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CIVILIAN PENSION BOARD AGENDA AUGUST 15, 2012 - 4:00 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 - Civilian Pension Board Meeting of May 9, 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. Discussion - Comprehensive Annual Financial Report (CAFR) As It Relates to Pension Funds 6. Discussion - Adjustment to the Minimum Payment for Pension 7. Scheduling of Future Meeting Dates 8. Adjournment 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. /js S:\AGENDAS-MINUTES-PACKETS\Misc-Agendas\PENSION BOARDS\2012\CIVILIAN PENSION BOARD\08-15-2012 CIVIILAN PENSION BOARD AGENDA.wpd 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.

CIVILIAN PENSION BOARD A meeting of the Civilian Pension Board was held on May 9, 2012 at 3:30 with Chairman McGlumphy presiding. Members present were Mr. Bonar, Mr, Koenig (arrived at 3:43 p.m.), Mrs. Mitchell, Mr. Blakeman, and Mr. Clendaniel. Mrs. Hettinger was absent. AGENDA ADDITIONS/DELETIONS Mr. Bonar moved for approval of the agenda as presented, seconded by Mr. Blakeman and unanimously carried. Quarterly Return Summary and Quarterly Investment Monitor Report (Milliman, Inc.) Mr. Jeff Marzinsky, Principal and Employee Benefits Consultant, Milliman, Inc., stated that it was an honor to be retained by the City of Dover and that he hoped to bring value to the organization and bring results with the City’s investment plans. Mrs. Donna Mitchell, Controller/Treasurer, explained that since Milliman, Inc., performs the City’s actuarial analysis for the unfunded liability, they would be reviewing investments to see how to best serve the unfunded liability. She noted that the Civilian and Police Pension Plan investments were currently aligned; however, in the future these trust funds may ultimately have a different mix of investments. For this reason, she stated that the Civilian and Police Pension Board meetings would be held separately in the future. Noting the length of the report and the distance traveled by Mr. Marzinsky, Mr. Bonar inquired if the report could be presented in the form of an executive summary in the future. He felt that, in the interest of expediency for members and for Milliman, if members received an executive summary, the presence of a representative from Milliman might be necessary only once or twice per year. Mrs. Mitchell explained that, since the City’s investment policy requires the Pension Board to authorize changes in investments, quarterly meetings would be necessary in order to make such changes. If the Controller/Treasurer were authorized to make investment decisions, the policy could be changed to reflect this. She indicated that this was something that could be addressed in the future; however, in the past, the Board had chosen to be a part of making investment decisions. Mr. Bonar felt that it would be appropriate for the Board to continue to make investment decisions; however, if members were provided the reports in executive summary format, requesting Milliman to attend twice per year would be sufficient. Mrs. Mitchell reiterated her concern that investment decisions must be made on a quarterly basis. Mr. Bonar expressed his opinion that these decisions could be made by holding expedited meetings. Mr. Marzinsky stated that the quarterly reports contain an executive summary which could be provided separately in the future.

