SKAGEN-Kon-Tiki-March

8/7/2019 SKAGEN-Kon-Tiki-March

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SKAGEN Kon-Tiki

Skagen reefs lightship, 1892By Carl Locher, one of the Skagen painters.The picture is owned by the SkagensMuseum.

Leading the way

in new waters

March 2011

- Good recovery for EM equities inMarch and still strong earnings

reports -

report-KAGEN-


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2

Contents

Highlights in March 2011 3

Investment results 4

Portfolio update 15

Outlook and conclusion 37

Companies in SKAGEN Kon-Tiki 57

Investment mandate 63

Investment philosophy 67

Global emerging markets (GEM) 72


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3

Highlights in March 2011

SKAGEN Kon-Tiki gained 2.4 percent in EUR in March, which was 0.6 percentagepoints behind the benchmark index. For 1Q11, the fund is down 0.2 percent versus anindex decline of 3.6 percent.

We added no new positions in March and sold out of Qingling Motors. We increasedour positions in a number of companies, notably Equinox Minerals, Vale, SabanciHolding and Hon Hai Precision Industry, while we trimmed our positions in some verystrong performers such as Seadrill, Great Wall Motor and Banrisul. We raised our

forecasts for Great Wall Motor and downgraded for Aveng. For our 35 largest holdings,we foresee a median earnings growth of 22 percent for 2011 (in line with EM at 21percent). We did not make any changes to target prices.

The 35 largest holdings, representing 78% of the fund, trade at a weighted P/BV of 1.2xversus 2.1x for the EM index. The weighted P/E for 2011e is 7.8x, which is also asignificant discount to the benchmark index at 11.5x.

For the 35 largest holdings, we see a weighted upside of 40%. This would put P/BV at1.8x and P/E for 2011e at 10.6x, which would still be a significant discount to EM ingeneral.


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Investment results


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5

Results in EUR as of 31 March 2011

Start date: April 5 2002

All returns beyond 12 months are annualised (geometric return)

QTD 2010 Past 3 years Since Inception

SKAGEN Kon-Tiki -0,2 % 29,0 % 15,0 % 21,1 %

MSCI EM Index -3,6 % 27,0 % 8,2 % 10,9 %Excess return 3,3 % 2,0 % 6,9 % 10,2 %


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SKAGEN Kon-Tiki performance in EUR since inception


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Strong relative returns every year since inception; in years withboth positive and negative market returns

*) The fund was launched on 5 April 2002. **) Returns in NOK as of 31 March 2011

-30 %

103 %

32 %

59 %

23 % 23 %

-36 %

63 %

21 %

0 %

-34 %

50 %

14 %

49 %

22 % 21 %

-40 %

48 %

19 %

-3 %

-60 %

-40 %

-20 %

0 %

20 %

40 %

60 %

80 %

100 %

120 %

2002* 2003 2004 2005 2006 2007 2008 2009 2010 2011

SKAGEN Kon-Tiki MSCI EM index


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Emerging markets in Q1 2011 in EUR (as of 31 March)

Hungary 13 %

Croatia 9 %Russia 8 %Ukraine 6 %Slovakia 6 %Czech Republic 5 %Poland 1 %SKAGEN KON-TIKI 0 %USA -1 %

Ghana -1 %China (local) -1 %South Korea -1 %China (International) -1 %Industrialized markets -1 %Slovenia -2 %Malaysia -3 %MSCI EM Index -4 %Hong Kong -4 %Indonesia -4 %

Mexico -5 %

Thailand -6 %Brazil -6 %Singapore -7 %Pakistan -7 %Turkey -8 %South Africa -8 %Nigeria -8 %Philippines -9 %

Taiwan -10 %India -10 %Colombia -11 %Peru -11 %Argentina -12 %Chile -14 %Vietnam -16 %Kenya -20 %Egypt -30 %


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Emerging markets in March in EUR (as of 31 March)

South Korea 8 %

Slovakia 8 %India 8 %Turkey 6 %Philippines 5 %Thailand 4 %Indonesia 4 %China (International) 4 %MSCI EM Index 3 %

Croatia 3 %SKAGEN KON-TIKI 2 %Pakistan 2 %Poland 2 %Slovenia 2 %Hungary 1 %Malaysia 1 %Singapore 1 %Brazil 1 %Russia 1 %

Chile 1 %

Czech Republic 0 %Mexico 0 %South Africa 0 %Taiwan -1 %China (local) -2 %Ghana -2 %Hong Kong -2 %USA -3 %

Vietnam -3 %Industrialized markets -4 %Colombia -5 %Ukraine -5 %Argentina -5 %Peru -7 %Egypt -8 %Nigeria -9 %Kenya -11 %


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Healthcare and Industrials big underperformers this year; Energythe big outperformer

-10 %

-8 %

-7 %

-7 %

-5 %

-4 %

-4 %

-3 %

-3 %

-3 %

6 %

-15 % -10 % -5 % 0 % 5 % 10 %

Healthcare

Industrials

Consumer staples

Info. technology

Financials

Telecom services

Consumer discr

Utilities

Materials

MSCI EM index

Energy

EM index performance by industry 2011 YTD* (NOK)

Source: MSCI * as of 31. March, 2011


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Total value creation in March 2011: NOK 1,706m

Hyundai Motor 289

Sistema 197

Great Wall Motor 182

Banrisul 172

Sabanci Holding 130

Eletrobras 120

Samsung Electronics 112

Gazprom 104 Mahindra & Mahindra 88

Baker Hughes 75

Bharti Airtel 65

Richter Gedeon 63

Asya Bank 55

Shoprite Holdings 51

Hon Hai Precision Industry - 70

Harbin Power Equipment - 53

EFG-Hermes Holding - 40

Vale - 40

A P Mller Maersk - 39

Cosan Ltd. - 38

China Mobile - 35

LG Electronics - 33 Seadrill - 31

PZ Cussons - 26

Empresas ICA - 25

JSE Limited - 23

Stada Arznemittel - 23

ABB - 22

Main contributors in March 2011 (in MNOK)


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Total value creation in 2011: NOK 458m

Baker Hughes 491

Great Wall Motor 353

Eletrobras 308

Pride International 294

Gazprom 233

Hyundai Motor 196

Sistema 178

Banrisul 139 Golar LNG Energy 70

Gjensidige Forsikring 58

Marine Harvest Group 51

Stada Arneimittel 45

Seadrill 43

Kim Eng Holding 40 VTB Bank 39

Hon Hai Precision Industry - 249

Harbin Power Equipment - 186

EFG-Hermes Holding - 166

Samsung Electronics - 164

Aveng - 154

China Mobile - 141

Mahindra & Mahindra - 104

LG Electronics - 99 Empresas ICA - 94

Vale - 90

Standard Chartered Bank - 75

Equinox Minerals - 74

JSE Limited - 70

PZ Cussons - 64 Cosan Ltd. - 62

Main contributors in 1Q 2011 (in MNOK)


