board of university and school lands - trust lands · d. william s. wilkinson et al. case no....

BOARD OF UNIVERSITY AND SCHOOL LANDS

Coteau Room Judicial Wing, State Capitol

April 8, 2020 at 11:30 AM

AGENDA

➢ = Board Action Requested

This meeting is open to the public via conference call – Meeting Call in: 701-328-7950

Passcode: 612618

1. Approval of Meeting Minutes – Jodi Smith

Consideration of Approval of Land Board Meeting Minutes by voice vote.

➢ A. February 27, 2020 – pg. 1

2. Reports – Jodi Smith

A. COVID-19 Operations Update – pg. 14

B. Encumbrance Report – pg. 16

C. Financial Position – pg. 17

D. Unclaimed Property Report – pg. 26

3. Energy Infrastructure and Impact Office – Jodi Smith

A. Energy Infrastructure and Impact Office Report – pg. 27

➢ B. Contingency Grant Round Award Recommendations – pg. 29

4. Investments – Michael Shackelford

A. Investments Update – pg. 40

B. 4th Quarter Investment Update – pg. 41

➢ C. Review of Strategic Asset Allocation – pg. 73

➢ D. RVK Contract Review – pg. 121

5. Minerals – Jodi Smith

A. Shut-In Administrative Rule – pg. 132

B. Extension Request Administrative Rule – pg. 134

6. Litigation – Jodi Smith

➢ A. BLM - Case No. IBLA 2016-170 – pg. 136

➢ B. XTO Energy, Inc. et al. (Interpleader) Case No. 1:19-cv-00076 – pg. 137

➢ C. Continental Resources, Inc. (Interpleader) Case No. 1:17-cv-00014 – pg. 139

➢ D. William S. Wilkinson et al. Case No. 53-2012-CV-00038 – pg. 141

➢ E. Newfield Exploration Company et al Civ. No. 27-2018-CV-00143 – pg. 144

➢ Executive session under the authority of NDCC §§ 44-04-19.1 and 44-04-19.2 forattorney consultation with the Board’s attorneys to discuss:

- BLM - Case No. IBLA 2016-170- Continental Resources, Inc. (Interpleader) Case No. 1:17-cv-00014- XTO Energy, Inc. et al. (Interpleader) Case No. 1:19-cv-00076- William S. Wilkinson et al. Case No. 53-2012-CV-00038- Newfield Exploration Company et al Civ. No. 27-2018-CV-00143

Next Meeting Date – April 30, 2020 at 9:00 AM

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Minutes of the Meeting of the Board of University and School Lands

February 27, 2020

The February 27, 2020 meeting of the Board of University and School Lands was called to order at 9:00 AM in the Governor’s Conference Room of the State Capitol by Chairman Doug Burgum.

Members Present: Doug Burgum Governor Alvin A. Jaeger Secretary of State Wayne Stenehjem Attorney General Kelly Schmidt State Treasurer Kirsten Baesler Superintendent of Public Instruction

Department of Trust Lands Personnel present: Jodi Smith Commissioner Kathy Brandvold Auditor Rob Dixon Computer Network Specialist Brad Fettig Mineral Title Specialist Peggy Gudvangen Accounting Division Director Mike Humann Surface Division Director Bev Jacobson Administrative Assistant Kristie McCusker Paralegal Catelin Newell Administrative Staff Officer Adam Otteson Revenue Compliance Division Director Rick Owings Administrative Officer Dave Shipman Minerals Division Director Mike Shackelford Investment Division Director

Guests in Attendance: Bethany Kurz EERC, Grand Forks Ron Rauschenberg Self Jeff Engleson Self Eric Sundberg Slawson Exploration Co. Todd Slawson Slawson Exploration Co. Ron Ness North Dakota Petroleum Council Rudie Martinson Primary Strategy Group Kate Black Inland Oil & Gas Pete Wolla Self Arlin Link Self Brian Anderson WBROA Sara Bilden Midkota Public School Lawrence Bender Fredrikson & Byron, P.A. Tyler Gludt Fredrikson & Byron, P.A. Charles Tuttle Self Steven Poeckes Self Peter Masset Altair Corp Nick Archuleta ND United Dale Patten District 39 Senator Danielle Yourk Altair Corp Aimee Copas NDCEL Brandt Dick Underwood School/NDSOS Fintan Dooley Salted Lands Council

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Brady Pelton North Dakota Petroleum Council Paul Clarys Armstrong OP, Inc Geoff Simon WDEA Blue Hulsey Continental Land Resources Roger Kelley Continental Land Resources James McPherson AP Brent Sanford Lt. Governor Dave Garner Attorney General’s Office Leslie Bakken Oliver Governor’s Legal Counsel Reice Haase Governor’s Office Lynn Helms NDIC-DMR

L I T I G A T I O N Sorum Litigation

Case: Paul Sorum, et. al. v. State of North Dakota, et. al. – Civ. No. 09-2018-CV-

00089 Tribunal: Cass County District Court Judge: John C. Irby Attorney: Mark Hanson, Nilles Law Firm Opposing Counsel: Terrance W. Moore, Fintan L. Dooley Issues: The Board was named as a defendant in the above reference case which was

served on January 10, 2018. Plaintiffs have filed this action to challenge the Constitutionality of S.B. 2134 passed during the last legislative session and codified as N.D.C.C. ch. 61-33.1. Under the new legislation, “[t]he state sovereign land mineral ownership of the riverbed segments inundated by Pick-Sloan Missouri basin project dams extends only to the historical Missouri riverbed channel up to the ordinary high water mark.” N.D.C.C. § 61-33.1-02. S.B. 2134 established a process by which the Department of Mineral Resources is directed to procure a “qualified engineering and surveying firm” to “review the delineation of the ordinary high water mark of the corps survey segments” for the portion of the Missouri River designated as the “historical Missouri riverbed channel.” N.D.C.C. § 61-33.1-03(2), (3). Following a review process, which includes a public hearing and public comments, the North Dakota Industrial Commission must adopt final review findings which “will determine the delineation of the ordinary high water mark for the segment of the river addressed by the findings.” N.D.C.C. § 61-33.1-03(7). Plaintiffs’ complaint requests from the court a declaratory judgment finding that N.D.C.C. ch. 61-33.1 violates the Public Trust Doctrine and the Anti-Gift, Privileges and Immunities, and Local and Special Law Clauses of the North Dakota Constitution. Plaintiffs are also requesting the Court issue an injunction to prevent all state officials from further implementing and enforcing N.D.C.C. ch. 61-33.1.

History: An Answer was filed. Defendants filed a Motion to Dismiss, which was denied in April

2018. Petition for Supervisory Writ and Exercise of Original Jurisdiction was filed by Defendants and denied in May 2018. A Motion for Preliminary Injunction was brought by Plaintiffs and a hearing was held on May 21, 2018. An Order for Preliminary Injunction was filed June 26, 2018. A Scheduling Conference was held on September 6, 2018 and the following briefing deadlines were set: Summary Judgment Motions were filed October 22, 2018. Response Briefs were filed

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December 10, 2018. Reply Briefs were due December 21, 2018. A hearing on the Motions for Summary Judgment was held on January 4, 2019. The Order on Cross-Motions for Summary Judgment was issued on February 27, 2019, and Defendants were directed to prepare the proposed Judgment. On March 6, 2019, Defendants filed their proposed Judgment. Plaintiff’s filed a letter on March 7, 2019, advising the Court that they felt Defendants’ proposed Judgment was deficient and that they would also be submitting a proposed Judgment. Plaintiff’s proposed Judgment was filed March 8, 2019. Defendants filed a letter on March 8, 2019 advising the Court that they intended to submit a response to Plaintiffs’ proposed Judgment within 14 days. On March 19, 2019, Defendants filed an Objection to Plaintiffs’ Proposed Judgment. Thereafter, Plaintiffs filed a letter asking the Court not to rule on Defendants’ Objection until Plaintiffs have had the opportunity to be heard and further, that Plaintiffs’ intend to bring a Motion for Clarification concerning retroactive royalty refunds within 14 days. Plaintiffs filed their Response to Defendants’ Objection to Proposed Judgment and Request for Clarification and their Amended Proposed Order and Judgment on March 29, 2019. Defendants filed their Objection to Plaintiffs’ Proposed Order and Judgment (Plaintiffs’ Amended Proposed) and Reply to Plaintiffs’ Response to Defendants’ Objection to Proposed Judgment and Request for Clarification on April 8, 2019. On April 25, 2019, Judge Irby entered an Order for Entry of Judgment ordering the Clerk to enter Defendants’ Proposed Order as the Judgment of the Court. Judgment was entered on April 26, 2019. Plaintiffs’ filed a Notice of Motion for Attorney Fees, Costs, and Service Award to Plaintiffs scheduling a hearing for 1:30 p.m. June 10, 2019 in Fargo. The Notice of Entry of Order on Cross-Motions for Summary Judgment, Order for Entry of Judgment, and Judgment was filed by Defendants on May 3, 2019. On May 15, 2019, Plaintiffs filed their Motion for Attorney Fees, Costs and Service Award to Plaintiffs and the Memorandum in Support of Motion, together with supporting documents. On May 20, 2019, Plaintiffs filed their Amended Motion for Attorneys Fees, Costs and Service Award to Plaintiffs. Defendants filed an Expedited Motion for Extension of Time to Respond to Plaintiffs’ Memorandum in Support of Motion for Attorney Fees, Costs and Service Award to Plaintiffs and requested the June 10, 2019 hearing be postponed. Defendants filed, with the District Court, its Response to Plaintiffs’ Memorandum in Support of Motion for Attorneys Fees, Costs and Service Award to Plaintiffs on June 12, 2019. Plaintiffs’ filed their Reply Memorandum in Support of Motion for Attorney Fees, Costs and Service Award to Plaintiffs on June 19, 2019. A hearing on the motion for attorneys fees was held before the District Court on July 18, 2019. The State Defendants/Appellants filed a Notice of Appeal to the North Dakota Supreme Court (Supreme Court) on June 27, 2019. Plaintiff/Appellees/Cross-Appellants filed a Notice of Cross-Appeal dated July 10, 2019. Appellants’ Briefs were due to the Supreme Court on August 6, 2019. On July 18, 2019, the parties filed a Stipulation and Joint Motion for Appellate Briefing Schedule with the Supreme Court to allow for a decision to be rendered in the District Court on the issue of attorneys fees prior to the briefs being due to the Supreme Court. On July 19, 2019, the Joint Motion for Appellate Briefing Schedule was denied and an Order of Remand was entered by the Supreme Court temporarily remanding the case to the trial court for the limited purpose of consideration and disposition of Plaintiffs’ Motion for Attorney Fees, Costs and Service Award to Plaintiffs. The briefing schedule for briefs before the Supreme Court is stayed pending the District Court’s disposition of the attorneys fees issue. On July 24, 2019, the District Court issued its Order on Plaintiffs’ Motion for Attorney Fees, awarding attorney fees to Plaintiffs’ attorneys and service awards to Plaintiffs. An Amended Judgment was entered in the District Court on July 31, 2019. On August 1, 2019, State Defendants filed an Amended Notice of Appeal and the Order and Request for Transcript. Also

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on August 1, 2019, the Supreme Court provided its Notice of Filing Notice of Appeal. On August 7, 2019, the Amended Notice of Cross-Appeal was filed by Plaintiffs. The transcripts requested by the State Defendants of the January 4, 2019 summary judgment hearing and the July 18, 2019 hearing on attorney fees/costs/service award were filed with the North Dakota Supreme Court on October 4, 2019. In light of the filing of those transcripts, the Supreme Court’s clerk has advised that the State Defendants’ initial appellant brief is to be filed on November 13, 2019. Brief of Defendants, Appellants and Cross-Appellees the State of North Dakota, the Board of University and School Lands of the State of North Dakota, the North Dakota Industrial Commission, the Hon. Douglas Burgum, in his Official Capacity as Governor of the State of North Dakota, and the Hon. Wayne Stenehjem, in his Official Capacity as Attorney General of North Dakota was filed with the Supreme Court on November 13, 2019. A Motion for Leave to File Amicus Curiae Brief by the North Dakota Petroleum Council in Support of the Constitutionality of N.D.C.C. ch. 61-33.1 was filed with the Supreme Court on November 13, 2019. The Supreme Court granted the North Dakota Petroleum Council’s Motion for Leave to File Amicus Curiae Brief on November 14, 2019. Plaintiffs’ brief was due to the Supreme Court on or before December 13, 2019. On December 9, 2019, Plaintiff Paul Sorum made a request to the Suprme Court for an extension to file his brief until January 29, 2020. The Supreme Court granted Plaintiff Paul Sorum’s request for an extension, giving him until January 21, 2019 to file his brief.

Current Status:

• On January 29, 2020, Defendants requested an extension of time to file the reply brief until February 14, 2020, due to the amount of information that was filed in the separate briefs and appendixes.

• On January 30, 2020, an initial letter was issued in which the Supreme Court granted Defendants’ request for an extension to file the Reply Brief until February 24, 2020. Thereafter, the Court issued a corrective letter advising reply briefs are due February 14, 2020.

• On February 13, 2020, Paul Sorum filed the Reply to Appellant Brief of Defense.

• Defendants filed the Reply Brief of Defendants, Appellants and Cross-Appellees the State of North Dakota, the Board of University and School Lands of the State of North Dakota, the North Dakota Industrial Commission, the Hon. Douglas Burgum, in his Official Capacity as Governor of the State of North Dakota, and the Hon. Wayne Stenehjem, in his Official Capacity as Attorney General of North Dakota on February 14, 2020.

• Oral Argument before the Supreme Court is scheduled for 1:30 p.m. on March 4, 2020.

EXECUTIVE SESSION

Under the authority of North Dakota Century Code Sections 44-04-19.1 and 44-04-19.2, the Board close the meeting to the public and go into executive session for purposes of attorney consultation relating to:

• Paul Sorum et al. Civ. No. 09-2018-CV-00089

Action Record Motion Second

Aye Nay Absent

Secretary Jaeger X X Superintendent Baesler X

Treasurer Schmidt X

Attorney General Stenehjem X X

Governor Burgum X

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At 9:03 AM the Board entered executive session for the purposes outlined in its adopted motion.

EXECUTIVE SESSION

Members Present: Doug Burgum Governor Alvin A. Jaeger Secretary of State Wayne Stenehjem Attorney General Kelly Schmidt State Treasurer Kirsten Baesler Superintendent of Public Instruction

Department of Trust Lands Personnel present: Jodi Smith Commissioner Kristie McCusker Paralegal Catelin Newell Administrative Staff Officer

Guests in Attendance: Brent Sanford Lt. Governor Leslie Bakken Oliver Governor’s Legal Counsel Reice Haase Governor’s Office Mark Hanson Nilles Law Firm ____________________________________________________________________________ The executive session adjourned at 9:27 AM. During the executive session, the Board was provided information from its attorney and no formal action was taken. To accommodate the number of public in attendance the Board reconvened in open session in the Roughrider Room in the State capitol.

A P P R O V A L O F M I N U T E S A motion to approve the minutes of the January 21, 2020 regular meeting, January 27, 2020 special meeting and February 11, 2020 special meeting was made by Attorney General Wayne Stenehjem and seconded by Secretary Alvin Jaeger and the motion carried unanimously on a voice vote.

L I T I G A T I O N North Range Litigation Case: North Range Resources, LLC v. State of North Dakota, North Dakota Board

of University and School Lands, Jodi Smith, Commissioner of University and School Lands, Case No. 27-2020-CV-00028

Date Filed: January 16, 2020 Court: McKenzie County District Court Judge: Honorable Daniel El-Dweek Attorney: David Garner Opposing Counsel: Lawrence Bender, Spencer D. Ptacek Issues: On January 15, 2020, North Range Resources served a Summons and Complaint

on State of North Dakota, the North Dakota Board of University and School Lands, and the Commissioner. This case is requesting a judgment be entered under Chapter 32-12 of the North Dakota Century Code quieting title in Leases in favor of Plaintiffs;

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a judgment be entered under Chapter 32-23 of the North Dakota Century Code declaring that the Leases remain valid and in effect with respect to all of the Subject Lands; and that Plaintiffs be awarded their costs and reasonable attorney fees.

History: Summons and Complaint was served on January 15, 2020, with the Answer being due in 21 days.

Current Status:

• Notice of Lis Pendens was filed on January 23, 2020.

• Answer filed on February 4, 2020.

S U R F A C E M A N A G E M E N T Construction Aggregate Lease Applications

Aggregate Construction, Inc., of Minot, North Dakota, submitted three applications for Construction Aggregate Mining Leases on the following tracts of land in Mountrail and Williams Counties: Application 1:

Mountrail County Township 158 North, Range 92 West, Section 16: N½ North of Road (see attached map for location)

Application 2:

Mountrail County Township 158 North, Range 92 West, Section 16: NW¼ South of Road (see attached map for location)

Application 3:

Williams County Township 156 North, Range 100 West, Section 16: NW¼ The applications for Construction Aggregate Leases were submitted under authority of North Dakota Administrative Code chapter 85-04-02 which requires posting a Notice of Construction Aggregate Leasing on the Department of Trust Land’s (Department) website and allowing for a 14-day period comment. The applications located in Mountrail County Township have been posted for the 14-day comment period and no comments were received. The application located in Williams County Township is currently posted. The applications will be prepared for public auction by publishing a notice of the auction at least 10 days prior to the auction in the official newspaper of the county where the proposed construction aggregate leased premises is located and in the Bismarck Tribune. The Commissioner is authorized to approve and issue a construction aggregate lease on the board’s behalf N.D.A.C. § 85-04-02-03. Any Construction Aggregate Leases approved by the Commissioner would appear on the Encumbrance Report at a future Board meeting. Application location maps were provided to the Board and are available upon request at the Department.

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XTO Holdings Request for Temporary Gas Storage – Pilot Program Extraction of oil and gas from the Bakken petroleum system has dramatically increased over the past decade without commensurate augmentation of gas capture infrastructure, which has resulted in continued flaring of produced gas. The North Dakota Industrial Commission (NDIC) has worked with industry to establish gas capture requirements to reduce the volume of flared gas. To evaluate potential options to alleviate flaring, conserve natural resources and optimize oil production from the Bakken, the Sixty-Sixth Legislative Assembly of North Dakota allocated funding to the EERC under Section 25 of House Bill 1014 “for pilot projects relating to the underground storage of produced natural gas.” The intent of the funding is to enable the assessment of produced gas injection into geologic targets in the Williston Basin as a mechanism to reduce flaring and achieve gas capture goals in Bakken oilfield locations with limited gas capture and transportation infrastructure. XTO Holdings, LLC (XTO) in collaboration with the EERC is evaluating a pilot demonstration project relating to temporary underground storage of produced natural gas on Trust Land involving the injection, storage and withdrawal of natural gas and other associated gaseous substances (“Natural Gas”) into the pore space of the Broom Creek Formation Reservoir (Minnelusa Group). Temporary gas storage may enable XTO to bring drilled well bores into production and provide additional revenue to the Trust in areas where there is not adequate infrastructure. XTO requests the Department to obtain authority to issue an easement allowing for the injection, temporary storage and withdrawal of Natural Gas. Through the site granted by the easement, EERC would be able to study and collect monitoring information regarding gas storage. The general terms and conditions of an easement would be developed in consultation with the Attorney General office and approval to negotiate and grant such easement. Any easements issued to XTO would also include reclamation responsibility. Motion: The Board approves the Commissioner to develop an easement for the purpose of injecting, storing and withdrawing natural gas subject to review of the easement document by the Attorney’s General Office and final approval of the Board.


Aye Nay Absent

Secretary Jaeger X X

Superintendent Baesler X

Treasurer Schmidt X X

Attorney General Stenehjem X

Governor Burgum X

R E P O R T S Report of Encumbrances Issued by Land Commissioner 1/15/2020 to 2/14/2020 Granted to: SLAWSON EXPLORATION COMPANY INC, DENVER-CO For the Purpose of: Easement-Amend: Well-Directional Wellsite Location Right-of-Way Number: RW0006937 Trust: A – Common Schools Legal Description: MOU-152-92-14-SE4

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Granted to: WHITING OIL & GAS CORPORATION, DENVER-CO For the Purpose of: Easement-Amend: Drop Line-Pipeline Right-of-Way Number: RW0008431 Trust: A – Common Schools Legal Description: MOU-153-92-16-NW4

Granted to: MOUNTRAIL COUNTY, STANLEY-ND For the Purpose of: Easement: Road Right-of-Way Right-of-Way Number: RW0008477 Trust: A – Common Schools Legal Description: MOU-155-94-36-NE4, SE4

Granted to: BRIDGER PIPELINE LLC, CASPER-WY For the Purpose of: Easement: Pipeline-Oil Gathering Pipeline Right-of-Way Number: RW0008535 Trust: A – Common Schools Legal Description: MCK-149-96-16-NW4, SW4

Granted to: ONEOK BAKKEN PIPELINE LLC, TULSA-OK For the Purpose of: Easement: Pipeline-Gas Transmission Pipeline Right-of-Way Number: RW0008575 Trust: A – Common Schools Legal Description: WIL-155-99-16-SW4 WIL-155-102-16-NE4

Granted to: WHITING OIL & GAS CORPORATION, DENVER-CO For the Purpose of: Permit: Road-Access Road Right-of-Way Number: RW0008594 Trust: A – Common Schools Legal Description: MOU-153-92-16-NW4

Granted to: ONEOK ROCKIES MIDSTREAM LLC, SIDNEY-MT For the Purpose of: Easement-Amend: Pipeline-Gas Gathering Pipeline Right-of-Way Number: RW0008598 Trust: A – Common Schools Legal Description: MCK-149-96-16-NE4,NW4,SW4 Granted to: CONTINENTAL RESOURCES INC, OKLAHOMA CITY-OK For the Purpose of: Permit-Amend: Road-Access Road Right-of-Way Number: RW0008604 Trust: A – Common Schools Legal Description: MCK-153-94-16-NE4, NW4, SW4

Granted to: CONTINENTAL RESOURCES INC, OKLAHOMA CITY-OK For the Purpose of: On-lease Act. Amend: Well-Horizontal Oil Well Right-of-Way Number: RW0008605 Trust: A – Common Schools Legal Description: MCK-153-94-16-NW4, SW4

Granted to: PURITY OILFIELD SERVICES LLC, WILLISTON-ND For the Purpose of: Permit: Temporary Water Layflat Line Right-of-Way Number: RW0008649 Trust: A – Common Schools Legal Description: BRK-159-94-16-NW4

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Granted to: AMES SAVAGE WATER SOLUTIONS, WILLISTON-ND For the Purpose of: Permit: Temporary Water Layflat Line Right-of-Way Number: RW0008654 Trust: A – Common Schools Legal Description: WIL-156-97-16-S2SW4 LESS THE N 248 FT The Financial Position was provided to the Board and is available at the Department upon request. Investment Updates Asset Allocation The table below shows the status of the permanent trusts’ asset allocation as of January 31, 2020. The figures provided are unaudited.

Angelo Gordon ($121.9 million, 2.4% of PTF assets as of 1/31/20) Direct Lending Fund The Angelo Gordon Direct Lending Fund III portfolio was initially funded in late-August 2018. At present, total funded to Angelo Gordon stands at 81.50% of total capital commitment or $122.25 million out of $150 million. According to Angelo Gordon, the Board’s commitment should be fully drawn by late-2020. At the end of January, we have received a $2,329,264 distribution from the Fund. Including this distribution, the Fund will have distributed approximately 4.9% of total paid-in capital total. Theodore Roosevelt Presidential Library and Museum Endowment Fund On September 30, 2019, $15M of the Theodore Roosevelt Presidential Library Endowment Fund was invested into the permanent trust pool. Upcoming Investment Manager Meetings There is no upcoming meeting scheduled.

Account/Asset Class

Large Cap US Equity 14.5% 776,890,321$ 15.3% 0.8%

Mid/Small Cap US Equity 4.0% 203,875,104$ 4.0% 0.0%

International Equity 14.5% 758,683,083$ 15.0% 0.5%

Emerging Market Equity 4.0% 209,220,005$ 4.1% 0.1%

Total Equities 37.0% 1,948,668,513$ 38.5% 1.5%

Core Fixed Income 13.8% 748,589,704$ 14.8% 1.0%

Non-Core Fixed Income 9.2% 424,436,755$ 8.4% -0.8%

Total Fixed Income 23.0% 1,173,026,459$ 23.2% 0.2%

Total Absolute Return 15.0% 738,004,376$ 14.6% -0.4%

Commodities 3.0% 146,113,218$ 2.9% -0.1%

MLPs 3.0% 137,115,513$ 2.7% -0.3%

TIPS 2.0% 100,457,409$ 2.0% 0.0%

Natural Resource Equities 2.0% 91,421,252$ 1.8% -0.2%

Total Inflation Strategies 10.0% 475,107,392$ 9.4% -0.6%

Core Real Estate 8.0% 392,016,685$ 7.7% -0.3%

Core Plus Real Estate 7.0% 335,468,622$ 6.6% -0.4%

Total Real Estate 15.0% 727,485,307$ 14.4% -0.6%

Total Asset 100.0% 5,062,292,047$ 100.0%

Long-Term

Asset Allocation

1/31/20 Actual

Allocation $

1/31/20 Actual

Allocation %

1/31/20

% Diff.

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Unclaimed Property Program Report

Unclaimed property is all property held, issued, or owing in the ordinary course of a holder’s business that has remained unclaimed by the owner for more than the established time frame for the type of property. It can include checks, unpaid wages, stocks, amounts payable under the terms of insurance policies, contents of safe deposit boxes, etc.

An owner is a person or entity having a legal or equitable interest in property subject to the unclaimed property law. A holder can include a bank, insurance company, hospital, utility company, retailer, local government, etc.

Since 1975, the Unclaimed Property Division (Division) of the Department of Trust Lands has been responsible for reuniting individuals with property presumed abandoned. The Division acts as custodian of the unclaimed property received from holders. The property is held in trust in perpetuity by the State and funds are deposited in the Common Schools Trust Fund. The 1981 Uniform Unclaimed Property Act created by the national Uniform Law Commission was adopted by the State in 1985.

For the month of January 2020, the Division received 38 holder reports with a property value of $64,250 and paid 693 claims with a total value of $787,210. Energy Infrastructure and Impact Office Program Report

The Energy Infrastructure and Impact Office (EIIO) is a division within the Department of Trust Lands (Department). EIIO provides financial assistance to local units of government that are impacted by oil and gas activity. In turn, EIIO receives a portion of the Oil and Gas Gross Production Tax. The office has been a part of the Department since 1977 and was formally known as the Energy Development Impact Office created under N.D.C.C. ch. 57-62. Over the course of the past 40 years, EIIO has dispersed over $624 million in funding. The Oil and Gas Impact Grant Fund currently has 21 grants with a balance of $7,207,988.75 as of February 13, 2020. The following shows grant activity for the last four months:

Oil and Gas Impact Grant Fund

Grants with balances

Current Balance Obligated to Grants

11/15/2019 40 $17,164,734.70

12/9/2019 36 $15,477,345.77

12/31/2019 30 $14,388,087.28

2/13/2020 21 $7,207,988.75

The Energy Impact Fund, established within Senate Bill 2013 as enacted by the Sixty-fifth Legislative Assembly, was created to supplement the Oil and Gas Impact Grant Fund for the 2017-2019 biennium. This fund currently has three grants with a balance of $3,447,448.60 as of February 13, 2020. House Bill 1013 of the Sixty-sixth Legislative Assembly requires the Commissioner of University and School Lands to transfer any unexpended funds remaining in the Energy Impact Fund when the fund is repealed on June 30, 2021, to the Oil and Gas Impact Grant Fund. The following shows grant activity for the last four months:

Energy Impact Fund

Grants with balances

Current Balance Obligated to Grants

11/15/2019 4 4,793,191.14

12/9/2019 4 $4,793,191.14

12/31/2019 4 $4,108,325.39

2/13/2020 3 $3,447,448.60

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The Energy Infrastructure and Impact Office is currently managing 24 grants for a total of $10,655,437.35. The following shows grant activity for the last four months: Oil and Gas

Impact Grant Fund

Grants with

balances

Current Balance Obligated to

Grants

Energy Impact Fund

Grants with

balances


Grants

Total between both Funds

11/15/2019 40 $17,164,734.70 11/15/2019 4 $4,793,191.14 $21,957,925.84

12/9/2019 36 $15,477,345.77 12/9/2019 4 $4,793,191.14 $20,270,536.91

12/31/2019 30 $14,388,087.28 12/31/2019 4 $4,108,325.39 $18,496,412.67

2/13/2020 21 $7,207,988.75 2/13/2020 3 $3,447,448.60 $10,655,437.35 Acreage Adjustment Survey

Senate Bill 2211 of the Sixty-Sixth Legislative Assembly amended N.D.C.C. ch. 61-33.1 relating to the ownership of mineral rights of land subject to inundation by Pick-Sloan Missouri basin project dams. Under N.D.C.C. § 61-33.1-03(8), the Department executed a contract with Kadrmas, Lee & Jackson, Inc. “to analyze the final review findings and determine the acreage on a quarter-quarter basis or government lot basis above and below the ordinary high water mark as delineated by the final review findings of the industrial commission.” The contract’s scope of work concludes twelve months from the date of execution, at a total cost of $1,088,635.

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Summary of Oil and Gas Lease Auction On behalf of the Board, the Department conducted an oil and gas mineral lease auction on www.energynet.com which concluded on February 4, 2020. There were 36 tracts offered and all received competitive bids (If the Board does not receive a competitive bid the lease is awarded to the nominator). The highest bid per acre was $251.00 for 80 acres in Divide County.

February 2020

County Mineral Acres Total Bonus Bonus/Acres

Billings 160 $2,560.00 $16.00

Burke 153.17 $2,683.89 $17.52

Divide 480 $87,840.00 $183.00

Dunn 16.19 $1,230.44 $76.00

Hettinger 80 $1,280.00 $16.00

McKenzie 3200 $213,280.00 $66.65

GRAND TOTAL 4,089.36 $308,874.33 $75.53

There were 28 registered bidders, 13 of which placed a bid in the 8-day auction. There were bidders from 3 states (ND, MT and LA). A total of $308,874.33 of bonus was collected from the auction. Information Technology Project Status Update

The Department of Trust Land’s (Department) 2017-2019 biennial budget appropriation includes $3.6 million to replace legacy information technology (IT) systems as authorized by Senate Bill 2013 of the Sixty-fifth Legislative Assembly. Severe limitations in the current IT system, including redundant manual processes, have hampered efficiencies. Many of the Department’s core data management systems were developed in the 1980s and 1990s, using designs and tools no longer supported by vendors. Some supplemental system improvements and purchases have been implemented; however, the outdated database structure restricts many potential improvements. On April 29, 2019, the new system for Unclaimed Property was successfully launched. The Department has a tentative go-live date of June 16, 2020 with a lag time go-live of October 15, 2020 for the new Financial Management & Accounting (FMA) system that will utilize the Microsoft Dynamics 365 Finance and Operations module. The FMA implementation plan has been strategically developed into four iterations: (1) Planning and Analysis Cycle; (2) Design and Build Cycle 1; (3) Design and Build Cycle 2; (4) Production Cycle. At the end of each iteration, the implementation team will review progress to-date with the Commissioner. Appropriate adjustments to the go-live date will be made if necessary. The Planning and Analysis Cycle Iteration is now complete and the FMA project is on schedule. On December 16, 2019, the Department issued the RFP for the Land Management system. In February 2020, five responses were received. An evaluation team is currently reviewing and scoring these proposals.

