Members Information

Australia:

The Future Fund

Goals and objectives
The Future Fund Act 2006 (the Act) commenced on April 3, 2006, and established the Future Fund Special Account (the Fund Account), the Future Fund Board of Guardians (the Board) and the Future Fund Management Agency (the Agency), collectively referred to as the Future Fund. The object of the Act is to strengthen the Commonwealth’s long-term financial position.
The Future Fund will make provision for unfunded superannuation liabilities that will become payable during a period when an aging population is likely to place significant pressure on the Commonwealth’s finances. The legislation quarantines the Fund, the balance of the Fund Account and other investments, for the ultimate purpose of paying unfunded superannuation liabilities and expenses associated with the investment and administration of both the Board of Guardians, and by direct transfer from the administered funds, the expenses of the Future Fund Management Agency.

How the fund is managed
The Future Fund is controlled by an independent Board of Guardians that is collectively responsible for the investment decisions of the fund and is accountable to the Australian Government for the safekeeping and performance of fund assets. The Future Fund Management Agency is responsible for the development of recommendations to the Board on appropriate investment strategies and for the implementation of these strategies. The functions of both the Board of Guardians and the Future Fund Management Agency are set out in the Future Fund Act. The Board of Guardians reports annually to the Australian Parliament on all aspects of the Fund’s performance, and the Fund is subject to independent external audit by the Australian National Audit Office. At June 30, 2008, the assets of the Future Fund portfolio were valued at A$64.18 billion.

In the 2008–09 budget, the Australian Government announced that the Future Fund Board of Guardians and Management Agency would be given additional responsibility for managing the investment of three additional specific purpose funds that the government proposes to establish to support expenditure on education, health, and infrastructure.

Azerbaijan:

State Oil Fund of the Republic of Azerbaijan

Assets under management: USD 13 bln as of September 2009.

Goals and objectives
The State Oil Fund of Azerbaijan (SOFAZ) was set up in December 1999 by the Presidential Decree as an extra-budgetary legal entity accumulating and managing oil and gas revenues of the state. The Fund’s primary objectives are to help maintain macroeconomic stability in the country and to generate wealth for present and future generations.  

Governance structure and Investment policy
SOFAZ has a three-tier governance structure, with the President of the country being a supreme governing and reporting authority for the Fund. SOFAZ's activities are overseen by a Supervisory Board headed by the Prime Minister and is comprised of members of Parliament, Government and a representative of academia. The executive management of SOFAZ is vested with the Executive Director, who is appointed by the President of Azerbaijan.

The Fund’s investments should comply with the Investment Guidelines and Investment Policy approved by the head of state. (Detailed information on investment policy and guidelines can be obtained from http://www.oilfund.az/en/content/8 ) 

Funding and withdrawal
The Fund’s annual budget of revenues and expenditures is a part of consolidated government budget and as such has to go through the relevant budget drafting and approval process. SOFAZ’s revenue is generated primarily from sales of oil and gas and asset management.

The main parts of SOFAZ’s expenditures are transfers to the state budget and financing of the strategically important social and economic projects.

Reporting and auditing
The governance of the SOFAZ is characterized by a high degree of transparency. SOFAZ’s accounts are audited by a reputable international audit firm and disclosed for public scrutiny. In addition to routine reporting procedures the Fund holds regular press conferences to keep stakeholders updated on its activities. SOFAZ is an active part of Extractive Industries Transparency Initiative (EITI) since its inception. The State Oil Fund has received the 2007 United Nations Public Service Award for Improving Transparency, Accountability and Responsiveness in Public Service for EITI.

SOFAZ’s official website is  www.oilfund.az

Bahrain:

The Future Generations Reserve Fund

The Future Generations Reserve Fund (FGF) of Bahrain was established with a Royal Decree issued on July 17, 2006.

Source and purpose of the FGF
The FGF’s purpose is to strengthen Bahrain’s long-term fiscal management and help preserve the hydrocarbon wealth. The FGF receives, in monthly payments, part of the oil income accruing from higher than budgeted oil prices.

Institutional framework
The FGF is owned by the Government of Bahrain and managed by the Ministry of Finance. Its governance framework includes a Board of Directors and a head of the Investment, Operations, and Administrational team.

Accounting and reporting
The FGF’s activities are audited internally by an Audit Directorate, and its financial statements are subject to an external audit by an independent commercial auditor.

Investment and risk management
The FGF invests only in liquid instruments with the aim of preserving its capital. The risk management framework encompasses a range of financial risks, including interest rate, liquidity, currency, and credits risks. As a newly established SWF, the FGF’s policies and procedures of operation are still in the process of development.

Botswana:

The Pula Fund

The Pula Fund was established in 1993 under the Bank of Botswana Act (CAP 55:01).

Source of funds
The Pula Fund is a long-term fund and forms part of the overall foreign exchange reserves. The accumulation of foreign exchange reserves stems from the general trend of surpluses in the balance of payments, which were based mainly on the export of diamonds.

Ownership of the Pula Fund
The Pula Fund is accounted for in the balance sheet of Bank of Botswana. Through budget surpluses, the Government has accumulated cash balances with the Bank of Botswana. The balances with the Bank of Botswana are transformed into direct government ownership of part of the Pula Fund.
Currently, the Government’s share of the Pula Fund is about two-thirds, while the remainder is owned by the Bank.

Investment policy and asset allocation
The Pula Fund, being a part of the foreign exchange reserves, is exclusively invested in foreign currency denominated assets. The investment objectives are based on the maintenance of the purchasing power of the reserves and maximizing returns within acceptable risk parameters. The strategic asset allocation includes public equity and fixed income instruments in industrialized economies.

Assets under management
At the end of 2007 the Pula Fund amounted to US$6.6 billion, equivalent to 56 percent of GDP and 18 months of import cover. The Pula Fund accounted for 68 percent of the total foreign exchange reserves.

Reporting of Pula Fund activities
The financial and investment activities of the Pula Fund are reported in the financial statements of the Bank. Annual financial statements are audited by external auditors and submitted to the Minister of Finance and Development Planning, for submission to Parliament.

Canada:

Alberta Heritage Savings Trust Fund

The Alberta Heritage Savings Trust Fund (Heritage Fund) was created in 1976 with the passage of the Alberta Heritage Savings Trust Fund Act.

