line with the long
20x term average.
15x 14,1x We have recently stressed that the severe
13,2x
10x underperformance of larger companies, both
5x
in developed and emerging markets, has cre-
ated a situation in which large caps now offer
Dec-87

Dec-88

Dec-89

Dec-90

Dec-91

Dec-92

Dec-93

Dec-94

Dec-95

Dec-96

Dec-97

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

superior relative value. This still holds true as

Source: MSCI, Morgan Stanley Research - 31 march 2011. large caps continued to underperform slightly
in the first quarter of 2011. One exception to
No cause for vertigo: Based on current earnings, emerging markets are now priced at a P/E of 13.2 versus 14.1 for the deve-
loped markets. None of the price tags should cause vertigo. this observation is Norwegian equities, where
large caps have outperformed and we now
see better value in selected small and mid
slight downgrade for US and Japan and minor data. Much of the inflationary pressure is dri- cap companies.
upgrades for Emerging Asia. ven by escalating food and energy prices. 2010 was a year which proved difficult for
Data from the US has been mixed lately High soft commodity prices are partly explai- a number of active fund managers as stock
with the Philadelphia Fed Business Outlook ned by abnormal weather conditions in 2010. and sector correlation was high. In early 2011,
Index at a 27 year high, but durable goods Bearing in mind the short harvesting cycle we saw a notable decline in correlation, which
orders slipping into the red and private con- of commodities and the fact that high prices has increased somewhat again lately. We
sumption data on the weak side. A continu- stimulate supply, we expect to see inflation believe 2011 will be a year in which strong
ous decline in US residential housing prices, pressure from food prices to taper off in the franchises, pricing power and control of the
which have improved affordability to a level second half of the year. This is good news supply chain will prove to be critical and a
not seen since the index started in 1971, has for emerging countries, as the food share of year in which great opportunities will open
failed to attract buyers while existing home household consumption in EM is around 30 up to active managers. It is therefore encou-
sales continue to decline. The US 30 year percent versus 10-15 percent for developed raging that returns for all our equity funds, as
treasury yield went up 17bps during the first countries. Energy only comprises six percent well as our fixed income funds, are ahead of
quarter of 2011 to 4.49 percent. of the CPI basket in emerging countries versus their benchmark indices year-to-date.
ten percent for the US for example.
Belief in lower inflation
The Brazilian minister of finance introduced M&A picks up By Knut Harald Nilsson
the expression “currency war” last autumn, Merger and acquisition activity has, as we
when several emerging countries aimed to expected, picked up in the past year, but
stem speculative flows and weaken their is still far off the pre-crises level we saw in
currencies to sustain competitiveness. After 2007/2008. Across the globe, balance sheets
lengthy discussions at the G-20 summit in have seldom been stronger, with net debt for
Seoul in October, the FX discussion has the global universe at less than four times
waned this year as central banks have turned EBITDA. This combined with the thawing
their near focus on curbing inflation. of the credit market, low interest rates and
CPI is now running at six percent in emer- modest equity valuation, sets the scene for
ging countries while global inflation is hove- continuous strong M&A activity.
ring slightly south of three percent on recent We would expect the cash generative tele-

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
22 porTFolio manaGerS reporT

SKaGen vekst SKaGen veKST Key FiGureS For The larGeST holdinGS (aS oF 31 marCh 2011)

Company Size of holding, % price p/e 10e p/e 11e p/b last price target
perFormanCe (eur) January-marCh* laST 12 monThS* Kongsberg Gruppen 5,1 % 153,5 12,2 11,4 3,8 200
Samsung Electronics 3,2 % 625 000 6,6 6,9 1,0 750 000
SKAGEN Vekst -0.1 % 10.6 %
Eletrobras 3,0 % 30,6 10,0 9,5 0,4 65
mSCI AC/ oSEBX Index -0.3 % 14.4 % doF 2,6 % 55,8 11,2 1,3 70
Norsk Hydro 2,5 % 45,4 34,1 14,2 1,3 75
*As of 31 march 2011 Solstad offshore 2,5 % 130,0 10,0 1,1 160
Carnival Corp 2,5 % 38,4 15,3 12,0 1,3 60
SKaGen vekst team Gjensidige Forsikring 2,3 % 66,7 11,3 10,3 1,4 80
Wilh Wilhelmsen Holding 2,2 % 168,5 9,6 8,4 1,1 210
petroleo Brasileiro 2,1 % 28,5 8,0 8,6 1,1 45
Ganger rolf 2,0 % 151,5 15,6 6,6 1,2 205
Bonheur 2,0 % 167,0 11,1 6,0 1,1 220
Top 12 weighted average 32,0 % 13,1 9,3 1,1 42%
oSebx 13,9 11,4 1,8
World index 14,9 12,6 1,9

portfolio managers beate bredesen and ross porter

ahead of the index
In march we celebrated our first year at the
helm of SKAGEN Vekst and after a relatively
poor start the fund has now beaten its bench-
mark index for two consecutive quarters.
We look forward to ole Søeberg joining the
team in may. the addition of a third portfolio
manager will in no way change how the fund
is managed however.
We continue to strive to construct a robust
portfolio, that is to say a portfolio which falls
less than the market in downturns yet also
keeps up with the market when it rises. If
we succeed this will translate into a good
absolute return over time to the benefit of
our unitholders.
Further from the index
to achieve the desired portfolio construction
we have distanced ourselves further from the
largest companies in the benchmark index.
For example at the end of the first quarter we
only held one of the 13 largest companies on
the oslo Stock Exchange. We continue to find
better value in the smaller companies on the
oslo Stock Exchange.
In the global stock market we believe that
it is still the largest companies that provide
the best opportunities. In contrast to the Nor-
wegian part of the portfolio, the international
part consists of companies with a considera-
bly higher market value. At the same time we
still hold relatively few of the really large com-
panies in the mSCI All Country World Index as
these are often not under-researched.
In short, we maintain a no compromise
approach to the management of the fund;
managing money as if it were our own.
impressive Kongsberg Gruppen
Although the fund’s return in the first quar-
ter was moderate, it was nevertheless an
eventful first three months. Several of our
larger holdings did well. Kongsberg Gruppen,
which is our largest holding, was once again
the best contributor in absolute terms. the
company has an operating margin that is far
better than we could have dreamed of. the
order backlog is still good and the outlook
for a new framework agreement with the uS
investment in discovery offshore and Seadrill
offshoot North Atlantic drilling.
North Atlantic drilling’s rigs are amongst
the best in Norway, but the company is not
directly cheap based purely on the value of
the steel. discovery offshore, on the other
hand, does seem cheap based on the market
value of harsh environment jack-up rigs. the
company has ordered two rigs for delivery in
2013 and has options to buy a further two.
We have raised our stakes in petrobras
and seismic company tGS Nopec. the lat-
ter has a unique asset light business model,
something that should provide an extra pre-
mium compared to other seismic companies.
tGS Nopec is priced at 4.6 times the enter-
prise value (EV) to cash flow from operations
ConTribuTorS FirST quarTer
largest positive contributors
Company mnoK
Kongsberg Gruppen + 68
Eltek + 46
pride International + 42

military for the protector remote weapon sta- doF + 31

Eletrobras + 30
tion seems positive. Kongsberg maritime also
larGeST purChaSeS/SaleS has a strong order intake, for instance within
GjensidigeForsikring + 30
January-marCh
enerGy Share oF inFlaTion index
Solstadoffshore + 29
their dp systems (dynamic positioning) for marine Accurate Well + 28
largest purchases largest sales
new oil rigs. Norske Skogindustrier + 23
tGS Nopec Geophysical + 19
CompANY mNoK CompANY mNoK We still believe that a price to earnings
tGS Nopec 101 pride International -252
ratio of less than 12 is too cheap for a solid largest negative contributors
royal Caribbean
Carnival 98
Cruises
-104
company with good growth prospects. Kongs- Company mnoK
France telecom 97 pfizer -88 berg Gruppen also looks likely to be able to dixons retail -51
russland 66 Stolt-Nielsen -68 Carnival -51
raise its dividend in the coming years. this
morpol 50 rezidor -61 Aveng -23
Eletrobras 44 Farstad Shipping -60 should encourage further interest in the com- Norwegian Energy -22
Benetton 38 Superior Energy -49 pany. LG Electronics -19
Northland tevapharma -18
dixons retail 35 -44
resources
rig switch Samsung Electronics -17
Norwegian LG Corp -16
Kesko 34 -36
property After Ensco offered to buy pride International, Ganger rolf -16
Norwegian Car
29 Solstad offshore -36 we sold all our shares in pride at a solid profit. Bonheur -15
Carriers
Some of the proceeds were used to buy an

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
p o r tf o l i o m a n a g e r s r e p o r t 23

for 2011. These are extremely conservative

earnings expectations.

Noreco – the loser of the quarter

After the failure of its “garage sale”, Noreco
ended up being the worst performer in the
first quarter. The managing director has step-
ped down and we expect new management
and board members to restore some of the
lost trust in the company. The level of confi-
dence in the company is at record lows, to put
it mildly. We have chosen to keep our stake in
the company – for the time being.
The offshore supply companies have been
good contributors in the quarter. We have uti-
lised the increased interest and rising share
prices to exit Havila Shipping and reduce our
stakes in Solstad Offshore and Farstad Off-
shore. The offshore supply companies still
constitute a little more than seven percent
of the total portfolio.
We exited Northland Resources and
booked a good profit. The company is still in
the developmental stage. If the current iron
ore prices prevail until the Kaunasvari mine
opens in 2014 there will be a large upside.
If, however, the iron ore prices drop back to
historic levels, the negative impact could be
significant.
Our stake in Turkish gold producer Koza
Altin Islet was increased significantly. This
company extracts gold at a quarter of the
current gold price. The company is also cur-
rently priced at ten times this year’s expected
earnings.

Debt-free Swedish pulp

We have built up a significant position in the
Swedish pulp producer Rottneros. After we
bought shares the company published good
earnings figures and introduced a dividend
corresponding to a dividend yield of four PHOTO: Bloomberg

percent. This has resulted in a good share

price increase. Rottneros is debt free and is
benefitting from rising pulp prices.
Norwegian Car Carriers, which also ships
freight other than cars, came into the portfolio
in February when the shipping company was
raising money to buy a new vessel. Norwegian
Car Carriers is priced at less than book value
and from the autumn will be able to enter
into new freight agreements at higher prices.
Some of our investment in Norwegian Car
Carriers was financed by reducing our stake
in Wilh. Wilhelmsen.
Unfortunately we increased our holding
in electronics retailer Dixons, which was last
year’s worst contributor to the fund’s return.
After we bought shares the company announ-
ced lower sales in Great Britain and southern
Europe. Good sales figures from the Nordic
Poor fashion and high cotton prices: The share price of Italian clothing retailer Benetton was affected by low sales growth,
a poor clothes collection last autumn and high prices of the company’s central input, cotton.
region and an ongoing cost cutting program growth in new markets, especially in India
did not prevent the company from also beco- and Turkey, and an expansion in children’s
ming this year’s worst contributor so far. clothing, coupled with falling cotton prices,
will make the company more popular.
Unpopular Italian clothing Another newcomer is Kesko of Finland.
Another new holding is Italian clothing retailer The company has a 35 percent market share
Benetton. As a result of low sales growth, in food trade in Finland and healthy margin
poor autumn clothing lines and high prices levels. Kesko also has activities within the
for its main raw material, cotton, the company building and home improvement, car and
is very unpopular at the moment. We couldn’t machinery and home and specialty goods
resist the temptation of a solid balance sheet, trades. In addition to its operations in Finland
huge values within property, high dividend the company has activities in Russia and the
and a downtrodden stock price. Substantial Baltic countries, where it has considerable

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
24 p o r tf o l i o m a n a g e r s r e p o r t

market shares.
Kesko is cheap measured in terms of price
to sales, but its margins are currently low
within the building and home improvement
trade. Margin improvement in this business
segment, in addition to a possible sale of the
car division, may be triggers for a revaluation
of the stock. The company also has a strong
balance sheet, which can be utilised for further
expansion in Russia.

Stranded cruise
Increased fuel costs and turmoil in the Middle
East and North Africa resulted in a bruising for
cruise operators’ share prices in the quarter.
We completed our switch from RCCL to Carni-
val, which we believe represents better value
for money. Carnival was one of the fund’s lar-
gest negative contributors in the quarter. The
share price decline seems excessive based
on what the increased fuel cost and turmoil

in the Middle East and North Africa actually
mean for the company.
The pharmaceutical sector was a mixed
bag in the first quarter. One of the winners
in the quarter was Axis-Shield. At the same
time Teva Pharma was one of the largest nega-
tive contributors. Axis-Shield is showing good
development in new markets and had better
earnings than the year before.
Some analysts reacted negatively to Teva’s
presentation of last year’s fourth quarter num-
bers, with guidance for 2011 being lowered
somewhat. The fact that the company was one
of the price losers in the first quarter this year
was largely due to a weakening of the dollar
against the Norwegian kroner.
Into Swedish pulp: SKAGEN Vekst bought a relatively large holding in Swedish pulp producer Rottneros just before the
company reported good quarterly figures, which resulted in a good price lift for the share.
With a price to cash flow of less than nine
and an expected growth rate of 10 percent
going forward, we still find the company att-
ractively priced.
After good gains for Pfizer we sold our hol-
ding in the quarter.
Venturing into Danish bank
Within finance our strategy has been to be cau-
tious when it comes to traditional banks. The
PHOTO: Bloomberg
PHOTO: Rottneros
outlook for return on capital has been much
better within, for example, P&C insurance. Our
holding Gjensidige became one of the quarter’s
winners.
Despite our aversion to banks we still ventu-
red into Danske Bank and invested about one
percent of the fund in this Danish bank. The
shares were bought both before and during the
bank’s raising of capital at the end of March/
beginning of April. After the share sale the
bank has better capital coverage than most of
the Nordic banks. For this we paid well below
the book value
Like SKAGEN’s two other equity funds we
have also participated in the equity issue in
Eletrobras and benefitted from the subsequent
increased stock price. Our stake in France
Telecom was also increased somewhat in the
quarter.
We believe that the SKAGEN Vekst portfolio
is now well balanced and we appreciate the
opportunity to rejuvenate the portfolio with
new and cheaper companies. We are optimistic
as we head into spring.

