Anexo

OTHER POST-EMPLOYMENT BENEFITS (OPEB) BOARD AGENDA AUGUST 15, 2012 - 3:00 P.M. CITY HALL COUNCIL CHAMBERS 15 LOOCKERMAN PLAZA DOVER, DELAWARE Public comments are welcomed on any item and will be permitted at appropriate times. When possible, please notify the City Clerk (736-7008 or e-mail at CityClerk@dover.de.us) should you wish to be recognized. AGENDA ADDITIONS/DELETIONS 1. Adoption of Minutes - OPEB Board Meeting of February 8, 2012 2. Organizational Issues - Election of Chair 3. Quarterly Performance Review (Quarter Ending June 30, 2012) (Milliman, Inc.) 4. Discussion - Liability to Asset Allocation Study (Milliman, Inc.) 5. Scheduling of Future Meeting Dates 6. Adjournment by 3:30 p.m. /js S:\AGENDAS-MINUTES-PACKETS\Misc-Agendas\OPEB\2012\08-15-2012 OPEB BOARD.wpd TO ASSURE THAT THERE WILL BE A QUORUM, PLEASE RSVP BY CONTACTING THE CITY CLERK’S OFFICE BY EMAIL AT CITYCLERK@DOVER.DE.US OR BY CALLING 736-7008 AS SOON AS POSSIBLE. THE AGENDA ITEMS AS LISTED MAY NOT BE CONSIDERED IN SEQUENCE. THIS AGENDA IS SUBJECT TO CHANGE TO INCLUDE THE ADDITION OR THE DELETION OF ITEMS, INCLUDING EXECUTIVE SESSIONS.

OTHER POST-EMPLOYMENT BENEFITS (OPEB) BOARD The Other Post-Employment Benefits (OPEB) Board met on February 8, 2012, at 3:45 p.m., with Mr. Hare presiding in the absence of Chairwoman Williams. Members present were Mrs. Hawkins, Mr. Koenig, and Mrs. Mitchell. Councilman Bonar and Mayor Carey were also present. AGENDA ADDITIONS/DELETIONS Mr. Koenig moved for approval of the agenda as presented, seconded by Mrs. Mitchell and unanimously carried. INVESTMENT PERFORMANCE ANALYSIS REPORT - PRESENTED BY PEIRCE PARK GROUP Mr. Lee Martin, Principal and Senior Investment Consultant, Peirce Park Group, reviewed the City of Dover OPEB Trust Investment Performance Report dated December 31, 2011. He noted that the OPEB fund increased by 7.5% during the quarter, gaining over $450,000 and outperforming the policy index. He attributed this gain to the value tilt of the portfolio and favorable returns from the PIMCO Total Return Fund. He noted that the OPEB Fund balance was over $8M in 2012. Mr. Martin explained that the OPEB fund is designed to capture more of the up market than the Pension Funds as it is a long-term liability with a lower funded ratio. Although the OPEB fund is a little more aggressive on asset allocation, defensive-minded managers are utilized. Mr. Martin noted that during the quarter to date, the fund was up 4.1%, which is 0.5% above the index. He mentioned that the Fund’s volatility could be reduced by indexing in the core area and managing the value area actively and he stated that this would be a topic of discussion later in the meeting. In reviewing individual funds, Mr. Martin stated that American Funds Fundamental Investors underperformed last year but did well in the last quarter and the current year to date. Against its peer group it was just below median, but over three (3) and five (5) years has done very well. The Vanguard Mid Cap Index Fund did well in the last quarter and increased by 12.1%. He advised members that the Target Small Cap Value Fund was included for down side protection. Mr. Martin noted that global funds are performing exceptionally well in the quarter to date at 2%. Performance in the last quarter was quite strong but was slightly behind the index because riskier, low-quality growth did better last quarter; however, he emphasized that it is best to invest in high quality over the long term. In terms of fixed income investments, Mr. Martin stated that the Vanguard Total Bond Index Fund performed exceptionally well last year, ranking in the 15th percentile at 7.7%. He explained that PIMCO was included in the portfolio to capture more return than the index; however, it is slightly more volatile. Mr. Martin noted that two-thirds of the OPEB Fund’s fixed income assets are held in the Vanguard Total Bond Index Fund and one-third in the PIMCO Total Return. He stated that PIMCO’s correlation to the index is currently .85 and he suggested that this be monitored to ensure that it does not continue to diverge. Should this divergence increase, he suggested that some of the investments in PIMCO be placed back into the Vanguard Total Bond Index Fund.

