HomeMy Public PortalAbout2019 Audited Financials
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
DEFERRED COMPENSATION PLAN
AND TRUST
FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
Contents
Page
Independent Auditors’ Report........................................................................ 1 - 2
Management’s Discussion And Analysis ....................................................... 3 - 6
Financial Statements
Statements Of Fiduciary Net Position .................................................................7
Statements Of Changes In Fiduciary Net Position ..............................................8
Notes To Financial Statements ................................................................... 9 - 18
Supplemental Information
Historical Trend Information ............................................................................19
Investment Returns And Expense Ratios .................................................. 20 - 21
Page 1
INDEPENDENT AUDITORS’ REPORT
Board of Trustees
The Metropolitan St. Louis Sewer District
St. Louis, Missouri
Report on the Financial Statements
We have audited the accompanying financial statements of The Metropolitan St. Louis Sewer District
Deferred Compensation Plan and Trust (the Plan), which comprise the statements of fiduciary net
position as of December 31, 2019 and 2018, and the related statements of changes in fiduciary net
position for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud
or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Board of Trustees
The Metropolitan St. Louis Sewer District
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
fiduciary net position of the Plan as of December 31, 2019 and 2018, and the changes in fiduciary net
position for the years then ended, in accordance with accounting principles generally accepted in the
United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 3 through 6 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the supplementary information in accordance
with auditing standards generally accepted in the United States of America, which consisted of inquiries
of management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. However, we did not audit
the information and express no opinion on it.
Other information
Our audit was conducted for the purpose of forming an opinion on the Plan’s financial statements. The
schedules included in the supplemental information on pages 19 through 21, are presented for
purposes of additional analysis and are not a required part of the financial statements. The schedules
included in supplemental information are the responsibility of management and were derived from and
relate directly to the underlying accounting and other records used to prepare the financial statements.
The supplemental information has not been subjected to the auditing procedures applied in the audit of
the basic financial statements and, accordingly, we do not express an opinion or provide any assurance
on it.
CliftonLarsonAllen LLP
St. Louis, Missouri
June 26, 2020
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 3
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Years Ended December 31, 2019 and 2018
This report consists of a series of financial statements related to The Metropolitan St. Louis Sewer
District (“District”) Deferred Compensation Plan and Trust (“Plan”). The Statements of Fiduciary Net
Position and the Statements of Changes in Fiduciary Net Position (on pages 7 and 8) provide
information about this Plan’s net position and changes in its net position during the year. These
statements are prepared using the accrual basis of accounting.
The Management’s Discussion and Analysis of the Plan’s financial performance provides an overview
of the Plan’s financial activities for the years ended December 31, 2019 and 2018. Please read it in
conjunction with the Plan’s financial statements.
FINANCIAL HIGHLIGHTS 2019
Net position restricted for plan benefits was approximately $76.6M at the end of 2019 and the
net position value increased by approximately $15.2M from that of December 31, 2018, due to
an increase in the overall value of equity investments that resulted from an increase in market
values and an increase in participant contributions.
Contributions from participants were approximately $4.7M, which was an increase of $0.3M
as compared with prior year contributions.
Distributions to participants and beneficiaries were approximately $3.9M, which was a decrease
of $0.1M compared with prior year distributions.
The increase in the fair value of investments in 2019 was approximately $11.9M whereas the
fair value of investments decreased approximately $5.5M in 2018.
FINANCIAL HIGHLIGHTS 2018
Net position restricted for plan benefits was approximately $61.4M at the end of 2018 and the
net position value decreased by approximately $2.6M from that of December 31, 2017, due to
a decrease in the overall value of equity investments that resulted from a decrease in market
values offset by an increase in participant contributions.
Contributions from participants were approximately $4.4M, which was an increase of $0.5M
as compared with prior year contributions.
Distributions to participants and beneficiaries were approximately $4.0M, which was relatively
flat compared with prior year distributions.