Read more about the fund on page 34

Danish bank: Despite our doubt about traditional banks, we took a chance and bought a stake corresponding to one per- SKAGENFUNDS.COM/SKAGEN-VEKST
cent of the fund in Danske Bank, at a price well below the bank’s book equity. Following a share sale at the end of the quar-
ter, the bank’s capital coverage is among the best of the large banks in Scandinavia.

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
porTFolio manaGerS reporT 25

SKaGen Global SKaGen Global Key FiGureS For The larGeST holdinGS (aS oF 31 marCh 2011)

Company Size of holding, % price p/e 10e p/e 11e p/b last price target
perFormanCe (eur) January-marCh* laST 12 monThS* Samsung Electronics 6,7 % 625 000 7,0 6,5 1,0 780 000
Eletrobras 4,5 % 30,6 11,7 10,7 0,4 50
SKAGEN Global 1.9% 15.4%
tyco International 4,3 % 44,8 16,2 14,7 1,5 50
mSCI AC -1.1% 8.9% pfizer 3,4 % 20,3 8,9 9,1 1,9 22
Accenture 2,7 % 55,0 18,6 17,2 10,7 60
*As of 31 march 2011 Citigroup 2,6 % 4,4 12,6 10,5 0,8 8
Bunge 2,2 % 72,3 17,4 12,3 0,9 75
SKaGen Global team
pride International 2,1 % 43,0 30,2 16,6 1,7 42
Kyocera 2,1 % 8430 13,0 14,1 1,2 11 000
Gazprom 2,0 % 32 6,5 5,7 0,9 50
Top 12 weighted average 32,8 % 10,9 9,8 1,0 29 %
World index n.a. 14,9 12,6 1,9 n.a.

be relatively high in 2011, with the large of our pride shares were bought in 2005 and
emerging markets countries as the most 2006, the annual return is only satisfactory
portfolio managers Kristian Falnes, Torkell eide, important contributors to growth. however.
Søren milo Christensen and Chris-Tommy Simonsen.

accepted offer for parmalat longed for lift for eletrobras

For SKAGEN Global the most important the long heralded share issue in Eletrobras
event of the quarter was the decision to sell took place in February. We used our rights
relatively good our entire stake in Italian dairy producer par- to subscribe shares in the company. Since
this year has so far been characterised by malat. At the time of selling, we owned five the share issue resulted in an overhang of
natural disasters in Japan, New Zealand and percent of the company, which was equal to shares for sale in the market, we also used
Australia, as well turmoil in oil-exporting sta- 4.3 percent of the total portfolio. the opportunity to increase our position in
tes in the middle East and North Africa. together with Swedish Zenit Asset mana- the company at attractive prices. once the
In this turbulent climate SKAGEN Global gement and Canadian mackenzie Financial flotation was carried out, we saw the longed
has experienced a positive and relatively Corp. we put forward a list of candidates to for price lift for Eletrobras, which was one of
good first quarter, with an excess return of the new Board of directors to be decided at the largest negative contributors last year.
3.0 percentage points relative to the world the forthcoming general meeting in parmalat. We believe that Eletrobras is still largely
index. Since the manager change at the begin- the rationale behind our proposal was a wish undervalued relative to current earnings, but
ning of march last year, SKAGEN Global is to bring in a Board that was better suited to
eight percentage points ahead of the fund’s exploit the company’s strong financial posi-
ConTribuTorS FirST quarTer
benchmark index. tion to find attractive growth opportunities.
despite rising oil prices and a tight mar- French Groupe Lactalis then increased
largest positive contributors
ket for a number of other commodities, the their holding in the company substantially
Company mnoK
inflation pressure has so far not put a damper and offered us Eur 2.80 euro per share. We parmalat + 421
on economic developments. most indicators accepted the bid, which was 40 percent more pride International + 234
are still signalling that global growth will also than when we first entered the company in the Eletrobras + 149
pfizer + 126
summer of 2009. the lion’s share of the value
Gazprom + 112
increase came in the first quarter of this year, Baker Hughes + 104
larGeST purChaSeS/SaleS making parmalat by far the best contributor Cliffs Natural resources + 93
January-marCh
enerGy Share oF inFlaTion index of the quarter. Bunge + 77
largest purchases largest sales Nabors + 74
Accenture + 70
CompANY mNoK CompANY mNoK down in pride following bid
tesco 757 parmalat -1511 Another of the fund’s larger investments, largest negative contributors
China mobile 349 renault -587 namely rig operator pride International, Company mnoK
Samsung Electronics -138
Gazprom 301 pride International -464
received a bid from competitor Ensco at the
Citigroup -94
unilever 287 Bunge -399
beginning of February. pride shareholders ternium -75
Eletrobras 267 Noble -279 were offered uSd 15.6 in cash and 0.4778 microsoft -69
Vimpelcom 259 Cheung Kong -122 shares in Ensco for each pride share held. China mobile -69
Citigroup 215 time Warner Cable -95 LG Corp -55
the offer price represented a premium of 21
Asya Katilim Vimpelcom -53
Bankasi
147 Calpine -45 percent to the market price. tesco -45
petrobras 97 Kyocera -40 We have reduced our holding in pride by Finnair -43

Comcast 95
Chaoda modern
Agriculture
-36 around 35 percent since the bid was laun- EFG Hermes -42

ched, at a good profit. Given that the majority

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
26 p o r tf o l i o m a n a g e r s r e p o r t

not least relative to the estimated market

value of the company’s distribution network
and energy-producing assets. The share price
constitutes only 40 percent of the book value
of the equity. Following the share issue and
conversion of public debt to equity, the com-
pany has a very healthy balance sheet, with
very little net interest bearing debt. See the
separate article on Eletrobras on page 14.

Disasters to the tune of half a billion euro

The tragic earthquake in Japan had a relatively
large impact on our portfolio company Han-
nover Re. The company recently announced
an estimated loss of 250 million euro as a
result of the disaster. Taking into account the

PHOTO: Bloomberg
earthquake in New Zealand and flooding in
Australia, the total payments for these natural
disasters are estimated at 440-500 million
euro. To put things into perspective, the com- Out of Parmalat: We accepted an offer from French Groupe Lactalis for our shares in Italian Parmalat. We noted a value in-
crease of over 40 percent since we first bought into the company in the summer of 2009.
pany has budgeted 530 million euro for total
disaster payments for the full year.
Following the earthquake in Japan, the
market value of Hannover Re has fallen by
around 360 million euro, corresponding to
a price drop of around seven percent. One
consequence of the natural disasters this
year is that the premium level for disaster
insurance will rise markedly.

Our Japanese stocks are doing fine

Although the earthquake resulted in seve-
ral Japanese factories having to shut down
temporarily, for the time being it appears
that there will not be any long term negative
effects on our Japanese portfolio companies.
A general consequence of the disaster is that
the energy situation in Japan will be negati-
vely affected, with a subsequent shortage of
energy and higher electricity prices.
At the end of the quarter, around 5.5 per-
cent of the portfolio was invested in Japanese
equities, of which the largest holdings were
the industrial conglomerates Kyocera and
Toyota Industries.

Satisfactory results
On the whole the earnings results for the
fourth quarter were very satisfactory for our
portfolio companies. The majority of the com-
panies reported better results than expec-
ted. But there were a few that also stood out,
though for negative reasons.
Both our US banks, Bank of America and
Citigroup, reported poorer figures than expec-
ted. Weaker results from securities trading,
PHOTO: Bloomberg

pressure on interest margins and higher

general costs must take much of the blame
for this. On the positive side, the default and
loss situation in banks is steadily improving Down in Pride: After competitor Ensco made an offer for Pride International that was 21 percent above the prevailing mar-
and a larger part of the balance sheets can ket price, we sold around 35 percent of our shareholding in Pride.

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
p o r tf o l i o m a n a g e r s r e p o r t
Unilever at a bargain: We believe that the stock market has focused far too much on weaker growth in mature markets and low margins as a result of higher commodity prices rather than
the growth Unilever is experiencing in emerging markets, and that the share price is therefore far too low.
be reported fit for duty.
As a result of pressure on profit margins
from higher commodity costs, South American
steel company Ternium also delivered poorer
results than expected.
The list of positive results surprises is long.
It was most gratifying that several of our ten
largest investments reported impressive
results, well above expectations. Security
company Tyco International delivered a net
income that was ten percent above expecta-
tions. Five percent organic sales growth, higher
operating margins, signs of higher dividends
as well as new share buyback programs, were
well received both by us and the stock market.
A rare shining pharmaceutical star
US Pfizer has this year been one of the few
shining stars in a dark pharmaceutical sky.
The company reported somewhat better figu-
res than expected, at the same time as they
announced large cuts in development costs
over the next few years. Higher dividends and
share buyback programs are also signs of grea-
ter investor friendliness.
Accenture reported an impressive orga-
nic results growth of 18 percent compared
to the same quarter last year. Both turnover
and net income were far better than expec-
ted. The company’s business model requires
little capital, so earnings improvements here
are also resulting in increased dividends and
share buyback.
Bunge hit back
With last year’s catastrophic half year results
from agricultural company Bunge fresh in
investors’ minds, it was important for the
company to prove they were back on profita-
ble ground. Agricultural operations delivered
substantially better figures than expected,
while the sugar operations in Brazil reported
disappointing results. Poor crops as a result
of drought must take the blame for this. Bunge
has poor visibility over its future earnings and
– sensibly enough – declines to give estimates
on annual earnings. If Bunge does not repeat
last year’s blunder by increasing the risk on
future contracts, there is a good chance that
the company will present substantial earnings
improvements this year.
Tesco and Unilever on sale
Newcomers to the portfolio are British-based
grocery retailer Tesco and Anglo-Dutch consu-
mer goods company Unilever.
As a result of expectations of weak growth
in mature developed markets, as well as mar-
gin pressures due to higher commodity prices,
both companies have low valuation based on
current earnings. Based on expected results
for this year, Unilever and Tesco are priced at
13 and 11 times earnings. Dividend yield is
around four percent.
We believe that the stock market is forget-
ting that Unilever and Tesco are heavily expan-
ding in the emerging markets. More than 50
percent of Unilever’s turnover comes from
these markets, while for Tesco the correspon-
ding figure is around 25 percent. In other words
both companies are well exposed to consumer
growth in these markets going forward.
In the first quarter we have also increased
our shareholding in Gazprom, Petrobras, Com-
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
27
PHOTO: Bloomberg
cast, Bank Asya, Citigroup, Vimpelcom and
China Mobile.
Besides selling the Parmalat stake and trim-
ming our position in Pride International, we
have substantially reduced our positions in
Bunge, Renault, Time Warner Cable, Cheung
Kong and Noble. The common denominator to
all the sales was a price upturn which in turn
brought us closer to our fundamental price
target.
Less concentrated
The cash position in SKAGEN Global at the end
of the quarter was 8.0 percent. This is unusu-
ally high and a result of the sale of Parmalat
carried out at the end of the quarter.
Following the sale and cutback of several of
our larger holdings the portfolio concentration
has been reduced somewhat. The ten largest
investments in SKAGEN Global now constitute
32.8 percent of the fund.
We still find our companies to be attracti-
vely priced. The weighted average of the top
ten companies in our portfolio have an esti-
mated price/earnings ratio of only 10 for 2011,
and a price/book ratio of 1.0. This is substan-
tially lower than for the market in general.
Attractive ratios and expected results growth
should be a good starting point for a positive
development of SKAGEN Global’s fund price
going forward.
Read more about the fund on page 36
SKAGENFUNDS.COM/SKAGEN-GLOBAL
28 porTFolio manaGerS reporT

SKaGen Kon-Tiki
perFormanCe (eur) January-marCh* laST 12 monThS* SKaGen Kon-TiKi Key FiGureS For The larGeST holdinGS (aS oF 31 marCh 2011)
SKAGEN Kon-tiki -0.2% 16.3%
Company Size of holding, % price p/e 10e p/e 11e p/b last price target
mSCI Emerging markets Index -3.6% 12.8%
Eletrobras 6,5 % 30,8 8,8 8,8 0,4 70
*as of 31 march 2011 Samsung Electronics 5,5 % 625 000 6,6 6,8 1,0 780 000
Baker Hughes 5,3 % 73,7 35,8 14,7 2,0 100
SKaGen Kon-Tiki team
Hyundai motor 5,0 % 66 000 3,4 3,1 0,6 100 000
Sistema 3,7 % 29,1 9,7 7,3 2,1 30
Vale 3,0 % 47,4 8,2 6,3 2,0 65
Banrisul 2,9 % 20,0 11,1 8,9 2,2 22
Gazprom 2,8 % 32,4 6,5 8,5 0,9 40
Standard Chartered 2,6 % 1639 10,2 8,9 1,7 2 000
Hon Hai precision Industry 2,6 % 103 9,5 8,5 2,1 200
VtB Bank 2,5 % 7,00 17,5 11,7 2,2 9
portfolio managers Kristoffer Stensrud, richter Gedeon 2,4 % 39 095 10,8 10,9 1,7 50 000
Knut harald nilsson and Cathrine Gether Top 12 weighted average 44,7 % 8,1 7,1 1,0
Top 35 weighted average 77,8 % 9,2 7,8 1,2
World index 14,0 11,5 2,1