OPEB BOARD MEETING OF FEBRUARY 8, 2012 PAGE 2 ADJUSTMENTS TO PORTFOLIO - VALUE AND CORE STOCKS - PRESENTED BY PEIRCE PARK GROUP During the Joint Civilian and Police Pension Boards and OPEB Trust Board Meeting held on November 9, 2011, members requested Peirce Park Group to provide additional information at a subsequent meeting in regard to making adjustments to the OPEB portfolio by switching its value and core stocks. Peirce Park Group previously suggested that the City’s American Funds Fundamental Investors funds (a large core manager) be switched to the Washington Mutual Fund (a value fund) and the Vanguard Value Index Fund to the Vanguard S&P Fund. This would allow the OPEB Trust funds to remain with the same mutual fund companies currently being utilized but switch specific funds. Mr. Lee Martin, Principal and Senior Investment Consultant, Peirce Park Group, reviewed the City of Dover OPEB Portfolio Changes - February 2012. He advised members that after analyzing the approach that was previously suggested, it was determined that this strategy would not achieve the value tilt desired for the City’s portfolio. For this reason, it was suggested that mid cap value index funds be added to the portfolio to restore the value tilt. Mr. Martin reviewed Portfolio Allocations (Page 1) that compared the original proposal (Switch) to the modified suggestion (MidVal). He indicated that Peirce Park Group suggested the mid-value approach. Mrs. Mitchell moved to reallocate the City’s OPEB portfolio according to the Mid-Value Option listed under Portfolio Allocations, Page 1 of the the City of Dover - OPEB Portfolio Changes Report (Attachment #1), seconded by Mr. Koenig and unanimously carried. By unanimous consent, the meeting adjourned at 4:01 P.M. William F. Hare Acting Chairman WPM/JS/dd/tm S:\AGENDAS & MINUTES\Misc-Minutes\OTHER POST-EMPLOYMENT BENEFITS (OPEB) BOARD\2012\02-08-2012 OPEB.wpd Attachment Attachment #1 - Portfolio Allocations - City of Dover - OPEB Portfolio Changes Report

ATTACHMENT #1 OPEB Board Meeting of February 8, 2012 Portfolio Allocations (%) Current Portfolio Switch* MidVal** Vanguard Value Index Signal 21.6% - - American Funds Fundamental Investors R6 8.7% - - Vanguard Mid Cap Index Signal 8.3% 10.8% - Target Small Capitalization Value 7.3% 7.3% 7.0% American Funds New Perspective R6 13.0% 13.0% 13.0% Harding Loevner Global Equity Inst’l 9.6% 12.6% 12.7% Vanguard Total Bond Market Index Signal 18.7% 18.7% 18.7% PIMCO Total Return Inst’l 12.8% 12.8% 12.8% American Funds Washington Mutual R6 - 10.0% 10.0% Vanguard 500 Index Signal - 14.8% 15.8% Vanguard Mid Cap Value Adm Index - - 10.0% Total Cost 0.35% 0.38% 0.38% ATTACHMENT #1 *Terminates Value Index and American Funds Fundamental Investors. 3% to Harding Loevner Global and 2.5% to Mid Cap Index. Add American Funds Washington Mutual at 10% and balance to S&P 500 Index. **Terminates Value Index and Fundamental Investors. Switches the Mid Cap index to the Mid Cap Value Index and invests 10%. 3% to Harding Loevner Global – Redeem some from Target Small Cap Value. Adds American Funds Washington Mutual at 10% and balance to S&P 500 Index. OPEB Board Meeting of February 8, 2012 1

250 Washington Ave Ext Albany, NY 12203 USA Tel +1 518 514 7157 MEMO Fax +1 518 514 7200 milliman.com August 2, 2012 To: City of Dover, DE – OPEB Board From: Jeff Marzinsky/Milliman Re: Meeting Notes – 8/15/2012 Enclosures: Milliman Quarterly Investment Monitor Report and Asset Liability Study 1. Investment Performance Review as of June 30, 2012 – See Quarterly Investment Monitor Report a. Plan assets have changed from $8.43 million at the beginning of the period to $10.48 million at the end of the period. After contributions of approximately $2.15 million, the plan had a net gain/loss of 2.45%. b. The majority of plan investments have returns that are exceeding their respective benchmarks and rank well within their asset categories over three and five year time periods. c. The passive-index investments are following their respective benchmarks. d. No changes to funds at this time. Milliman will be completing an asset allocation review and changes to asset classes and fund may be forthcoming. 2. Asset Liability Study – See Asset Liability Study a. Background: i. Plan is active and has recently begun to fund future benefits from the plan. ii. The plan has a 30-year amortization schedule to fund projected benefits. iii. Target actuarial interest rate is set at 7.00%. b. Milliman has conducted an asset liability study to determine the duration of plan cash flows in comparison to the duration of plan assets. i. The study determined approximate cash flow duration on plan liabilities of approximately 25 years, while current plan assets have a fixed income duration of approximately 5.88 years and an overall plan asset duration of 1.72 years. ii. By adding longer duration bond investments, the plan could increase the duration of fixed income assets (and the overall plan). c. The expected return on plan assets, based on the current allocation is approximately 7.00%, with a standard deviation of 13.16. The allocation is approximately 68% equity and 32% fixed income. i. It could be possible to produce an expected return slightly higher then the actuarial target return of 7.00%, provide more diversification, provide a slightly better match of plan liabilities to assets and lower expected standard deviation (~13.02) by adding additional asset classes to the plan. The allocation would be approximately 66% equity and 34% fixed income. Offices in Principal Cities Worldwide

