Anexo

ATTACHMENT #1 Regular Civilian and Police Pension Boards" i =26= INVESTMENT POLICY CITY OF DOVER POLICE PENSION BOARD November 2004 Policy Adopted: March, 2004 Amended: November, 2004 version 2.2

TABLE OF CONTENTS INTRODUCTION ovsssssesssssvsaneerscssessnsenssonisoncasenenenrsensneenvscavensessvessssenss srroneenessesesesnrensesssen attonesrereeneseesessecoveonenessesnssessees 3 PURPOSES OF THE STATEMENT 3 PLAN DESCRIPTION .... wad PORTFOLIO MANAGEMENT PRECEPTS.. 4 PRUDENCE IN INVESTMENT........ccsscsssooee 4 RESPONSIBILITIES OF THE BOARD AND STAFF .. 5 RESPONSIBILITIES OF THE INVESTMENT MANAGER(S). 6 RESPONSIBILITIES OF THE PLAN CUSTODIAN(S)..........-.. a 6 INVESTMENT OBJECTIVES sessscsssssssersessssnsseseersssssesssssussnssssssossenescnensocenesaveensonsessvennuesnssonsanscensaasesscsnstsseaneenceaneessess 8 INVESTMENT POLICY. evssesssevsesessserssarsseerenrenneansatsesseeseten soseasensevensereeentenesetoes: sursavesevacrevescosconconsonsorseessssannaes ssessveveer 10 ASSET ALLOCATION... ALLOCATION MONITORING/REBALANCING LIQUIDITY.......... 10 PROXY VOTING ll DIVERSIFICATIO li MUTUAL FUNDS.. INVESTMENT GUIDELINES .sscsesssssessseovsnsensevecssvsessessesecnssnssunensenssnsenennegnecersiseetsnesesvesselsseussassueseessseecenseavaventesvenesee 12 GENERAL GUIDELINES DOMESTIC EQUITY INVESTMENT GUIDELINE: SPECIFIC GUIDELINES, DOMESTIC EQUITY veessssseseseesessessenns INTERNATIONAL EQUITY INVESTMENT GUIDELINES. SPECIFIC GUIDELINES, INTERNATIONAL EQUITY... we DOMESTIC FIXED INCOME INVESTMENT GUIDELINES... REVIEW PROCEDURES... SIGNATURES vessssssssseenesnsaneerscsernennensesnes soneavenensesovanseavenoesussuesusnsonsavesecssussuonsessessenesutscsorensassussnsesntonseussuranssessesessersersers 18 APPENDIX — INVESTMENT POLICY KEY PARAMETERS wveseessenersorrees susenssneresunevnsonvensonsanreseecssusserovencsnreersors® 19 11/18/2004 20f 19 City of Dover -- Police

City of Dover Police Pension Board Investment Policy Statement Pension Plan INTRODUCTION PURPOSES OF THE STATEMENT Based upon and in keeping with requirements of City of Dover officials and Police Pension Plan participants serving as members of the Police Pension Board of the City of Dover (“Board”) under Section 18-47 of the City of Dover Code of Ordinances, this Investment Policy Statement (“Statement”) presents investment objectives, policies, guidelines, and monitoring and review procedures relating to financial assets (the “Fund”) of the City of Dover Police Pension Plan (“Plan”). The Statement’s purposes are to: 1. Present appropriate goals and objectives relating to investment management of the Fund. Recognize and/or specify diversification and liquidity requirements and identify any legal constraints affecting investment management of the Fund. Promulgate guidelines, consistent with any Board-selected investment time horizon(s), investment management classifications, and/or investment management styles, to which any Board-appointed Investment Manager (IM) shall adhere when determining investment strategies, making periodic investment decisions, and/or undertaking specific investment transactions relating to the Fund. Establish standards and procedures for monitoring, measuring, reviewing, and absolutely and comparatively evaluating IM investment performance, along with similar standards and procedures for assuring conformity with investment policies, goals, objectives, guidelines, and/or constraints. Foster understanding and effective communications between the Board and Staff and any persons appointed, employed, designated or in any way called upon by the Board or Staff to serve the Plan and its participants and/or beneficiaries. 11/18/2004 3 of 19 City of Dover — Police

PLAN DESCRIPTION The Plan is a public employee retirement plan governed by the City of Dover Code of Ordinances as cited within “Purposes of the Statement”, above. PORTFOLIO MANAGEMENT PRECEPTS The Board endorses contemporary investment practices, based upon the construction of well diversified multi-asset portfolios, which facilitate control of investment risk and afford reasonably predictable long-term investment returns, primarily by IM selection which maintain distinct investment practices or “‘styles” within any asset class. The monitoring and appropriate investment performance measurement respecting such styles requires relative comparisons among peers and to chosen (usually index) benchmarks as well as absolute measures respecting the financial progress of the Plan itself. PRUDENCE IN INVESTMENT Applicable terms, conditions, limitations and restrictions of applicable law upon Delaware fiduciaries notwithstanding, any IM serving the Fund shall discharge any duties relating to the Fund solely in the interest of Plan participants and beneficiaries, shall demonstrate appropriate knowledge of the Plan’s purpose and contemporary operations, and shall diversify the investments of any Fund investment portfolio so as to minimize the risk of substantial loss. When contemplating any investment, investment strategy or investment program, any IM managing any part of the Fund shall consider all relevant factual and circumstantial information and the impact of such information on a particular investment, strategy, or program, and on the Total Fund. Further, respecting investment strategies, programs and/or specific investment actions for the Fund, any IM shall also consider: 1. potential losses and gains, 2. the composition of any IM-assigned portfolio, and the Total Fund, with regard to a. diversification b. liquidity and current return relative to the Fund’s cash flow requirements c. projected total return relative to the Plan's funding objectives Guidelines respecting Prudence have been developed in light of investment objectives related solely to the Plan’s varied and dynamic obligations to its participants and beneficiaries. Actuarial, economic, investment, and even socio-political events and trends are fluid factors affecting the funding of those obligations. Accordingly, these guidelines respecting Prudence are, as a part of this Statement, intended singularly to present broad and balanced considerations to guide incumbent and successor Board and Staff, and all other parties concerned, seeking appropriate allocation, investment, safekeeping, monitoring and evaluation of the Fund. 11/18/2004 4o0f 19 City of Dover — Police

RESPONSIBILITIES OF THE BOARD AND STAFF The Board is charged under Section 18-51 of the City of Dover Code of Ordinances with overall responsibility for investment of the Fund. To assist the Board in this function, it is authorized and permitted by said Ordinances to appoint an IM or IM(s), including for this purpose banks, insurance companies, and firms registered under the Investment Advisers Act of 1940 and/or Delaware State law, to manage (including the power to acquire and dispose of) Pian assets. Any appointed IM must agree to conduct itself in accordance with all applicable City of Dover Ordinances. The Board must also develop prudent management policies and guidelines intended to assure that the Plan will fulfill its objectives. Policies and guidelines are inclusive of, but not restricted to: 1. Establishment of investment objectives, investment policy, investment guidelines, and monitoring and review procedures. 2. Establishment of standards for measuring, monitoring, evaluating and comparing absolute and relative investment performance to assure that investment returns are reviewed on a regular basis and investment return objectives are met during acceptable periods of time. 3. Establishment of authorization, reporting, control, review and general governance procedures to assure that investment policies and guidelines are reviewed on a regular basis and conformed to at all times. All modifications of policies and/or guidelines shall be in writing, signed by all Board members, and delivered on a timely basis to any IM and/or Custodian affected by such changes. 4. Establishment of, through contractual relationships with recognized and carefully selected professional organizations, or by alternative means satisfactory to the Board, a retirement plan management structure which will assure appropriate investment management, custody, and surveillance or compliance procedures to meet investment objectives in conformity with the Board's stated investment policies and guidelines. The Board shall examine this Statement from time to time and make appropriate revisions. At least annually the Board shall review the Statement entire and communicate any material changes to any persons affected by them. 11/18/2004 S$ of 19 City of Dover — Police