Flight of capital
unlike last year, when we saw record amounts
of money flowing into emerging markets, the
first quarter this year has been characterised
by a flight of capital. Almost 30 percent of
the money that came in last year has found
its way out again in the first three months
of this year. this money has moved back to
what are perceived to be the safer developed
markets. the emerging markets index has
therefore underperformed the world index
by 2.5 percentage points. SKAGEN Kon-tiki
has managed relatively well and ended the
quarter 3.4 percentage points ahead of the
emerging markets index.
inflation fears should wane
there are many reasons why the risk appe-
tite of investors in the global equity markets
in general, and in the emerging markets in
particular, has declined in the period. the
debt problem in Europe, which for a while
was swept under the carpet, has resurfaced.
unrest in the middle East and North Africa has
pushed up the oil price and led to concerns
that the economic growth in the world is slo-
wing. to top it all, there was the disaster in
Japan, the global ripple effects of which have
been difficult to predict up to now.
But the main reason for the flight from
emerging markets has been the rising infla-
tion we have seen in these markets, with the
accompanying economic tightening.
Higher food prices have been the main
contributor to rising inflation. recently, howe-
ver, we have seen a stabilisation of, and in
fact a slight decline in food prices. If this
development continues, inflation in emer-
ging markets should wane in the second half
of the year. In addition we are now also see-
ing signs that the recent tightening in China
might abate.
With a much higher trend growth in
emerging markets than in developed mar-
kets, coupled with the fact that global equity
visible signs that the company’s organisa-
tional turnaround is now bearing fruit, Baker
Hughes was the largest contributor in the
period. Last year’s acquisition of BJ Services
has now been integrated. the restructuring
towards geographical focus rather than pro-
duct focus is starting to have an effect. At the
same time the combination of cost savings,
changes to the supply chain and a strong
oil service market is leading to substanti-
ally better operational leverage than many
expected.
We sold our holding in pride International
following a bid from Ensco for the company
at a price that was 21 percent above the last
closing price. We found the bid price to be
ConTribuTorS FirST quarTer
largest positive contributors
Company mnoK
Baker Hughes + 491
Great Wall motor + 353
Eletrobras + 308

funds are substantially underweight these pride International + 294

larGeST purChaSeS/SaleS Gazprom + 233
January-marCh regions, we believe that the long term trend
enerGy Share oF inFlaTion index Hyundai motor + 196
of money flow into emerging markets is intact. Sistema + 178
largest purchases largest sales
And provided that there are no unforeseen Banrisul + 139
CompANY mNoK CompANY mNoK events, this spring should bring more light GolarLNG Energy + 70
Gjensidige Forsikring + 58
VtB Bank 548 pride International -1727
and warmth to those who have invested their
richter Gedeon 453 Kim Eng Holding -204
equity assets in emerging markets. largest negative contributors
Eletrobras 448 Seadrill -184
Company mnoK
First Quantum
Softbank 444
minerals
-143 popular oil and gas HonHai precision Industry -249
Harbin power Equipment -186
Equinox minerals 399 petrobras -138 the events of the past few weeks in the
EFG-Hermes -166
Hon Hai precision
Industry
286
marine Harvest
Group
-127 middle East and Japan have led to rising oil Samsung Electronics -164

Haci omer Sabanci

and gas prices. It is therefore no surprise that Aveng -154
132 polaris Securities -87
Holding energy was the fund’s best sector in the quar- China mobile -141
mahindra & mahindra -104
China mobile 119 Sistema -83 ter. But positive specific events linked to our LG Electronics -99
Indo tambanraya
Vale 111
megah
-64 companies also contributed. Empresas ICA -94

Aveng 96
Aberdeen Asset
-61
Having delivered a 2010 result that was Vale -90
management
well above expectations, as well as showing

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
p o r tf o l i o m a n a g e r s r e p o r t 29

reasonable and believe it is unlikely that a

higher bid will be made.
Following a strong share price develop-
ment, we also sold out of Indo Tambangraya
Megah, and bought a stake in Seadrill’s newly
established company of North Sea rigs, North
Atlantic Drilling. At the same time we used the
opportunity to reduce our position in Seadrill
slightly after a good run.
A recent acquisition from the end of last
year, Russian Gazprom, also ended up on the
winners’ list after the gas market in Europe
tightened. Geopolitical events, in Libya in par-
ticular, have reduced gas exports to Europe
at the same time as the situation in Japan is
leading to increased demand from the region.
At a price of 5.5 times the year’s expected
earnings, Gazprom still stands out as very
attractively priced.

Buoyant Golar
Golar LNG Energy, one of the world’s largest
independent owners and operators of LNG
ships, experienced a price lift of 76 percent in
the period. With a quarter of Japan’s nuclear
power out of action, there is now a greater
demand for imports of liquified natural gas,
or LNG. This has led to higher spot rates in
an already tight market for LNG ships. Golar
may now be able to reactivate three old ships
which are laid up, as well as achieve higher
rates on its four modern LNG ships when they
finish their current contracts in the first half
of 2012.
We did not make major changes in the
commodity sector in the period. We conti-
nued to add to our position in copper produ-

PHOTO: Baker Hughes

cer Equinox Minerals before they received a
bid from Chinese Minmetals Resources in
April.

Weak construction companies
There was a negative contribution from the
industrial sector, largely owing to our two
construction companies, Empresas ICA and
Aveng. Mexican ICA delivered relatively good
results, but the stock was affected by con-
cerns that the company’s debt situation may
hamper future growth. South African Aveng
continued to report disappointing figures,
but the order book is growing and prospects
appear somewhat brighter.
Our Chinese manufacturer of power plant
equipment, Harbin Power Equipment, was
also one of the big losers in the period.
Nuclear power is one of the company’s growth
areas and the stock was badly affected by
China’s decision to put new projects on hold
following the disaster in Japan. We added to
our positions in all three “loser companies”
in the period.
US oil service on top: With a value increase of half a billion Norwegian kroner, US oil services company Baker Hughes was
the best contributor to SKAGEN Kon-Tiki’s result in the first quarter.
Fantastic Chinese cars tions downwards as a result of power outages
After an exceptionally good year in 2010, our and possible damage to production plants.
companies within consumer discretionary Hyundai Motor buys only one percent of com-
continue their good development. Our Chi- ponents from Japan, and these can mostly be
nese car manufacturer, Great Wall Motor, was replaced by other suppliers.
particularly noteworthy and is up 50 percent We have continued to add to our position
so far this year. Higher growth, a better pro- in Malaysian conglomerate DRB-Hicom. The
duct mix, higher prices and not least good company is still trading well below book value.
cost efficiency has resulted in the company In Marine Harvest Group we took advantage
reporting far better figures than expected this of strong price development to reduce our
quarter. After a fantastic journey, we used position slightly.
the opportunity to trim our position slightly.
Hyundai Motor was also a good contribu- Poor health
tor. In the short term many global car com- The pharmaceutical sector was the weakest
panies are affected by a shortage of compo- sector in the quarter, both in emerging mar-
nents from Japan. In addition Japanese car kets and for SKAGEN Kon-Tiki. Following wea-
manufacturers must adjust sales expecta- ker guidance than expected, and the ensu-

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
30 p o r tf o l i o m a n a g e r s r e p o r t
Softbank has hidden values: The head of Japanese Softbank, Masayoshi Son, can confirm that iPad has also been a great sales success for them. We believe that the company has signi-
ficant hidden values in Chinese internet companies.
ing downgrading of earnings estimates, our
generic drugs producer Richter Gedeon faced
strong headwinds in the stock market. We
took advantage of the price drop to add to our
position in the company. Richter Gedeon has
a tendency to be conservative. So now that
the estimates have come down, we believe
there is a good chance there will be positive
surprises later in the year.
Egyptian brokerage gets a beating
Financials also provided a negative contribu-
tion. The unrest in Egypt meant that Egyptian
EFG-Hermes performed particularly poorly.
It is obviously unfavourable for a brokerage
company when the stock market remains clo-
sed for two months.
Following the decision by the Russian
government to sell 10 percent of VTB Bank, we
doubled our position in the company. After
the government’s sale and the announcement
that they had bought a controlling and exci-
ting stake in Bank of Moscow, the VTB share
price rose around 10 percent.
We exited Kim Eng Holding after the com-
pany received a bid from Maybank. The bid
was 13 percent higher than the previous tra-
ding day and 37 percent more than the share
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
price a month earlier. We have also exited
Aksigorta and Yapi Kredi Bankasi.
Affected by component fears
Information technology turned out to be a
dismal sector for SKAGEN Kon-Tiki. Following
the earthquake in Japan, the world’s largest
maker of electronic components, Hon Hai Pre-
cision Industry, was impacted by the fear of a
component shortage. Having looked into this,
however, we believe that the risk is exaggera-
ted and have therefore added to our position
in the company.
A newcomer in the portfolio is Softbank,
Japan’s second largest telecommunications
operator. The company also has large stakes
in various Chinese internet companies, where
we believe there is significant hidden value.
This may become visible by listing the com-
panies, among other things.
It is gratifying to note that Eletrobras has
come to life again, as we expected. The share
issuance had been weighing down the stock
and acted like a clamp on the share price.
SKAGEN Kon-Tiki took advantage of the sale
to subscribe in line with the existing holding.
The company has a new managing director,
who together with the management, is signal-
PHOTO: Bloomberg
ling an increased focus on better corporate
governance. This is something that has been
lacking and it bodes well for the future. (See
the separate article on Eletrobras on page
14).
More wind in the sails
We are still comfortable with the pricing of the
emerging markets in general. An estimated
price/earnings ratio (P/E) for 2011 of 11.5 and
a price relative to book value of 2.1, are just
below historic average.
The 35 largest holdings in SKAGEN Kon-
Tiki, corresponding to 78 percent of the port-
folio, are priced at a P/E of 7.8 and 1.2 times
book value. Lower inflation fears, still strong
economic growth and a flow of money that
has started to make its way back into emer-
ging markets may put more wind in Kon-Tiki’s
sails going forward.
Read more about the fund on page 38
SKAGENFUNDS.COM/SKAGEN-KON-TIKI
porTFolio manaGerS reporT 31

macro turmoil
on solid ground
the global economy was hit by four macro
shocks in the first quarter. First, the massive
earthquake and concomitant tsunami in Japan
dealt a severe blow to the world’s third largest
economy, where growth had already faltered
in the last quarter of 2010. In addition to the
weight of human suffering, we now expect two
further quarters of negative growth and lower
growth from 2010 to 2011 than previously
anticipated.
Second, the ongoing revolutions in the
Arab world turned violent in Libya, a rather
large opEC-member. oil and gas prices had
already been rising quite fast due to higher
demand, and the curtailment of Libyan oil
production pushed them even higher. more
recently Saudi increased its oil production
though and that may keep a lid on prices. We
view the Arab revolutions as very positive
for the global economy in the long run; more
minds will be set free and resource use will
probably be increasingly guided by market
principles. But in the short term, they create
turbulence in the markets and hurt growth
prospects somewhat.
third, uS law makers have recently come to
an agreement about public expenditure up to
1 october 2011, but Congress needs to lift the
federal debt ceiling during may or June, somet-
hing which might be difficult to agree on. poli-
ticians will come to an agreement at the end of
the day, but all the big decisions that have an
impact on long term fiscal prospects will be
postponed. Hence the government is wholly
dependent on growth in tax revenues to shrink
the alarmingly high federal deficit.
Fourth, the fiscal situation in the Eurozone
continues to worsen. Ireland just released the
results of the final stress test on its remaining
banks. they showed the need for yet a new
round of capital injections. Since most of the
capital is going to be provided by Irish tax
payers, thanks to the bank guarantee that
was issued to dublin in 2008, this means
yet another layer of public debt. Ireland is of
course “bailed out” by the ImF and the Euro-
zone, but this does not reduce the Irish public
debt, it just reduces interest expenses somew-
hat relative to market financing. the situation
in Ireland is looking increasingly similar to the
one in Greece, which is clearly insolvent. It is
just a matter of time now before the ImF, the
Eurozone or the ECB pull the plug and decide
that Athens needs “restructuring” of its debt.
the same may very well happen in portugal
too. the fragile political situation in portugal
turned messy in march when the socialist
government lost a vote of confidence in parlia-
ment. Currently portugal is run by a caretaker
government. A new election will be held late
in early June, with a new government forming
in late June at the earliest. In the meantime
Lisbon has to roll over substantial amounts
of public debt. this could be very difficult, so
Lisbon has now asked for an international bail-
out. the portuguese situation is very proble-
matic though since the caretaker government
does not have sufficient power to negotiate
a bail-out.
While troublesome, none of these events
is likely to reverse global expansion. Hence
we think that growth and somewhat higher
inflation will push up long term government
yields further in the months ahead. But it could
be a rather rocky ride, with short term flow
effects at times pushing interest rates and
currency rates back and forth.
Fixed inCome
Torgeir høien
Portfolio manager
SKAGEN Tellus
th skagenfunds.com

reCord hiGh riSK premiumS in debT-laden euroZone

Spread to 10-year Germand bund

10 10
9 Greece Portugal Italy 9
8 Belgium 8
Ireland Spain
7 7
Percentage points

Percentage points

6 6
5 5
4 4
3 3
2 2
1 1
0 0
-1 -1
jan mar mai jul sep nov jan mar mai jul sep nov jan mar mai jul sep nov jan mar mai jul sep nov jan mar
2007 2008 2009 2010 2011
Source: Reuters EcoWin