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Emerging market currencies in 2011 (versus NOK)

Hungarian Forint 6 %

Czech Koruna 3 %

Russian Ruble 2 %

Croatian Kuna 1 %

Slovakia Koruna 1 %

Euro 1 %

Polish Zloty - 1 %

Mexican Peso - 2 %

Indonesian Rupee - 2 %

Colombian Peso - 2 %

South Korean Won - 3 %

Brazilian Real - 3 %

Singapore Dollar - 3 %

Malaysian Ringgit - 4 %

Philippine Peso - 4 %

Chinese Renminbi - 5 %

Indian Rupee - 5 %

Turkish Lira - 5 %

US Dollar - 5 %

Hong Kong Dollar - 5 %

Thai Baht - 6 %

Taiwanese Dollar - 6 %

Chilean Peso - 7 %

Ghanaian Cedi - 7 %

Nigerian Naira - 7 %

South African Rand - 7 %

Egyptian Pound - 7 %

Kenyan Shilling - 7 %


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Commodity prices in 2011

14

-6 %

-6 %

-3 %

-3 %

-1 %

1 %

5 %

5 %

9 %

9 %

9 %

10 %

21 %

22 %

39 %

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

Wheat

Sugar

Copper

Natural gas

Soybeans

Gold

Aluminum

Nickel

Lean hogs

Coffee

Live cattle

Corn

Gasoline

Silver

Cotton

Best and worst commodities 2011 YTD


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Portfolio update


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Sector distribution in Emerging vs. Industrialised markets

0 % 5 % 10 % 15 % 20 % 25 %

Energy

Materials

Industrials

Consumer discr

Consumer staples

Healthcare

Financials

Info technology

Telecom services

Utilities

MSCI World Developed MSCI EMSource: MSCI - updated as of 31 March, 2011


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Sector distribution of SKAGEN Kon-Tiki versus MSCI AllCountry Index (includes emerging markets)

0 % 5 % 10 % 15 % 20 % 25 %

Energy

Materials

Industrials

Consumer discr

Consumer staples

Healthcare

Financials

Info technology

Telecom services

Utilities

MSCI AC World SKAGEN Kon-TikiSource: MSCI, SKAGEN Funds - updated as of 31 March, 2011


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0 % 5 % 10 % 15 % 20 % 25 % 30 %

Energy

Materials

Industrials

Consumer discr

Consumer staples

Healthcare

Financials

Info technology

Telecom services

Utilities

MSCI EM SKAGEN Kon-TikiSource: MSCI, SKAGEN Funds - updated as of 31 March, 2011

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Sector distribution for SKAGEN Kon-Tiki versus MSCI EmergingMarkets Index


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0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

16 %

18 %

20 %

Chinaincl.HK

Brazil

South

-Korea

Taiwan

India

South

Africa

Russia

Mexico

Malaysia

Ind

onesia

Poland

Thailand

Chile

Turkey

Co

lombia

Peru

Philippines

Egypt

H

ungary

CzechRepublic

M

orocco

Frontierm

arkets

US

N

orway

UK

Other

MSCI EM SKAGEN Kon-Tiki

Source: MSCI, SKAGEN Funds - updated as of 31 March, 2011

19

Country distribution SKAGEN Kon-Tiki vs. MSCI EM Index


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Why did we buy in and sell out in March?

Qingling Motors went out of the portfolio as we grew concerned about its intellectual property

and its margin potential amid its close ties to Isuzu Motors.


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News from our portfolio companies (1)

Eletrobras (6.5% weight) announced its CAPEX budget for 2011 of BRL 10.2bn versus a 12m rolling CAPEX of

BRL 7.7bn as of 3Q10, driven by large generation investments as San Antonio and Bel Monte. According to localpress, Folha, Eletrobras is also studying the possibilities of divestments of projects and minority participations inorder to reduce unwarranted risk in the portfolio with minority stakes likely to be the first target.

Samsung Electronics (5.5% weight) has hired ex BMW design chief, Chris Bangle, as a design advisor. Mr.Bangle will reportedly be involved in handset- and TV design from day one.

Hyundai Motor (5.0% weight) revealed March sales figures showing a 2% YoY growth (+9% YoY for 1Q10).Domestic sales rose 5%, while sales outside of Korea was up 1%. Its domestic market share continued to

recover to 46.5%. Sistema (3.7% weight) announced the appointment of Mikhail Shamolin, currently CEO of its subsidiary MTS, as

new CEO, replacing Leonid Melamed, who will remain an active board member. This is positive, amid recentspeculation that the son of its major shareholder, Vladimir Yevtushenkov, would take the top post.

Sistema will sell its 63% stake in Sitronics to RTI (85% owned by Sistema) for USD 110m constituting a 20%premium to current market levels. This is neutral for Sistema as it is an intra company transaction.

Sistema also announced that the Russian government has finally has acquired a 17.1% stake in its Indian mobileoperations, Sistema Shyam Teleservices, for USD 600m, through a capital increase. The government has a putoption to Sistema for a one year period starting five year after the acquisition at the highest of USD 777m andmarket value. Thus, this could seem like a financing deal implying a 5.3 per cent annual interest.


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Standard Chartered (2.6% weight) reported full year results with pretax profit of USD 6.1bn (+19% YoY) and

EPS of USD 1.96 (+16% YoY), in-line with expectations. Tangible book value per share of USD 12.74 (+20%HoH) was better than expected. The groups P&L impairment charge fell to 40bp in 2H10 with 2H10 nonperforming loans at 1.9%. The consumer bank NPL declined 15bps HoH in 2H to 1.0%, while Wholesale NPL of2.6% has a 50% NPL cover. The core Tier 1 ratio of 11.8% was better than expected. CASA now supports 37%of the groups funded assets. STAN left guidance for 2011 unchanged, expecting double digit income growth in2011 and beyond, and 2011 income and cost growth to be in-line excluding USD180m in UK bank levy.

Great Wall Motor (2.3% weight) announced impressively strong 2H10 results. Net profit was RMB 1,839mversus 859m in 1H10 and 760m in 2H09, lifted by tax credits. Pretax profit was RMB 1,891m versus 1,147m in

1H10 and 616m in 2H10. This was 30% above consensus of RMB 1,455m and our estimate of 1,807m. Thestrong result was driven by 1) stronger than expected ASP (up HoH for all 3 categories) and good cost control.Sales rose 80% YoY in 2H10.