RESPONSIBILITIES OF THE INVESTMENT MANAGER(S) Fund management and responsibilitics for investment decisions are delegated to any appointed IM. Any IM shall exercise complete discretion within the clear limits established by this Statement. Accordingly, the Board requires adherence to Delaware or other pertinent laws as now apply, or may apply in the future, with particular attention to the standards established by applicable rules of law. Fiduciary insurance, and officer liability and omissions and errors insurance coverages, of any IM, must meet standards set by the Board from time to time. If at any time a manager believes that this Investment Policy Statement inhibits its investment performance, it is the manager’s responsibility to communicate this view to the Pension Board. In addition, the manager will promptly (within 30 days) notify the Pension Board, in writing, regarding all material or significant matters that change pertaining to the investments of the retirement fund assets, including but not limited to: * changes in investment strategy portfolio structure, tactical approaches and market value of managed assets; © changes in ownership organizational structure, financial condition, and/or professional staff of the investment firm; and e all material legal, SEC and other regulatory proceedings effecting the firm. RESPONSIBILITIES OF THE PLAN CUSTODIAN(S) Any Custodian appointed by the Board shall be responsible for safekeeping of the Fund, including all security transaction settlements and deliveries, and for comprehensive recordkeeping and reporting, which shall include any custom recordkeeping, record retention, or reporting reasonably required by the Board or Staff. Safety and continuity of operations shall be the primary objectives of any Custodian. Timely, accurate, and complete recordkeeping and reporting, arising from superior state-of-the-art information systems and committed staff, shall be the primary benchmarks for month-to-month evaluation of Custodian performance. Fund safekeeping and securities settlement procedures shall include direct Custodian participation in one or more appropriate securities depositories (e.g., Depository Trust Company, New York) and, as necessary, correspondent participation in other major depositories (e.g., the Federal Reserve System). The Plan's beneficial ownership of all assets shall be inviolate and in all circumstances perfected. Board or designated IM authority to direct all investment transactions shall similarly be protected. 11/18/2004 6 of 19 City of Dover — Police

Ready access to information by the Board and Staff shall be a prime requisite of recordkeeping and reporting services, with no bar as to frequency of access, nor any delay greater than one day acceptable. Transaction records shall be maintained on a trade date basis and shall remain immediately available for at least two years. Nationally accepted asset pricing should be daily and reported not less often than monthly, and "non-trade" transaction records (e.g., stock splits, etc.) should be both available immediately and properly carried into monthly transaction and asset value reports. Fiduciary insurance, and officer liability and omissions and errors insurance coverages, of any Custodian, must meet standards set by the Board from time to time. 11/18/2004 7 of 19 City of Dover — Police

INVESTMENT OBJECTIVES Investment Objectives for the Plan represent anticipated results and are long-term in nature. Given the Board assumptions respecting current and projected Plan and capital market conditions, the following Objectives have been delineated: 1. All Plan fiduciaries shall discharge their responsibilities and the Fund shall be invested in a manner consistent with [relevant law] and generally accepted fiduciary standards. Further: (1) all transactions undertaken on behalf of the Plan shall be solely in the interest of Plan participants and beneficiaries, and (2) with reference to Prudence in Investment, set forth earlier in this Statement, safeguards and diversification to which a prudent investor familiar with and managing the Fund of this Plan under known or foreseeable circumstances would adhere, and liquidity and current return consistent with rationally anticipated cash flow requirements of the Fund, shall be governing factors in all investment considerations. Consideration shall be given to suitable long-term investment intended to provide Fund capital and income growth which may be utilized to increase future benefits and thus maintain the purchasing power of Plan participants and their beneficiaries; the Board anticipates that such capital and income growth will be achieved during each economic and/or securities market cycle and/or within its selected three-to-five (3-5) year investment time horizon. Consideration shall also be given, granting conformity with the objectives of 2., above, to providing adequate and timely cash flows to meet anticipated Plan benefit payments, with sufficient reserves to meet relatively smaller flows for unanticipated benefit payments; adequate emphasis, consistent with the foregoing, shall be placed upon current investment return; any Fund IM should expect to receive periodic projections of Fund liquidity requirements but, in the absence of such projections, shall be responsible for seeking necessary information from the Board or any party designated by the Board for this purpose. While professional managers may strive to record positive rates of investment return during all measurement periods, securities markets are unlikely to provide a consistently favorable climate, on a shorter-term basis, for longer-term investments. Therefore, considering usual multi-year economic and/or investment cycles, and the three-to-five (3-5) year investment time horizon selected by the Board, requisite but not exclusive comparative or benchmark measures of investment return, and of risk or volatility, are delineated as follows: a. Commensurate with preserving participant and beneficiary purchasing power through the Plan, it is desired to achieve a positive real (post-inflation) rate of return during any multi-year period and over the life of the Plan. Based upon current and projected Plan and capital market conditions, and the extensive historical records provided by such sources as Ibbotson-Sinquefeld, the Board has set returns meeting or exceeding the Plan’s actuarial interest rate assumption at any time, annualized, as a gross multi-year return target. Concurrently, 3.5 percentage points above the CPI, or an annualized 3.5 percent real rate of return, is anticipated for the Total Fund. 11/18/2004 8 of 19 City of Dover — Police

b. Consistent with anticipated real returns (above) and separate asset class returns (below), annualized Total Fund investment performance, for periods of three-to-five (3-5) years or more, is expected to meet or exceed the Plan's assumed actuarial rate and to meet or exceed the annualized investment performance of a "policy index" comprised of a weighted average of relevant asset-class indexes matched with policy or "target" asset allocations in effect on average for the Fund during the period considered. c. Consistent with b., above, the Total Fund’s investment return volatility, as measured by the standard deviation of quarterly investment returns, is not expected to exceed the volatility of the policy index during any three-to-five (3-5) year measurement period. d. Also consistent with b., above, Total Fund domestic equity investment returns are expected to meet or exceed similar annualized returns of the Russell 3000 Stock Index during periods of three-to-five (3-5) years or more; equity investment returns of any specific IM, annualized, are expected to meet or exceed returns of any index or benchmark cited in writing by the Board as appropriate to the investment process or "style" of any specific IM. e. Also consistent with b., above, Total Fund domestic fixed income investment returns, annualized, are expected to meet or exceed similar returns of the Lehman Brothers Intermediate Government/Credit Bond Index during periods of three-to-five (3-5) years or more; as in d., above, any index or benchmark may be chosen by the Board as appropriate to the investment process, "style", or time-horizon of any specific IM. f. All investment performance data submitted to the Board or its designees directly or indirectly by or on behalf of any IM shall as applicable be submitted in conformity with the North American Performance Presentation Standards and/or Global Investment Performance Standards promulgated by the Association for Investment Management and Research. 5. Investment performance objectives of the Fund are, as stated initially under Investment Objectives, above, long-term in nature. Concem respecting market value or Fund investment return volatility and other measures reflecting investment uncertainty will be addressed in part by functional constraints imposed by the Board through asset (class) allocations, investment management processes or "styles" chosen, portfolio diversification Tequirements, and other investment management guidelines and/or limitations. 11/18/2004 9 of 19 City of Dover — Police

INVESTMENT POLICY Investment Policy delineates controls and the associated monitoring intended to enhance the likelihood of meeting Investment Objectives during acceptable periods of time. ASSET ALLOCATION Asset class allocation, resulting in so-called asset mix or investment ratios, is intended to afford an optimum approach toward Investment Objectives while limiting investment risk by assuring basic diversification. The variable percentages of asset classes delineated below provide a framework through which the Fund investments may be adjusted to meet economic and/or investment market conditions while remaining centered on the allocation target deemed most appropriate to the Fund's long-term Investment Objectives. Asset Class Minimum % Target % Maximum % Domestic Equity 46 51 36 International Equity 9 14 18 Fixed Income 30 35 40 ALLOCATION MONITORING/REBALANCING The Board shall review asset allocation quarterly to monitor Total Fund allocation targets. In the event that asset allocations because of cash flows or market value changes fall moderately outside the ranges in the tables above, any appointed Custodian may be notified and instructed by the Board to adjust contribution cash flows to any specific IM and thus return the Total Fund to appropriate asset allocation levels. Should an allowable range be breached substantially, i-e., by ten (10) percent of per-portfolio per-IM assets or five (5) percent of Total Fund Assets, any IM involved may be required by the Board to adjust assets immediately. The Board may set asset allocation ranges for any specific IM different from ranges for the Total Fund. LIQUIDITY Emphasis shall, per Investment Objectives, 3., above, be placed on providing adequate and timely Fund cash flow to permit benefit payments from the Plan when due. The Board endeavors to meet all of the Plan’s multiple objectives through assct allocation and constructive Investment Guidelines. Nevertheless, any IM appointed by the Board shall be responsible for secking from the Board or its designee(s) current information respecting cash flow requirements and for assisting in meeting said requirements. 11/18/2004 10 of 19 City of Dover — Police