CIVILIAN PENSION BOARD MEETING OF MAY 9, 2012 PAGE 2 Mr. Marzinsky indicated that, over the next few months, Milliman, Inc. would be reviewing the plan’s asset allocation, examining the actuarial side to determine the liabilities of the plan, and reviewing the funded status. He noted that tying those pieces together was very important and fundamental to asset management and that assets and liabilities were two (2) dynamic components that change based on market activity and interest rates. He cautioned members that the current report was a work in progress and Milliman would be reviewing the City’s plan in the months ahead. Mr. Marzinsky provided members a revised Quarterly Investment Monitor - Summary Report for the Quarter Ending March 31, 2012 - Prepared for City of Dover, Delaware General Employee Pension Plan (Attachment #1) which included a Quarterly Return Summary and presented an overview of the report. He explained that Section A contained the Market Commentary, which summarized the status of the world economy. He indicated that for the majority of the quarter, most of the three (3) month and one (1) year returns were positive, with a slight lag in smaller cap equity categories and noted that favorable economic signs were being seen. Referring to the Quarterly Return Summary in the Performance Summary section of the Report, Mr. Marzinsky noted that some of the calculations of the City’s prior advisor had been replicated to show month-to-month and quarter-to-quarter performance. He noted a 6.03% net return and 6.14% gross return for the quarter. Mr. Marzinsky stated that Asset Allocation was reflected on Page 9 of the report and that Milliman may recommend some changes in this regard in the future. He indicated that the current allocation of the plan was approximately 65-66% equity and 34-35% fixed income. He noted that international investments accounted for approximately 19-20% of investments and that changes may be recommended in this area in the next few months. Mr. Marzinsky explained that Page 10, Investment Policy Review - Active Management, focused on the investment parameters of the report. He noted that Columns 1 and 2, Return Rank, reflected how each fund compared to the same type of funds in that asset category. Columns 3 and 4 reflected Excess Return, showing how the fund’s performance over the time period compared to its market benchmark. He indicated that highlighting reflects that a fund is performing worse than it should be. Mr. Marzinsky advised members that Columns 5 and 6 related to Standard Deviation, which is a measure of the volatility of returns. He explained that the columns labeled Alpha and Sharpe are measures that show how well the fund manager does with their investment style within the fund. He noted that Alpha indicated the value being added and Sharpe was a measure of the reward per unit of risk being taken. As an illustration, Mr. Marzinsky reviewed statistics regarding the Vanguard Prime Cap Investment Fund. He pointed out that, on Page 10, this fund had a Return Rank of 79 (highlighted). He explained that funds are ranked within their peer group from 0 (best) to 99 (lowest); therefore, at 79, this fund ranked below the halfway mark; however, over five (5) years it ranked better than half of the funds in its peer group. Mr. Marzinsky stated that Excess Return compared the fund to a large- cap benchmark and noted that for the three (3) year period the fund was trailing its benchmark by -3.51% and over five (5) years by -0.45%. In reference to Standard Deviation, Mr. Marzinsky explained that figures greater than 1.0 reflect that a fund was a little more aggressive than its

CIVILIAN PENSION BOARD MEETING OF MAY 9, 2012 PAGE 3 benchmark; therefore this fund was slightly more volatile than the market. With this amount of volatility, he felt that figures for excess return should have been better. He reminded members that Alpha and Sharpe were peer group comparisons and that the rank of 72, in over three (3) and five (5) years, under Alpha reflected the fund’s ability to generate value compared to the peer group. He stated that the figures indicated that this fund was underperforming its peers. Mr. Marzinsky explained that Page 11, Investment Policy Review - Passive Management, reflected similar measures for passive funds by providing Beta and Tracking Error information. He explained that if a fund had a beta of 1.0 it was following the index exactly and the majority of index funds have a beta that is close to 1.0. He stated that Milliman had used a three (3) year benchmark in their report and would be adjusting this to a five (5) year benchmark and that the beta would then be close to 1.0 and tracking error would be very low. Mr. Marzinsky advised members that the Investment Policy Review, contained on Pages 10-11, functions as a “scorecard” which ties back to the parameters set in the investment policy for fund managers that are included in the plan. He indicated that the high-level review conducted showed underperformance in some funds but nothing major at this time and that a more thorough review of asset allocation and managers would be performed. Referring to Page 14, U.S. Equity Style Map, Mr. Marzinsky noted that the grid assessed how a manager was doing in accordance with a style-specific index, taking actual performance over time periods and comparing it to the performance style of the index to see if it is well correlated. He noted that this would reflect if a manager was adhering to his/her style. For example, the actions of a large cap value manager should appear in the upper left quadrant, and a small cap growth manager should be in the lower right quadrant. He explained that a fund that moves “all over the place” would illustrate that a manager was not adhering to his/her style, which could cause overlapping styles in the plan and duplication of efforts. Mr. Marzinsky noted that the lower right quadrant of the grid indicated that there were no small growth or mid-cap investments in the portfolio and that these may be asset categories that would enhance the trust fund. In addition, he noted that the International Equity Style Map (Page 15), indicated that the funds had a style that reflected large cap value and large cap growth and not much international small cap or emerging market investments, which might enhance the return. Mr. Marzinsky indicated that Milliman would be returning with a review of liabilities and projected future cash flows of actuarial valuation, which would allow them to develop a statistic called duration (when liabilities would come due). He stated that this would provide a measure of how much sensitivity the liability side of the pension plan had to changes in interest rates. The asset side would then be examined to determine how well funded the plan was. If the plan needed growth to become funded, Milliman may consider this a growth portfolio. If the plan was in a favorably funded position, he stated that it may be considered a liability investment driven portfolio. Mr. Marzinsky indicated that there would be a duration measure for liabilities (or the demographics of the plan) and a duration measure for the assets of the plan, and an attempt would be made to tie them together. He advised members that, as interest rates move, the value of the portfolio goes up and down on the actuarial side. Since interest rates decreased during the last few years, the value of liabilities had been increasing, causing the funded status of the plan to go down.

