Hugin & Munin Information from ODIN Fund Management

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1 February 2007 Hugin & Munin Information from ODIN Fund Management The offshore sector is seething with activity Interest in the offshore sector has declined in line with the falling oil price. However, this nervousness has resulted in these companies becoming even cheaper. Offshore is still a robust «case» in which ODIN has great faith. The price of oil has fallen during the past half-year: from a peak in July/August 2006 when the price of a barrel of oil was USD 78, the oil price is at the time of writing USD 57 after being below USD 50 per barrel at the beginning of January. However, the market for the delivery of oil in the future indicates a continued high oil price. Short-term thinking characterises the market In the short term, the oil price is currently being governed by the weather in the USA. Secondly, it is a matter of what OPEC does about production. The latest signs from OPEC, and from Saudi Arabia in particular, indicate that the cuts the organisation is planning will actually be implemented. If OPEC cuts its production by too much, the reduction in oil supply will lead to a significant rise in the price of oil. Winter has recently enveloped the USA. The cold weather, combined with a cut in production in OPEC countries, has led to a sharp increase in the oil price lately. Since this increase has taken place in a rather negative market, this indicates a strength in itself. Better than ever... The fundamental macroeconomic circumstances are very good, with high economic growth worldwide. The demand for energy in general, and oil in particular, is still very high. In fact, we are now experiencing the best times ever for offshore companies. The outlook is excellent for offshore and oil-service companies! As long as the new markets (China, India, Brazil, Russia and Vietnam) continue to grow by producing cheap products that the whole world enjoys and their populations climb up the welfare ladder, thus leading to an increased demand for energy we can see a bright future for offshore companies. Sold out until 2010 Several investors currently have a lower weighting in oil service companies than they have had for a long time. A falling oil price combined with a less euphoric atmosphere among investors has led to these companies declining in value. They have thus become even cheaper at least when the earnings we see these companies will make during the next few years are taken into account. However, we can see that the offshore companies valuations, balance sheets and order books have never been better. Almost everything in the offshore sector is sold out for a long period into the future.

2 We have a good overview of the equipment ships and rigs that is available on which date. We actually have to go far into 2010 to find spare capacity. Willingness and ability The oil companies have both the ability and willingness to develop new fields. In order to obtain access to vital resources, whether in exploration or production activities, oil companies are willing to enter into long-term contracts with delivery far into the future at very high rates. And something that is very important the decision to carry out exploration and production work is made on the basis of a future oil price of around USD 30 per barrel. In this connection, it must be mentioned that there is an important difference between the national oil companies and the large listed ones. The national companies have a strategic interest in exploring for and developing new fields, so they are less interested in the oil price when making their investment decisions. This means they will maintain their demand for oil services and oil service equipment even if the oil price falls below that which the listed oil companies use in their budgets. Incessant demand for oil We simply cannot see what would make the demand for oil service decline in the future. The oil companies cannot manage to reach their production targets and, if production is to be maintained, more oil services and equipment must be used. Since reservoirs are becoming more difficult to access, fields are growing smaller and more and more fields have to be stimulated to compensate for depletion, the picture is relatively rosy for oil service companies. Unless (contrary to expectation) there is a dramatic economic cooling-down period worldwide, which in our opinion would have to take place by the industries in the USA, China, India, Russia, Brazil and Vietnam stopping entirely, there is little to indicate that the demand for oil, and thus oil services, will decline. Cheap in Norway very cheap in the USA On the Oslo Stock Exchange there has been and still is great interest in offshore oil service companies rig, seismic and supply companies. Last year, a number of companies were listed on the stock exchange and even more were established as unlisted companies. The market does not pay much attention to the new companies in general and the unlisted ones in particular. These include, in our opinion, a number of «gems» whose share prices are very likely to rise sharply. In the USA, there is less interest in the oil service sector and, in our opinion, American drilling companies, among others, are very cheap. In other words, WTI future curve WTI fremtids kurve Pr Pr Forventet Budgeted budsjettert oil price oljepris Gjennomsnittlig budsjettert oljepris The graph shows that the oil market believes the price of oil will remain at over USD 60 per barrel until This means oil companies are willing to invest in new fields and thus require oil services and oil service equipment. Performance as at (NOK): The graph shows that the oil companies on the whole budgeted with an average future oil price of USD 34 per barrel in The price used in the budgets has risen in line with the rising spot price of oil. As long as the future price of oil is at least the same as the price budgeted for, the oil companies will maintain their exploration and development budgets. ODIN Norden: 2,0% ODIN Finland: 2,2% ODIN Norge: 2,2% ODIN Norden VINXBCAP 97 ODIN Finland OMXHC 96 ODIN Norge OSEFX ODIN Sverige: 2,5% ODIN Europa: 0,2% ODIN Europa SMB: 3,8% ODIN Sverige OMXSB ODIN Maritim MSCI World Marine,0,0,0,0,0, ODIN Europa MSCI Europe ODIN Offshore OSX ODIN Europa SMB MSCI Europe Small Cap ODIN Maritim: 2,0% ODIN Offshore: -2,1% ODIN Eiendom: 2,2% ODIN Eiendom Carnegie Sw e Real Estate Source: ODIN Fund Management and OBI