The decrease in the fair value of investments in 2018 was approximately $5.5M whereas the
fair value of investments increased approximately $7.4M in 2017.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Management’s Discussion And Analysis (Continued)
Page 4
INVESTMENT ASSET ALLOCATION
Investment decisions are participant directed. The participants are offered a diversified
portfolio of investment options from which to select. These investment options represent a
series of mutual funds primarily sponsored and managed by the Vanguard Group. A breakdown
of the participant directed asset allocation as of December 31, 2019 follows:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Management’s Discussion And Analysis (Continued)
Page 5
PARTICIPANT CENSUS
Employee participation in the Plan is on a voluntary basis. Plan participants are comprised of active
employees of the District, retirees or surviving spouses, and terminated employees with account
balances. Active employee participants are as follows:
2019 2018 Change
Net Investment Income (Loss) $ 14,299,022 $ (3,062,767) $ 17,361,789
Contributions and Other Additions 4,847,170 4,527,030 320,140
Total Additions $ 19,146,192 $ 1,464,263 $ 17,681,929
2019 2018 Change
Distributions to Participants $ 3,845,540 $ 3,955,843 $ (110,303)
Administrative Expenses and Legal Fees 126,164 129,348 (3,184)
Total Deductions $ 3,971,704 $ 4,085,191 $ (113,487)
2019 2018 Change
Net Increase/(Decrease) $ 15,174,488 $ (2,620,928) $ 17,795,416
Net Position Restricted for Benefits, January 1 61,446,355 64,067,283 (2,620,928)
Net Position Restricted for Benefits, December 31 $ 76,620,843 $ 61,446,355 $ 15,174,488
Net Position
Plan Deductions
Plan Additions
Plan Additions, Deductions, and Net Position are as follows:
Number Of Active
December 31 ,Participants
2019 810
2018 773
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Management’s Discussion And Analysis (Continued)
Page 6
FIDUCIARY RESPONSIBILITIES
The Board of Trustees and senior management are fiduciaries of the Plan and Trust. Fiduciaries are
charged with the responsibility of assuring that the assets of the Plan are used exclusively for the benefit
of plan participants and their beneficiaries.
REQUEST FOR INFORMATION
This financial report is designed to provide the Board of Trustees, participants, investment managers,
and other interested parties with an overview of the Plan’s finances and accountability for the money
received. Questions concerning any of the information provided in this report or requests for additional
information should be addressed to:
Tim Snoke, Secretary-Treasurer
The Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103-2555
Email: tsnoke@stlmsd.com
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying Notes To Financial Statements. Page 7
STATEMENTS OF FIDUCIARY NET POSITION
2019 2018
ASSETS
Investments at Fair Value:
Mutual Funds 71,642,836$ 56,385,261$
Annuity Contracts 569,885 480,233
Total Investments at Fair Value 72,212,721 56,865,494
Investments at Contract Value:
Common/Collective Trust 2,998,100 3,274,298
Total Investments 75,210,821 60,139,792
Notes Receivable from Participants 1,410,022 1,306,563
NET POSITION RESTRICTED FOR PLAN BENEFITS
December 31,
76,620,843$ 61,446,355$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying Notes To Financial Statements. Page 8
STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION
2019 2018
ADDITIONS TO NET POSITION ATTRIBUTED TO:
Investment Income:
Interest and Dividends on Investments 2,459,094$ 2,446,989$
Interest Income on Participant Loans 75,083 66,264
Net Appreciation (Depreciation) in Fair Value of Investments 11,871,937 (5,487,058)
Total Investment Income (Loss)14,406,114 (2,973,805)
Less: Investment Expenses 107,092 88,962
Net Investment Income (Loss )14,299,022 (3,062,767)
Contributions and Other Additions:
Emplo yee Contributions 4,721,006 4,397,682
Plan Expenses Paid by Emplo yer 126,164 129,348
Total Contributions and Other Additions 4,847,170 4,527,030
Total Additions 19,146,192 1,464,263
DEDUCTIONS FROM NET POSITION ATTRIBUTED TO:
Distributions to Participants and Beneficiaries 3,845,540 3,955,843
Administrative Expenses 125,900 123,813
Legal Fees 264 5,535
Total Deductions 3,971,704 4,085,191
NET INCREASE/(DECREASE)15,174,488 (2,620,928)
NET POSITION RESTRICTED FOR BENEFITS, January 1 61,446,355 64,067,283
NET POSITION RESTRICTED FOR BENEFITS, December 31 76,620,843$ 61,446,355$
For the Years
Ended December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 9
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 And 2018
1. Summary of Significant Accounting Policies
The following significant accounting policies, which conform to generally accepted accounting
principles, have been used consistently in the preparation of The Metropolitan St. Louis Sewer
District Deferred Compensation Plan and Trust’s (“Plan”) financial statements.