Great Wall Motor also announced that February sales rose 21% YoY driven by a 29% growth in sedan sales withhigh-margin SUV sales +17%. This brings year-to-date sales to 47%. Chinese car sales had a weak month with agrowth of 3%, diluted by one less working day and early timing of the Chinese New Year versus February 2010.

China Mobile (2.3% weight) reported good 2H10 results, with revenues up 7% YoY and 11% HoH to RMB255bn. Voice was a little weaker than expected, being up 6% HoH, while VAS were up a strong 23% HoH. 2Hoperating profit of RMB77bn was in-line, with margins of 30.3% (-160bps HoH). 2H EPS of RMB3.1 (+9% HoH)beat consensus slightly. A stabilization of ARPU of RMB72/month in 2H was a key positive together with thestatement that they didnt loose many high-end users. They are leading the 3G subscriber growth challenge with41% market share of net adds giving them 21m users (3.5% of total users). The reluctance of the company toincrease the dividend payout (43%) and a 35% increase in capex guidance to RMB132bn (+6.5% YoY) were thenegatives from these results.


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Sabanci Holding (2.2% weight) posted a net profit of TRY 477m for 4Q10 versus TRY 85m in 4Q09m and TRY278m in 3Q10. This was ahead of consensus at TRY 338m, driven higher operating results and one-off assetrevaluation gains.

Sabanci also announced that its subsidiary, Exsa Export, will buy 5% of outstanding shares in the next year.Management commented that it is not happy with the discount to NAV, estimated at 30% pre-announcement,and will jump-start a share buy-back through a subsidiary ahead of the general share buy-back law which isexpected to be put in place from 2012. Pre-announcement, the buy-back would cost TRY 656m. Financing is notan issue amid a net cash position both in holding and Exsa Export.

ABB (2.0% weight) received a USD 900m order from India to deliver a 1728 km transmission network to PowerGrid Corporation of India.

Equinox Minerals (2.0% weight) reported 4Q10 results largely in-line with expectations. Adjusted EPS of USD0.15 (+7% QoQ) beat consensus of USD 0.12, but CEPS was USD 0.16 (+36% QoQ) compared to expectationsof USD0.17, due to lower grades and higher diesel costs. As previously released, they produced 34k of copper inconcentrate at a cash cost of USD1.64/lb in 4Q. They kept their 2011 production guidance of 145k copper at acash cost of USD1.45/lb. With only 9% of 2011 production hedged, they are set to benefit from the high copperprices. Construction at Jabal Sayid is now expected to commission 1H12, a slight delay from previous guidance.

The Lumwana expansion study is expected by 2Q11 and the Lundin takeover approach are the next catalysts.

Seadrill (1.8% weight) announced that its 75% owned subsidiary, North Atlantic Drilling, has entered into acontract with Jurong shipyard for the construction of a high-spec JU rig for an all-in cost of USD 530m to bedelivered in 3Q 2013. The rig has been contracted by ConocoPhillips for a 5-year period at a rate of USD c360kper day, which equals a c6 year pay back on new building costs.


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Mahindra & Mahindra (1.5% weight) reported continuous strong March sales data with auto sales up 19% YoY(+25% for FY 2010/2011) and tractor sales +23% YoY (+22% for FY 2010/2011).

Indosat (1.5% weight) reported 4Q10 results highlights, with dull details due on March 24. Revenues of IDR4953bn (-4% QoQ, -3% YoY) were a little below expectations due to weak mobile revenues on the back ofongoing price promotions. EBITDA was in-line (-1% QoQ, +2% YoY), with margins improving by 170bp QoQ to50.4% due to cost management. Net income fell 52% QoQ, and while no details were given we believe this wasdue to FX and interest rate hedging derivatives, higher interest rate costs and depreciation expenses. A YoYimprovement in operating cash flow was a positive.

Cosan (1.2% weight) finally announced the long awaited details of their expectations of the new JV with Shell(Raizen), with expected synergies of BRL3.4bn, or more than twice the consensus expectation of aroundBRL1.5bn. This is split into commercial synergies of BRL1.4bn (product mix/larger scale), financial synergies ofBRL400m and logistics/distribution/trading of BRL1.7bn. They expect the fuel distribution segment to deliver anEBITDA of BRL950m in FY12 and BRL1220m in FY13. This is obviously very good news, and it should have apositive impact as Cosan will now go from being a cyclical sugar stock to a diversified agriculture/energy playwith a less cyclical cash flow.

Aveng (1.2% weight) reported weak 1H 2010/2011 results with an EPS of ZAR 1.07 or down 35% YoY, which

was in the low end of guidance. Excluding non-recurring items, EPS declined 17% driven by FX losses withunderlying EBIT down 9% YoY impacted by two loss-making contracts in Australia which reduced contributionfrom its Australian subsidiary with 50%. Net cash declined by ZAR 2bn to 5.6bn HoH owing partly to a negativenet working capital development of ZAR 0.8m. The order book rose by ZAR 1bn HoH to 32bn. The outlook for 2H2010/2011 looks slightly more positive.


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Stada Arzneimittel (1.2% weight) released final 4Q10 results, which was in line with preliminary results.Management repeated its 2011 guidance for an EBITDA of EUR 330-345m. Net debt declined EUR 51m QoQ to

EUR 848m which at 2.7x trailing EBITDA is below management upper target of 3x.

Empresas ICA (1.1% weight) announced that it has been awarded a contract to construct a toll road in MexicoCity worth MXN 5.4bn adding 15% to its 4Q10 closing backlog. ICA will hold a 30% share in the concessionfollowing completion in 19 months.

ICA also announced news of management rotation, where the current CFO, Alonso Quintana Kawage, willassume a new position as COO while Victor Bravo, current CEO of OMA (airport operator subsidiary of ICA), willbecome ICAs new CFO. They have created a new executive committee with 4 members, to be chaired by

Alonso Quintana Kawage. They also announced 3 members of the Board has retired and been replaced. Webelieve these changes are done to strengthen ICAs organization.

Marine Harvest Group (0.8% weight) announced that the board proposed to increase the final dividend for 2010from NOK 0.6 to 0.8 per share to be approved at the AGM on 23 May.