CIVILIAN PENSION BOARD MEETING OF MAY 9, 2012 PAGE 4 Responding to Mr. Blakeman in reference to Page 14, Mr. Marzinsky stated that the upper right quadrant of the grid indicated that two (2) funds (Vanguard Morgan Growth and Vanguard Prime Cap) were covering this sector, which might be creating some overlap. Mr. Marzinsky noted that Page 21 of the report contained additional statistics regarding the Vanguard Equity-Admiral Fund, including a breakdown of the overall asset allocation of the fund, portfolio region, portfolio structure, sector allocation, and credit quality. He explained that the middle column contained operational information about the fund, for example, the market capitalization of the companies that this particular fund invests in was $56B, so this was a very large cap investment. He advised members that the turnover ratio showed how much the fund turned itself over each year (100% or higher would indicate that the fund gets rid of all its investments every year) and that this fund had very low turnover of 29%. He noted that 32% of the assets of this fund were in the top ten holdings. The Portfolio Ratings indicated that, on a scale of one (1) to five (5), the fund ranked very well at five (5) stars. In regard to the expense ratio, Mr. Marzinsky stated that the square in the floating bar chart on the left showed that the fund had an expense ratio far below all other funds in its category and that this was a very economical investment, which he stated was important in a pension fund. He noted that the Performance vs. Peer Group chart broke the fund universe into four (4) quartiles and that it was desirable for a fund to be in the top half compared to its peer group. He stated that over three (3) months, this fund was ranked slightly low, but it had good performance long-term. He explained that fund performance versus peer group was reflected numerically in the chart below the graph. Mr. Marzinsky concluded his review, noting that Page 22 of the report reflected performance of the fund year-by-year, as well as a numerical comparison performance index on a year-to-year basis compared to the Standard & Poor Index and risk-adjusted measures, rolling period returns, Up/Down Market Capture Ratio, and Return vs. Risk. Responding to requests of Mr. Blakeman, Dr. McGlumphy requested that Mrs. Mitchell provide a presentation to the Board regarding the Comprehensive Annual Financial Report (CAFR) as it relates to the pension funds and that a discussion be held as well regarding an adjustment to the minimum payment for pension. Mr. Bonar moved for adjournment, seconded by Mr. Clendaniel and unanimously carried. Meeting adjourned at 4:00 P.M. William P. McGlumphy Chairman WPM/JS/dd/tm S:\AGENDAS-MINUTES-PACKETS\Misc-Minutes\PENSION\2012\05-09-2012 Civilian Pension.wpd Attachment to Original Attachment #1 - Revised Quarterly Investment Monitor - Summary Report for the Quarter Ending March 31, 2012 - Prepared for City of Dover, Delaware General Employee Pension Plan, Including Quarterly Return Summary

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 – General Employees’ Pension 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 $22.02 million at the beginning of the period to $21.98 million at the end of the period. After contributions of approximately $1.2 million and withdrawals of $840k, the plan had a net gain/loss of (2.27%). b. Some of the actively managed investments are trailing their benchmarks over three and five year time periods, as well as ranking below median in their respective peer groups. 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 funds may be forthcoming. 2. Asset Liability Study – See Asset Liability Study a. Background: i. Plan has closed to new participants during 2008 and is significantly underfunded. ii. Plan is following a 24-year amortization schedule to meet a projected fully funded status. 