Basis of Accounting
The financial statements of the Plan are prepared under the accrual basis of accounting.
Estimates and Assumptions
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires the Plan Administrator to make certain estimates and assumptions that affect
the reported amounts in the financial statements. Actual results could differ from those
estimates.
Investment Valuation and Income Recognition
The Plan’s investments in mutual funds and annuity contracts are stated at fair value. Shares
of registered investment companies are valued at quoted market prices which represent the net
asset value of shares held by the Plan at year-end. Units of the Retirement Savings Trust III
common/collective trust are valued at contract value which approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis. Interest income is
accrued when earned. Dividend income is recorded on the ex-dividend date. Capital gain
distributions are included in dividend income. Realized gains of $201,412 and $15,105,079
were recorded in the periods ended December 31, 2019 and 2018, respectively.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance. The interest
amount is determined when the loan is taken and then disbursed across each payment.
Delinquent notes receivable from a participant are reclassified as distributions based upon the
terms of the Plan document.
Payment of Benefits
Benefits are recorded when paid.
Subsequent Events
Management has evaluated subsequent events through June 26, 2020 the date through which
the financial statements were available for issue.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 10
2. Description of the Plan
The following description of the Plan provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan covering substantially all employees of the District
beginning on the first day of employment. The District’s Board of Trustees established the Plan
in January 1976 through ordinance No. 2971. Plan provisions are established and may be
amended by the District’s Board of Trustees. The District does not contribute to the Plan except
where mandated by the Internal Revenue Service to compensate participants for lost deferral
contributions.
All assets of the Plan are the sole property of the Plan and are not subject to the claims of
creditors of the District. The Plan Administrator issues a publicly available Summary Plan
Description. That information may be obtained by writing to The Metropolitan St. Louis Sewer
District, 2350 Market Street, St. Louis, MO 63103-2555.
Contributions
Under the Plan provisions, employees of the District are eligible to contribute up to 100% of
their total compensation into the Plan, through payroll deferral, or any amount not previously
reduced or withheld from their total compensation. In accordance with Internal Revenue Code
Section 457 as amended, the Plan limits an individual’s annual contribution (adjusted annually)
to $19,000 and $18,500 for the years ended December 31, 2019 and 2018, respectively. If the
employee is 50 or older, there is a special option which allows the employee to contribute an
additional “catch-up” contribution of up to $6,000 for the years ended December 31, 2019 and
2018.
Another special option is a one-time 457(b) “catch-up” contribution of two times the standard
annual deferral, less amounts already deferred under the Plan, which is allowed in one of the
last three calendar years before the employee reaches Normal Retirement Age. Normal
Retirement Age is defined as the first day of the month coinciding with or next following a
person’s 65th birthday and completion of 60 months of continuous service. Employees are not
permitted to take advantage of both special options in the same year.
Amounts contributed by employees are deferred for federal and state income tax purposes until
received as a withdrawal or distribution from the Plan.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 11
Participant Accounts
Each participant’s account is credited with the participant’s contribution and allocations of Plan
earnings. Allocations are based on participants’ account balances, as defined. There are no
forfeitures applicable to the Plan. Participants’ contributions are immediately fully vested.
At December 31, 2019 and 2018, 810 and 773 participants, respectively, actively participated
in the Plan.