Goals and objectives
The Heritage Fund was established as a means of saving a portion of the royalty and other revenues that the Province of Alberta receives from the production of its oil and natural gas resources. Initially the Fund received annual transfers of non-renewable resource revenues from the Province and retained its investment income. Since 1982 the investment income from the Fund has been transferred to the Province’s General Revenue Fund and is used to help pay for government programs and services. Automatic annual transfers of revenues into the Fund stopped in 1987. Since that time the Fund has grown through regular inflation-proofing and capital additions made by the government from time to time, primarily from budgetary surpluses.

Assets and income of the Heritage Fund are fully consolidated with the assets and revenue of the Province. As of March 31, 2008, the assets in the fund are approximately Can$17 billion.

On January 1, 1997, a new Alberta Heritage Savings Trust Fund Act was passed. This Act sets out the current structure and investment framework for the Fund. The Fund is managed as an endowment fund with the goal to maximize long-term returns at a prudent level of risk. The Fund is not to be used for economic development or social investment purposes.

Investment policy
Under the legislation, the provincial Minister of Finance is assigned responsibility for the Fund and its investments. The Minister is required to adhere to investment policies that a reasonable and prudent person would apply in respect of a portfolio of investments to avoid undue risk of loss and obtain a reasonable return. The Minister must report on the performance of the Fund quarterly within 60 days of the end of the quarter and make public the Annual Report within 90 days of the end of the fiscal year. A three-year business plan is prepared and published annually as part of the provincial budget.

The Fund consists of investments in bonds, public and private equities, hedge funds, derivatives, real estate, and other real asset investments such as infrastructure and timberlands. The current allocations are approximately 32 percent to cash and fixed income, 46 percent to Canadian and global equity, 11 percent to real estate, and 11 percent to alternative investments. The assets of the Heritage Fund are globally diversified.

Governance arrangement
The Minister must report on the performance of the Fund quarterly within 60 days of the end of the quarter and make public the Annual Report within 90 days of the end of the fiscal year. A three-year Business Plan is prepared and published annually as part of the provincial budget.

The legislation also creates the Standing Committee on the Alberta Heritage Savings Trust Fund, which is a committee of the Alberta Legislature with members from all major parties of the legislature. The Standing Committee reviews and approves the Business Plan and Annual Report of the Fund, receives regular reports on the performance of the Fund, and conducts public meetings on an annual basis in different locations in the Province. The purpose of these meetings is to update Albertans on the investment activities and results of the Fund. The Auditor General of Alberta is the auditor of the Heritage Fund.

The Fund’s investments are managed by the Alberta Investment Management Corporation (AIMCo). AIMCo is wholly owned by the Province and was established by statute in 2008 to manage all the government’s investments including the Heritage Fund. AIMCo is governed by a Board of Directors and is operationally independent from the government.

Chile:

Fiscal Responsibility Funds

Goals and objectives
Chile has a fiscal policy designated to contribute to macroeconomic stability and to provide public assets, increasing opportunities and social protection for its citizens. As of 2001, the fiscal policy has been guided by the structural balance rule, which aligns current spending with the trend or long-term revenue of the central government. Thus, the effects of cyclical fluctuations in economic activity, the copper price, and other factors of similar nature are excluded. In this way, public spending is dissociated from the cyclical evolution of the revenue track record, helping to avoid drastic adjustments in the face of adverse economic crisis.

In line with the implementation of a fiscal policy ensuring sustainability of public spending over time, a Fiscal Responsibility Law (FRL) was enacted in September 2006. This law created the Pension Reserve Fund (PRF) and empowered the President of the Republic to create the Economic and Social Stabilization Fund (ESSF), which was officially established in February 2007 under Decree with Force of Law (DFL) N° 1 issued by the Ministry of Finance in 2006. The purpose of the PRF is to supplement the financing needs of future pension contingencies. In the case of the ESSF its objectives are to finance potential fiscal deficits and to amortize public debt.

In accordance with the law, contributions to the PRF must be made each year by a minimum amount equivalent to 0.2 percent of prior year’s GDP. If the actual fiscal surplus exceeds 0.2 percent of GDP, the PRF receives a contribution up to a maximum of 0.5 percent of GDP. The law also authorizes the Government to make annual capital contributions to the Central Bank equivalent to the difference between its contributions to the PRF and the effective fiscal surplus, with an upper limit of 0.5% of prior year’s GDP (until 2010). Lastly, the ESSF gets the remainder of previous year’s effective surplus.

Institutional arrangement
The institutional arrangement of the two funds is clearly defined in the FRL and additional regulations. The Minister of Finance is assisted by a Financial Committee on key issues such as the design and analysis of the investment policy. The committee is integrated by academics and professionals with vast experience in economic and financial fields.

To implement the investment policy, the Minister of Finance appointed the Central Bank as fiscal agent to act on his behalf and in the name of the Republic to manage and invest the funds’ resources. The Central Bank must follow specific guidelines issued by the Ministry of Finance.

The Ministry of Finance reports on the situation of the PRF and ESSF to the Chilean Congress by publishing monthly and quarterly reports.

Investment policy and size
Current investment policy for each fund includes only short-term and low-risk financial instruments. In fact, 30% of the portfolio is invested in money market instruments, 66.5% in sovereign bonds, and 3.5% in inflation-indexed sovereign bonds.
As of July 2009, the ESSF and PRF reached US$15.5 billion and US$3.4 billion, respectively.

Reporting
Monthly, quarterly and annual reports are prepared by the Ministry of Finance and made available to the public through its website. The annual report prepared by the Financial Committee is also available on this website. Most of these reports are in the process or already published in English.

China:

China Investment Corporation

Incorporation and purpose
China Investment Corporation (CIC) was established on September 29, 2007, by the Chinese government in compliance with the Company Law of the People’s Republic of China. It is wholly owned by the Chinese government and has its own corporate entity status. The purpose of the CIC is to maximize return at acceptable risk tolerance and improve the corporate governance of key state-owned financial institutions.

Source of funds
CIC’s capital is funded through issuing special treasury bonds. With the approval of the Standing Committee of the 10th National People’s Congress, the Ministry of Finance issued Y1.55 trillion special treasury bonds and used raised funds to purchase foreign reserves (US$200 billion) to be injected into CIC as its registered equity capital. CIC has to pay dividends to the State Council as its owner, to cover the cost of these special treasury bonds.