Harbin Power Equipment (0.7% weight) reported a net profit of RMB 578m for 2H10 versus 391m for 2H09.This was well above consensus driven by strong cost control and lower material costs, which improved the grossmargin for 2010 by 1.6pp to 12.8%. Order intake was up 1.7% YoY for 2010 to RMB 36.2bn, which excludes the10bn Indian order which will be included in the 2011 intake. The order backlog is RMB 85.5bn equal to 3.4 year

of revenues. Nuclear orders, representing 18% of the backlog, are all domestic and approved by NDRC andtherefore not subject to risk amid the recent suspension of new project approvals following the Japan reactormelt down. Management expects the 2011 gross margin to at least track 2010 while other operating costs shouldalso decline as per cent of sales.


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JSE (0.7% weight) revealed 2010 results that were a little disappointing, with fully diluted EPS of ZAR 4.3 (-5%YoY). This was despite inline revenue growth of 9%, and EBITDA margins expanding to 39%. Thedisappointment came from an additional impairment charge (ZAR24m) on top of a higher tax rate. A veryconservative dividend coverage decrease from 2.2x to 2.1x was also disappointing (DPS of 2.1 compared to 1.9last year), given their strong cash generation and the fact that they are in a strong cash position (ZAR 1bn). Thenumber of trades in January and February is up 18% YoY, compared to 13% for the full year, with the averagevalue per trade remaining constant at ZAR126k. The recent turmoil in global markets is positive for exchanges astrading volumes tend to rise on the back of negative investor sentiment.

Korean Reinsurance (0.6% weight) said the potential impact from earthquake in Japan: given that theiroverseas business portion is less than 20%, and the Japanese portion is less than 1% among the overallinsurance portfolio, hence we expect limited claim costs. Korean Reinsurance is also normally insured by otherglobal reinsurers to prevent large claim costs from catastrophe events. They have said that the probablemaximum loss is less than KRW 5bn due to the retrocession and the loss amount exceed 5bn will be covered byother global reinsurers. For comparison, 2011 expected net income is around KRW 220bn.

Tullow Oil (0.6% weight) announced full year results with fully diluted EPS of USD6.1, less than expected due tohigher than expected exploration write offs (USD155m) and net finance charges. Net debt of USD1.9bn was in-line, while dividends were kept flat YoY at USD 6 per share. Focus however was on the significant upsidepotential from the aggressive development and exploration potential over the next year. According to pressreports (but not confirmed by the company), the re-elected Ugandan government has resolved a tax dispute thatshould now allow them to bring Total SA and China National Offshore Oil Company into its oil projects in the EastAfrican country.


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Tullow also said theyve encountered good quality reservoir sands in the Enyenra 2a well offshore Ghana. Theyhit two channels; an upper 21-meter net sand channel and a lower 13-meter lower sand channel, which seems tobe in communication with the reservoirs discovered in the original Owo-1 well, which de-risks this complex field.They are however keeping the fields gross resource range unchanged until further analysis is conducted.

Tullow finally signed a memorandum of understanding with the Ugandan Government to resolve the USD400mcapital gains tax dispute. Following this, Tullow announced they have finally signed the farm down of 66% of theirLake Albert acreage to Total and CNOOC for a cash consideration of USD2.93bn (in-line with expectations), withan implied value of USD4.5/boe. Some procedural approvals are still required, like approval by the Chinese

government. The tax dispute with the Uganda Government has been resolved (at least temporary) according topress reports, whereby Tullow will pay USD469m in tax, which includes USD313m for Heritage plus 30% of thetax bill related to the CNOOC/Total farm down.

EFG-Hermes Holding (0.5% weight) net profit for 4Q10 was EGP 32m versus EGP 88m in 3Q10 and EGP 85min 4Q09. This was slightly lower than expected due to weak commission income both from investment banking (-45% QoQ), asset management (+60% QoQ) and brokerage (+20% QoQ), while newly acquired Credit Libanais(65% owned) reported strong results with net profit +52% for 2010, leading to a 17% RoE.

Provida (0.5% weight) reported an EPS of USD 1.67 in 4Q10 versus USD 2.63 in 3Q10 and RoE was 24%. Thedecline is mainly related to lower return on required investments of its equity into the pension funds. With an EPSof USD 4.3 for 2H10, this bodes well for a high final dividend to be announced in April.

DRB Hicom (0.5% weight) won the long awaited USD2.5bn contract for the design, development andmanufacturing of 257 armored vehicles from the Malaysias Government.


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DRB-Hicom has also been shortlisted together with 2 other firms to buy Khazanah Nasional Bhds 32.2% stake in

Pos Malaysia. At current market values a potential acquisition would equal 13% of DRBs cap (MYR 600m),which is still less than their net cash position. Pos Malaysia provides postal and related services and trades on2011 P/E of 14x compared to DRB at 7.5x. It was also reported that they plan to develop their Rebak IslandResort further through an extension to the hotel, developing private beaches for guests and opening a spa.

Enka Insaat (0.4% weight) reported a net profit of USD 2+6m for 4Q10 versus 240m in 4Q10. This was in linewith consensus. EBITDA of USD 237m was down markedly on USD 376m in 4Q09 driven by a sharp correctionin contribution from the contracting business. However, higher non-operating income limited the decline in thebottom line. Net cash increased by USD 86m to USD 1,380m sequentially (now 17% of market cap). The backlog

improved slightly to an estimated USD 5.5bn at year-end 2010 and should now stand at USD c6.2bn after recentorder wins.

Royal Unibrew (0.4% weight) reported a better than expected net profit for 4Q10 of DKK 68 versus DKK -37m in4Q09 and consensus of DKK 43m. The beat was mainly related to lower tax charge. FCF was strong and netdebt declined to DKK 770m versus the guided 850m. This allows for higher payback and the companyannounced a DPS of DKK 12.5 and an additional DKK 110m in share buy-back (DKK 9.8 per share) bringingtotal pay out to 90%. Unibrew guided for sales of DKK 3.4-3.55bn (down from 2010 due to deconsolidation ofPoland and the Caribbean operation) and EBIT before special items of DKK 435-485m (DKK 417m in 2010)

which was in line with consensus. Golar LNG Energy (0.4% weight) reported weak 4Q10 results with EBITDA of USD 1m versus 3m in 3Q10. The

company reported that it was pre-qualified for two FSRU projects in 4Q10; one in Indonesia and one in Bahrain.GOLE has 3 vessels with potential for conversion to FSRU and is also considering new-building.


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Asia Cement China (0.3% weight) reported a strong 2H10 net profit of RMB 371m versus 287m in 2H09. This

was a strong recovery from 140m in 1H10 driven by higher cement prices. Energy efficiency focus of thegovernment, which requires a shutdown of less efficient capacity, is leading to improved pricing with currentprices in most of its regions up c20% versus 4Q10.