Notes Receivable from Participants
Participants may borrow from their account a minimum of $1,000 up to a maximum equal to
the lesser of $50,000 or 50% of their vested account balance. If the participant also participates
in the Metropolitan St. Louis Sewer District Defined Contribution Plan, borrowing from the
vested account balance is generally limited to 50% of the available balance in excess of 4% of
the participant’s compensation.
Participants may only apply for a loan once during each Plan Year and may only have two
outstanding loans from the Plan at any time. Loans may not extend beyond a term of five years
except for the purchase of a principal residence for which the term is thirty years. Loans are
secured by the balance of the participant’s account and bear interest at the prime interest rate
plus 1%. Interest rates on current loans range from 4.25% to 9.25% and the rate is fixed during
the term of the loan. Current loans are due at varying dates through June 2046. Principal and
interest are paid ratably through payroll deductions.
Investment Options
Upon enrollment in the Plan, a participant directs elective contributions and rollovers in any of
the investment options available. The investment options consist of mutual funds and a
common/collective trust fund. Employee contributions may be allocated to the Vanguard
accounts only, in 1% increments, as the participant directs. No new contributions are currently
allowed to the Lincoln National annuity contract accounts.
Vanguard offers participants in the Plan the following investment options:
Equity option (Large Cap): Vanguard Windsor II Fund, Vanguard Institutional Index Fund, and
Vanguard U.S. Growth Fund - Investment objective is long-term capital appreciation.
Equity Diversification option (Small/Mid Cap and International): Vanguard Small-Cap Index
Fund, Vanguard Mid-Cap Index Fund, and Vanguard International Growth Fund - Investment
objective is long-term capital appreciation.
Bond option (Fixed Income): Vanguard Total Bond Market Index Fund - Investment objective
is income stability and conservation of principal.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 12
Balanced option (Balanced): Vanguard Balanced Index Fund - Investment objective is income,
conservation of principal and long-term growth.
Stable Value option (Capital Preservation): Vanguard Retirement Savings Trust III - Investment
objective is income stability and conservation of principal.
Money Market option (Capital Preservation): Vanguard Prime Money Market Fund -
Investment objective is income while maintaining safety of principal.
Target Retirement option (Target Date): Vanguard Target Retirement 2015-2065 Funds and
Vanguard Target Retirement Income Fund - Investment objective is capital appreciation and
current income consistent with its current asset allocation.
Distributions
Participants contributing to the Plan may receive benefits or withdraw the present value of funds
contributed to the Plan upon retirement, disability, or termination of employment from the
District or due to financial hardship as defined by the Plan, if approved by the Plan
Administrator.
Participants may select various payout options including lump sum or equal annual payments
over various periods. Participants may also elect to have the value of the account converted
into fixed or variable annuity contracts. All investments, including annuity contracts, remain
assets of the Plan until payments are made to the participants.
Administrative Expenses
The general administrative expenses of the Plan are paid by the District. These expenses consist
of legal, consultant and accounting expenses as well as the administration of the Plan. Expenses
attributable to a participant’s choice of optional investments or optional forms of benefit
payments are charged to the respective participant’s account balance.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 13
3. Investments
Investment Balances
Investments held by custodians in the Plan’s name are as follows:
2019 2018
Mutual Funds:
Vanguard Group, Inc.
Institutional Index Fund 11,509,902$ * 8,296,932$ *
Windsor II Fund Admiral 9,410,915 * 7,870,062 *
U.S. Growth Fund Admiral 6,637,616 * 5,351,534 *
Institutional Target Retirement 2025 5,273,622 * 4,632,195 *
Balanced Index Fund Institutional 4,973,004 * 4,700,254 *
International Growth Fund Admiral 4,305,103 * 2,769,033
Mid-Cap Index Fund Admiral 4,290,243 * 3,170,722 *
Total Bond Market Index Fund Admiral 3,858,244 * 3,205,088 *
Small-Cap Index Fund Admiral 3,340,023 2,504,098
Prime Money Market Fund 3,086,143 1,851,932
Institutional Target Retirement 2020 2,575,867 2,561,246
Institutional Target Retirement 2035 2,433,938 1,815,949
Institutional Target Retirement 2030 2,411,260 1,904,867
Institutional Target Retirement 2045 2,064,819 1,425,147
Institutional Target Retirement 2040 1,644,626 1,192,473
Institutional Target Retirement 2050 1,192,855 877,811
Institutional Target Retirement 2015 1,035,303 953,613
Institutional Target Retirement Income 1,026,226 969,751
Institutional Target Retirement 2055 321,946 203,139
Institutional Target Retirement 2060 240,830 127,586
Institutional Target Retirement 2065 10,351 1,829
Total Mutual Funds 71,642,836 56,385,261
Common/Collective Trust:
Vanguard Group, Inc.
