PUBLISHED: 4:21 PM on Wednesday, August 6, 2008
Permanent Fund returns reflect market woes while dividends rise
JUNEAU - The Alaska Permanent Fund returned -3.6 percent for the fiscal year and ended June 30 with a balance of $35.9 billion after paying a $1.3 billion dividend, according to unaudited figures released last week.

The Fund began the fiscal year with an audited value of $37.8 billion.

"Considering the large returns we have seen for the last several years, including last year's 17.1 percent return, a correction in the market wasn't surprising," said Michael Burns, Chief Executive Officer. "Rising commodity prices, the weak dollar, and the problems with subprime mortgages and the related credit crunch, certainly made for a challenging year."

The Fund's bond portfolios were the positive performers for the year, helping mitigate some of the losses on the stock side.

Stock portfolios reflected this volatility, with the fund's U.S. portfolio returning -11.7 percent, the non-U.S. portfolio returning -5.5 percent and the global portfolio returning -10.2 percent.

Real estate largely held steady for the year, returning 1.2 percent.

"The thing to keep in mind in all of this is that if you are a long term investor, you are going to see markets go up and down, and you have to build a portfolio that can prosper and grow through all markets," said Burns. "Our investment goal is a 5 percent real rate of return over ten years, and we continue to make that goal."

The Permanent Fund received $844 million in oil royalty deposits, and earned $2.9 billion in statutory net income, the amount used to calculate the dividend. This month the Corporation transferred $1.3 billion to the Permanent Fund Dividend to pay dividends to eligible Alaskans this fall, $300 million more than was paid in FY07.

Final audited returns and balances for the fiscal year will be reported at the Permanent Fund's annual meeting in Juneau on Sept. 24-25.