FUND NEWS                               May 26, 2006

Trustees hire new managers, discuss infrastructure investments

MAY 26 - The Alaska Permanent Fund Corporation Board of Trustees was briefed on infrastructure investments, including information specifically related to evaluating gas pipeline investments on Thursday, as part of a two-day meeting in Juneau.

The Alaska Permanent Fund Corporation Board of Trustees was briefed on infrastructure investments, including information specifically related to evaluating gas pipeline investments on Thursday, as part of a regular two-day meeting.

“The Board has always put a great deal of research into new asset classes before they are added to the Permanent Fund’s portfolio,” said Board Chair Carl Brady. “We want to be well prepared to evaluate an investment in an Alaska gas pipeline if it is offered to us, and the presentations we heard today were a good first step.”

Michael O’Leary of Callan Associates, the Board’s general consultant, discussed infrastructure investments, a category of assets that includes transportation facilities such as toll roads and airports, public facilities and utilities, as well as pipelines. O’Leary explained that this is a relatively new area for private investors, and that infrastructure investments have similar return characteristics to real estate, while adding greater diversification of a portfolio’s assets.

In April, the Board hired Pace Global Energy Services to serve as an advisor on potential Alaska gas pipeline investments, as well as general education on infrastructure investments. Four Pace Global staff, Bo Poats, Bob Linden, Kenny Zeng and Thom Hirsch, discussed possible pipeline investment structures that might be presented to the Board, as well as key issues that should be considered when evaluating a pipeline investment.

The Board hired two new managers for a new high yield fixed income portfolio on Wednesday. Goldman Sachs Asset Management and Capital Guardian were each given $100 million mandates, for High Yield and Global High Yield products respectively.

On Thursday the Board also set a new asset allocation for the Permanent Fund, based on five-year capital market assumptions provided by Callan Associates at the February Board meeting. The allocation is largely unchanged, with 1% moved from domestic small cap stocks to emerging market stocks. The new allocation is: 53% equities (34% domestic and 19% international), 29% fixed income (25% domestic and 4% international), 10% real estate, 4% private equity and 4% absolute return.

The Board is scheduled to meet in Anchorage on August 23 and 24 at the Anchorage Downtown Marriott Hotel.