3 there is no shortage of good candidates for inclusion in ODIN Offshore s portfolio or the portfolios of ODIN s other equity funds. Still good opportunities in the offshore sector Offshore is still a robust «case», since the oil companies use an oil price of around USD 30 per barrel when deciding to make future investments. So they will maintain their exploration and development budgets and thus the demand for oil services even if the oil price falls considerably compared to the current level. We repeat the same arguments we have now used for more than a year arguments that are still being used in all our analyses of offshore companies and which strengthen our faith that offshore is a robust «case»: The oil market is tight and has high prices due to little spare production capacity compared to the demand A lot of the world s oil reserves and production are located in politically uncertain areas The market indicates the price of oil will remain high for a long time into the future The oil companies are concentrating on increased production and on increasing their oil reserves The oil companies have a strong willingness and ability to pay for offshore services. The trend that ODIN has pointed out for several years has been reinforced and, if Senior Portfolio Manager,Lars Mohagen possible, become even clearer lately. Although share price developments have been extreme, we by no means believe the peak has been reached. This makes us believe that ODIN Offshore will continue to provide a very attractive yield to its unit holders. Investing is always profitable The date when you invest becomes less and less important in the long-term. Forget about speculating in peaks and troughs invest when you can afford it Very few people, whether they are professionals or amateurs, manage to invest in shares when the stock market is in one of its many troughs or to sell when the market is at one of its many peaks. Most people mistime this far more often than not, so that their yield is actually lower than it strictly speaking should be. Don t hunt for «peaks» and «troughs» «Speculating» in whether the «peak has soon been reached» is a waste of time and energy for the long-term equity fund investor. Just ask those who invested in the temporary peak in Among ODIN Norden s unit holders, even those who invested during the peak in 2000 and have not sold their investments have achieved annual yields of at least 18.4 per cent. This is despite the fact that the Nordic stock market fell by all of 63 per cent from September 2000 to the low point in February During the same period, bank savings have only produced annual interest rates of 3.2 per cent and that does not take into account the annual taxation on bank yields, which reduces the interest rate even more. Equity funds are a long-term investment instrument Investing in equity funds is a long-term exercise in patience, and in the long run the date when you start becomes less and less interesting. For example, the Nordic index annual yield during 15-year periods varies between nine and 25 per cent, with an average annual yield of 15 per cent. If we remove the 10 per cent best and worst during these periods which after all are so-called «outsiders» that cannot be taken into account when calculating the expected future yield then the variation is «only» per cent. Over time these differences also result in significant amounts, but 10 per cent is actually also more or less the same as the long-term expected yield for the world index. Buy when you can afford it At ODIN we have the following simple rule of thumb for when you should invest in an equity fund: when you can afford it. That might sound irritatingly simple, but if you try to invest during a trough and sell at a peak you are unfortunately bound to fail over time as many equity fund investors have experienced. On the other hand, if the fluctuations in the stock market keep you awake at night, then it may be worth trying to avoid the deepest falls in value. The benefit of this is a good night s sleep. The cost is a lower yield than you should have had. Equity funds are the simplest, cheapest, most effective and most profitable long-term investment alternative especially for those who do not speculate in the purchase date and who also have some patience. Over time, a longterm view pays off in the form of a high yield. Remember too that the stock market is in fact a perpetual row of record prices, «spiced up» with several large or small temporary setbacks. Can be expensive to postpone saving If you are thinking about investing in an equity fund, there is in other words no reason for you to put this off. At ODIN, we believe there is still a high yield to be obtained in the stock market, and we have therefore invested our unit holders money in the companies we think will be tomorrow s winners.