Governance arrangements
As required by the Company Law, CIC has been working on its internal institutional setting and governance structure. It has established a Board of Directors, Supervisory Board, and management team. The appointment and dismissal of Board directors should be approved by the State Council. The chairman and vice chairman of the Board are appointed by the State Council. CIC’s development strategies and operational and investment guidelines are determined by the Board of Directors. Responsibilities and accountabilities within the CIC, across departments and desks, are clearly defined.

Reporting and auditing
CIC’s implementing performance and accounting are reported to the Board, and are subject to the scrutiny by the Supervisory Board. The Internal Audit Department carries out independent audits. The audit reports shall be approved by the Chairman of the Supervisory Board. CIC is subject to financial supervision by the Ministry of Finance and periodic external auditing by the National Audit Office.

Investment objectives and risk management
CIC’s investment objectives are first, to invest in a diversified portfolio of overseas financial instruments, to maximize long-term returns on CIC’s capital; and second, to recapitalize domestic financial institutions as a shareholder abiding by relevant laws in order to maintain and increase the value of stateowned financial assets in its wholly owned subsidiary—Central Huijin.

CIC focuses its overseas investment mainly on equity, fixed-income, and alternative assets. CIC will allocate assets prudently and effectively at acceptable risk tolerance.

CIC has established its preliminary system of investment decision-making, internal control, and risk monitoring and management. CIC has established a risk management structure in order to ensure legitimate, compliant, sound, and prudent operation.

Equatorial Guinea:

Fund for Future Generations

Iran:

Oil Stabilization Fund

Ireland:

National Pensions Reserve Fund

National Pensions Reserve Fund (NPRF) was established in April 2001 to meet as much as possible of the costs of Ireland's social welfare and public service pensions from 2025 onwards when these costs are projected to increase dramatically due to the ageing of the population. No money can be drawn down before 2025 and, from then on, drawdowns will continue until at least 2055. The Government is required to contribute the equivalent of 1% of GNP to the Fund annually.

The Fund is controlled and managed by the National Pensions Reserve Fund Commission, whose functions include the determination and implementation of the Fund's investment strategy in accordance with its statutory investment policy. This policy requires that the Fund be invested so as to secure the optimal total financial return provided the level of risk is acceptable to the Commission.

In March and May 2009 the Fund invested a total of €7 billion in a bank recapitalisation programme. Investments made in financial institutions by the Fund under the programme are made at the direction of the Minister for Finance and the Fund’s statutory investment policy is not applied to these investments.

The Commission performs its functions through the National Treasury Management Agency, which is the Manager of the Fund.

NPRF Commission
The National Pensions Reserve Fund Commission comprises seven members appointed by the Minister for Finance for their expertise and experience in a number of areas including investment or international business management, finance or economics, law, actuarial practice, accountancy and auditing.

The Commission publishes a statutory annual report containing a complete list of its portfolio of investments. It also publishes quarterly performance statements on a non-statutory basis. The Fund’s accounts are audited by the Comptroller and Auditor General (Public Auditor) and are laid before both Houses of the Oireachtas (Parliament). The Chairperson of the Commission and the Chief Executive of the Manager can be called upon to give evidence to the Committee of Public Accounts.

Assets and investments
The value of the Fund at end June 2009 was €19.4 billion. As well as investments in diversified quoted equities (large cap, small cap and emerging markets) and bonds, the Fund has an allocation to property, private equity and commodities. The only constraints on its investment are that it may not invest in Irish Government securities or acquire a controlling interest in a company.

The NPRF Commission was a founding signatory of the UN Principles for Responsible Investment.

Korea:

Korea Investment Corporation

Goal and objective
Korea Investment Corporation (KIC) was established in July 2005 under the KIC Act. It was launched with a mandate to manage public funds entrusted by the government and the Bank of Korea, by investing in a variety of financial assets in the international financial markets.

How the fund is managed
KIC has adopted a governance structure with the Steering Committee as the highest governing body in order to ensure autonomy and independent operation. The Steering Committee is currently composed of nine members including the committee chairman. Committee members include six professionals from the private sector, the CEO of KIC, and the heads of trust institutions that have entrusted assets exceeding one trillion won, namely the Minister of Strategy and Finance and the Governor of the Bank of Korea. Six private sector members, who are nominated by the Civil Member Candidate Nomination Committee and appointed by the President of Korea, serve two-year terms. The Chairman of the Steering Committee is elected from among the private sector members.

Assets and investment policy
KIC signed an investment management agreement with the Bank of Korea and the Ministry of Strategy and Finance in June and October of 2006, respectively. KIC began investing the entrusted assets in November of the same year. Construction of the portfolio using the initially entrusted assets of USD 20.0 billion was completed in June 2008. KIC was entrusted with an additional USD 4.7 billion from the Ministry of Strategy and Finance during 2008.

The asset classes that KIC may invest in include securities (stocks and bonds), foreign exchanges, and derivatives, as defined under the KIC Act. At present, KIC invests in asset classes that are specified in the investment management agreements between KIC and its clients.

KIC reports on its business activities to the National Assembly in accordance with the National Assembly Act and the Act on the Inspection and Investigation of State Administration, and is subject to annual inspections conducted by the National Assembly.

Kuwait:

Kuwait Investment Authority

History and origins
The Kuwait Investment Authority (KIA) is the oldest sovereign wealth fund in the world. KIA traces its roots to the Kuwait Investment Board, which was established in 1953, eight years before Kuwait’s independence.

In 1982, KIA was established to take over the responsibility of managing the assets of Kuwait from the Ministry of Finance. Today, the KIA manages two main funds: the General Reserve Fund (GRF) and the Future Generations Fund (FGF). The KIA may also manage any other funds entrusted to it by the Minister of Finance. The KIA is an asset manager, and does not own any of the assets it manages, all of which are owned by the State of Kuwait.

Investment philosophy
KIA’s mission is to achieve a long-term investment return on the financial reserves entrusted by the State of Kuwait to the Kuwait Investment Authority by providing an alternative to oil reserves.

KIA’s objectives are threefold: (1) KIA aims to achieve a rate of return on its investment that, on a three-year rolling average, exceeds composite benchmarks by designing and maintaining an uncorrelated asset allocation, consistent with mandated return and risk objectives; (2) KIA endeavors to be a world class investment management organization committed to continuous improvement in the way it conducts business; and (3) KIA is committed to the excellence of the private sector in Kuwait, while ensuring that it does not compete with or substitute for it in any field.