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
32 p o r tf o l i o m a n a g e r s r e p o r t
SKAGEN Tellus
Performance (EUR) January-March*
SKAGEN Tellus -4.38%
Barclays Capital Index -4.67%
*As of 31 March 2010
SKAGEN Tellus
Portfolio manager Torgeir Høien
A discomforting winter
SKAGEN Tellus took at hit during the first quar-
ter, with the fund’s net asset value down 4.4
percent as measured in euro. The only comfort
lies in the fact that we beat the benchmark
index which fell 4.7 percent.
At the start of the quarter we had positio-
ned our fund for a substantial increase in long
term government bond yield. Thus the fund’s
duration was very low, as we only have short
term government paper in our portfolio. The
exception is a four-year renminbi bond issued
by the European Bank of Reconstruction and
Development that we hold for the currency
exposure. So far long term yields have not
risen nearly as much as we anticipated. The
real risk free 10-year yield is hovering just
above zero, all too low in our opinion, as the
recovery in the global economy is now two
years old. There are many reasons for lagging
long term yields, mostly related to geo-poli-
tical disturbances in the Arab world and, of
course, the tragedy that hit Japan. We expect
markets to shrug off these tremors during the
S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
Last 12 months* coming quarter, and still position the fund sation of the policy rate. As markets become
for higher long term yield. The fund’s relative aware of this prospect, we expect the dollar
3.97%
outperformance was due to the weakening of to appreciate noticeably versus the euro and
2.53% the yen, a currency that we did not hold. the other main currencies. Hence a dollar bet
Short term interest rates are on the move, is part of our strategy for the coming months.
and the ECB hiked its policy rate from 1 to As for the euro, we expect it to hold up
1.25 percent on 7 April. As inflation is way in the coming weeks thanks to the ECB’s
above target in the UK, we expect the Bank of expected tightening. However, as the finan-
England to follow suit at the end of the quar- cial turmoil in the Eurozone escalates, we
ter. The US markets are proving remarkably think that the common currency will take a
resilient, and the overnight interest rate on hit. Fundamentally the euro is quite strong
the dollar is still expected to remain around when measured at purchasing power pari-
0.25 percent for the next 12 months. ties. Also, a union that crumbles under the
We view the outlook for the Federal weight of rapidly escalating public debt is not
Reserve’s interest rate setting committee dif- a sustainable framework for a strong common
ferently. While the Fed typically disregards currency.
movements in headline inflation, they are Prudent navigation in these waters should
wary of any sign of increasing core inflation. help us recoup the first quarter loss and hope-
And core inflation clearly bottomed out last fully give our unit holders a decent return in
autumn. As it climbs further and the employ- 2011.
ment situation continues to improve, we
expect the Fed to shift gear and begin to tigh-
ten monetary policy this autumn. Modestly
at first, but then from early 2012 they will
probably move quite fast toward a normali-
Expected average overnight interest rates next 12 months
6 6
5 5
Sweden UK Switzerland
Eurozone US Japan
4 4
Precent
Precent
3 3
2 2
1 1
0 0
jan mar may jul
2008
sep nov jan mar may jul
2009
sep nov jan mar maiy jul
2010
sep nov jan mar
2011
Source: Reuters EcoWin
R e t u r n a n d r i sk m e a s u r e m e n ts 33

Return and risk

measurements
Returns in euro*
as of 31-03-2011 Year to 1 year 2 year 3 year 5 year 10 year Since
date start NOTICE
SKAGEN Vekst -0,1 % 10,6 % 43,5 % 4,3 % 4,4 % 14,1 % 17,2 %
OSEBX/MSCI AC Total Return Index (50/50) -0,3 % 14,4 % 47,7 % 2,5 % 2,0 % 8,8 % 10,1 % Historical returns are no guarantee for future
SKAGEN Global 1,9 % 15,4 % 39,4 % 6,5 % 5,0 % 12,1 % 17,1 % returns. Future returns will depend, inter alia,
MSCI AC Total Return Index -1,1 % 8,9 % 27,5 % 3,7 % -1,0 % -0,5 % 1,6 % on market developments, the fund manager’s
SKAGEN Kon-Tiki -0,2 % 16,3 % 51,8 % 15,0 % 11,8 % 21,1 % skill, the fund’s risk profile and subscription
MSCI Emerging Markets Index -3,6 % 12,8 % 41,6 % 8,2 % 7,2 % 10,9 % and management fees. The return may become
SKAGEN Tellus -4,38 % 3,97 % 12,31 % 8,92 % 5,62 % negative as a result of negative price develop-
Barclays Capital Global Treasury Index 3 - 5 years -4,67 % 2,53 % 3,95 % 7,56 % 4,86 %
ments. Investments in foreign currencies are
normally not hedged.

SKAGEN Vekst has a fixed management fee

Risk and performance measurements of 1% pro anno. Returns exceeding 6 % p.a.
are shared 90/10 between the unitholders
as of 31-03-2011 SKAGEN Vekst SKAGEN Global SKAGEN Kon-Tiki SKAGEN
Tellus (Euro) and the management company.
Mean variance analysis last 5 years
Standard deviation, fund 24,6 % 19,6 % 24,7 % SKAGEN Global has a fixed management fee
Standard deviation, benchmark index 31,6 % 15,4 % 23,3 % of 1% pro anno. Better value development
Sharpe-ratio, fund 0,07 0,12 0,37 measured in percent in the fund’s net asset
Sharpe-ratio, benchmark index -0,02 -0,24 0,19 value compared with the MSCI AC World
Relative volatility/tracking error 10,7 % 8,2 % 5,6 % Index (in NOK) is shared 90/10 between
Information ratio 0,22 0,73 0,82 the unitholders and the management com-
Alpha 2,2 % 8,6 % 7,5 % pany.
Beta 0,75 1,18 1,04
R2 91 % 82 % 94 % SKAGEN Kon-Tiki has a fixed management
Correlation 0,96 0,91 0,97 fee of 2% pro anno. Better value develop-
ment measured in percent in the fund’s net
Gain/loss analysis last 5 years asset value compared with the MSCI Emer-
Relative gain 81 % 136 % 109 % ging Markets Index (in NOK) is shared 90/10
Relative loss 77 % 106 % 97 % between the unit holders and the manage-
Relative gain/loss ratio 1,06 1,28 1,13 ment company. However, the total annual
Positive index divergence 14,53 13,78 10,28 management fee charged may not exceed 4
Negative index divergence 12,52 7,90 6,14 % of the fund’s average annual asset value.
Index divergence ratio 1,16 1,74 1,67 If the fund’s net asset value shows a poorer
Percentage positive index divergence 54 % 64 % 63 %
development measured in percent than the
Percentage positive index divergence when market is up 20 % 77 % 65 %
MSCI Emerging Markets Index, 10 % of the
Percentage positive index divergence when market is down 91 % 52 % 60 %
poorer value development is deducted from
Percentage of number of positive index divergence 45 % 65 % 65 %
the fixed management fee. However, the total
Percentage of number of positive index divergence when market is up 25 % 71 % 67 %
Percentage of number of positive index divergence when market is down 75 % 58 % 63 %
annual management fee charged may not be
lower than 1 % of the fund’s average annual
Value at risk last 5 years; 2.5 % confidence
asset value.
Value at risk: observed, NAV -20,4 % -15,0 % -19,0 %
Value at risk: observed, Benchmark -26,9 % -10,0 % -16,8 % SKAGEN Global and SKAGEN Kon-Tiki may
Relativ Value at Risk, observed -5,5 % -6,4 % -4,2 % be charged a variable management fee
even if the fund’s return has been negative,
Gain/loss analysis since inception as long as the fund has outperformed the
Relative gain 96 % 163 % 125 % 99 % benchmark. Conversely, the fund may have
Relative loss 75 % 102 % 99 % 94 % a positive return without being charged a
Relative gain/loss ratio 1,29 1,60 1,26 1,06 variable management fee, as long as there is
Positive index divergence 15,80 22,11 14,52 12,53 no outperformance of the benchmark.
Negative index divergence 9,54 8,40 5,87 12,07
Index divergence ratio 1,66 2,63 2,47 1,04 The fixed management fees are calculated
daily and charged quarterly. The variable
management fees are calculated daily and
charged annually.
* All return figures beyond 12 months are annualised.
For SKAGEN Tellus there are no costs asso-
ciated with the purchase and sale of shares.
Neither are there any withdrawal limits. The
annual management fee is 0.8% for SKAGEN
Right of Cancellation Tellus. The management fee is calculated
When you buy fund units, according to the Right of Cancellation Act (Act no. 105 of 2001-12-12, ref. §22b, litra a), clients have no right daily and charged quarterly.
of cancellation. However, when subscriptions are sent to us by mail/fax or are carried out via the Investor client at VPS (My Account), Please refer to the product sheets and pro-
you are entitled to information about the fund and the management company immediately after the purchase. The information is avail- spectuses for a detailed description of the
able in the fund’s product sheet (simplified prospectus) and the general commercial terms. Statutory information is sent to unit holders cost, etc. They are available upon request
in the welcome letter immediately after the first subscription. Subsequently, unit holders can find all information on our website www. from SKAGEN Funds or at
skagenfunds.com as well as in the annual report. www.skagenfunds.com

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
34 S e C u r i T i e S p o r T F o l i o S K a G e n v e K S T a S o F 31- 03 -2 011

hiSToriCal priCe developmenT SK aGen veKST (eur)

320 SKAGEN Vekst
Benchmark Index (EUR)
20 % annual return
1 60

NAV SKAGEN Vekst

80

40

20
SKaGen veKST 10
Handpicked for you* 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

a minimum of 50 percent of the Security number

acquistion
value noK *
market
price
Cur-
rency
market-
value noK*
unrealised
gain/loss *
Share of
fund
Stock-
exchange
assets of the SKaGen vekst equity
fund will at all times be invested in enerGy
doF ASA 4 935 100 78 246 55,75 NoK 275 131 196 885 2,69 % oslo Børs
norway. The rest will be invested SoLStAd oFFSHorE ASA 1 948 750 94 361 130,00 NoK 253 337 158 976 2,48 % oslo Børs
in the global equity market. pEtroLEo BrASILEIro prEF Adr 1 102 415 110 313 35,50 uSd 216 575 106 261 2,12 % New York
SKaGen vekst is suitable for GANGEr roLF ASA 1 348 555 138 055 151,50 NoK 204 306 66 250 2,00 % oslo Børs
BoNHEur ASA 1 197 092 88 449 167,00 NoK 199914 111 464 1,95 % oslo Børs
investors who want an equity fund tGS NopEC GEopHYSICAL Co ASA 1 300 000 97 070 148,40 NoK 192 920 95 849 1,89 % oslo Børs
with a good balance between trANSoCEAN Ltd 346 900 153 116 78,52 uSd 150 736 -2 379 1,47 % New York
SIEm oFFSHorE 8 036 317 68 364 12,45 NoK 100 052 31 687 0,98 % oslo Børs
norwegian and global companies.
NorWEGIAN ENErGY Co ASA 5 713 731 90 613 14,45 NoK 82 563 -8 050 0,81 % oslo Børs
The fund has a broad mandate SEVAN mArINE ASA 12 975 000 96 176 6,06 NoK 78 628 -17 547 0,77 % oslo Børs
which gives it the freedom to EIdESVIK oFFSHorE ASA 1 680 541 64 139 38,20 NoK 64 196 56 0,63 % oslo Børs
mArINE ACCurAtE WELL ASA 68 997 076 52 277 0,90 NoK 62 097 9 819 0,61 % unotert
invest in a number of companies,
FArStAd SHIppING ASA 287 809 20 159 182,00 NoK 52 381 32 222 0,51 % oslo Børs
industries and regions. ELECtromAGNEtIC GEoSErVICES 4 422 474 44 888 10,80 NoK 47 762 2 874 0,47 % oslo Børs
NortHErN oFFSHorE Ltd 2 940 000 28 386 14,70 NoK 43 218 14 831 0,42 % oslo Børs
SEABIrd EXpLorAtIoN Ltd 07/12 FrN CALL 43 000 000 11 850 93,00 NoK 40 368 28 518 0,39 % unotert
risk Bp pLC Adr 165 000 52 614 44,12 uSd 40 286 -12 328 0,39 % New York
FrEd oLSEN produCtIoN ASA 3 000 000 18 734 10,20 NoK 30 600 11 865 0,30 % oslo Børs
mINor ItEmS 187 788 142 953 -44 835 1,40 %
Total energy 1 495 608 2 278 030 782 422 22,27 %
Standard & poor’s
qualitative rating
raW maTerialS
morningstar quantitative NorSK HYdro ASA 5 583 010 133 214 45,36 NoK 253 245 120 030 2,48 % oslo Børs
rating
★★★★ NorSKE SKoGINduStrIEr ASA 5 622 000 340 640 17,90 NoK 100 633 -240 006 0,98 % oslo Børs
rottNEroS AB 12 119 718 59 827 5,05 SEK 53 645 -6 181 0,52 % Stockholm
morningstar qualitative HINdALCo INduStrIES Ltd 1 950 673 46 051 209,15 INr 50 634 4 582 0,49 % Nat. India
rating
KWS SAAt AG 34 724 23 484 148,95 Eur 40 587 17 102 0,40 % Frankfurt
KoZA ALtIN ISLEtmELErI AS 546 250 38 589 20,25 trY 39 628 1 039 0,39 % Istanbul
Fund start date 1 december 1993 NordIC mINING ASA 12 380 000 21 650 2,26 NoK 27 978 6 328 0,27 % oslo Axess
mINor ItEmS 56 606 79 854 23 247 0,78 %
return since start 1466.4% Total raw materials 720 065 646 209 -73 856 6,32 %