Ghana Commercial Bank (0.3% weight) reported further progress in 4Q10 with a net profit of GHS 20.3mversus 3Q10 of 18.3m. For the full year, EPS of GHS 0.21 was impressive compared to GHS 0.07 in 2009.Interest income was up 46% YoY, while non-interest income was disappointing down 14%. Operating incomewas up 63% YoY despite a 20% increase in operating expenses, leading to a sharp drop in the cost to incomeratio from 70% to 51%. Funding costs were down 23% for the year. Their Tier 1 ratio increased 300bps YoY to13.7%, and NPLs compared to gross loans decreased 400bp to 15%. RoE increased from 9.2% to 24.7% for FY.

Aberdeen Asset Management (0.2% weight) released a pre-close trading update for January and February.Inflows were better than expected, with GBP 0.2bn (GBP 1.0bn for equities), while performance took away GBP7.3bn (a little weaker than expected), leading to AuM of GBP 176.2bn (-4% since December).

Aquarius Platinum (0.2% weight) was hit by the announcement of the requirements for the implementation ofthe Indigenisation Act for the mining sector by Zimbabwe. This requires a controlling interest of 51% of theshares in issue to be held by indigenous Zimbabweans, with the value to be based on an agreement betweenthe Minister and the businesses concerned. However, they also noted it should take into account the States

sovereign ownership of the minerals exploited or to be exploited. Aquarius asset Mimosa is a 50:50 JV withImpala Platinum. Mimosas long life and low cost production makes it an important contributor for Aquarius. It isexpected to contribute 35% of their aggregate production until 2035, but with a higher share of EPS. It isobviously unlikely that they will achieve the fair value in a forced sale.


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Coal of Africa (0.1% weight) reported disappointing 1H results, with 1H revenues of AUD93m, belowexpectations due to weather impacted production, derailments to Matola and legacy contracts at Woestalleenwhich are due to expire in 3Q11. EBITDA of AUD -18m and EPS of AUD -0.11 also disappointed due to higherD&A charges and exceptional of -22m. Cash at the end of the period was AUD 24m, but with a AUD 20m bankfacility due and payable on 24 March. Despite weak results the underlying story remains intact with Makhadosfeasibility study the next catalyst.


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The largest companies in SKAGEN Kon-Tiki

Eletrobras is Brazil's largest electricity company with a 39% share of generation. The company has installed acapacity of 39 TWh where 87% is hydro power, and 59 000 km transmission lines (55% market share). The federal

government owns 66% of the equity and 78% of the voting rights.

Samsung Electronics is one of the world's largest producers of consumer electronics, with 155 000 employees. The

company is global #2 in mobile phones, the world's largest in TV and a global #1 in memory chips. Samsung

also produces appliances, cameras, printers, PC's and airconditioners.

Sistema is a Russian conglomerate with focus on telecom and other consumer related business, in addition to oil.

The majority of the value is linked to a 54% holding in MTS, which is Russia's largest mobile phone company with a

market share of 38% and 102m subscribers. The oligarch Vladimir Evtushenkov owns 64%.

Banrisul is a Brazilian savings bank in the Rio Grande do Sul state with its 11m inhabitants. The company has about 20%

market share in the state and 2.8m customers, with 700 branches/service offices. Good solidity and deposit coverage.

Local authorities own 53%.

Richter Gedeon is Hungary's largest pharmaceutical company and the 10th largest in generics globally. This is

74% of sales, with focus on cardiovascular and central nervous system. Has 10 000 employees. Main markets are EU and

central/eastern Europe. Hungarian government owns 25.1%.

Standard Chartered is a British bank with focus on emerging markets in Asia, Afr ica and the Middle East (more than 80%

of the balance sheet). Has 75 000 employees in 75 countries/provinces, 1 800 branches. Private lending is 47% andmuch of business loans are wholesale. Short loan book duration (54% under 1 yr). Temasek (Singapore) owns 18.4%.


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33

The largest companies in SKAGEN Kon-Tiki (cont.)

Hyundai Motor is the world's 4th largest car maker, including their 39% stake in Kia Motor. Sold 3.6m cars in 2010

(+16% YoY) and has approx. 5% global market share. Focus on smaller/less expensive cars. Strong position in several

countries and in emerging markets such as India and China.

Baker Hughes is the third largest oilfield services company in the world with 55 000 employees. Sales is split evenly

between drilling/evaluation and completion/production. Following the merger with BJ Services in April 2010, BHI

also has a leading position within pressure pumping.

Hon Hai Precision Industry is the largest electronics contract manufacturer in the world with 1,000 000 employees. Almost

all production commence in China. Major customers include Apple, Cisco, Dell, HP and Intel. Hon Hai also provides

design engineering and mechanical tooling services.

Vale is the world's largest producer of iron ore with about 35% global market share, which is 54% of sales. They also

produce nickel (#2 globally), copper, aluminium, coal and other products. 62 000 employees. All extraction of iron ore in

Brazil. Vale plans to double its total production from 2009 to 2015. Government controlled Valepar owns 33.3%.

Gazprom is the largest gas producer in the world with representing 9% of global supply and has reserves of 550bn m3

or 10% global reserves. The company also controls a wide pipeline network of 160k km, the largest power utility company

in Russia, the #5 oil producer as well as drillling assets and a bank. Russian federation owns 50.002%.

VTB is the #2 bank in Russia with a 13% market share in commercial lending and 10% in private credits. 84% of loans

comes from corporates. It has 935 branches, including other CIS countries, and 156k corporate clients as well as 5m

retail customers. Russian Federation owns 75.5%.


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34

Portfolio composition and changes

Company focus drives portfolio composition, but we are cautious with sector andcountry exposure exceeding 20% in order to balance portfolio risk.

Our 12 largest holdings now represent 45% of the portfolio value (compared to42% at the end of 2010 and 46% at the start of 2010). The 35 largest positionsrepresent 78%, unchanged from last month.

Our portfolio consists of 97 companies, which is in line with 99 at the end of2009.

We added no companies to our portfolio in March and disposed of ProtonHoldings and Qingling Motors.


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SKAGEN Kon-Tiki: key figures as of 31 March 2011

35

Please note that aggregated valuation and upside are now weighted and calculatedbased on the same methodology as the benchmark index.