Page 012

http://www.energynet.com/

32

(02/27/20)

O P E R A T I O N S Reconsideration of Gas Royalty Repayment Notification – no memo provided. Repayment of Unpaid Gas Royalties Update The North Dakota Board of University and School Lands (Board) manages land, minerals and proceeds as trustee for the exclusive benefit of constitutionally identified beneficiaries, with much of the income funding North Dakota schools and institutions. The Board also manages sovereign minerals for the State of North Dakota. The Department of Trust Lands (Department) has persistently worked with operators to collect payment or establish escrow accounts for royalties from the production of minerals, in accordance with the Board’s lease, rules, and policies. In 2012, the Department sent letters to operators and lessees who reported deductions for royalties paid. In July 2017, letters were sent to all operators and lessees regarding the proper method to calculate gas royalties. Companies who were audited and found to be non-complaint with the proper calculation of gas royalties, as outlined in the July 2017 letter, received audit findings letters. All companies who have continued to be non-compliant have received additional communication regarding the proper calculation of gas royalties. The Board’s administrative rules, N.D.A.C. Title 85, provide guidelines for assessment of penalties and interest. Current Department and Board policy assesses the maximum interest (18%) under N.D.C.C. § 47-16-39.1, and penalty (12%) allowed on all late royalty payments unless a request is made to the Commissioner to negotiate the interest rate. The Department’s revenue compliance procedures are configured to calculate and generate interest and penalty notices in accordance with these policies. The letter regarding Formal Notification of Gas Royalty Repayment Obligations dated February 11, 2020 with enclosed Gas Deduction Compliance Notification (Letter) was sent to all entities required to pay royalties to the Board pursuant to the Board’s lease. The Letter advised all entities who have been deducting post production costs from royalty payments made to the Department that they have been underpaying royalties contrary to the terms of the Board’s lease. Penalties and interest continue to accrue in accordance with the Gas Deduction Compliance Notification until payment is received. As of noon on February 21, 2020, twenty-five gas royalty payors had contacted the Department. Two gas royalty payors made a formal offer of repayment and the Department is actively working with the other gas royalty payors.

A D J O U R N There being no further business, the meeting was adjourned at 10:48 AM. ________________________________ Doug Burgum, Chairman Board of University and School Lands ________________________________ Jodi Smith, Secretary Board of University and School Lands

Page 013

Item 2A

MEMORANDUM TO THE BOARD OF UNIVERSITY AND SCHOOL LANDS April 8, 2020

RE: COVID-19 Update (No Action Requested)

The Department of Trust Lands (Department) understands the serious issue of COVID-19 confronting the nation. As a result, the Department has transitioned all non-essential staff to telecommuting. All services and programs are operational and we are informing our constituents they may experience delays in services. Additionally, the Commissioner has cancelled the nomination and auctioning of oil and gas leases. The Department’s next oil and gas lease nomination deadline is scheduled for June 19, 2020 for our August 4, 2020 Minerals Auction. The Commissioner cancelled all surface lease auctions scheduled for March 23, 2020 thru March 27, 2020. There were 141 tracts in 30 counties available for auction. A formal request for an Executive Order allowing the Department to host surface auctions outside of the county seat was submitted to the Governor’s Office. The Commissioner has also formally requested an Executive Order to extend the deadline for any life insurance company to report and provide property to Unclaimed Property. The Commissioner issued the attached 60-day extension for all gas royalty payors currently working to come into compliance with the Board of University and School Lands. Attachment: Formal Notification of Gas Royalty Repayment Obligations Extension

Page 014

ITEM 2B

MEMORANDUM TO THE BOARD OF UNIVERSITY AND SCHOOL LANDS March 26, 2020

RE: Report of Encumbrances Issued by Land Commissioner (2-15-202 to 3-16-2020): No Action Requested

Granted to: SLAWSON EXPLORATION COMPANY INC, DENVER-CO For the Purpose of: On-lease Activity: Well-Horizontal Oil Well Right-of-Way Number: RW0007600 Date Issued: 2/28/2020 Application Fee: N/A Right-of-way Income: $12,880.00 Damage Payment to Lessee: N/A Trust: A – Common Schools Length (Rods): 111.97 Area (Acres): 6.48 Legal Description: MOU-152-92-23-NE4NW4, W2W2NE4NE4, NW4NE4

Granted to: SLAWSON EXPLORATION COMPANY INC, DENVER-CO For the Purpose of: Easement: Well-Directional Wellsite Location Right-of-Way Number: RW0008202 Date Issued: 2/28/2020 Application Fee: $100.00 Right-of-way Income: $44,300.00 Damage Payment to Lessee: $615.85 Trust: A – Common Schools Length (Rods): 111.97 Area (Acres): 6.48 Legal Description: MOU-152-92-23-NE4NW4, W2W2NE4NE4, NW4NE4

Granted to: MCKENZIE ELECTRIC COOP INC, WATFORD CITY- ND For the Purpose of: Easement-Amend: Drop Line-Electric Right-of-Way Number: RW0008652 Date Issued: 3/10/2020 Application Fee: $100.00 Right-of-way Income: $500.00 Damage Payment to Lessee: N/A Trust: A – Common Schools Length (Rods): 60.19 Area (Acres): 0.57 Legal Description: DUN-148-96-36-SW4

Granted to: SELECT ENERGY SERVICES LLC, WILLISTON-ND For the Purpose of: Permit: Temporary Water Layflat Line Right-of-Way Number: RW0008679 Date Issued: 3/13/2020 Application Fee: $100.00 Right-of-way Income: $7,930.00 Damage Payment to Lessee: N/A Trust: A – Common Schools Length (Rods): 481.00 Area (Acres): N/A Legal Description: MOU-154-91-16-SE4, SW4

Page 016

Item 2C

NORTH DAKOTABOARD OF UNIVERSITY AND SCHOOL LANDS

Financial Position Report(Unaudited)

For period ended January 31, 2020

Page 017

Assets by Trust: January 31, 2020 January 31, 2019

Common Schools $4,843,030,295 $4,358,533,803

North Dakota State University 72,769,421 68,607,545

School for the Blind 13,021,959 11,767,447

School for the Deaf 21,391,546 20,493,348

State Hospital 14,529,110 14,121,532

Ellendale * 22,902,928 20,671,622

Valley City State University 13,056,031 12,363,372

Mayville State University 8,318,096 7,481,648

Youth Correctional Center 24,229,601 22,745,502

State College of Science 18,672,993 16,416,149

School of Mines ** 22,341,097 20,455,380

Veterans Home 5,366,501 5,207,547

University of North Dakota 35,142,477 32,175,093

Capitol Building 6,234,413 6,537,055

Strategic Investment and Improvements 732,766,497 784,740,750

Coal Development 71,219,664 70,487,110

Indian Cultural Education Trust 1,326,591 1,263,013

Theodore Roosevelt Presidental Library 15,668,856 -

Total $5,941,988,076 $5,474,067,916

Assets by Type:

Cash $83,016,882 $45,979,199

Receivables 10,943,897 10,999,590

Investments *** 5,766,480,784 5,227,817,256

Office Building (Net of Depreciation) 400,092 455,931

Farm Loans 9,452,329 12,524,789

Energy Construction Loans 945,376 1,007,430

Energy Development Impact Loans 10,844,799 11,565,066

School Construction Loans (Coal) 41,391,562 44,670,542

Due to/from Other Trusts and Agencies 18,512,355 119,048,113

Total $5,941,988,076 $5,474,067,916

* Ellendale Trust

The following entities are equal beneficiaries of the Ellendale Trust:

Dickinson State University School for the Blind

Minot State University Veterans Home

Dakota College at Bottineau State Hospital

State College of Science - Wahpeton

** School of Mines

Benefits of the original grant to the School of Mines are distributed to the University of North Dakota.

*** Investments

Includes available cash available for loans, investments, abandoned stock and claimant liability.

Board of University and School LandsComparative Financial Position (Unaudited)

Schedule of Net Assets

Page 018

Combined Permanent TrustsJanuary 31, 2020 January 31, 2019

Balance SheetAssets:

Cash $58,097,572 $39,065,765Interest Receivable 7,974,564 7,629,961 Investments 5,036,031,081 4,555,812,831 Farm Loans 9,452,329 12,524,789 Energy Construction Loans 945,376 1,007,430 Due from Other Agencies 18,426,519 12,059,320 Office Building (Net of Depreciation) 400,092 455,931

Total Assets $5,131,327,533 $4,628,556,027

Liabilities:Unclaimed Property Claimant Liability $16,551,604 $17,510,901Due to Other Trusts - - Due to Other Funds 3,874 5,137 Accounts Payable - -

Total Liabilities 16,555,478 17,516,038

Equity:Fund Balance 4,919,177,984 4,571,686,280 Net Income/(Loss) 195,594,071 39,353,709

Total Liabilities and Equity $5,131,327,533 $4,628,556,027

Income StatementIncome:

Investment Income $71,457,159 $76,127,136Realized Gain/(Loss) (6,703,776) (22,371,740) Unrealized Gain/(Loss) 93,009,308 (83,300,442) Royalties - Oil and Gas 84,056,077 96,361,068 Royalties - Coal 300,913 262,229 Royalties - Aggregate 176,705 30,999 Bonuses - Oil and Gas 8,105,517 272,831 Bonuses - Coal 24,000 - Rents - Surface 11,293,957 11,332,981 Rents - Mineral 123,032 24,357 Rents - Coal 28,732 42,500 Rents - Office Building - - Gain/Loss on Sale of Land - OREO - - Sale of Capital Asset 25,000 - Oil Extraction Tax Income 62,711,692 56,675,242 Unclaimed Property Income 10,035,841 9,630,886

Total Income 334,644,157 145,088,047

Expenses and Transfers:Investment Expense 3,821,502 3,564,221 In-Lieu and 5% County Payments - - Administrative Expense 1,828,024 1,720,090 Operating Expense - Building 265,560 46,351 Transfers to Beneficiaries 133,135,000 100,403,676

Total Expense and Transfers 139,050,086 105,734,338 Net Income/(Loss) $195,594,071 $39,353,709

Board of University and School LandsComparative Financial Position (Unaudited)

Page 019

Capitol Building Trust

January 31, 2020 January 31, 2019

Balance Sheet

Assets:

Cash $586,439 $80,429

Interest Receivable 32,137 34,762

Investments 5,615,838 6,421,863

Total Assets $6,234,414 $6,537,054

Liabilities:

Due to Other Trusts and Agencies $0 $0

Equity:

Fund Balance 6,548,608 4,723,483

Net Income (314,194) 1,813,571

Total Liabilities and Equity $6,234,414 $6,537,054

Income Statement

Income:

Investment Income $97,225 $81,363

Realized Gain(Loss) 20,841 4,477

Unrealized Gain/(Loss) (2,806) 27,896

Rents - Surface 158,525 136,869

Rents - Mineral 1,602 240

Royalties - Oil and Gas 579,343 505,263

Bonuses - Oil and Gas 802 -

Royalties - Coal - -

Royalties - Aggregate - 1,070,995

Total Income 855,532 1,827,103

Expenses and Transfers:

Investment Expense 1,919 923

In-Lieu and 5% County Payments - -

Administrative Expense 13,447 12,609

Transfers to Facility Management 1,154,360 -

Total Expense and Transfers 1,169,726 13,532

Net Income/(Loss) ($314,194) $1,813,571

Board of University and School Lands

Comparative Financial Position (Unaudited)

Page 020

Coal Development Trust


Balance Sheet

Assets:

Cash $13,926 $11,170

Interest Receivable 526,020 514,449

Investments 18,357,204 13,641,276

Coal Impact Loans 10,844,799 11,565,066

School Construction Loans 41,391,562 44,670,542

Due from other Trusts and Agencies 287,171 282,014

Total Assets $71,420,682 $70,684,517

Liabilities:

Due to Other Trusts and Agencies $201,019 $197,410

Equity:

Fund Balance 70,296,353 69,591,292

Net Income 923,310 895,815


Income Statement

Income:

Investment Income $256,298 $168,809

Interest on School Construction Loans 421,844 401,303

Realized Gain/(Loss) 58,082 11,830

Unrealized Gain/(Loss) (4,432) 71,399

Coal Severance Tax Income 280,243 298,500

Total Income 1,012,035 951,841

Expenses and Transfers:

Investment 5,752 2,487

Administrative 495 867

Transfers to General Fund 82,478 52,672

Total Expense and Transfers 88,725 56,026

Net Income/(Loss) $923,310 $895,815



Page 021

Strategic Investment and Improvements FundJanuary 31, 2020 January 31, 2019

Balance SheetAssets:

Cash $24,138,830 $6,815,748Interest Receivable 2,415,171 2,819,327 Investments 706,212,497 668,201,488Due from other Trusts or Agencies - 106,904,188

Total Assets $732,766,498 $784,740,751

Liabilities:Accounts Payable $0 $0

Equity:Fund Balance 1,134,326,018 354,701,097 Net Income (401,559,520) 430,039,654


Income StatementIncome:

Investment Income $10,096,864 $4,768,674Realized Gain/(Loss) 2,166,372 352,478 Unrealized Gain/(Loss) (89,661) 2,564,922 Interest on Fuel Prod Facility - 100,445 Royalties - Oil and Gas 49,383,774 61,001,416 Bonuses - Oil and Gas 1,160,500 2,140,464 Royalties - Coal 247,978 309,589 Rents - Mineral 51,334 38,230 Tax Income - Oil Extraction & Production Distribution - 484,825,852

Total Income 63,017,161 556,102,070

Expenses and Transfers:Administrative 895,822 503,228 Investment Expense 185,010 39,718 Transfers to General Fund 382,200,000 124,000,000 Transfer to State Highway Patrol 358,000 Transfer to Commerce Department 3,000,000 1,000,000 Transfer to Adjutant General 2,502,253 300,000 Transfer to ND Department of Health 75,736 Transfer to Energy Infrastructure& Impact Office 2,000,000 - Transfer to Aeronautics Commission 20,000,000 - Transfer from ND Parks & Recreation 1,877,500 - Transfer to Information Technology Department 25,150,000 - Transfer to Industrial Commission 270,000 - Transfer to Bank of North Dakota 25,137,707 - Transfer to ND Department of Corrections 1,218,000 - Transfer to Office of Management & Budget 100,000 Transfer to Agencies with Litigation Pool 328,201 Transfer from NDSU - Vet Diag Lab (HB 1008) - (214,266) Transfer from Public Service Commission (52,818) -



Page 022

Transfer from Department of Health Department (67,310) - Transfer from Attorney General Office (6,387) - Transfer from State Highway Patrol (49,403) - Transfer from Commerce Department (111,895)

Total Expense and Transfers 464,576,681 126,062,416 Net Income/(Loss) ($401,559,520) $430,039,654

As of January 31, 2020 the SIIF had a fund balance of $732,766,498. The fund balance is made up of two parts. The committed fund balance is that portion of the fund that has either been set aside until potential title disputes related to certain riverbed leases have been resolved or appropriated by the legislature. The uncommitted fund balance is the portion of the fund that is unencumbered, and is thus available to be spent or dedicate to other programs as the legislature deems appropriate. The uncommitted fund balance was $52,185,990 as of January 31, 2020.

Page 023

Indian Cultural Trust


Fiduciary Net Position

Assets:

Cash 46,812$ 6,088$

Interest receivable 1,159 1,092

Investments 1,278,620 1,255,833

Total Assets 1,326,591 1,263,013

Liabilities:

Accounts payable - -

Total Liabilities - -

Net Position:

Net position restricted 1,326,591 1,263,013

Total Net Position 1,326,591$ 1,263,013$

Changes in Fiduciary Net Position

Additions:

Contributions:

Donations - -

Total Contributions -$ -$

Investment Income:

Net change in fair value of investments 22,655 (29,336)

Interest 18,313 20,920

Less investment expense (984) (974)

Net Investment Income 39,984 (9,390)

Miscellaneous Income 3,009 2,940

Total Additions 42,993 (6,450)

Deductions:

Payments in accordance with Trust agreement - -

Administrative expenses 1,667 244

Total Deductions 1,667 244

Change in net position held in Trust for:

Private-Purpose 41,326 (6,694) Total Change in Net Position 41,326 (6,694)

Net Position - Beginning of Year 1,285,265 1,269,707 Net Position - January 31, 2020 1,326,591$ 1,263,013$


Comparative Fiduciary Statements (Unaudited)

Page 024

Indian Cultural TrustJanuary 31, 2020

Fiduciary Net PositionAssets:

Cash 133,303$ Interest receivable (5,153) Investments 15,541,021

Total Assets 15,669,171

Liabilities:Accounts payable 315

Total Liabilities 315

Net Position:Net position restricted 15,668,856

Total Net Position 15,669,171$

Changes in Fiduciary Net PositionAdditions:

Contributions: Donations -

Total Contributions -$

Investment Income:Net change in fair value of investments 404,291 Interest 139,824 Less investment expense 8,248

Net Investment Income 535,868

Miscellaneous Income 82,556 Total Additions 618,424

Deductions:Payments in accordance with Trust agreement - Administrative expenses 315

Total Deductions 315

Change in net position held in Trust for:Private-Purpose 618,109

Total Change in Net Position 618,109

Net Position - Beginning of Year 15,050,748 Net Position - January 31, 2020 15,668,857$

Comparative Fiduciary Statements (Unaudited)Board of University and School Lands

Page 025

ITEM 2D


RE: Unclaimed Property Program Report (No Action Requested)

Unclaimed property is all property held, issued, or owing in the ordinary course of a holder’s business that has remained unclaimed by the owner for more than the established time frame for the type of property. It can include checks, unpaid wages, stocks, amounts payable under the terms of insurance policies, contents of safe deposit boxes, etc.

An owner is a person or entity having a legal or equitable interest in property subject to the unclaimed property law. A holder can include a bank, insurance company, hospital, utility company, retailer, local government, etc.

Since 1975, the Unclaimed Property Division (Division) of the Department of Trust Lands has been responsible for reuniting individuals with property presumed abandoned. The Division acts as custodian of the unclaimed property received from holders. The property is held in trust in perpetuity by the State and funds are deposited in the Common Schools Trust Fund. The 1981 Uniform Unclaimed Property Act created by the national Uniform Law Commission was adopted by the State in 1985.

For the month of February 2020, the Division received 34 holder reports with a property value of $69,446 and paid 507 claims with a total value of $460,546.

Page 026

Item 3A


RE: Energy Infrastructure and Impact Office Program Report (No Action Requested)

The Energy Infrastructure and Impact Office (EIIO) is a division within the Department of Trust Lands (Department). EIIO provides financial assistance to local units of government that are impacted by oil and gas activity. In turn, EIIO receives a portion of the Oil and Gas Gross Production Tax. The office has been a part of the Department since 1977 and was formally known as the Energy Development Impact Office created under N.D.C.C. ch. 57-62. Over the course of the past 40 years, EIIO has dispersed over $624 million in funding.

The Oil and Gas Impact Grant Fund currently has 21 grants with a balance of $7,090,723.31 as of March 16, 2020. The following shows grant activity for the last four months:

Oil and Gas Impact Grant

Fund

Grants with

balances

Current Balance

Obligated to Grants

12/9/2019 36 $15,477,345.77

12/31/2019 30 $14,388,087.28

2/13/2020 21 $7,207,988.75

3/16/2020 21 $7,090,723.31

The Energy Impact Fund, established within Senate Bill 2013 as enacted by the Sixty-fifth Legislative Assembly, was created to supplement the Oil and Gas Impact Grant Fund for the 2017-2019 biennium. This fund currently has three grants with a balance of $3,447,448.60 as of March 16, 2020. House Bill 1013 of the Sixty-sixth Legislative Assembly requires the Commissioner of University and School Lands to transfer any unexpended funds remaining in the Energy Impact Fund when the fund is repealed on June 30, 2021, to the Oil and Gas Impact Grant Fund. The following shows grant activity for the last four months:

Energy Impact Fund

Grants with

balances


Grants

12/9/2019 4 $4,793,191.14

12/31/2019 4 $4,108,325.39

2/13/2020 3 $3,447,448.60

3/16/2020 3 $3,447,448.60

The Energy Infrastructure and Impact Office is currently managing 24 grants for a total of $10,538,171.91. The following shows grant activity for the last four months:

Oil and Gas Impact Grant

Fund

Grants with

balances


Grants

Energy Impact Fund

Grants with

balances


Grants Total between

both Funds

12/9/2019 36 $15,477,345.77 12/9/2019 4 $4,793,191.14 $20,270,536.91

12/31/2019 30 $14,388,087.28 12/31/2019 4 $4,108,325.39 $18,496,412.67

2/13/2020 21 $7,207,988.75 2/13/2020 3 $3,447,448.60 $10,655,437.35

Page 027

Item 3A

3/16/2020 21 $7,090,723.31 3/16/2020 3 $3,447,448.60 $10,538,171.91

Page 028

Item 3B


RE: Energy Infrastructure and Impact Office (EIIO) Contingency Grant Round Award Recommendations

2019-2021 Biennium Funding The Sixty-Sixth Legislative Assembly appropriated $2 million through House Bill 1013 for grants to political subdivisions impacted by oil and gas development activities.

N.D.C.C. § 15-01-02(6) provides the Board of University and School Lands (Board) has:

Authority to award and distribute energy infrastructure and impact grants from moneys deposited in the oil and gas impact grant fund, except that grants awarded annually may not exceed sixty percent of the biennial appropriation for energy infrastructure and impact grants. The board may create an advisory committee to assist the board in making its grant award determinations.

EIIO opened a contingency grant round in December 2019 and applications were accepted through January 31, 2020. EIIO received 60 applications requesting a total of $15,506,192.

The following is a summary of the applications received:

Application Color Legend

Township/County EMS Fire K-12

Schools

POLITICAL SUB NAME CITY COUNTY

APPLICATION NUMBER SHORT DESCRIPTION

PROJECT TOTAL

AMOUNT REQUESTED LONG DESCRIPTION

BENTINCK TOWNSHIP WESTHOPE BOTTINEAU A200001

ROAD REPAIR AND MAINTENANCE $30,000.00 $30,000.00

UNABLE TO REPAIR OR DO ANY ROAD PROJECTS THAT NEED ADDRESSING IN THE TOWNSHIP INCLUDING CULVERT REPLACEMENTS

RICHARDTON-TAYLOR PSD RICHARDTON STARK A200002

RTPS PLAYGROUND PROJECT $242,000.00 $50,000.00

A BOND REFERENDUM GENERATED FINANCIAL RESOURCES TO CONTRACT A NEW SCHOOL, HOWEVER NO ADDITIONAL FUNDS WERE AVAILABLE TO BUILD A PLAYGROUND FOR THE ELEMENTARY STUDENTS.

SCRANTON PSD SCRANTON BOWMAN A200003 MID- SIZED BUS $70,000.00 $60,000.00

LOOKING FOR ASSISTANCE IN PURCHASING A BUS. OVER $2.1 MILLION DOLLARS HAS BEEN SPENT RENOVATING THEIR 60-YEAR-OLD BUILDING. THIS WAS DONE WITH TWO BONDS.

Page 029

Item 3B



PROJECT TOTAL


GROVER TOWNSHIP TOLLEY RENVILLE A200004

MAINTAINING GRAVEL ROADS $20,000.00 $15,000.00

BLADING ROADS AND ADDING MORE GRAVEL TO OIL IMPACTED ROADS IN THE TOWNSHIP.

CITY OF NEW ENGLAND

NEW ENGLAND HETTINGER A200005

2020 NORTH SIDE GROWTH AREA STREET & SEWER IMPROVEMENTS $1,442,000.00 $1,000,000.00

CITY STREETS AND STORM SEWER INFRASTRUCTURE WILL NEED IMPROVEMENTS TO FACILITATE THE GROWTH ON THE NORTH SIDE OF TOWN, INCLUDING THE PROPOSED SCHOOL EXPANSION PROJECT.

GARNET TOWNSHIP ALAMO DIVIDE A200006

ROAD RECONSTRUCTION $83,094.00 $83,094.00

OIL ACTIVITY CONTINUED THRU THE WET FALL CAUSING DAMAGE TO ROADS. TOWNSHIP WAS FORCED TO BLADE AND GRAVEL ROADS MORE THAN NORMAL, PUTTING A FINANCIAL STRAIN ON THEIR FINANCIAL RESOURCES.

NOONAN FIRE DEPARTMENT NOONAN DIVIDE A200007

PURCHASE A USED 1000 GALLON PUMPER APPARATUS $35,000.00 $28,000.00

PURCHASE A USED TANKER FROM WILDROSE RURAL FIRE TO REPLACE AN OBSOLETE AND UNSERVICEABLE TANKER ON LOAN FROM THE US FOREST SERVICE.

MINOT RURAL FIRE DISTRICT MINOT WARD A200008

AR AFFF FIREFIGHTING FOAM REPLACEMENT $14,796.00 $14,796.00

MOUSE RIVER FIREFIGHTERS ASSOC. OWNS A FOAM TRAILER. IF USED THE FOAM IS TO BE REPLACED. COST TO REFILL THE 500 GALLON TANK OF FOAM IS APPX $14,000 TO $19,000. BECAUSE OF THIS COST, OTHER DEPARTMENTS ARE NOT UTILIZING THIS PIECE OF EQUIPMENT.

LANSFORD TOWNSHIP LANSFORD BOTTINEAU A200009 ROAD MAINTENANCE $44,000.00 $44,000.00

GRAVELING 8 MILES OF ROAD AND RESHAPING 4 SPOTS DUE TO OIL TRAFFIC CAUSING DAMAGE TO THE ROADS.

NEW ENGLAND PSD #9

NEW ENGLAND HETTINGER A200010

WATER, SEWER, AND INFRASTRUCTURE PROJECT $314,400.00 $208,600.00

DUE TO STUDENT GROWTH, THE DISTRICT DECIDED TO ADD 25,000 SF OF NEW CONSTRUCTION INCLUDING 6 CLASSROOMS, MUSIC ROOM, CAFETERIA, KITCHEN, OFFICES, COMMONS AREAS, LOCKER ROOM ADDITIONS, GYMNASIUM, AND RESTROOMS.

TROY TOWNSHIP CROSBY DIVIDE A200011 ROAD MAINTENANCE $50,000.00 $50,000.00

IMPACTS ON ROADS NOT ONLY FROM TRUCKS HAULING, BUT ALSO THE TRAFFIC FROM SERVICING THE NEW AND EXISTING WELLS.

Page 030

Item 3B



PROJECT TOTAL


EQUALITY TOWNSHIP RAY WILLIAMS A200012

REPAIR AND REBUILDING OF ROADS $2,000,000.00 $500,000.00

HEAVY TRUCK AND VARIOUS EQUIPMENT ARE TRAVELING ON THESE ROADS AND CAUSING DAMAGE, MAKING TRAVEL UNSAFE.

SMOKEY BUTTE TOWNSHIP ALAMO DIVIDE A200013 ROAD REBUILD $70,000.00 $55,000.00

ROADWAY IS HEAVILY USED BY OIL FIELD TRAFFIC AND IS NEED OF REPAIR. ROUTE IS USED FOR ALL WELLS ON 88TH ST.

ZAP RURAL FIRE PROTECTION DISTRICT ZAP MERCER A200014

EXTRICATION EQUIPMENT $36,900.00 $36,900.00

REQUESTING STRONGER AND MORE UPDATED EXTRICATION EQUIPMENT TO ALLOW CUTTING THROUGH BORON STEEL WHICH NEW VEHCILES ARE BEING MADE OF. THIS WOULD INCLUDE A CUTTER, SPREADER, AND RAM WITH ACCESSORIES, INCLUDING BACK UP BATTERIES AND CHARGERS.

GARRISON-MAX AMBULANCE DISTRICT GARRISON MCLEAN A200015 STAFFING $750,000.00 $250,000.00

HARD TO FIND VOLUNTEERS. DUE TO LACK OF STAFFING, THEY'VE HAD TO TURN DOWN ALS MEDICAL TRANSFERS FOR PATIENTS THAT NEED A HIGHER LEVEL OF CARE.

DIVIDE COUNTY PSD #1 CROSBY DIVIDE A200016

BUS TRANSPORTATION RELIEF $174,000.00 $100,000.00

DUE TO THE HEAVY USE OF RURAL ROADS BY OIL AND GAS TRANSPORTING VEHICLES, RURAL ROADS HAVE BEEN DAMAGED OR RUINED, CAUSING BUSES TO BE REPLACED AT A MUCH FASTER RATE THAN IN THE PAST.

MCKENZIE PSD #1 WATFORD CITY MCKENZIE A200017

ELEMENTARY SCHOOLS INSTRUCTURE AND COMPLETION PROJECT $1,619,642.00 $1,619,642.00

NEW CONSTRUCTION ELEMENTARY SCHOOL TO BE OPEN FOR STUDENTS TO START THE 2020-2021 SCHOOL YEAR. REQUESTING SUPPORT FOR THE OWNER COST ITEMS ASSOCAITED WITH THE PROJECT AND OUTSIDE THE ALLOCATION PROVIDED WITH THE BOND REFERENDUM. EXAMPLES INCLUDE DESKS, TABLES, SEATING AREAS, PLAYGROUNDS, AND CLASSROOM TECHNOLOGY ITEMS.

RENVILLE TOWNSHIP MAXBASS BOTTINEAU A200018

REPAIR AND MAINTENANCE $15,000.00 $10,000.00

HEAVY LOADS ON WET ROADS HAS CAUSED SEVERE DAMAGE TO TOWNSHIP ROADS.

WILLISTON TOWNSHIP WILLISTON WILLIAMS A200019

52ND STREET LANDSLIDE $1,450,000.00 $350,000.00

DUE TO HEAVY MOISTURE THIS PAST FALL, A SUPPORTING WALL HAS SLID INTO SAND CREEK AND THE ROADWAY IS IN DANGER OF COLLAPSING.

CHAMPION TOWNSHIP RAY WILLIAMS A200020 ROAD REBUILD $182,700.00 $170,000.00 ROAD REBUILD

Page 031

Item 3B



PROJECT TOTAL


STARBUCK TOWNSHIP SOURIS BOTTINEAU A200021 ROAD MAINTENANCE $50,655.00 $50,655.00

OIL AND WATER TRUCK ACTIVITY HAS CAUSED RUTS AND MUDDY ROADS MAKING THEM DANGEROUS.

MONT TOWNSHIP WILLISTON WILLIAMS A200022 REBUILD 1 MILE OF 143RD AVE NW $83,836.00 $60,000.00

WAS A PRAIRIE ROAD THAT OASIS FIXED UP FOR A WELL SITE. NOW 2 FAMILES LIVE ALONG THIS ROAD AND FUNDS ARE NEEDED TO MAINTAIN THIS ROAD.

GLADSTONE CONSOLIDATED FIRE DISTRICT DICKINSON STARK A200023

NEW PUMPER FIRE TRUCK $375,000.00 $375,000.00

CURRENTLY HAVE A 1997 MODEL THAT CAN ONLY HAUL 1000 GALLONS OF WATER, FIRE SUPPRESSION EQUIPMENT IS FROM 1961 AND CAN ONLY PUMP 400 GALLONS PER MINUTE ON THE PTO PUMP AND 300 GALLONS ON THE STATIONARY PUMP.

LINCOLN VALLEY TOWNSHIP FORTUNA DIVIDE A200024 ROAD GRAVELING $193,200.00 $193,200.00

DUE TO EXTREME OIL TRUCK TRAFFIC AND WET FALL RAINS, ALL GRAVEL ON TOWNSHIP ROADS HAS DISSIPATED TO NOTHING.

MOUNTRAIL COUNTY STANLEY MOUNTRAIL A200025

36TH ST NW- CEMENT STABILIZATION AND GRAVELING $82,700.00 $82,700.00

ROAD WAS IMPACTED BY THE UNOFFICIAL DETOUR DURING THE HWY 23 RECONSTRUCTION PROJECT. DUE TO EXTENSIVE AND INCREASED OIL FIELD TRUCK TRAFFIC, THIS ROAD IS IN UNSAFE CONDITION FACING SUBGRADE DAMAGES. ROAD NEEDS TO BE REBUILT TO PROVIDE FOR SAFE TRAVELING.

MOUNTRAIL COUNTY STANLEY MOUNTRAIL A200026

53RD ST NW- CEMENT STABILIZATION AND GRAVELING $567,600.00 $567,600.00

CEMENT TREATING 12 INCHES OF THE BASE AND PLACING 6 INCHES OF NEW AGGREGATE WITH A 24FT TOP WIDTH ON THE ROADWAY. THE DAMAGE WAS CAUSED BY THE MOST RECENT CENEX PIPELINE ACTIVITIES ALONG THIS ROAD. THIS IS A 5 MILE SECTION OF ROAD.

GARNESS TOWNSHIP

POWERS LAKE BURKE A200027 ROAD MAINTENANCE $25,000.00 $25,000.00

GRAVEL TO MAINTAIN CURRENT ROADS DUE TO HEAVY OIL FIELD TRAFFIC.

