FUND NEWS                               Jul 12, 2005

Fund reaches $31 billion

JULY 12 – The Permanent Fund reached a new high on July 11, closing with an unaudited value of $31.1 billion, despite periods of poor markets over the last year. Shortly after the Fund reached $30 billion last November, it then dropped by almost $1 billion. Strong stock growth in both May and June have reversed the downward trend. Approximately $540 million from the Fund will be used to pay dividends this year.

The Permanent Fund reached a new high water mark on July 11, closing with an unaudited value of $31.1 billion.

“When I became a Trustee for the first time in 1991, the Fund was worth about $12 billion. It’s gratifying to see how it has grown over the years,” said Carl Brady, Alaska Permanent Fund Corporation (APFC) Board Chair. “The Trustees have held steady in our long term investment strategies, especially during the recent years of poor stock market performance, and that patience is paying off.”

While the Fund saw significant growth and reached new highs, there were periods of poor markets over the last year. Shortly after the Fund reached $30 billion last November, the markets turned down, causing a drop of almost $1 billion in the Fund’s value. Strong growth in the stock markets in May and June reversed the downward trend, carrying the Fund’s total value to $31 billion.

Of the $31.1 billion, approximately $540 million will be transferred to the Permanent Fund Dividend Division by the end of July to pay dividends this fall.

“I know that it is surprising that this year’s dividend will be lower than last year’s check after strong stock market growth and record-setting oil prices,” said CEO Michael J Burns. “Our dividend formula isn’t designed to match current year performance or oil prices, but rather to reflect the average earnings of the Fund’s investments.”

In short, the dividend will be smaller this year than last year because:

· The dividend formula uses a five-year average, and realized earnings are lower in 2005 than in 2000.
· The low earnings of 2002 and 2003 continue to dampen the five-year average.
· Oil revenues are not directly included in the dividend calculation.
· Unrealized gains on the Fund’s investments are not part of the dividend calculation, and most of this year’s growth was in unrealized gains in the stock and real estate portfolios.
· The Permanent Fund Dividend Division reports that more qualified applicants are expected in 2005 than in 2004, so more people are dividing a smaller pie.

APFC publishes the Fund unaudited daily market value on its home page at www.apfc.org, as well as monthly, quarterly and annual financial reports.