Average annual return 17.2% induSTrialS

KoNGSBErG GruppEN ASA_ 3 367 028 127 179 153,50 NoK 516 838 389 659 5,05 % oslo Børs
Assets under Eur 1304 million WILH. WILHELmSEN HoLdING ASA
management A-AKSJEr 1 304 351 92 271 168,50 NoK 219 783 127 511 2,15 % oslo Børs
StoLt-NIELSEN LImItEd 1 229 002 152 404 138,00 NoK 169 602 17 197 1,66 % oslo Børs
Number of unitholders 100 384
doCKWISE Ltd 1 032 108 173 044 150,50 NoK 155 332 -17 712 1,52 % oslo Børs
NorWEGIAN AIr SHuttLE ASA 1 416 510 74 200 107,50 NoK 152 274 78 074 1,49 % oslo Børs
Subscription fee 0%
odFJELL SE-A 2 134 725 95 549 48,60 NoK 103 747 8 198 1,01 % oslo Børs
redemption fee 0% LG Corp 233 515 46 417 81800,00 KrW 96 211 49 793 0,94 % Seoul
I.m. SKAuGEN SE 1 679 916 21 062 44,70 NoK 75 092 54 029 0,73 % oslo Børs
management fee 1.0 % per year + 10 % AVENG Ltd 2 575 700 75 193 35,67 ZAr 75 062 -131 0,73 % Johannesb.
of return exceeding 6% KoNGSBErG AutomotIVE ASA 15 151 251 108 807 4,38 NoK 66 362 -42 444 0,65 % oslo Børs
per year
KVErNELANd ASA 9 945 616 54 939 6,40 NoK 63 651 8 712 0,62 % oslo Børs
GLAmoX ASA 5 944 034 5 852 8,50 NoK 50 524 44 671 0,49 % unotert
minimum subscription one-time subscription
amount Eur 150 FAIrStAr HEAVY trANSport NV 4 408 585 46 608 11,15 NoK 49 155 2 547 0,48 % oslo Børs
GoodtECH ASA 20 511 694 46 786 2,18 NoK 44 715 -2 070 0,44 % oslo Børs
Authorised for Norway, Sweden, A p moLLEr - mAErSK A 811 38 032 48350,00 dKK 41 270 3 237 0,40 % København
marketing in denmark, Finland, trELLEBorG AB-B 645 000 28 763 64,75 SEK 36 605 7 842 0,36 % Stockholm
Netherlands, Luxem-
bourg, Iceland, uK and LG Corp prEF 224 482 25 796 28000,00 KrW 31 659 5 862 0,31 % Seoul
Switzerland NorWEGIAN CAr CArrIErS ASA 7 918 227 29 050 3,65 NoK 28 901 -148 0,28 % oslo Børs
rEdErI AB trANSAtLANtIC 1 118 676 27 428 27,90 SEK 27 356 -71 0,27 % Stockholm
Benchmark index oSEBX/mSCI AC mINor ItEmS 190 312 107 220 -83 091 1,05 %
(50/50)
Total industrials 1 459 699 2 111 369 651 669 20,64 %

uCIts Yes

portfolio managers Beate Bredesen

ross porter

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
S e C u r i T i e S p o r T F o l i o S K a G e n v e K S T a S o F 31- 03 -2 011 35
acquistion Cur- market- unrealised Share of Stock-
Security number value noK * market price rency value noK* gain/loss * fund exchange

ConSumer diSCreTionary
CArNIVAL Corp 1188 770 2 94 904 38,38 uSd 252 486 -42 417 2,47 % New York
HurtIGrutEN ASA 2 6692 352 91 197 4,72 NoK 125 987 34 790 1,23 % oslo Børs
LG ELECtroNICS INC prEF 600 000 1 44 987 38 800,00 KrW 117 257 -27 729 1,15 % Seoul
rENAuLt SA 294 488 89 048 39,01 Eur 90 150 1 101 0,88 % paris
dIXoNS rEtAIL pLC 57 626 905 2 84 227 0,13 GBp 64 312 -219 915 0,63 % London
HANKooK tIrE Co Ltd 297 931 27 633 35 850,00 KrW 53 797 26 164 0,53 % Seoul
mAHINdrA & mAHINdrA Ltd Gdr 591 300 10 522 15,93 uSd 52 126 41 604 0,51 % London Int.
FJord LINE AS 2 850 000 28 500 15,00 NoK 42 750 14 250 0,42 % unotert
BENEttoN Group SpA 946 940 37 699 5,29 Eur 39 309 1 610 0,38 % BrsaItaliana

SKaGen veKST
NHSt mEdIA Group ASA 60 000 31 447 570,00 NoK 34 200 2 752 0,33 % unotert
mINor ItEmS 31 273 21 214 -10 058 0,21 %
Total Consumer discretionary 1 071 441 893 593 -177 847 8,74 %
Handpicked for you*
ConSumer STapleS
morpoL ASA 8 623 320 180 551 22,40 NoK 193 162 12 610 1,89 % oslo Børs
CErmAQ ASA 1 792 956 71 312 97,75 NoK 175 261 103 949 1,71 % oslo Børs SeCTor diSTribuTion
CHIQuItA BrANdS INtL 1 246 505 102 395 15,20 uSd 104 851 2 455 1,02 % New York Utilities 3,0% Telecom 4,8%
WINN-dIXIE StorES INC 2 172 770 89 871 7,08 uSd 85 129 -4 741 0,83 % NASdAQ
Cash 1,2%
AuStEVoLL SEAFood ASA 1 371 382 48 182 43,00 NoK 58 969 10 786 0,58 % oslo Børs IT 7,3%
YAZICILAr HoLdING AS 750 000 25 622 13,50 trY 36 273 10 651 0,35 % Istanbul Energy
22,3%
KESKo oYJ-B SHS 131 948 34 052 33,00 Eur 34 169 117 0,33 % Helsinki
pEopLE'S Food HoLdING Ltd 9 364 000 24 106 0,80 SGd 33 097 8 990 0,32 % Singapore Finance 11,6%

mINor ItEmS 182 472 135 981 -46 491 1,33 %

Total Consumer Staples 758 568 856 896 98 328 8,38 % Raw Health 5,8%
Materials
healTh Care 6,3%
Consumer
tEVA pHArmACEutICAL-Sp Adr 711 351 215 807 50,25 uSd 197 813 -17 993 1,93 % NASdAQ Staples 8,4%
AXIS-SHIELd pLC GBp 2 809 221 82 551 3,25 GBp 81 059 -1 492 0,79 % London
CLAVIS pHArmA ASA 1 710 477 56 464 36,00 NoK 61 577 5 112 0,60 % oslo Børs Consumer
Industrials 20,6% Discretionary 8,7%
pHotoCurE ASA 1 114 401 44 889 49,70 NoK 55 385 10 495 0,54 % oslo Børs
mEdI-StIm ASA 1 710 000 21 366 21,00 NoK 35 910 14 543 0,35 % oslo Børs
ALGEtA ASA 269 080 26 361 130,50 NoK 35 114 8 753 0,34 % oslo Børs
AXIS-SHIELd pLC 1 017 998 25 837 29,50 NoK 30 030 4 193 0,29 % oslo Børs GeoGr aphiCal diSTribuTion
mINor ItEmS 83 294 93 451 10 157 0,91 %
Total health Care 556 572 590 343 33 770 5,77 % Asia ex Cash 1,2% South America 5,5%
Japan 10,9%
FinanCialS Peripheral EU 5,8%
GJENSIdIGE ForSIKrING ASA 3 594 300 211 847 66,70 NoK 239 739 27 891 2,34 % oslo Børs Oceania 0,1%
EMEA 3,6%
oLAV tHoN EIENdomSSELSKAp ASA_ 180 000 33 812 896,00 NoK 161 280 127 467 1,58 % oslo Børs
HANNoVEr ruECKVErSICHEruNG AG 435 000 87 663 38,52 Eur 131 508 43 845 1,29 % Frankfurt
Japan 0,6%
AArEAL BANK AG 426 382 64 227 22,63 Eur 75 719 11 492 0,74 % Frankfurt
NortHErN LoGIStIC propErtY ASA 2 500 050 76 104 26,50 NoK 66 251 -9 852 0,65 % oslo Børs
KorEAN rEINSurANCE Co 952 093 11 484 12800,00 KrW 61 383 49 898 0,60 % Seoul Eurozone
6,5%
ImArEX ASA 1 026 100 65 708 59,00 NoK 60 539 -5 168 0,59 % oslo Børs
dANSKE BANK A/S 468 213 60 058 116,50 dKK 57 410 -2 647 0,56 % København
SpArEBANKEN ØSt 1 500 000 26 585 36,40 NoK 54 600 28 014 0,53 % oslo Børs North
America 6,7% Norway 59,1%
SpArEBANKEN VESt 995 506 45 056 44,50 NoK 44 300 -756 0,43 % oslo Børs
HItECVISIoN AS 762 746 5 183 53,00 NoK 40 425 35 242 0,40 % unotert
HACI omEr SABANCI HoLdING AS 1501 444 23 339 7,18 trY 38 621 15 282 0,38 % Istanbul
IrSA SA Adr 397 502 31 351 14,01 uSd 30 818 -532 0,30 % New York
NorWEGIAN FINANS HoLdING ASA 14 900 000 29 215 2,00 NoK 29 800 585 0,29 % unotert 10 L ArGESt HoLdINGS
mINor ItEmS 69 830 90 057 20 226 0,88 %
Total Financials 841 468 1 182 455 340 986 11,56 % Kongsberg Gruppen AS 5.1 %
inFormaTion TeChnoloGy
Samsung Electronics Co Ltd 3.3 %
SAmSuNG ELECtroNICS Co Ltd prEF Gdr 135 832 107 711 286,10 uSd 215 057 107 345 2,10 % London Int.
SAmSuNG ELECtroNICS Co Ltd Gdr 50 000 19 712 426,10 uSd 117 900 98 188 1,15 % London Int. Eletrobras SA 3.0 %
ELtEK ASA 19 000 000 102 369 5,70 NoK 108 300 5 930 1,06 % oslo Børs
proACt It Group AB 468 000 15 542 130,00 SEK 53 326 37 783 0,52 % Stockholm doF ASA 2.7 %
Q-FrEE ASA 2 900 000 39 742 17,60 NoK 51 040 11 297 0,50 % oslo Børs
SAmSuNG SdI Co Ltd 51 320 21 573 168000,00 KrW 43 426 21 853 0,42 % Seoul Solstad offshore ASA 2.5 %
EdB ErGoGroup ASA 2 734 240 33 268 14,60 NoK 39 919 6 651 0,39 % oslo Børs
KYoCErA Corp 63 565 45 929 8430,00 JpY 35 796 -10 133 0,35 % tokyo Norsk Hydro ASA 2.5 %
mINor ItEmS 120 904 86 520 -34 384 0,85 %
Total information Technology 506 754 751 287 244 533 7,34 % Carnival Corp 2.5 %

TeleCom Gjensidige Forsikring ASA 2.3 %

FrANCE tELECom SA 1 290 000 164 895 15,81 Eur 160 045 -4 849 1,56 % paris
SIStEmA JSFC Gdr 573 709 19 189 29,10 uSd 92 388 73 199 0,90 % London Int. Wilh Wilhelmsen Holding ASA 2.2 %
moBILE tELESYStEmS Adr 645 000 41 050 21,43 uSd 76 492 35 441 0,75 % New York
totAL ACCESS tELECommuNICAtIoN pLC_ 8 560 000 7 587 48,00 tHB 75 149 67 562 0,73 % Bangkok petroleo Brasileiro SA 2.1 %
tELEKomuNIKASI INdoNESIA tBK Adr 290 000 16 154 33,56 uSd 53 858 37 704 0,53 % New York
INdoSAt tBK pt Adr 200 000 33 264 30,25 uSd 33 480 215 0,33 % New York totAL 10 LArGESt HoLdINGS 28.0 %
mINor ItEmS 7 842 2 204 -5 637 0,02 %
Total Telecom 289 984 493 620 203 635 4,83 %

uTiliTieS
CENtrAIS ELEtrICAS BrASILEIrAS SA prEF 2 610 818 126 051 30,85 BrL 273 405 147 354 2,67 % Sao paulo
CENtrAIS ELEtrICAS BrASILEIrAS SA 357 348 29 055 24,72 BrL 29 985 930 0,29 % Sao paulo
Total utilities 155 106 303 391 148 284 2,97 %

Total equity portfolio* 7 855 271 10107 198 2 251 926 98,80 % * Children and young women picking flowers
disposable liquidity 122 290 1,20 % in a field north of Skagen, 1887. detail.
Total share capital 10 229 488 100,00 % By michael Ancher, one of the Skagen painters.
Base price as of 31.03.2011 1471,5102 the picture is owned by the Skagens museum.
* Figures in 1000 NoK

the market value as of 31.03.2011 is the last quoted price from the stock exchange. the average cost method is used for the calculation of sales gain.