HAWKEYE VALLEY TOWNSHIP KEENE MCKENZIE A200028 ROAD RESURFACE $360,000.00 $360,000.00

REQUESTING FUNDING TO MAINTAIN 3 MILES OF 40TH ST, DUE TO CONSTANT OIL TRUCK TRAFFIC WHICH HAS TAKEN ITS TOLL ON THE ROAD BED ITSELF.

TRENTON TOWNSHIP TRENTON WILLIAMS A200029

IMPROVEMENTS TO RAILROAD CROSSING, GRAVEL, AND DUST CONTROL $150,000.00 $150,000.00

ND 1804 IS CONGESTED AT THE SITE ENTRANCE, SO OFTEN TRUCKS ARE USING TOWNSHIP ROADS TO AVOID 1804. THIS ALSO CAUSES THE LOSS OF GRAVEL AND THE NEED FOR DUST CONTROL.

MISSOURI RIDGE TOWNSHIP WILLISTON WILLIAMS A200030

IMPROVE 3 MILES OF 139TH AVE, 56TH ST AND 138TH AVE $373,500.00 $373,500.00

OVER THE PAST FEW YEARS COMPLAINTS ABOUT VEHICLE REPAIR AND THE CONDITION OF THE ROAD HAVE BEEN RECEIVED FROM MANY SOURCES.

Page 032

Item 3B



PROJECT TOTAL


ARNEGARD TOWNSHIP ALEXANDER MCKENZIE A200031

133RD AVE NW RECONSTRUCTION $294,922.00 $250,000.00

ROADWAY IS IN TOTAL DISREPAIR. BEFORE 2005, THIS ROAD MAY HAVE SEEN 2-3 VEHICLES PER DAY, TODAY IT COULD BE 40-50 PER DAY AND MOST ARE TRUCKS.

NESSON PSD #2 RAY WILLIAMS A200032 CLASSROOM ADDITION $289,450.00 $289,450.00

PROCESS OF BUILDING A 14 CLASSROOM 2 STORY ADDITION FOR STUDENTS GRADES 7-12. ADDITION IS NEEDED DUE TO INCREASES IN STUDENT POPULATION AT THE ELEMENTARY LEVEL

POWERS LAKE PSD #27

POWERS LAKE BURKE A200033

TRANSPORTATION IMPROVEMENTS $170,000.00 $170,000.00

TWO FULL-SIZE BUSES ARE CURRENTLY OVER 100,000 MILES AND NEED TO BE REPLACED VERY SOON. DUE TO OIL TRAFFIC GRAVEL ROADS ARE POOR AND HAVE DECREASED THE LIFE EXPECTANCY OF BUSES.

POWERS LAKE PSD #27

POWERS LAKE BURKE A200034

SECURITY IMPROVEMENTS $55,000.00 $55,000.00

OUTSIDE SECURITY CAMERAS AT THE MAIN SCHOOL BUILDING FOR SAFETY. INDOOR SECURITY SYSTEM INCLUDING A BUZZ IN SYSTEM FOR ADDED SECURITY.

TOLLEY FIRE DEPARTMENT TOLLEY RENVILLE A200035

50 X 50 BUILDING ADDITION $555,000.00 $555,000.00

CURRENT FACILITY IS 5,000 SQUARE FEET AND HOUSES 9 EMERGENCY RESPONSE VEHICLES AS WELL AS FIREFIGHTER BUNKER GEAR, TOOLS AND EQUIPMENT. PROJECT INCLUDES 2 ADDITIONAL PARKING BAYS, MEETING/TRAINING ROOM, BATHROOM, AND KITCHEN FACILITIES.

BILLINGS CO. RURAL FIRE PROTECTION DIST. BELFIELD BILLINGS A200036

FAIRFIELD RESCUE TRUCK $244,529.00 $184,529.00

ASSISTANCE IN PURCHASING A NEW RESCUE TRUCK AND EXTRICATION TOOLS FOR THE FAIRFIELD STATION.

PHERRIN TOWNSHIP WILLISTON WILLIAMS A200037

130TH AVE NW ROAD REPAIR $167,000.00 $167,000.00

THIS ROAD IS A HIGHLY TRAVELED TRUCK ROUTE AND HAS BEEN REPAIRED BEFORE. HOWEVER, IT WAS CRUSHED DURING THE WET FALL AND NEEDS TO BE REBUILT.

WARD TOWNSHIP BOWBELLS BURKE A200038 ROAD MAINTENANCE FOR A 6 MILE STRETCH $60,000.00 $60,000.00

DUE TO THE WET FALL OILFILED TRAFFIC CAUSED DAMAGE TO TOWNSHIP ROADS. THIS 6 MILE STRETCH HAD A WELL FRACKED CREATING EXCESS OIL TRAFFIC.

BILLINGS COUNTY MEDORA BILLINGS A200039 EQUIPMENT REPLACEMENT $202,460.00 $101,230.00

REPLACE 2 OUTDATED CARDIAC MONITORS AND TO OUTFIT THE PARAMEDIC RESPONSE VEHICLES WITH UPDATED CARDIAC COMPRESSION DEVICES TO BE USED IN CARDIAC ARREST EMERGENCIES.

BILLINGS COUNTY MEDORA BILLINGS A200040 AMBULANCE REPLACEMENT $573,761.00 $264,943.00

REPLACE 2 AMBULANCES IN THE CURRENT FLEET. A POWER LOAD COT SYSTEM IS FOR ONE OF THE TWO AMBULANCES.

Page 033

Item 3B



PROJECT TOTAL


CITY OF BELFIELD BELFIELD STARK A200041 AMBULANCE REPLACEMENT $255,000.00 $100,000.00

CURRENT AMBULANCE IS A 2014 INTERNATIONAL TERRASTAR WHICH HAS SEVERAL ISSUES AND NEEDS TO BE REPLACED.

CITY OF BELFIELD BELFIELD STARK A200042 POLICE RADIO EQUIPMENT $34,875.00 $34,875.00

REQUESTING RADIO UPGRADES FOR 3 PATROL VEHICLES AND 3 HANDHELD PORTABLE RADIOS. UPGRADES WILL ALLOW OFFICERS BETTER COMMUNICATION WITH DISPATCH AND OTHER FIRST RESPONDERS.

WILLISTON PSD #1 WILLISTON WILLIAMS A200043

ASB INNOVATION ACADEMY $14,092,183.00 $500,000.00

SEEKING FUNDS TO HELP FUND THE $14 MILLION RENOVATION PROJECT INCREASING CAPACITY FOR THE RAPIDLY GROWING SCHOOL DISTRICT.

WILLIAMS CTY SD #8 WILLISTON WILLIAMS A200044

MISSOURI RIDGE 400 STUDENT MODULAR COMPLEX $5,000,000.00 $1,250,000.00

OVERCROWING IN SCHOOL FACILITIES IS A MATTER OF PUBLIC SAFETY. REQUESTING ASSISTANCE TO FUND THIS EXPANSION.

HARVEY AMBULANCE SERVICES INC HARVEY WELLS A200045

AMBULANCE REPLACEMENT FUND $335,000.00 $304,000.00

TRANSFER AMBULANCE IS 12 YEARS OLD AND HAS BROKEN DOWN TWICE, ONCE WITH A PATIENT ON BOARD. REQUESTING FUNDS TO REPLACE THIS RIG.

MCKENZIE COUNTY

WATFORD CITY MCKENZIE A200046

PERSONNEL AND EQUIPMENT $671,110.00 $671,110.00

REQUESTING FUNDING FOR 2 DEPUTIES FOR 2 YEARS TO ASSIST WITH DEALING WITH OVERLOADED SALTWATER TRUCKS CAUSING IMPACTS ON THE COUNTY.

ALEXANDER PSD #2 ALEXANDER MCKENZIE A200047 NEW VO-AG BUILDING $2,078,964.00 $366,609.00

CURRENT VO-AG BUILDING WAS A MODULAR CLASSROOM RENOVATED INTO A SHOP. WITH INCREASED ENROLLMENT, THE BUILDING HAS BECOME UNSAFE AND INADEQUATE.

LONE TREE PSD #6 GOLVA

GOLDEN VALLEY A200048

RENOVATIONS AND IMPROVEMENT PROJECTS $37,700.00 $37,700.00

REQUESTING FUNDS FOR 7 DIFFERENT PROJECTS AROUND THE SCHOOL.

RENVILLE COUNTY RURAL AMBULANCE DISTRICT MOHALL RENVILLE A200049

STAFFING FOR MOHALL AMBULANCE AND SUBSTATIONS $291,627.00 $291,627.00

REQUESTING FUNDS TO PAY FOR STAFFING FROM APRIL 1, 2020 TO MARCH 31, 2022. SUBSTATIONS ARE IN TOLLEY, LANSFORD, AND SHERWOOD.

CITY OF TIOGA TIOGA WILLIAMS A200050 LIFT STATION REPLACEMENT $429,000.00 $429,000.00

RECONSTRUCT THE LIFT STATION REPLACING THE DEGRADING AND UNDERSIZED CONCRETE STRUCTURES ALONG WITH UNDERSIZED PUMPS, INTERNAL PIPING, CONTROLS, AND OTHER COMPONENTS.

GRENORA PSD #99 GRENORA WILLIAMS A200051

SCHOOL BUS REPLACEMENT, MAINTENANCE AND ROUTE DRIVER $386,567.00 $386,197.00

REPAIR AND REPLACE BUSES $282,619.23. BUS RENTAL $18,907.92. MINIBUS $58,995. DRIVER SALARY FOR AN ADDITIONAL ROUTE $25,674.53.

BOWMAN COUNTY RURAL AMBULANCE DISTRICT BOWMAN BOWMAN A200052

4- WHEEL DRIVE AMBULANCE $210,000.00 $50,000.00

REPLACE A 2009 MODEL WITH OVER 157,000 MILES. BOWMAN AMBULANCE SERVICES A LARGE AREA AND TRANSPORTS ADD ADDITIONAL MILES ON EACH RIG. 4-WHEEL DRIVE WILL ASSIST IN RESPONDING TO OILFIELD EMERGENCIES ON MUDDY ROADS.

Page 034

Item 3B



PROJECT TOTAL


FOOTHILLS TOWNSHIP

POWERS LAKE BURKE A200053 ROAD MAINTENANCE $5,000.00 $5,000.00

SOUTH SIDE OF 11 NEEDS GRAVEL AND TO BE BLADED DUE TO HEAVY OILFIELD TRAFFIC.

WILLIAMS COUNTY WILLISTON WILLIAMS A200054

COUNTY ROAD #8 PHASE 1 AND PHASE 2 PAVING PROJECT $8,998,838.00 $301,250.00

REQUESTING FUNDS TO COVER THE DESIGN ENGINEERING FOR THIS PROJECT.


COUNTY ROAD #9 GRAVEL & BASE STABILIZATION, DRAINAGE INCIDENTALS $4,274,966.00 $218,896.00

FUNDS BEING REQUESTED WILL COVER 100% OF DESIGN ENGINEERING FOR THIS PROJECT.


COUNTY ROAD #10 GRAVEL & BASE STABILIZATION WITH PAVING $6,499,245.00 $187,000.00

REQUESTING FUNDING TO COVER 100% OF DESIGN ENGINEERING FOR THIS 5 MILE PROJECT.

COLUMBUS RURAL FIRE DISTRICT COLUMBUS BURKE A200057

ACQUISITION OF VEHICLE CHASSIS/INSTALLATION OF 4000-TANK AND EQUIPMENT $162,489.00 $141,589.00

CURRENT RIG IS A 1991 GMC. LOOKING TO PURCHASE A 6X4 INTERNATIONAL MV607 VEHICLE/CHASSIS. THIS IS A NEWLY FORMED DISTRICT AND REVENUES ARE MINIMAL.

BOTTINEAU COUNTY BOTTINEAU BOTTINEAU A200058

CMC 0537 ROAD IMPROVEMENTS $360,000.00 $324,000.00

STRENGTHENING THIS ROAD WHICH IS LOCATED 6 MILES NORTH OF SOURIS RUNNING 6 MILES EAST TO HIGHWAY 14. ROAD WAS AN OLD MUCKER ROAD AND GRAVEL WAS ADDED, SINCE BEING DESIGNATED AS A "COUNTY MAJOR COLLECTOR" IT WAS PLACED ON THE COUNTY'S IMPROVEMENT PLAN.

YELLOWSTONE PSD #14 FAIRVIEW MCKENZIE A200059

STUDENT TRANSPORTATION $60,000.00 $60,000.00

REQUESTING FUNDING TO PURCHASE A NEW SUBURBAN TO PROVIDE SAFE AND TIMELY TRANSPORTATION FOR STUDENTS.

CITY OF STANLEY STANLEY MOUNTRAIL A200060

WASTEWATER TREATMENT FACILITY IMPROVEMENTS AND UPGRADE TO PUMPS AT MAIN LIFT STATION $1,675,000.00 $837,500.00

CRITICAL TO MAKE IMPROVEMENTS TO CELL 3 TO PREVENT FURTHER DAMAGE TO THE SIDE SLOPES TO EXTEND THE LIFE OF THE TREATMENT CELL. PUMPS NEED TO BE UPGRADED FROM 14 HP TO 30 HP TO HANDLE WATER PUMPED TO THE WATER TREATMENT FACILITY.

$15,506,192.00

Page 035

Item 3B

EIIO Director and the EIIO Administrator scored all 60 applications. The Board created the Contingency Grant Advisory Committee (Committee) on December 18, 2019. The Committee met on March 4, 2020 to complete the scoring process. The Committee includes the following:

• Williston Township Supervisor Dan Kalil

• Stark County Commissioner Jay Elkin

• Mayor of Stanley Gary Weisenberger

• Mayor of Watford City Philip Riely

• Dunn County Commissioner Reinhard Hauck

• Border Township Supervisor Mark Spooner

• Beach PSD #3 Superintendent Dave Wegner

• Billings County Auditor Marcia Lamb

• Powers Lake Ambulance Kari Enget

• Commissioner of University and School Lands Jodi Smith

Applications were scored by EIIO staff and the Committee, using the following established criteria:

• Objective – Does the project meets the legislative intent outlined in state law and is directlyrelated to local infrastructure caused by damage or impact by current oil and gasdevelopment activities since January 2019?

• Financial Need – Demonstration of financial need, indicated by the political subdivision’scommitment of local resources, coupled with a financial shortfall due to increased energyactivity. The cost benefit (value for the investment) of this project compared to the otherapplicants was considered. Cash, outstanding grant balances, levy, revenue streamsavailable, debt, and additional financial details are considered.

• Result of Energy Activity – The application clearly lays out how current oil and gasdevelopment is impacting the political subdivision.

• Improves public health, or welfare – Assessment of the project’s contributions to economicvitality and development by removing growth restraints and obstacles from the community byenhancing the infrastructure of the political subdivision and supporting long term sustainableeconomic activity.

• Public Safety – Does the project relate to improving the safety of those receiving the award,the general public, the emergency services responders, and emergency services?

• Project Readiness/Achievability – Is project design, planning, cost estimates, and anyadditional preparation in place allowing the project to move forward once funding isavailable?

• Complete Application Received – Did the applicant submit a complete application withfinancial reports outlining the revenue, levy with calculation, liabilities detailed and budget,details of the project plans, projected cost, maps, and any additional documentation requiredto support the project defined in the application?

EIIO contacted the Department of Transportation (DOT), Department of Commerce, Bureau of Criminal Investigation (BCI), and Department of Public Instruction (DPI) for additional funding avenues that may be available to those applicants who are not awarded funding.

The DOT reviewed road project applications and determined DOT would need additional information in order to provide additional funding opportunities to applicants. However, DOT was able to identify some projects as possible FEMA eligible.

Page 036

Item 3B

The Department of Commerce noted only non-oil-producing counties are eligible for the Municipal Infrastructure Funds (see N.D.C.C. § 57-51.1-07-7) and County and Township Infrastructure Funds (see N.D.C.C. § 57-51.1-07-8); therefore, any counties identified as oil-producing will not be eligible for those funds.

Applications from Bottineau, Renville, and Hettinger Counties are eligible for funds through the municipal infrastructure funds.

BCI will have grants available in the summer 2020 for law enforcement and applicants may apply for this funding.

All K-12 school districts that do not receive funding will be encouraged to contact DPI for other avenues of funding.

The Committee gave careful consideration when categorizing which applications should receive funding in March and which applications could wait until July 2020.

The Committee input, as well as information gathered from other state agencies, was utilized in formulating recommendations to the Board. Infrastructure needs, with impacts as a direct result of oil and gas development, were considered. The grants recommended by the Committee are dominated by suggestions to address safety issues. The Committee and EIIO staff emphasize that all the applying political subdivisions have legitimate needs and have submitted justifiable requests.

N.D.C.C. § 15-01-02(6) provides that no more than 60% of the biennial appropriation be awardedin any one fiscal year. Of the $2,000,000 appropriated, 60% would be $1,200,000.

The following are the Committee’s recommendations for awards for the Board’s consideration:

POLITICAL SUB NAME CITY COUNTY SHORT DESCRIPTION PROJECT TOTAL AMOUNT

REQUESTED RECOMMENDED

AWARD

NOONAN FIRE DEPARTMENT NOONAN DIVIDE

PURCHASE A USED 1000 GALLON PUMPER

APPARATUS $35,000.00 $28,000.00 $28,000.00

ZAP RURAL FIRE PROTECTION DISTRICT ZAP MERCER EXTRICATION EQUIPMENT $36,900.00 $36,900.00 $33,210.00

GLADSTONE CONSOLIDATED FIRE DISTRICT DICKINSON STARK NEW PUMPER FIRE TRUCK $375,000.00 $375,000.00 $187,500.00

TOLLEY FIRE DEPARTMENT TOLLEY RENVILLE 50 X 50 BUILDING ADDITION $555,000.00 $555,000.00 $355,172.00

BILLINGS CO. RURAL FIRE PROTECTION DIST. BELFIELD BILLINGS FAIRFIELD RESCUE TRUCK $244,529.00 $184,529.00 $184,529.00

BILLINGS COUNTY MEDORA BILLINGS AMBULANCE REPLACEMENT $573,761.00 $264,943.00 $120,000.00

CITY OF BELFIELD BELFIELD STARK AMBULANCE REPLACEMENT $255,000.00 $100,000.00 $100,000.00

BOWMAN COUNTY RURAL AMBULANCE DISTRICT BOWMAN BOWMAN

4- WHEEL DRIVEAMBULANCE $210,000.00 $50,000.00 $50,000.00

COLUMBUS RURAL FIRE DISTRICT COLUMBUS BURKE

ACQUISITION OF VEHICLE CHASSIS/INSTALLATION OF

4000-TANK AND EQUIPMENT $162,489.00 $141,589.00 $141,589.00

Total: $1,200,000.00

Page 037

Item 3B

Recommendation #1: For fiscal year 2020, it is recommended the Board award nine grants, totaling $1,200,000 from the Oil and Gas Impact Grant Fund to:

• NOONAN FIRE DEPARTMENT

• ZAP RURAL FIRE PROTECTION DISTRICT

• GLADSTONE CONSOLIDATED FIRE DISTRICT

• TOLLEY FIRE DEPARTMENT

• BILLINGS CO. RURAL FIRE PROTECTION DISTRICT

• BILLINGS COUNTY

• CITY OF BELFIELD

• BOWMAN COUNTY RURAL AMBULANCE DISTRICT

• COLUMBUS RURAL FIRE DISTRICT

Action Record Motion Second Aye Nay Absent

Secretary Jaeger

Superintendent Baesler

Treasurer Schmidt

Attorney General Stenehjem

Governor Burgum

If the Board approves the above recommendations, $800,000 will remain for the Board to award in the following fiscal year as N.D.C.C. § 15-01-02(6) provides that no more than 60% of the biennial appropriation be awarded in any one fiscal year.

The Board may pledge awards for the 2021 fiscal year to allow political subdivisions to better plan for future development. The amount available for pledged awards is $800,000 (remaining amount available from the $2,000,000 appropriated from the Legislature) and the $400,000 available from cancelled grants. The total amount the Board can pledge is $1,200,000, which will not be awarded until the 2021 fiscal year.

The following is a list of the Committee’s recommendations for pledged awards for the Board’s consideration:

POLITICAL SUB NAME CITY COUNTY SHORT DESCRIPTION PROJECT TOTAL AMOUNT

REQUESTED

RECOMMENDED PLEDGED GRANT

AWARD

CITY OF NEW ENGLAND NEW ENGLAND HETTINGER

2020 NORTH SIDE GROWTH AREA STREET & SEWER

IMPROVEMENTS $1,442,000.00 $1,000,000.00 $348,650.00

WILLISTON TOWNSHIP WILLISTON WILLIAMS 52ND STREET LANDSLIDE $1,450,000.00 $350,000.00 $350,000.00

MOUNTRAIL COUNTY STANLEY MOUNTRAIL

36TH ST NW- CEMENT STABILIZATION AND

GRAVELING $82,700.00 $82,700.00 $41,350.00

WILLISTON PSD #1 WILLISTON WILLIAMS ASB INNOVATION ACADEMY $14,092,183.00 $500,000.00 $250,000.00

CITY OF STANLEY STANLEY MOUNTRAIL

WASTEWATER TREATMENT FACILITY IMPROVEMENTS AND UPGRADE TO PUMPS AT MAIN

LIFT STATION $1,675,000.00 $837,500.00 $210,000.00

Total: $1,200,000.00

Page 038

Item 3B

Recommendation #2: That the Board pledge grant awards, with the intent to award in fiscal year 2021, the five grants totaling $1,200,000 from the Oil and Gas Impact Grant fund to:

• CITY OF NEW ENGLAND

• WILLISTON TOWNSHIP

• MOUNTRAIL COUNTY

• WILLISTON PSD #1

• CITY OF STANLEY

Action Record Motion Second Aye Nay Absent

Secretary Jaeger


Treasurer Schmidt


Governor Burgum

Page 039

Item 4A


RE: Investment Updates (No Action Requested)

Asset Allocation The table below shows the status of the permanent trusts’ asset allocation as of March 31, 2020. The figures provided are unaudited.

Angelo Gordon ($154.99 million, 3.6% of PTF assets as of 3/31/20) Direct Lending Fund

The Angelo Gordon Direct Lending Fund III portfolio was initially funded in late-August 2018. On March 23, 2020 the remaining $27,750,000 or 18.50% was called. After the said capital call, this would complete the total $150 million capital commitment made to Angelo Gordon.

We have received a $2,329,264 distribution from the Fund at the end of January 31, 2020. Including this distribution, the Fund will have distributed approximately 4.9% of total paid-in capital total.

Upcoming Investment Manager Meetings

There is no upcoming meeting scheduled.

Account/Asset Class

Large Cap US Equity 14.5% 619,082,532$ 14.2% -0.3%

Mid/Small Cap US Equity 4.0% 147,766,026$ 3.4% -0.6%

International Equity 14.5% 585,817,249$ 13.4% -1.1%

Emerging Market Equity 4.0% 158,840,208$ 3.6% -0.4%

Total Equities 37.0% 1,511,506,015$ 34.6% -2.4%

Core Fixed Income 13.8% 712,638,119$ 16.3% 2.5%

Non-Core Fixed Income 9.2% 429,018,394$ 9.8% 0.6%

Total Fixed Income 23.0% 1,141,656,513$ 26.2% 3.2%

Total Absolute Return 15.0% 622,518,925$ 14.3% -0.7%

Commodities 3.0% 114,864,987$ 2.6% -0.4%

MLPs 3.0% 73,217,317$ 1.7% -1.3%

TIPS 2.0% 100,004,606$ 2.3% 0.3%

Natural Resource Equities 2.0% 62,115,146$ 1.4% -0.6%

Total Inflation Strategies 10.0% 350,202,056$ 8.0% -2.0%

Core Real Estate 8.0% 395,014,688$ 9.1% 1.1%

Core Plus Real Estate 7.0% 341,840,608$ 7.8% 0.8%

Total Real Estate 15.0% 736,855,296$ 16.9% 1.9%

Total Asset 100.0% 4,362,738,805$ 100.0%

Long-Term Asset

Allocation

3/31/20 Actual

Allocation $

3/31/20 Actual

Allocation %

3/31/20

% Diff.

Page 040

ITEM 4B


RE: March Investment Reports – 4th Quarter 2020

(No Action Requested)

Josh Kevan from RVK will review the performance of the Board of University and School Land’s (Board) investment program for the period ending December 31, 2019 and discuss current market conditions.

The first report to be reviewed is prepared by RVK to enable the Board to monitor and evaluate the collective performance of the permanent trusts’ investments and the performance of individual managers within the program. In order to provide an overview of the program and highlight critical information, an executive summary has been incorporated into the Board report. A more comprehensive, detailed report is also available.

Next, Josh will touch on the performance of the Ultra-Short portfolio in which the Strategic Investment and Improvements Fund, the Coal Development Trust Fund and the Capitol Building Fund are invested.

Finally, Josh will discuss RVK’s view of the possible economic implications of COVID-19, and its likely effects on the PTF portfolios.

Attachment 1: RVK Permanent Trust Fund Performance Analysis Report Attachment 2: RVK Ultra-short Performance Report Attachment 3: RVK Economic Implications of COVID19

Page 041

North Dakota Board of University and School Lands

Period Ended: February 29, 2020

Page 042

nCapital Markets Review As of February 29, 2020

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•

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•

•

•

•

•Treasury Yield Curve (%) Feb-20 Jan-20 Feb-19 Feb-18 Feb-17

Economic Indicators Feb-20 Jan-20 Feb-19 10 Yr 20 Yr 3 Month 1.27 1.55 2.45 1.65 0.53Federal Funds Rate (%) 1.58 ▼ 1.59 2.40 0.64 1.76 6 Month 1.11 1.54 2.50 1.86 0.69Breakeven Inflation - 5 Year (%) 1.37 ▼ 1.60 1.86 1.75 1.84 1 Year 0.97 1.45 2.54 2.07 0.88Breakeven Inflation - 10 Year (%) 1.43 ▼ 1.64 1.94 1.99 2.03 2 Year 0.86 1.33 2.52 2.25 1.22Breakeven Inflation - 30 Year (%) 1.54 ▼ 1.73 1.98 2.12 2.25 5 Year 0.89 1.32 2.52 2.65 1.89Bloomberg US Agg Bond Index - Yield (%) 1.68 ▼ 2.02 3.21 2.49 3.75 7 Year 1.03 1.42 2.63 2.80 2.19Bloomberg US Agg Bond Index - OAS (%) 0.50 ▲ 0.44 0.45 0.52 0.63 10 Year 1.13 1.51 2.73 2.87 2.36Bloomberg US Agg Credit Index - OAS (%) 1.17 ▲ 0.98 1.14 1.31 1.45 20 Year 1.46 1.83 2.94 3.02 2.70Bloomberg US Corp: HY Index - OAS (%) 5.00 ▲ 3.90 3.79 4.77 5.45 30 Year 1.65 1.99 3.09 3.13 2.97Capacity Utilization (%) 76.98 ▲ 76.64 78.46 76.78 77.06 Market Performance (%) MTD QTD CYTD 1 Yr 3 Yr 5 Yr 7 Yr 10 Yr Unemployment Rate (%) 3.5 ▼ 3.6 3.8 6.1 5.9 S&P 500 (Cap Wtd) -8.23 -8.27 -8.27 8.19 9.87 9.23 12.29 12.65 PMI - Manufacturing (%) 50.1 ▼ 50.9 54.1 54.1 52.6 Russell 2000 -8.42 -11.36 -11.36 -4.92 3.52 5.12 8.62 10.41 Baltic Dry Index - Shipping 535 ▲ 487 658 1,240 2,319 MSCI EAFE (Net) -9.04 -10.94 -10.94 -0.57 3.92 1.96 3.98 4.83Consumer Conf (Conf Board) 130.70 ▲ 130.40 131.40 92.58 92.46 MSCI EAFE SC (Net) -9.80 -12.42 -12.42 -0.94 4.13 4.65 6.42 7.57CPI YoY (Headline) (%) 2.3 ▼ 2.5 1.5 1.8 2.2 MSCI EM (Net) -5.27 -9.69 -9.69 -1.88 4.89 2.73 1.75 3.18CPI YoY (Core) (%) 2.4 ▲ 2.3 2.1 1.9 2.0 Bloomberg US Agg Bond 1.80 3.76 3.76 11.68 5.01 3.58 3.29 3.93PPI YoY (%) 1.2 ▼ 2.5 0.5 1.8 2.2 ICE BofAML 3 Mo US T-Bill 0.15 0.28 0.28 2.18 1.73 1.13 0.82 0.61M2 YoY (%) 7.4 ▲ 7.0 4.1 5.9 6.2 NCREIF ODCE (Gross) N/A N/A N/A 5.34 7.09 8.97 10.17 11.42US Dollar Total Weighted Index 117.77 ▲ 115.79 114.12 102.71 102.90 FTSE NAREIT Eq REITs Index (TR) -8.01 -6.90 -6.90 4.22 4.38 5.06 7.63 11.16WTI Crude Oil per Barrel ($) 45 ▼ 52 57 72 62 HFRI FOF Comp Index -1.60 -1.30 -1.30 3.22 2.78 1.73 2.88 2.72Gold Spot per Oz ($) 1,586 ▼ 1,589 1,313 1,355 945 Bloomberg Cmdty Index (TR) -5.04 -12.03 -12.03 -11.05 -5.19 -6.20 -8.17 -5.58

NCREIF performance is reported quarterly; MTD and QTD returns are shown as "N/A" on interim-quarter months and until available. Data shown is as of most recent quarter-end.Treasury data courtesy of the US Department of the Treasury. Economic data courtesy of Bloomberg Professional Service.

Treasury Yield Curve (%)

Crude oil's price fell by 13.19% during the month, and has decreased by 21.78% YoY.

General Market Commentary

Equity markets posted negative returns in February as the S&P 500 (Cap Wtd) Index returned -8.23% and the MSCI EAFE (Net) Index returned -9.04%. Emerging markets returned -5.27% as measured by the MSCI EM (Net) Index.The Bloomberg US Aggregate Bond Index returned 1.80% in February, outperforming the 1.66% return by the Bloomberg US Treasury Intermediate Term Index. International fixed income markets returned -0.06%, as measured by the FTSE Non-US World Gov't Bond Index.Public real estate, as measured by the FTSE NAREIT Eq REITs Index (TR), returned -8.01% in February and 5.06% over the trailing five-year period.The Cambridge US Private Equity Index returned 7.76% for the trailing one-year period and 11.68% for the trailing five-year period ending September 2019.Absolute return strategies, as measured by the HFRI FOF Comp Index, returned -1.60% for the month and 3.22% over the trailing one-year period.

US Treasury interest rates dropped significantly in February and the spread between the 2 and 10 year Treasury widened. A decrease in forward-looking inflation expectations coupled with continued flows from equity markets into safe haven fixed income assets pushed rates lower.

Global equity markets sold off sharply during February, driven by heightened fears of the coronavirus (COVID-19) reaching pandemic status. Concerns of a global economic slowdown increased as the virus spread beyond China to South Korea, Italy, and Iran among other countries.US equity markets experienced their fastest correction in history, as the S&P 500 dropped more than 10% in just six days.

