mandate which regulates our responsibilities as the operational manager of the fund. the fund has important distinguishing characteristics which form the basis for the investment strategy. the most important are its size and long - term investment horizon. our potential to achieve results as an investor lies in turning these factors to the fund ’ s benefit through active strategies, and our most important advantage is the possibility of implementing these strategies at low cost. our owner expects added value from active ownership. it is important that large institutional investors such as norges bank exercise their rights as minority shareholders. in our dealings with companies, our legitimacy and influence depend on us being seen as a long - term investor pursuing financial interests. it is clear to me that the quality of the investment management organisation can only be ensured by pursuing excellence in all parts of the investment activities. to build an organisation which aims to be average will only assure mediocrity. the financial crisis revealed that many institutions based their strategies on short - term funding. when credit was no longer available, many business models collapsed. heavy losses were passed on to owners and investors. the situation for savings in the fund is different. we have had to record losses on equity investments and active credit investments. however, the fund has no traditional liability side and liquidity risk is low. the growing risks in the market did not force us to make changes that would have resulted in huge realised losses for our owners. the final results of our strategies through the troubled waters of the financial crisis cannot be deduced from the quarterly results at the peak of the crisis. actually, the fund has spent the last few quarters increasing its ownership in companies worldwide. as for credit, values are not lost as long as borrowers fulfil their obligations. the fund is prepared to retain ownership of its illiquid investments until they mature in a few years time. moreover, unless the economic outlook goes from bad to considerably worse, the fund will record a substantial excess return in years ahead from holding on to assets that the market has priced down due to a collapse in liquidity and fear. in fact, as the global economy seems to be stabilising, this effect is already evident. let me conclude by underlining the topic of this conference : “ investing for the long run ”. the fund is a long - term savings plan and capable of riding out large swings in the markets. this is the very foundation of the investment strategy. our ability to adhere to this strategy in a critical phase – even if this should last

opportunities abroad when the petroleum industry was being built up. we did the same in order to expand welfare schemes and to finance the countercyclical policy of the mid - 1970s and the early 1990s. over the last decade and a half, international capital markets have enabled us to convert national oil and gas resources into equities and bonds abroad in the fund. the implementation of our investment strategy is dependent on free capital movements. i would like to remind the audience that only some twenty five to thirty years ago we had very rigorous capital restrictions ourselves. for instance, norwegians could only purchase foreign equities through a fixed pool established in the 1960s ( by using the so - called “ security dollar ” market ), and foreigners ’ investments in norwegian equities were strictly regulated and actually limited to nok 50 000 per person until 1979. that ceiling was raised to nok 1 million in 1979. experiences over the past year may cast doubt on the effectiveness and benefits of international capital markets. nevertheless, history has seen a number of deep financial crises, and it is my belief that market conditions will also return to normal this time. i am confident that private entrepreneurship and public limited companies will continue to exist as the primary organisational bodies for commercial activities. owners and investors will also be needed in the years to come. but capitalism will have to adapt. after all, the willingness to trust the free play of market forces in finance has been seriously impaired. international stock exchanges lost more of their value in 2008 than in any other single year in recent history. absolute results, especially with regard to equities, were highly unusual. many investors have suffered losses. as a result of this experience, required returns will be higher in the future. an investor such as the government pension fund – global will earn more in the long term because of wide fluctuations in equity values. national transport plan 2010 – 2019 ( st. meld. nr. 16 ( 2008 - 2009 ). the fund has a longer investment horizon than the vast majority of other market participants. the important question is therefore how sound today ’ s investments will prove to be in the long term. the government now owns close to one per cent of the global business sector. this represents real value that will provide a return reflecting both global economic growth and the risk related to fluctuations in equity prices. another virtue of the fund is the strict division of labour between the norwegian government as owner and norges bank as the manager. the bank has been given a clear