Retirement Savings Trust III 2,998,100 3,274,298 *
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 14
* Represents 5% or more of the Plan’s net position at December 31, 2019 or 2018, respectively.
Certain participants are invested in a series of fixed and variable rate annuity contracts
sponsored by Lincoln National Life Insurance Company and these assets are valued at $569,885
and $480,233 at December 31, 2019 and 2018, respectively. The Lincoln National Life option
was phased out in 1992, and any balances represent undistributed participant balances. This
option is no longer available to new participants or for current deferrals.
Categories of Asset Risk - Debt Securities Interest Rate and Credit Risk
The Plan will minimize the risk that the market value of securities in the portfolio will fall due
to changes in general interest rates by selecting mutual funds for the investment portfolio that
manage credit quality and duration of fixed income investments.
The Plan will minimize credit risk, the risk of loss due to failure of the security issuer or backer,
by selecting mutual funds for the investment portfolio that manage their respective fund under
a predetermined average credit risk investment management policy.
The following tables provide information on the duration and credit ratings associated with the
Plan’s investments with debt securities, including obligations of the U.S. Government or
obligations explicitly guaranteed by the U.S. Government within these funds at December 31,
2019 and 2018:
2019 2018
Annuity Contracts:
Lincoln National Life
Fixed Earnings Option:
Fixed Account 182,406 179,681
Variable Earnings Option:
Growth & Income Fund 207,698 161,310
Special Opportunity Fund 179,781 139,242
Total Annuity Contracts 569,885 480,233
Total Investments 75,210,821$ 60,139,792$
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 15
Average Percentage
Effective of Debt
Fair Percentage Duration Not
Value of Debt In Years Rated
Institutional Target Retirement 2025 5,273,622$ 38% 6.85 0.00%
Balanced Index Fund Institutional 4,973,004 39% 6.26 0.00%
Total Bond Market Index Fund Admiral 3,858,244 97% 6.26 0.00%
Prime Money Market Fund 3,086,143 8% * 0.00%
Retirement Savings Trust III 2,998,100 89% 3.10 0.00%
Institutional Target Retirement 2020 2,575,867 47% 6.20 0.00%
Institutional Target Retirement 2035 2,433,938 23% 6.85 0.00%
Institutional Target Retirement 2030 2,411,260 31% 6.87 0.00%
Institutional Target Retirement 2045 2,064,819 10% 6.84 0.00%
Institutional Target Retirement 2040 1,644,626 17% 6.87 0.00%
Institutional Target Retirement 2050 1,192,855 10% 6.85 0.00%
Institutional Target Retirement 2015 1,035,303 61% 5.90 0.00%
Institutional Target Retirement Income 1,026,226 67% 5.82 0.00%
Institutional Target Retirement 2055 321,946 10% 6.84 0.00%
Institutional Target Retirement 2060 240,830 10% 6.84 0.00%
Institutional Target Retirement 2065 10,351 10% 6.87 0.00%
Fixed (Annuity Contracts)182,406 ***
* Information is unavailable for this security.
The average effective duration only applies to the debt portion of the investment.