Source of funds
KIA is responsible for the management and administration of Kuwait’s General Reserve Fund (GRF) and its Future Generations Fund (FGF), as well as all other funds entrusted to it by the Minister of Finance for and on behalf of the State of Kuwait. The GRF is the repository of all of the State of Kuwait’s oil revenues and income earned from GRF investments. The FGF was established in 1976 with 50 percent of the GRF balance, and each year 10 percent of all state revenues, including revenues of the GRF, are transferred to the FGF. KIA manages FGF assets for the benefit of future generations, permitting oil assets to be diversified into long-term financial investments.

Structure and governance
KIA is an independent public authority managed by its Board of Directors, the majority of whom must be from the private sector. The Managing Director is appointed by the Board of Directors from the private sector representatives. An Executive Committee of the Board is responsible for monitoring KIA’s activities.

Independent audits and review
KIA’s accounts are reviewed, audited, and approved by two of the world’s leading external audit firms. In addition, KIA is required by law to submit semi-annual statements of its assets under management to the independent State Audit Bureau; KIA presents an annual statement of its accounts to the Council of Ministers (Kuwait’s Cabinet); the KIA presents an annual statement of its accounts to the National Assembly (Kuwait’s Parliament); and the KIA appears before various committees at Parliament on a periodic basis to discuss KIA’s performance. KIA’s Board of Directors has an Audit Committee, with members from the private sector representative of the Board.

Risk management
KIA’s performance and risk management systems are the responsibility of KIA’s Risk and Performance Unit, which reports directly to the Managing Director. The Risk and Performance Unit is responsible for conducting performance and risk analysis, identifying and communicating performance and risk issues to senior management, developing an understanding of performance and risk within KIA’s investment sectors, and investigating data irregularities.

Libya:

Libyan Investment Authority

"The Libyan Investment Authority is committed to managing and developing the funds entrusted to it by employing the highest level of financial expertise to invest across a range of international markets and asset classes."; Executive Director, Mohamed H. Layas

Goals and objectives
established in December 2006 and started operations in June 2007. It is mandated to manage the financial assets allocated to it by the State. The intention is to build a high quality and well-diversified investment portfolio in order to create a sustainable source of revenue, with a view to reducing dependency on oil.

Headquartered in Tripoli, the LIA has the authority, infrastructure, and depth in resources to enable it to achieve its mandate: to be recognized as a world-class provider of investment management for the benefit of the Libyan state and the long-term future and well-being of its citizens.

Source of funds
The LIA funds consolidated pre-existing funds such as the Libyan Foreign Investment Company, the Libyan African Investment Portfolio and Oilinvest Company. Oil revenues in excess of budgeted amounts are transferred to the LIA.

Today it is estimated that the LIA’s fund is worth US$50 billion. The state will increase the funds entrusted to the LIA to US$70 billion before the end of 2008.

How the fund is managed
The fund invests in assets on a commercial basis mostly abroad through reputable international managers. The LIA may, however, make direct investments domestically or internally through jointventures or with national or international strategic partners. These are likely to be in sectors and industries that are of critical importance to Libya’s development.

Its organizational structure is being developed with assistance from international consultants. Its board of trustees includes the Prime Minister (Chairman), the Governor of the Central Bank, and the Minister of Planning, and its board of directors includes the Executive Director of the LIA, the Deputy Executive Director, and five Libyan investment professionals. The board of directors is advised by a committee of international financial experts.

An international consulting firm is helping the LIA develop a process for selecting and evaluating reputable investment managers for different asset classes.

Reporting and transparency
LIA intends to meet high transparency standards and a new decree in 2008 requires that LIA publish annual reports on its website in both English and Arabic.

Mexico:

Oil Revenues Stabilization Fund of Mexico

Goal and objectives
In 2000, the Oil Revenues Stabilization Fund was constituted with a risk management purpose in response to the observed oil price decreases that led to unplanned budget cuts in the late 1990s. The objective of the Fund is to lessen the effects on public finances of changes in the level of oil revenues derived from sudden variations in international oil prices.

Sources of funds
The Fund’s inflow comes from a special levy on oil revenues and 40 percent of excess revenues, when the observed oil price is higher than the one set in the budget. Also, it has an upper limit defined by the level of oil production platform.

The resources of the Fund are used to compensate for a decrease in estimated income from the levies of the related fiscal year derived from a lower observed oil price, using up to 50 percent of the accumulated resources at the end of the previous the fiscal year for that purpose. The operation of the Fund and the allocation of resources are audited by the Superior Auditor of the Federation, and reports are sent to Congress on a quarterly basis.

Investment policy
The investment policy of the Fund is set by a Technical Committee, which aims at an adequate level of liquidity required for the purpose of the Fund and a reasonable rate of return with a minimum risk level. The Technical Committee is composed of representatives of the Ministry of Finance.

New Zealand:

New Zealand Superannuation Fund

Mission, purpose and mandate
Our mission is to maximize returns without undue risk to reduce the future tax burden on New Zealanders. The New Zealand Superannuation and Retirement Income Act 2001 established both the New Zealand Superannuation Fund and the Guardians of New Zealand Superannuation.

The purpose of the Fund is to reduce the tax burden on future New Zealanders of the cost of New Zealand Superannuation, which is the Government retirement entitlement paid to all qualifying New Zealand residents. An ageing population means that the cost of providing the retirement entitlement is expected to double over the next 50 years. The Fund is owned by the Crown and it invests Government contributions. From 2031 future Governments will begin making withdrawals from the Fund to assist in meeting the cost of providing the retirement entitlement.

The purpose of the Guardians is to manage and administer the Fund. The Guardians are accountable to the Crown, but operate at arm’s length and are overseen by a Board selected by the Minister of Finance for their skills and experience.

Investment approach
The Fund’s mandate is to invest on a prudent, commercial basis consistent with best-practice portfolio management, maximizing return without undue risk and avoiding prejudice to New Zealand’s international reputation. This translates into a three-step investment process the Guardians believe is consistent with the mandate and the Fund’s purpose. It comprises determining a blueprint for an optimal mix of market exposures, which the Guardians call the "reference portfolio"; identifying an equivalent portfolio of low-cost "passive" market exposures for the Fund; then adding value to the passive portfolio through active management. Active management includes investing in private markets, strategic tilting and public markets security selection. The Guardians also actively deviate from the passive portfolio by making investment decisions in line with an embedded Responsible Investment Policy.