PROXY VOTING While matters of public interest as well as corporate governance have long been a part of publicly owned corporations’ Annual Meetings and proxy voting activity in the United States, the Board continues to believe that the Fund’s proxy voting must be based upon the long-term economic value of the securities represented in each case and thus solely in the interests of Plan participants and their beneficiaries. The Board delegates timely and complete proxy voting to any IM to assure that the interests cited immediately above have been met. Delegation as stated precludes Board interference with or exercise of proxy voting, but does not preclude any IM request for and independent consideration of Board views officially determined and expressed. DIVERSIFICATION Total Fund investments must be diversified broadly to minimize the risk of substantial losses, The Board recognizes that significant diversification is accomplished through asset allocation and the selection of investment management organizations. Nevertheless, the Investment Guidelines provided herewith include certain provisions intended to optimize investment diversification. MUTUAL FUNDS Given the nature of mutual funds, it is recognized that there may be deviations between this Investment Policy Statement and the objectives of the mutual fund(s). However, every effort shall be made to the extent practical or prudent and appropriate to select mutual funds that have investment objectives and policies that are consistent with this Investment Policy. 11/18/2004 11 of 19 City of Dover — Police

INVESTMENT GUIDELINES Investment Guidelines describe for any IM and for the information of any Custodian or interested person a wide range of permissible investment activities and choices while also delineating, specifically or by broader proscription, those which are not permissible. GENERAL GUIDELINES Subject to the asset allocation ranges set forth as a table within Investment Policy, above, or separate asset allocation ranges assigned specifically by the Board, any IM is expected to undertake dynamic and flexible discretionary management of Fund assets. Nevertheless, when responsible for any investment portfolio, any IM shall report immediately to the Board or its designee(s) any shift between or change in market value of asset classes which equals or exceeds ten (10) percent of the market value of the assets assigned to the specific IM. For the purpose described herein, cash and money market or cash equivalent securities shall be considered an asset class. The Board has determined that certain investment practices, as well as certain types of securities, are not suitable for the Fund irrespective of circumstances: 1. Buying or (short) selling securities on margin, and/or the use of any other form of leverage, excepting the lending of securities if approved in writing by the Board. 2. Privately placed or otherwise unregistered securities excepting fixed income securities, issued under SEC Rule 144(a), which are demonstrably marketable and otherwise within guidelines. 3. Investment in commodities or in any type of commodities contracts, forward or futures trading activities, and all forms of portfolio hedging, excepting the limited use of stock options and/or currency hedges; (See Domestic Equity and International Equity Investment Guidelines, below.) 4. Fixed income investments may not include deep discount or zero coupon (excepting U.S. Treasury) securities, tax exempt, indirectly asset backed or spread-dependent, and stripped or otherwise derivative or synthetic securities. Certain exceptions are delineated below. 11/18/2004 12 of 19 City of Dover — Police

DOMESTIC EQUITY INVESTMENT GUIDELINES The Board shall review the Total Fund at least quarterly to assure that the domestic equity limit of 56 percent of Total Fund market value is not exceeded; as necessary, any Custodian will be instructed to redirect cash flows to or from any IM or to accommodate immediate Board-directed IM asset allocation revision to restore the Asset Allocation currently approved by the Board. Permissible equity investments shall include convertible securities, which shall be limited to ten (10) percent of Total Fund assets at market value, as well as American Depositary Receipts (ADRs), equally limited. Any IM retained for this mandate shall conform to the Domestic Equity Investment Guidelines set forth above and below. Any departure from the Guidelines must be submitted in writing to the Board for prior approval, as must any change in the “style” or investment philosophy, process, or practices approved by the Board at the time any IM was retained to serve the Fund. Specific Guidelines, Domestic Equity 1. Full discretion, consistent with the Investment Objectives, Policies, and Guidelines set forth in this Statement, is granted to each IM retained to manage domestic equity securities. 2. Each IM retained for this mandate shall select domestic equity investments in conformity with criteria normally applied in its decision making process and previously reviewed and approved by the Board, 3. No IM shall invest on a market value basis more than five (5) percent of the domestic equity portion of any portfolio in the equity security(ies) of a single corporation or group of directly affiliated corporations, nor maintain an investment of more than eight (8) percent similarly calculated. 4. No IM may make or maintain an investment equaling or exceeding four and nine-tenths (4.9) percent ownership of the outstanding domestic equity security(ies) of a single corporation, or group of directly affiliated corporations, without the written consent of the Board. 5. Each IM is expected to purchase marketable domestic equity securities listed on national securities exchanges or actively traded within the national NASDAQ framework; domestic US. equity securities, purchased outside the channels cited, or purchased without regard to necessary market liquidity as demonstrated through weekly trading statistics, place upon any IM a special burden respecting Board tolerance of unacceptable risk and/or losses which might ensue. 6. As an exception to the general prohibition against so-called alternative investment instruments, stock options may be utilized by each IM managing domestic U.S. equity securities in “covered” or hedging postures but not in “naked” or speculative postures. 11/18/2004 13 of 19 City of Dover — Police

7. Again the total annualized investment return of all domestic U.S. equity investments of the Fund is expected to meet or exceed the total annualized return of the Russell 3000 Stock Index for cumulative periods of three-to-five (3-5) years or more. Any IM serving as an active domestic U.S. equity manager wil! be assigned an index or other type of benchmark deemed suitable for it and agreed upon with the Board; as a general expectation any IM should exceed its assigned benchmark, post fees, on annualized bases during periods of three-to-five (3-5) years or more. INTERNATIONAL EQUITY INVESTMENT GUIDELINES The aforesaid Investment Policy delineates a target, maximum, and minimum percent of Total Fund assets to be invested in International Equity. Stated percentages may include foreign equity securities admitted to trading on U.S. Stock Exchanges or NASDAQ; Depositary Receipts (ADRs) shall be designated as domestic equities. International Equity percentage limits vs. Total Fund shall be controlled as are domestic equities (see range, page 7). Specific Guidelines, International Equity 1. Investment in International Equity, is permissible up to the maximum stated in asset allocation (page 7). Each IM retained as an International Equity Manager must receive specific Board authorization to invest in International Equity. Investing in so-called emerging market equity securities is permissible subject to a maximum of fifteen (15) percent of any international equity portfolio at market value. Appropriate regional, national, industry and individual security diversification must be maintained at all times. Any IM retained for this mandate is expected to select International Equity investments in conformity with criteria normally applied in its decision making process and previously reviewed and approved by the Board. No IM shall invest more than five (5) percent of the equity portion of any International Equity portfolio in the equity security(ies) of a single corporation or group of directly affiliated corporations; no IM may maintain an investment equaling or exceeding eight (8) percent ownership in the equity security(ies) of any corporation, or group of directly affiliated corporations, without the written consent of the Board, nor may any International Equity IM exceed four (4) percent ownership of the outstanding equity of any company or group of affiliated companies. Any IM retained for this mandate shall purchase marketable foreign stocks traded on regulated foreign or U.S. stock exchanges for which trading activity is published on a daily basis and for which any IM can demonstrate necessary liquidity as well as acceptable investment quality standards. . The annualized total investment return from any portfolio of International Equity investments of the Fund is expected to meet or exceed after fees the annualized total retum of an appropriate benchmark, to be agreed upon by any IM and the Board, for periods of three-to- 11/18/2004 14 of 19 City of Dover — Police

five (3-5) years or more. In the absence of another selected benchmark, the Morgan Stanley CL. “EAFE” Index shall serve as benchmark. 6, Because an active currency hedging strategy may reduce risk of loss and/or enhance IM International Equity investment performance, hedging to protect against currency impact upon a security position may be in the best interest of the Fund. Nevertheless, the purchase of speculative or “naked” currency contracts (i.e., “currency trading” or related risk taking undertaken without a demonstrable exposed investment position to be hedged in a specific currency) is prohibited. DOMESTIC FIXED INCOME INVESTMENT GUIDELINES The Board shall review Total Fund assets at least quarterly to assure that the domestic fixed income securities market value limit of 40 percent is not exceeded. As necessary, any Custodian will be instructed by the Board to redirect investment and/or contribution cash flows to or from any JM or to accommodate immediate Board-ordered portfolio revisions to restore the asset allocation currently approved, Any IM retained for this mandate shall conform to the Domestic Fixed Income Investment Guidelines set forth above and below. Any departure from the Guidelines must be submitted in writing to the Board for prior approval, as must any change in the "style" or investment philosophy, process, or practices approved by the Board at the time any IM was retained to manage domestic fixed income securities of the Fund. Specific Guidelines, Domestic Intermediate Term Fixed Income 1. Full discretion, consistent with the Investment Objectives, Policies, and Guidelines set forth in this Statement, is granted to each IM retained to manage domestic intermediate term fixed income securities. 2. Any IM retained for this mandate is expected to select domestic intermediate term fixed income investments in conformity with the criteria normally applied in its decision making process and previously reviewed and approved by the Board. 3. Suitable domestic intermediate term fixed income investments include, but are not limited to, U.S. Treasury and Agency securities, marketable debt securities of U.S. corporations, U.S. certificates of deposit and bankers acceptances, and commercial paper or other generally utilized money market or cash equivalent investments, including money market mutual funds meeting the quality standards delineated below. 4. Foreign fixed income securities, if rated A or above, including Canadian securities, denominated in U.S. dollars (i-e., foreign “Yankee” and Canadian U.S. pay securities) may be purchased to a limit of fifteen (15) percent at market value of any domestic intermediate term fixed income securities portfolio. 11/18/2004 15 of 19 City of Dover — Police