Meeting Notes Page 2 The analysis in this report was prepared utilizing data from third parties and other sources including but not limited to internal computer software and databases, including among others mpiStylus Pro©,, software designed by Markov Processes International. Reasonable care has been taken to assure the accuracy of the data contained herein, and comments are objectively stated and are based on facts gathered in good faith. These reports do not constitute investment advice with respect to the sale or disposition of individual securities. Milliman disclaims responsibility, financial or otherwise, for the accuracy or completeness of this report. This Milliman work product was prepared solely for the internal business use of our clients. Milliman's work may not be provided to third parties without Milliman's prior written consent. Milliman does not intend to benefit any third party recipient of its work product, even if Milliman consents to the release of its work product to such third party. Past performance is no guarantee of future results. Unless explicitly stated in your Service Agreement, there should be no reliance on Milliman services to provide analysis or reporting on a daily basis, the changes to manager rankings, ratings or opinions thereon. Unless explicitly stated in your Service Agreement, Milliman services are not intended to monitor investment manager compliance with individual security selection criteria, limits on security selection, and/or prohibitions to the holding of certain securities or security types. Milliman provides a copy of its SEC Form ADV Part II to clients without charge upon request. Offices in Principal Cities Worldwide

Market Commentary - 2nd Quarter 2012 Qtr 1 Yr 3 Yrs 5 Yrs 10 Yrs S&P 500 Index -2.75 5.45 16.40 0.22 5.33 DJ US Total Stock Mkt Idx (Full-Cap) -3.21 3.78 16.84 0.63 6.16 Russell 1000 Index -3.12 4.37 16.64 0.39 5.72 “Look at market Russell 1000 Value Index Russell 1000 Growth Index -2.20 -4.02 3.01 5.76 15.80 17.50 -2.19 2.87 5.28 6.03 fluctuations as Russell 2000 Index Russell 2000 Value Index -3.47 -3.01 -2.08 -1.44 17.80 17.43 0.54 -1.05 7.00 6.50 your friend rather Russell 2000 Growth Index -3.94 -2.71 18.09 1.99 7.39 MSCI EAFE ND -7.13 -13.83 5.96 -6.10 5.14 MSCI EAFE Small Cap ND -8.65 -15.06 9.17 -5.32 8.49 than your enemy; MSCI Europe ND MSCI Japan ND -7.47 -7.30 -16.48 -7.23 6.29 1.85 -6.97 -6.51 5.09 2.50 profit from folly MSCI EM ND DJ World Real Estate -8.90 1.89 -15.95 0.76 9.77 17.36 -0.09 -3.58 14.08 9.13 rather than DJ US Select REIT Index ML 3-month T-Bill 3.75 0.03 13.29 0.06 33.52 0.12 1.97 0.98 10.27 1.87 participate in it.” BC US Gov 1-3Y Bonds 0.20 0.86 1.69 3.40 3.14 BC US Gov/Corp Bonds 2.56 8.78 7.34 6.90 5.79 BC US Aggregate Bond 2.06 7.47 6.93 6.79 5.63 BC US Gov Long Bonds 10.32 31.42 13.51 11.92 8.92 --Warren Buffett BC US Corp Long Bonds 5.12 18.74 15.10 9.85 8.45 BC US High Yield Bonds 1.83 7.27 16.28 8.45 10.16 BC TIPS 3.15 11.66 9.63 8.44 7.23 Page 1