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Asset Allocation by Manager

Asset Allocation vs. Target Allocation Differences

Schedule of Investable Assets

Asset Allocation vs. Target Allocation

Market Value($)

Allocation(%)

Broad US Equity

State Street Russell 1000 Index SL (US Large Cap) 713,411,982 14.64

State Street Russell Mid Cap Index (US Mid Cap) 85,336,511 1.75

NT Small Cap Core (US Small Cap) 102,576,182 2.11

Broad International Equity

State Street World Ex US Index (International Equity) 559,313,519 11.48

QMA International Small Cap Equity (International Equity) 131,373,692 2.70

DFA Emg Mkts Core Eq;I (Emerging Markets Equity) 98,037,438 2.01

Harding Loevner:IEM;IZ (Emerging Markets Equity) 100,010,687 2.05

Fixed Income 0.00

Payden & Rygel Long Term (Investment Grade US FI) 361,197,867 7.41

JP Morgan FI Intermediate Bond (Investment Grade US FI) 346,666,253 7.12

Brandywine Glbl Opp FI (Global FI) 176,658,578 3.63

FLP (Loans) 15,212,004 0.31

ECLP (Loans) 1,035,549 0.02

Payden:Low Dur;Inv (Low Duration FI) 29,594,330 0.61

AG Direct Lending Fund III, L.P. 124,319,474 2.55

Schroders Securitized Credit (SA) 121,103,741 2.49

ND Land - PTF Cash (Cash) 4,735,437 0.10

Absolute Return 0.00

GMO:Bchmk-Fr All;IV (GTAA) 363,414,780 7.46

PIMCO:All Ast Ath;Inst (GTAA) 352,012,534 7.23

Diversified Inflation Strategies (DIS)

NT Common TIPS Index (TIPS) 101,880,686 2.09

Gresham Commodities (Commodities) 138,261,981 2.84

Harvest MLP (MLPs) 123,645,743 2.54

Van Eck NR Equities (Natural Resources) 83,831,594 1.72

Real Estate

Morgan Stanley Prime Property Fund (Core Real Estate) 216,193,720 4.44

UBS Trumbull Property Fund, L.P. (Core Real Estate) 179,160,140 3.68

Jamestown Premier Property Fund (Core Plus Real Estate) 71,980,840 1.48

Prologis USLF (CF) (Core Plus Real Estate) 136,967,259 2.81

JP Morgan US RE Inc & Grth, LP (CF) (Core Plus Real Estate) 133,818,419 2.75

AssetAllocation

($000)

AssetAllocation

(%)

TargetAllocation

(%)

Total Fund 4,871,751 100.00 100.00

Broad US Equity 901,325 18.50 18.50

Broad International Equity 888,735 18.24 18.50

Fixed Income 1,180,523 24.23 23.00

Absolute Return 715,427 14.69 15.00

Diversified Inflation Strategies (DIS) 447,620 9.19 10.00

Real Estate 738,120 15.15 15.00

Periods EndingBeginning

Market Value ($)Net

Cash Flow ($)Gain/Loss ($)

EndingMarket Value ($)

% Return

MTD 5,074,153,417 -1,170,362 -201,232,116 4,871,750,939 -3.97

North Dakota Board of University and School LandsAA by Manager, AA vs. Target, and Schedule of Investable Assets

As of February 29, 2020

Market values and performance are preliminary and subject to change. Allocations shown may not sum up to 100% exactly due to rounding. Net cash flow includes fees, securities lending income and client directed flows. Gain/loss includes dividend and interest income and capital appreciation. Performance shown is net of fees. Real Estate market values are as of the most recent quarter-end and adjusted for subsequent cash flows.

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MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Total Fund -3.97 -5.15 -5.15 -0.90 2.44 4.04 3.22 4.71 6.18 14.33 -5.11 12.62 6.38 08/01/1995

Target Allocation Index (Net) -3.92 -4.43 -4.43 0.46 4.69 5.19 4.62 5.93 7.17 16.30 -4.51 13.14 N/A

Difference -0.05 -0.72 -0.72 -1.36 -2.25 -1.15 -1.40 -1.22 -0.99 -1.97 -0.60 -0.52 N/A

Broad US Equity -8.10 -8.34 -8.34 0.47 5.99 9.16 8.77 11.18 11.79 30.30 -5.49 21.40 13.31 07/01/2009

Russell 3000 Index -8.19 -8.29 -8.29 1.22 6.90 9.28 8.72 11.90 12.48 31.02 -5.24 21.13 13.82

Difference 0.09 -0.05 -0.05 -0.75 -0.91 -0.12 0.05 -0.72 -0.69 -0.72 -0.25 0.27 -0.51

Broad International Equity -8.16 -10.78 -10.78 -4.26 -1.06 3.05 1.69 3.77 4.29 22.05 -16.49 26.51 5.41 07/01/2009

MSCI ACW Ex US Index (USD) (Net) -7.90 -10.38 -10.38 -4.14 -0.69 4.15 2.18 3.37 4.34 21.51 -14.20 27.19 5.70

Difference -0.26 -0.40 -0.40 -0.12 -0.37 -1.10 -0.49 0.40 -0.05 0.54 -2.29 -0.68 -0.29

Fixed Income 0.54 1.57 1.57 3.68 7.77 4.06 3.14 2.99 4.12 7.43 -0.24 4.79 5.60 08/01/1995

Global Fixed Income Custom Index 1.50 3.32 3.32 5.99 11.26 5.18 3.82 3.28 3.99 9.21 -0.52 4.98 N/A

Difference -0.96 -1.75 -1.75 -2.31 -3.49 -1.12 -0.68 -0.29 0.13 -1.78 0.28 -0.19 N/A

Bloomberg US Agg Bond Index 1.80 3.76 3.76 6.30 11.68 5.01 3.58 3.29 3.93 8.72 0.01 3.54 5.37

Difference -1.26 -2.19 -2.19 -2.62 -3.91 -0.95 -0.44 -0.30 0.19 -1.29 -0.25 1.25 0.23

Absolute Return -3.06 -5.37 -5.37 -2.53 0.00 2.44 1.96 N/A N/A 11.09 -5.16 12.11 1.55 07/01/2014

Absolute Return Custom Index -4.19 -4.21 -4.21 1.84 6.74 6.16 4.88 5.96 6.70 19.28 -5.93 15.39 4.72

Difference 1.13 -1.16 -1.16 -4.37 -6.74 -3.72 -2.92 N/A N/A -8.19 0.77 -3.28 -3.17

Diversified Inflation Strategies (DIS) -5.62 -10.47 -10.47 -10.71 -8.35 -4.66 -4.99 N/A N/A 12.19 -14.24 2.45 -1.96 04/01/2014

DIS Custom Index -6.62 -10.49 -10.49 -10.53 -8.22 -3.35 -2.94 -0.91 2.97 10.27 -9.13 4.80 -0.93

Difference 1.00 0.02 0.02 -0.18 -0.13 -1.31 -2.05 N/A N/A 1.92 -5.11 -2.35 -1.03

Real Estate 0.00 0.00 0.00 2.88 4.48 7.43 N/A N/A N/A 4.48 8.34 9.52 8.02 07/01/2015

NCREIF ODCE Index (AWA) (Net) 0.00 0.00 0.00 2.36 4.39 6.13 7.98 9.17 10.39 4.39 7.36 6.66 7.05

Difference 0.00 0.00 0.00 0.52 0.09 1.30 N/A N/A N/A 0.09 0.98 2.86 0.97

Real Estate composite and index performance is available on a quarterly basis. Interim period performance assumes a 0.00% return.

North Dakota Board of University and School LandsComparative Performance - Net


Performance shown is net of fees. Performance is preliminary, subject to change, and annualized for periods greater than one year. Composite inception dates are based on availability of data for each asset class. Please see the Addendum for custom index definitions. RVK began monitoring the assets of North Dakota Board of University and School Lands in Q3 2014. Fiscal year ends 06/30.

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MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Broad US Equity

State Street Russell 1000 Index SL (CF) -8.17 -8.08 -8.08 1.66 7.80 N/A N/A N/A N/A 31.39 -4.78 N/A 9.68 06/01/2017

Russell 1000 Index -8.17 -8.07 -8.07 1.66 7.82 9.73 9.00 12.16 12.64 31.43 -4.78 21.69 9.70

Difference 0.00 -0.01 -0.01 0.00 -0.02 N/A N/A N/A N/A -0.04 0.00 N/A -0.02

State Street Russell Mid Cap Index (SA) -8.75 -9.41 -9.41 -2.58 2.28 N/A N/A N/A N/A 30.38 -8.97 N/A 6.59 06/01/2017

Russell Mid Cap Index -8.69 -9.42 -9.42 -2.55 2.34 6.57 6.37 10.35 11.91 30.54 -9.06 18.52 6.59

Difference -0.06 0.01 0.01 -0.03 -0.06 N/A N/A N/A N/A -0.16 0.09 N/A 0.00

NT Small Cap Core (CF) -7.06 -9.27 -9.27 -4.80 -2.62 6.86 7.09 N/A N/A 23.13 -7.63 21.82 5.89 07/01/2014

Russell 2000 Index -8.42 -11.36 -11.36 -4.88 -4.92 3.52 5.12 8.62 10.41 25.53 -11.01 14.65 5.27

Difference 1.36 2.09 2.09 0.08 2.30 3.34 1.97 N/A N/A -2.40 3.38 7.17 0.62


State Street World Ex US Index (CF) -8.87 -10.65 -10.65 -4.55 -0.48 3.81 1.89 N/A N/A 22.38 -14.16 24.15 0.89 07/01/2014

MSCI Wrld Ex US Index (USD) (Net) -8.88 -10.64 -10.64 -4.52 -0.39 3.89 1.96 3.79 4.65 22.49 -14.09 24.21 0.97

Difference 0.01 -0.01 -0.01 -0.03 -0.09 -0.08 -0.07 N/A N/A -0.11 -0.07 -0.06 -0.08

QMA International Small Cap Equity (CF) -9.22 -12.25 -12.25 -3.86 -3.00 N/A N/A N/A N/A 22.54 N/A N/A -11.50 02/01/2018

MSCI EAFE Sm Cap Index (USD) (Net) -9.80 -12.42 -12.42 -2.75 -0.94 4.13 4.65 6.42 7.57 24.96 -17.89 33.01 -7.25

Difference 0.58 0.17 0.17 -1.11 -2.06 N/A N/A N/A N/A -2.42 N/A N/A -4.25

DFA Emg Mkts Core Eq;I (DFCEX) -5.13 -10.89 -10.89 -5.60 -3.79 2.77 2.00 N/A N/A 16.04 -15.25 36.55 0.97 07/01/2014

MSCI Emg Mkts Index (USD) (Net) -5.27 -9.69 -9.69 -3.29 -1.88 4.89 2.73 1.75 3.18 18.44 -14.58 37.28 1.59

Difference 0.14 -1.20 -1.20 -2.31 -1.91 -2.12 -0.73 N/A N/A -2.40 -0.67 -0.73 -0.62

Harding Loevner:IEM;IZ (HLEZX) -5.54 -9.47 -9.47 -1.80 1.26 5.36 3.87 N/A N/A 25.97 -18.53 35.79 2.28 07/01/2014


Difference -0.27 0.22 0.22 1.49 3.14 0.47 1.14 N/A N/A 7.53 -3.95 -1.49 0.69



Performance shown is net of fees. Performance is preliminary, subject to change, and annualized for periods greater than one year. Manager inception dates shown represent the first full month following initial funding. Please see the Addendum for custom index definitions. RVK began monitoring the assets of North Dakota Board of University and School Lands in Q3 2014. Fiscal year ends 06/30.

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MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Fixed Income

Payden & Rygel Long Term (SA) 1.64 3.81 3.81 6.50 12.09 5.70 4.27 3.86 4.77 9.42 0.16 4.99 5.99 08/01/1995


Difference -0.16 0.05 0.05 0.20 0.41 0.69 0.69 0.57 0.84 0.70 0.15 1.45 0.62

JP Morgan FI Intermediate Bond (SA) 1.37 2.92 2.92 4.76 8.73 4.21 3.15 2.75 N/A 6.70 1.01 2.71 2.68 08/01/2012

Bloomberg US Gov't Crdt Int Trm Bond Index 1.41 2.85 2.85 4.65 8.81 3.96 2.95 2.55 3.16 6.80 0.88 2.14 2.47

Difference -0.04 0.07 0.07 0.11 -0.08 0.25 0.20 0.20 N/A -0.10 0.13 0.57 0.21

Brandywine Glbl Opp FI (CF) -2.57 -3.52 -3.52 -1.18 2.93 2.87 1.44 N/A N/A 9.31 -5.16 12.91 1.41 11/01/2014

FTSE Wrld Gov't Bond Index 0.99 2.63 2.63 3.14 8.17 4.54 2.86 1.52 2.08 5.90 -0.84 7.49 2.16

Difference -3.56 -6.15 -6.15 -4.32 -5.24 -1.67 -1.42 N/A N/A 3.41 -4.32 5.42 -0.75

Payden:Low Dur;Inv (PYSBX) 0.66 1.34 1.34 2.58 4.66 2.49 1.91 1.56 2.45 4.13 1.05 1.48 3.46 04/01/2002

Bloomberg US Trsy 1-3 Yr Index 0.90 1.45 1.45 2.56 4.72 2.26 1.63 1.33 1.28 3.59 1.56 0.42 2.37

Difference -0.24 -0.11 -0.11 0.02 -0.06 0.23 0.28 0.23 1.17 0.54 -0.51 1.06 1.09

AG Direct Lending Fund III, L.P. 0.00 0.00 0.00 2.84 7.49 N/A N/A N/A N/A 7.49 N/A N/A 6.57 09/01/2018

CS Lvg'd Loan Index 0.00 0.00 0.00 0.92 2.39 3.52 3.85 3.94 4.78 6.39 1.14 4.25 2.53

Difference 0.00 0.00 0.00 1.92 5.10 N/A N/A N/A N/A 1.10 N/A N/A 4.04

Schroders Securitized Credit (SA) 0.22 0.83 0.83 2.09 3.60 N/A N/A N/A N/A 3.85 N/A N/A 3.59 12/01/2018

3 Month LIBOR Index (USD)+1.75% 0.35 0.69 0.69 2.75 4.30 3.80 3.18 2.84 2.63 4.39 3.86 2.88 4.38

Difference -0.13 0.14 0.14 -0.66 -0.70 N/A N/A N/A N/A -0.54 N/A N/A -0.79

ND Land - PTF Cash (SA) 0.13 0.26 0.26 1.57 2.39 N/A N/A N/A N/A 2.49 1.71 N/A 1.92 07/01/2017

ICE BofAML 3 Mo US T-Bill Index 0.15 0.28 0.28 1.31 2.18 1.73 1.13 0.82 0.61 2.28 1.87 0.86 1.87

Difference -0.02 -0.02 -0.02 0.26 0.21 N/A N/A N/A N/A 0.21 -0.16 N/A 0.05

FLP (Loans) 0.35 0.74 0.74 3.16 4.77 5.65 5.83 5.80 5.92 4.86 6.15 6.16 7.13 08/01/1995

ECLP (Loans) 0.37 0.74 0.74 3.01 4.54 4.52 4.65 4.77 N/A 4.49 4.58 4.25 5.02 11/01/2010


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MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Absolute Return

GMO:Bchmk-Fr All;IV (GBMBX) -3.15 -5.55 -5.55 -1.62 0.21 2.87 1.48 N/A N/A 11.64 -5.27 13.07 1.41 07/01/2014

60% MSCI ACW (Net)/40% Bbrg Gbl Agg Idx -4.58 -4.72 -4.72 0.84 5.77 6.13 4.68 5.42 6.08 18.55 -6.00 17.09 3.95

Difference 1.43 -0.83 -0.83 -2.46 -5.56 -3.26 -3.20 N/A N/A -6.91 0.73 -4.02 -2.54

PIMCO:All Ast Ath;Inst (PAUIX) -2.97 -5.19 -5.19 -3.54 -1.57 1.15 1.12 N/A N/A 7.62 -6.14 12.04 -0.19 07/01/2014

All Asset Custom Index (Eql Wtd) -1.73 -1.24 -1.24 2.85 6.95 5.29 4.38 4.55 5.42 12.97 -1.62 8.94 4.03

Difference -1.24 -3.95 -3.95 -6.39 -8.52 -4.14 -3.26 N/A N/A -5.35 -4.52 3.10 -4.22


NT Common TIPS Index (CF) 1.41 3.57 3.57 5.74 10.79 4.07 2.94 1.68 3.71 8.43 -1.30 3.09 4.30 06/01/2004

Bloomberg US Trsy US TIPS Index 1.38 3.51 3.51 5.73 10.76 4.06 2.94 1.67 3.67 8.43 -1.26 3.01 4.25

Difference 0.03 0.06 0.06 0.01 0.03 0.01 0.00 0.01 0.04 0.00 -0.04 0.08 0.05

Gresham Commodities (SA) -4.81 -12.40 -12.40 -8.68 -7.94 -2.20 N/A N/A N/A 13.59 -13.80 11.31 -4.45 07/01/2015

Bloomberg Cmdty Ex Energy Index (TR) -2.56 -6.68 -6.68 -3.76 -3.90 -4.38 -3.26 -5.75 -2.41 6.01 -10.95 5.36 -3.17

Difference -2.25 -5.72 -5.72 -4.92 -4.04 2.18 N/A N/A N/A 7.58 -2.85 5.95 -1.28

Gresham Commodities (SA) Custom Index N/A N/A N/A N/A N/A N/A N/A N/A N/A 12.83 -14.04 5.89 N/A

Difference N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.76 0.24 5.42 N/A

Harvest MLP (SA) -9.82 -13.68 -13.68 -19.06 -16.35 -8.71 N/A N/A N/A 12.72 -13.63 -5.50 -7.21 07/01/2015

S&P MLP Index (TR) -12.91 -18.07 -18.07 -23.81 -21.04 -10.49 -10.01 -4.42 2.49 9.78 -11.67 -5.58 -8.92

Difference 3.09 4.39 4.39 4.75 4.69 1.78 N/A N/A N/A 2.94 -1.96 0.08 1.71

Van Eck NR Equities (SA) -8.30 -16.61 -16.61 -16.91 -15.32 -11.92 N/A N/A N/A 12.89 -28.52 -0.55 -8.60 07/01/2015

S&P Gbl Ntrl Res Sect Index (TR) -11.27 -18.02 -18.02 -15.61 -13.64 0.00 -0.12 -0.77 0.36 17.20 -12.57 22.66 1.30

Difference 2.97 1.41 1.41 -1.30 -1.68 -11.92 N/A N/A N/A -4.31 -15.95 -23.21 -9.90

S&P N Amer Ntrl Res Index -12.22 -19.47 -19.47 -17.33 -17.09 -7.72 -5.80 -3.97 -0.50 17.63 -21.07 1.23 -5.12

Difference 3.92 2.86 2.86 0.42 1.77 -4.20 N/A N/A N/A -4.74 -7.45 -1.78 -3.48


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MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Real Estate

Morgan Stanley Prime Property Fund (CF) 0.00 0.00 0.00 2.96 6.17 7.62 N/A N/A N/A 6.17 7.96 8.75 8.35 07/01/2015



UBS Trumbull Property Fund, L.P. (CF) 0.00 0.00 0.00 0.57 -2.84 2.83 N/A N/A N/A -2.84 6.17 5.42 4.41 07/01/2015



Jamestown Premier Property Fund (CF) 0.00 0.00 0.00 0.50 2.40 8.02 N/A N/A N/A 2.40 7.75 14.22 7.78 07/01/2015


Difference 0.00 0.00 0.00 -1.86 -1.99 1.89 N/A N/A N/A -1.99 0.39 7.56 0.73

Prologis USLF (CF) 0.00 0.00 0.00 9.10 16.84 17.73 N/A N/A N/A 16.84 16.18 20.21 16.62 04/01/2016



JP Morgan US Real Estate Income and Growth, LP (CF) 0.00 0.00 0.00 1.24 2.24 4.58 N/A N/A N/A 2.24 5.73 5.82 5.18 07/01/2016



Real Estate manager and index performance is available on a quarterly basis. Interim period performance assumes a 0.00% return. Net performance is reflective of fees paid according to investmentmanager's fee schedule.


Page 8

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MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Total Fund -3.95 -5.11 -5.11 -0.62 2.94 4.57 3.72 5.15 6.57 14.89 -4.63 13.23 7.52 07/01/2009

Target Allocation Index (Gross) -3.92 -4.43 -4.43 0.53 4.83 5.33 4.77 6.04 7.25 16.45 -4.38 13.29 8.40

Difference -0.03 -0.68 -0.68 -1.15 -1.89 -0.76 -1.05 -0.89 -0.68 -1.56 -0.25 -0.06 -0.88

Broad US Equity -8.09 -8.33 -8.33 0.53 6.08 9.26 8.89 11.31 11.92 30.42 -5.40 21.53 13.45 07/01/2009

Russell 3000 Index -8.19 -8.29 -8.29 1.22 6.90 9.28 8.72 11.90 12.48 31.02 -5.24 21.13 13.82

Difference 0.10 -0.04 -0.04 -0.69 -0.82 -0.02 0.17 -0.59 -0.56 -0.60 -0.16 0.40 -0.37

Broad International Equity -8.14 -10.74 -10.74 -4.07 -0.78 3.31 1.92 4.10 4.71 22.39 -16.27 26.75 5.84 07/01/2009

MSCI ACW Ex US Index (USD) (Net) -7.90 -10.38 -10.38 -4.14 -0.69 4.15 2.18 3.37 4.34 21.51 -14.20 27.19 5.70

Difference -0.24 -0.36 -0.36 0.07 -0.09 -0.84 -0.26 0.73 0.37 0.88 -2.07 -0.44 0.14

Fixed Income 0.54 1.57 1.57 3.81 8.04 4.29 3.37 3.22 4.35 7.70 -0.02 5.01 4.84 07/01/2009

Global Fixed Income Custom Index 1.50 3.32 3.32 5.99 11.26 5.18 3.82 3.28 3.99 9.21 -0.52 4.98 4.39

Difference -0.96 -1.75 -1.75 -2.18 -3.22 -0.89 -0.45 -0.06 0.36 -1.51 0.50 0.03 0.45


Difference -1.26 -2.19 -2.19 -2.49 -3.64 -0.72 -0.21 -0.07 0.42 -1.02 -0.03 1.47 0.60

Absolute Return -2.98 -5.23 -5.23 -1.94 0.89 3.28 2.78 N/A N/A 12.01 -4.41 12.99 2.35 07/01/2014

Absolute Return Custom Index -4.19 -4.21 -4.21 1.84 6.74 6.16 4.88 5.96 6.70 19.28 -5.93 15.39 4.72

Difference 1.21 -1.02 -1.02 -3.78 -5.85 -2.88 -2.10 N/A N/A -7.27 1.52 -2.40 -2.37

Diversified Inflation Strategies (DIS) -5.62 -10.47 -10.47 -10.47 -7.87 -4.14 -4.49 N/A N/A 12.78 -13.77 3.01 -1.48 04/01/2014

DIS Custom Index -6.62 -10.49 -10.49 -10.53 -8.22 -3.35 -2.94 -0.91 2.97 10.27 -9.13 4.80 -0.93

Difference 1.00 0.02 0.02 0.06 0.35 -0.79 -1.55 N/A N/A 2.51 -4.64 -1.79 -0.55

Real Estate 0.00 0.00 0.00 3.52 5.70 8.85 N/A N/A N/A 5.70 9.67 11.25 9.38 07/01/2015

NCREIF ODCE Index (AWA) (Gross) 0.00 0.00 0.00 2.84 5.34 7.09 8.97 10.17 11.42 5.34 8.35 7.62 7.99


Real Estate composite and index performance is available on a quarterly basis. Interim period performance assumes a 0.00% return.

North Dakota Board of University and School LandsComparative Performance - Gross


Performance shown is gross of fees. Performance is preliminary, subject to change, and annualized for periods greater than one year. Composite inception dates are based on availability of data for each asset class. Please see the Addendum for custom index definitions. RVK began monitoring the assets of North Dakota Board of University and School Lands in Q3 2014. Fiscal year ends 06/30.

Page 9

Page 050

MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Broad US Equity

State Street Russell 1000 Index SL (CF) -8.17 -8.08 -8.08 1.66 7.81 N/A N/A N/A N/A 31.40 -4.77 N/A 9.69 06/01/2017

Russell 1000 Index -8.17 -8.07 -8.07 1.66 7.82 9.73 9.00 12.16 12.64 31.43 -4.78 21.69 9.70

Difference 0.00 -0.01 -0.01 0.00 -0.01 N/A N/A N/A N/A -0.03 0.01 N/A -0.01

State Street Russell Mid Cap Index (SA) -8.75 -9.41 -9.41 -2.57 2.31 N/A N/A N/A N/A 30.42 -8.94 N/A 6.61 06/01/2017

Russell Mid Cap Index -8.69 -9.42 -9.42 -2.55 2.34 6.57 6.37 10.35 11.91 30.54 -9.06 18.52 6.59

Difference -0.06 0.01 0.01 -0.02 -0.03 N/A N/A N/A N/A -0.12 0.12 N/A 0.02

NT Small Cap Core (CF) -7.00 -9.16 -9.16 -4.35 -1.93 7.60 7.84 N/A N/A 23.98 -6.97 22.66 6.63 07/01/2014

Russell 2000 Index -8.42 -11.36 -11.36 -4.88 -4.92 3.52 5.12 8.62 10.41 25.53 -11.01 14.65 5.27

Difference 1.42 2.20 2.20 0.53 2.99 4.08 2.72 N/A N/A -1.55 4.04 8.01 1.36


State Street World Ex US Index (CF) -8.87 -10.65 -10.65 -4.54 -0.47 3.83 1.91 N/A N/A 22.40 -14.14 24.17 0.92 07/01/2014

MSCI Wrld Ex US Index (USD) (Net) -8.88 -10.64 -10.64 -4.52 -0.39 3.89 1.96 3.79 4.65 22.49 -14.09 24.21 0.97

Difference 0.01 -0.01 -0.01 -0.02 -0.08 -0.06 -0.05 N/A N/A -0.09 -0.05 -0.04 -0.05

QMA International Small Cap Equity (CF) -9.22 -12.11 -12.11 -3.41 -2.39 N/A N/A N/A N/A 23.29 N/A N/A -10.98 02/01/2018

MSCI EAFE Sm Cap Index (USD) (Net) -9.80 -12.42 -12.42 -2.75 -0.94 4.13 4.65 6.42 7.57 24.96 -17.89 33.01 -7.25

Difference 0.58 0.31 0.31 -0.66 -1.45 N/A N/A N/A N/A -1.67 N/A N/A -3.73

DFA Emg Mkts Core Eq;I (DFCEX) -5.09 -10.80 -10.80 -5.27 -3.29 3.34 2.59 N/A N/A 16.64 -14.77 37.36 1.56 07/01/2014


Difference 0.18 -1.11 -1.11 -1.98 -1.41 -1.55 -0.14 N/A N/A -1.80 -0.19 0.08 -0.03

Harding Loevner:IEM;IZ (HLEZX) -5.45 -9.29 -9.29 -1.07 2.39 6.54 5.04 N/A N/A 27.35 -17.61 37.29 3.43 07/01/2014


Difference -0.18 0.40 0.40 2.22 4.27 1.65 2.31 N/A N/A 8.91 -3.03 0.01 1.84



Performance shown is gross of fees. Performance is preliminary, subject to change, and annualized for periods greater than one year. Manager inception dates shown represent the first full month following initial funding. Please see the Addendum for custom index definitions. RVK began monitoring the assets of North Dakota Board of University and School Lands in Q3 2014. Fiscal year ends 06/30.

Page 10

Page 051



MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Fixed Income

Payden & Rygel Long Term (SA) 1.64 3.81 3.81 6.60 12.31 5.91 4.47 4.06 4.95 9.64 0.36 5.20 6.12 08/01/1995


Difference -0.16 0.05 0.05 0.30 0.63 0.90 0.89 0.77 1.02 0.92 0.35 1.66 0.75

JP Morgan FI Intermediate Bond (SA) 1.37 2.92 2.92 4.80 8.83 4.31 3.26 2.86 N/A 6.80 1.11 2.81 2.79 08/01/2012

Bloomberg US Gov't Crdt Int Trm Bond Index 1.41 2.85 2.85 4.65 8.81 3.96 2.95 2.55 3.16 6.80 0.88 2.14 2.47

Difference -0.04 0.07 0.07 0.15 0.02 0.35 0.31 0.31 N/A 0.00 0.23 0.67 0.32

Brandywine Glbl Opp FI (CF) -2.57 -3.52 -3.52 -0.99 3.33 3.26 1.83 N/A N/A 9.74 -4.71 13.33 1.79 11/01/2014

FTSE Wrld Gov't Bond Index 0.99 2.63 2.63 3.14 8.17 4.54 2.86 1.52 2.08 5.90 -0.84 7.49 2.16

Difference -3.56 -6.15 -6.15 -4.13 -4.84 -1.28 -1.03 N/A N/A 3.84 -3.87 5.84 -0.37

Payden:Low Dur;Inv (PYSBX) 0.70 1.42 1.42 2.87 5.11 2.93 2.38 2.03 2.94 4.57 1.48 1.93 3.97 04/01/2002

Bloomberg US Trsy 1-3 Yr Index 0.90 1.45 1.45 2.56 4.72 2.26 1.63 1.33 1.28 3.59 1.56 0.42 2.37

Difference -0.20 -0.03 -0.03 0.31 0.39 0.67 0.75 0.70 1.66 0.98 -0.08 1.51 1.60

AG Direct Lending Fund III, L.P. 0.00 0.00 0.00 3.11 8.32 N/A N/A N/A N/A 8.32 N/A N/A 7.15 09/01/2018

CS Lvg'd Loan Index 0.00 0.00 0.00 0.92 2.39 3.52 3.85 3.94 4.78 6.39 1.14 4.25 2.53

Difference 0.00 0.00 0.00 2.19 5.93 N/A N/A N/A N/A 1.93 N/A N/A 4.62

Schroders Securitized Credit (SA) 0.22 0.83 0.83 2.27 3.96 N/A N/A N/A N/A 4.22 N/A N/A 3.94 12/01/2018

3 Month LIBOR Index (USD)+1.75% 0.35 0.69 0.69 2.75 4.30 3.80 3.18 2.84 2.63 4.39 3.86 2.88 4.38

Difference -0.13 0.14 0.14 -0.48 -0.34 N/A N/A N/A N/A -0.17 N/A N/A -0.44

ND Land - PTF Cash (SA) 0.15 0.30 0.30 1.67 2.49 N/A N/A N/A N/A 2.56 1.71 N/A 1.96 07/01/2017

ICE BofAML 3 Mo US T-Bill Index 0.15 0.28 0.28 1.31 2.18 1.73 1.13 0.82 0.61 2.28 1.87 0.86 1.87

Difference 0.00 0.02 0.02 0.36 0.31 N/A N/A N/A N/A 0.28 -0.16 N/A 0.09

FLP (Loans) 0.38 0.79 0.79 3.24 4.85 5.68 5.85 5.81 5.92 4.89 6.15 6.16 7.13 08/01/1995

ECLP (Loans) 0.37 0.74 0.74 3.01 4.54 4.52 4.65 4.77 N/A 4.49 4.58 4.25 5.02 11/01/2010


Page 11

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MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Absolute Return

GMO:Bchmk-Fr All;IV (GBMBX) -3.08 -5.41 -5.41 -1.04 1.08 3.76 2.36 N/A N/A 12.59 -4.46 14.07 2.28 07/01/2014

60% MSCI ACW (Net)/40% Bbrg Gbl Agg Idx -4.58 -4.72 -4.72 0.84 5.77 6.13 4.68 5.42 6.08 18.55 -6.00 17.09 3.95

Difference 1.50 -0.69 -0.69 -1.88 -4.69 -2.37 -2.32 N/A N/A -5.96 1.54 -3.02 -1.67

PIMCO:All Ast Ath;Inst (PAUIX) -2.89 -5.04 -5.04 -2.93 -0.64 2.11 2.08 N/A N/A 8.63 -5.22 13.09 0.76 07/01/2014

All Asset Custom Index (Eql Wtd) -1.73 -1.24 -1.24 2.85 6.95 5.29 4.38 4.55 5.42 12.97 -1.62 8.94 4.03

Difference -1.16 -3.80 -3.80 -5.78 -7.59 -3.18 -2.30 N/A N/A -4.34 -3.60 4.15 -3.27


NT Common TIPS Index (CF) 1.41 3.57 3.57 5.77 10.84 4.12 2.99 1.73 3.76 8.48 -1.25 3.14 4.35 06/01/2004

Bloomberg US Trsy US TIPS Index 1.38 3.51 3.51 5.73 10.76 4.06 2.94 1.67 3.67 8.43 -1.26 3.01 4.25

Difference 0.03 0.06 0.06 0.04 0.08 0.06 0.05 0.06 0.09 0.05 0.01 0.13 0.10

Gresham Commodities (SA) -4.81 -12.40 -12.40 -8.42 -7.41 -1.62 N/A N/A N/A 14.25 -13.29 11.98 -3.90 07/01/2015

Bloomberg Cmdty Ex Energy Index (TR) -2.56 -6.68 -6.68 -3.76 -3.90 -4.38 -3.26 -5.75 -2.41 6.01 -10.95 5.36 -3.17

Difference -2.25 -5.72 -5.72 -4.66 -3.51 2.76 N/A N/A N/A 8.24 -2.34 6.62 -0.73

Gresham Commodities (SA) Custom Index N/A N/A N/A N/A N/A N/A N/A N/A N/A 12.83 -14.04 5.89 N/A

Difference N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.42 0.75 6.09 N/A

Harvest MLP (SA) -9.82 -13.68 -13.68 -18.77 -15.75 -8.04 N/A N/A N/A 13.54 -12.98 -4.81 -6.54 07/01/2015

S&P MLP Index (TR) -12.91 -18.07 -18.07 -23.81 -21.04 -10.49 -10.01 -4.42 2.49 9.78 -11.67 -5.58 -8.92

Difference 3.09 4.39 4.39 5.04 5.29 2.45 N/A N/A N/A 3.76 -1.31 0.77 2.38

Van Eck NR Equities (SA) -8.30 -16.61 -16.61 -16.65 -14.80 -11.36 N/A N/A N/A 13.59 -28.04 0.09 -8.02 07/01/2015

S&P Gbl Ntrl Res Sect Index (TR) -11.27 -18.02 -18.02 -15.61 -13.64 0.00 -0.12 -0.77 0.36 17.20 -12.57 22.66 1.30


S&P N Amer Ntrl Res Index -12.22 -19.47 -19.47 -17.33 -17.09 -7.72 -5.80 -3.97 -0.50 17.63 -21.07 1.23 -5.12

Difference 3.92 2.86 2.86 0.68 2.29 -3.64 N/A N/A N/A -4.04 -6.97 -1.14 -2.90


Page 12

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MTD QTD CYTD FYTD1

Year3

Years5

Years7

Years10

Years2019 2018 2017

SinceIncep.