5. Permissible private placement (Rule 144a) securities, per General Guidelines, 2., p. 9 above, shall not exceed twenty (20) percent of the market value of any domestic intermediate term fixed income portfolio. Fixed income investments may not otherwise include unregistered, deep discount or zero coupon securities (excepting U.S. Treasury, see 12., p. 13, below), tax exempt, indirectly asset backed, spread-dependent, stripped, or otherwise derivative or synthetic securities. (See also 14., p. 14, below). 6. At no time shall margin or other leveraged transactions, short sales, forward or futures trading, or any form of portfolio hedging be employed in the management of domestic intermediate term fixed income investments. 7. The total annualized investment return of alt domestic fixed income investments of the Fund is expected to meet or exceed the total annualized return of the blended benchmark of one- half (1/2) Lehman Intermediate Government/Credit Index and one half (1/2) the Lehman 1-3 Government/Credit Index for periods of three-to-five (3-5) years or more. 8. The average quality of domestic intermediate term fixed income securities purchased by any IM shall equal or exceed AA, the second broad investment grade as determined by any nationally recognized and regulated general or specialty debt/credit rating agency (e.g., including but not limited to Moody's, Standard & Poor's, Fitch, Duff & Phelps, Thompson's Bank Watch). If commercial paper is purchased the single acceptable quality shall be Al or P1 or "Prime", with no sccond Icvel considered, 9. The minimum quality of any single domestic intermediate term fixed income security shall at the time of purchase equal or exceed BBB, or the fourth broad investment grade as determined by any nationally recognized general or specialty debt/credit agency as exemplified in 8., above. At no time shall securities rated BBB exceed fifteen (15) percent, at market value, of any domestic intermediate term fixed income portfolio. If an investment is made in commercial paper, the single standard shall be Al or the equivalent as stated in 8., above. 10, The average effective duration of domestic fixed income securities, said average including any investments considered to be reserve or cash equivalent assets specific to any fixed income portfolio, shall never be more than twelve (12) months greater or less than the most recently published average or effective duration of the fixed income policy benchmark. 1 — . No domestic intermediate term fixed income portfolio security purchased for the Fund shall have a stated maturity or acceptably estimated average life (e.g., callable securities, mortgage securities) more than fifteen (15) years from date of purchase. Securities with maturities or average lives of more than ten (10) years or less than one (1) year from any date of measure shall not, without prior written authorization of the Board, constitute collectively more than fifty (50) percent of the market value of any domestic intermediate term fixed income portfolio of the Fund. 11/18/2004 16 of 19 City of Dover — Police

12. 14, There shall be no limit upon investment in U.S. Treasury securities as a percentage of domestic intermediate term fixed income investments at cost or market value, except that any single coupon issue thereof may constitute at purchase more than thirty (30) percent of domestic intermediate term fixed income portfolio at market value, nor any single Treasury zero coupon issue ten (10) percent at market value, with a per-portfolio collective limit for Treasury or Agency zero coupon securities of thirty (30) percent at market value and an eight (8) year effective duration limit for any zero coupon security. Federal Agency securities are hereby limited to forty (40) percent of any domestic intermediate term fixed income investment portfolio at market value, with a per-issue limit of ten (10) percent at market value, excepting zero coupon Agency securities which shall be limited to five (5) percent per- issue at market value. Sharply lower limits are set for other types of securities. Without prior written Board approval, excepting Treasury and Agency securities: a. any single security issue shall not constitute more than five (5) percent, b. securities of any single issuer or of directly affiliated issucrs shall not constitute more than seven (7) percent, c. securities of a recognized industry (e.g., steel, auto, aluminum, banking), or d. securities of a single broad issuer type (e.g,, utility, finance, industrial), or e. of one structural or transaction type (e.g., mortgage-backed, asset-backed), f. shall not constitute more than twenty (20) percent of any domestic intermediate term fixed income securities portfolio at market value. Permissible Rule 144a securities shall also be limited to twenty (20) percent at market value. . Any domestic fixed income security purchased in compliance with the quality, maturity, and/or diversification standards cited in 3., through 12., above, but no longer meeting a specific, per-security Investment Guideline standard, and/or by marginal effect causing non- compliance (e.g., occasioning fixed income portfolio decline to sub-standard average quality), may in lieu of immediate depressed or inappropriate sale be reported to the Board, with background information and an intended future course of action, by any IM. The Board may upon review approve temporary or indefinite retention or, in the Board’s best judgment, order disposition of the security and a return to full compliance with the Investment Guidelines. Securities retained under such circumstances shall constitute no more than five (5) percent of the market value of domestic intermediate term fixed income securities (5% “basket clause”), AAA-tated asset-backed securities and AAA-rated agency and private label mortgage-backed securities, including collateralized mortgage obligations limited to five (5) percent per-issue and ten (10) percent of the market value of any domestic intermediate term fixed income portfolio at the time of purchase, are suitable fixed income investments, provided said obligations afford no features which would increase volatility beyond that of the underlying 11/18/2004 17 of 19 City of Dover — Police

collateral. (E.g., C.M.O. “floaters” indexed to the London Interbank Offering Rate or LIBOR would not be suitable investments.) REVIEW PROCEDURES All Investment Policies, Objectives and Guidelines contained in this Statement shall be reviewed by the Board annually, or whenever circumstances change to the extent that earlier representations are ineffective or inappropriate. All concerned parties shall be notified in writing of any changes and/or additions. 1, Investment performance shall be reviewed quarterly. 2. Total Fund, asset class (e.g., domestic equity, international equity, domestic fixed income), and asset sub-class and/or “style” returns, shall be compared to universes of returns of comparable professionally managed tax-exempt balanced, equity and fixed income portfolios or collective or mutual funds as well as to benchmark indices or index composites. 3. It is expected that the investment performance of an [M will rank above any agreed upon universe median or index over periods of three-to-five (3-5) years and will meet or exceed the Investment Objectives identified in this Statement. 4. The Board reserves the right to terminate a relationship with any IM at any time, subject to the terms of any investment advisory agreement, if the Board determines that said action is warranted. In addition, the Board reserves the right to remove assets, in part, at any time provided that any contracted asset and/or fee minimum of any IM is met or a change is negotiated. 5. Any IM shall provide statements of assets under management to the Board quarterly, and shall also comply with reasonable additional information requests from the Board, including details of any/all securities transactions and/or “soft dollar” payments if said payments are made at official Board request and/or arise from transactions involving the Fund. 6. Any IM shall meet at least annually, if requested by the Board, to review the Total Fund and any respective portfolio(s) and to discuss investment results in the context of all of the goals, Objectives, Policies and Guidelines set forth in this Statement. SIGNATURES The effective date of this Investment Policy Statement, adopted by the City of Dover Police Pension Board, is Trt. 33~* , 2004, . 3 ‘ Treasurer/Finance Director 11/18/2004 18 of 19 City of Dover — Police

APPENDIX City of Dover Employees’ Pension Board Investment Policy — Key Parameters ASSET MIX MIN TARGET MAX Fixed Income 30 35 40 Domestic Equities 26 51 56 international Equities 9 14 18 BENCHMARKS Fixed Income - Lehman Intermediate Govt/Credit Domestic Equities - Russell 3000 International Equities - MSCI EAFE PERFORMANCE BENCHMARKS Managers - Meet or exceed appropriate benchmark Total Fund - Meet or exceed Policy index Fixed Income Average credit quality - AA or better Minimum quality - BBB (with 15% limit on BBB) Average duration - Benchmark +/— 9 months published average Security limits - No more than 5% of portfolio except US Treasuries, 30% limit Domestic Equities - Invest no more than 5% in any one security. May maintain no more than 8% in any one security. International Equities - Emerging market limit of 15% of international equity portfolio - Invest no more than 5% in any one security. May maintain no more than 8% in any one security. Note: Appendix added to investment policy for quick reference. 11/18/2004 19 of 19 City of Dover — Police