Market Commentary - 2nd Quarter 2012 Broad Markets - Five Years Jun-07 - Jun-12 140 130 120 110 Growth of $100 100 90 80 70 60 50 40 Jun-07 Dec-08 Dec-09 Dec-10 Jun-12 S&P 500 Index DJ US Total Stock Mkt Idx (Full-Cap) MSCI EAFE ND BC US Aggregate Bond Market Commentary The U.S. stock market declined on worries about the European debt crisis, weaker economic data in the U.S. and China, and concerns about the oncoming “fiscal cliff” in the U.S. The international equity markets fell in response to slowing global economic growth and fear that the European debt crisis could cause the Euro zone to break up. The Federal Reserve Bank continued to sell shorter-term U.S. Treasuries and buy longer-term bonds, with the goal of pushing down long-term interest rates to stimulate borrowing and spending. As the quarter ended, mutual fund investors increased their holdings in bonds and decreased their holdings in stocks. For the quarter, bond funds had net inflows of $58.8 billion, while stock funds had net outflows of $19.2 billion. Total money market mutual fund assets decreased by $66.90 billion to $2.538 trillion. The unemployment rate remained at 8.2%, as total employment increased by 225,000 jobs. The price of oil decreased from $106 per barrel to $82 during the quarter, a decrease of 22.6%. For the three months ending June 30, 2012, annualized seasonally adjusted CPI – U was -0.8%. Falling prices for fuel oil and gasoline drove the decrease. Page 2

Market Commentary - 2nd Quarter 2012 US Fixed Income - Five Years U.S. Treasury Yield Curve Jun-07 - Jun-12 5.00% 180 Las t Year 4.50% Las t Quarter 160 4.00% This Quarter 3.50% 140 3.00% 120 2.50% 2.00% 100 1.50% 80 1.00% 0.50% 60 Jun-07 Dec-08 Dec-09 Dec-10 Jun-12 0.00% ML 3-month T-Bill BC US Gov 1-3Y Bonds 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr BC US Gov/Corp Bonds BC US Aggregate Bond Term to Maturity BC US Gov Long Bonds BC US Corp Long Bonds Source: Department of US Treasury BC US High Yield Bonds BC TIPS US Bond Market Most fixed income markets rose in the 2nd quarter, as investors shifted from lower quality bonds to higher quality bonds. The short end of the yield curve remained unchanged as the Fed maintained its near-zero interest rate policy. Interest rates moved decidedly lower in the 10- and 30-year Treasury rates. Long-term government bonds were the best performing sector this quarter, up 10.32%, as investors sought the safety of government bonds. Long-term corporate bonds also performed well this quarter, up 5.12%, as long-term corporate rates fell sharply. Mortgage-backed securities were the worst performing sector this quarter, up 1.08%, as heavy refinancing activity dampened mortgage returns. 91-Day T-Bill returned 0.03% in the second quarter as compared with 0.01% in the first quarter. Page 3

Market Commentary - 2nd Quarter 2012 Russell Indices - Three Years Russell Indices - Five Years Jun-09 - Jun-12 Jun-07 - Jun-12 200 150 125 175 100 150 75 125 50 100 25 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Jun-07 Dec-08 Dec-09 Dec-10 Jun-12 Russell 1000 Index Russell 1000 Value Index Russell 1000 Growth Index Russell 1000 Index Russell 1000 Value Index Russell 1000 Growth Index Russell 2000 Index Russell 2000 Value Index Russell 2000 Growth Index Russell 2000 Index Russell 2000 Value Index Russell 2000 Growth Index Russell 1000 Index Sector Weights Russell 1000 Index Sector Quarterly Returns 0.08% -7.60% Utilities Utilities 7.35% 6.20% Growth Weight 0.96% Telecomm. 6.50% Telecomm. 4.76% 14.22% Value Weight -3.97% 5.11% Materials Materials -7.22% Growth Return 2.67% -6.84% Value Retu rn 30.02% Info. Tech. Info. Tech. -8.04% 8.53% 12.30% -6.42% Industrials Industrials -0.50% 9.29% 1.60% 10.69% Health Care Health Care 1.89% 12.49% 4.33% -0.73% Financials Financials -6.64% 26.21% 9.27% -6.62% Energy Energy -6.80% 11.63% 3.98% Consumer 12.46% Consumer Staples Staples -0.25% 7.84% -5.08% Consumer 14.78% Consumer Discretionary Discretionary -1.16% 9.24% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 0.00% 5.00% 10.00% 15.00% 20. 00% 25.00% 30.00% 35.00% Source: R ussell/M ellon Analytical Services US Stock Market Most major domestic equity indices posted a loss for the quarter. The large-cap Russell 1000 Value Index had the best return, down 2.2%. Large-cap stocks outperformed small-caps, down 3.1% vs. -3.5%. In comparing styles, value stocks did better than growth stocks. REITs had a strong quarter, up 3.75%, due to solid fundamentals, including growing cash flow and improving occupancy and rental rates. The best performing sectors were infrastructure and health care. Telecommunication services were the best performing sector, up 13.07%, on better-than-expected earnings from AT&T and Verizon. Info technology was the worst performing sector, down 7.11%, as corporate IT spending slowed significantly. Page 4

