2019 BBNC Annual Report | Page 35

The Corporation recognizes Portfolio earnings primarily from investments in public and private passive invest- ments including marketable securities, private equity placements and a number of commercial real estate investments located primarily in Anchorage, Alaska. The Portfolio is managed pursuant to an investment policy which calls for an asset allocation as follows: 50% equity securities, 45% alternative investments, 3% fixed income securities, and 2% cash. Real estate and alterna- tive investments are often private, non-publicly-traded equity interests. The allocation to each of these four investment classes was developed with the help of the Corporation’s external investment advisor using modern portfolio theory. The established policy allocation to dif- ferent investment classes is designed to achieve a target annual return of 8.4% while exposing the Corporation to the lowest level of risk possible. At March 31, 2019, the total market value of the Portfolio was $225.8 million compared to $223.1 million at March 31, 2018. Portfolio holdings in private, non-publicly traded investments were $75.0 million at March 31, 2019, compared to $72.4 million at March 31, 2018. The Corporation’s Portfolio generated investment earnings of $11.4 million, reflective of the broader trends in the equity markets, during 2019. The Corporation’s Portfolio returns are benchmarked against a custom index that approximates our investment allocation targets. NATURAL RESOURCE MANAGEMENT The following table displays results of Natural Resource earnings for the fiscal year ended (in thousands): FISCAL YEAR 2019 2018 2017 11,319 10,375 6,713 434 302 191 11,753 10,677 6,904 REVENUES Natural Resources 7(i) revenue sharing net of 7(j) distributions $ Natural Resources Earnings from Natural Resources Natural Resource earnings consist primarily of 7(i) revenue sharing, net of the 50% distribution to village corporations and at-large shareholders that the Corporation receives from other regional Alaska Native Corporations. 7(i) receipts received are primarily from NANA Regional Corporation and Arctic Slope Regional Corporation. The Corporation distributes 50% of these receipts to village corporations and at-large shareholders as 7(j) payments. Revenue from the sale of the Corporation’s natural resources, primarily sand and gravel, is driven largely by $ resource development and infrastructure improvement activities in the Bristol Bay region. Revenues from the sale of natural resources tend to fluctuate from year-to-year. The Corporation continues to advocate for responsible development of natural resources on BBNC lands and other lands within the Bristol Bay region. We are commit- ted to supporting a strong business climate that encour- ages investment in natural resource activities throughout the entire state of Alaska. GENERAL AND ADMINISTRATIVE EXPENSES Corporate general and administrative (G&A) expenses decreased from $23.4 million in FY2018 to $17.5 million in FY2019. G&A expenses are incurred by the Corpora- tion in its efforts to provide corporate governance and oversight of its increasingly complex subsidiary opera- tions, pursue new investments, protect the Corporation’s assets and provide shareholder services. Corporate G&A expenses decreased by $5.9 million, primarily as a result of reductions of health insurance claims incurred on the Corporation’s self-insured plans in FY2019. G&A expenses as a percentage of revenue was 1.0%, 1.4% and 1.3% in FY2019, FY2018 and FY2017, respectively. M anagement ' s D iscussion and A nalysis 33