Credit Quality Percentage of Total Plan Investments-2019
Lincoln National Life
Plan Investments
With Debt Securities
December 31, 2019:
Vanguard Group, Inc.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 16
Average Percentage
Effective of Debt
Fair Percentage Duration Not
Value of Debt In Years Rated
Balanced Index Fund Institutional 4,700,254$ 39% 5.94 0.00%
Institutional Target Retirement 2025 4,632,195 38% 6.52 0.00%
Retirement Savings Trust III 3,274,298 87% 2.90 0.00%
Total Bond Market Index Fund Admiral 3,205,088 99% 5.94 0.00%
Institutional Target Retirement 2020 2,561,246 47% 6.03 0.00%
Institutional Target Retirement 2030 1,904,867 30% 6.52 0.00%
Prime Money Market Fund 1,851,932 11% * 0.00%
Institutional Target Retirement 2035 1,815,949 23% 6.52 0.00%
Institutional Target Retirement 2045 1,425,147 10% 6.52 0.00%
Institutional Target Retirement 2040 1,192,473 15% 6.52 0.00%
Institutional Target Retirement Income 969,751 69% 5.62 0.00%
Institutional Target Retirement 2015 953,613 60% 5.69 0.00%
Institutional Target Retirement 2050 877,811 10% 6.52 0.00%
Institutional Target Retirement 2055 203,139 10% 6.52 0.00%
Institutional Target Retirement 2060 127,586 10% 6.52 0.00%
Institutional Target Retirement 2065 1,829 10% 6.63 0.00%
Fixed (Annuity Contracts)179,681 ***
* Information is unavailable for this security.
The average effective duration only applies to the debt portion of the investment.
Lincoln National Life
Credit Quality Percentage of Total Plan Investments-2018
Plan Investments
With Debt Securities
December 31, 2018:
Vanguard Group, Inc.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 17
4. Fair Value Measurement and Application
The Plan has the following fair value measurements as of December 31, 2019 and 2018:
Mutual fund investments of $71,642,836 and $56,385,261, respectively, are valued
using quoted market prices (Level 1 inputs).
Annuity contract investments of $569,885 and $480,233, respectively, may contain
illiquid investments and are valued using estimates and assumptions related to pricing,
including assumptions regarding risk (Level 3 inputs).
5. Risks and Uncertainties
The Plan invests in various investment securities as directed by the Plan’s participants.
Investment securities are exposed to various risks such as interest rate, market, and credit risk.
Due to the level of risk associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in the near term and that
such change could materially affect the participants’ account balances and amounts reported in
the Plan’s Statements of Fiduciary Net Position.
6. Plan Termination
Although it has not expressed any intent to do so, the District has the right under the Plan to
terminate the Plan at any time. In the event of Plan termination, participants would remain
100% vested in their accounts.
7. Related Party Transactions
The Plan invests in shares of mutual funds managed by an affiliate of Vanguard Fiduciary Trust
Company (“VFTC”). VFTC acts as trustee for only those investments as defined by the Plan.
Transactions in such investments qualify as related party transactions which are exempt from
the prohibited transaction rules.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 18
8. Tax Status
The Plan received a favorable determination letter from the Internal Revenue Service (“IRS”)
on June 23, 1999, indicating the Plan and its underlying Trust are qualified under Section 457
of the Internal Revenue Code. Although the Plan has been amended since receiving the
determination letter, the Plan Administrator believes that the Plan is currently designed and is
being operated in compliance with applicable requirements of the IRS.
SUPPLEMENTAL INFORMATION
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying independent auditors’ report. Page 19
HISTORICAL TREND INFORMATION
Employee
And Employer Distributions
For The Contributions And To Participants Increase
Years Ended Expenses Paid Net Investment And Plan (Decrease)
December 31, By Employer Income (Loss) Expenses In Net Position
2019 4,847,170$ 14,299,022$ (3,971,704)$ 15,174,488$
2018 4,527,030 (3,062,767) (4,085,191) (2,620,928)
2017 4,021,256 9,235,115 (4,136,198) 9,120,173
2016 3,962,177 3,944,851 (2,991,735) 4,915,293
2015 3,584,552 17,327 (2,499,216) 1,102,663
2014 3,227,393 3,677,147 (3,977,801) 2,926,739
2013 3,163,343 7,863,858 (3,298,602) 7,728,599
2012 2,969,056 4,056,818 (2,725,147) 4,300,727
2011 2,723,859 238,167 (1,886,224) 1,075,802
2010 2,674,626 3,420,763 (2,406,761) 3,688,628
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying independent auditors’ report. Page 20
INVESTMENT RETURNS AND EXPENSE RATIOS
An independent investment consultant, Aon Investments USA Inc., monitored investment performance
of the various options offered to the participants. Performance of the funds are measured net of the
corresponding expense ratios. Below is a table that reflects the funds available for employees to invest
and their one-year performance for the years 2019 and 2018 as compared to the appropriate
benchmarks, as well as their current expense ratios:
*The expense ratios reported as of December 31 of the respective year.