Market Commentary - 2nd Quarter 2012 International - Five Years Currency Exchange Rates in mixed currency, Jun-07 - Jun-12 Units per US Dollar 150 This Quarter Last Quarter % Change 125 Brazil Reais 2.01 1.83 10.00% China Yuan Renminbi 6.36 6.30 0.88% 100 Euro 0.79 0.75 5.22% India Rupees 55.57 50.87 9.24% 75 Japan Yen 79.81 82.87 -3.69% 50 Mexico Pesos 13.41 12.81 4.71% Russia Rubles 32.42 29.32 10.56% 25 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 United Kingdom Pounds 0.64 0.62 2.84% MSCI EAFE ND MSCI EAFE LOC MSCI Europe ND MSCI Japan ND MSCI EM ND Source: www.xe.com Regional Performance - Quarter Apr-12 - Jun-12 -4.09 -8.84 -6.89 -6.50 -5.32 -18.31 -14.80 -9.90 -6.95 -20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 Total Annualized Return, % S&P United Kingdom BMI S&P Europe Ex-U.K. BMI S&P Japan BMI S&P Asia Pacific Ex-Japan BMI S&P Mid-East and Africa BMI S&P Brazil BMI S&P Russian Federation BMI S&P India BMI S&P China BMI International Markets The dollar was up against the euro and pound, but down against the yen. For the quarter, the EAFE Index was down 7.13% and Emerging Markets were down 8.90%. Local currency returns for the EAFE Index and Emerging Markets were -5.43% and -5.26%, respectively. Among the major international regions, Brazilian stocks had the lowest return (-18.31%) on concerns about the country's future economic growth. Stocks in Russia also fell substantially (-14.80%), as a result of lower oil prices and a reduction in gas exports to Europe. Small-cap stocks, down 8.7%, underperformed large-cap stocks. Page 5

City of Dover OPEB Trust Quarterly Return Summary OPEB-NET OPEB-GROSS Month End BMV Contribution Withdrawls Fees Gain EMV RETURN RETURN 4/30/2012 $ 8,434,713.73 $ - $ - $ 1,250.00 $ 10,300.57 $ 8,444,180.97 0.12% 0.15% 5/31/2012 $ 8,444,180.97 $ 2,150,000.00 $ - $ - $ (34,875.37) $ 10,200,972.27 -0.41% -0.38% 6/30/2012 $ 10,200,972.27 $ - $ - $ - $ 280,823.56 $ 10,481,795.83 2.75% 2.78% $ 2,150,000.00 $ - $ 1,250.00 $ 256,248.77 Quarterly Return 2.45% 2.55% Monthly Returns are calculated with a mid month weighting on cash flows. Milliman, Inc.

Quarterly Investment Monitor Data as of 06/30/2012 Performance Summary City of Dover, Delaware Other Postemployment Benefit (OPEB) GASB 45 8

Quarterly Investment Monitor Data as of 06/30/2012 Asset Allocation Balances As of Percent As of Balances As of Percent As of Notes 06/30/2012 06/30/2012 03/31/2012 03/31/2012 Wells Fargo Advantage Cash Inv MMkt I $315,935 3.01% $109,869 1.30% PIMCO Total Return Instl $1,280,295 12.21% $1,016,933 12.05% Vanguard Total Bond Market Index Signal $1,868,340 17.83% $1,446,449 17.15% American Funds Washington Mutual R6 $1,033,832 9.86% $837,534 9.93% Vanguard 500 Index Signal $1,518,956 14.49% $1,347,271 15.97% Vanguard Mid Cap Index Adm $1,100,867 10.50% $832,669 9.87% Target Small Capitalization Value T $742,595 7.08% $623,517 7.39% American Funds New Perspective R6 $1,334,316 12.73% $1,150,048 13.63% Harding Loevner Global Equity Inst $1,286,406 12.27% $1,071,653 12.70% Plan Total $10,481,542 $8,435,942 City of Dover, Delaware Other Postemployment Benefit (OPEB) GASB 45 9