The Fund commenced investing at the end of September 2003. As of May 31, 2009, the value of the Fund was NZ$13.1 billion.

Investment approach
The Guardians have a high level of transparency, publishing monthly performance figures, an annual Statement of Intent setting out their organizational objectives including performance expectations for the following three years; an Annual Report measuring performance against those objectives; and a Statement of Investment Policies, Standards and Procedures. Each of those public documents, together with more information about the Guardians and the Fund, can be found on the Fund’s website, www.nzsuperfund.co.nz.

Norway:

Government Pension Fund

Incorporation and objectives
The Government Pension Fund was established by the Pension Fund Act in 2006 to support the long-term management of petroleum revenues and facilitate the government’s accumulation of financial assets in order to help cope with large, future financial commitments associated with an ageing population. The Fund consists of the Government Pension Fund – Global (formerly known as the Petroleum Fund, established in 1990) and the Government Pension Fund – Norway (formerly known as Folketrygdfondet, established in 1967).

The Pension Fund – Global’s inflow consists of all state petroleum revenues, net financial transactions related to petroleum activities, as well as the return on the Fund’s investments. The outflow from the Fund is the sum needed to cover the non-oil budget deficit. The Fund is thus fully integrated with the state budget and net allocations to the Fund reflect the total budget surplus (including petroleum revenues). Fiscal policy, which regulates the outflow from the Fund, is anchored in a guideline where the structural, non-oil budget deficit shall over time correspond to the real return on the Fund, estimated at 4 percent.

Investment policy
The Fund is invested globally in a large number of financial instruments in order to get a broad diversification and achieve good investment returns with moderate financial risk. The Fund is a pure financial investor with a diversified portfolio of minority holdings in a wide range of companies. The Fund’s strategic benchmark portfolio consists of 60 percent equities, 35 percent fixed income instruments, and 5 percent real estate investments (in process of being established).

Governance arrangement
The governance structure of the Fund is marked by a clear division of responsibilities between the political authorities and the operational management. Under the Pension Fund Act, the Ministry of Finance is the formal owner of the Fund. The Ministry has formulated the investment strategy by setting a benchmark with risk limits. Within these limits, there is full delegation of operational management to the central bank of Norway - Norges Bank. The Bank manages parts of the funds internally, while parts are managed by external managers appointed by the Bank on a commercial basis. As formal owner of the assets, Norges Bank is also charged with exercising the Fund’s ownership rights.

Ethical guidelines
The Ministry has established ethical guidelines that are based on two elements: to ensure that a reasonable portion of the country’s petroleum wealth benefits future generations, and to not make investments which constitute an unacceptable risk that the Fund may contribute to unethical acts or omissions. To implement the ethical guidelines, the following mechanisms are employed: (i) achieve high returns subject to moderate risk; (ii) exercise the ownership rights associated with the equity holdings (done by Norges Bank); and (iii) exclude some companies from the investment universe (decided by the Ministry based on advice from Council on Ethics).

Accountability
The management of the Fund is characterized by a high degree of transparency and disclosure of information. The Ministry reports to Parliament and the public on all important matters relating to the Fund. Norges Bank publishes quarterly reports on the management of the Fund, as well as an annual report and an annual listing of all investments. At the end of 2007, the Fund’s value stood at NOK 2,275 billion, or US$ 325 billion.

The Government Pension Fund – Norway originates primarily from surpluses in the national insurance accounts from the introduction of the National Insurance Scheme in 1967 and until the late 1970s. The return on the assets is added to the Fund. There are no transfers between the fiscal budget and the Fund, nor are there any transfers of capital between the Pension Fund — Global and the Pension Fund – Norway. Equities account for 60 percent and fixed income instruments for 40 percent of the Pension Fund — Norway’s strategic benchmark, with 85 percent allocated to Norway and the remaining 15 percent to Denmark, Finland, and Sweden. The governance structure and transparency arrangements are similar to that of the Pension Fund — Global. The Ministry of Finance represents the owner and sets the benchmark with risk limits, while there is full delegation of operational management of the Pension Fund — Norway to the state-owned asset manager Folketrygdfondet. At the end of 2007, the Fund’s value stood at NOK 88 billion, or US$13 billion.

Qatar:

Qatar Investment Authority

Establishment and ownership
Qatar Investment Authority (QIA) was established in 2005 by virtue of the Emiri Decision No (22) of 2005 as an independent government investment institution and went into operation in early 2006.

QIA is wholly owned and subject to supervision by the Government of the State of Qatar and pursuant to Article (2) of QIA’s constituent instrument, namely said Emiri Decision, QIA has a legal personality and a budget, both of which are independent of those of the Government of the State of Qatar. Said provisions together with other provisions of the above-mentioned Decision as well as those of other Emiri Decisions and QIA Board resolutions provide for separation of roles and responsibilities among the owner, the governing entity, and the management.

According to its constitutive instrument, QIA’s objectives are to develop, invest, and manage the state reserve funds and other property assigned to it by the Government via the Supreme Council of Economic Affairs and Investments. The above mentioned Emiri Decision endowed QIA with required capacity, powers, and competences to act in fulfilling its statutory mandate and achieve its objectives.

Governing body
QIA’s Board of Directors is the supreme body, having full control over its affairs and the discharge of its business. The Board consists of a Chairman, a Vice Chairman, and a number of members who are appointed in accordance with said Emiri Decision. QIA’s Board meets regularly and as required, for setting out and review of QIA’s strategic policy in accordance with the objectives provided for in its constitutive instrument. QIA’s Board does not normally engage itself in the decisions relating to day-to-day business, as those are assigned by the Emiri Decision to the Chief Executive Officer and the management.

Management
QIA’s Chief Executive Officer is responsible for the internal control of QIA, management of its affairs, and the implementation of its general policy. To carry out these functions, he is assisted by a management team including an investment committee and business departments, covering, inter alia, direct investment in real estate and private equity, supported by internal audit, legal, administration, and finance departments. In addition to the existing regulations, policies, and procedures, QIA is currently engaging a number of specialist companies to update the same and prepare comprehensive systems and sets of manuals involving codes, policies, and procedures pertaining to corporate governance, code of conduct, legal policies, investment approval process, risk management and investment strategy, operations, and the like.