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 18 years, while current plan assets have a fixed income duration of approximately 3.92 years and an overall plan asset duration of 1.27 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 6.70%, with a standard deviation of 12.19. The allocation is approximately 64% equity and 36% fixed income. i. It could be possible to produce an expected return more in line with 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 (~12.13) by adding additional asset classes to the plan. The allocation would be approximately 61% equity and 39% fixed income. d. It should also be noted that a dynamic investment policy should be considered, whereby the plan reduces equity exposure as funded status improves. 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 General Employees Pension Plan Quarterly Return Summary CIVILIAN-NET CIVILIAN-GROSS Month End BMV Contribution Withdrawls Fees Gain EMV RETURN RETURN 4/30/2012 $ 22,024,476.41 $ 254,000.00 $ 283,873.37 $ 1,202.36 $ (281,228.97) $ 21,935,187.64 -1.28% -1.24% 5/31/2012 $ 21,935,187.64 $ 1,079,450.00 $ 276,741.36 $ 1,203.57 $ (638,847.89) $ 21,697,092.29 -2.91% -2.88% 6/30/2012 $ 21,697,092.29 $ - $ 279,855.73 $ 1,158.98 $ 426,974.03 $ 21,983,558.97 1.97% 2.00% $ 1,333,450.00 $ 840,470.46 $ 3,564.91 $ (493,102.82) Quarterly Return -2.27% -2.16% 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 General Employee Pension Plan 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 Treas Plus MMkt I $796,424 3.62% $307,004 1.39% Vanguard Short-Term Bond Index Signal $4,789,645 21.79% $4,761,695 21.63% Vanguard Interm-Term Bond Index Signal $2,462,709 11.20% $2,369,773 10.76% Vanguard Equity-Income Adm $3,012,964 13.71% $3,037,025 13.79% Vanguard Morgan Growth Adm $1,557,190 7.08% $1,657,174 7.53% Vanguard PRIMECAP Inv $1,324,934 6.03% $1,379,204 6.26% Vanguard Mid-Cap Value Index Admiral $1,797,180 8.18% $1,878,583 8.53% DFA US Targeted Value I $1,056,913 4.81% $1,115,662 5.07% DFA International Value I $1,291,544 5.88% $1,428,025 6.49% American Funds New Perspective R6 $1,954,379 8.89% $2,037,180 9.25% Harding Loevner Global Equity Inst $1,939,671 8.82% $2,046,544 9.29% Plan Total $21,983,553 $22,017,866 City of Dover, Delaware General Employee Pension Plan 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 Vanguard Equity-Income Adm 3 6 3.29 4.45 0.81 0.84 4 4 5 6 Vanguard Morgan Growth Adm 28 53 -1.08 -2.10 1.18 1.14 44 37 55 53 Vanguard PRIMECAP Inv 67 37 -3.74 -1.13 1.11 1.06 62 63 38 39 DFA US Targeted Value I 35 70 -0.07 -1.16 1.09 1.08 82 74 67 67 DFA International Value I 78 81 0.65 0.28 1.07 1.10 79 79 56 60 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 General Employee Pension Plan 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 Short-Term Bond Index Signal 1.25 1.00 1.74 0.82 1.50 0.90 0.11 Vanguard Interm-Term Bond Index Signal -0.03 0.11 1.02 0.34 1.02 0.44 0.11 Vanguard Mid-Cap Value Index Admiral -0.08 -0.67 0.97 2.96 0.98 4.49 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 General Employee Pension Plan 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 Treas Plus MMkt I 0.00 0.01 0.01 0.01 0.76 1.69 PISXX 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 Short-term Bond Vanguard Short-Term Bond Index Signal 0.59 1.04 2.44 3.51 4.67 3.99 VBSSX 4.00 0.11 Barclays US Govt/Credit 1-3 Yr TR USD 0.22 0.58 1.12 2.26 3.67 3.43 N/A NA NA Intermediate-term Bond Vanguard Interm-Term Bond Index Signal 3.31 3.97 11.11 9.94 8.68 6.81 VIBSX 5.00 0.11 Barclays US Govt/Credit 5-10 Yr TR USD 3.22 3.96 11.03 9.97 8.57 6.89 N/A NA NA Large Value Vanguard Equity-Income Adm (0.79) 7.52 9.37 18.61 1.77 6.43 VEIRX 5.00 0.22 S&P 500 Value (3.58) 8.92 3.00 15.32 (2.68) 4.90 N/A NA NA Large Growth Vanguard Morgan Growth Adm (6.03) 10.14 0.73 16.38 0.93 6.44 VMRAX 4.00 0.30 Large Growth Vanguard PRIMECAP Inv (3.49) 6.51 (0.89) 13.71 1.90 7.90 VPMCX 4.00 0.45 S&P 500 Growth (2.05) 9.97 7.76 17.45 3.04 5.67 N/A NA NA Mid-Cap Value Vanguard Mid-Cap Value Index Admiral (4.33) 