"Developments through 1998 were a reminder that there may be large fluctuations in the return on capital from the Petroleum Fund that is invested in international equity and bond markets. It is important, therefore, that results are always interpreted against the background of the long-term horizon on which the management strategy is based", says Gjedrem.

The international equity markets rose strongly in the fourth quarter after a sharp decline in the third quarter. The return on the equity portfolio for the year as a whole was 12.9 per cent, measured in international currencies. The situation for the bond portfolio was the reverse, with a high yield in the third quarter and a weak fourth quarter.

The depreciation of the krone raised the return measured in NOK to 19.8 per cent for 1998. But since the purpose of management is to increase the international purchasing power of the Petroleum Fund, changes in the krone exchange rate are of little relevance. The return measured in USD was 15 per cent.

In 1998 Norges Bank achieved a return that was 0.20 percentage point higher than that of the benchmark portfolio defined by the Ministry of Finance.

At the end of 1998, the value of the Petroleum Fund's assets abroad was NOK 171.8 billion. Transfers amounting to NOK 32.8 billion were made by the Ministry of Finance during the year. The last transfer, of NOK 11 billion, was made on 30 November. Of the return of NOK 25.6 billion, NOK 12.5 billion is an increase in value measured in international currencies, while NOK 13.1 billion can be ascribed to the depreciation of the krone, and therefore does not represent an increase in the Fund's international purchasing power.