these companies. our long time horizon exposes us to developments in markets traditionally of less concern to more short - term investors. we use our position as a shareholder to address topics relating to traditional shareholder rights, such as the right to equal treatment and influence. we also focus on topics that influence the development and regulation of companies ’ input factors – both regarding human resources such as labour, in particular children ’ s rights, and natural resources such as access to clean water and clean air. norges bank ’ s executive board has established a set of principles and a strategy for the exercise of ownership rights. openness and transparency are key principles in the management of the government pension fund – global, and we aim to be as open as possible about our active ownership work. our active ownership is practised in a number of different ways : through the exercise of voting rights, through dialogue and engagement with individual companies, through collaboration with other investors, through submissions to the regulatory authorities, and through research and public communication. we aim to vote at all general meetings of the companies in which the fund has shares. we voted on 68 724 items at 7 871 general meetings in 2008. the impact of the crisis on the norwegian fund the norwegian fund has been hard hit by the crisis. in 2008, the total return on the fund was a negative 23 per cent, the weakest in the fund ’ s history. there was a negative return of 41 per cent on the equity portfolio, while the return on the fixed income portfolio was close to zero. the real rate of return after costs has been 1 per cent since 1998. this is well below the assumed long - term return of 4 per cent. the negative return reduced the value of the fund by nearly usd 100 billion. at the same time, new capital of close to usd 60 billion was transferred to the fund during the year, the largest annual inflow in the fund ’ s history. furthermore, a weaker krone in relation to the currencies in which the fund is invested increased the fund ’ s value by some usd 80 billion. consequently, in spite of the negative return, the fund ’ s market value increased by nearly usd 40 billion during the year. the market value of the pension fund was around usd 350 billion ( nok 2 275 billion ) at the end of 2008. the financial crisis is having a broad impact, and most forms of investment are falling in value. other government assets, such as shareholdings in domestic industries and subsea

level. most often, however, there will be a number of ways to achieve this. we need some references that provide some indication of whether a given interest rate path is reasonable. it is natural to turn first to monetary policy theory. in the theoretical literature, the trade - off between price stability and stability in the real economy is often described as a problem of minimisation, where the central bank wants to minimise a loss function, which includes variations in output and variations in inflation. the central bank shall then choose the path for the interest rate ahead that minimises the expected discounted “ losses ” in all future periods. in practice, no inflation - targeting central bank uses a loss function of this kind directly. however, what they do contains elements of theoretical thinking. we try to set the interest rate so that woodford, michael ( 2003 ) : “ interest and prices ”, princeton university press, page 15. it provides a “ reasonable balance ” between the objective of stabilising inflation around the target and the objective of stable developments in the real economy. the theoretical framework provides limited concrete and easily communicable guidance. in practice, it may be useful to have some simple points of reference that can help us to evaluate whether an interest rate path seems reasonable in relation to the monetary policy objective. the most important task of monetary policy is to provide an anchor for inflation expectations. norges bank sets the interest rate with a view to stabilising inflation at the target within a reasonable time horizon, normally 1 - 3 years. therefore, when evaluating the interest rate path, the most important criterion is whether inflation reaches the target within this time horizon and remains there. if we do not reach the target within this time horizon, there may be a risk that inflation expectations will gradually move away from the target. this could weaken confidence in monetary policy and the inflation target as a nominal anchor. for the same reason, inflation should also be moving towards the target well before the end of the three - year period. the inflation gap and the output gap should be in reasonable proportion to each other until closure. this assessment must also take account of the substantial uncertainty surrounding the calculation of the output gap, and of norges bank ’ s mandate which specifies that inflation shall be 2. 5 per cent over time. the inflation gap and the output gap shall normally not be positive or negative at the same time further ahead. if, for example, both gaps are positive, a higher interest rate path would