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
36 S e C u r i T i e S p o r T F o l i o S K a G e n G l o b a l a S o F 31- 03 -2 011

hiSToriCal priCe developmenT SK aGen Global (eur)

160 SKAGEN Global

World Index
20 % annual return

NAV SKAGEN Global

80

40

20

SKaGen Global 10
A world of opportunities*
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

The SKaGen Global equity fund Security number

acquistion
value noK *
market
price
Cur-
rency
market-
value noK*
unrealised
gain/loss *
Share of
fund
Stock-
exchange
invests in stocks worldwide.
The fund seeks to maintain a enerGy
balanced industry exposure. prIdE INtErNAtIoNAL INC 3 091 787 511 555 43,41 uSd 742 279 230 724 2,09 % New York
GAZprom oAo Adr 3 992 957 606 713 32,37 uSd 714 834 108 121 2,02 % London Int.
SKaGen Global is suitable for pEtroLEo BrASILEIro prEF Adr 2 928 604 530 447 35,65 uSd 577 415 46 967 1,63 % New York
investors who want an equity BAKEr HuGHES INC 1 369 227 377 282 73,70 uSd 558 136 180 854 1,58 % New York
fund which invests over the NABorS INduStrIES Ltd 2 362 679 374 445 30,30 uSd 395 992 21 547 1,12 % New York
KAZmuNAIGAS EXpLorAtIoN -Gdr 2 853 374 390 519 22,50 uSd 355 066 -35 453 1,00 % London Int.
whole world and is therefore
trANSoCEAN Ltd 766 100 370 211 79,58 uSd 337 176 -33 034 0,95 % New York
diversified both geographically Bp pLC 4 432 578 227 566 4,57 GBp 179 848 -47 717 0,51 % London
and by industry. The fund is Bp pLC Adr 564 260 176 229 44,24 uSd 138 058 -38 171 0,39 % New York
also suitable for those who NoBLE Corp 504 593 113 576 46,28 uSd 129 152 15 575 0,36 % New York
mINor ItEmS 56 110 57 034 923 0,16 %
already have exposure towards Total energy 3 734 659 4 184 997 450 337 11,81 %
the norwegian equity market,
but who wish to strengthen raW maTerialS
their portfolio and reduce risk. SVENSKA CELLuLoSA AB-B 7 193 756 572 080 101,60 SEK 641 015 68 934 1,81 % Stockholm
CLIFFS NAturAL rESourCES INC 1 069 875 211 701 97,68 uSd 577 972 366 271 1,63 % New York
HEIdELBErGCEmENt AG 1 137 483 363 322 49,74 Eur 444 100 80 778 1,25 % Xetra
risk NorSK HYdro ASA 8 271 604 241 031 45,55 NoK 376 771 135 740 1,06 % oslo Børs
tErNIum SA Adr 1 757 735 272 199 36,42 uSd 354 047 81 847 1,00 % New York
mAYr-mELNHoF KArtoN AG 442 235 198 445 82,64 Eur 286 862 88 417 0,81 % Wien
AKZo NoBEL 707 796 241 939 48,74 Eur 270 812 28 873 0,76 % Amsterdam
Standard & poor’s KWS SAAt AG 121 802 79 888 148,45 Eur 141 927 62 038 0,40 % Frankfurt
qualitative rating
mINor ItEmS 84 122 71 455 -12 667 0,20 %
Total raw materials 2 264 732 3 164 965 900 233 8,93 %
morningstar qualitative
rating ★★★★★
induSTrialS
morningstar qualitative tYCo INtErNAtIoNAL Ltd 6 190 352 1 269 813 44,85 uSd 1 535 486 265 673 4,33 % New York
rating BuNGE Ltd 1 938 791 630 110 72,81 uSd 780 711 150 600 2,20 % New York
Wassum SIEmENS AG 894 319 522 346 97,03 Eur 681 129 158 782 1,92 % Frankfurt
LG Corp 1 646 420 375 208 81800,00 KrW 678 806 303 597 1,92 % Seoul
Lipper rANdStAd HoLdING NV 1 220 116 306 131 39,76 Eur 380 783 74 652 1,07 % Amsterdam
Europe 2011 Best Fund tE CoNNECtIVItY Ltd 1 797 319 279 506 34,80 uSd 345 917 66 411 0,98 % New York
10 Years Equity Global
StoLt-NIELSEN LImItEd 1 730 217 319 311 137,00 NoK 237 039 -82 271 0,67 % oslo Børs
BAYWA-BAYErISCHE WArENVErmIt
Fund start date 7 August 1997 AG 731 155 219 454 31,97 Eur 183 477 -35 976 0,52 % Frankfurt
FINNAIr oYJ 4 850 820 263 458 3,87 Eur 147 352 -116 106 0,42 % Helsinki
return since start 762.5% mINor ItEmS 64 864 94 513 29 648 0,27 %
Total industrials 4 250 205 5 065 217 815 012 14,29 %
Average annual return 17.1%

Assets under Eur 4514 million ConSumer diSCreTionary

management ComCASt Corp 4 147 589 406 027 23,14 uSd 530 795 124 768 1,50 % NASdAQ
toYotA INduStrIES Corp 2 782 642 469 865 2516,00 JpY 467 024 -2 841 1,32 % tokyo
Number of unitholders 103 659 rENAuLt SA 1 157 627 327 608 39,29 Eur 357 011 29 403 1,01 % paris
HYuNdAI motor prEF (2pB) 541 808 151 334 71200,00 KrW 194 436 43 101 0,55 % Seoul
Subscription fee 0% tELEVISIoN BroAdCAStS Ltd 5 866 571 142 014 45,70 HKd 190 647 48 632 0,54 % Hong Kong
LG ELECtroNICS INC prEF 961 448 261 187 38800,00 KrW 188 022 -73 165 0,53 % Seoul
redemption fee 0%
YAmAHA motor Co Ltd 1 896 311 153 944 1452,00 JpY 183 673 29 729 0,52 % tokyo
tImE WArNEr CABLE 432 523 115 401 71,53 uSd 171 106 55 704 0,48 % New York
management fee 1.0 % per years + 10 %
of return exceeding the SHANGrI-LA ASIA Ltd 6 709 614 62 025 20,10 HKd 95 901 33 876 0,27 % Hong Kong
benchmark index mINor ItEmS 118 901 136 709 17 807 0,39 %
Total Consumer discretionary 2 208 309 2 515 327 307 017 7,10 %
minimum subscription one-time subscription
amount Eur 150

Authorised for Norway, Sweden,

marketing in denmark, Finland,
Netherlands, Luxem-
bourg, Iceland, uK and
Switzerland

Benchmark index mSCI AC

uCIts Yes

portfolio managers Kristian Falnes

torkell Eide
Søren Christensen

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
S e C u r i T i e S p o r T F o l i o S K a G e n G l o b a l a S o F 31- 03 -2 011 37

acquistion market Cur- market- unrealised Share of Stock-

Security number value noK * price rency value noK* gain/loss * fund exchange

ConSumer STapleS
tESCo pLC 20 877 830 756 848 3,84 GBp 711 770 -45 077 2,01 % London
uNILEVEr NV-CVA 1 649 701 286 637 22,25 Eur 288 179 1 542 0,81 % Amsterdam
YAZICILAr HoLdING AS 3 965 257 95 714 13,50 trY 191 787 96 072 0,54 % Istanbul
uNItEd INtL ENtErprISES 172 931 25 545 684,00 dKK 124 518 98 973 0,35 % København
mINor ItEmS 168 939 215 227 46 288 0,61 %
Total Consumer Staples 1 333 684 1 531 484 197 799 4,32 %

healTh Care
pFIZEr INC 10 695 621 1 254 986 20,36 uSd 1 204 289 -50697 3,40 % New York
roCHE HoLdING AG-GENuSSCHEIN
mINor ItEmS
471 300 410 042
33 888
131,60 CHF 374 923
12 129
-35119
-21759
1,06 %
0,03 %
Zürich
SKaGen Global
Total health Care 1 698 917 1 591 341 -107576 4,49 % A world of opportunities*

FinanCialS
CItIGroup INC 37 705 500 983 481 4,42 uSd 922 754 -60 726 2,60 % New York SeCTor diSTribuTion
BANCo do EStAdo rIo GrANdE do Utilities Telecom 7,3%
SuL prEF 8 289 877 156 714 20,03 BrL 564 723 408 008 1,59 % Sao paulo 5,1%
GJENSIdIGE ForSIKrING ASA 8 437 000 497 630 66,65 NoK 562 326 64 695 1,59 % oslo Børs IT 13,3%
Cash
HANNoVEr ruECKVErSICHEruNG 8,0%
AG 1 508 407 314 685 38,37 Eur 454 298 139 613 1,28 % Frankfurt
Financials
BANK oF AmErICA Corp 5 789 030 546 165 13,33 uSd 426 853 -119 311 1,20 % New York Energy 15,3%
CHEuNG KoNG HoLdINGS Ltd 3780 674 283 779 126,80 HKd 340 893 57 114 0,96 % Hong Kong 11,8%
ASYA KAtILIm BANKASI AS 28 282 168 280 220 3,01 trY 304 995 24 775 0,86 % Istanbul
HACI omEr SABANCI HoLdING AS 10 049 870 184 442 7,18 trY 258 523 74 080 0,73 % Istanbul Raw
Materials Health 4,5%
KINNEVIK INVEStmENt AB-B 1 969 910 92 277 146,90 SEK 253 797 161 520 0,72 % Stockholm 8,9%
Consumer
oSAKA SECurItIES EXCHANGE Co 8 912 169 869 417 500,00 JpY 248 200 78 330 0,70 % tokyo Staples 4,3%
ABErdEEN ASSEt mANAGEmENt pLC 10 659 589 92 206 2,12 GBp 200 527 108 320 0,57 % London
ALBArAKA turK KAtILIm BANKASI Consumer
AS 18 859 400 216 075 2,30 trY 155 406 -60 668 0,44 % Istanbul Industrials 14,3% Discretionary 7,1%

JApAN SECurItIES FINANCE Co 4 207 375 244 798 550,00 JpY 154 363 -90 434 0,44 % tokyo
IrSA SA Adr 1 815 671 151 638 13,99 uSd 14 048 -11 155 0,40 % New York
mIZuHo FINANCIAL Group INC 14 880 000 143 639 138,00 JpY 136 978 -6 660 0,39 % tokyo
EFG-HErmES HoLdING SAE 5 695 991 157 113 21,96 EGp 116 102 -41 010 0,33 % Cairo GeoGr aphiCal diSTribuTion
mINor ItEmS 179 450 180 238 788 0,51 %
South America 9,5% Peripheral
Total Financials 4 694 189 5421 468 727 279 15,30 %
Cash 8,0% EU 14,2%

inFormaTion TeChnoloGy
North
SAmSuNG ELECtroNICS Co Ltd Asia ex
Africa
prEF 635 430 1 454 224 625000,00 KrW 2 001 703 547 479 5,65 % Seoul Japan 17,9%
0,3%
ACCENturE pLC 3 201 763 782 279 54,91 uSd 972 317 190 038 2,74 % New York
KYoCErA Corp 1 258 268 661 411 8430,00 JpY 707 574 46 162 2,00 % tokyo Norway
3,3%
mICroSoFt Corp 3 681 898 546 138 25,58 uSd 520 883 -25 255 1,47 % NASdAQ
SAmSuNG ELECtroNICS Co Ltd EMEA 4,6%
prEF Gdr 146 978 148 488 286,10 uSd 232 561 84 073 0,66 % London Int.
Japan 5,4%
SAmSuNG ELECtroNICS Co Ltd Gdr 64 277 54 716 426,10 uSd 151 473 96 756 0,43 % London Int.
orACLE Corp 493 000 72 161 33,15 uSd 90 385 18 224 0,26 % NASdAQ Eurozone North
11,5% America 25,2%
mINor ItEmS 45 267 49 362 4095 0,14 %
Total information Technology 3 764 686 4 726 262 961 576 13,34 %

TeleCom
VImpELCom Ltd-SpoN Adr 8 098 603 687 886 14,03 uSd 628 399 -59 486 1,77 % New York 10 L ArGESt HoLdINGS
totAL ACCESS tELECommuNICA-
tIoN pLC_ 47 428 100 146 600 48,00 tHB 416 266 269 666 1,17 % Bangkok Samsung Electronics Co Ltd 6.7 %
BHArtI AIrtEL Ltd 8 455 753 355 980 357,40 INr 374 878 18 898 1,06 % Nat. India
CHINA moBILE Ltd Adr 1 386 102 379 876 46,19 uSd 354 088 -25 788 1,00 % New York Eletrobras SA 4.5 %
CHINA moBILE Ltd 6 605 200 387 574 71,65 HKd 336 537 -51 037 0,95 % Hong Kong
tELECom ItALIA SpA 22 442 086 151 300 0,95 Eur 167 435 16 134 0,47 % BrsaItaliana tyco International Ltd 4.3 %
INdoSAt tBK pt Adr 921 819 137 600 30,18 uSd 153 862 16 262 0,43 % New York
totAL ACCESS tELECommuNICA- pfizer Inc 3.4 %
tIoN NVdr pLC 13 644 940 106 570 48,00 tHB 119 758 13 188 0,34 % Bangkok
mINor ItEmS 30 223 32 595 2 372 0,09 % Accenture pLC 2.7%
Total Telecom 2 383 613 2 583 823 200 209 7,29 %
Citigroup Inc 2.6 %
uTiliTieS
CENtrAIS ELEtrICAS BrASILEIrAS Bunge Ltd 2.2 %
SA prEF 11 295 481 698 456 30,77 BrL 1 182 058 483 602 3,34 % Sao paulo
CENtrAIS ELEtrICAS BrASILEI- pride International Inc 2.1 %
rAS SA 4 907 659 426 428 24,70 BrL 412 266 -14 162 1,16 % Sao paulo
CALpINE Corp 2 413 298 171 937 15,90 uSd 212 215 40 278 0,60 % New York
Kyocera Corp 2.1 %
Total utilities 155 106 303 391 148 284 2,97 %
Gazprom oAo 2.0 %
Total equity portfolio* 27 629 821 32 591 429 4 961 607 91,98 %
disposable liquidity 2 842 219 8,02 % totAL 10 LArGESt HoLdINGS 32.7%
Total share capital 35 433 649 100,00 %

Base price as of 31.03.2011

832,0553
* Figures in 1000 NoK
the market value as of 31.03.2011 is the last quoted price from the stock exchange. the average cost method is used for the calculation of sales gain.