ATTACHMENT #2 Regular Civilian-and-Police-Pension Boards-Meeting-08-26-2004...._. INVESTMENT POLICY CITY OF DOVER EMPLOYEES’ PENSION BOARD November 2004 Policy Adopted: March, 2004 Amended: November, 2004 version 2.2

TABLE OF CONTENTS INTRODUCTION wrerreses PURPOSES OF THE STATEMENT .. PLAN DESCRIPTION... a PORTFOLIO MANAGEMENT PRECEPTS. PRUDENCE IN INVESTMENT... RESPONSIBILITIES OF THE BO, RESPONSIBILITIES OF THE INVESTMENT MAN. AGER( 5). RESPONSIBILITIES OF THE PLAN CUSTODIAN(S).... INVESTMENT OBJECTIVES ssssesssrereesee erennnanene yetbssansunemtanenrenesten cere seseeetirenereset A rensenesvenesasees INVESTMENT POLICY wasessecvssvveersesrearsensenvennennees oveesnsasneeonsnsansenensen sonseasneonensens toneneten sovsesesenerncanes sveaseussvonanesee coneneses 10 ASSET ALLOCATION... 10 ALLOCATION MONITORING/REBALANCING.. LIQUIDITY 10 PROXY VOTING ll DIVERSIFICATION. Al MUTUAL FUNDS... GENERAL GUIDELINES DOMESTIC EQUITY INVESTMENT GUIDELINES 13 SPECIFIC GUIDELINES, DOMESTIC EQUITY.........:0::csee 13 INTERNATIONAL EQUITY INVESTMENT GUIDELINES 14 SPECIFIC GUIDELINES, INTERNATIONAL EQUITY .,,...000:c:seeceseseses 14 DOMESTIC FIXED INCOME INVESTMENT GUIDELINES . 1S REVIEW PROCEDURES... 18 SIGNATURES woessssrenssosessevseresavsconssoussntsvenvecerssntsnnsnatsntennennteness dsssetaneanesaversutes soreensaen sussessvsssussonssessstnesenssasesessesesasereeees LB APPENDIX — INVESTMENT POLICY KEY PARAMETERS .esessssssessserssersserneees seceevecee a tecnrearstentoneroettaatiseetceten: 19 11/18/2004 2 of 19 City of Dover — Employees

City of Dover Employees’ Pension Board Investment Policy Statement Pension Plan INTRODUCTION PURPOSES OF THE STATEMENT Based upon and in keeping with requirements of City of Dover officials and Employees’ Pension Plan participants serving as members of the Employees’ Pension Board of the City of Dover (“Board”) under Section 2-202 of the City of Dover Code of Ordinances, this Investment Policy Statement (“Statement”) presents investment objectives, policies, guidelines, and monitoring and review procedures relating to financial assets (the “Fund”) of the City of Dover Employees’ Pension Plan (“Plan”). The Statement’s purposes are to: 1. 2. Present appropriate goals and objectives relating to investment management of the Fund. Recognize and/or specify diversification and liquidity requirements and identify any legal constraints affecting investment management of the Fund, Promulgate guidelines, consistent with any Board-selected investment time horizon(s), investment management classifications, and/or investment management styles, to which any Board-appointed Investment Manager (IM) shall adhere when determining investment strategies, making periodic investment decisions, and/or undertaking specific investment transactions relating to the Fund. Establish standards and procedures for monitoring, measuring, reviewing, and absolutely and comparatively evaluating IM investment performance, along with similar standards and procedures for assuring conformity with investment policies, goals, objectives, guidelines, and/or constraints. Foster understanding and effective communications between the Board and Staff and any persons appointed, employed, designated or in any way called upon by the Board or Staff to serve the Plan and its participants and/or beneficiaries. 11/18/2004 3 of 19 City of Dover — Employees

PLAN DESCRIPTION The Plan is a public employee retirement plan governed by the City of Dover Code of Ordinances as cited within “Purposes of the Statement”, above. PORTFOLIO MANAGEMENT PRECEPTS The Board endorses contemporary investment practices, based upon the construction of well diversified mutti-asset portfolios, which facilitate control of investment risk and afford reasonably predictable long-term investment returns, primarily by IM selection which maintain distinct investment practices or “styles” within any asset class. The monitoring and appropriate investment performance measurement respecting such styles requires relative comparisons among peers and to chosen (usually index) benchmarks as well as absolute measures respecting the financial progress of the Plan itself. PRUDENCE IN INVESTMENT Applicable terms, conditions, limitations and restrictions of applicable law upon Delaware fiduciaries notwithstanding, any IM serving the Fund shall discharge any duties relating to the Fund solely in the interest of Plan participants and beneficiaries, shall demonstrate appropriate knowledge of the Plan’s purpose and contemporary operations, and shall diversify the investments of any Fund investment portfolio so as to minimize the risk of substantial loss. When contemplating any investment, investment strategy or investment program, any IM managing any part of the Fund shall consider all relevant factual and circumstantial information and the impact of such information on a particular investment, strategy, or program, and on the Total Fund. Further, respecting investment strategies, programs and/or specific investment actions for the Fund, any IM shall also consider: 1. potential losses and gains, 2. the composition of any IM-assigned portfolio, and the Total Fund, with regard to a. diversification b. liquidity and current return relative to the Fund’s cash flow requirements c. projected total return relative to the Plan's funding objectives Guidelines respecting Prudence have been developed in light of investment objectives related solely to the Plan’s varied and dynamic obligations to its participants and beneficiaries. Actuarial, economic, investment, and even socio-political events and trends are fluid factors affecting the funding of those obligations. Accordingly, these guidelines respecting Prudence are, as a part of this Statement, intended singularly to present broad and balanced considerations to guide incumbent and successor Board and Staff, and all other parties concerned, seeking appropriate allocation, investment, safekeeping, monitoring and evaluation of the Fund. 11/18/2004 4 of 19 City of Dover — Employees

RESPONSIBILITIES OF THE BOARD AND STAFF The Board is charged under Section 2-208 of the City of Dover Code of Ordinances with overall responsibility for investment of the Fund. To assist the Board in this function, it is authorized and permitted by said Ordinances to appoint an IM or IM(s), including for this purpose banks, insurance companies, and firms registered under the Investment Advisers Act of 1940 and/or Delaware State law, to manage (including the power to acquire and dispose of) Plan assets. Any appointed IM must agree to conduct itself in accordance with all applicable City of Dover Ordinances. The Board must also develop prudent management policies and guidelines intended to assure that the Plan will fulfill its objectives. Policies and guidelines are inclusive of, but not restricted to: 1, Establishment of investment objectives, investment policy, investment guidelines, and monitoring and review procedures. 2, Establishment of standards for measuring, monitoring, evaluating and comparing absolute and relative investment performance to assure that investment returns are reviewed on a regular basis and investment return objectives are met during acceptable periods of time. 3. Establishment of authorization, reporting, control, review and general governance procedures to assure that investment policies and guidelines are reviewed on a regular basis and conformed to at all times. All modifications of policies and/or guidelines shall be in writing, signed by all Board members, and delivered on a timely basis to any IM and/or Custodian affected by such changes. 4. Establishment of, through contractual relationships with recognized and carefully selected professional organizations, or by alternative means satisfactory to the Board, a retirement plan management structure which will assure appropriate investment management, custody, and surveillance or compliance procedures to meet investment objectives in conformity with the Board's stated investment policies and guidelines. The Board shall examine this Statement from time to time and make appropriate revisions. At least annually the Board shall review the Statement entire and communicate any material changes to any persons affected by them. 11/18/2004 5 of 19 City of Dover — Employees

