FUND NEWS                               Nov 16, 2006

APFC Board approves the use of credit default swaps

NOVEMBER 16 - The Alaska Permanent Fund Corporation Board of Trustees approved the use of credit default swaps in the Fund`s bond portfolios. "The Board believes that conservative use of credit default swaps can add liquidity and decrease risk for the Fund," said Chair Carl Brady. "We aren`t looking to increase returns, but rather to better manage risk."

The Alaska Permanent Fund Corporation Board of Trustees approved the use of credit default swaps in the Fund`s bond portfolios on Wednesday during a two-day regular meeting in Anchorage.

"The Board believes that conservative use of credit default swaps can add liquidity and decrease risk for the Fund," said Board Chair Carl Brady. "We aren`t looking to increase returns, but rather to better manage risk."

APFC staff explained that credit default swaps have become a significant part of the bond markets, with outstanding swaps exceeding the number of outstanding corporate bonds. Credit default swaps are publicly traded financial securities with readily available market values, and the Fund`s external bond managers regularly use swaps for other clients` accounts.

Following the presentation, the Board authorized the use of credit default swaps in the Permanent Fund`s bond portfolios. Managers would need written approval by the APFC’s Chief Executive Officer to use swaps. These securities would be limited for the Fund`s core and core plus mandates to less than 25 percent of the corporate bond portion of the Lehman Aggregate Index, and less than 10 percent of the non-domestic fixed income portfolio.

During the meeting the Board also extended the mandates of two existing stock managers, Capital Guardian and McKinley Capital Management, to global mandates. This decision follows the Board`s move at the September meeting to allocate 14 percent of the Fund`s assets to global stocks.

The Board`s next regular meeting is February 28 and March 1 in Juneau.