Quarterly Investment Monitor Data as of 06/30/2012 Investment Policy Review - Active Management Return Return Excess Excess Relative Relative Alpha Sharpe Alpha Sharpe Fund Rank Rank Return Return StdDev StdDev Rank Rank Rank Rank Name 3Y 5Y 3Y 5Y 3Y 5Y 3Y 3Y 5Y 5Y PIMCO Total Return Instl 38 2 2.87 3.21 1.40 1.30 45 65 4 6 American Funds Washington Mutual R6 14 15 1.48 2.86 0.82 0.83 11 9 18 16 Target Small Capitalization Value T 49 16 -2.57 0.13 0.91 0.91 21 19 21 19 American Funds New Perspective R6 28 19 1.97 3.30 0.97 0.93 26 24 19 19 Harding Loevner Global Equity Inst 29 11 1.82 3.94 0.95 0.94 24 23 14 12 Definitions Return Rank - Fund's category percentile return rank, a value less than 50 (1 is the best and 100 is the worst) implies the fund is beating more than 50% of its peer group. Excess Return - Fund's excess return over its becnchmark, a value greater than 0 implies the fund's return is higher than its benchmark. Relative StdDev - Fund's standard deviation relative to its benchmark, a value less than 1 implies the fund's standard deviation is lower than its benchmark. Alpha Rank - Fund's category percentile Alpha rank, a value less than 50 (1 is the best and 100 is the worst) implies the fund is beating more than 50% of its peer group. Sharpe Rank - Fund's category percentile Sharpe Ratio rank, a value less than 50 (1 is the best and 100 is the worst) implies the fund is beating more than 50% of its peer group. City of Dover, Delaware Other Postemployment Benefit (OPEB) GASB 45 10

Quarterly Investment Monitor Data as of 06/30/2012 Investment Policy Review - Passive Management Excess Excess Tracking Tracking Fund Beta Beta Expense Return Return Error Error Name 3Y 5Y Ratio 3Y 5Y 3Y 5Y Vanguard Total Bond Market Index Signal -0.17 NA 1.03 0.31 NA NA 0.10 Vanguard 500 Index Signal -0.01 0.02 1.00 0.02 1.00 0.04 0.05 Vanguard Mid Cap Index Adm -0.08 -0.03 1.00 0.02 1.00 0.04 0.10 Definitions Excess Return - Fund's excess return over its becnchmark, a value greater than 0 implies the fund's return is higher than its benchmark. Beta - Fund's Beta or sensitivity to movements compared to its benchmark, a value of 1 implies its moving in sync with its benchmark. Tracking Error - Fund's Tracking Error versus its benchmark, a value of 0 implies the Fund's ups and downs are the same size as its benchmark. City of Dover, Delaware Other Postemployment Benefit (OPEB) GASB 45 11

Quarterly Investment Monitor Data as of 06/30/2012 Investment Option Return Summary Asset Fund 3 1 3 5 10 Mstar Expense YTD Ticker Class Name Months Year Years Years Years Rating Ratio Taxable Money Market Wells Fargo Advantage Cash Inv MMkt I 0.01 0.02 0.04 0.12 1.23 1.98 WFIXX NA 0.20 BofA ML 3-month T-bill total return Index 0.03 0.04 0.06 0.12 0.98 1.87 N/A NA NA Intermediate-term Bond PIMCO Total Return Instl 2.79 5.75 6.96 8.68 9.23 6.98 PTTRX 5.00 0.46 Intermediate-term Bond Vanguard Total Bond Market Index Signal 2.16 2.43 7.57 6.85 6.82 5.50 VBTSX 3.00 0.10 BC Intermediate Government/Credit 1.48 2.10 5.42 5.81 6.01 5.08 N/A NA NA Barclays US Agg Float Adj TR USD 2.12 2.42 7.62 7.02 NA NA N/A NA NA Large Value American Funds Washington Mutual R6 (0.45) 7.33 6.43 16.80 0.17 5.00 RWMGX 5.00 0.31 S&P 500 Value (3.58) 8.92 3.00 15.32 (2.68) 4.90 N/A NA NA Large Blend Vanguard 500 Index Signal (2.76) 9.47 5.42 16.39 0.24 5.29 VIFSX 4.00 0.05 S&P 500 Index (2.75) 9.49 5.45 16.40 0.22 5.33 N/A NA NA Mid-Cap Blend Vanguard Mid Cap Index Adm (5.46) 7.21 (2.77) 19.59 0.65 7.81 VIMAX 4.00 0.10 MSCI US Mid Cap 450 Index USD (5.46) 7.23 (2.71) 19.68 0.68 8.24 N/A NA NA Small Value Target Small Capitalization Value T (5.05) 4.75 (2.79) 17.20 1.96 9.68 TASVX 4.00 0.71 S&P 600 Index (3.58) 7.98 1.43 19.78 1.83 7.92 N/A NA NA World Stock American Funds New Perspective R6 (4.06) 9.22 (3.12) 12.77 0.60 7.89 RNPGX 4.00 0.46 World Stock Harding Loevner Global Equity Inst (5.22) 9.85 (2.76) 12.61 1.25 7.40 HLMVX 4.00 0.95 MSCI AC World Index ND USD (5.56) 5.65 (6.49) 10.80 (2.70) 5.73 N/A NA NA Total Plan OPEB-GROSS RETURN 2.55 11.82 6.40 NA NA NA N/A NA NA Total Plan OPEB-NET RETURN 2.45 11.61 5.98 NA NA NA N/A NA NA OPEB Plan Policy Index (2.15) 6.24 2.13 12.03 1.73 5.87 N/A NA NA City of Dover, Delaware Other Postemployment Benefit (OPEB) GASB 45 12