Holding Price P/E P/E P/BV Price Upside

size 2010e 2011e Last target

Eletrobras 6,5 % 30,8 8,8 8,8 0,4 70 127 %

Samsung Electronics 5,5 % 625 000 6,6 6,8 1,0 780 000 25 %

Baker Hughes 5,3 % 73,7 35,8 14,7 2,0 100 36 %

Hyundai Motor 5,0 % 66 000 3,4 3,1 0,6 100 000 52 %

Sistema 3,7 % 29,1 9,7 7,3 2,1 30 3 %

Vale 3,0 % 47,4 8,2 6,3 2,0 65 37 %

Banrisul 2,9 % 20,0 11,1 8,9 2,2 22 10 %

Gazprom 2,8 % 32,4 6,5 5,8 0,9 40 24 %

Standard Chartered 2,6 % 1 639 10,2 8,9 1,7 2 000 22 %

Hon Hai Precision Industry 2,6 % 103 9,5 8,5 2,1 200 94 %

VTB Bank 2,5 % 7,00 17,5 11,7 2,2 9 29 %

Richter Gedeon 2,4 % 39 095 10,8 10,9 1,7 50 000 28 %

Weighted top 12 44,7 % 8,1 7,1 1,0 46 %

Weighted top 35 77,8 % 9,2 7,8 1,2 40 %

Emerging market index 14,0 11,5 2,1


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36

Valuation of the SKAGEN Kon-Tiki portfolio

We have raised our 2011 estimates for Great Wall Motor while we downgraded our

forecast for Aveng. We have made no changes to any target prices this month.

We expect our 35 largest holdings to report a median EPS growth of 22% for 2011ewhich is in line with consensus for the EM universe at 21%.

The 35 largest positions now trade at a weighted P/E of 7.8x for 2011e. This is aconsiderable discount to Emerging Markets trading at a P/E of 11.5x for 2011e.

The weighted trailing P/BV for the 35 largest positions is 1.2x. This is substantiallylower than the P/BV of 2.1x for the emerging markets index.

We see a weighted average upside of 40% for our 35 largest positions. At thistarget, these positions (representing 78% of the portfolio) would trade at a 2011eP/E of 10.6x and a trailing P/BV of 1.8x. This would still be a meaningful discount tothe current emerging markets valuation.


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Outlook and conclusion


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38

Returns in EM equities have been unmatched in the past decade:accumulated +113% for EM and -21% for DM . . . .

*) As of 31 March 2011

-5 %

-16 %

-38 %

28 %

4 %

22 %

11 %

-5 %

-24 %

8 %13 %

0 %

-24 %

-1 %

-28 %

50 %

14 %

49 %

22 % 21 %

-40 %

48 %

19 %

-3 %

-50 %

-40 %

-30 %

-20 %

-10 %

0 %

10 %20 %

30 %

40 %

50 %

60 %

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Performance of EM and Industrialized markets (in NOK)

MSCI Developed World MSCI Emerging Markets


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39

Inflation fear has killed the party in EM but we expectinflation to taper off in 2H11

Annual change in CPI

Source: Reuters EcoWin

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

2007 2008 2009 2010 2011

Percent

-3,0

-0,5

2,0

4,5

7,0

9,5

12,0

14,5

17,0

Percent

-3,0

-0,5

2,0

4,5

7,0

9,5

12,0

14,5

17,0

China

Taiwan

South Korea

Mexico

Brazil

Hungary

Poland

India (wholesale prices)Russia


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40

Exposure to commodity driven inflation differs widely in the EM universewith the poor countries being most exposed

Countries with low GDP percapita more exposed to foodinflation as food is greatershare of basket.

In August 2008, CPI inPhilippines rose 12.4% YoY.

South Korea, a highlydeveloped emerging countryless exposed.


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41

Purchasing managers expectations (PMI) above 50 for all countries

IKKE OPPDATERT

PMI manufacturing

Sources: Reuters EcoWin and Bloomberg

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

2007 2008 2009 2010 2011

Diffusionindex

25

30

35

40

45

50

55

60

65

70

Diffusionindex

25

30

35

40

45

50

55

60

65

70

Russia

China

India

South Africa

Mexico

Brazil

Taiwan

Turkey

Israel

South Korea


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42

Small downward revisions to 2011 GDP forecasts for all regions,but particularly for Japan

-4,0 %

-3,4 %

-2,4 %

-5,2 %

-5,0 %

-2,9 %

1,0 %

4,6 %

8,7 %

1,7 %

2,5 %

2,8 %

4,0 %

4,3 %

6,1 %

7,2 %

9,1 %

10,3 %

2,2 %

2,3 %

2,9 %

0,9 %

4,1 %

4,3 %

6,0 %

7,5 %

9,4 %

-7 % -5 % -3 % -1 % 1 % 3 % 5 % 7 % 9 % 11 %

Eurozone

Developed economies

US

Japan

Emerging Europe

Latin-America

Emerging economies

Asia ex. Japan

China

Regional GDP growth

2011e

2010e

2009

Source: JPMorgan Markets, 31. March, 2011


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43

Stable and low volatility and some EM spread compression in March


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45

Volatility spiked in January but has come down in February and March


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46

Consensus Emerging Markets earnings growth for 2011 and 2012stable month-over-month

E= IBES aggregate estimate. Source: IBES, FactSet, Morgan Stanley Research

IBES Consensus EPS growth MSCI EM, 2010-2013


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48

P/BV for emerging markets at 2.1x is at a similar level to the long termaverage and at a marginal premium to MSCI World at 1.9x

Historical P/BV 1992-2011: MSCI EM versus MSCI World


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49

. . . but this can be explained by higher return on equity despitestronger balance sheets than in industrialised markets

Historical return on equity for Emerging Markets versus MSCI World

Source: Morgan Stanley research, MSCI.


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50

No sign of an emerging market bubble when comparing P/BV valuationsof historical bubbles to current valuations

Source: CIRA, MSCI, Factset


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51

Big outflow from EM so far this year, but inflow in recent weeks


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EM share of MSCI AC World is steadily increasing on backof strong relative return and high IPO and issue activity

52


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Institutional allocation to EM equities is still well below itsshare of the global index weighting, capitalization and GDP

53


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54

Outlook for emerging markets (1)

The decoupling of the world becomes increasingly clear with Asia in the drivers seat

when it comes to global economic growth. This development is fuelled by Brazil,China, India and Indonesia. Convergence in standard of living continues with rapidincrease in real incomes in emerging markets and increased savings rates in theindustrialised countries.

Domestic consumption and infrastructure investments will continue to be the mostimportant drivers of growth in the Asian countries.

Earnings growth was high going into 2010 as a result of comparison effects; signs ofinflation now result in tightening policy in the emerging markets; a huge contrast tothe situation in many industrialised countries.

The emerging markets proved in 2010 that they were more dependent on intra-EM

trade and less dependent on demand from industrialised countries.


