“It is remarkable how much long-term advantage people like us have

gotten by trying to be consistently not stupid, instead of trying to be very intelligent”

Charlie Munger

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Our competitive edge is patience and discipline

Ø Emphasize a clear and simple portfolio structure Ø  Invest exclusively in high quality, diversified assets Ø Maintain consistent market exposure Ø Take advantage of volatility by buying low and selling high Ø Utilize index management Ø Keep implementation costs and asset turnover low Ø Emphasize daily portfolio pricing and liquidity

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THE NEVADA MODEL

“Perfection is achieved, not when there is nothing more to add, but when

there is nothing left to take away.”

Antoine de Saint-Exupéry

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Simple Portfolio Composition: 60% S&P 500 Index, 40% Barclays Aggregate Bond Index Complex Portfolio Composition: 30% S&P 500 Index, 4% Russell 2000 Index, 3% Mid-Cap U.S. Stock Index, 2% REIT Index, 16% MS EAFE Index, 3% Emerging Market Stock Index, 2% Commodities, 32% Barclays Aggregate Index, 3% High Yield Bond Index, 3% Citi World Government Bond x U.S. Index, 2% Cash (3 month Treasury Bill) Portfolios are rebalanced monthly, all returns are before fees.

0.0 5.0 10.0 15.0 20.00.0

5.0

10.0

15.0

for 20 Years Ended September 30, 2014Scatter Chart

Standard Deviation

Ret

urns

Complex Portfolio

Simple Portfolio

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U.S. Stocks 44%

Intl. Stocks 19%

U.S. Bonds 30%

Private Markets 7%

U.S. Stocks 49%

Intl. Stocks 21%

U.S. Bonds 30%

Legislators’ Fund Total Assets = $5 million

Public Employees’ Retirement System Total Assets = $33 billion

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3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.05.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

for 24 Years Ended June 30, 2014Scatter Chart

Standard Deviation

Ret

urns

Nevada Legislators

Nevada PERS

Nevada PERS Median State Pension Fund

U.S. Stocks 45%

Intl. Stocks 18%

U.S. Bonds 30%

Private Equity 3%

Real Estate 4%

U.S. Stock 27%

Intl. Stock 17%

Emerging Market Stocks

4% HY Bonds

4%

U.S. Bonds 18%

Intl Bonds

2%

Cash 2%

Real Estate 7%

Private Equity 7%

Hedge Funds 7%

Commodities 1%

Infrastructure 1%

Other 3%

8 Source: State Pension Fund Survey

Key Differences between Nevada PERS and Median Fund More U.S. Stocks, Less Alternatives, Higher Quality Security Emphasis,

Significantly More Index Management

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140.0

0.2

0.4

0.6

0.8

1.0

for 15 Years Ended June 30, 2014Rolling 12 Quarter Correlation Relative To S&P:500

Cor

rela

tion

0.97 - NEV PERS Total Fund0.95 - CAI:Pub Fund Large DB

Line denotes price level of S&P 500 U.S. stock index. Green dots mark stock buy points and red dots mark sell points based on activity within Nevada PERS’ investment portfolio from 2008-2014.

PERS’ DISCIPLINED REBALANCING

Sell into rallies and buy into weakness to control portfolio risk

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DISCIPLINE = SUCCESS

2013 2012 2011 2010 2009 2008 2007(40.0)

(20.0)

0.0

20.0

40.0

Group: CAI Public Fund - Large (>1B)7 Years Ended December 31, 2013

for Calendar YearsReturns

Median 15.75 13.20 0.80 13.54 20.17 (26.73) 8.89

Member Count 100 132 130 129 118 114 113

PERS Fee Adjusted A 18.45 12.24 2.86 11.72 17.25 (21.75) 7.92

A (27)A (76)

A (14)

A (84)A (75)

A (10)

A (69)

Nevada PERS Peer Group Return Ranking: 7 Years ended 2013 = top 15%

Nevada PERS Peer Group Risk Adjusted Return Ranking: 7 Years ended 2013 = top 16%

Produced using Callan Associates Performance Evaluation Program. Peer group ranking data for PERS is from Callan Associates’ database of public pension plans over $1 billion. Percentile rankings are ranked from 1 (highest) to 100 (lowest). Past performance is not indicative of future returns or results that may be generated by Peavine Capital Management.

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COMPETITIVE RESULTS

Produced using Callan Associates Performance Evaluation Program. Peer group ranking data for PERS is from Callan Associates’ database of public pension plans over $1 billion. Percentile rankings are ranked from 1 (highest) to 100 (lowest). Past performance is not indicative of future returns or results that may be generated by Peavine Capital Management.

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COMPETITIVE RESULTS

Produced using Callan Associates Performance Evaluation Program. Peer group ranking data for PERS is from Callan Associates’ database of public pension plans over $1 billion. Percentile rankings are ranked from 1 (highest) to 100 (lowest). Past performance is not indicative of future returns or results that may be generated by Peavine Capital Management.

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.40%

0.45%

0.50%

2008 2009 2010 2011 2012 2013 2014

Nevada PERS Median Large Public Pension Fund

58% Increase

40% Decrease

0.46%

0.08%

PERS’ Fees are 83% Lower

FEES MATTER

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Nevada PERS (%)

Nevada PERS ($)

Median Public Pension Plan

(%)

Median Public Pension Plan

($)

External Manager Fees 0.078% $26.2 million 0.46% $154 million

Investment Consulting Fees 0.002% $663,866 0.004% $1,338,542

Internal Staff Cost 0.0007% $234,395 0.014% $4,690,000

Total Cos 0.08% $27 million 0.48% $160 million

Median Public Pension Plan rates applied to similar size fund as Nevada PERS. 10 year savings calculation assumes $133 million in annual savings compounded at 8% annually.

$133 million in annual savings

$1.9 billion in savings compounded over 10 years

FEES MATTER

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“The difference between successful people and very successful people is that very successful people say ‘no’ to almost everything.”

Warren Buffett

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