Asset Liability Study City of Dover, DE - OPEB Asset Liability Study Date Prepared: July 31, 2012 For Additional Information Contact: Investment Consultant Investment Consultant ® ® Jeff Marzinsky, CPC, CIMA Matt Albano, CIMA , QKA (518)-514-7100 (518)-514-7100 jeff.marzinsky@milliman.com matt.albano@milliman.com

Quarterly Investment Monitor - June 2012 Asset Allocation Study Optimization Input Review Expected Annual Return Annual Standard Deviation Sharpe Ratio Cash 2.50% 1.20 0.00 ML U.S. Treasuries, Inflation-Linked 2.35% 4.45 -0.03 Barclays Capital Interm U.S.Govt/Credit 2.65% 3.95 0.04 Barclays Capital Long Gov/Credit Index 3.90% 9.50 0.15 Russell 1000 Value Index 8.30% 17.75 0.33 Russell 1000 Growth Index 9.15% 21.25 0.31 Russell Midcap Index 9.10% 20.85 0.32 Russell 2000 Index 9.70% 23.55 0.31 FTSE NAREIT REIT: Equity 8.30% 22.50 0.26 MSCI EAFE (Net) Index 9.10% 21.45 0.31 MSCI EM (Emerging Markets) Index 11.30% 30.40 0.29 2

Quarterly Investment Monitor - June 2012 Asset Allocation Study Input Correlation Corr Corr Corr Corr Corr Corr Corr Corr with Corr Corr with with with with with with with Corr Barclays with with MSCI ML Barclays Russell Russell FTSE MSCI with Capital Russell Russell EM US Capital 1000 1000 NAREIT EAFE Cash Long Midcap 2000 (Emerging Treas Interm Value Growth REIT: (Net) Gov/Credit Index Index Markets) Infl-Linked U.S.Govt/Credit Index Index Equity Index Index Index Cash 1.00 0.03 0.24 0.03 0.07 0.06 -0.01 -0.03 -0.05 -0.08 -0.11 ML U.S. Treasuries, Inflation-Linked 0.03 1.00 0.63 0.56 -0.22 -0.25 -0.19 -0.26 0.05 -0.19 -0.15 Barclays Capital Interm U.S.Govt/Credit 0.24 0.63 1.00 0.86 -0.08 -0.18 -0.17 -0.23 0.04 -0.10 -0.25 Barclays Capital Long Gov/Credit Index 0.03 0.56 0.86 1.00 -0.06 -0.13 -0.12 -0.17 0.04 -0.07 -0.24 Russell 1000 Value Index 0.07 -0.22 -0.08 -0.06 1.00 0.79 0.93 0.87 0.72 0.80 0.61 Russell 1000 Growth Index 0.06 -0.25 -0.18 -0.13 0.79 1.00 0.89 0.83 0.45 0.79 0.68 Russell Midcap Index -0.01 -0.19 -0.17 -0.12 0.93 0.89 1.00 0.95 0.68 0.83 0.73 Russell 2000 Index -0.03 -0.26 -0.23 -0.17 0.87 0.83 0.95 1.00 0.70 0.76 0.75 FTSE NAREIT REIT: Equity -0.05 0.05 0.04 0.04 0.72 0.45 0.68 0.70 1.00 0.58 0.45 MSCI EAFE (Net) Index -0.08 -0.19 -0.10 -0.07 0.80 0.79 0.83 0.76 0.58 1.00 0.70 MSCI EM (Emerging Markets) Index -0.11 -0.15 -0.25 -0.24 0.61 0.68 0.73 0.75 0.45 0.70 1.00 3