InceptionDate

Real Estate

Morgan Stanley Prime Property Fund (CF) 0.00 0.00 0.00 3.54 7.38 8.76 N/A N/A N/A 7.38 9.05 9.86 9.48 07/01/2015



UBS Trumbull Property Fund, L.P. (CF) 0.00 0.00 0.00 0.95 -2.11 3.64 N/A N/A N/A -2.11 6.98 6.30 5.29 07/01/2015



Jamestown Premier Property Fund (CF) 0.00 0.00 0.00 0.80 3.02 10.15 N/A N/A N/A 3.02 9.96 18.00 9.79 07/01/2015


Difference 0.00 0.00 0.00 -2.04 -2.32 3.06 N/A N/A N/A -2.32 1.61 10.38 1.80

Prologis USLF (CF) 0.00 0.00 0.00 10.59 19.51 20.74 N/A N/A N/A 19.51 18.56 24.22 19.37 04/01/2016



JP Morgan US Real Estate Income and Growth, LP (CF) 0.00 0.00 0.00 1.72 3.21 5.58 N/A N/A N/A 3.21 6.75 6.83 6.16 07/01/2016



Real Estate manager and index performance is available on a quarterly basis. Interim period performance assumes a 0.00% return.


Page 13

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Performance Related CommentsMarket values and performance are preliminary and subject to change.

Real Estate composite, manager, and index performance are available on a quarterly basis. Market values are as of the most recent quarter-end and adjusted for subsequentcash flows. Interim period performance assumes a 0.00% return.Manager inception dates shown represent the first full month following initial funding.

RVK began monitoring the assets of North Dakota Board of University and School Lands in Q3 2014. Prior historical data was provided by North Dakota Board of University andSchool Lands.

Indices show N/A for since inception returns when the fund contains more history than the corresponding benchmark.

As of 07/2014, composite and manager performance is provided and calculated by RVK.Net performance for FLP & ECLP bank loans represent Fees Payable.

Payden:Low Dur;Inv (PYSBX) performance prior to 08/2012 consists of blended Payden:Low Dur;Inv (PYSBX) and Payden:GNMA;Inv (PYGNX).

Index Comments

The Target Allocation Index (Net) is a static custom index that is calculated monthly and consists of:From 07/2019 through present: 18.5% Russell 3000 Index, 18.5% MSCI ACW Ex US Index (USD) (Net), 23% Global Fixed Income Custom Index, 15% NCREIF ODCEIndex (AWA) (Net), 15% Absolute Return Custom Index, and 10% DIS Custom Index.From 02/2018 through 06/2019: 17% Russell 3000 Index, 17% MSCI ACW Ex US Index (USD) (Net), 21% Global Fixed Income Custom Index, 15% NCREIF ODCEIndex (AWA) (Net), 20% Absolute Return Custom Index, and 10% DIS Custom Index.

From 07/2014 through 01/2018: 17% Russell 3000 Index, 15% MSCI ACW Ex US Index (USD) (Net), 23% Global Fixed Income Custom Index, 15% NCREIF ODCEIndex (AWA) (Net), 20% Absolute Return Custom Index, and 10% DIS Custom Index.

From 01/2013 through 06/2014: 18.7% Russell 1000 Index, 12.4% Russell 2500 Index, 7.5% FTSE EPRA/NAREIT US Index, 12.4% MSCI EAFE Index (USD) (Net),33.3% Bloomberg US Agg Bond Index, 0.70% CS Lvg'd Loan Index, 10% Bloomberg US Corp Hi Yld Index, and 5% Bloomberg Gbl Agg Ex USD Index (Hedged).

From 07/2009 through 12/2012: 15% Russell 1000 Index, 10% Russell 2500 Index, 6% FTSE EPRA/NAREIT US Index, 10% MSCI EAFE Index (USD) (Net), 32.3%Bloomberg US Agg Bond Index, 1.70% CS Lvg'd Loan Index, 10% Bloomberg US Corp Hi Yld Index, 5% Bloomberg Gbl Agg Ex USD Index (Hedged), and 10% ICEBofAML Cnvrt Bonds Index (All Qual).

The Target Allocation Index (Gross) is a static custom index that is calculated monthly and consists of:

From 07/2019 through present: 18.5% Russell 3000 Index, 18.5% MSCI ACW Ex US Index (USD) (Net), 23% Global Fixed Income Custom Index, 15% NCREIF ODCEIndex (AWA) (Gross), 15% Absolute Return Custom Index, and 10% DIS Custom Index.

From 02/2018 through 06/2019: 17% Russell 3000 Index, 17% MSCI ACW Ex US Index (USD) (Net), 21% Global Fixed Income Custom Index, 15% NCREIF ODCEIndex (AWA) (Gross), 20% Absolute Return Custom Index, and 10% DIS Custom Index.From 07/2014 through 01/2018: 17% Russell 3000 Index, 15% MSCI ACW Ex US Index (USD) (Net), 23% Global Fixed Income Custom Index, 15% NCREIF ODCEIndex (AWA) (Gross), 20% Absolute Return Custom Index, and 10% DIS Custom Index.From 01/2013 through 06/2014: 18.7% Russell 1000 Index, 12.4% Russell 2500 Index, 7.5% FTSE EPRA/NAREIT US Index, 12.4% MSCI EAFE Index (USD) (Net),33.3% Bloomberg US Agg Bond Index, 0.70% CS Lvg'd Loan Index, 10% Bloomberg US Corp Hi Yld Index, and 5% Bloomberg Gbl Agg Ex USD Index (Hedged).From 07/2009 through 12/2012: 15% Russell 1000 Index, 10% Russell 2500 Index, 6% FTSE EPRA/NAREIT US Index, 10% MSCI EAFE Index (USD) (Net), 32.3%Bloomberg US Agg Bond Index, 1.70% CS Lvg'd Loan Index, 10% Bloomberg US Corp Hi Yld Index, 5% Bloomberg Gbl Agg Ex USD Index (Hedged), and 10% ICEBofAML Cnvrt Bonds Index (All Qual).

The Global Fixed Income Custom Index consists of the Bloomberg US Unv Bond Index. Prior to 03/2019, the index consisted of 75% Bloomberg US Unv Bond Index and 25%Bloomberg Multiverse Index.

The Absolute Return Custom Index consists of 60% MSCI ACW IM Index (USD) (Net) and 40% Bloomberg US Agg Bond Index.

The DIS Custom Index consists of 50% Bloomberg US Trsy US TIPS Index and 50% FTSE EPRA/NAREIT Dvl'd Index (Gross) through 06/2015. It consists of 20% BloombergUS Trsy US TIPS Index, 30% Bloomberg Cmdty Ex Energy Index (TR), 30% S&P MLP Index (TR), and 20% S&P Gbl Natural Res Sect Index (TR) thereafter.

The All Asset Custom Index (Eql Wtd) is an equal-weighted hybrid created independently by RVK specifically for PIMCO’s All Asset strategies, and it consists of the followingbenchmarks:

1. Short Term Strategies: ICE BofAML 1 Yr T-Bill Index

North Dakota Board of University and School LandsAddendum


Page 14

Page 055

North Dakota Board of University and School LandsAddendum


2. US Core and Long Maturity Bond Strategies: Bloomberg US Agg Bond Index3. EM and Gbl Bond Strategies: PIMCO GLADI Index*4. Crdt Strategies: ICE BofAML US Hi Yld Master II Index5. Inflation Related Strategies: Bloomberg US Trsy US TIPS Index6. US Equity Strategies: Russell 3000 Index7. Global Equity Strategies: MSCI ACW Index (USD) (Net)8. Alternative Strategies: ICE BofAML 3 Mo US T-Bill Index+3%

* Performance for the PIMCO Gbl Advantage Bond Index (London Close) prior to 01/01/2004 consists of the JPM EMBI Gbl Dvf'd Index (USD) (TR).

Page 15

Page 056

Disclaimer of Warranties and Limitation of Liability - This document was prepared by RVK, Inc. (RVK) and

may include information and data from some or all of the following sources: client staff; custodian banks;

investment managers; specialty investment consultants; actuaries; plan administrators/record-keepers;

index providers; as well as other third-party sources as directed by the client or as we believe

necessary or appropriate. RVK has taken reasonable care to ensure the accuracy of the

information or data, but makes no warranties and disclaims responsibility for the accuracy or

completeness of information or data provided or methodologies employed by any external

source. This document is provided for the client’s internal use only and does not

constitute a recommendation by RVK or an offer of, or a solicitation for, any

particular security and it is not intended to convey any guarantees as to

the future performance of the investment products, asset classes,

or capital markets. Page 057

Schedule of Investable Assets

Asset Allocation & Performance

Portfolio Characteristics

Sector Distribution (%)

Fund Objective

The objective of this fund is to provide capital preservation with returns which exceed that of its custom benchmark,50% Bloomberg US Gov't Crdt 1-3 Yr Bond Index and 50% ICE BofAML 3 Mo US T-Bill Index.

Periods EndingBeginning

Market Value ($)Net

Cash Flow ($)Gain/Loss ($)

EndingMarket Value ($)

% Return

MTD 732,694,367 -91,060 3,474,080 736,077,387 0.47

MarketValue ($)

Performance (%)

MTD QTD FYTD CYTD1

YearSinceIncep.

InceptionDate

NT Ultra Short Extended (SA) 736,077,387 0.47 0.91 2.16 0.91 3.74 2.14 08/01/2015

NT Ultra Short Extended Custom Index 0.48 0.83 1.99 0.83 3.53 1.60

Difference -0.01 0.08 0.17 0.08 0.21 0.54

Portfolio Benchmark

Effective Duration 0.99 1.07

Modified Duration 1.12 1.02

Spread Duration 1.20 1.07

Convexity 0.02 N/A

Avg. Maturity 1.01 1.11

Avg. Quality Aaa Aa1

Yield To Maturity (%) 1.45 1.18

Coupon Rate (%) 2.25 N/A

Current Yield (%) 2.22 N/A

Holdings Count 174 1,624

North Dakota Board of University and School Lands As of February 29, 2020NT Ultra Short Extended (SA)

Performance shown is net of fees. Net cash flow includes securities lending income and client directed flows. Gain/loss includes dividend and interest income and capital appreciation. Allocations shown may not sum up to 100% exactly due to rounding. The NT Ultra Short Extended Custom Index is calculated monthly and currently consists of 50% Bloomberg US Gov't Crdt 1-3 Yr Bond Index and 50% ICE BofAML 3 Mo US T-Bill Index. Fiscal year end 06/30.

Page 058

COVID-19 and Economic

ImplicationsNorth Dakota Board of University and School

Lands

April 8, 2020

Introduction• Over the last several weeks, investors have faced increased market volatility due to

uncertainty surrounding developments with the novel (new) Coronavirus, and other geopolitical

events:

– Oil production/price disputes between Russia and Saudi Arabia.

– 2020 Presidential Election brings the potential for a significant shift in US policy.

• Given the rapidly evolving nature of “COVID-19” and the related ongoing developments, this

analysis is meant to provide a brief update on an ongoing situation.

• The following slides provide an overview of key developments thus far on these topics as well

as the implications for investors.

Source: Bloomberg, New York Times, Aljazeera, Global Endowment Management

MSCI All Country World Index

Wuhan Cases first reported to

WHO

2019 nCov identified

First Death in China

First Japan Case

China 139 new cases & first death

Wuhan shuts Down

NY Celebrations

Cancelled

US Travel Restrictions on

China

Diamond Princess Outbreak

American Dies in Wuhan

Chinese National Dies in France

Weekend surge in Italian Cases

CDC Pandemic warning

First Death in US

Super Tuesday and 50 bps reduction in Federal Funds Rate

Oil Production Dispute

US Bans Travel From Europe and WHO Declaration of Pandemic

Senate approves $2 trillion stimulus

package

CARES Act signed into law

Fed Injects Liquidity

Fed sets near zero policy rates

65

70

75

80

85

90

95

100

105

110

12/31/2019 01/10/2020 01/20/2020 01/30/2020 02/09/2020 02/19/2020 02/29/2020 03/10/2020 03/20/2020 03/30/2020

Page 2

Market Impact

• From an investment point of view, the sheer speed of this decline has been astonishing, particularly relative to

other equity market drawdowns in the last 40 years.

Data is as of March 30, 2020.

-60%

-50%

-40%

-30%

-20%

-10%

0%

1 31 61 91 121 151 181 211 241 271 301 331 361 391 421 451 481 511 541 571 601 631 661 691 721 751

Cu

mu

lati

ve %

Decli

ne

(S&

P 5

00)

Duration of Decline (Days)

Inflation/Recession (Ending 1974) Black Monday (1987) Tech Bubble GFC COVID-19

9%3%

-4%

-13% -13%-18%

-30%-23% -25% -29%

-60%-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

US Gov't US MBS USCredit

Lev.Loans

US HY S&P 500 R2000 MSCIEAFE

MSCI EM GlobalREIT

S&PMLP

YT

D R

etu

rn

Page 3

COVID-19 US Impact

• In the US, cases jumped to approximately

160,0001 as of March 30 representing the

highest number of reported cases globally within

a single country. Although more than half of the

United States has imposed lockdown measures

and restrictions on social gatherings, the number

of cases has continued to accelerate.

• There is a growing view among health

professionals and investors alike that new daily

cases will peak sometime over the next 30-45

days, though uncertainty remains.

• A few of the more notable countermeasures

implemented to date domestically include:

• Emergency rate reductions of 150 bps by the FED

over two week timeframe, bringing the target range

for the federal funds rate to 0-0.25%

• Federal Reserve injection of liquidity,

announcement of open-ended QE, and other

significant actions aimed to support market liquidity

• Global travel bans

• $2 trillion CARES stimulus packaged, with

potentially more stimulus on the horizon

Source: 1Johns Hopkins University & Medicine, The New York Times, 2Worldometer

Illnesses that began

during this time may

not be reported yet

Daily New Cases2

Page 4

Economic Impact of COVID-19

• Containment efforts to reduce the number of infections have resulted in a standstill of many economies. The

unprecedented lockdown and “shelter in place” orders have materially impacted supply and demand dynamics

at many stages of the supply chain. Supply chain disruptions have shifted from initial pressures following

China’s lockdown, to unprecedented logistics issues across the globe.

• It is still too early to reliably estimate what the ultimate damage to the global and domestic economies will be.

• Globally, the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and

Development (OECD) both issued a negative global growth outlook for 2020, anticipating a recession at least

as bad as during the global financial crisis or worse. However, recovery is expected to begin in 2021, provided

coronavirus containment efforts succeed.

• The industries hardest hit by COVID-19 around the world to date have been commercial aerospace, air &

travel, insurance carriers, oil and gas, automotive and entertainment activities.

– Within the travel sector, the shock to immediate demand is estimated to be five-to-six times greater than following the

terror attacks of September 11, 2001.1

1 McKinsey & Company, “COVID-19: Briefing Materials”. Updated: March 25, 2020.

Source: J.P. Morgan, Goldman Sachs, Morgan Stanley, Deutsche Bank, IMF, Bridgewater, International Monetary Fund, Organisation for Economic Co-operation and

Development (OECD), the Federal Reserve Bank of New York.

• The Weekly Economic Index (WEI), measuring real economic

activity in the US on a weekly frequency, as of March 21st

unsurprisingly displayed a drastic drop in economic activity.

• Furthermore in the US, fiscal support, coupled with a major

hole in tax revenues this year, will certainly expand the US

budget deficit.

Data through March 21, 2020.

Page 5

Economic Impact of COVID-19: Unemployment

• Unemployment claims for the week

ended March 28 shattered previous

records, coming in at nearly 10 times the

highest weekly claims number witnessed

during the GFC.

• Reduced employment can have a

cascading effect as consumer confidence

decreases and consumers spend less,

thus potentially contributing to a slower

recovery.

• Individuals unemployed for a short period

of time tend to revert back to historical

spending patterns relatively quickly, while

data shows that those unemployed for a

longer period of time may significantly

change their spending behavior.

Weekly Unemployment Claims

Source: St. Louis FRED

Page 6

Economic Impact of COVID-19: GDP

• The range of GDP estimates is wide in

the US as economists estimate that

GDP will suffer a 9-40% decline during

Q2.

• That being said, according to recent

data, economists are similarly

projecting a recovery in 2021 (with

some estimating a recovery beginning

in Q4 2020). There is also a wide

range of opinions about the various

paths of the recovery.

• Will it be fast as pent up demand

quickly unravels and firms rehire the

majority of workers?

• Or could it be slow and protracted as

firms may be reluctant to rehire until

they see signs of a sustained

recovery?

Firm

Q2 2020 GDP

Estimate

Bloomberg Economics -9.0%

UBS -9.5%

Pantheon -10.0%

Strategas -10.0%

Cornerstone Macro -11.0%

Oxford Economics -11.9%

Citigroup -12.0%

Credit Suisse -12.0%

Bank of America Merrill Lynch -12.0%

Deutsche Bank -12.9%

HIS Markit -13.0%

Wells Fargo -14.7%

TSLombard -17.7%

Evercore ISI -20.0%

JPMorgan -25.0%

Morgan Stanley -30.1%

Goldman Sachs -34.0%

Capital Economics -40.0%

Source: Charles Schwab

Data as of April 1, 2020

Page 7

Oil Production and Price Disputes

• Further exacerbating the global economic picture is volatility inspired by disputes between oil

producing countries, specifically Russia and Saudi Arabia, over production levels and price.

• The sell-off in crude began the first week of March following the failure of the OPEC deal with

its allies to reduce production as a countermeasure to lessened demand due to COVID-19.

– OPEC attempted to reduce supply (i.e. production) among the allies, but Russia did not comply.

– In turn, Saudi Arabia slashed prices, putting additional pressure on the energy sector.

– As a result, on Monday March 9th, oil prices dove 24.6% settling at $31.13 per barrel as investors

feared the possibility of an oil price war. Not surprisingly, this was WTI’s second worst day on record.

• The flood of oil supply has been exacerbated by significantly reduced demand as social

distancing measures have been adopted across the world, manufacturing activity has

decreased, and travel has come to a halt.

Largest Single Day Percent Drops in Oil Prices

Source: Factset data as of 3/9/20. CNBC.

Page 8

Downside Scenario Analysis

• Recent historical US Equity market corrections:- The table below illustrates three recent 1-year periods with significant equity market corrections as well

as North Dakota’s actual return.

• Subsequent Performance- The table below illustrates the subsequent performance over the following 1, 3 and 5 year periods that

followed each of the above periods.

MSCI ACWI Market Corrections 1-Year

MSCI ACWI Subsequent Performance 1, 3 and 5 Year

Mar 2008 -

Feb 2009

Apr 2002 -

Mar 2003

Oct 2000 -

Sep 2001

YTD Through

Mar 31, 2020

MSCI ACWI Return -48% -24% -28% -21%

North Dakota Actual Return -22% -6% -5% -15%*

Subsequent Returns Following a

Drawdown Event

Mar 2008 –

Feb 2009

Apr 2002 –

Mar 2003

Oct 2000 –

Sep 2001

MSCI ACWI Return – 1 year 59% 46% -18%

North Dakota – 1 year 24% 23% -2%

MSCI ACWI Return – 3 year 24% 25% 7%

North Dakota – 3 year 15% 13% 7%

MSCI ACWI Return – 5 year 20% 18% 11%

North Dakota – 5 year 13% 12% 8%

*YTD return for North Dakota is an estimate based on preliminary data.

Page 9

27%

-21%

14%

-15%

-14%

-6%

1%

6%

10%

18%

23%

-30% -20% -10% 0% 10% 20% 30%

MSCI ACWI: Jan- Dec 2019

MSCI ACWI: Jan 2020 - Mar 2020

North Dakota Return: Jan - Dec 2019

North Dakota Estimated Return: 01/01/20 - 03/31/20

1st Percentile

5th Percentile

25th Percentile

50th Percentile

75th Percentile

95th Percentile

99th Percentile

Downside Scenario Analysis

2019 and 2020 Performance in Context

• Based on RVK’s capital market assumptions and corresponding Monte Carlo analysis, the

chart below illustrates how both current YTD return for 2020 and the 2019 returns compare to

the range of expected potential outcomes.

Figures shown are representative of the Monte Carlo analysis completed through the Asset Allocation modeling.

Monte Carlo

output based

on the PTF’s

Current Targets

Page 10

11.19%

9.57%

7.61%

4.91%

2.53%

0.93%

-0.42% -1.0%

1.5%

4.0%

6.5%

9.0%

11.5%

14.0%

16.5%

19.0%

20-Year PeriodExcluding

15 Worst Days


10 Worst Days


5 Worst Days

20-Year Period 20-Year PeriodExcluding

5 Best Days


10 Best Days


15 Best Days

Risk of Timing the Market

• Market timing is a risky proposition. History shows investors typically miss market swings

when they attempt to time major entry and exit points, because when the market moves, it

often moves quickly.

• Systematic rebalancing can help resolve market timing risks; it addresses the uncertainty

inherent in the question, “…is now a good time to rebalance?” It does not try to catch

market peaks or bottoms.

Risk of Timing the MarketAnnualized S&P 500 Index Returns as of 3/30/2020

Page 11

Comparison to 2008-09 Global Financial Crisis

• Some investors may draw parallels between the current

drawdown and that of the 2008-09 Great Financial Crisis

(GFC).

• It is important to remember, however, that from a liquidity

perspective, thanks to reform following the GFC, the US

financial system is now better positioned to demonstrate

greater resilience than it did during the GFC (true for

Europe as well, but to a lesser degree).

• The Fed started a $700 billion QE program on March 14,

and nine days later, it expanded the size of QE to be

open-ended. To put this into perspective, after the global

financial crisis (GFC), the span of QE1 to QE3 took 5

years. It took only nine days for the Fed to expand QE to

its current open-ended form.

Page 12

Monetary Policy: The Role of the Federal Reserve

• On March 15th, the Fed effectively reduced the fed funds rate to zero in an effort to support the US economy.

• Given the speed with which the drawdown in risk assets occurred, there were signs of liquidity strains as

investors fled to the dollar.

• On March 12th, the Fed introduced measures of liquidity injection; on March 15th it announced new

quantitative easing and continues to take significant measures to support liquidity in the market, including

reintroducing tools last used during the GFC and even developing new tools to combat the unique challenges

presented by COVID-19.

• Fiscal policy has the potential to play a much larger role, with the CARES act having recently been signed

into law, and further stimulus potentially on the horizon.

US 10-Year Treasury Yields

Source: Global Endowment Management

Source: St. Louis FRED; Data as of 3/25

Federal Reserve Total Assets

Page 13

Fiscal Policy: CARES Act and Additional Stimulus

• On March 27, the CARES Act was

enacted, marking the third policy

relief measure instituted by the US

and cementing it as the largest fiscal

stimulus package in US history.

• The package total $2 trillion,

including cash payments for

individuals, expansion to

unemployment benefits, money for

state-level governments, and loans to

corporations.

• Loans to corporations come with

conditions, including maintenance of

payrolls and limitations to share

buybacks.

• The Senate is already exploring a

fourth fiscal stimulus package to

further stimulate the economy.

1 Coronavirus Aid, Relief, and Economic Security “CARES” Act.

*Bill data sourced from NPR. Page 14

Update on Fixed Income Markets

• As expected, US Treasuries have provided a safe haven for investors nervous about market risks.

• Rates were generally on a slow downward trend to start the year, but began a steeper decline toward the end

of February. In particular, between February 28th and March 9th, the 10-year treasury fell to just 0.54% (a 76

basis point drop from the 1.30% start).

– It had fallen to just 0.32% in overnight trading, the lowest point on record.

• The decline has been across all maturities. The 30-year treasury also fell to a record low 0.70% overnight

before ending Monday, March 9th at 0.99%, putting all treasury yields below 1% for the first time in history.

• The Federal Reserve on Sunday, March 15th announced a comprehensive easing package including near-

zero policy rates, large-scale purchases of U.S. Treasuries and mortgage-backed securities (MBS), lower

rates on currency swaps, and regulatory relief for banks.

– The move took the 10-year Treasury yield briefly to 31 basis points and the 30-year to 71 basis points, record lows.

• Yields have since risen, but remain well below levels seen at the beginning of the year.

Page 15

Summary

• Institutional portfolios are designed with a specific purpose and time horizon in mind. Unless

something has changed with regards to the purpose or time horizon of the portfolio, it is

unlikely that strategic asset allocation changes are advisable solely as a result of recent

events.

• We expect diversified portfolios to provide meaningful protection in turbulent capital markets.

• During times like these, it is also important to remember that:

– Thoughtful rebalancing is key, as this tends to reward investors over the long-term.

– Sharp declines in equity and credit markets may create new investment opportunities.

– Funds (and portfolio managers) which have carefully analyzed and managed liquidity prior to the

decline will be better prepared to meet their near-term obligations and more likely be able to capitalize

on opportunities resulting from these market dislocations.

As always, your RVK team stands ready to serve you as we all navigate this difficult

environment. Please reach out to us with any requests that may be helpful to you, no

matter how large or small.

Page 16

Disclaimer of Warranties and Limitation of Liability - This document was prepared by RVK, Inc. (RVK) and may include

information and data from some or all of the following sources: client staff; custodian banks; investment managers;

specialty investment consultants; actuaries; plan administrators/record-keepers; index providers; as well as other

third-party sources as directed by the client or as we believe necessary or appropriate. RVK has taken

reasonable care to ensure the accuracy of the information or data, but makes no warranties and disclaims

responsibility for the accuracy or completeness of information or data provided or methodologies

employed by any external source. This document is provided for the client’s internal use only

and does not constitute a recommendation by RVK or an offer of, or a solicitation for, any

particular security and it is not intended to convey any guarantees as to the future

performance of the investment products, asset classes, or capital markets.

Item 4C


RE: Strategic Asset Allocation Study and Recommended Changes The Board of University and School Lands’ (Board) Investment Policy Statement (IPS) requires a formal asset allocation review at least once every four years, with the last study completed in 2017. At the request of the Commissioner and the Department of Trust Lands’ investment staff (DTL staff), RVK conducted a formal asset allocation study for the Permanent Trust Funds (PTFs). As part of the study, RVK used their 2020 capital market assumptions which updated their long-term expectations for investment returns and risk for major asset classes, including public equities, fixed income, real estate, inflation strategies, absolute return strategies, infrastructure, and private equities. The new assumptions deemphasized treasury inflation protected securities (TIPS) and commodities across optimal portfolios on the efficient frontier. In addition, the assumptions slightly reduced public equities. Conversely, the new assumptions favor the introduction of infrastructure and private equities in the optimal portfolios on the efficient frontier (see Attachment 1). Further, RVK and DTL staff had several discussions regarding the advantages and disadvantages of TIPS, commodities, infrastructure, and private equities. RVK and DTL staff reached the following consensus:

• TIPS are a hedge against inflation; however, TIPS have consistently underperformed aggregate bonds over twenty years. A scenario where TIPS would outperform aggregate bonds would not persist beyond one year, due to the rapid repricing of aggregate bonds if actual inflation rises above expectations. Therefore, the model is correct to hold a zero allocation of TIPS in the optimal portfolios, and the PTFs should likewise be allocated away from TIPS. (PTFs current allocation target is 2% in TIPS.)

• Commodities are another hedge against inflation; however, like TIPS, commodities have underperformed over several cycles and have high volatility. In the three years the PTFs have held commodities, they have underperformed all other asset classes, except master limited partnerships (MLPs) and natural resource equities. Therefore, the model is correct to hold a zero allocation of commodities in the optimal portfolios, and the PTFs should likewise be allocated away from commodities. Additionally, the PTFs already have a large exposure on the revenue side, from both surface and mineral leases. (The PTFs current allocation target is 3% in commodities.)

• Public equities have had a strong runup over the past decade, despite the recent market correction. Most market observers and RVK professionals believe future return expectations for public equities should be muted. Further, if public equities show a stronger return potential, the Absolute Return strategies can add public equities quickly. Therefore, reducing the PTFs’ target holdings by 6 percentage points would be prudent. (The PTFs current allocation target is 38% in public equities.)

• Infrastructure would be a replacement strategy for the reduction in the above-mentioned asset classes. Infrastructure has steady return potential with moderate risk, similar to commercial real estate. Therefore, the model is correct to add a 5% allocation to infrastructure in the optimal portfolios, and the PTFs should likewise be allocated to infrastructure.

• Private equities would be another replacement strategy for the reduction in the above-mentioned asset classes. While private equities have a higher risk profile than most other asset classes, they also have a higher return profile. Further, more firms are staying private longer and market participants and RVK professionals see private equities as an enhancement to a long-term portfolio. Therefore, the model is correct to add a 5%

Page 073

Item 4C

allocation to private equities in the optimal portfolios, and the PTFs should likewise be allocated to private equities.

Finally, the staff and RVK would like the Board to consider a zero allocation or reduced allocation to MLPs and natural resource equities. The rationale is based on viewing the assets of the PTFs in a holistic approach, as opposed to a siloed approach. Holistically, the PTFs hold surface land, mineral rights, and investment securities, and these should be viewed together. Therefore, the PTFs should not “double-down” on assets in the investment portfolio that it holds in surface and mineral rights. Specifically, the exposures to commodities, MLPs and natural resource equities which mirror the risk assets already held in the surface and minerals portfolios. Please note, RVK’s optimal portfolios would continue to hold the PTFs’ current target allocation in MLPs and natural resource equities; however, the RVK model is unaware of the exposure the PTFs hold in their non-investment portfolios. Attachment 1: RVK Asset Allocation Overview Recommendation Options: Option 1: The Board approve the changes to the PTFs’ Strategic Asset Allocation to the Proposed Portfolio as indicated on page 11 of the attached RVK Asset Allocation Overview (March 26, 2020); to authorize DTL Staff and RVK to begin investment manager searches for both infrastructure and private equities for future Board approval; and to authorize DTL Staff to liquidate the TIPS and Commodities holdings in the PTFs in a manner that is consistent with the best interests of the PTFs and as market conditions allow. Option 2: The Board approve the changes to the PTFs’ Strategic Asset Allocation to the Proposed Portfolio as indicated on page 11 of the attached RVK Asset Allocation Overview (March 26, 2020); to authorize DTL Staff and RVK to begin investment manager searches for both infrastructure and private Equities for future Board approval; to authorize DTL Staff to liquidate the TIPS and Commodities holdings in the PTFs in a manner that is consistent with the best interests of the PTFs and as market conditions allow; and to discontinue adding new dollars to MLPs and Natural Resource Equities and allow the MLPs and Natural Resource Equities’ holdings to reduce naturally as a percent of the PTFs’ holdings. Option 3: The Board approve the changes to the PTFs’ Strategic Asset Allocation to the Proposed Portfolio as indicated on page 13 of the attached RVK Asset Allocation Overview (March 26, 2020); to authorize DTL Staff and RVK to begin investment manager searches for both infrastructure and private Equities for future Board approval; and to authorize DTL Staff to liquidate the TIPS, Commodities, MLPs, and Natural Resource Equities’ holdings in the PTFs in a manner that is consistent with the best interests of the PTFs and as market conditions allow. DTL Staff recommends this Option.