RESPONSIBILITIES OF THE INVESTMENT MANAGER(S) Fund management and responsibilities for investment decisions are delegated to any appointed IM. Any IM shall exercise complete discretion within the clear limits established by this Statement. Accordingly, the Board requires adherence to Delaware or other pertinent laws as now apply, or may apply in the future, with particular attention to the standards established by applicable rules of law. Fiduciary insurance, and officer liability and omissions and errors insurance coverages, of any IM, must meet standards set by the Board from time to time. If at any time a manager believes that this Investment Policy Statement inhibits its investment performance, it is the manager’s responsibility to communicate this view to the Pension Board. In addition, the manager will promptly (within 30 days) notify the Pension Board, in writing, regarding all material or significant matters that change pertaining to the investments of the retirement fund assets, including but not limited to: « changes in investment strategy portfolio structure, tactical approaches and market value of managed assets; * changes in ownership organizational structure, financial condition, and/or professional staff of the investment firm; and ¢ all material legal, SEC and other regulatory proceedings effecting the firm. RESPONSIBILITIES OF THE PLAN CUSTODIAN(S) Any Custodian appointed by the Board shall be responsible for safekeeping of the Fund, including all security transaction settlements and deliveries, and for comprehensive recordkeeping and reporting, which shall include any custom recordkeeping, record retention, or reporting reasonably required by the Board or Staff. Safety and continuity of operations shall be the primary objectives of any Custodian. Timely, accurate, and complete recordkeeping and reporting, arising from superior state-of-the-art information systems and committed staff, shall be the primary benchmarks for month-to-month evaluation of Custodian performance. Fund safekeeping and securities settlement procedures shall include direct Custodian participation in one or more appropriate securities depositories (e.g., Depository Trust Company, New York) and, as necessary, correspondent participation in other major depositories (e.g., the Federal Reserve System). The Plan's beneficial ownership of all assets shall be inviolate and in all circumstances perfected. Board or designated IM authority to direct all investment transactions shall similarly be protected. 11/18/2004 6 of 19 City of Dover — Employees

Ready access to information by the Board and Staff shal] be a prime requisite of recordkeeping and reporting services, with no bar as to frequency of access, nor any delay greater than one day acceptable. Transaction records shall be maintained on a trade date basis and shall remain immediately available for at least two years. Nationally accepted asset pricing should be daily and reported not less often than monthly, and "non-trade" transaction records (e.g., stock splits, etc.) should be both available immediately and properly carried into monthly transaction and asset value reports. Fiduciary insurance, and officer liability and omissions and errors insurance coverages, of any Custodian, must meet standards set by the Board from time to time. 11/18/2004 7 of 19 City of Dover — Employees

INVESTMENT OBJECTIVES Investment Objectives for the Plan represent anticipated results and are long-term in nature. Given the Board assumptions respecting current and projected Plan and capital market conditions, the following Objectives have been delineated: I Ali Plan fiduciaries shall discharge their responsibilities and the Fund shall be invested in a manner consistent with [relevant law] and generally accepted fiduciary standards. Further: (1) all transactions undertaken on behalf of the Plan shall be solely in the interest of Plan participants and beneficiaries, and (2) with reference to Prudence in Investment, set forth earlier in this Statement, safeguards and diversification to which a prudent investor familiar with and managing the Fund of this Plan under known or foreseeable circumstances would adhere, and liquidity and current return consistent with rationally anticipated cash flow requirements of the Fund, shall be governing factors in all investment considerations. Consideration shall be given to suitable long-term investment intended to provide Fund capital and income growth which may be utilized to increase future benefits and thus maintain the purchasing power of Plan participants and their beneficiaries; the Board anticipates that such capital and income growth will be achieved during cach economic and/or securities market cycle and/or within its selected three-to-five (3-5) year investment time horizon. Consideration shall also be given, granting conformity with the objectives of 2., above, to providing adequate and timely cash flows to meet anticipated Plan benefit payments, with sufficient reserves to meet relatively smaller flows for unanticipated benefit payments; adequate emphasis, consistent with the foregoing, shall be placed upon current investment return; any Fund IM should expect to receive periodic projections of Fund liquidity requirements but, in the absence of such projections, shall be responsible for seeking necessary information from the Board or any party designated by the Board for this purpose. While professional managers may strive to record positive rates of investment return during all measurement periods, securities markets are unlikely to provide a consistently favorable climate, on a shorter-term basis, for longer-term investments. Therefore, considering usual multi-year economic and/or investment cycles, and the three-to-five (3-5) year investment time horizon selected by the Board, requisite but not exclusive comparative or benchmark measures of investment return, and of risk or volatility, are delineated as follows: a. Commensurate with preserving participant and beneficiary purchasing power through the Plan, it is desired to achieve a positive real (post-inflation) rate of return during any multi-year period and over the life of the Plan. Based upon current and projected Plan and capital market conditions, and the extensive historical records provided by such sources as Ibbotson-Sinquefeld, the Board has set returns meeting or exceeding the Plan’s actuarial interest rate assumption at any time, annualized, as a gross multi-year return target. Concurrently, 3.5 percentage points above the CPI, or an annualized 3.5 percent real rate of return, is anticipated for the Total Fund. 11/18/2004 8 of 19 City of Dover — Employees

b. Consistent with anticipated rea] returns (above) and separate asset class returns (below), annualized Total Fund investment performance, for periods of three-to-five (3-5) years or more, is expected to meet or exceed the Plan's assumed actuarial rate and to meet or exceed the annualized investment performance of a "policy index” comprised of a weighted average of relevant asset-class indexes matched with policy or "target" asset allocations in effect on average for the Fund during the period considered. c. Consistent with b., above, the Total Fund’s investment return volatility, as measured by the standard deviation of quarterly investment returns, is not expected to exceed the volatility of the policy index during any three-to-five (3-5) year measurement period. d. Also consistent with b., above, Total Fund domestic equity investment returns are expected to meet or exceed similar annualized returns of the Russell 3000 Stock Index during periods of three-to-five (3-5) years or more; equity investment returns of any specific IM, annualized, are expected to mect or exceed returms of any index or benchmark cited in writing by the Board as appropriate to the investment process or "style" of any specific IM. e. Also consistent with b., above, Total Fund domestic fixed income investment returns, annualized, are expected to meet or exceed similar returns of the Lehman Brothers Intermediate Government/Credit Bond Index during periods of three-to-five (3-5) years or more; as in d., above, any index or benchmark may be chosen by the Board as appropriate to the investment process, "style", or time-horizon of any specific IM. f. All investment performance data submitted to the Board or its designees directly or indirectly by or on behalf of any IM shall as applicable be submitted in conformity with the North American Performance Presentation Standards and/or Global Investment Performance Standards promulgated by the Association for Investment Management and Research. 5. Investment performance objectives of the Fund are, as stated initially under Investment Objectives, above, long-term in nature. Concern respecting market value or Fund investment return volatility and other measures reflecting investment uncertainty will be addressed in part by functional constraints imposed by the Board through asset (class) allocations, investment management processes or "styles" chosen, portfolio diversification requirements, and other investment management guidelines and/or limitations. 11/18/2004 9 of 19 City of Dover - Employees

INVESTMENT POLICY Investment Policy delineates controls and the associated monitoring intended to enhance the likelihood of meeting Investment Objectives during acceptable periods of time. ASSET ALLOCATION Asset class allocation, resulting in so-called asset mix or investment ratios, is intended to afford an optimum approach toward Investment Objectives while limiting investment risk by assuring basic diversification. The variable percentages of asset classes delineated below provide a framework through which the Fund investments may be adjusted to meet economic and/or investment market conditions while remaining centered on the allocation target deemed most appropriate to the Fund's long-term Investment Objectives. Asset Class Minimum % Target % Maximum % Domestic Equity 46 51 56 International Equity 9 14 18 Fixed Income 30 35 40 ALLOCATION MONITORING/REBALANCING The Board shall review asset allocation quarterly to monitor Total Fund allocation targets. In the event that asset allocations because of cash flows or murkel value changes fall moderately outside the ranges in the tables above, any appointed Custodian may be notified and instructed by the Board to adjust contribution cash flows to any specific IM and thus retum the Total Fund to appropriate asset allocation levels. Should an allowable range be breached substantially, i.e., by ten (10} percent of per-portfolio per-IM assets or five (5) percent of Total Fund Assets, any IM involved may be required by the Board to adjust assets immediately. The Board may set asset allocation ranges for any specific IM different from ranges for the Total Fund. LIQUIDITY Emphasis shall, per Investment Objectives, 3., above, be placed on providing adequate and timely Fund cash flow to permit benefit payments from the Plan when due. The Board endeavors to meet all of the Plan’s multiple objectives through asset allocation and constructive Investment Guidelines. Nevertheless, any IM appointed by the Board shall be responsible for seeking from the Board or its designee(s) current information respecting cash flow requirements and for assisting in meeting said requirements. 11/48/2004 10 of 19 City of Dover — Employees