Quarterly Investment Monitor - June 2012 Asset Allocation Study Portfolio Options Gen Option Option Option EE & OPEB 1 2 3 Police Pension Cash 5.000 5.000 5.000 2.000 1.000 ML U.S. Treasuries, Inflation-Linked 7.000 7.000 7.000 0.000 0.000 Barclays Capital Interm U.S.Govt/Credit 10.000 10.000 10.000 34.000 31.000 Barclays Capital Long Gov/Credit Index 20.000 17.268 12.287 0.000 0.000 Russell 1000 Value Index 12.117 10.000 11.344 14.000 10.000 Russell 1000 Growth Index 10.000 10.738 14.369 14.000 15.000 Russell Midcap Index 5.000 5.000 5.000 8.000 11.000 Russell 2000 Index 5.000 5.000 5.000 5.000 7.000 FTSE NAREIT REIT: Equity 5.000 4.994 5.000 0.000 0.000 MSCI EAFE (Net) Index 10.000 10.000 10.000 23.000 25.000 MSCI EM (Emerging Markets) Index 10.883 15.000 15.000 0.000 0.000 Fixed Income 42.00% 39.27% 34.29% 36.00% 32.00% Equity 58.00% 60.73% 65.71% 64.00% 68.00% Option 1 Option 2 Option 3 Gen EE & Police Pension OPEB Expected Return 6.75% 7.00% 7.25% 6.70% 7.00% Expected Standard Deviation 11.3045 12.1307 13.0225 12.1951 13.1609 Expected Sharpe Ratio 0.3760 0.3710 0.3648 0.3444 0.3422 Option 1 Option 3 OPEB Option 2 Gen EE & Police Pension Expected Return Expected Risk Expected Sharpe Ratio 8 14 13.16 7.25 13.02 0.50 7.00 7.00 12.13 12.20 6.75 6.70 12 11.30 6 0.38 0.37 0.36 Expected Sharpe Ratio 10 0.34 0.34 Expected Return Expected Risk 8 4 0.25 6 4 2 2 0 0 0.00 4

Quarterly Investment Monitor - June 2012 Asset Allocation Study Efficient Frontier Mean/Variance Efficient Frontier (Milliman Capital Market Assumptions) 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 Return, % 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Risk (StDev Rtn), % Unconstrained Fixed Income Constrained Option Gen EE & Police Pension OPEB 5

Annual Return, % -15 -10 -5 0 5 10 15 20 25 30 Dec 2011 Dec 2012 Dec 2013 Option 1 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Monte-Carlo Downside Log-stable Simulations Dec 2011 Dec 2012 Monte Carlo Simulation Dec 2013 Option 2 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Dec 2011 Dec 2012 Dec 2013 Option 3 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Quarterly Investment Monitor - June 2012 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Monte Carlo Annual Return Simulation Dec 2018 Dec 2019 Dec 2020 Dec 2011 Dec 2012 Gen EE & Police Pension OPEB Dec 2013 Dec 2014 Asset Allocation Study Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 75th to 95th Percentile 50th to 75th Percentile 25th to 50th Percentile 6 5th to 25th Percentile

Quarterly Investment Monitor - June 2012 Asset Allocation Study Liability Duration 7

Quarterly Investment Monitor - June 2012 Asset Allocation Study Liability Duration 8

Quarterly Investment Monitor - June 2012 Asset Allocation Study Liability Duration 9

Quarterly Investment Monitor - June 2012 Asset Allocation Study Disclaimer This report has been prepared for the internal use of City of Dover, DE - OPEB and is only to be relied upon by City of Dover, DE - OPEB. No portion of this report may be distributed or otherwise furnished to any other party without Milliman's prior written consent. In the event such consent is given, the report must be provided in its entirety. Milliman does not intend to benefit any third party recipient of its work product and does not intend to create any legal duty from Milliman to any other party even if Milliman's work product is so distributed. Information on individual investment managers and plan investment options contained in this report have been obtained from the firms themselves or a third party vendor. Although Milliman did not perform a detailed audit of the information provided, we reviewed the data for reasonableness and consistency. The performance data within this report represents past performance and is no guarantee of future results. All returns include internal expenses, except sales charges, if any. The rates of return shown are for the investment options in which the retirement program participates, not for the plan specifically. Returns credited to individual accounts will vary due to the timing of contributions, transfers, and withdrawals. Past performance is no guarantee of future results. Milliman provides a copy of its SEC Form ADV to clients without charge upon request. Unless explicitly stated in your Service Agreement, there should be no reliance on Milliman services to provide analysis or reporting on a daily basis, the changes to manager rankings, ratings or opinions thereon. Unless explicitly stated in your Service Agreement, Milliman services are not intended to monitor investment manager compliance with individual security selection criteria, limits on security selection, and/or prohibitions to the holding of certain securities or security types. This projection is intended for the sole use of City of Dover, DE - OPEB. It is a complex, technical analysis and is not for the use or benefit of any third party for any purpose and may not be provided to third parties without Milliman’s prior written consent. Any third party recipient of Milliman’s work product who desires professional guidance should not rely upon Milliman’s work product but should engage qualified professionals for advice appropriate to its own specific needs. These estimates are subject to the uncertainties of a regular actuarial valuation; the estimates are inexact because they are based on assumptions that are themselves necessarily inexact, even though we consider them reasonable. Thus, the emerging liabilities and market returns may vary from those presented to the extent actual experience differs from that projected by the actuarial assumptions. 10