Aye Nay Absent

Secretary Jaeger


Treasurer Schmidt


Governor Burgum

Page 074

North Dakota Board

of University and School LandsAsset Allocation Overview

March 26, 2020

Page 075

• Overview and Recommendation 1

• Asset Allocation Study 2

• Scenario Analysis 3

• Appendix 4

Table of Contents

Section

Page 2

Page 076

Overview & Recommendation

Page 3

Page 077

• In line with The Land Board’s Investment Policy Statement which calls for a formal asset

allocation review at least every four years, RVK conducted a formal asset allocation study for

the Permanent Trust Funds (“the PTFs) updated with RVK’s 2020 capital market assumptions.

– A formal asset allocation study was previously completed for the PTFs in 2017.

• RVK and Staff evaluated the PTFs’ current target portfolio and potential portfolios that could

improve the PTF’s long-term expected risk/return profile, including considering allocations

private infrastructure and private equity.

– Analysis included wealth projects based on various contribution scenarios provided by Staff.

• RVK and Staff recommend the PTFs’ asset allocation targets be modified to either:

– Potential Portfolio 1

• modestly decrease public equity allocations,

• phase out allocations to TIPS and commodities, and

• add new allocations to private infrastructure and private equity.


• modestly decrease fixed income allocation,

• modestly increase public equity allocations,

• phase out allocations to TIPS, commodities, MLPs, and natural resource equities, and

• add new allocations to private infrastructure and private equity.

Overview and Recommendation

Page 4

Page 078


Broad US Equity, 18.5%

Broad International

Equity, 18.5%

Fixed Income, 23.0%

GTAA, 15.0%

Core Real Estate, 15.0%

TIPS, 2.0%

Commodities, 3.0%

MLPs, 3.0%

Global Natural Resource Equities, 2.0%

Current Target


Broad International Equity, 16.0%

Fixed Income, 23.0%

GTAA, 15.0%


MLPs, 3.0%


Private Infrastructure, 5.0%

Private Equity, 5.0%

Potential Portfolio 1



Fixed Income, 23.0%

GTAA, 15.0%


TIPS, 2.0%

Commodities, 3.0%

MLPs, 3.0%


Current Target



Fixed Income, 22.0%

GTAA, 15.0%


Private Infrastructure, 5.0%

Private Equity, 5.0%


Page 5

Page 079


• Compared to the current target portfolio, the potential portfolios would:– Improve long-term expected returns, while maintaining a similar expected risk/return ratio

– Provide additional diversification through new allocations to private infrastructure and private equity

– Better align with current Board/Staff tolerance for illiquid investments

– Exclude allocations to relatively less attractive asset classes (commodities and TIPs in Potential 1;

commodities, TIPs, MLPs, and natural resource equities in Potential 2), in favor of allocations to more

attractive asset classes, private infrastructure and private equity

– Provide additional income from Infrastructure investments

– Be expected to provide a higher projected median real wealth value over 10 years across various

contribution scenarios modeled

Current

Target

Potential

Portfolio 1


vs. Current Target

Potential

Portfolio 2


vs. Current Target

Broad US Equity 18.50% 16.00% -2.50% 19.00% 0.50%

Broad International Equity 18.50% 16.00% -2.50% 19.00% 0.50%

Fixed Income 23.00% 23.00% -- 22.00% -1.00%

GTAA 15.00% 15.00% -- 15.00% --

Core Real Estate 15.00% 15.00% -- 15.00% --

TIPS 2.00% -- -2.00% -- -2.00%

Commodities 3.00% -- -3.00% -- -3.00%

MLPs 3.00% 3.00% -- -- -3.00%

Global Natural Resource Equities 2.00% 2.00% -- -- -2.00%

Private Infrastructure -- 5.00% 5.00% 5.00% 5.00%

Private Equity -- 5.00% 5.00% 5.00% 5.00%

Total 100% 100% -- 100% --

Expected Return 5.79% 6.01% 0.21% 5.98% 0.19%

Risk (Standard Deviation) 9.32% 9.73% 0.41% 9.96% 0.64%

Risk/Return Ratio 0.62 0.62 -- 0.60 -0.02

RVK Liquidity Metric 80 71 -9 71 -9

Page 6

Page 080

Asset Allocation Study

6Page 7

Page 081

Asset Allocation Inputs

• Key Inputs in the asset allocation setting process include:

– Return objectives

• Long-term preservation of purchasing power (spending rate + inflation)

– Cash flow expectations and liquidity needs

• Analysis of projected income levels from royalties, extraction taxes, and other sources

• Analysis of projected payout levels (spending policy) and net cash flow

– Capital Markets Assumptions

• Projected long-term return, risk, and correlation behavior of the various capital markets

and investment categories

– Updated Qualitative Preferences of the Board/Staff

• Tolerance for illiquid investments; previously had a strong preference for liquid

investments

– Other Considerations

• Relationship between income sources and investment portfolio exposures

Page 8

Page 082

RVK Capital Markets Assumptions Overview

Capital Market (CM) assumptions are forward-looking estimates of the behavior of

asset classes.

• The asset class behaviors that we attempt to estimate in our CM assumptions – risk, return and

correlation – are widely accepted as the most powerful drivers of the total fund return over the

long run.

• Forecast Horizon: CM forecasts are virtually never less than three years, and even forecasts of

five years are rare. Typically, the outlook is 10 years or more. Economic forecasts typically center

around 12 months.

• We deploy a team of RVK professionals each year to focus on each asset class and we ensure

that all of our consultants formally review, critique, and ultimately support our CM assumptions.

• RVK’s CM assumptions have a time horizon of 10-20 years.

• Annual updates are typically gradual and incorporate historic performance, current valuations, as

well as the overall economic environment.

• The modeling assumes passive index returns for traditional asset classes. Additional alpha can

be achieved through active management in select asset classes.

Page 9

Page 083

Asset Allocation StudyKey Inputs

Long-Term Return and Risk Assumptions

2020 RVK Capital Market Assumptions.

Custom GTAA Index is comprised of 30% MSCI ACWI IMI, 25% BB US Agg, 5% FTSE Non-US Wrld Gov Bond, 10%

JPM EMBI Gbl Dvf’d, 10% BB US TIPS, 10% BB US Corp HY, and 10% BB Cmdty.

A return premium is added onto the standard Infrastructure assumption to reflect the additional expected return of the

private asset class.

Asset Class

Arithmetic

Return

Assumption

Standard

Deviation

Assumption

IndexLongest Historical Time

Frame

Annualized

Arithmetic

Return

Annualized

Standard

Deviation

Broad US Equity 6.30 16.01 Russell 3000 Jan 1979 - Dec 2019 11.92 16.48

Broad International Equity 8.40 18.63 MSCI ACW Ex US IMI (Gross) Jun 1994 - Dec 2019 5.70 21.60

US Agg Fixed Income 3.00 5.00 Bloomberg US Agg Bond Jan 1976 - Dec 2019 7.31 6.74

GTAA 5.50 9.15 Custom GTAA Index* Dec 1988 - Dec 2019 7.14 11.37

Core Real Estate 6.00 12.50 NCREIF ODCE (Gross) (AWA) Mar 1978 - Sep 2019(Q) 8.50 9.35

TIPS 2.75 5.63 Bloomberg US Trsy: US TIPS Jun 2002 - Dec 2019 5.29 6.03

Commodities 5.25 17.51Bloomberg Commodity Index (Total

Return)Jan 1991 - Dec 2019 1.89 17.85

MLPs 9.25 21.00 Alerian MLP Jan 1996 - Dec 2019 10.67 25.48

Global Natural Resource

Equities8.50 23.02 S&P Global Natural Resources Jan 2008 - Dec 2019 -0.12 22.92

Private Infrastructure 7.00 15.01 S&P Global Infrastructure Index Dec 2001 - Dec 2019 9.24 19.43

Private Equity 9.00 22.00 Cambridge US Private Equity Index Jun 1986 - Jun 2019(Q) 14.30 13.22

Page 10

Page 084

Asset Allocation StudyKey Inputs

Correlations

Broad US

Equity

Broad

International

Equity

US Agg

Fixed

Income

GTAA

Core

Real

Estate

TIPSCommo

ditiesMLPs

Global

Natural

Resource

Equities

Private

Infrastructure

Private

Equity

Broad US Equity 1.00 0.83 0.14 0.81 0.22 0.03 0.33 0.45 0.76 0.76 0.76

Broad International Equity 0.83 1.00 -0.01 0.90 0.30 0.14 0.50 0.46 0.87 0.89 0.74

US Agg Fixed Income 0.14 -0.01 1.00 0.26 -0.08 0.76 0.01 0.03 0.00 0.24 -0.29

GTAA 0.81 0.90 0.26 1.00 0.34 0.36 0.64 0.52 0.84 0.89 0.68

Core Real Estate 0.22 0.30 -0.08 0.34 1.00 0.11 0.24 0.18 0.20 0.37 0.35

TIPS 0.03 0.14 0.76 0.36 0.11 1.00 0.26 0.13 0.25 0.33 -0.15

Commodities 0.33 0.50 0.01 0.64 0.24 0.26 1.00 0.41 0.76 0.53 0.45

MLPs 0.45 0.46 0.03 0.52 0.18 0.13 0.41 1.00 0.62 0.56 0.41

Global Natural Resource Equities 0.76 0.87 0.00 0.84 0.20 0.25 0.76 0.62 1.00 0.78 0.71

Private Infrastructure 0.76 0.89 0.24 0.89 0.37 0.33 0.53 0.56 0.78 1.00 0.67

Private Equity 0.76 0.74 -0.29 0.68 0.35 -0.15 0.45 0.41 0.71 0.67 1.00

Page 11

Page 085

Asset Allocation StudyEfficient Portfolio

Constraints: US Equity must be greater than International Equity. Total DIS asset classes must be less than 12% of

the total portfolio.

In conducting the Asset Allocation study, RVK and Staff considered including new asset classes that could be of potential interest. In

particular, we modeled private equity and private infrastructure into an asset allocation study. Potential Portfolio 1 is most similar to

Efficient Portfolio 7.Frontier 1

Page 12

Page 086

Asset Allocation StudyEfficient Portfolios – No MLPs or Global Natural Resource Equities

Constraints: US Equity must be greater than International Equity. Total DIS asset classes must be less than 12% of

the total portfolio.

In this Frontier, Private Infrastructure and Private Equity remain, while MLPs and Global Natural Resource Equities are eliminated from

the possible asset classes. The Current Target and Potential Portfolio 1 are unchanged, for reference. Potential Portfolio 2 is most

similar to Efficient Portfolio 7.Frontier 2

Page 13

Page 087

Asset Allocation StudyEfficient Frontier – No MLPs or Global Natural Resource Equities

The figure below illustrates the relationship between risk and return. The line connecting the points represents all the optimal

portfolios subject to the given constraints and is known as the "efficient frontier“. The green frontier represents Frontier 1, which

includes MLPs and Global Natural Resource Equities, while the blue frontier represents Frontier 2, which excluding MLPs and Global

Natural Resource Equities. Potential Portfolio 1 is most similar to Efficient Portfolio 7 on Frontier 1, while Potential Portfolio 2 is most

similar to Efficient Portfolio 7 on Frontier 2.

Page 14

Page 088

Private Equity Overview

• Private Equity investments are made up of privately held businesses that do not trade on an

exchange, are illiquid, and have a long investment horizon

• It has a unique cash flow structure requiring paced cash funding and distributions

– Capital is called “as needed”, slowly over a period of years, and distributions occur

irregularly as investments are sold

• Investments are long-term, typically 12 years or more, with limited ability to liquidate before the

termination of a partnership

Benefits of Investing in Private Equity (PE) Unique Considerations

• Additional source of alpha – PE investments are

expected to generate alpha above public market

returns. RVK currently estimates that the private

equity asset class will return a premium of 300 basis

points over public market returns

• Diversification - Provides some limited additional

diversification benefits to a broadly diversified portfolio

• Broader market exposure - Provides a way to

access industries, sectors and products not easily

available to public markets

• Improves companies’ value - Allows skilled

managers to effect meaningful change to businesses,

thus improving value

• Illiquidity – PE investments consist predominantly of

holdings in privately held businesses with limited

marketability prior to an exit

• Long investment horizon- PE investments typically

have a horizon of 10 years or more

• Cash flow uncertainty - Cash flows are dependent

upon market dynamics and can be difficult to forecast.

Low transparency - PE firms typically raise capital

with limited insight into the actual investments that will

be included with the fund

• Higher fees - higher fees than traditional asset

classes and include management fees and carried

interest, or incentive fee on the investment gains

Page 15

Page 089

Infrastructure Overview

Public Equities Open-End Funds Close-End Funds

• Liquid and not complex

• Higher correlation with large cap

equities

• Limited investment universe

• Pooled vehicles without a

defined term

• Structured as core or core-plus

mandates

• Target returns - 8-12% net of

fees

• Illiquid investment in a blind pool

(passive investor)

• May not have sufficient time

horizon to realize full potential of

invested asset

• Target returns:10-15% net of

fees

What is Infrastructure?

• Basic facilities needed for the continued function of an economy

• Essential characteristics:

• Long useful life

• High barriers to entry (monopolistic)

• Operates in a regulated environment

• Stable, predictable cash flows

• Difficult to replicate

• Examples: toll roads, airports, pipelines, water treatment facilities, energy distribution systems

How Can you Invest in Infrastructure?

Page 16

Page 090

Infrastructure Overview

Benefits and Unique Considerations for Investing in Private Infrastructure

Benefits Unique Considerations

• Lower correlated source of return, historically

• Stable cash yield from mature assets with proven

demand

• Exposure to diverse array of subsectors

• Inflation hedge, as the replacement cost of

infrastructure assets increase, protecting the value of

the investment

• Low volatility of expected returns, given long-term

contractual revenue sources

• Long-term illiquid vehicles, generally longer than other

locked up asset classes

• Exposed to regulatory and political risks

• Funds compete with lower cost of capital providers

• Investments often use leverage to increase returns

• Limited US infrastructure investment opportunities so

most portfolios focus on international investments

Page 17

Page 091

Scenario Analysis

Page 18

Page 092

Monte Carlo Simulation – Expected Returns Current vs. Proposed

The charts below show the expected return by percentile for the Current and Potential Portfolios for the 1 and 10

year periods.

1st -5th percentile 5th -25th percentile 25th -50th percentile 50th -75th percentileMedian 95th -99th percentile

-20

-15

-10

-5

0

5

10

15

20

25

30

Current Target Potential Portfolio 1 Potential Portfolio 2

Monte Carlo Simulation - 1 Year Returns

-2

0

2

4

6

8

10

12

14


Monte Carlo Simulation - 10 Year Returns

1 Year 10 Years

Percentile

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

99th 23.36 23.15 -0.21 24.88 1.52 10.99 11.16 0.17 11.90 0.91

95th 17.54 17.52 -0.02 19.07 1.53 9.36 9.51 0.15 10.07 0.71

75th 10.36 10.60 0.24 11.26 0.90 7.15 7.37 0.22 7.50 0.35

Median 5.78 6.02 0.24 6.05 0.27 5.65 5.87 0.22 5.80 0.15

25th 1.42 1.69 0.27 1.08 -0.34 4.00 4.23 0.23 4.01 0.01

5th -5.98 -5.65 0.33 -6.81 -0.83 1.51 1.77 0.26 1.24 -0.27

1st -14.05 -13.43 0.62 -16.06 -2.01 -0.46 -0.15 0.31 -1.06 -0.60

Page 19

Page 093

Monte Carlo Simulation – Probability of Achieving Set ReturnsCurrent vs. Potential

The chart below shows the percentage chance of achieving or exceeding the given real return for the Current and

Potential portfolios over the 10 Year period.

55

47

39

30

23

58

50

42

33

26

57

50

42

34

28

0

10

20

30

40

50

60

70

3.00% 3.50% 4.00% 4.50% 5.00%

Pro

ba

bili

ty o

f A

ch

ievin

g T

arg

et

Target Return

Probability of Achieving Given Real Return Over 10 Years


Page 20

Page 094

Cash Flow Projections

• Contributions – Revenues received from sources outside of the investment portfolio including mineral

royalties, oil taxes, rental income, easement revenues and unclaimed property collections.

– Staff provided projections of the Permanent Trust Funds’ surface and mineral contributions

for three different scenarios based on projections from the North Dakota Pipeline Authority.

• Distributions – Assumes bi-annual distribution calculation (10% of trailing 5 year average market value as of

1 year prior to start of bi-annual period). Annual spending during the bi-annual period is 50% in Year 1 and 50%

in Year 2.

– If portfolio values are rising, this will result in a “lag effect” whereby the annual spending rate is effectively

lower than 5%. The reverse will occur if portfolio values are falling.

Surface Contributions Mineral Contributions

Scenario 1 Initial Contribution $14.75 M $285 M

Annual Growth Rate +2.5% +2.5% for 15 years and -1.5% thereafter


Annual Growth Rate +2.0% +1.0% for 15 years and -2.0% thereafter


Annual Growth Rate +1.5% -2.0% for 5 years and -3.5% thereafter

Page 21

Page 095

Real Wealth Analysis

• The following slides compare the projected market value/total assets based on the modeling

output of the PTF under various time frames, asset allocation targets, and external asset inflow

scenarios previously described. Monte Carlo simulation was used for this analysis.

• The projected market values incorporate the cash flow assumptions previously outlined on the

prior slide.

• The beginning point for the analysis is 06/30/2020, with an assumed starting asset value of $5.0

billion.

• We considered the following asset allocation targets:

– Current Targets: PTF’s current target asset allocation



• Based on our analysis, the Potential Portfolios have more favorable expected outcomes than the

PTFs’ current target across virtually all scenarios.

Page 22

Page 096

$5,296

$8,709

$14,426

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*


5th Percentile 50th Percentile 95th Percentile

Projected Market Value Summary

Scenario 1Projected Market Value ($ Millions)

5 Years

Current

Target

Potential

Portfolio 1

Potential 1 vs.

Current

Potential

Portfolio 2

Potential 2 vs.

Current

5th Percentile $4,713 $4,780 $67 $4,609 ($104)

50th Percentile $6,078 $6,147 $69 $6,114 $36

95th Percentile $7,753 $7,829 $76 $8,045 $292

$5,544

$8,524

$13,401

$-

$4,000

$8,000

$12,000

$16,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*

Current Target

$5,717

$8,814

$13,705

$-

$4,000

$8,000

$12,000

$16,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*

Potential Portfolio 110 Years

Current

Target

Potential

Portfolio 1

Potential 1 vs.

Current

Potential

Portfolio 2

Potential 2 vs.

Current

5th Percentile $5,062 $5,165 $103 $4,798 ($264)

50th Percentile $7,016 $7,161 $145 $7,146 $130

95th Percentile $9,690 $9,818 $128 $10,426 $736

20 Years

Current

Target

Potential

Portfolio 1

Potential 1 vs.

Current

Potential

Portfolio 2

Potential 2 vs.

Current

5th Percentile $5,544 $5,717 $173 $5,296 ($248)

50th Percentile $8,524 $8,814 $290 $8,709 $185

95th Percentile $13,401 $13,705 $304 $14,426 $1,025

*Market values are in real and not in nominal terms

Page 23

Page 097

$4,754

$7,991

$13,424

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*



$5,144

$8,073

$12,741

$-

$4,000

$8,000

$12,000

$16,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*



Scenario 2

$4,971

$7,803

$12,416

$-

$4,000

$8,000

$12,000

$16,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*

Current Target Projected Market Value ($ Millions)Scenario 2

5 Years

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

5th Percentile $4,647 $4,721 $74 $4,524 ($123)

50th Percentile $6,010 $6,078 $68 $6,043 $33

95th Percentile $7,679 $7,750 $71 $7,926 $247

10 Years

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

5th Percentile $4,866 $4,962 $96 $4,612 ($254)

50th Percentile $6,782 $6,920 $138 $6,920 $138

95th Percentile $9,417 $9,538 $121 $10,085 $668

20 Years

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

5th Percentile $4,971 $5,144 $173 $4,754 ($217)

50th Percentile $7,803 $8,073 $270 $7,991 $188

95th Percentile $12,416 $12,741 $325 $13,424 $1,008


Page 24

Page 098

$3,728

$6,612

$11,494

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*




Scenario 3


$3,922

$6,443

$10,634

$-

$4,000

$8,000

$12,000

$16,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*

Current Target

$4,105

$6,700

$10,947

$-

$4,000

$8,000

$12,000

$16,000

2020 2023 2026 2029 2032 2035 2038

Mill

ion

s*


Projected Market Value ($ Millions) Scenario 3

5 Years

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

5th Percentile $4,533 $4,607 $74 $4,442 ($91)

50th Percentile $5,880 $5,949 $69 $5,922 $42

95th Percentile $7,534 $7,603 $69 $7,817 $283

10 Years

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

5th Percentile $4,471 $4,573 $102 $4,233 ($238)

50th Percentile $6,327 $6,471 $144 $6,450 $123

95th Percentile $8,876 $9,005 $129 $9,584 $708

20 Years

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

5th Percentile $3,922 $4,105 $183 $3,728 ($194)

50th Percentile $6,443 $6,700 $257 $6,612 $169

95th Percentile $10,634 $10,947 $313 $11,494 $860

Page 25

Page 099

10 Year Projected Market Values ($ Millions)

Revenue Scenario 1 Revenue Scenario 2 Revenue Scenario 3

PercentileCurrent

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

Current

Target

Potential

Portfolio 1

Potential 1

vs. Current

Potential

Portfolio 2

Potential 2

vs. Current

5th $5,062 $5,165 $103 $4,798 ($264) $4,866 $4,962 $96 $4,612 ($254) $4,471 $4,573 $102 $4,233 ($238)

25th $6,150 $6,284 $134 $6,103 ($47) $5,937 $6,060 $123 $5,872 ($65) $5,511 $5,639 $128 $5,462 ($49)

Median $7,016 $7,161 $145 $7,146 $130 $6,782 $6,920 $138 $6,920 $138 $6,327 $6,471 $144 $6,450 $123

75th $8,053 $8,179 $126 $8,304 $251 $7,798 $7,925 $127 $8,056 $258 $7,316 $7,439 $123 $7,549 $233

95th $9,690 $9,818 $128 $10,426 $736 $9,417 $9,538 $121 $10,085 $668 $8,876 $9,005 $129 $9,584 $708

Real Wealth Analysis – 10 Years

Market values are in real and not in nominal terms

5th -25th percentile 25th -50th percentile 50th -75th percentileMedian

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

Current Target PotentialPortfolio 1

PotentialPortfolio 2

Mill

ion

s

Projected Market ValueRevenue Scenario 1

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000



Mill

ion

s


$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000



Mill

ion

s


Page 26

Page 100

Appendix

Page 27

Page 101

Investment Decision Making Hierarchy

The Land

Board

Assets

Public

Equity

Global

Fixed

Income

Alternatives

US Equity

Non-US Equity

US Fixed Income

Non-US Fixed

Income

Diversifying

Assets

Return-Seeking

Assets

Large Cap

Small Cap

Developed

Emerging

Core

Non-Core

Developed

Emerging

Liquid

Illiquid

Liquid

Semi-Liquid

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Manager(s)

Asset Allocation Study Asset Class Structure Studies

• Models specific targets to asset

classes

• Used to select overall target

allocation

• Uses passive assumptions

• Implementation guide with targets to

sub-asset classes

• Mix of active and passive investments

determined

• Optimal mix of managers

Page 28

Page 102

RVK 2020 Capital Markets Assumptions

RVK Capital Market Assumptions’ Process

• Each winter, representatives from RVK’s general consulting and research teams convene to

update long-term forward looking expectations for each asset class utilized by our ~190 clients.

• The components we estimate include:

– Return

– Risk (volatility of returns)

– Correlation (relationship of asset class returns with all other asset classes)

• Annual updates are typically gradual and incorporate historic performance, current valuations,

as well as the overall economic environment.

Notable Changes to 2020 Assumptions

• Lower expected returns across most asset classes

– Strong 2019 returns experienced by most asset classes resulted in more expensive valuations and lower

yields observed

• Lower expected risk (standard deviation)

– RVK has broadened its focus across monthly, annual, and historical distribution considerations, as well

as enhanced its analysis of the historical distribution of returns for each asset class

– Mostly attributed to RVK’s improved estimate process and does not imply that RVK believes capital

markets have entered into a lower volatility regime going forward

Page 29

Page 103

2020 Capital Markets Assumptions

Diversified Inflation Strategies is a combination of 1/3 TIPS, 1/3 Global REITs, and 1/3 Commodities.

The Custom DIS Index is comprised of 1/3 BC US Try: US TIPS Index, 1/3 MSCI World Real Estate Index, and 1/3DJ-UBS Commodity Index.

Asset Class

Nominal

Return

(Arith.)

Risk

(St. Dev.)

Nominal

Return

(Geo.)

Nominal

Return

(Arith.)

Risk

(St. Dev.)

Nominal

Return

(Geo.)

Nominal

Return

(Arith.)

Risk

(St. Dev.)

Nominal

Return

(Geo.)

Large/Mid Cap US Equity 6.75% 17.75% 5.30% 6.25% 16.00% 5.07% -0.50% -1.75% -0.24%

Small Cap US Equity 7.25% 21.25% 5.20% 6.75% 19.00% 5.10% -0.50% -2.25% -0.11%

Broad US Equity 6.80% 17.80% 5.35% 6.30% 16.00% 5.12% -0.50% -1.80% -0.23%

Dev'd Large/Mid Cap Int'l Equity 8.25% 19.00% 6.62% 7.75% 17.00% 6.43% -0.50% -2.00% -0.19%

Dev'd Small Cap Int'l Equity 8.50% 23.00% 6.14% 8.25% 20.00% 6.45% -0.25% -3.00% 0.31%

Emerging Markets Equity 10.75% 29.00% 7.14% 10.00% 25.00% 7.26% -0.75% -4.00% 0.13%

Broad International Equity 8.90% 20.95% 6.94% 8.40% 18.60% 6.84% -0.50% -2.35% -0.10%

Global Equity 7.80% 18.40% 6.26% 7.25% 16.45% 6.01% -0.55% -1.95% -0.25%

US Aggregate Fixed Income 3.75% 6.00% 3.58% 3.00% 5.00% 2.88% -0.75% -1.00% -0.70%

Non-US Dev'd Sovereign Fixed Income UH 2.25% 10.50% 1.72% 1.50% 8.50% 1.15% -0.75% -2.00% -0.57%

TIPS 4.00% 6.25% 3.81% 2.75% 5.50% 2.60% -1.25% -0.75% -1.21%

Low Duration Fixed Income 3.50% 3.50% 3.44% 2.50% 2.50% 2.47% -1.00% -1.00% -0.97%

Long Duration Fixed Income 3.75% 11.50% 3.12% 3.00% 10.00% 2.52% -0.75% -1.50% -0.60%

High Yield 6.00% 15.00% 4.95% 5.00% 10.00% 4.53% -1.00% -5.00% -0.43%

Bank Loans 5.25% 10.00% 4.78% 4.75% 8.00% 4.45% -0.50% -2.00% -0.33%

Emerging Markets Debt Hard Currency 5.75% 10.50% 5.23% 5.00% 10.00% 4.53% -0.75% -0.50% -0.71%

Emerging Markets Debt Local Currency 5.75% 12.50% 5.02% 5.25% 11.50% 4.63% -0.50% -1.00% -0.39%

Core Real Estate 6.00% 12.50% 5.27% 6.00% 12.50% 5.27% 0.00% 0.00% 0.00%

Global REITs 6.50% 19.00% 4.84% 6.25% 21.00% 4.23% -0.25% 2.00% -0.61%

MLPs 9.00% 23.00% 6.65% 9.25% 21.00% 7.29% 0.25% -2.00% 0.63%

Funds of Hedge Funds 5.50% 9.50% 5.07% 4.75% 9.50% 4.32% -0.75% 0.00% -0.75%

Multi-Strategy Hedge Funds 6.25% 9.50% 5.83% 5.50% 8.50% 5.16% -0.75% -1.00% -0.67%

GTAA 6.25% 10.50% 5.73% 5.50% 9.00% 5.12% -0.75% -1.50% -0.62%

Private Credit 8.50% 23.00% 6.14% 6.75% 13.00% 5.97% -1.75% -10.00% -0.17%

Private Equity 9.50% 25.50% 6.65% 9.00% 22.00% 6.85% -0.50% -3.50% 0.20%

Commodities 5.50% 19.75% 3.70% 5.25% 17.50% 3.82% -0.25% -2.25% 0.13%

Diversified Inflation Strategies 5.35% 11.50% 4.73% 4.75% 11.30% 4.15% -0.60% -0.20% -0.58%

US Inflation 2.50% 3.00% 2.46% 2.25% 1.50% 2.24% -0.25% -1.50% -0.22%

Cash Equivalents 3.00% 3.00% 2.96% 2.25% 2.00% 2.23% -0.75% -1.00% -0.73%

Change (2020 - 2019)2019 2020

Page 30

Page 104

2017 2020 Change (2020 - 2017)

Asset Class Benchmark

Nominal

Return

(Arith.)

Standard

Deviation

Nominal

Return

(Geo.)

Nominal

Return

(Arith.)

Standard

Deviation

Nominal

Return

(Geo.)

Nominal

Return

(Arith.)

Standard

Deviation

Nominal

Return

(Geo.)

Broad US Equity Russell 3000 7.05% 17.80% 5.60% 6.30% 16.00% 5.12% -0.75% -1.80% -0.48%

Broad International Equity MSCI ACW Ex US IMI (Gross) 8.85% 20.65% 6.94% 8.40% 18.60% 6.84% -0.45% -2.05% -0.10%

Global Equity MSCI ACW IMI (Gross) 7.90% 18.30% 6.38% 7.25% 16.45% 6.01% -0.65% -1.85% -0.37%

US Aggregate Fixed Income Bloomberg US Aggregate Bond 3.50% 6.00% 3.33% 3.00% 5.00% 2.88% -0.50% -1.00% -0.45%

TIPS Bloomberg US Treasury: US TIPS 3.75% 6.25% 3.56% 2.75% 5.50% 2.60% -1.00% -0.75% -0.96%

Core Real Estate NCREIF ODCE (Gross) (AWA) 6.25% 12.50% 5.52% 6.00% 12.50% 5.27% -0.25% 0.00% -0.25%

MLPs Alerian MLP Index 8.50% 22.00% 6.34% 9.25% 21.00% 7.29% 0.75% -1.00% 0.95%

GTAA Custom GTAA Index 6.25% 10.00% 5.78% 5.50% 9.00% 5.12% -0.75% -1.00% -0.66%

Commodities Bloomberg Commodity Index 5.75% 19.75% 3.95% 5.25% 17.50% 3.82% -0.50% -2.25% -0.13%

Diversified Inflation Strategies Custom DIS Index 6.60% 13.15% 5.80% 4.75% 11.30% 4.15% -1.85% -1.85% -1.65%

US Inflation Consumer Price Index 2.50% 3.00% 2.46% 2.25% 1.50% 2.24% -0.25% -1.50% -0.22%

Cash Equivalents BofA ML 3 Mo US T-Bill 2.25% 3.00% 2.21% 2.25% 2.00% 2.23% 0.00% -1.00% 0.02%

RVK 2020 Assumptions


Custom GTAA Index is comprised of 60% MSCI ACW IMI (Gross) and 40% Barclays US Aggregate Bond Index.

Custom Diversified Inflation Strategies Index is comprised of 20% Bloomberg US TIPS Index, 30% Alerian MLP Index, 20% MSCI All

Country World Investable Market Index (Gross), 30% Dow-Jones-UBS Commodity Index (Total Returns)


Custom GTAA Index is comprised of 30% MSCI ACW IMI, 25% BB US Agg, 5% FTSE Non-US Wrld Gov Bond, 10% JPM EMBI Gbl

Dvf’d, 10% BB US TIPS, 10% BB US Corp HY, and 10% BB Cmdty.

