IDAHO ENDOWMENT TRUSTMISSION STATEMENT

Provide a perpetual stream of income to the beneficiaries by: maximizing long-term financial return at a prudent level of risk; protecting future generations’ purchasing power; and providing a

relatively stable and predictable payout.

Idaho Land Grant EndowmentsA Report to the Citizens – 2014

01

Endowment assets of the State of Idaho consist of both land and funds. At statehood, 3.6 million acres of land were granted to the state by the federal government and 2.4 million acres remain. Certain proceeds from the sale of land and reinvested income have been accumulated in the endowment funds, which totaled $1.7 billion as of June, 2014.

The Idaho Board of Land Commissioners oversees the state’s endowment assets. Under the direction of the Land Board, endowment lands are managed by the Idaho Department of Lands and the funds are managed by the Endowment Fund Investment Board.

Overview of Trust Assets

Find more information online at www.efib.idaho.gov and www.idl.idaho.gov

ENDOWMENT GOVERNANCE: IDAHO LAND BOARD

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INSIDE THIS REPORTOverview ofTrust Assests

The Beneficiaries, Endowment Fund

Revenues & Expenses

Returns & Highlights, Income History

01

02

03

04

Federal Land

State Endowment Land

Tribal Land

Private & Other

LAND OWNERSHIP & MANAGEMENT

N

0 25 50 100Miles

Projection: Idaho Transverse Mercator NAD 83Author: Ed DeYoung, IDL Technical Services BureauDate: May 2014

2.4 million acresof endowment land

LewistonLewiston

MoscowMoscow

Coeur d’AleneCoeur d’Alene

SandpointSandpoint

BoiseBoise

Mountain HomeMountain Home

Twin FallsTwin Falls

PocatelloPocatello

Idaho FallsIdaho Falls

TheBeneficiaries

Endowment Fund

Endowment assets are assigned by law to specific beneficiaries and income from those assets can only be spent for the support of those beneficiaries.

HISTORY OF ENDOWMENT DISTRIBUTIONS

ENDOWMENT FUND BALANCEENDOWMENT FUND

ASSET TARGET

Public SchoolHigher EducationOther

TOTAL

$337$103$58

$498

11 YEAR TOTAL (millions)

$60

$50

$40

$30

$20

$10

$0

$0

$500

$1,000

$1,500

$2,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$ in millions

2005 2006 2007 2008 2009 2010 2011 2012 2013 201420042002 200320011999 200019981997199619951994June

02

30%

21%

49%

US Equity

Foreign Equity

Fixed Income

$ in millions

Other Endowments $22 Million One-Time Public SchoolPublic School Endowment

Revenues & Expenses (Land & Fund)

• Public School Fund - largest endowment beneficiary

• Agricultural College Fund - University of Idaho

• Charitable Institutions Fund - Idaho State University, State Juvenile Corrections, State Hospital North, Idaho Veterans Homes and the School for the Deaf & Blind

• Normal School Fund - Idaho State University Department of Education and Lewis-Clark State College

• Penitentiary Fund• School of Science Fund - University of Idaho

• State Hospital South Fund

• University of Idaho Fund• Capitol Permanent Fund – Capitol building (major

maintenance)

All nine endowment funds are pooled together for investment purposes.

Distributions can only be made from earnings and are determined annually by the Land Board based on permanent fund balances, amount in earnings reserves, and expected future income.

ENDOWMENT OWNERSHIP FY 2014BY ENDOWMENTPublic SchoolAgricultural CollegeCharitableNormal SchoolPenitentiarySchool of ScienceState Hospital SouthUniversity of IdahoCapitol Permanent

TOTALS

ACRES2,073,094

33,50377,25459,65528,90875,49031,42355,180

7,2832,441,790

PERMANENT FUND*$922

$23$95$81$35$96$55$64$28

$1,400

EARNING RESERVES*$164

$12$29$23$16$23$33$42

$2$344

FUND $ OWNERSHIP* $1,086

$35$124$104

$51$119$88

$106$30

$1,744

*$ in millions

03

5 YEAR HISTORY OF LAND REVENUE & INCOME FROM FUND INVESTMENTS

USES OF LAND REVENUEFY 2014

Permanent Fund

Earnings Reserves

Land Mgmt Expenses

70.9%

2.7%

26.4%

FACT: The construction of the Capitol in the 1920’s was funded by the sale of endowment land.

LAND INCOME BY ACTIVITYBY ACTIVITYRangelandForestAgricultureCommercialResidentialOther

TOTAL

ACRES1,411,452972,54616,89015,437

72624,738

2,441,789

2014 INCOME*$0.8

$53.5$0.4$3.8$4.2$3.2

$65.9

2013 INCOME*$0.7

$42.2$0.4$1.4$5.0$0.3

$50.0

2005-2009

2010-2014

$ in millions$0

$100$200$300$400$500$600$700$800

Land Revenue Income from Investments(includes market gains & losses)

*$ in millions

FY 2014 ENDOWMENT TRUST HIGHLIGHTS

300

250

200

150

100

50

$0

-50

-100

-150

-200

-250

04 How can we make this report better? Contact EFIB at www.efib.idaho.gov

• Annual income from endowment land reached a 14-year high of $66 million (on record revenues of $89 million)

• Record timber harvest of 347 million board feet, due in part to the response to limit losses from wildfire and insects

• Public School endowment fund received close to $1 million for lease of Snake River jump site

• Cottage sites worth $12 million were auctioned for private ownership

• Relative to peers, endowment fund returns were in the top 10% over the last two, five and ten year periods (due in part to a higher commitment to U.S. stocks than most other institutional investors)

• Land Board suspended plan to increase investment in Idaho commercial real estate and initiated a comprehensive strategy review due for completion in December, 2014

ANNUALIZED FUND RATE OF RETURN FOR YEARS ENDED JUNE 30, 2014

ENDOWMENT INCOME 2005-2014 LAND AND FUND (NET OF EXPENSES)

0% 5% 10% 15% 20%

18.8%

14.7%11.1%

8.5%

Total return, including market gains and losses. Before annual management fees and administrative expenses of about 0.4%

2005 2006 2007 2010 2011 2012 2013 20142008 2009

9.8% 10.9% 16.6% 15.8% 24.6% 1.0% 14.4% 18.8%-2.2% -18.0%FISCAL YEARS - Annual Fund Return (Before Fees)

Returns & Highlights

Income History

1 Year

3 Years

5 Years

10 Years

Land Earnings

Fund Earnings

Average Land

Average Fund