6.40 (0.73) 19.60 0.01 NA VMVAX 3.00 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 DFA US Targeted Value I (5.27) 6.08 (5.41) 18.22 (0.89) 8.02 DFFVX 3.00 0.38 S&P 600 Value (4.93) 7.30 1.74 18.29 0.27 6.76 N/A NA NA Foreign Large Value DFA International Value I (9.56) 0.70 (20.11) 4.76 (7.57) 6.71 DFIVX 3.00 0.45 MSCI EAFE Large Value NR USD (6.79) 1.79 (14.97) 4.11 (7.85) 4.27 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 CIVILIAN-GROSS RETURN (2.16) 3.85 (1.27) 10.85 2.22 NA N/A NA NA Total Plan CIVILIAN-NET RETURN (2.27) 3.63 (1.69) 10.37 1.77 NA N/A NA NA Employee Plan Policy Index (2.01) 6.03 2.20 11.72 1.92 5.86 N/A NA NA City of Dover, Delaware General Employee Pension Plan 12

Asset Liability Study City of Dover, DE - General Employees Pension 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 8 14 Expected Sharpe Ratio 13.02 13.16 0.50 7.25 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 - General Employees Pension and is only to be relied upon by City of Dover, DE - General Employees Pension. 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 - General Employees Pension. 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

2011 Comprehensive Annual Financial Report for the City of Dover, Delaware Notes to Financial Statements 89 ii. City of Dover General Employee Pension Plan The City of Dover General Employee Pension Plan started on July 1, 1967, under the authority of the City Code, Chapter 2, Article IV, Division 7, General Employee Pension Plan, Sections 2-321 through 2-370, and was made contributory on July 1, 1983. The contribution and funding requirements of the plan are established by the City and may be amended by the City. Employees contribute 3.5% of gross salary, exclusive of unscheduled overtime. An employee’s pension right is vested upon completion of 10 years of continuous service. Participation in the plan became mandatory for employees hired after July 1, 1991. At the present time, 177 employees and 188 retirees participate in the plan, while 91 employees are enrolled in the defined contribution plan, which began July 1, 2000. Current membership in the General Employee Pension Plan as of June 30, 2011, is comprised of the following: Retired and beneficiaries currently receiving benefits 188 Active employees: Fully Vested 94 Non-Vested 83 Deferred Vested: 14 The percentage of covered payroll which employees contribute is stated in the City Code, and is considered by the actuaries in their determination of the actuarial requirement for employer normal cost. For the year ended June 30, 2011, payroll earnings of $8,387,029 were reported to and covered by this plan. An employee hired before May 1, 1994 is eligible for normal retirement benefits under this plan: when he/she attains the age of 65 with 10 years of continuous service. This same employee is eligible for early retirement when he/she attains the age of 50 with 20 years of continuous service or has completed 25 years of service. Employees hired on or after May 1, 1994 who attained age 55 and whose attained age plus years of continuous service is equal to or greater than 80 are eligible for early-unreduced retirement benefits under this plan. The monthly benefits are 1/50 of the average monthly earnings multiplied by years and months of credited service upon retirement (highest 36 consecutive months in his/her final 10 years of continuous service). The monthly benefit shall not be less than $200 per month. Benefits are paid for the lifetime of the participant. Upon the death of the participant, 50% of the benefit continues to the eligible survivor. An employee may also take an early-reduced retirement on any date following the attainment of age 55 and the completion of 10 years of continuous service. However, the early retirement benefit is calculated in the same manner as the normal retirement benefit, reduced by one-half of one percent for each month the benefit commences prior to the age 65.