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55

Outlook for emerging markets (2)

Earnings growth for companies in emerging markets continued at a strong pace in

2010. Expectations for 2011 have been stable in recent months at a growth rate of17%.

Emerging markets are now priced at a slight P/E and P/BV discount to the historicalaverage, but the valuation is considerably lower than at historical peaks. It does notreflect the higher return on equity and higher growth rates of emerging marketsequities.

Low interest rates globally boost the hunt for good investments and yield.

Continued globalisation provides larger flow of capital into the emerging markets;this increases both the depth and the breadth of the market place and availableinvestment options.


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56

Risk factors for emerging markets

A thawing of the financial markets has not rubbed off onto borrowers and lendersin industrialised countries. A potential tightening of the capital requirements in the

global banking sector may further amplify this.

Inflation may rise on the back of high commodity prices (metals and agriculture).Idle capacity in industrialised countries will keep inflation down, but growthsurprises in EM may give increased fear of inflation.

The new world order may cause increased systemic friction. Increasedprotectionism and a tendency towards regulating currency markets after a strongrise in emerging markets currencies in 2009. High unemployment in industrialisedcountries and an undervalued Chinese currency may lead to protectionismpressure and measures.

The valuation of emerging markets becomes prohibitively high both in relative andabsolute terms, just like in the early 1990s.

Strong EM currencies may yield negative earnings surprises in 2011 for exportoriented companies.


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Companies in SKAGEN Kon-Tiki


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ABB (ABBN VX) CHF 22.0

ABB is a global leader in equipment to power distribution and automation with131,000 employees and operations in approx. 100 countries.

Sales (2010): Power products 30%, Power systems 20%, Process automation21%, Discrete automation and motion 16%, Low voltage products 13%.

60% of power sales to utilities. Balances sector exposure in automation.

Adjusted EBIT margin (2010): Power prod. 14.5%, Power sys. 9.0%, Processauto. 10.9%, Discrete auto. and motion 18.2%, Low voltage products 20.6%.

Sales (2010): Europe 43%, Asia 27%, Americas 19%, MEA 11%.

Strong exposure to EM with approx. 44% of sales and +50% of new orders.

Closed USD 3bn cost reduction program in 2010 (upped twice) and announced

another USD 1bn for 2011 (supply chain, productivity, footprint).

Net cash of USD 6.4bn or 1.4x trailing EBITDA. Leverage potential of USD 20-25bn through M&A could add CHF 0.6-.7 in EPS. 54% payout ratio for 2010.

EV/Sales of 1.3x versus 1.5x average (2000-2010) and 2008 peak of 2.5x.

Catalysts:

Announcement of value-accretive acquisitions, gearing its overfunded BS.

Increased payout ratio and/or share buy-back.

Cost reduction announcements following Baldor Electronics integration in 1Q11.Large potential for low cost sourcing versus peers.

Late cyclical nature of CAPEX cycle and positioned to energy saving lead toorder intake surprises. Book-to-bill at 1.1x for 2010 and positive organic growth.

Relatively unpopular (32 Buy, 14 Hold, 2 Sell).

Risks: price pressure (especially power products), FX, GDP/CAPEX cycle.

Key figures:

Market cap: CHF 51bn

USD 54bn

NOK 271bn

No. of shares: 2308.8m

P/E (11e): 13.1x

P/E (12e): 11.6x

P/BV: 3.4x

P/TBV: 4.9x

RoE (11e): 25%

Div. yield: 2.7%

Average daily trading volume of

9.7m shares (CHF and SEK) or

USD 227m.

Investor AB owns 7.2% of

shares.

58


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Banrisul (BRSR6 BS) BRL 18.0

Regional saving bank in Rio Grande do Sul with 11m inhabitants. #1 in theregion and 11th largest bank in Brazil. 9,300 employees. 43% free float.

3m customers, 438 branches, 274 banking services stations and 500 ATMs.About 30% of population banks with Banrisul with c20% state market share.

Loans: consumer 44%, mortgage 8%, industry 20%, trade/service 20%, other8%. 70% of consumer loans are payroll loans (security in salary). 74% ofcommercial lending is general loans (working capital).

Deposits: demand 12%, time 53%, saving 35%.

Net interest margin of 10.1% and 48% cost/income ratio in 4Q10.

Good NII growth with 25% YoY increase and 11% QoQ in 4Q10.

Level 1 corporate governance and a financially oriented majority owner.

NPL (+60 days overdue) of 2.5% with coverage ratio of 264% in 4Q10.

Strong balance; loan/deposit 90%, Tier 1 (Basel II) 15.5% (11% min. by localregulator incl. Tier II max. 50% of Tier 1) and A+ rating. Good growth potential.

Payout ratio of 30-40% secures firm dividend yield.

Catalysts:

Ongoing sector consolidation; interesting acquisition target for a major bank.

Further leverage of strong balance sheet improving RoE.

New cost initiatives from new management further improves efficiency.

Successfully building merchant acquiring franchise.

Minimal research coverage (8), low international ownership (except SKAGEN).

Risk: cost and margin pressure, payroll account portability, NPL formation.

Key figures:

Market cap: BRL 6.6bn

NOK 22bn


P/E (11e): 8.7x

P/BV: 1.5x

P/TBV: 1.6x

RoE (11e): 21%

Div. yield: 4.4%

Average daily trading volume of

653k shares or USD 7.1m.

Rio Grance do Sul state owns

57% through non-listed ordinary

shares.

59


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Empresas ICA (ICA* MM), MXN 26.6

Mexicos #1 construction and infrastructure company with 26,000employees (employees own 10% of the shares).

Construction: Civil (39% of EBITDA) and Industrial (6% of EBITDA) with20% market share. Strong position within energy (ICA Fluor).

Infrastructure: Airports (18% of EBITDA through 50.7% owned and listedOMA, 13 airports, 50 year concession from 1998) and other concessions(28% of EBITDA, 11 motorways (7 operative), and 5 hydro projects (2operative), lasting to 2020-2056)

Homebuilding: #8 in Mexico with approx 8000 units/year directed towardsthe lower segments. 7% of EBITDA. Large portfolio of land plots amounting to20 mill. m (103,000 units), approx. 14 years land bank.

MXN 40bn backlog (15 months work equivalent). The addressablepipeline over the next 2 years is roughly MXN 400bn (USD33bn).

Catalysts:

Corredor Sur sale to the state of Panama going through, USD420m.

Civil construction pick-up after 4Q slowdown due to delays in rights of way.

New contracts from major government infrastructure program of USD 234bnfrom 2007-2012 (only 40% completed by 2010).