* From the moor north of Skagen, 1885. detail.

By p.S. Krøyer, one of the Skagen painters.
the picture is owned by the Skagens museum.

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
38 S e C u r i T i e S p o r T F o l i o S K a G e n K o n -T i K i a S o F 31- 03 -2 011

hiSToriCal priCe developmenT SK aGen Kon-TiKi (eur)

80
SKAGEN Kon-Tiki
Emerging Markets Index
20 % annual return

NAV SKAGEN Kon-Tiki

40

20

10
SKaGen Kon-TiKi
Leading the way in new waters* 2003 2004 2005 2006 2007 2008 2009 2010 2011

The SKaGen Kon-Tiki equity fund acquistion market Cur- market- unrealised Share of Stock-
will invest at least 50 percent of its Security number value noK * price rency value noK* gain/loss * fund exchange
assets in emerging markets. These
are markets that are not included in enerGy
the mSCi World index. neverthe- BAKEr HuGHES INC 6 079 956 1 712 190 73,7 uSd 2 478 367 766 176 5,27 % New York
less, following on from our require- GAZprom oAo Adr 7 250 284 982 068 32,37 uSd 1 297 974 315 905 2,76 % London Int.
ment to have a reasonable industry pEtroLEo BrASILEIro prEF Adr 4 846 964 847 080 35,65 uSd 955 647 108 566 2,03 % New York
SEAdrILL Ltd 4 200 000 369 995 200,8 NoK 843 360 473 364 1,79 % oslo Børs
balance, 50 percent of the fund’s
tuLLoW oIL pLC 2 194 900 133 809 14,67 GBp 285 721 151 911 0,61 % London
assets may be invested in markets
GoLAr LNG ENErGY Ltd 8 031 151 99 649 22 NoK 176 685 77 035 0,38 % oslo Børs
that are included in the mSCi World
SEAWELL Ltd 4 245 148 108 938 38,2 NoK 162 164 53 225 0,34 % oslo Børs
index. SKaGen Kon-Tiki is suitable
dEEp SEA SuppLY pLC 11 096 000 109 900 14,45 NoK 160 337 50 437 0,34 % oslo Børs
for an investor who wants to benefit mINor ItEmS 130 321 92 612 -37 708 0,20 %
from the value creation taking place Total energy 4 493 953 6 452 869 1 958 916 13,71 %
in the world’s emerging markets.
The fund offers the opportunity of raW maTerialS
extraordinary returns, but at a VALE SA SpoNS Adr 7 422 364 734 507 29,48 uSd 1 210 146 475 639 2,57 % New York
higher risk than with a global/ EQuINoX mINErALS Ltd 28 331 000 83 477 5,78 CAd 931 993 97 216 1,98 % toronto
norwegian equity fund. VALE SA-prEF A 1 231 900 210 807 47,39 BrL 198 549 -12 257 0,42 % Sao paulo
ASIA CEmENt CHINA HoLdINGS 46 742 500 172 551 4,87 HKd 161 871 -10 679 0,34 % Hong Kong
risk
mINor ItEmS 391 506 347 411 -44 094 0,74 %
Total raw materials 2 344 148 2849 972 505 823 6,06 %

Standard & poor’s induSTrialS

qualitative rating ABB Ltd 6 985 681 772 466 152,7 SEK 935 549 163 083 1,99 % Stockholm
AVENG Ltd 19 495 215 575 546 35,67 ZAr 568 484 -7 062 1,21 % Johannesb.
morningstar quantitative ★★★★★ EmprESAS ICA S.A.B 41 000 000 601 175 26,9 mXN 512 462 -88 712 1,09 % mexico
rating
A p moLLEr - mAErSK A 10 000 456 235 48350 dKK 508 980 52 745 1,08 % København
HArBIN poWEr EQuIpmENt Co Ltd 57 918 000 557 093 8,05 HKd 331 543 -225 550 0,70 % Hong Kong
morningstar qualitative
AIrASIA BHd 62 078 300 145 080 2,69 mYr 305 275 160 195 0,65 % Kuala Lumpur
rating
StrABAG SE 1 625 310 235 502 22,39 Eur 285 641 50 139 0,61 % Wien
NordIC AmErICAN tANKEr SHIppING LtC 1 722 600 299 544 25 uSd 238 173 -61 371 0,51 % New York
Wassum
BArLoWorLd Ltd 3 626 000 181 674 74,7 ZAr 221 429 39 755 0,47 % Johannesb.
ENKA INSAAt VE SANAYI AS 9 166 665 107 998 5,96 trY 195 736 87 737 0,42 % Istanbul
Lipper
Europe 2011, Best Fund 5 years tEKFEN HoLdING AS 7 521 955 113 250 6,06 trY 163 311 50 061 0,35 % Istanbul
Equity Emerging markets NorWEGIAN AIr SHuttLE ASA 1 509 026 110 549 108 NoK 162 974 52 425 0,35 % oslo Børs
mINor ItEmS 344 597 315 648 -28 948 0,67 %
Fund start date 5 April 2002 Total industrials 4 500 714 4 745 212 244 498 10,08 %

return since start 458.6%

ConSumer diSCreTionary
HYuNdAI motor prEF (2pB) 3589 600 570 521 71200 KrW 1288 184 717 663 2,74 % Seoul
Average annual return 21.1%
GrEAt WALL motor Co Ltd 107 000 000 161 213 14,38 HKd 1094 141 932 927 2,32 % Hong Kong
Assets under Eur 5996 million HYuNdAI motor prEF (1p) 3 248 610 517 371 66000 KrW 1080 671 563 299 2,30 % Seoul
management mAHINdrA & mAHINdrA Ltd Gdr 7 634 388 137 004 15,93 uSd 672 602 535 597 1,43 % London Int.
LG ELECtroNICS INC prEF 3 150 000 850 969 38800 KrW 616 019 -234 949 1,31 % Seoul
Number of unitholders 91 921 SHANGrI-LA ASIA Ltd 16 034 213 143 985 20,1 HKd 229 178 85 193 0,49 % Hong Kong
drB-HICom BHd 51 886 300 194 985 2,3 mYr 218 162 23 177 0,46 % Kuala Lumpur
Subscription fee 0% mINor ItEmS 122 559 89 278 -33 280 0,19 %
Total Consumer discretionary 2698 611 5288 238 2 589 627 11,24 %
redemption fee 0%

management fee 2 % per year plus/

ConSumer STapleS
minus variable CoSAN Ltd-CLASS A SHArES 8 179 730 410 941 12,94 uSd 585 384 174 443 1,24 % New York
management fee SHoprItE HoLdINGS Ltd 6 491 588 302 950 103,77 ZAr 550 694 247 744 1,17 % Johannesb.
YAZICILAr HoLdING AS 9 654 470 239 353 13,5 trY 466 957 227 603 0,99 % Istanbul
minimum subscription one-time subscription
KuLIm mALAYSIA BErHAd 67 500 400 213 083 3,33 mYr 410 913 197 830 0,87 % Kuala Lumpur
amount Eur 150
mArINE HArVESt ASA 51 713 589 198 067 6,88 NoK 355 789 157 722 0,76 % oslo Børs
Authorised for Norway, Sweden, pZ CuSSoNS pLC 8 730 032 146 456 3,27 GBp 253 005 106 548 0,54 % London
marketing in denmark, Finland, roYAL uNIBrEW A/S 489 758 82 208 362,5 dKK 186 893 104 685 0,40 % København
Netherlands, Luxem- podrAVKA prEHrAmBENA INd dd 406 584 111 935 325 HrK 140 544 28 609 0,30 % Zagreb
bourg, Iceland, uK and
Switzerland mINor ItEmS 205 954 177 639 -28 315 0,38 %
Total Consumer Staples 1 910 949 3 127 821 1 216 871 6,65 %
Benchmark index mSCI Emerging
markets Index (NoK)

uCIts Yes

portfolio managers J. Kristoffer Stensrud

Knut Harald Nilsson
Cathrine Gether

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
S e C u r i T i e S p o r T F o l i o S K a G e n K o n -T i K i a S o F 31- 03 -2 011 39

acquistion market Cur- market- unrealised Share of Stock-

Security number value noK * price rency value noK* gain/loss * fund exchange

healTh Care
rICHtEr GEdEoN NYrt 968 258 1 070 376 39 095 HuF 1 117 640 47 264 2,37 % Budapest
StAdA ArZNEmIttEL AG 2 597 658 383 691 27 Eur 559 699 176 008 1,19 % Frankfurt
HANmI pHArm Co Ltd 724 500 315 456 87 500 KrW 319 520 4 064 0,68 % Seoul
EIS ECZACIBASI ILAC VE SANAYI 21 268 365 145 692 2 trY 179 829 34 136 0,38 % Istanbul
mINor ItEmS 277 121 207 481 -69 640 0,44 %
Total health Care 2 192 337 2 384 171 191 834 5,07 %

FinanCialS
BANCo do EStAdo rIo GrANdE do
SuL prEF
StANdArd CHArtErEd pLC
20 063 929
8 325 000
430 207
965 167
20,03
16,39
BrL
GBp
1 366 795
1 210 767
936 587
245 599
2,90 %
2,57 %
Sao paulo
London SKaGen Kon-TiKi
VtB BANK oJSC Gdr 30 931 536 1026 881 7 uSd 1 197 478 170 597 2,54 % London Int. Leading the way in new waters*
HACI omEr SABANCI HoLdING AS 39 547 688 777 734 7,18 trY 1 017 326 239 591 2,16 % Istanbul
GJENSIdIGE ForSIKrING ASA 6 134 212 361 918 66,65 NoK 408 845 46 926 0,87 % oslo Børs
KIWoom SECurItIES Co Ltd 1 180 000 215 647 59400 KrW 353 281 137 634 0,75 % Seoul SeCTor diSTribuTion
ASYA KAtILIm BANKASI AS 31 004 245 319 850 3,01 trY 334 350 14 499 0,71 % Istanbul
Telecom 9,8%
JSE LImItEd 5 694 251 214 587 70 ZAr 325 853 111 265 0,69 % Johannesb. Utilities
KorEAN rEINSurANCE Co 4 671 633 181 790 12800 KrW 301 391 119 600 0,64 % Seoul 6,5% IT 9,6%