2011 Comprehensive Annual Financial Report for the City of Dover, Delaware 90 Notes to Financial Statements Survivor's benefits are payable to eligible survivors of a participant who dies after completing 10 years of continuous service. The amount of the death benefit is equal to 50% of the retirement benefit the participant would have received had he retired the day before he died. A participant is vested in the pension plan after completing 10 years of continuous service, with survivor benefits commencing when the employee would have attained the age of 65. The benefit is calculated using the normal retirement benefit formula and service at date of termination. If an employee terminated before becoming vested in the plan, they are eligible to withdraw this total contribution with interest compounded annually. Interest is based on prime. The plan is managed by the City of Dover Employees’ Pension Board established in the Code, which may make recommendations for changes and amendments to the plan to the City Council. The City Council must authorize changes to the City Code. The rate of the City contribution is determined by the actuarial study. The Pension Board of Trustees does not issue a separate comprehensive annual financial report, and the City of Dover General Employee Pension Plan is included in the City’s Comprehensive Annual Financial Report as a Pension Trust. The legally defined liability for the City of Dover General Employee Pension Plan is the full amount required to pay the current year's total benefits. The City has met this liability for the current fiscal year. An actuarial study as of July 1, 2011 has been completed in accordance with GASB Statements No. 25 and 27. The City's actuary is Milliman of Wayne, PA. The annual required contribution (ARC) conforms to the aggregate entry age cost method as defined in Statement 25. During the past year, the City contributions did not exceed the calculated annual pension cost and have resulted in an increase of the overall net pension asset (NPA), defined as the accumulated value of contributions, deficiencies, or excesses over required contributions of $343,372. The Governmental Activities have a net pension asset of $621,773 of which $535,811 is attributed to the City of Dover Police Pension Plan and $85,962 is attributed to the General Pension Plan as indicated in the table below. The Business-Type Activities have a net pension asset of $257,410 of which $189,031 is attributed to the Water/Wastewater Fund and $68,379 is attributed to the Electric Revenue Fund as included in the following table.

2011 Comprehensive Annual Financial Report for the City of Dover, Delaware Notes to Financial Statements 91 Governmental Wastewater Electric Fund Total Activities Fund Activities Activities Annual required contribution $3,149,493 $1,687,508 $259,071 $1,202,914 Interest on net pension obligation (10,324) (4,487) (1,966) (3,871) Adjustment to annual required contribution 14,035 6,880 2,410 4,745 Annual pension cost 3,153,204 1,689,901 259,515 1,203,788 Contributions made (3,347,728) (1,710,390) (420,466) (1,216,872) Increase in net pension asset (194,524) (20,489) (160,951) (13,084) Net pension obligation (asset) at beginning of year (148,848) (65,473) (28,080) (55,295) Net pension obligation (asset) at end of year ($343,372) ($85,962) ($189,031) ($68,379) There have been no significant changes affecting benefits provided by the Plan during the valuation periods shown in the preceding table. The following summarizes activity for this plan for the past three years: Annual Percentage NPO (Asset) Pension Cost Contributed End of Year 2009 $ 2,358,663 106% $ (446,423) 2010 $ 2,569,578 88% $ (147,468) 2011 $ 3,153,204 106% $ (343,372) On May 1, 1994, a deferred compensation option was offered to employees in lieu of participation in the General Employee Pension Plan, and at that time 41 employees elected to switch to the deferred compensation plan. (See Note 18 – Deferred Compensation Plan) Effective September 29, 2009 the City Council voted to close the General Employee’s Pension plan to new hires. Funded Status and Funding Progress As of June 30, 2011, the most recent actuarial valuation date, the plan was 38.1% funded. The actuarial accrued liability for benefits was $52.5 million, and the actuarial value of assets was $20.0 million, resulting in an unfunded actuarial accrued liability (UAAL) of $32.5 million for the primary government. The covered payroll (annual payroll of active employees covered by the plan) was $8.3 million, and the ratio of the UAAL to the covered payroll was 394%. The actuarial valuation included changes in the investment return assumption from 7.5% to 7.0%, decrease in the salary increase from 4.5% to 4.0%, postretirement mortality table and changes in the retirement, turnover, and disability assumptions. These changes increased the unfunded Actuarial Accrued Liability (AAL) by $4.1 million and the Annual Required Contribution (ARC) by $0.2 million. The amortization of the unfunded AAL has been extended from a 15 year level percent of pay to a 25 year level dollar amortization (closed plan).