Russia:

Reserve Fund and the National Wealth Fund of the Russian Federation

Incorporation and objectives
The Reserve Fund (RF) and National Wealth Fund (NWF) were established in accordance with the amendments to the Budget Code, the federal law of the Russian Federation, approved in 2007. The initial transfers to the RF and NWF were executed on January 30, 2008, from the Stabilization Fund of the Russian Federation, whereupon it ceased to exist. As of that date the size of the RF and NWF totaled US$125.40 billion and US$31.98 billion, respectively. As of September 1, 2009, the RF and NWF totaled US$85.74 billion and US$90.69 billion, respectively.

The objective of the RF is to ensure that the federal budget expenses are financed and the federal budget balance is maintained in case oil and gas revenues of budget decline. The RF could also be used for early state foreign debt repayment in compliance with the federal budget law for the corresponding fiscal year. Actually the RF has replaced the Stabilization Fund. The amount of the RF is limited to 10 percent of GDP.

The objectives of the NWF are to co-finance voluntary pension savings of the Russian citizens and to maintain the budget balance of the Pension Fund of the Russian Federation. The NWF assets could not be used for any other purposes.

Accumulation
The budget proceeds from the mineral production tax and export duties on oil, gas, and oil products are accounted separately from other proceeds to the budget. As the oil and gas proceeds are withdrawn from the budget the artificial budget deficit appears. This calculated non-oil deficit should be covered by the transfer, which amount is pegged to GDP: 6.1 percent in 2008, 5.5 percent in 2009, 4.5 percent in 2010 and 3.7 percent from 2011. The oil and gas proceeds in excess of the transfer are to be channeled to the RF until its amount reaches 10 percent of GDP. If after all there is an excessive amount of oil and gas revenues, then it will be channeled to the NWF.

Governance structure
The Ministry of Finance of the Russian Federation manages the RF and NWF. Some functions of asset management of the RF might be delegated to the Central Bank of the Russian Federation (Bank of Russia) in accordance with agreement with the Ministry of Finance. As for the NWF, some functions of asset management might be delegated to the Bank of Russia or specialized financial institutions (external managers).

Investment policy
The primary investment objective of the RF and NWF is to ensure safety of the assets and stable level of return in long-term perspective.

The RF assets are to be invested in foreign currency and the following asset classes, nominated in foreign currency:

• foreign debt securities issued by foreign governments;
• foreign debt securities issued by foreign state agencies and central banks;
• foreign debt securities of international financial institutions;
• deposits in foreign banks and credit organizations; and
• deposits and account balances with the Bank of Russia.

The NWF assets are to be invested in financial instruments eligible for the RF and also in:

• fixed income securities and equities of legal entities;
• shares in investment funds; and
• deposits in banks, credit organizations and Bank for Development and Foreign Economic Affairs (Vnesheconombank).

Foreign currency composition for both Funds stayed the same as it was for the Stabilization Fund: USD—45 percent, EUR—45 percent, GBP–10 percent.

Current strategic asset allocation for the RF is the following:

• foreign debt securities issued by foreign governments—95 percent;
• foreign debt securities of international financial institutions—5 percent

Current strategic asset allocation for the NWF is the following:

• in foreign currency: foreign debt securities issued by foreign governments—100 percent;
• in rubles: deposits in Bank for Development and Foreign Economic Affairs (Vnesheconombank) – 100 percent;

The issuer of foreign debt security shall have a long-term credit rating not lower than AA-level. The investment horizon is limited by minimum maturity for debt securities of three months and maximum maturity of three years for debt securities nominated in USD and EUR, and five years for debt securities nominated in GBP.

Currently the RF and NWF are not invested in eligible assets directly and external managers are not used. The Ministry of Finance places both Funds on the banking accounts with the Bank of Russia in USD, EUR, and GBP. Under the banking account agreement, the Bank of Russia should pay the Ministry interest equal to the performance of the total return indices, composed from the eligible asset classes in accordance with the requirements mentioned above. Besides, part of NWF assets (currently approximately 15%) is placed on fixed-rate ruble deposit in Bank for Development and Foreign Economic Affairs (Vnesheconombank). Overall, up to 40 percent of NWF can be deployed in ruble denominated assets.

Singapore:

Government of Singapore Investment Corporation Pte. Ltd. and Temasek Holdings (Private) Limited

Government of Singapore Investment Corporation Pte. Ltd.

Incorporation
The Government of Singapore Investment Corporation Pte Ltd (GIC) was incorporated in 1981 under the Singapore Companies Act and is wholly owned by the Government of Singapore. The Government, through its Investment Mandate to GIC, has authorized GIC as its agent to manage Singapore’s reserves. The government is the owner of the reserves.

Source and purpose of funds
The fundamental sources of funds are accumulated national savings and sustained balance of payments surpluses.  GIC’s mission is to preserve and enhance the purchasing power of these reserves, which may be called upon during times of crisis.  The Government is allowed to spend part of the investment returns on its reserves to meet its budgetary needs. 

Governance
The Ministry of Finance, as representative of the Government in dealing with GIC, provides GIC with an investment mandate that sets out the investment objective, time horizon, risk parameters, and investment guidelines for managing the portfolio. The Government does not direct nor interfere in GIC’s investment decisions.
The Government ensures that a competent board of directors is in place and holds the GIC Board accountable for its overall portfolio performance. GIC is additionally accountable to the President of Singapore, who is elected directly by Singaporeans and acts in his discretion and independently of the Government of Singapore.  The President is empowered under the Constitution of Singapore to protect the past reserves of the nation.  The President also has to concur with any appointment or removal of directors from the GIC Board, to ensure that each director is a person with integrity and competence.

The GIC Board sets the asset allocation policy and reviews the performance of the portfolio. The GIC management executes the investment strategies and is responsible for all investment transactions. It has full autonomy on where and how to invest the portfolio within the asset allocation approved by the Board. Three asset management subsidiaries—GIC Asset Management Pte Ltd, GIC Real Estate Pte Ltd, and GIC Special Investments Pte Ltd—are responsible for investing the portfolio in the asset classes under their charge and within the guidelines set out in the Investment Mandate.

Reporting and audit
GIC reports to the Accountant General’s Department of the Ministry of Finance on a monthly and quarterly basis, with detailed information on the performance, risk, and distribution of the portfolio. Once a year, GIC management meets the ministry formally to review the risk and performance of the portfolio in the preceding financial year. The Government portfolio is audited annually by the Auditor-General of Singapore, who is appointed by the President of Singapore.