The Custom DIS Index is comprised of 1/3 BC US Try: US TIPS Index, 1/3 MSC

I

World Real Estate Index, and 1/3DJ-UBS

Commodity Index.Page 31Page 105

How does Private Equity work?

A private equity manager (also called the general partner) finds investors to

commit to their private equity fund.

The general partner then searches multiple private companies to

purchase where they believe they can create value.

Once these companies are purchased, the

general partner then works to create value

within each company through increasing sales

or reducing costs.

Fund

launchPurchase

Company A

Purchase

Company B

Purchase

Company C

Value Creation

Sell

Company A

Sell

Company B

Sell

Company C

Fund

ends

The general partner then

sells the companies,

realizing value and

returning investor’s

capital.

Page 32

Page 106

Private Equity Strategies

Outside of venture capital, individual funds may overlap multiple strategies.

Co

mp

an

y G

row

th

Company Age

Venture Capital• Rapid revenue growth• Approaching profitability• Still building out management team• 3 out of 10 “hit rate”

Sample Firm: Sequoia CapitalSample Investment: Google

Buyouts

• Stable, possibly growing revenue• Generates consistent cash flow• Seasoned management team• 7 out of 10 “hit rate”

Sample Firm: KKRSample Investment: Hertz

Turnarounds / Distressed / Special Situations• Structured investments, restructurings, mergers,

and recapitalizations.• Decent assets in complicated situations• Can use debt or equity• 7 out of 10 “hit rate”

Sample Firm: Sun CapitalSample Investment: Boston Market

Growth Equity• Profitable growing companies• Capital provided for expansion to new

markets, regions, or product lines• 6 out of 10 “hit rate”

Sample Firm: TA AssociatesSample Investment: Tempur Pedic

Natural Resources

• Upstream and midstream oil & gas

investments• Spectrum of risk approaches• 5 out of 10 “hit rate”

Sample Firm: QuantumSample Investment: Ceritas Energy II

Page 33

Page 107

Funds Raised by Private Equity Strategy

193

12694

69

122

225

320

386 370

187165

215 209

283

365 357

439

512

402

0

100

200

300

400

500

600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Buyout Growth Venture Other

193

12694

69

122

225

325

386 371

187165

215 209

283

365 359

440

515

404

0

100

200

300

400

500

600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

North America Europe Asia & Rest of World

Page 34

Page 108

Characteristics of Investment Strategies

StrategySecurity

Owned

Typical Hold

PeriodExit Method

Return

Potential

Use of

Leverage

Current

Income

Potential

Venture Capital Equity 5-8+ years IPO or M&A High No None

Buyouts Equity 4-6 years M&A Moderate Yes Limited

Growth Equity Equity 3-7 years IPO or M&A Moderate to High No Limited

MezzanineDebt notes with

equity warrants1-3 years Repayment Low Yes Good

Turnarounds /

Distressed /

Special

Situations

Debt or Equity 0-7 yearsM&A,

RecapitalizationLow to High Yes Limited

Natural

ResourcesEquity 3-7 years IPO or M&A High Yes Limited

Page 35

Page 109

Other Private Equity Structures

Purchase of existing private

equity partnership interests on

the secondary market

Can be used to quickly obtain

exposure and/or diversification

Proper due diligence and price

are key determinants of

success in the secondary

market

Generally associated with

higher IRRs and lower multiples

than primary funds and co-

investments

Investments made directly into

private equity companies,

typically made alongside an

experienced lead investor

Co-investments are typically

more passive than a lead

investor, but will usually have

equal economic terms

This results in the removal of a

layer of fees as compared to a

traditional fund-of-funds

investment

Secondaries Co-Investments

Page 36

Page 110

Structure Comparison

Structure Summary Advantages Risks

Fund of Funds Multi-layered structure

where the client invests

with a manger who

selects 15 to 30

underlying funds

Broad diversification

across managers and

vintage years

Double layer of fees,

potential for over-

diversification, potential

for longer tail end

position due to number

of companies

Direct Funds Investments with

private equity funds

Direct access to PE

managers

RVK recommends 3+

annual commitments

annually to achieve

diversified portfolio,

difficult for smaller

investors to access

best in class managers

Co-Investment Funds Invests alongside

different direct funds in

15 to 40 deals

Low fees relative to

both direct funds and

fund of funds, built-in

diversification

More concentrated

than fund of funds

Secondaries Funds Acquires older private

equity fund interests

from investors

Potential for rapid

capital deployment,

stronger earlier cash

flows

Over diversified

portfolios even above

fund of funds,

overheated market

Page 37

Page 111

Vintage Year Diversification

• Not participating in specific years can have a significant effect on overall return

• To achieve the long-term expected return, it is important to maintain consistent

exposure in each vintage year

Source: Preqin (2017).

6%

10%

11%11% 11%

8% 8% 8%

10%

13%

14%13%

15%16%

15%14%

16%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Private Equity Vintage Year ReturnsAs of September 30, 2018

Vintage Year IRR (Median) Average IRR (2001 to 2015: 11.8%)

Page 38

Page 112

Private Equity Terms

• Private equity funds typically have a fixed ten-year term with possible one to two year

extensions; fund of funds have twelve-year terms with two to three year extensions

• The investment period is generally around five years for direct funds and three to five

years for fund-of-funds. This is the time when a fund actively seeks out and invests in

new opportunities

• Most of the capital will be drawn and most of the management fees and expenses will

also be paid during the investment period.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10

Year11

Year12

Capital Called Capital Distributed Fund NAV

Page 39

Page 113

Private Equity Fund Lifecycle

Observations:

• The fund is fully funded between years eight and nine (PIC)

• Contribution and distribution schedules cause the amount of private equity exposure to

peak between years five and six, at approximately 80% of the Commitment amount (RVPI)

• Sample PE Fund returned slightly above 1.8X Commitment (DPI)

0%

40%

80%

120%

160%

200%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

% o

f C

om

mit

men

ts

Year

Sample Private Equity Fund Cash Flows

Paid In Capital (PIC) Distributed Capital (DPI) Residual Valuation (RVPI)

Page 40

Page 114

Infrastructure

• Definition:

– Typically defined as basic facilities needed for the functions of a community or

society

• Companies demonstrate the following characteristics:

– Monopolistic or quasi-monopolistic market position

– Long useful life and high barriers to entry

– Stable, predictable cash flows, often linked to inflation

– Operate in regulated environments and/or exhibit resistance to business cycles

Page 41

Page 115

Infrastructure Types

• Four main infrastructure types:

– Transportation (e.g., bridges, toll roads, airports)

– Utilities and regulated industries (e.g., electricity lines, oil and gas pipelines)

– Communication (e.g., communication towers, satellites, cable systems)

– Social infrastructure (e.g., schools buildings, hospitals, courthouses, and

correctional facilities)

• Other infrastructure types include water-related investments and

natural resources:

– Examples include water aquifers and coal mines

Page 42

Page 116

Why Infrastructure?

• Provides exposure to steady cash flows and strong yields

• Possible inflation hedge and relatively low correlation to other asset

classes

• Assets with limited competition and high barriers to entry

Page 43

Page 117

Infrastructure

• Benefits to a portfolio allocation

– Low correlation historically to many other asset classes

– Low volatility of expected returns, given long-term contractual revenue sources

– Stable cash yield from mature assets with proven demand

– Large capital need for under-capitalized and aging assets

– Inflation protection provided through two aspects

• In inflationary environments, the replacement cost of infrastructure assets increase

thereby protecting the value of investment

• Many revenue streams are set to a regulated rate which increases with inflation

• Challenges to consider

– Long-term illiquid vehicles, generally longer than other locked up asset classes

– Return potential somewhat lower than other strategies

– Asset class often uses leverage to increase return profile

– Regulatory and political risks

Page 44

Page 118

Types of Infrastructure Investments

Utilities Communications Social Transportation

Asset TypesPipelines, energy productions and

distribution, water services

Telecommunications,

broadcast towers, satellites,

cable systems, etc.

Hospitals, educational

facilities, court houses,

prisons, etc.

Toll roads, rail lines, airports,

water ports, etc.

OwnershipRegulated utilities, private

companies

Regulated utilities, private

companies

Municipal or special purpose

entities

Municipal, some private

companies

Revenues

Stable, commodity exposure-

hedged, some fluctuation during

the credit crisis

Volatile, sensitive to

technological changeStable, cost reimbursement

Stable, predictable,

positively correlated with

growth rates/inflation

Liquidity Asset sales and public offeringsAsset sales and public

offerings

Little, leased back to

government entities

Little, MLP or REIT

structures may develop

Life SpanLong-lived assets, contracts in 10-

20 year rangeLong-lived assets Long-lived assets

75 to 99-year operating

leases

Risk Level MediumMedium to high, risk of

technological obsolescenceLow to medium Low to medium

Price/Valuation Low to high Low to high Low to medium High

Strategy Core-plus to value added Value added to opportunistic Core Core-Plus

Sources of ReturnCash yield with potential

appreciation

Cash yield with potential

appreciationCash yield

Cash yield, some

appreciation

Page 45

Page 119

Disclaimer of Warranties and Limitation of Liability - This document was prepared by RVK, Inc. (RVK) and may include

information and data from some or all of the following sources: client staff; custodian banks; investment managers;

specialty investment consultants; actuaries; plan administrators/record-keepers; index providers; as well as other

third-party sources as directed by the client or as we believe necessary or appropriate. RVK has taken

reasonable care to ensure the accuracy of the information or data, but makes no warranties and disclaims

responsibility for the accuracy or completeness of information or data provided or methodologies

employed by any external source. This document is provided for the client’s internal use only

and does not constitute a recommendation by RVK or an offer of, or a solicitation for, any

particular security and it is not intended to convey any guarantees as to the future

performance of the investment products, asset classes, or capital markets.

Page 120

ITEM 4D


RE: RVK Contract Renewal The Board of University and School Land’s (Board) relationship with RVK began in 2013 when, through a competitive hiring process, the Board chose the firm to submit a written report addressing various investment issues, such as, investment policies and procedures, asset allocation policy, transitioning from the old asset allocation plan to the new asset allocation plan, and analysis of the cash-like funds. In January 2014, the Board entered into another agreement with RVK to implement the recommendations that resulted from RVK’s 2013 investment study and to provide performance monitoring services to the Board. This agreement was extended six months to provide for the completion of all fund manager searches and the adoption of the Board’s Investment Policy Statement. In July 2015, the Board directed the Commissioner to enter into an agreement with RVK for traditional investment consultant services. The fee for the initial two-year contract with RVK was $145,000 per year and that contract concluded in August 2017. During the August 2017 Board meeting, the RVK contract was extended for one year, with a fee increase of 3%, for a total of $149,350. This fee included four personal visits, during which RVK representatives reviewed quarterly investment performance with the Board, advised on asset allocation and asset class structure issues, reviewed investment policies, provided information and guidance for three manager searches, and provided the Board with educational presentations and summaries. In June 2018, the Board directed the Commissioner to enter into another contract with RVK for investment consultant services. The fee for the two-year contract increased by approximately 3% per annually for a total of $153,800 in year one and $158,400 in year two. This contract will expire in August 2020. The contract was substantially similar to the previous one, which included four personal visits per year, a review of quarterly investment performance, advice on asset allocation and asset class structure issues, review of investment policies, information and guidance for manager searches, guidance with the dismissal of one manager, and providing the Board with educational presentations and information. Department of Trust Lands’ staff previously conducted an internal assessment of similar sized permanent trust investment consulting practices throughout the western United States. That assessment involved discussions with permanent trust investment officers in New Mexico and Oklahoma, as well as gathering data regarding other permanent trust investment programs. During that assessment, it was found that many investment programs maintain consultant relationships for extended periods of time and for as long as the consultant continues to provide the desired services in an efficient and effective manner at a reasonable price. Consultants are trusted partners and help shape programs over time. This philosophy is followed by the Oklahoma and New Mexico permanent trusts investment offices and is also followed by North Dakota’s State Investment Board. Research into other state permanent trust investment programs indicates that RVK is the consultant of choice for five of the seven largest permanent trust investment programs. In addition to North Dakota, the states that currently work with RVK are Montana, New Mexico, Oklahoma and Wyoming. The fees paid by each of those states, approximately $325,000, is measurably more than what North Dakota has paid historically; if fees are dollar weighted to consider the amount of the assets under consultation, the fee being proposed by RVK for the Board is less than half what other states pay.

Page 121

ITEM 4D

RVK has $67.4 billion in permanent trust assets under consultation from the five states noted above. Additionally, RVK has been a Greenwich Quality Leader among large US investment consultants for the last two consecutive years. Greenwich Associates, a trusted independent investment research firm, conducted interviews with over 1,000 senior professionals of 924 large plan sponsors and ranked opinions of their investment consulting relationships on a series of key metrics, including but not limited to:

• Understanding Clients' Goals and Objectives • Advice on Long-term Asset Allocation • Proactive Advice and Innovative Ideas • Credibility with the Board and/or Investment Committee • Knowledge of Investment Managers • Advice on DC Plan Structure and Design • Satisfaction with Manager Recommendations • Responsiveness to Client Requests and Needs • Competitive Fees

Based upon staff’s assessment of other state programs and satisfaction with the services provided by RVK over the past five years, the Commissioner and staff recommend the Board continue contracting with RVK for investment consulting services. The staff would propose a contract substantially similar to the previous contract with the following changes:

1. A three-year contract with an optional two-year extension by mutual consent of the Board and RVK, instead of a two-year contract with no optional extensions. The contract term would be from September 2020 to August 2023, with the option of extending the contract from September 2023 to August 2025.

2. A fee for each year that increases as follows: $163,000 in FY 2020, $168,000 in FY 2021, $173,000 in FY 2022, and if the contract is extended, fees of: $178,000 in FY 2024 and $183,000 in FY 2025. Each year’s fee increase is approximately 3% over the prior year.

3. RVK would make six personal visits each year, instead of four, to better communicate with the Board and Department staff.

4. The contract would provide more detail as to the services expected and provided in the annual fee, and would provide more detail on the additional cost of services not provided in the annual fee. The previous contract did not list all the services included in the annual fee and was silent on the exact fee for most additional services.

Recommendation: The Board authorizes the Commissioner to enter into a contract with RVK for comprehensive investment advisory services, including investment performance monitoring, assistance with investment manager searches, investment advice and educational efforts, with the contract subject to final approval by the Attorney General.


Aye Nay Absent

Secretary Jaeger

Superintendent Baesler Treasurer Schmidt


Governor Burgum

Attachment 1: Draft of potential agreement

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1

CONTRACT FOR SERVICES This contract (Contract) is made this ______ of __________________ 2020, between the State of North Dakota, acting through the Board of University and School Lands (BOARD) and RVK, Inc. having its principal place of business at principal business address (RVK). I. SCOPE OF WORK

RVK, in exchange for the compensation paid by the BOARD under the Contract, agrees to provide strategic investment consulting services to the BOARD covering the following areas of responsibility: General Retainer Services:

1. Portfolio evaluation 2. Asset allocation analysis 3. Investment policy development and review 4. Investment manager search, selection, and monitoring for the following categories of

managers: a. All traditional equity, fixed income and cash b. Core and core plus real estate c. Core and core plus infrastructure d. Any fund of fund or fund of one manager searches e. Liquid alternatives including liquid real assets

5. Investment manager structure analysis 6. Performance analysis and reporting 7. Risk monitoring and analysis 8. Client education 9. Public fund peer analysis 10. Capital market research 11. Pacing studies for private equity, private real estate, and other illiquid assets 12. Intergenerational equity analysis 13. Sustainable spending policy analysis 14. Assistance with preparation and analysis for client on site meetings with asset managers 15. Assistance with transition manager selection and transition planning 16. Securities Lending program review and analysis 17. Fee Analysis and monitoring, including assistance with fee negotiation with asset

managers and other investment related vendors Additional Consulting Services (not included in General Retainer Services): The following services are also available, and would be billed at a mutually agreeable rate, negotiated in advance of the commencement of work, and generally expected to be within the ranges provide in Section 3 “Cost of Services.”

1. Manager searches for direct partnership level investment in private equity, non-core real estate, and hedge funds

2. Operational due diligence for hedge fund investments 3. Custodial bank search, including assistance with selection and negotiation of terms 4. Governance and strategic planning reviews.

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2

II. TERM OF CONTRACT

This Contract term (Term) begins on September 1, 2020 and ends on August 31, 2023. This contract will not automatically renew. BOARD reserves the right to extend this Contract for an additional period-of-time, not to exceed twenty-four months, beyond the current termination date of this Contract. BOARD may renew this Contract upon satisfactory completion of the initial Contract Term. BOARD reserves the right to execute up to five options to renew this Contract under the same terms and conditions for a period of twelve months each. In view of the fact that it is unknown how long the products and services will be employed by BOARD and that BOARD will require ongoing support of the services for as long as the system is operational, therefore after completion of the initial Term of this Contract including any extensions and renewals, BOARD and RVK may renegotiate this Contract upon mutual agreement of the parties.

III. COMPENSATION Contractual Amount BOARD shall pay for the accepted services provided by CONTRACTOR under this Contract an amount (Contractual Amount) not to exceed:

First Year: $163,000 Second Year: $168,000 Third Year: $173,000 Fourth Year (optional): $178,000 Fifth Year (optional): $183,000

The Contractual Amount is firm for the duration of this Contract and constitutes the entire compensation due RVK for performance of its obligations under this Contract regardless of the difficulty, materials or equipment required, including fees, licenses, overhead, profit and all other direct and indirect costs incurred by BOARD, except as provided by an amendment to this Contract. The General Retainer Fee is intended to be comprehensive, including up to six in-person meetings in North Dakota over each 12-month period of the Contract and all reasonable costs associated with providing the services included in the preceding scope of services. RVK acknowledges travel costs are covered by the Contractual Amount and shall not invoice BOARD for travel costs. RVK may at its discretion charge an added fee of $5,000 per additional on-site meeting beyond the six meetings included within the Contract. The expected range of fees for services identified as “additional consulting services” is as follows for the term of this Contract:

1. Manager searches for direct partnership level investment in private equity, non-core real estate, and hedge funds: $20,000 to $27,500 per search

2. Operational due diligence for hedge fund investments: $5,000 to $10,000 per partnership 3. Custodial bank search, including assistance with selection and negotiation of terms:

$35,000 to $45,000 per search 4. Governance and strategic planning reviews: $5,000 to $50,000 depending on scope.

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3

In person meetings associated with additional consulting services will not be counted against the six in person meetings anticipated for general consulting services. Payment

1. Payment made in accordance with this Compensation section shall constitute payment in full for the services and work performed and the deliverables and work(s) provided under this Contract and RVK shall not receive any additional compensation hereunder.

2. BOARD shall make payment under this Contract within sixty (60) calendar days after

receipt of a correct invoice. The General Services Fees for the Contract will be invoiced quarterly in arrears. Fees will be payable net 30 days upon invoicing by RVK. Invoices shall be sent to: Commissioner; North Dakota Department of Trust Lands; 1707 North 9th Street; Bismarck, ND 58501.

3. Payment of an invoice by BOARD will not prejudice BOARD’s right to object to or question

that or any other invoice or matter in relation thereto. RVK's invoice will be subject to reduction for amounts included in any invoice or payment made which are determined by BOARD, on the basis of audits conducted in accordance with the terms of this Contract, not to constitute allowable costs. At BOARD’s sole discretion, all payments shall be subject to reduction for amounts equal to prior overpayments to RVK.

4. For any amounts that are or will become due and payable to BOARD by RVK, BOARD

reserves the right to deduct the amount owed from payments that are or will become due and payable to RVK under this Contract.

IV. ACKNOWLEDGEMENTS RVK acknowledges that it is a fiduciary under this Contract and as a fiduciary it will discharge each of its duties and exercise each of its powers with the care, skill, prudence, and diligence under the circumstances that a prudent investor acting in like capacity and familiar with such matters would use in the conduct of any enterprise of like character with like aims. RVK shall discharge its duties hereunder solely in the interest of the BOARD. RVK shall not, knowingly, in any capacity, represent or act on behalf of a party whose interest is adverse to the BOARD or its participants or beneficiaries in any transaction involving the BOARD. RVK shall not receive any consideration from any party dealing with the BOARD in connection with a transaction involving the assets of the BOARD. RVK agrees to comply with all applicable laws and regulations in the performance of its duties under this Contract. RVK is registered with the Securities and Exchange Commission (the "SEC") and files a disclosure statement (Form ADV) with the SEC. RVK is required to provide a copy of the ADV Form Part II (or successor brochure) to all newly retained clients. Pursuant to SEC Rule 204-2(a) (10), RVK is required to keep executed agreements on file. Executed agreements must be directed to: RVK, Inc., ATTN: CEO, 1211 S.W. 5th Avenue, Suite 900; Portland, Oregon 97204. Furthermore, pursuant to Section 205(a) (2) of the Investment Advisers Act, neither RVK nor the BOARD will assign, subcontract, or otherwise transfer its rights and duties under this Contract without prior approval from the other party.

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4

The BOARD shall retain absolute discretion over, and responsibility for the implementation of any of RVK's recommendations. Although the information collected by RVK is believed to be reliable, RVK cannot guarantee the accuracy or validity of such information and, unless performed by RVK, the uniformity of the manner-in-which such calculations are made. The BOARD understands that the prior performance of an investment manager is not necessarily indicative of such investment manager's future results. RVK shall not be liable for the conduct or investment performance, either historical or prospective, of any investment manager recommended by RVK and selected by the BOARD. This Contract is adopted as a result of BOARD approval on XXX. V. TERMINATION OF CONTRACT Termination by Mutual Agreement This Contract may be terminated by mutual consent of both parties executed in writing. Early Termination in the Public Interest BOARD is entering into this Contract for the purpose of carrying out the public policy. If this Contract ceases to further the public policy of the BOARD, in its sole discretion, by written notice to RVK, may terminate this Contract in whole or in part. Termination for Lack of Funding or Authority BOARD by written notice to RVK, may terminate the whole or any part of this Contract under any of the following conditions:

1. If funding from federal, state, or other sources is not obtained and continued at levels sufficient to allow for purchase of the services or supplies in the indicated quantities or term.

2. If federal or state laws or rules are modified or interpreted in a way that the services are

no longer allowable or appropriate for purchase under this Contract or are no longer eligible for the funding proposed for payments authorized by this Contract.

3. If any license, permit, or certificate required by law or rule, or by the terms of this Contract,

is for any reason denied, revoked, suspended, or not renewed. Termination of this Contract under this subsection is without prejudice to any obligations or liabilities of either party already accrued prior to termination. Termination for Cause BOARD may terminate this Contract effective upon delivery of written notice to RVK, or any later date stated in the notice:

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5

1. If RVK fails to provide services required by this Contract within the time specified or any extension agreed to by BOARD; or

2. If RVK fails to perform any of the other provisions of this Contract, or so fails to pursue the

work as to endanger performance of this Contract in accordance with its terms. The rights and remedies of BOARD provided in this subsection are not exclusive and are in addition to any other rights and remedies provided by law or under this Contract.

VI. WORK PRODUCT, EQUIPMENT AND MATERIALS All work product, equipment or materials created for the sole benefit of the BOARD or purchased under this Contract belong to the BOARD and must be delivered to the BOARD at the BOARD's request upon termination of this Contract. RVK agrees that all materials prepared for the sole benefit of the BOARD under this Contract are "works for hire" within the meaning of the copyright laws of the United States and assigns to the BOARD all rights and interests RVK may have in the materials it prepares under this Contract, including any right to derivative use of the material. RVK shall execute all necessary documents to enable the BOARD to protect its rights under this section. VII. FORCE MAJEURE Neither party shall be held responsible for delay or default caused by fire, riot, terrorism, acts of God, or war if the event is beyond the party’s reasonable control and the affected party gives notice to the other party promptly upon occurrence of the event causing the delay or default or that is reasonably expected to cause a delay or default. VIII. MERGER AND MODIFICATION This Contract constitutes the entire agreement between the parties. There are no understandings, agreements, or representations, oral or written, not specified within this Contract. This Contract may not be modified, supplemented, or amended, in any manner, except by written agreement signed by both parties. IX. SEVERABILITY If any term of this Contract is declared to be illegal or unenforceable by a court having competent jurisdiction, the validity of the remaining terms is unaffected and, if possible, the rights and obligations of the parties are to be construed and enforced as if this Contract did not contain that term. X. NOTICE All notices or other communications which are required under this Contract must be given by registered or certified mail and are complete on the date post marked when addressed to the parties at the following addresses: RVK, Inc., ATTN: CEO, 1211 S.W. 5th Avenue, Suite 900; Portland, Oregon 97204. BOARD, ATTN: Commissioner, 1707 N. 9th Street; Bismarck, North Dakota 58501. Notice provided under this provision does not meet the notice requirements for monetary claims against the State found at N.D.C.C. § 32-12.2-04.

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6

XI. APPLICABLE LAW AND VENUE This Contract is governed by and construed in accordance with the laws of the State of North Dakota. Any action commenced to enforce this Contract must be brought and solely adjudicated exclusively in the State District Court of Burleigh County, North Dakota. Each party consents to the exclusive jurisdiction of such court and waives any claim of lack of jurisdiction or forum non conveniens. XII. SPOLIATION- NOTICE OF POTENTIAL CLAIMS RVK shall promptly notify the BOARD of all potential claims that arise from or result from this Contract. RVK shall also take all reasonable steps to preserve all physical evidence and information that may be relevant to the circumstances surrounding a potential claim, while maintaining public safety, and grants to the BOARD the opportunity to review and inspect the evidence, including the scene of an accident. XIII. INDEMNITY

The BOARD and RVK each agree to assume its own liability for any and all claims of any nature including all costs, expenses and attorneys' fees which may in any manner result from or arise out of this Contract. XIV. INSURANCE

RVK shall secure and keep in force during the term of this Contract, from insurance companies, government self-insurance pools or government self-retention funds, authorized to do business in North Dakota, the following insurance coverages:

1. Commercial general liability, including premises or operations, contractual, and products or completed operations coverages (if applicable), with minimum liability limits of $250,000 per person and $1,000,000 per occurrence.

2. Professional errors and omissions, with minimum liability limits of $1,000,000 per

occurrence and in the aggregate.

3. Automobile liability, including Owned (if any), Hired, and Non-Owned automobiles, with minimum liability limits of $250,000 per person and $500,000 per occurrence.

4. Workers compensation coverage meeting all statutory requirements.

The insurance coverages listed above must meet the following additional requirements:

1. Any deductible or self-insured retention amount or other similar obligation under the policies will be the sole responsibility of RVK.

2. This insurance may be in policy or policies of insurance, primary and excess, including the so- called umbrella or catastrophe form and must be placed with insurers rated "A-" or better by A.M. Best Company, Inc., provided any excess policy follows form for coverage. Less than an "A-" rating must be approved by the BOARD.

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7

3. Upon request of the BOARD, RVK will provide a current certificate of insurance to the

undersigned BOARD representative.

4. RVK shall furnish a certificate of insurance to the undersigned BOARD representative prior to Commencement of this Contract. All endorsements shall be provided as soon as practicable.

5. Failure to provide insurance as required in this Contract is a material breach of contract

entitling the BOARD to terminate this Contract immediately. XV. ALTERNATIVE DISPUTE RESOLUTION- JURY TRIAL The BOARD does not agree to any form of binding arbitration, mediation, or other forms of mandatory alternative dispute resolution. The parties may enforce the rights and remedies in judicial proceedings. The BOARD does not waive any right to a jury trial. XVI. ATTORNEY FEES AND COSTS In the event a lawsuit is initiated by BOARD to obtain performance due under this contract, and BOARD is the prevailing party, RVK shall, except when prohibited by N.D.C.C. § 28-26-04, pay BOARD’s reasonable attorney fees and costs in connection with the lawsuit. WORK PRODUCT All work product, equipment or materials created for BOARD or purchased by BOARD under this Contract belong to BOARD and must be immediately delivered to BOARD at BOARD'S request upon termination of this Contract. XVII. CONFIDENTIALITY

RVK shall not use or disclose any information it receives from BOARD under this Contract that BOARD has previously identified as confidential or exempt from mandatory public disclosure except as necessary to carry out the purposes of this Contract or as authorized in advance by BOARD. BOARD shall not disclose any information it receives from RVK that BOARD has previously identified as confidential and that BOARD determines in its sole discretion is protected from mandatory public disclosure under a specific exception to the North Dakota public records law, N.D.C.C. ch. 44-04. The duty of BOARD and RVK to maintain confidentiality of information under this section continues beyond the Term of this Contract. XVIII. COMPLIANCE WITH PUBLIC RECORDS LAW RVK understands that, in accordance with this Contract’s Confidentiality clause, BOARD must disclose to the public upon request any records it receives from RVK. BOARD further understands that any records obtained or generated by RVK under this Contract may, under certain circumstances, be open to the public upon request under the North Dakota public records law. RVK agrees to contact BOARD promptly upon receiving a request for information under the public records law and to comply with BOARD’s instructions on how to respond to the request. XIX. INDEPENDENT ENTITY RVK is an independent entity under this Contract and is not a BOARD employee for any purpose, including the application of the Social Security Act, the Fair Labor Standards Act, the Federal

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Insurance Contribution Act, the North Dakota Unemployment Compensation Law and the North Dakota Workforce Safety and Insurance Act. RVK retains sole and absolute discretion in the manner and means of carrying out RVK’S activities and responsibilities under this Contract, except to the extent specified in this Contract. XX. NONDISCRIMINATION AND COMPLIANCE WITH LAWS

RVK agrees to comply with all applicable federal and state laws, rules, and policies, including those relating to nondiscrimination, accessibility and civil rights (See N.D.C.C. Title 34 – Labor and Employment, specifically N.D.C.C. ch. 34-06.1 Equal Pay for Men and Women). RVK agrees to timely file all required reports, make required payroll deductions, and timely pay all taxes and premiums owed, including sales and use taxes, unemployment compensation and workers' compensation premiums. RVK shall have and keep current at all times during the Term of this Contract all licenses and permits required by law. RVK’s failure to comply with this section may be deemed a material breach by RVK entitling BOARD to terminate in accordance with the Termination for Cause section of this Contract. XXI. STATE/BOARD AUDIT

All records, regardless of physical form, and the accounting practices and procedures of RVK relevant to this Contract are subject to examination by the North Dakota State Auditor, the Auditor’s designee, or Federal auditors, if required. RVK shall maintain all of these records for at least three (3) years following completion of this Contract and be able to provide them upon reasonable notice. BOARD, State Auditor, or Auditor’s designee shall provide reasonable notice to RVK prior to conducting examination. XXII. ASSIGNMENT AND SUBCONTRACTS RVK may not assign or otherwise transfer or delegate any right or duty without BOARD’s express written consent, provided, however, that RVK may assign its rights and obligations hereunder in the event of a change of control or sale of all or substantially all of its assets related to this Contract, whether by merger, reorganization, operation of law, or otherwise. Should Assignee be a business or entity with whom BOARD is prohibited from conducting business, BOARD shall have the right to terminate without cause. RVK may enter into subcontracts provided that any subcontract acknowledges the binding nature of this Contract and incorporates this Contract, including any attachments. RVK is solely responsible for the performance of any subcontractor with whom RVK contracts. RVK does not have authority to contract for or incur obligations on behalf of BOARD. XXIII. PREPAYMENT The BOARD will not make any advance payments before performance by RVK under this Contract. XXIV. TAXPAYER ID

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RVK's federal ID number is: 93-0910652. XXV. PAYMENT OF TAXES BY BOARD BOARD is not responsible for and will not pay local, state, or federal taxes. State sales tax exemption number is E-2001. BOARD will furnish certificates of exemption upon request by the RVK. XXVI. EFFECTIVENESS OF CONTRACT This Contract is not effective until fully executed by all parties.

