FUND NEWS                               Jul 21, 2005

Permanent Fund returns 10% for FY05

JULY 21 - The Alaska Permanent Fund earned a total return of 10.2% in fiscal year 2005 according to preliminary, unaudited numbers released today by the corporation. The Fund finished the fiscal year on June 30 with a value just under $30.0 billion dollars, an increase of $2.6 billion over the ending value on June 30, 2004.

The Alaska Permanent Fund earned a total return of 10.2% in fiscal year 2005 according to preliminary, unaudited numbers released today by the corporation.

The Fund finished the fiscal year on June 30 with a value just under $30.0 billion dollars, an increase of $2.6 billion over the ending value on June 30, 2004. The ending value is after accounting for transfers from the Fund totaling $559 million, which were authorized in the FY05 budget, but will occur later this month. $532 million will be transferred to the Permanent Fund Dividend Division and $27 million in Amerada Hess earnings will be forwarded to the Department of Revenue to be deposited in the Alaska Capital Income Fund.

“It was exciting to see the Fund reach a new high water mark of $30 billion earlier this year,” said Michael J Burns, Chief Executive Officer. “While we ended with a significant increase in the Fund’s value, this last year also had two periods of flat and downward markets. Our Trustees approve an annual asset allocation and stick with it, despite short-term market conditions. This strategy has paid off.”

Preliminary returns for the year show that all of the Fund’s asset classes had positive performance. The real estate portfolio lead with a greater than 24% return, while overseas investments in bonds and stocks returned 10% and 15%respectively. US bond and stock investments also performed well, each returning about 7%.

Burns added that it is surprising to many Alaskans that this year’s dividend will be lower than last year’s check, even after the high returns and recent record-setting oil prices.

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 realized 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.