Investment and risk management
GIC invests only for financial returns. GIC invests in equities, fixed income, foreign exchange, commodities, money markets, alternative investments, real estate, and private equity. With a network of eight offices in key financial capitals around the world, it invests in more than 40 markets worldwide and in a variety of investments and securities.

Risk management and control forms a critical part of the company’s investment management activities. It protects the portfolio against catastrophic losses. The company places great emphasis on risk awareness and a strong governance framework run by people of high integrity. The risk management framework includes policies which cover a wide spectrum of risks such as credit risks, market risks, operational risks, counterparty risks, and legal and regulatory risks.

Detailed information on GIC’s governance framework, investment processes, asset mix, and long-term returns are available at www. gic.com.sg.

Temasek Holdings (Private) Limited

Company Description

• An Asia investment company
• Invests on commercial principles as an asset owner
• Aims to create and deliver sustainable long-term value for its stakeholders as an active investor and an active shareholder of successful enterprises

Heritage & Purpose

• Incorporated under the Singapore Companies Act as an investment holding company in 1974
• Owns and commercially manages investments in companies previously held directly by the Singapore Government, thus freeing the Government to focus on its responsibilities of policy making and market regulation

Shareholder

• The Singapore Government through the Minister for Finance (Incorporated)

Source of Funds

• Investments are financed through dividends received from portfolio companies, divestment proceeds, commercial borrowings, Yankee bond issue in 2005 and occasional capital injections from its shareholder
• Does not  manage Singapore’s official foreign reserves and other Government reserves 

Governance

• Temasek Board, comprising a majority of independent directors, provides overall strategic guidance and policy directions to Temasek’s management
• Investment, divestment and other operational decisions are made by the Board and management
• The Board is accountable to its shareholder, for  delivering sustainable  long-term returns
• The Board appoints or removes its Chief Executive Officer (CEO), subject to the concurrence of the President of Singapore 

Relationship with the President of Singapore

• The President of the Republic of Singapore has a constitutional role to protect past reserves which have been accumulated prior to the current government's term of office in designated organisations such as Temasek
• An example of a draw on past reserves is when total reserves are less than past reserves
• Temasek’s Chairman and CEO report the position of its reserves to the President every half year, and are required to seek his concurrence for any draw on Temasek’s past reserves
• The President's concurrence is also required for the appointment, renewal or removal of Temasek's Board members, so that no government can change the Board at will
• Similarly, the President’s concurrence is required for the appointment or removal of Temasek’s CEO by the Board
• The President’s role in safeguarding Temasek’s past reserves does not involve him in directing Temasek’s investment, divestment or other business decisions

Relationship with the Shareholder

• Under the Singapore Companies Act, the Singapore Government has the right as its shareholder to appoint and remove the Board members of Temasek, subject to the concurrence of the President of the Republic of Singapore
• Temasek provides annual statutory financial statements audited by an international audit firm, as well as periodic updates to its sole shareholder
• The Singapore Government is not involved in the investment or operating decisions of Temasek or its portfolio companies, except in its role as a regulator or policy maker

Relationship with Portfolio Companies

• Companies in the portfolio are managed by their respective management teams, and guided and supervised by their respective boards
• Temasek does not direct the day-to-day commercial or operational decisions of its portfolio companies
• Temasek exercises its shareholder rights, including voting, to protect its commercial interests, in accordance with the relevant regulations in the various jurisdictions

Corporate Credit Rating

• AAA/Aaa by Standard & Poor’s and Moody’s respectively

Staffing

• About 380 people in Singapore, China, India, Vietnam, Brazil and Mexico

Investment Themes

• Transforming Economies
• Growing Middle Class
• Deepening Comparative Advantages
• Emerging Champions

Investment Sectors

• Financial Services
• Telecommunications & Media
• Transportation & Logistics
• Real Estate
• Infrastructure, Industrial & Engineering
• Energy & Resources
• Technology
• Life Sciences
• Consumer & Lifestyle

Offices & Affiliates

• Singapore
• China (Beijing, Shanghai and Hong Kong SAR)
• India (Mumbai & Chennai)
• Vietnam (Ho Chi Minh & Hanoi)
• Brazil (São Paulo)
• Mexico  (Mexico City)

Detailed information on Temasek's financial performance, investments, governance framework, compensation, risk management, and community engagements are published for the public in the annual Temasek Review, available at www.temasekholdings.com.sg.

Timor Leste:

Timor-Leste Petroleum Fund

The Republic of Timor-Leste established a Petroleum Fund in 2005 under the Petroleum Fund Law 09/2005. The Petroleum Fund shall contribute to a prudent and transparent management of the petroleum resources for the benefit of both current and future generations and sound fiscal policy. According to the law, the Government is the overall manager of the Fund, while the Banking and Payments Authority (BPA) is the operational manager.

As of June 30, 2009, the Petroleum Fund’s balance was US$4.9 billion and the monthly revenues to the Fund are currently estimated at approximately US$100 million. Based on prudent assumptions, the Fund’s closing balances at year-end 2009 and 2010 are estimated at US$5.3 billion and US$6.2 billion, respectively.

The Petroleum Fund Law requires that not less than 90 percent of the portfolio be invested in debt instruments and deposits denominated in U.S. dollars. Not more than 10 percent of the portfolio may be invested in other financial instruments, provided that the instruments are issued abroad, are liquid and transparent, and are traded in a financial market of the highest regulatory standard.

The current investment mandate defined in the Management Agreement between the Ministry of Finance and the BPA includes two fixed income sub mandates. 80% of the portfolio is managed by the BPA and invested in US Government fixed interest instruments and measured against the benchmark Merrill Lynch 0-5 year government bond index, while 20% of the portfolio is managed by the Bank for International Settlements (BIS), which was appointed as the Fund’s first external manager in June 2009. The portfolio managed by the BIS is invested in fixed interest instruments, including instruments denominated in USD, AUD, JPY, EUR and GBP. The performance is measured against a composite benchmark of government bonds and supra nationals.

The Government is responsible for establishing the overall policies and guidelines for the investment of the capital of the Fund, within the framework of the current Petroleum Fund Law, including the specific asset allocation strategy, the investment mandate given to the operational manager, comprising an overall mandate and eventually any subsidiary mandates to external and/or internal managers, with such benchmarks, financial targets, performance and risk measures as may be necessary to convey the Ministry of Finance’s intentions to the BPA for the investment and anticipated return on the Fund.