RVK, INC. BOARD OF UNIVERSITY AND SCHOOL LANDS

BY: BY:

Rebecca Gratsinger Jodi Smith

CEO Commissioner

Date: Date:

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RE: Shut-In Administrative Rule (No Action Requested) Due to the downturn in oil prices, the Department of Trust Lands (Department) has been advised that the petroleum industry is considering whether to abandon production, either temporarily or by permanently plugging wells, on certain state land subject to leases that cover substantial stripper wells or marginal wells. In an attempt to maintain production potential on these wells, an option is to consider allowing wells to be moved to shut-in status until such time as this downturn begins to correct itself. The Board of University and School Lands (Board) has always recognized its fiduciary responsibility to maximize revenues from state lands. Of critical importance to the state is ensuring that currently producing wells are not permanently abandoned due to the current downturn in prices for crude oil and natural gas which could render production from these wells uneconomic. If this happens, those reservoirs have the potential to no longer produce, eliminating state revenues. It also may not be economically feasible to re-drill these minerals. Permanent abandonment of production would be of no benefit to the state or industry. Therefore, it is reasonable for the Board to permit the temporary shut-in of petroleum and natural gas production on certain lands under its jurisdiction. Section N.D.C.C. § 38-09-18, provides as follows:

All leases for the purposes as hereinbefore provided shall be made by the state of North Dakota and all agencies and departments and political subdivisions thereof for not less than twenty-five cents per acre [.40 hectare] per year for deferred drilling and shall be made with a royalty reservation of not less than one-eighth of all oil and gas produced from said land as long as oil and gas may be produced from said land. The term one-eighth as used herein must be construed to mean one-eighth of such interest as may be owned by the lessor. All leases hereunder must be made for a period of not less than five years and must continue in effect under the terms thereof as long as oil or gas may be produced thereon in commercial quantities…

In May 1986, the Board adopted a shut-in well policy. This policy allowed marginal wells to be shut in without lease termination. This policy was adopted in response to the sharp decline in oil prices in early 1986. The rationale behind the policy was to avoid plugging wells because of difficult economic conditions facing the oil industry. The policy was extended each year for a one-year period until December 31, 2004. In 2004, the Board unanimously affirmed this policy without expiration and required a report be made to the Board annually. In January 2020, the North Dakota Administrative Code § 85-06-01-14 was enacted. It provides as follows:

85-06-01-14. Request for shut-in status for oil.

1. A lessee requesting shut-in status of an oil well, without canceling the oil and gas lease, shall submit a written request to the department utilizing the form available on the department's website. The request must contain the following information:

a. The name and well file number assigned by the North Dakota department of mineral resources oil and gas division;

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b. The township, range, and section of the surface location of the well;

c. The board's oil and gas lease number for the subject lease, the date of the oil and gas lease, the acreage covered by the oil and gas lease, and the current lessee;

d. The name and address of the operator of the well;

e. The cumulative oil production and the number of days of production for the three months immediately preceding the request;

f. The written approval of the request from the operator;

g. The grounds for the request and the anticipated length of time the well will be shut-in; and

h. Any additional information requested by the department.

2. An application fee, in an amount set by the department, and the shut-in royalty payment must be submitted with the application. If the application is denied, the shut-in royalty payment will be refunded by the department.

3. An application is deemed filed when the department receives the application form, application fee, shut-in royalty payment, and any additional information requested by the department.

4. Within fifteen days of receipt of an application, the commissioner shall notify the applicant in writing, as follows:

a. The application is approved and the terms of the shut-in approval;

b. The application is denied;

c. An additional fifteen day period is necessary to consider the application; or

d. The application requires board approval.

5. If an application is denied, a lessee may file with the department a written request for commissioner review, specifying the grounds for the request.

6. A shut-in approval is effective for one year from the date of approval unless the commissioner determines a shorter amount of time is appropriate.

7. The commissioner may revoke a shut-in approval if the commissioner determines the action is in the best interests of the trusts. If a shut-in approval is revoked prior to its expiration, the department shall provide notice to the lessee by certified mail. Within sixty days from the date of receipt of the notice, the lessee shall re-establish production. If the lessee fails to re-establish production, the oil and gas lease is subject to cancellation under section 85-06-01-10.

The Department anticipates an increase in shut-in requests. Operators are required to formally request a shut-in by submitting a written request to the Department, as required by North Dakota Administrative Code § 85-06-01-14. A report will be provided to the Board upon request.

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RE: Extension Administrative Rule (No Action Requested) Companies bid on Board of University and School Land (Board) leases at a public auction for the right to explore for oil and gas within the five-year lease term. Pursuant to the Board’s lease, lessees are required to produce oil and/or gas in commercial quantities or risk lease termination. Due to travel and other restrictions resulting from by the COVID-19 crisis and depressed prices of oil and gas, however, production of oil and/or gas may not be prudent at this time. Section 8 of the Board’s Oil and Gas lease states:

If, at the expiration of the primary term, production of oil and/or gas has not been obtained in commercial quantities on the leased premises but drilling, testing, completion, recompletion, reworking, deepening, plugging back, or repairing operations are being conducted thereon in good faith, lessee may, on or before the expiration of the primary term, file a written application with the Commissioner of University and School Lands for a one hundred eighty (180) day extension of this lease, such application to be accompanied by a payment of ten dollars ($10.00) per acre, and the Commissioner shall, in writing, extend this lease for a period of one hundred eighty (180) days beyond the expiration of the primary term and as long as oil and/or gas is produced in commercial quantities; lessee may, as long as such drilling, testing, or completion operations are being conducted in good faith, make written application to the Commissioner, on or before the expiration of the initial extended period of one hundred eighty (180) days for an additional extension of one hundred eighty (180) days, such application to be accompanied by a payment of twenty dollars ($20.00) per acre, and the Commissioner shall, in writing, extend this lease for an additional one hundred eighty (180) day period from and after the expiration of the initial extended period of one hundred eighty (180) days, and as long as oil and/or gas is produced in commercial quantities; this lease shall not be extended for more than a total of three hundred sixty (360) days from and after the expiration of the primary term unless production in commercial quantities has been obtained or unless extended by some other provision hereof.

Per North Dakota Administrative Code § 85-06-01-06:

A lessee shall submit a written request to the department for an assignment, amendment, or extension of an oil and gas lease, or a portion of the oil and gas leased premises, utilizing the form available on the department's website. A request must include any documents requested by the department. The lessee shall submit a fee, in an amount set by the board, to the department with the request. . . . 2. Extensions. If, at the expiration of the primary term, production of oil or gas or both has not been obtained in commercial quantities on the leased premises but drilling, testing, completion, recompletion, reworking, deepening, plugging back, or repairing operations are being conducted thereon in good faith, the lessee may, on or before the expiration of the primary term, file a written application with the

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department for a one hundred eighty day extension of this oil and gas lease, such application to be accompanied by a payment of ten dollars per acre, and the commissioner, in writing, shall extend this oil and gas lease for a period of one hundred eighty days beyond the expiration of the primary term and as long as oil or gas or both is produced in commercial quantities; the lessee may, as long as such drilling, testing, or completion operations are being conducted in good faith, make written application to the commissioner, on or before the expiration of the initial extended period of one hundred eighty days for an additional extension of one hundred eighty days, such application to be accompanied by a payment of twenty dollars per acre, and the commissioner, in writing, shall extend this oil and gas lease for an additional one hundred eighty day period from and after the expiration of the initial extended period of one hundred eighty days, and as long as oil or gas or both is produced in commercial quantities; this oil and gas lease must not be extended for more than a total of three hundred sixty days from and after the expiration of the primary term unless production in commercial quantities has been obtained or unless extended by some other provision hereof.

The Department anticipates an increase in extension requests. Operators are required to formally request an extension by submitting a written request to the Department, as required by North Dakota Administrative Code § 85-06-01-06.

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RE: BLM Litigation

Case: ND Office of State Engineer, Board of University and School Lands v. BLM - Case No. IBLA 2016-170

Tribunal: US Dept. of Interior Office of Hearings and Appeals – Board of Land Appeals Attorney: Charles Carvell and Jennifer Verleger Opposing Counsel: Karan Dunnigan

Issues: In 2014, the Bureau of Land Management (BLM) resurveyed land along the Missouri River to locate the boundary, ordinary high water mark (OHWM), between the public domain land owned by the United States and the riverbed owned by the state of North Dakota. In identifying the OHWM, the BLM applied federal law rather than state law. Specifically, the BLM adopted the survey conducted by the Corps of Engineers as part of the Garrison Dam project. In certain areas, the survey overlaps with the state’s claim to sovereign lands.

After the survey work was complete, the BLM published a “Notice of Filing Plats of Survey; North Dakota” in which BLM intends to formally file the survey plats as Official Plats. After the Federal Register Notice appeared, the State Engineer and the Board jointly filed a protest challenging the filing of the survey plats. The BLM rejected the State’s protest and the State appealed the BLM’s decision to the Interior Board of Land Appeals.

History:

Current Status:

• On June 24, 2019, the BLM submitted its Request to Take Judicial Noticeof North Dakota Law.

• On March 25, 2020, the Opinion by Administrative Judge Haugrud wasissued by the United States Department of Interior, Office of Hearings andAppeals, Interior Board of Land Appeals (Interior Board). The InteriorBoard held that while it is in general proper for federal agencies andfederal courts to adopt state law to decide water boundaries alongfederally owned land, it is inappropriate to do so in matters involving thelocation of an OHWM. Were the rule otherwise, the Interior Board stated,states could acquire federal land “simply by adopting an expansiveOHWM definition … whenever a State chose to [do so].” The InteriorBoard then stated that because it was proper for the BLM, in preparingits OHWM surveys, to apply the BLM Survey Manual and other federalsources, the state’s appeal is denied.

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RE: XTO Interpleader Litigation

Case: XTO Energy, Inc., and XTO Holdings, LLC v. North Dakota Board of University and School Lands and the United States of America, Case No. 1:19-cv-00076

Date Filed: April 29, 2019 Court: Federal District Court Judge: Magistrate Judge Clare R. Hochhalter Attorney: Charles Carvell, David Garner, Jennifer Verleger Opposing Counsel: Lawrence Bender, Spencer Ptacek for XTO

Shaun Pettigrew for United States

Issues: In April 2019, XTO Energy, Inc. and XTO Holdings, LLC (XTO), brought an interpleader action against the Board of University and School Lands and the United States regarding certain public domain lands underlying XTO operated wells located in McKenzie and Williams Counties. This case addresses overlapping ownership claims by the State and the United States of minerals underlying Lake Sakakawea. XTO is requesting the Court determine the property interests for the disputed lands so that XTO can correctly distribute the proceeds from the affected wells. XTO has claimed that there is “great doubt as to which of the Defendants is entitled to be paid royalties related to the Disputed Lands.” Currently, XTO is paying the United States its full royalty based on the acreage it claims under two of the wells at issue and not paying the State its royalty on the acreage claimed by the State under these two wells. The State’s royalty on the remaining ten wells at issue is being escrowed with the Bank of North Dakota pursuant to the policies and rules of the Board.

History: The Summons and Complaint were served on the Board and the Attorney General’s Office on April 30, 2019, with the Answer being due May 21, 2019. The United States was served on April 30, 2019, and its Answer is due on June 29, 2019. A request for an extension to file the Board’s Answer was made and the parties entered into a Stipulation for Extension of Time to Answer Pleadings.

Current Status:

• The Answers of both the Board and the United States were filed onAugust 1, 2019.

• Order for Rule 26(f) Planning Meeting and Rule 16(b) SchedulingConference, and Order RE Resolution of Discovery Disputes

• A scheduling conference was scheduled for December 30, 2019 but wasrescheduled to January 28, 2019 as attorney John Most is leaving theemployment of the Department of Justice and it is necessary to get hisreplacement up to speed on the case.

• On January 13, 2020, XTO filed a Motion for Leave to Deposit Funds withthe Court, Memorandum of Law in Support of Plaintiffs XTO Energy Inc.and XTO Holdings, LLC Motion for Leave to Deposit Funds with the Court,and Declaration of Mary Holman.

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• Status conference held January 28, 2020. A second status conference was scheduled for April 7, 2020 at 9:30 a.m. before Magistrate Clare R. Hochhalter.

• Extension of time to respond to Motion for Lease to Deposit funds. Responses due March 2, 2020.

• Court granted the Motion for Extension of Time to File Response regarding Motion to Deposit Funds. Responses are due by March 23, 2020.

• On March 23, 2020, the Court granted the Motion for Extension of Time to File Response regarding Motion to Deposit Funds (filed March 20, 2020). Responses are due by May 20, 2020.

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RE: Continental Interpleader Litigation

Case: Continental Resources, Inc. v. North Dakota Board of University and School Lands, et al., Case No. 1:17-cv-00014

Date Filed: December 23, 2016 Court: Federal District Court, 8th Circuit Judge: Honorable Daniel Hovland Attorney: Charles Carvell, David Garner, and Jen Verleger Opposing Counsel: Lawrence Bender, David Ogden, Paul Wolfson, Shaun Pettigrew

Issues: In December 2016, Continental Resources, Inc. (Continental) brought an interpleader action against the Board of University and School Lands and the United States regarding certain public domain lands underlying Continental operated wells located in McKenzie, Mountrail, and Williams Counties. This case involves a disagreement between the State and United States over the location of the ordinary high watermark—and consequently title to underlying minerals—on federally owned land along the now inundated historic Missouri River. Continental is requesting the Court determine title to the disputed lands so that Continental can correctly distribute the proceeds from the affected wells. Continental has claimed that there is “great doubt as to which Defendant is entitled to be paid royalties related to the Disputed Lands.” Currently, Continental is paying the United States its full royalty based on the acreage it claims. The remaining royalty, over and above what is due the United States, is being escrowed with the Bank of North Dakota.

History: The United States removed this action to federal district court on January 11, 2017. The Board filed its answer to the complaint on February 13, 2017. The United States filed its answer to the complaint on May 12, 2017. An Amended Complaint was filed by Continental Resources on September 14, 2017. The United States filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction on October 18, 2017. In support of its motion, the United States alleges that it has not waived its sovereign immunity under the Quiet Title Act and that the interpleader action is moot under S.B. 2134.

The Board filed a response on December 20, 2017 opposing the motion to dismiss. Continental filed a response and the United States filed its reply. The United States filed a reply on March 16, 2018. The Board filed a Surreply to the Motion to Dismiss on April, 16, 2018. The Order Denying the United States’ Motion to Dismiss for Lack of Subject Matter Jurisdiction was entered on December 31, 2018. The Order provided that North Dakota and the United States confer and submit a proposed scheduling order to the Court no later than sixty days from the date of the order. On January 8, 2019 the United States filed its Motion to Stay Action Due to Lapse of Appropriations. On January 10, 2019, the Court granted the United States’ Motion and cancelled the January 24, 2019 scheduling conference. The Order stated the “action is stayed until [federal] appropriations are restored and Department attorneys and the Bureau of Land Management personnel are permitted to resume their usual civil litigation functions.” The United States filed a Notice of Restoration of Appropriations on January 28, 2019, which requested the Court set a new scheduling conference date. On January 30, 2019, the Court

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issued an order granting the motion for scheduling conference, requiring the parties submit a revised scheduling/discovery plan by March 15, 2019, and setting a telephonic scheduling conference for 10:00 a.m., March 18, 2019. The parties filed a Joint Motion for Extension of Time to File Scheduling Proposal and Participate in Scheduling Conference on March 12, 2019. The Court entered an Order granting the extension to April 12, 2019 and a scheduling conference was reset for April 15, 2019. The Scheduling Conference was held on April 15, 2019. On June 14, 2019, the Board of University and School Lands filed its Amended Answer to Amended Complaint with Statement of Claim. By August 13, 2019, the United States shall shall assert its claims, if any, to the disputed stake. After the August 13, 2019 filing, the proceedings will be stayed until September 19, 2019 or another date set by the Court. During the stay, the United States and the Board are to discuss whether the dispute that gave rise to the litigation can be resolved. By no later than September 19, 2019, the United States and Board shall inform the Court of the status of their discussions and the Court will consider a schedule for the case. A Status Conference was set for September 20, 2019 before Magistrate Judge Clare R. Hochhalter. On August 1, 2019, the Status Conference previously set for September 20 was reset to October 11, 2019 at 10 a.m. before Magistrate Judge Clare R. Hochhalter. On August 13, 2019, the United States filed a Motion for Extension of Time to Plead and Assert Affirmative Claims and the Motion was granted on the same day, giving the United States until August 27, 2019 to file. The United States filed their Answer to Amended Complaint on August 27, 2019. On October 3, 2019, Defendants filed a joint motion and memornadum for postponement of the October 11, 2019 status conference by 90 days. On October 4, 2019, the Court entered an Order granting the motion to continue status conference. Status conference was reset to January 13, 2020, at 9 a.m. via telephone before Magistrate Clare R. Hochhalter. United States Department of Justice advised it will be working with the United States Department of Interior – Bureau of Land Management regarding a settlement proposal. On November 8, 2019, the Board received an email from the US DOJ in response to the Board’s request that the federal government start settlement discussions by making a proposal to the Board. The email states the federal government believes its OHWM surveys are accurate, and cited N.D.C.C. § 61-33.1-06, which states: “Notwithstanding any provision of this chapter to the contrary, the ordinary high water mark of the historical Missouri riverbed channel abutting . . . public domain lands . . . must be determined by the branch of cadastral study of the [BLM] in accordance with federal law.” Relying on this statute, US DOJ suggests that the federal surveys are presumptively accurate, and then states: “we respectfully suggest that the best and most appropriate path forward would be for representatives of North Dakota to identify the specific areas where it believes the agency erred in identifying the OHWM and proffer the evidence on which it bases that belief. BLM would then assess that evidence in good faith to ascertain if a compromise, aimed at reducing litigation risk, is possible.” Status conference was held January 13, 2020 and another status conference was set for April 7, 2020.

Current Status:

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RE: Wilkinson Litigation (No Action Requested)

Case: William S. Wilkinson, et. al. v. Board of University & School Lands, Brigham Oil & Gas, LLP; EOG Resources, Inc.; Case No. 53-2012-CV-00038

Date Filed: January, 2012 Court: Williams County District Court Judge: Paul Jacobson Attorney: Jennifer Verleger/Matthew Sagsveen/David Garner Opposing Counsel: Josh Swanson/Rob Stock, Lawrence Bender, Lyle Kirmis

Issues: The Wilkinson lawsuit was filed on January 10, 2012. The Plaintiffs assert that they own minerals in a 200 acre tract west of Williston. This suit was initially filed in state court as a quiet title action. The Attorney General’s Office filed an Answer and Counterclaim on February 27, 2012.

On July 1, 2014, the Plaintiffs filed an amended complaint in the case and added claims of unconstitutional takings, conversion, constructive trust and unjust enrichment, civil conspiracy and deprivation of rights under 42 U.S.C. § 1983. Plaintiffs assert in their amended complaint that the Board should be issuing leases on the west side of the Highway 85 bridge pursuant to the Phase II Investigation – the estimated location of the ordinary high watermark (OHWM) prior to inundation of Lake Sakakawea – rather than the Phase I Delineation – current location of the OHWM. Plaintiffs argue that the subject property is located under Lake Sakakawea, which did not exist at statehood, and thus the state did not acquire title to it as sovereign lands. Therefore, the State’s title to the Missouri River is limited to the channel as it existed prior to inundation of Lake Sakakawea as determined by the Phase II investigation.

In January of 2016, the State Engineer sought and was granted intervention. A joint motion for summary judgment was filed by the Board and the State Engineer on March 1, 2016. On May 18, 2016, the district court granted the motion for summary judgment finding that: (1) the subject property is located along the Missouri River, which is no doubt navigable; (2) The Phase I Delineation should be used to determine the OHWM for the subject property rather than the Phase II Investigation, and therefore the property is determined to be sovereign land of the state of North Dakota; (3) to the extent Plaintiffs are aggrieved by the Phase I Delineation, they must exhaust their administrative remedies through the State Engineer before making a claim in district court; and (4) there are no grounds to support Counts II through VII. Plaintiffs filed a notice of appeal on June 1, 2016. Both EOG Resources, Inc. and Statoil Oil and Gas LP filed cross-appeals.

On September 28, 2017, the North Dakota Supreme Court reversed the district court’s decision and remanded the case back to the district court. The Supreme Court held that:

1. Surface ownership could not be determined without the United States as aparty to the action;

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2. N.D.C.C. ch. 61-33.1 has a retroactive clause and the district court did not have an opportunity to determine if it applies and governs ownership of the minerals at issue;

3. A “takings” analysis must be conducted if the district court determines the State owns the disputed minerals; and

4. The district court erroneously made findings of disputed fact.

History: Due to the passage of S.B. 2134, the District Court ordered the case stayed and all deadlines be held in abeyance until the final review findings under S.B. 2134 are issued by the North Dakota Industrial Commission (NDIC). Plaintiff, after NDIC issued the review findings, requested a status conference with the Court to set a new trial date and other deadlines. The Board and State Engineer filed a Motion for Continued Stay of Proceedings on October 11, 2018. The telephonic status conference scheduled for November 2, 2018 was cancelled. A Hearing on the Motion for Continued Stay was held November 30, 2018. Defendants submitted a proposed Order and the Judge asked for Plaintiffs to submit a proposed Order, which was filed December 4, 2018. The Court issued its Order on December 12, 2018, denying the Motion for Continued Stay and requiring the parties confer on a scheduling order and submit a Rule 16 scheduling order by January 26, 2019. The State filed a Motion for Proposed Scheduling Order on January 28, 2019, and Plaintiffs filed a notice of hearing on January 31, 2019, and filed their Response to State’s Motion for Proposed Scheduling Order and Plaintiffs’ Request for Rule 16(F) Sanctions on February 1, 2019. State Defendants filed a Reply Brief in Support of Motion for Proposed Scheduling Order on February 8, 2019. Statoil & Gas LP filed a Response to State’s Motion for Proposed Scheduling Order and Plaintiff’s Proposed Scheduling Order on February 11, 2019. Plaintiffs scheduled a hearing in District Court on the Motion for Scheduling Order which was held March 5, 2019, at 2:00 p.m. The District Court didn’t rule on the scheduling motions but granted Plaintiffs’ request to file a motion for Summary Judgment within 30 days of the hearing. On April 15, 2019, Plaintiffs’ filed with the District Court a Notice of Motion, Motion for Summary Judgment, Brief in Support of Motion for Summary Judgment, Affidavit of Joshua Swanson, Notice of Hearing (requesting a hearing be held at the earliest possible date available on the Court’s calendar), and proposed Order Granting Plaintiffs’ Motion for Summary Judgment. On April 17, 2019, Plaintiffs’ filed a Notice of Hearing scheduling a hearing for 2:00 p.m. on July 30, 2019 before the Honorable Paul W. Jacobson, at the Williams County Courthouse, Williston. The parties entered into a Stipulation Extending Time to Respond to Plaintiffs’ Motion for Summary Judgment and Plaintiffs’ Time to Reply which was entered May 1, 2019. The Order Extending Time to Respond was entered May 2, 2019, extending Defendants’ time to respond to June 14, 2019, and extending Plaintiffs’ deadline to file reply to July 1, 2019. On June 10, 2019 Statoil & Gas LP filed its Opposition to Plaintiffs’ Motion for Summary Judgment. Also, on June 10, 2019, the Stipulated Motion to Dismiss Defendant XTO Energy Inc. was filed in which Plaintiffs, Cross-claimant EOG, and Defendant XTO stipulated and requested the Court dismiss XTO from the action with prejudice and without costs and disbursements to any party, as it holds no ownership interest in, right to, claim or title to any mineral interests as alleged by Plaintiffs. The Board of University and School Lands filed its Brief in Opposition to Plaintiffs’ Motion for Summary Judgment on June 14, 2019. Also filed on June 14, 2019 where the State Engineer’s Response to Brief in Opposition to Plaintiffs’ Motion for Summary and the Response of EOG Resources, Inc., to Plaintiffs’ Motion for Summary Judgment. On June 17, 2019, the Court entered its Order Dismissing Defendant XTO Energy, Inc. from the Action. On July 1, 2019, Plaintiff’s filed their Reply Brief

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in Support of Motion for Summary Judgment. The hearing on the Motion for Summary Judgment was held on July 30, 2019. Order Granting Plaintiffs’ Motion for Summary Judgment was entered on September 6, 2019.The proposed Judgment was submitted on September 12, 2019. The Judgment and Notice of Entry of Judgment were filed with the District Court on September 16, 2019. Board of University and School Lands’ Notice of Appeal to the North Dakota Supreme Court was filed on November 15, 2019. State Engineer’s Notice of Appeal to the North Dakota Supreme Court was filed on November 15, 2019. Notice of Appeal to North Dakota Supreme Court filed by Statoil Oil & Gas LP f/k/a Brigham Oil & Gas, LLP on November 27, 2019. Appellant’s Initial Briefs were due December 12, 2019; however, a Joint Motion for Extension of Time to File Briefs was filed and an extension was granted on December 13, 2019, with all briefs being due to the Supreme Court as follows:

• Appellants’ (including Board of University and School Lands) Initial Briefs - January 13, 2020;

• Appellees’ Response Briefs – March 2, 2020; and

• Appellants’ (including Board of University and School Lands) Reply Briefs – March 16, 2020.

On January 13, 2020, the Brief of Appellant, Board of University and School Lands was filed with the Supreme Court. Appellant North Dakota State Engineer’s Principal Brief was also filed on January 13, 2020.

Current Status:

• Plaintiffs/Appellees Response Brief filed with the Supreme Court on March 2, 2020.

• Reply Brief of Defendant and Appellant, Board of University and School Lands filed on March 16, 2020.

• Appellant North Dakota State Engineer’s Reply Brief filed March 16, 2020.

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ITEM 6E


RE: Newfield Litigation (No Action Requested)

Case: Newfield Exploration Company, Newfield Production Company, and Newfield RMI LLC v. State of North Dakota, ex rel. the North Dakota Board of University and School Lands and the Office of the Commissioner of University and School Lands, a/k/a the North Dakota Department of Trust Lands, Civ. No. 27-2018-CV-00143

Date Filed: March 7, 2018 Court: District Court/McKenzie County Attorneys: David Garner Opposing Counsel: Lawrence Bender - Fredrikson & Byron, P.A. and Michelle P. Scheffler –

Haynes and Boone, LLP Judge: Robin Schmidt

Issues: Plaintiff is seeking a Declaratory Judgment that it is currently paying gas royalties properly under the Board’s lease. Specifically, Plaintiff is asking the Court to order that gas royalty payments made by the Plaintiff be based on the gross amount received by the Plaintiff from an unaffiliated third-party purchaser, not upon the gross amount paid to a third party by a downstream purchaser, and that Plaintiff does not owe the Defendants any additional gas royalty payments based on previous payments.

History: A Complaint and Answer with Counterclaims have been filed. Newfield filed an Answer to Counterclaims. A Scheduling conference was held July 27, 2018. Plaintiffs’ filed a Motion for Summary Judgment on August 13, 2018 and Defendants filed a Cross-Motion for Summary Judgment. Plaintiffs’ Response was filed October 19, 2018 and Defendants’ Reply was filed November 9, 2018. A hearing on the Motions for Summary Judgment was held on January 4, 2019 at 1:30 p.m., McKenzie County. An Order on Cross Motions for Summary Judgment was issued on February 14, 2019, granting Plaintiff’s motion for summary judgment and denying Defendants’ motion for summary judgment. The Judgment was entered March 1, 2019, and the Notice of Entry of Judgment was filed March 4, 2019. Defendants have filed a Notice of Appeal to the North Dakota Supreme Court (Supreme Court). The trial scheduled in McKenzie County District Court for September 10 and 11, 2019 has been cancelled. Defendants/Appellants’ Brief to the Supreme Court was filed April 29, 2019. Plaintiffs/Appellees filed their Brief of Appellees and Appendix of Appellees on June 7, 2019. Defendants/Appellants filed a reply brief on June 18, 2019. Oral Argument before the Supreme Court was held on June 20, 2019. On July 11, 2019, the Supreme Court entered its Judgment reversing the Judgment of the McKenzie County District Court. On July 25, 2019 Newfield filed Appellee’s Petition for Rehearing. Also on July 25, 2019, a Motion for Leave to File Amicus Curiae Brief by Western Energy Alliance in Support of Newfield was filed with the Supreme Court. On July 26, 2019, a Motion for Leave to File Amicus Curiae Brief by North Dakota Petroleum Council in Support of Newfield was filed with the Supreme Court. On August 20, 2019, the North Dakota Supreme Court requested Defendants file a Response to the Petition for Rehearing and the two Amicus Curiae Briefs no later than September 4, 2019. Defendants/Appellants filed their Response to Petition for Rehearing on September 4, 2019. A Corrected

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ITEM 6E

Opinion was filed by the North Dakota Supreme Court on September 9, 2019, changing the page number of a citation. On September 12, 2019, the North Dakota Supreme Court entered an order denying Newfield’s Petition for Rehearing. On September 20, 2019, the opinion and mandate of the Supreme Court was filed with McKenzie County District Court. A Telephonic Status Conference was held October 8, 2019. On October 9, 2019, the District Court issued an Order Setting Briefing Schedule which ordered “the parties to file a brief regarding how they suggest the case proceed after the Supreme Court’s decision.” The parties filed briefs with the District Court on November 6, 2019. Notice of Appearance for Michelle P. Scheffler of Hayes and Boone, LLP on behalf of Plaintiffs was filed November 7, 2019.

Current Status:

• Telephonic Status Conference scheduled for March 17, 2020 before the District Court.

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Procedures for Executive Session regarding Attorney Consultation and Consideration of Closed Records

Overview

1) The governing body must first meet in open session.

2) During the meeting’s open session the governing body must announce the topics

to be discussed in executive session and the legal authority to hold it.

3) If the executive session’s purpose is attorney consultation, the governing body

must pass a motion to hold an executive session. If executive session’s purpose

is to review confidential records a motion is not needed, though one could be

entertained and acted on. The difference is that attorney consultation is not

necessarily confidential but rather has “exempt” status, giving the governing body

the option to consult with its attorney either in open session or in executive

session. Confidential records, on the other hand, cannot be opened to the public

and so the governing body is obligated to review them in executive session.

4) The executive session must be recorded (electronically, audio, or video) and the

recording maintained for 6 months.

5) Only topics announced in open session may be discussed in executive session.

6) When the governing body returns to open session, it is not obligated to discuss

or even summarize what occurred in executive session. But if “final action” is to

be taken, the motion on the decision must be made and voted on in open

session. If, however, the motion would reveal “too much,” then the motion can

be abbreviated. A motion can be made and voted on in executive session so

long as it is repeated and voted on in open session. “Final actions” DO NOT

include guidance given by the governing body to its attorney or other negotiator

regarding strategy, litigation, negotiation, etc. (See NDCC §44-04-19.2(2)(e) for

further details.)

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Recommended Motion to be made in open session:

Under the authority of North Dakota Century Code Sections 44-04-19.1 and 44-04-

19.2, the Board close the meeting to the public and go into executive session for

purposes of attorney consultation relating to:

• BLM - Case No. IBLA 2016-170

• Continental Resources, Inc. (Interpleader) Case No. 1:17-cv-00014

• XTO Energy, Inc. et al. (Interpleader) Case No. 1:19-cv-00076

• William S. Wilkinson et al. Case No. 53-2012-CV-00038

• Newfield Exploration Company et al Civ. No. 27-2018-CV-00143


Aye Nay Absent

Secretary Jaeger


Treasurer Schmidt


Governor Burgum

Statement: “This executive session will be recorded and all Board members are reminded that the discussion during executive session must be limited to the announced purpose for entering into executive session, which is anticipated to last approximately one hour. The Board is meeting in executive session to provide guidance or instructions to its attorneys regarding the identified litigation. Any formal action by the Board will occur after it reconvenes in open session. Board members, their staff, employees of the Department of Trust Lands and counsel with the Attorney General staff will remain, but the public is asked to leave the room. The executive session will begin at: ______AM, and will commence with a new audio recording device. When the executive session ends the Board will reconvene in open session.”

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Statements upon return to open session: State the time at which the executive session adjourned and that the public has been invited to return to the meeting room. State that the Board is back in open session. State that during its executive session, the Board provided its attorney with guidance regarding litigation relating to the sovereign lands’ minerals claims. [The guidance or instructions to attorney does not have to be announced or voted upon.] State that no final action will be taken at this time as a result of the executive session discussion

-or- .

Ask for a formal motion and a vote on it. Move to the next agenda item.

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board of university and school lands - trust lands · d. william s. wilkinson et al. case no....

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