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3.9.2011

ARIZONA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS. 3.9.2011. AGENDA: 3.9.2011. Endowment Performance Asset Allocation Changes Endowment Distribution Formula State Cash Flow Q & A. ENDOWMENT PERFORMANCE Through December 2010. ENDOWMENT PERFORMANCE. Privately-owned land. State trust land.

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3.9.2011

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  1. ARIZONA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS 3.9.2011

  2. AGENDA: 3.9.2011 • Endowment Performance • Asset Allocation Changes • Endowment Distribution Formula • State Cash Flow • Q & A

  3. ENDOWMENT PERFORMANCEThrough December 2010

  4. ENDOWMENT PERFORMANCE Privately-owned land State trust land Tribal Reservations US Forest Service Bureau of Land Management

  5. ENDOWMENT PERFORMANCE $1,600.04M $502.79M $1,052.42M

  6. ENDOWMENT MARKET VALUE $3.15 Billion! UPWARD TREND

  7. ENDOWMENT UNREALIZED GAINS $713 million! GAINS AT RECORD HIGH

  8. ENDOWMENT FY 11 2ND QUARTER CHANGE SINCE 2010 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $3,155,262 $2,669,674 $2,277,232 $2,036,303 $23,158,917 $2,441,490 SHARES BOOK VALUE MARKET VALUE DEC 09 DEC 10

  9. ENDOWMENT FY 11 2ND QUARTER CHANGE SINCE 2010 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 0 $713,772 $392,441 UNREALIZED GAINS DEC 09 DEC 10

  10. ENDOWMENT FY 11 2ND QUARTER SHARES BOOK VALUE MARKET VALUE UNREALIZED GAINS

  11. Endowment Asset Allocation Changes

  12. ASSET ALLOCATION: 1999 100% BONDS

  13. ASSET ALLOCATION: MARCH 2003 50% STOCKS 50% BONDS

  14. ASSET ALLOCATION: MARCH 2011 51% STOCKS 49% BONDS

  15. TARGET ASSET ALLOCATION: FEB 2011 60% STOCKS 40% BONDS With +/- 5% market value rebalance triggers. Sell high, buy low.

  16. Endowment Distribution Formula

  17. ADJUSTED FOR INFLATION 20% 20% 20% 20% 20% Formula takes 20% of the returns adjusted for inflation from each of the previous five years.

  18. How the FORMULA WORKS

  19. How the FORMULA WORKS SUBTRACT

  20. How the FORMULA WORKS Equals .75% multiplied by 5-year average market value of $2.158 billion (in millions) Results in a $16.2 million K-12 distribution in FY11

  21. What’s the Formula forecast for 2012? 2012 Preliminary estimate 21

  22. What’s the Formula forecast for 2012? 2012 Preliminary estimate 22

  23. What’s the Formula forecast for 2012? 2012 Preliminary estimate = estimated FY 12 distribution of $45 million 23

  24. STATE CASH FLOW

  25. STATE CASH FLOW TOTAL OPERATING ACCOUNT AVERAGE MONTHLY BALANCE BACK IN THE BLACK $863 million in February

  26. QUESTIONS?

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