Funds / Benchmarks Expense Ratios % 2019 *2018*
Vanguard Prime Money Market 2.2 2.0
ICE BofAML 3 Month U.S. T-Bill 2.3 1.9
Vanguard Retirement Savings Trust III 2.5 2.2
ICE BofAML 3 Month U.S. T-Bill 2.3 1.9
Vanguard Total Bond Market Index Admiral 8.7 0.0
Vanguard Splc Blmbg. Barc. US Agg Flt Adj 8.9 -0.1
Vanguard Balanced Index Institutional 21.8 -2.8
Vanguard Balanced Composite Index 21.9 -2.8
Vanguard Windsor II Admiral 29.2 -8.5
Russell 1000 Value Index 26.5 -8.3
Vanguard Institutional Index 31.5 -4.4
Standard & Poor’s 500 Index 31.5 -4.4
Vanguard U.S. Growth Admiral 33.5 0.7
Russell 1000 Growth Index 36.4 -1.5
Vanguard Mid-Cap Index Admiral 31.0 -9.2
Vanguard Spliced Mid Cap Index 31.1 -9.2
Vanguard Small-Cap Index Admiral 27.4 -9.3
Vanguard Spliced Small Cap Index 27.3 -9.3
Vanguard International Growth Admiral 31.5 -12.6
Vanguard Spliced International Index 21.5 -14.2
0.28
0.04
Returns Net of Fees
0.05
0.06
0.25
0.16
0.31
0.05
0.05
0.32
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying independent auditors’ report. Page 21
INVESTMENT RETURNS AND EXPENSE RATIOS (Continued)
*The expense ratios reported as of December 31 of the respective year.
Vanguard Institutional Target Retirement Income 13.2 -2.0
Vanguard Target Income Composite Index 13.4 -2.0
Vanguard Institutional Target Retirement 2015 14.9 -2.9
Vanguard Target 2015 Composite Index 15.1 -2.9
Vanguard Institutional Target Retirement 2020 17.7 -4.2
Vanguard Target 2020 Composite Index 17.9 -4.1
Vanguard Institutional Target Retirement 2025 19.7 -5.0
Vanguard Target 2025 Composite Index 19.9 -5.0
Vanguard Institutional Target Retirement 2030 21.1 -5.8
Vanguard Target 2030 Composite Index 21.3 -5.7
Vanguard Institutional Target Retirement 2035 22.6 -6.6
Vanguard Target 2035 Composite Index 22.8 -6.5
Vanguard Institutional Target Retirement 2040 23.9 -7.3
Vanguard Target 2040 Composite Index 24.2 -7.2
Vanguard Institutional Target Retirement 2045 25.1 -7.9
Vanguard Target 2045 Composite Index 25.4 -7.8
Vanguard Institutional Target Retirement 2050 25.1 -7.9
Vanguard Target 2050 Composite Index 25.4 -7.8
Vanguard Institutional Target Retirement 2055 25.1 -7.8
Vanguard Target 2055 Composite Index 25.4 -7.8
Vanguard Institutional Target Retirement 2060 25.1 -7.9
Vanguard Target 2060 Composite Index 25.4 -7.8
Vanguard Institutional Target Retirement 2065 25.1 -7.8
Vanguard Target 2065 Composite Index 25.4 -7.8
Returns Net of Fees
0.09
0.09
0.09
0.09
0.09
0.09
0.09
0.09
0.09
0.09
0.09
0.09