Increased margins as a consequence of larger projects. Start up of new infrastructure concessions (4 over the next 12 months)

enhances CF and visibility and reduces refinancing risk.

Concession division revealed through sale of stake to pension fund / IPO.

Better segment reporting will reveal values, especially for concessions.

Risks: cost overruns, project delays, interest rate level, competition,macro.

Key figures:Market value: MXN 17bn

NOK 7.9bn


P/E (11e): 11.3x

P/E (12e): 10.6x

EV/EBITDA (11e): 8.4x

P/BV: 0.9xP/TBV: 0.9x

P/S (11e): 0.4x

ROE (11e): 8%

Dividend yield: 0%

Net debt of MXN 28.1bn or4.9x EBITDA

60


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Korean Re (003690 KS) KRW 12 400 KRW

#1 reinsurance company in Asia and #11 globally. 69% market share in aregulated South Korea reinsurance market.

Premiums: Domestic P&C 23%, Domestic personal 54%, Overseasreinsurance 23% (74% from Asia).

Combined ratio: commercial 90%, personal/life 103%, foreign 100%. Totalof 96% with 76% loss ratio and 20% cost ratio.

Growth ambitions focused on China and other EM within maritime andproperty where it has solid competence. LT growth target 10% p.a.

Domestic personal market has low margins has low margins with slidingscale and typically 99% combined ratio.

Solvency ratio 210% (100% required/150% recommended). S&P A rating.

Capital returns and premium growth in top league of industry.

30-40% payout ratio secures sound yield.

Catalysts:

Mandatory P&C for SME/SoHo increased domestic potential.

Successful efforts to penetrate domestic government market.

Likely rating upgrade will reduce cost of funding.

Global reinsurance premium hardening after major natural disasters.

Interest rate hikes (60-70% of investment portfolio in fixed income withshort duration).

Sale of treasury shares will enhance liquidity (less likely although possible).

Risks: new local competition, premium decline, natural disasters.

Key figures:Market cap: KRW 1437bn

NOK 7.2bn


P/E (03/11e): 7.0x

P/E (03/12e): 6.6x

P/BV: 1.6x

P/BV adj: 0.9xRoE (03/11e): 17%

Div. yield: 2.5%

Daily average turnover of 424k

shares or USD 4.7m.

Won family owns 22.5%.

Treasury holding 14.6%. Foreign

holding 44.6%.

61
http://www.koreanre.co.kr/eng/main.jsp


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Investment mandate


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64

SKAGEN Kon-Tiki and Global Emerging Markets

Investment mandate: Minimum 50 percent in GEM, the rest predominantly incompanies with activity largely directed towards emerging market economies.

What is included under Global Emerging Markets (GEM)?

Asia ex Japan, Singapore, Hong Kong

South Africa, Eastern Europe including Turkey (EMEA)

South America, including Mexico

High growth, good demographics, cheap companies, higher risk

Benchmark index: MSCI Emerging Markets (Daily TR Net in NOK)

Our investment focus: Undervalued, Unpopular, Under-researched companies

Sensible sector balance oriented towards companies value creation

Variable, relative, asymmetrical fee structure. Minimum 1% management fee withrelative value drop of 8% or weaker, increasing to maximum 4% with relativereturn of 22%. Charged annually. No high watermark.


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66

Good results in terms of awards and good returns for the investors

SKAGEN

Fund rating Kon-Tiki

Standard & Poor's

(AAA = best qualitative rating) AAA

Citywire (5 year performance)

Fund manager rating No. 1 of 79

Lipper Europe 2010: Best Fund 5 years

Fund Awards Equity Emerging Markets Global

Morningstar Quantitative Rating

(5 = best quantitative rating)

Morningstar Qualitatitve Rating

Wassum

(5 = best rating)

Updated as of 28 February 2011.


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Investment philosophy


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68

Criteria in selecting companies

The idealinvestments are

Focus forcompany selection

Undervalued Unpopular

Under-researched

Revaluation catalysts Value creation at low price Debt and risk

Simple and proven business model Willingness to create shareholder value


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69

An explanation of our three Us with examples

Undervalued

A temporarily unprofitable division; is implicitly evaluated at negative value The company has a diversified business portfolio; large discount to total value

The company is out of the spotlight due to the sector to which it belongs

Examples; Yazicilar Holding

Unpopular

Negative historical merits Unsatisfactory or hard-to-access information from the company

Examples; Eletrobras, Harbin Power Equipment, VTB Bank

Under-researched The company has little or no analysis coverage

Examples; Provida, DRB-Hicom

Analysts perceptions about the company are erroneous; wrongly analysed ormisunderstood

Examples; Eletrobras, Samsung Electronics


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Economic growth is not a good indicator of stock marketreturns maybe it is still about valuations?

Academic work has

found few

correlations between

economic growthand stock market

performance over

the long run

Worth noting the

difference between

Sweden/Switzerland

and Spain

70


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Global Emerging Markets


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73

The substantial difference in GDP growth between emergingmarkets and developed countries is expected to continue

Difference in GDP growth emerging markets anddeveloped countries in percentage points


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74

Public debt to GDP substantially lower in EM and expected todecline slightly while DM set to accelerate

Public debt as % of GDP


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Total debt level is significantly lower in BRIC countriesthan developed countries


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77

The shift from West to East will continue . . . . .

Source: IMF


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78

Global emerging markets are undercapitalised relative tothe developed markets


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79

There is a long way to go before the BRIC countries reachthe same standard of living as Korea and Japan


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80

Six of the worlds largest mobile phone markets are nowin emerging markets, despite relatively low penetration


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81

Auto sales in EM have clearly decoupled from industrialisedcountries; China is now the worlds biggest car market

Source: CEIC, Haver, UBS estimates

C


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Chinas growing importance for commodities is apparentin share of world demand

F i f i


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For more information:

Please refer to:

Our latest Market report

Information about SKAGEN Kon-Tiki on our web pages

Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on marketdevelopments, the fund managers skill, the funds risk profile and subscription and management fees. The returnmay become negative as a result of negative price developments. SKAGEN seeks to the best of its ability to ensure that all information given in this report is correct, however,makes reservations regarding possible errors and omissions. Statements in the report reflect the portfoliomanagers viewpoint at a given time, and this viewpoint may be changed without notice. The report should not beperceived as an offer or recommendation to buy or sell financial instruments. SKAGEN does not assume

responsibility for direct or indirect loss or expenses incurred through use or understanding of the report.Employees of SKAGEN AS may be owners of securities issued by companies that are either referred to in thisreport or are part of the fund's portfolio.
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