PROXY VOTING While matters of public interest as well as corporate governance have long been a part of publicly owned corporations’ Annual Meetings and proxy voting activity in the United States, the Board continues to believe that the Fund’s proxy voting must be based upon the long-term economic value of the securities represented in each case and thus solely in the interests of Plan participants and their beneficiaries. The Board delegates timely and complete proxy voting to any IM to assure that the interests cited immediately above have been met. Delegation as stated precludes Board interference with or exercise of proxy voting, but does not preclude any IM request for and independent consideration of Board views officially determined and expressed. DIVERSIFICATION Total Fund investments must be diversified broadly to minimize the risk of substantial losses. The Board recognizes that significant diversification is accomplished through assct allocation and the selection of investment management organizations. Nevertheless, the Investment Guidelines provided herewith include certain provisions intended to optimize investment diversification. MUTUAL FUNDS Given the nature of mutual funds, it is recognized that there may be deviations between this Investment Policy Statement and the objectives of the mutual fund(s). However, every effort shall be made to the extent practical or prudent and appropriate to select mutual funds that have investment objectives and policies that are consistent with this Investment Policy. 11/18/2004 11 of 19 City of Dover — Employees

INVESTMENT GUIDELINES Investment Guidelines describe for any IM and for the information of any Custodian or interested person a wide range of permissible investment activities and choices while also delineating, specifically or by broader proscription, those which are not permissible. GENERAL GUIDELINES Subject to the asset allocation ranges set forth as a table within Investment Policy, above, or separate asset allocation ranges assigned specifically by the Board, any IM is expected to undertake dynamic and flexible discretionary management of Fund assets. Nevertheless, when responsible for any investment portfolio, any IM shall report immediately to the Board or its designee(s) any shift between or change in market value of asset classes which equals or exceeds ten (10) percent of the market value of the assets assigned to the specific IM. For the purpose described herein, cash and money market or cash equivalent securities shall be considered an asset class. The Board has determined that certain investment practices, as well as certain types of securities, are not suitable for the Fund irrespective of circumstances: 1. Buying or (short) selling securities on margin, and/or the use of any other form of leverage, excepting the lending of securities if approved in writing by the Board. 2. Privately placed or otherwise unregistered securities excepting fixed income securities, issued under SEC Rule 144(a), which are demonstrably marketable and otherwise within guidelines. 3. Investment in commodities or in any type of commodities contracts, forward or futures trading activities, and all forms of portfolio hedging, excepting the limited use of stock options and/or currency hedges; (See Domestic Equity and International Equity Investment Guidelines, below.) 4. Fixed income investments may not include deep discount or zero coupon (excepting U.S. Treasury) securities, tax exempt, indirectly asset backed or spread-dependent, and stripped or otherwise derivative or synthetic securities. Certain exceptions are delineated below. 11/18/2004 12 of 19 City of Dover —- Employees

DOMESTIC EQUITY INVESTMENT GUIDELINES The Board shall review the Total Fund at least quarterly to assure that the domestic equity limit of 56 percent of Total Fund market value is not exceeded; as necessary, any Custodian will be instructed to redirect cash flows to or from any IM or to accommodate immediate Board-directed IM asset allocation revision to restore the Asset Allocation currently approved by the Board. Permissible equity investments shall include convertible securities, which shall be limited to ten (10) percent of Total Fund assets at market value, as well as American Depositary Receipts (ADRs), equally limited. Any IM retained for this mandate shall conform to the Domestic Equity Investment Guidelines set forth above and below. Any departure from the Guidelines must be submitted in writing to the Board for prior approval, as must any change in the “style” or investment philosophy, process, or practices approved by the Board at the time any IM was retained to serve the Fund. Specific Guidelines, Domestic Equity 1. Full discretion, consistent with the Investment Objectives, Policies, and Guidelines set forth in this Statement, is granted to each IM retained to manage domestic equity securities. 2. Each IM retained for this mandate shall select domestic equity investments in conformity with criteria normally applied in its decision making process and previously reviewed and approved by the Board. 3. No IM shall invest on a market value basis more than five (5) perecnt of the domestic equity portion of any portfolio in the equity security{ies) of a single corporation or group of directly affiliated corporations, nor maintain an investment of more than eight (8) percent similarly calculated. 4. No IM may make or maintain an investment equaling or exceeding four and nine-tenths (4.9) percent ownership of the outstanding domestic equity security(ies) of a single corporation, or group of directly affiliated corporations, without the written consent of the Board. 5. Each IM is expected to purchase marketable domestic equity securities listed on national securities exchanges or actively traded within the national NASDAQ framework; domestic U.S. equity securities, purchased outside the channels cited, or purchased without regard to necessary market liquidity as demonstrated through weekly trading statistics, place upon any IM a special burden respecting Board tolerance of unacceptable risk and/or losses which might ensue. 6. As an exception to the general prohibition against so-called alternative investment instruments, stock options may be utilized by cach IM managing domestic U.S. equity securities in “covered” or hedging postures but not in “naked” or speculative postures. 11/18/2004 13 of 19 City of Dover — Employees

7. Again the total annualized investment return of all domestic U.S. equity investments of the Fund is expected to meet or exceed the total annualized return of the Russell 3000 Stock Index for cumulative periods of three-to-five (3-5) years or more. Any IM serving as an active domestic U.S. equity manager will be assigned an index or other type of benchmark deemed suitable for it and agreed upon with the Board; as a general expectation any IM should exceed its assigned benchmark, post fees, on annualized bases during periods of three-to-five (3-5) years or more. INTERNATIONAL EQUITY INVESTMENT GUIDELINES The aforesaid Investment Policy delineates a target, maximum, and minimum percent of Total Fund assets to be invested in International Equity. Stated percentages may include foreign equity securities admitted to trading on U.S. Stock Exchanges or NASDAQ; Depositary Receipts (ADRs) shall be designated as domestic equities. International Equity percentage limits vs. Total Fund shall be controlled as are domestic equities (see range, page 7). Specific Guidelines, International Equity 1. Investment in International Equity, is permissible up to the maximum stated in asset allocation (page 7). Each IM retained as an International Equity Manager must receive specific Board authorization to invest in International Equity. Investing in so-called emerging market equity securities is permissible subject to a maximum of fifteen (15) percent of any international equity portfolio at market value. Appropriate regional, national, industry and individual security diversification must be maintained at all times. Any IM retained for this mandate is expected to select International Equity investments in conformity with criteria normally applied in its decision making process and previously reviewed and approved by the Board. No IM shail invest more than five (5) percent of the equity portion of any International Equity portfolio in the equity security(ies) of a single corporation or group of directly affiliated corporations; no IM may maintain an investment equaling or exceeding eight (8) percent ownership in the equity security(ies) of any corporation, or group of directly affiliated corporations, without the written consent of the Board, nor may any International Equity IM exceed four (4) percent ownership of the outstanding equity of any company or group of affiliated companies. . Any IM retained for this mandate shall purchase marketable foreign stocks traded on regulated foreign or U.S. stock exchanges for which trading activity is published on a daily basis and for which any IM can demonstrate necessary liquidity as well as acceptable investment quality standards. . The annualized total investment return from any portfolio of International Equity investments of the Fund is expected to meet or exceed after fees the annualized total return of an appropriate benchmark, to be agreed upon by any IM and the Board, for periods of three-to- 11/18/2004 14 of 19 City of Dover — Employees

five (3-5) years or more. In the absence of another selected benchmark, the Morgan Stanley C.I. “EAFE” Index shail serve as benchmark. 6. Because an active currency hedging strategy may reduce risk of loss and/or enhance IM International Equity investment performance, hedging to protect against currency impact upon a security position may be in the best interest of the Fund. Nevertheless, the purchase of speculative or “naked” currency contracts (i.¢., “currency trading” or related risk taking undertaken without a demonstrable exposed investment position to be hedged in a specific currency) is prohibited. DOMESTIC FIXED INCOME INVESTMENT GUIDELINES The Board shall review Total Fund assets at least quarterly to assure that the domestic fixed income securities market value limit of 40 percent is not exceeded, As necessary, any Custodian will be instructed by the Board to redirect investment and/or contribution cash flows to or from any IM or to accommodate immediate Board-ordered portfolio revisions to restore the asset allocation currently approved. Any IM retained for this mandate shall conform to the Domestic Fixed Income Investment Guidelines set forth above and below. Any departure from the Guidelines must be submitted in writing to the Board for prior approval, as must any change in the “style” or investment philosophy, process, or practices approved by the Board at the time any IM was retained to manage domestic fixed income securities of the Fund. Specific Guidelines, Domestic Intermediate Term Fixed Income 1. Full discretion, consistent with the Investment Objectives, Policies, and Guidelines set forth in this Statement, is granted to each IM retained to manage domestic intermediate term fixed income securities. 2. Any IM retained for this mandate is expected to select domestic intermediate term fixed income investments in conformity with the criteria normally applied in its decision making process and previously reviewed and approved by the Board. 3. Suitable domestic intermediate term fixed income investments include, but are not limited to, U.S. Treasury and Agency securities, marketable debt securities of U.S. corporations, U.S. certificates of deposit and bankers acceptances, and commercial paper or other generally utilized money market or cash equivalent investments, including money market mutual funds meeting the quality standards delineated below. 4. Foreign fixed income securities, if rated A or above, including Canadian securities, denominated in U.S. dollars (i.e., foreign “Yankee” and Canadian U.S. pay securities) may be purchased to a limit of fifteen (15) percent at market value of any domestic intermediate term fixed income securities portfolio. 11/18/2004 15 of 19 City of Dover — Employees