4 ODIN Fund Performance January 2007 Returns pr Etableringsdato Establised month mnd i år 12 month mnd 3 år(p.a.) years 5 år years (p.a.) 10 years år (p.a.) etabler Last Siste Per Hittil Siste Last Siste Last Siste Last Last Siste Since Siden start (p.a.) ing (p.a.) MUTUAL FUNDs ODIN Norden VINX Benchmark Cap NOK NI 1) ODIN Finland OMX Helsinki CAP 2,04% 2,04% 24,24% 35,00% 28,88% 15,11% 18,26% 3,01% 3,01% 28,36% 26,97% 17,96% 14,10% 10,% 2,21% 2,21% 33,66% 30,97% 29,38% 18,76% 27,28% 2,28% 2,28% 22,82% 20,21% 13,60% 9,80% 10,23% ODIN Norge Oslo Børs Fondsindex (OSEFX) 2) ODIN Sverige OMXSB Cap GI 3) ODIN Europa * MSCI Europe ODIN Europa SMB ** MSCI Europe Small Cap ODIN Maritim 4) MSCI World Gross Marine Index ODIN Offshore Philadelphia Stock Exchange Oil Service Sector Index ODIN Eiendom Carnegie Sweden Real Estate Index 2,15% 2,15% 22,51% 40,18% 27,95% 15,67% 24,66% 4,59% 4,59% 31,57% 35,41% 23,56% 12,59% 15,75% 2,49% 2,49% 33,09% 29,10% 26,70% 21,55% 25,09% 2,07% 2,07% 33,67% 24,84% 15,55% 13,67% 16,04% 0,20% 0,20% 28,25% 26,86% 11,53% - 4,55% 0,89% 0,89% 16,70% 13,30% 5,53% - 1,23% 3,84% 3,84% 39,20% 34,19% 21,15% - 10,94% 2,35% 2,35% 24,26% 22,84% 15,79% - 10,% 1,% 1,% 22,65% 39,65% 45,64% 22,01% 21,51% 6,70% 6,70% 10,02% 18,43% 20,03% 4,74% 5,53% -2,05% -2,05% 19,79% 54,74% 32,13% - 16,79% -1,56% -1,56% -16,71% 20,20% 9,46% - 0,61% 2,19% 2,19% 41,48% 37,43% 32,29% - 27,68% 3,75% 3,75% 44,31% 33,% 29,15% - 22,29% Benchmarks 1) VINX Benchmark Cap NOK NI has been the benchmark index since 31 December Carnegie Total Index Nordic was the benchmark index from 31 December 13 to 30 December Alfred Berg Nordic index was the benchmark from 1 June 10 to 30 December 13. 2) Oslo Exchange Mutual Fund Index has been the benchmark index since 31 December 15. Oslo Exchange All-Share Index was the benchmark from 26 June 12 to 31 December 15. 3) OMXSB Cap GI has been the benchmark index since 31 December 15. Stockholm Exchange General Index was the benchmark from 31 October 14 to 31 December 15. 4) MSCI World Gross Marine Index has been the benchmark since 31 December 18. Orkla Enskilda Shipping Index was the benchmark from 31 October 14 to 31 December 18. * From 15 November 19 to 24 November 2004, this was a fund within a fund which invested exclusively in Roburs Europafond. ** From 15 November 19 to 24 November 2004, this was a fund within a fund which invested exclusively in Roburs Småbolagsfond Europa. ODIN has based its market comments on the views of sources that are considered to be reliable. However, ODIN cannot guarantee that the information provided by its sources is either accurate or complete. Statements in this Hugin & Munin reflect ODIN s views on the market at the time when Hugin & Munin was being prepared. Employees of ODIN Forvaltning can trade in several types of financial instruments for their own account. This means that employees of ODIN Forvaltning can own securities in companies that are discussed in Hugin & Munin and units in ODIN s mutual funds. The purchase and sale of these, as well as other own-trading activities, must comply with ODIN Forvaltning s internal guidelines for employee own-trading activities, which have been prepared in accordance with the Norwegian Securities Trading Act and the Norwegian Mutual Fund Association s industry standard.