2011 Comprehensive Annual Financial Report for the City of Dover, Delaware 92 Notes to Financial Statements The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. The funding requirement for fiscal year 2010-2011 for this plan is as follows: 1. Employee As required by the City Code 3.5% of Contribution and the plan provisions payroll ($293,546) 2. Employer’s 4.15% Actuarially determined Contribution Plus percent of payroll for current July 2010– June 2011 $2.2 million normal cost ($3,347,728) 3. Annual Pension Actuarially computed using entry $3,153,204 Cost age cost method 4. Net Pension Asset $343,372 As of June 30, 2011 Actuarial Methods and significant assumptions: Valuation date July 1, 2011 Actuarial cost method Aggregate entry age cost method Amortization method Level percentage of projected payroll Remaining amortization period 25 years Amortization Period Closed Asset valuation method Current market value Actuarial Assumptions: Investment rate of return 7.0% Projected salary increases 4.0% Includes inflation at 3.5%

2011 Comprehensive Annual Financial Report for the City of Dover, Delaware Financial Section, Part D-Required Supplementary Information 103 B. Employee Pension Plan General Employee Pension Fund Required Supplementary Information Schedule of Funding Progress Actuarial Unfunded Unfunded as a Valuation Plan Accrued Accrued Funded Percent of Date Assets Liability Liability Ratio Payroll Payroll 7/1/05 $ 16,277,640 $ 39,860,241 $ 23,582,601 40.8% $ 7,380,629 319.5% 7/1/06 $ 15,712,605 $ 41,103,526 $ 25,390,921 38.2% $ 7,612,121 333.6% 7/1/07 $ 17,616,172 $ 42,335,142 $ 24,718,970 41.6% $ 8,006,103 308.8% 7/1/08 $ 19,381,391 $ 43,800,212 $ 24,418,821 44.2% $ 8,716,361 280.1% 7/1/09 $ 19,880,033 $ 45,525,384 $ 25,645,351 43.7% $ 8,786,981 291.9% 7/1/10 $ 19,963,426 $ 52,462,693 $ 32,499,267 38.1% $ 8,256,751 393.6% The unfunded actuarial accrued liability for this plan is being amortized over 30 years beginning July 1, 1994, 14 of which remain as of June 30, 2011, with payments increasing at 3 1/2% per year. Investment gains or losses are spread over five years. The amortization period is closed. The City utilizes the level percentage of projected payroll method to amortize the unfunded liabilities. Employee Pension Plan Required Supplementary Information Schedule of Employer’s Contribution Annual Year Ended Required Percentage June 30 Contribution Contributed 2006 $2,022,614 86% 2007 $2,231,594 124% 2008 $2,269,802 128% 2009 $2,356,529 106% 2010 $2,564,767 89% 2011 $3,149,493 106% 3. OTHER POSTEMPLOYMENT PLAN The following information presents additional information related to funding status and progress of Other Postemployment Benefits. It is intended to help readers assess the individual plans’ funding status on a going-concern basis and assess progress made in accumulating sufficient assets to pay benefits when due.

NOTICE The following information relates to Agenda Item #6, Discussion - Adjustment to the Minimum Payment for Pension, and was provided to the Clerk’s Office by Mr. Les Blakeman on August 7, 2012. - City Clerk’s Office