EFG-HErmES HoLdING SAE 11 959 505 353 506 21,96 EGp 243 773 -109 732 0,52 % Cairo
Cash
A.F.p. proVIdA SA Adr 573 981 114 169 75,01 uSd 238 114 123 944 0,51 % New York 3,8%
Financials
BANGKoK BANK puBLIC Co-NVdr 7 530 000 189 242 172 tHB 236 820 47 577 0,50 % Bangkok 17,5%
GHANA CommErCIAL BANK Ltd 17 697 904 8 503 2,5 GHS 161 528 76 496 0,34 % Ghana Energy
13,7%
NordNEt AB 7 034 191 97 675 19,7 SEK 121 534 23 859 0,26 % Stockholm
KIAtNAKIN BANK pCL-NVdr 18 754 400 139 342 35,25 tHB 120 880 -18 462 0,26 % Bangkok Raw
Materials Health 5,1%
tISCo FINANCIAL Group NVdr 16 668 600 62 098 39 tHB 118 866 56 768 0,25 % Bangkok 6,1%
mINor ItEmS 406 197 471 848 65 651 1,00 % Consumer
Staples 6,7%
Total Financials 5 941 050 8 229 456 2 288 405 17,49 %
Industrials Consumer
10,1% Discretionary 11,2%
inFormaTion TeChnoloGy
SAmSuNG ELECtroNICS Co Ltd prEF 565 556 1 397 250 625 000 KrW 1 781 589 384 339 3,79 % Seoul
HoN HAI prECISIoN INduStrY 62 000 000 1 474 995 103 tWd 1 199 290 -275 704 2,55 % taipei
SAmSuNG ELECtroNICS Co Ltd GeoGr aphiCal diSTribuTion
prEF Gdr 509 038 500 004 286,1 uSd 805 445 305 441 1,71 % London Int.
SoFtBANK Corp 2 000 000 443 592 3 320 JpY 442 934 -658 0,94 % tokyo Cash 3,8% West Africa 1,5%
Asia ex
Japan 32,5% South
NASpErS Ltd 686 999 161 812 364 ZAr 204 430 42 618 0,43 % Johannesb. America 17,3%
mINor ItEmS 225 472 75 928 -149 543 0,16 %
Total information Technology 4 203 127 4 509 619 306 492 9,58 %
Perpheral EU
6,9%
TeleCom
East North
SIStEmA JSFC Gdr 10 813 965 846 594 29,1 uSd 1 740 388 893 794 3,70 % London Int.
Africa Africa 0,5%
CHINA moBILE Ltd Adr 4 166 081 1 275 335 46,19 uSd 1 064 250 -211 085 2,26 % New York 2,1%
BHArtI AIrtEL Ltd 19 324 305 885 063 357,4 INr 856 727 -28 336 1,82 % Nat. India Norway 5,7%
INdoSAt tBK pt Adr 4 154 595 708 198 30,18 uSd 693 451 -14 746 1,47 % New York North
America 5,3%
totAL ACCESS tELECommuNICA-
tIoN pLC_ 15 933 600 36 013 48 tHB 1 398 46 103 832 0,30 % Bangkok EMEA 22,3% Japan 1,0% Eurozone 1,2%
mINor ItEmS 62 762 1067 33 43 970 0,23 %
Total Telecom 3 813 969 4 601 398 787 429 9,78 %

uTiliTieS
10 L ArGESt HoLdINGS
CENtrAIS ELEtrICAS BrASILEIrAS
SA prEF 27 648 063 2 051 697 30,77 BrL 2 893 335 841 638 6,15 % Sao paulo
CENtrAIS ELEtrICAS BrASILEIrAS Eletrobras SA 6.5 %
SA 2 050 451 160 437 24,7 BrL 172 247 11 809 0,37 % Sao paulo
Total utilities 2 212 135 3 065 583 853 447 6,51 % Samsung Electronics Co Ltd 5.5 %

Total equity portfolio* 34 310 998 4 5254 345 10 943 346 96,16 % Baker Hughes Inc 5.3 %

disposable liquidity 1 807 538 3,84 %

Total share capital 4 7061 884 100,00 % Hyundai motor Co 5.0 %

Sistema JSFC 3.7 %

Base price as of 31.03.2011 573,1411

* Figures in 1000 NoK Vale SA 3.0 %

the market value as of 31.03.2011 is the last quoted price from the stock exchange. the average cost method is used for the calculation of sales gain.
Banrisul 2.9 %

Gazprom oAo 2.8 %

Standard Chartered pLC 2.6 %

Hon Hai precision Industry Co 2.6 %

totAL 10 LArGESt HoLdINGS 39.8 %

* Skagen reef’s lightship, 1892. detail.

By Carl Locher, one of the Skagen painters.
the picture is owned by the Skagens museum.

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
40 S e C u r i T i e S p o r T F o l i o S K a G e n T e l l u S a S o F 31- 03 -2 011

unrealised
Face value

value incl.
Cost price

gain/loss
value ***
maturity

Share of
accrued
interest

interest
accrued
Coupon

market

market

market
price

fund
***

***

***

***

***
Security

GovernmenT bondS
SVEItSISK StAt 11.02.2013 4,00 6 500 41 760 640,68 213 41 644 41 857 -116 5,48 %
EuropEAN BANK rECoN & dEV 17.06.2015 0,50 31 300 28 361 86,25 103 26 996 27 100 -1 365 3,55 %
HoNG KoNG StAt 07.12.2011 0,00 50 000 38 626 70,78 0 35 391 35 391 -3 234 4,63 %
mALAYSIAN GoVErNmENt 28.04.2011 3,76 17 900 33 118 182,51 518 32 669 33 188 -449 4,35 %
NorSK StAt 16.05.2011 6,00 40 000 40 250 100,43 2097 40 172 42 269 -78 5,53 %
tAIWAN StAt 10.02.2012 0,21 150 000 28 375 18,67 8 28 010 28 018 -365 3,67 %
uSA StAt 31.07.2011 1,00 13 000 77 919 553,38 116 71 939 72 056 -5 979 9,43 %

SKaGen TelluS tYSK StAt

uK StAt
11.05.2011
15.08.2011
0,00
0,00
24 500
7 000
190 413
63 024
783,31
883,81
0
0
191 909
61 866
191 909
61 866
1 496
-1 158
25,13 %
8,10 %
A doorway to global interest rates* SVENSK StAt 15.06.2011 0,00 95 000 84 690 87,31 0 82 941 82 941 -1 748 10,86 %

Total equity portfolio 626 541 30 58 613 542 616 601 -12 998 80,73 %
disposable liquidity 149 676 0 147 210 147 210 -2 466 19,27 %
SKaGen Tellus is an actively
ToTal 776 217 3 058 760 753 763 811 -15 464 100,00 %
managed global bond fund
investing in bonds issued by portfolio Key Figures
Effective underlying return 0,69 %
governments, regional autho- Effective return to clients* -0,11 %
rities and financial institutions duration** 0,43
all over the world. SKaGen
unit price as of 31.03.2011 101,9348
Tellus is a good option for
investors who wish to invest * Effective underlying return adjusted for managment fee.
** duration is a simplified expression of how much the price of the security will
in global bonds and who have change if the interest rate changes by one percentage point.
an investment horizon of at *** Figures in 1000 NoK

least 12 months. investors Effective interest is the average annual return of an interest bearing security until maturity.
Securities are valued at market price as of 31.03.2011.
must be tolerant of exchange Bonds and notes for which there are no market maker prices are at all times valued against the applicable yield curve.

rate fluctuations.

risk

morningstar ★★★★★
Fund start date 29 September 2006

return since start 27.91%

Average annual return 5,62%

Assets under Eur 97 million

management

Number of unitholders 2 414

Subscription fee 0%

redemption fee 0%

management fee 0,8 % per year

minimum subscription one-time subscription

amount Eur 150

Authorised for Norway, Sweden,

marketing in denmark, Finland,
Netherlands, Luxem-
bourg, Iceland, uK and
Switzerland

Benchmark index Barclays Capital

Global treasury Index
3-5 years

uCIts Yes

portfolio managers torgeir Høien

* Interior. Brøndum’s annex, ca. 1920. detail.

By Anna Ancher, one of the Skagen painters.
the picture is owned by the Skagens museum.

S K A G E N F u N d S m A r K E t r E p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
 F i n a n c i a l stat e m e n t 41

Financial statement
As of 31-03-11

Inocme Statement SKAGEN Vekst

31-03-2011
SKAGEN Global
31-03-2011
SKAGEN Kon-Tiki SKAGEN Avkastning
31-03-2011 31-03-2011
SKAGEN Høyrente
31-03-2011
SKAGEN Høyrente
Institusjon
SKAGEN Tellus
31-03-2011
SKAGEN Krona**
31-03-2011
(all figures in NOK 1000) 31-03-2011
PORTFOLIO REVENUE AND COSTS
Income interest and costs 2 390 3 811 2 365 11 405 29 491 11 569 3 134 1 410
Dividends 18 959 98 842 121 426 - - - - -
Realised capital gain/loss 297 201 922 246 1 157 835 -8 554 75 -455 -23 069 -
Change unrealised capital gain/loss -211 125 9 408 -802 540 653 2 436 1 113 -12 189 106
Guarantee commission - - - - - - - -
Broker's fee -2 646 -14 313 -20 438 -4 -38 -16 -9 -18
Currency gain/loss -27 640 -13 620 -20 430 5 687 - - -419 -
Portfolio result 77 139 1 006 374 438 218 9 187 31 965 12 210 -32 553 1 498

MANAGEMENT REVENUE AND COSTS

Fixed management fee -25 369 -85 037 -233 704 -1 653 -2 272 -535 -1 601 -113
Calculated variable management fee* - -110 348 -177 130 - - - - -
Asset management result -25 369 -195 385 -410 834 -1 653 -2 272 -535 -1 601 -113
Result before tax 51 770 810 989 27 384 7 534 29 693 11 676 -34 153 1 385

Tax cost -564 -10 953 -11 522 - - - -106 -

Net income for the period 51 206 800 036 15 862 7 534 29 693 11 676 -34 260 1 385

Balance sheet SKAGEN Vekst

31-03-2011
SKAGEN Global
31-03-2011
SKAGEN Kon–Tiki SKAGEN Avkastning
31-03-2011 31-03-2011
SKAGEN Høyrente
31-03-2011
SKAGEN Høyrente
Institusjon
SKAGEN Tellus
31-03-2011
SKAGEN Krona**
31-03-2011
31-03-2011
ASSETS
Norwegian securities at cost price 4 373 225 753 619 1 497 353 1 003 147 2 767 530 831 768 40 250 -
Foreign securities at cost price 3 482 047 26 855 707 32 813 645 - - - 586 291 246 706
Unrealised capital gains/loss 2 250 376 4 979 252 10 943 347 1 388 2 879 897 -12 998 -162
Accrued interest securities 1 551 2 852 - 3 545 13 887 4 759 3 058 1 035
Total securities portfolio 10 107 198 32 591 430 45 254 345 1 008 080 2 784 297 837 424 616 601 247 579
Dividend receivable 29 242 166 481 194 078 - - - - -
Accrued interest bank 6 207 151 1 - - 2 -
Total accrued income 29 248 166 688 194 229 1 - - 2 -
Accounts receivable - brokers 25 328 61 926 27 354 81 426 60 367 45 610 - 4 992
Accounts receivable - management company 1 1 2 - - - 1 -
Tax receivable on dividends 2 793 33 374 1 900 - - - 1 308 -
Other receivables - - - - - - - -
Total other receivables 28 122 95 302 29 256 81 426 60 367 45 610 1 309 4 992
Bank deposits 159 576 3 106 770 1 959 389 134 907 934 690 640 121 147 514 4 285
Total assets 10 324 145 35 960 190 47 437 221 1 224 413 3 779 353 1 523 154 765 426 256 855

Equit y capital
Unit capital at par value 694 918 4 258 949 8 215 179 922 038 3 648 408 1 451 145 748 086 244 375
Premium -37 787 18 101 027 20 662 970 319 944 33 497 -2 898 54 970 1 086
Total paid-in equity capital 657 131 22 359 977 28 878 149 1 241 981 3 681 904 1 448 247 803 056 245 461
Retained earnings 9 568 548 13 076 255 18 087 994 -49 878 30 091 11 372 -40 551 1 248
Total equity capital 10 225 679 35 436 232 46 966 143 1 192 103 3 711 995 1 459 620 762 505 246 709

Debt
Accounts payable - to brokers 60 966 254 250 3 825 29 986 53 178 63 000 - 4 931
Accounts payable - to management company 25 369 195 385 410 834 1 653 2 272 535 1 601 113
Other debt 12 131 74 323 56 418 671 11 908 - 1 320 5 103
Total debt 98 466 523 958 471 078 32 310 67 358 63 535 2 921 10 146
Total debt and equity capital 10 324 145 35 960 190 47 437 221 1 224 413 3 779 353 1 523 154 765 426 256 855

Number of units issued 6 949 177,87 42 589 493,02 82 151 788,11 9 220 375,71 36 484 076,10 14 511 452,45 7 480 858,75 2 443 753,35
Base price per unit 1471,5102 832,0553 573,1411 129,2880 101,7332 100,5801 101,9348 100,9428

Note: Divergence in price relative to the portfolios is due to accruals divergence as of 31.03.2011.
* Calculated variable management fee as of 31.03.11: pursuant to the regulations, the definitive statement shall take place as of 31.12.2011 based on value developments during the rest of the year.

S K A G E N F u n d s m a r ke t Re p o r t ✱ n u m b e r 1 ✱ a p r i l 2 0 11
SKaGen continues
to expand in europe offices:
head office
SKAGEN Funds
postbox 160
4001 Stavanger,
Norway
or
Skagen 3, torgterrassen
Stavanger, Norway

telephone:
+47 51 21 38 58
Fax: +47 51 86 37 00

Email: contact@skagenfunds.com
www.skagenfunds.com

london
Albemarle House
1 Albemarle Street
London W1S 4HA
uK

Stockholm
drottningsgatan 8
111 36 Stockholm,
Sweden

Copenhagen
Nyhavn 63A, (2nd floor)
1051 Copenhagen K.
denmark
Countries highlighted in dark blue are a home market.
Countries highlighted in light blue are those in which SKaGen has an office.
Countries highlighted in green are those in which SKaGen has marketing permission. Contact Customer Services
Customer Services is open from
monday to Friday from 9 a.m. to
5 p.m. (CEt)
SKAGEN’s International department has over the past few years grown to meet increasing interest and demand
Either visit us at our office, send
from outside the home market in the Nordic region. an email or call us and we will do
our utmost to assist you.
the department now handles inquiries and clients from countries as diverse as the Netherlands, Luxembourg,
Finland, Iceland, the uK and Switzerland. SKAGEN’s international department has grown alongside the
international expansion and now consists of a total of fourteen people and is based between Stavanger,
Norway and London, uK.
Graphical production:
printting produksjon as

p h o n e : + 47 51 21 3 8 5 8 * e m a i l : Co n Ta C T@ S K a G e n F u n d S . Co m