10. 11. Permissible private placement (Rule 144a) securities, per General Guidelines, 2., p. 9 above, shall not exceed twenty (20) percent of the market value of any domestic intermediate term fixed income portfolio. Fixed income investments may not otherwise include unregistered, deep discount or zero coupon securities (excepting U.S. Treasury, see 12., p. 13, below), tax exempt, indirectly asset backed, spread-dependent, stripped, or otherwise derivative or synthetic securities. (See also 14., p. 14, below). At no time shall margin or other leveraged transactions, short sales, forward or futures trading, or any form of portfolio hedging be employed in the management of domestic intermediate term fixed income investments. The total annualized investment return of all domestic fixed income investments of the Fund is expected to meet or exceed the total annualized return of the blended benchmark of one- half (1/2) Lehman Intermediate Government/Credit Index and one half (1/2) the Lehman 1-3 Government/Credit Index for periods of three-to-five (3-5) years or more. The average quality of domestic intermediate term fixed income securities purchased by any IM shall equal or exceed AA, the second broad investment grade as determined by any nationally recognized and regulated general or specialty debt/credit rating agency (¢.g., including but not limited to Moody’s, Standard & Poor's, Fitch, Duff & Phelps, Thompson's Bank Watch). If commercial paper is purchased the single acceptable quality shall be Al or P1 or "Prime", with no second level considered. The minimum quality of any single domestic intermediate term fixed income security shall at the time of purchase equal or exceed BBB, or the fourth broad investment grade as determined by any nationally recognized general or specialty debt/credit agency as exemplified in 8., above. At no time shall securities rated BBB exceed fifteen (15) percent, at market value, of any domestic intermediate term fixed income portfolio. If an investment is made in commercial paper, the single standard shall be Al or the equivalent as stated in 8., above. The average effective duration of domestic fixed income securities, said average including any investments considered to be reserve or cash equivalent assets specific to any fixed income portfolio, shall never be more than twelve (12) months greater or less than the most recently published average or effective duration of the fixed income policy benchmark. No domestic intermediate term fixed income portfolio security purchased for the Fund shall have a stated maturity or acceptably estimated average life (e.g., callable securities, mortgage securities) more than fifteen (15) years from date of purchase. Securities with maturities or average lives of more than ten (10) years or less than one (1) year from any date of measure shall not, without prior written authorization of the Board, constitute collectively more than fifty (50) percent of the market value of any domestic intermediate term fixed income portfolio of the Fund. 11/18/2004 16 of 19 City of Dover — Employees

12. 13. 14. There shall be no limit upon investment in U.S. Treasury securities as a percentage of domestic intermediate term fixed income investments at cost or market value, except that any single coupon issue thereof may constitute at purchase more than thirty (30) percent of domestic intermediate term fixed income portfolio at market value, nor any single Treasury zero coupon issue ten (10) percent at market value, with a per-portfolio collective limit for Treasury or Agency zero coupon securities of thirty (30) percent at market value and an eight (8) year effective duration limit for any zero coupon security. Federal Agency securities are hereby limited to forty (40) percent of any domestic intermediate term fixed income investment portfolio at market value, with a per-issue limit of ten (10) percent at market value, excepting zero coupon Agency securities which shall be limited to five (5) percent per- issue at market value. Sharply lower limits are set for other types of securities. Without prior written Board approval, excepting Treasury and Agency securities: a. any single security issue shall not constitute more than five (5) percent, b. securities of any single issuer or of directly affiliated issuers shall not constitute more than seven (7) percent, ¢. securities of a recognized industry (e.g., steel, auto, aluminum, banking), or d. securities of a single broad issuer type (e.g., utility, finance, industrial), or e. ofone structural or transaction type (e.g., mortgage-backed, asset-backed), f. shall not constitute more than twenty (20) percent of any domestic intermediate term fixed income securities portfolio at market value. Permissible Rule 144a securities shall also be limited to twenty (20) percent at market value. Any domestic fixed income security purchased in compliance with the quality, maturity, and/or diversification standards cited in 3., through 12., above, but no longer meeting a specific, per-security Investment Guideline standard, and/or by marginal effect causing non- compliance (e.g., occasioning fixed income portfolio decline to sub-standard average quality), may in lieu of immediate depressed or inappropriate sale be reported to the Board, with background information and an intended future course of action, by any IM. The Board may upon review approve temporary or indefinite retention or, in the Board’s best judgment, order disposition of the security and a return to full compliance with the Investment Guidelines. Securities retained under such circumstances shall constitute no more than five (5) percent of the market value of domestic intermediate term fixed income securities (5% “basket clause”). AAA-rated asset-backed securities and AAA-rated agency and private label mortgage-backed securities, including collateralized mortgage obligations limited to five (5) percent per-issue and ten (10) percent of the market value of any domestic intermediate term fixed income portfolio at the time of purchase, are suitable fixed income investments, provided said obligations afford no features which would increase volatility beyond that of the underlying 11/18/2004 17 of 19 City of Dover — Employees

collateral. (E.g., C.M.O. “floaters” indexed to the London Interbank Offering Rate or LIBOR would not be suitable investments.) REVIEW PROCEDURES All Investment Policies, Objectives and Guidelines contained in this Statement shall be reviewed by the Board annually, or whenever circumstances change to the extent that earlier representations are ineffective or inappropriate. All concerned parties shall be notified in writing of any changes and/or additions. 1. Investment performance shall be reviewed quarterly. 2. Total Fund, asset class (e.g., domestic equity, international equity, domestic fixed income), and asset sub-class and/or “‘style” returns, shall be compared to universes of returns of comparable professionally managed tax-exempt balanced, equity and fixed income portfolios or collective or mutual funds as well as to benchmark indices or index composites. 3. It is expected that the investment performance of an IM will rank above any agreed upon universe median or index over periods of three-to-five (3-5) years and will meet or exceed the Investment Objectives identified in this Statement. 4. The Board reserves the right to terminate a relationship with any IM at any time, subject to the terms of any investment advisory agreement, if the Board determines that said action is warranted. In addition, the Board reserves the right to remove assets, in part, at any time provided that any contracted asset and/or fee minimum of any IM is met or a change is negotiated. 5. Any IM shall provide statements of assets under management to the Board quarterly, and shall also comply with reasonable additional information requests from the Board, including details of any/all securities transactions and/or “soft dollar” payments if said payments are made at official Board request and/or arise from transactions involving the Fund. 6. Any IM shall meet at least annually, if requested by the Board, to review the Total Fund and any respective portfolio(s) and to discuss investment results in the context of all of the goals, Objectives, Policies and Guidelines set forth in this Statement. SIGNATURES The effective date of this Investment Policy Statement, adopted by the City of Dover Employees’ Pension Board, is AS, 2004. ’ azz Employees Penn Board Chairperson Treasurer/Finance Director 11/18/2004 18 of 19 City of Dover ~- Employees

APPENDIX City of Dover Employees’ Pension Board Investment Policy — Key Parameters ASSET MIX MIN TARGET MAX Fixed Income 30 35 40 Domestic Equities 26 51 56 International Equities 9 14 18 BENCHMARKS Fixed Income ~ Lehman intermediate Govt/Credit Domestic Equities - Russell 3000 International Equities - MSCI EAFE PERFORMANCE BENCHMARKS Managers - Meet or exceed appropriate benchmark Total Fund - Meet or exceed Policy index Fixed Income Average credit quality - AA or better Minimum quality - BBB (with 15% limit on BBB) Average duration - Benchmark +/ - 9 months published average Security limits - No more than 5% of portfolio except US Treasuries, 30% limit Domestic Equities - Invest no more than 5% in any one security. May maintain no more than 8% in any one security. International Equities - Emerging market limit of 15% of international equity portfolio - Invest no more than 5% in any one security. May maintain noe more than 8% in any one security. Note: Appendix added to investment policy for quick reference. 11/18/2004 19 of 19 City of Dover — Employees