Taking into account the size of the Petroleum Fund and the fact that the balance of the Fund is growing rapidly, the Government is reviewing the current legal framework, including the investment strategy and eligible instruments, with the aim of diversifying the portfolio into other asset classes, currencies, and regions than the current law permits, subject to certain risk limits.

Trinidad and Tobago:

The Heritage and Stabilization Fund

Establishment
The Heritage and Stabilization Fund (HSF) was established in March 2007 by an Act of Parliament, Act 6 of 2007.

Source of funds
The HSF is a long-term fund that has two distinct elements: a stabilization component to insulate fiscal policy from fluctuations in energy sector revenues, and a savings component for future generations. More emphasis will be placed on the savings component of this Fund. The accumulation of foreign exchange in the Fund derives from the proceeds of exports of oil and natural gas.

The Fund is separate from the overall foreign exchange reserves of Trinidad and Tobago.

Ownership of the fund
The HSF is owned by the Government of Trinidad and Tobago and managed by an independent board, composed of one representative each from the Ministry of Finance and the Central Bank and three representatives from the private sector. The Board delegates operational management to the Central Bank of Trinidad and Tobago and the Bank uses external fund managers to manage part of the portfolio.

Assets under management
As of August 23, 2008, the HSF amounted to US$2,400 million.

Investment policy and asset allocation
The HSF is invested exclusively in foreign currency denominated assets with a mediumto long-term focus. The Board decides on the investment objectives of the Fund, on strategic asset allocations, and on the benchmark portfolio. The Bank manages the Fund to achieve a target rate of return. The Fund is to be invested in fixed income securities and equities.

Report of the HSF activities
The Central Bank reports on a quarterly basis to the Board of the HSF, while the Board reports to the Minister of Finance annually. The Minister of Finance reports to Parliament on an annual basis after an independent audit by the Auditor General.

Relations between the HSF and the budget
The Act requires that 60 percent of the excess tax revenue from oil and gas (the difference between the actual and the budget estimate) be transferred into the HSF on an annual basis. The oil and gas prices to be used for the budget estimate take into account the recent price history as well as projected prices obtained from defined international sources.

United Arab Emirates:

Abu Dhabi Investment Authority

Ownership
Abu Dhabi Investment Authority (ADIA) is a public institution established in 1976 by the Government of the Emirate of Abu Dhabi as an independent government investment institution. ADIA replaced the Financial Investments Board created in 1967 (part of the then Abu Dhabi Ministry of Finance).

ADIA is wholly owned and subject to supervision by the Abu Dhabi Government and has an independent legal identity with full capacity to act in fulfilling its statutory mandate and objectives. ADIA’s current constitutive document is Law No. (5) of 1981 Concerning the Re-organization of the Abu Dhabi Investment Authority. Law No. (5) provides separation of roles and responsibilities among the owner, the governing entity, and the management.

ADIA’s Law (5) objective is "to receive funds of the Government of Abu Dhabi allocated for investment, and invest and reinvest those funds in the public interest of the Emirate in such a way so as to make available the necessary financial resources to secure and maintain the future welfare of the Emirate."

Abu Dhabi is one of seven Emirates comprising the sovereign federal state of the United Arab Emirates (UAE or Union). Each Emirate exercises sovereignty over all matters that are not within the assigned jurisdiction of the Union government. In particular, under the UAE Constitution, the natural resources and wealth in each Emirate is the public property of that Emirate. Consequently, the natural resources and wealth of Abu Dhabi are considered essential to the economic prosperity, well-being, and security of its citizens.

Governing body
ADIA’s Board of Directors is the supreme body having absolute control over its affairs and the discharge of its business. The Board is composed of a Chairman, Vice Chairman, Managing Director, and other Board members, all of whom are senior Government officials appointed by a Decree of the Ruler of the Emirate. ADIA’s Board of Directors meets periodically as required for establishment and review of ADIA’s strategic policy in accordance with Law (5) objectives and its oversight of ADIA. ADIA’s Board does not normally involve itself in ADIA’s investment and operational decisions, as the Managing Director is assigned these responsibilities by Law (5).

Management
ADIA’s Managing Director is the chief executive responsible for the implementation of its policy, the management of its affairs, and the legal representative of ADIA in its relationship with third parties. The Managing Director is vested by Law (5) with financial independence and various powers, including the power to take decisions in respect of investment proposals following review and analysis in context of the policies approved by the Board within the Law’s objectives. Thus, ADIA’s management has operational independence from general government.

ADIA’s Managing Director is assisted by the Investment Committee established pursuant to Law (5), which is composed mainly of the heads of the several investment departments. The Investment Committee assists the Managing Director in the performance of his duties and provides advice in respect of ADIA’s investments and the management and coordination of ADIA’s affairs and activities. The Investment Committee is supported by a number of advisory committees: the Strategy Committee, the Administration Committee, and the Guidelines Committee. The Managing Director is also supported by the Strategy Unit, Evaluation and Follow-up Department, Internal Audit Department, and Legal Division.

The United States:

Alaska Permanent Fund Corporation

The Alaska Permanent Fund was created by the people of Alaska in 1976 to save a portion of the state’s oil revenue for the future. The Fund is currently worth about US$37 billion.

In 1980, the Alaska State Legislature created the Alaska Permanent Fund Corporation to manage the investments of the Permanent Fund outside of the State Treasury. The investments are guided by a six-member board of trustees, appointed by the Governor.

The Trustees have maintained a conservative asset mix over the years. The current asset allocation includes 53 percent in U.S., non- U.S., and global equities, 22 percent in U.S. and non-U.S. fixed income, and 10 percent in real estate. The Fund also has allocations of 6 percent to private equity, 6 percent to absolute return strategy investments, and 3 percent to infrastructure investments.

The Permanent Fund is made up of two parts: reserved (principal) and unreserved assets. The Constitution does not allow the reserved portion of the Fund to be spent. The Alaska State Legislature may spend the unreserved part of the Fund as it chooses.

Prior to 2005, the Legislature had only used the earnings of the Fund for one purpose: the Permanent Fund Dividend program (administered by the Department of Revenue). This program annually distributes a portion of the unreserved assets to every eligible Alaskan. These dividends have ranged from US$331 in 1984 to US$1,964 in 2000. In the fall of 2008, dividends of approximately US$2,000 will be paid to more than 600,000 Alaskans.