5 Recommendations: In order to avoid any misunderstandings, we emphasise the following: We at ODIN have a huge amount of faith in all our own-managed funds and our view of the market and of the funds we recommend has therefore not changed. In order to be extra clear about the funds we recommend for the average fund saver, we are introducing the following rule of thumb: If you are going to have only one savings agreement or make one investment in one fund, you should choose either ODIN Norden or ODIN Europa. The reason why we only point out two funds is to be extra clear and make it simple. However, there are good arguments for owning units in several ODIN funds. These are the best three arguments for ODIN s nine equity funds: ODIN Norden: ODIN Finland: ODIN Norge: Some of our best investments are gathered in one fund You obtain a very good spread of investment and thus a low risk, since there are great differences between the industry structures of the various Nordic countries This fund is heavily invested in such areas as industrial shipping and fi shing You obtain an exciting investment that also includes Eastern Europe As at March 2006, this fund has considerable investments in the mechanical engineering, metals and construction industries Finland s industry structure is different to Norway s and combined with, for example, an investment in ODIN Norge and/or ODIN Sverige, you will spread your investment widely and achieve an overall lower risk This fund is still low priced despite the strong upswing on the Oslo Stock Exchange This is a different Norway fund, since it is very active compared to other Norwegian equity funds ODIN Norge is heavily invested in the industrial shipping, offshore and fi sheries industries ODIN Sverige: ODIN Europa: ODIN Europa SMB: ODIN Europa SMB: You get a fund that is investted in many good, financially sound Swedish industrial companies Sweden s industrial structure is very different to Norway s, and together with an investment in, for example, ODIN Norge or ODIN Finland, you will achieve a very good spread of investment and an over all lower risk This fund has a lot invested in companies in the metals and mining & quarrying industries A different Europe fund, which has full freedom to invest in the best European companies This fund is well adapted to sound fi nancial developments in Europe in the years to come This fund has considerable investments in industrial companies and subcontractors to European industry This fund invests in smaller companies that the masses have not yet discovered The fund invests in exciting companies, irrespective of their country of origin or sector ODIN Europa SMB has a higher expected yield and higher risk than ODIN Europa ODIN Maritim: ODIN Offshore: ODIN Eiendom: This fund has invested in several interesting companies that are well positioned for icreased global trade and transport ODIN Maritim invests in undervalued companies worldwide This fund has major investments in industrial shipping and chemical transport companies A tight oil market leads to increased exploration for black gold Oil companies are willing to pay a lot for offshore services, even if the price of oil should drop sharply High prices for offshore services due to little new-building work and a long waiting period for new rigs A very interesting fund for those who want to be exposed to the property market and have the opportunity to sell when they want Rising rents for commercial properties lead to improved results and higher property company share prices This fund invests in real estate companies in all Nordic Markets ODIN Forvaltning AS. Dronning Mauds gate 11, N-0250 Oslo, P.O. Box 1771 Vika, N-0122 Oslo Telephone: Fax: kundeservice@odinfond.no Webaddress: Company registration number: NO The company is a wholly owned subsidiary of SpareBank 1 Gruppen AS