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HomeMy Public PortalAboutExhibit MSD 11A22 Independent Auditors' Rep & Fin Statements Employee's Pension Plan Dec 2009Exhibit MSD 11A22 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2009 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN CONTENTS Page INDEPENDENT AUDITORS' REPORT 1 MANAGEMENT'S DISCUSSION AND ANALYSIS 2 - 9 FINANCIAL STATEMENTS Statements of Plan Net Assets 10 Statements of Changes in Plan Net Assets 11 Notes to Financial Statements 12 - 24 REQUIRED SUPPLEMENTAL INFORMATION Schedule of Funding in Progress 25 Schedule of Employer Contributions in Accordance with GASB Statement No. 25 25 Note to Required Supplemental Information 26 STATISTICAL SECTION (Unaudited) Performance and Net Asset Value 27 Historical Trend Information: Revenue by Source 28 Expenses by Type 29 Member Count 30 Graphs: Total Benefit Payments 31 Employer Contributions 31 Total Benefit Recipients 32 Top Ten Investment Holdings 33 Schedule of Investment Managers and Advisor Fees 34 SCHMERSAHL TRELOAR& CO. ■.on= Certified Public Accountants Independent Auditors' Report To the Board of Trustees of the Metropolitan St. Louis Sewer District We have audited the accompanying statements of plan net assets of the Metropolitan St. Louis Sewer District Employees' Pension Plan (the "Plan") as of December 31, 2009 & 2008, and the related statements of changes in plan net assets for the year then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the plan net assets as of December 31, 2009 and 2008, and changes in plan net assets for the years then ended, in conformity with U.S. generally accepted accounting principles. The management's discussion and analysis (the "MD&A") and the schedules of funding progress and employer contributions (the "schedules"), as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures to the MD&A and the schedules, which consisted principally of inquires of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. The statistical data included in the statistical section of this report has not been subjected to the auditing procedures applied in the audits of the basic financial statements and, accordingly, we express no opinion on them. December 7, 2010 (314) 966-2727 • fax (314) 966-6464 • 10805 Sunset Office Drive, Suite 400 • St. Louis, MO 63127 • e-mail: stcpa@stcpa.com THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2009 As management of The Metropolitan St. Louis Sewer District Employees' Pension Plan (the Plan), we offer readers of the Plan's financial statements this Management's Discussion and Analysis (MD&A) of the financial activities of the Plan for the year ended December 31, 2009. This MD&A is intended to supplement the Plan's financial statements, and we encourage readers to consider the information presented here in conjunction with those statements, which begin on page 10. OVERVIEW OF THE FINANCIAL STATEMENTS The following MD&A is intended to serve as an introduction to the Plan's financial statements. The basic financial statements are: 1) Statements of plan net assets 2) Statements of changes in plan net assets 3) Notes to financial statements This report also contains required supplemental information to the basic financial statements which provides actuarial information for use in analyzing the funded status of the Plan and includes: 1) Schedule of funding progress 2) Schedule of employer contributions in accordance with GASB Statement No. 25 3) Note to required supplemental information Certain revenues, expenses associated with administering the Plan, and other trend data are presented immediately following the note to required supplemental information in the statistical section of this report. The basic financial statements contained in this report are described below: • The statement of plan net assets is a point in time snapshot of account balances at year-end. It reports the assets available for future payments to retirees, and any current liabilities that are owed as of the statement date. The resulting net assets value [assets - liabilities = net assets] represents the value of assets held in trust for pension benefits. • The statements of changes in plan net assets displays the effect of pension fund transactions that occurred during the fiscal year [additions - deductions = net increase (decrease) in net assets]. This net increase (decrease) in net assets reflects the change in the net assets value of the statements of plan net assets from the prior year to the current year. Both statements are in compliance with Governmental Accounting Standards Board (GASB) Pronouncements. 2 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2009 • The notes to financial statements are an integral part of the financial statements and provide additional information that is essential for a comprehensive understanding of the data provided in the financial statements. These notes describe the accounting and administrative policies under which the Plan operates, and provide additional levels of detail for selected financial statement items. See notes to financial statements beginning on page 12 of this report. Because of the long-term nature of a defined benefit pension plan, financial statements alone cannot provide sufficient information to properly reflect the ongoing plan perspective. Therefore, in addition to the financial statements explained above, this financial report includes two additional schedules entitled "required supplemental information". • The schedule of funding progress (page 25) includes actuarial information about the status of the Plan from an ongoing, long-term perspective and the progress made in accumulating sufficient assets to pay pension benefits when due. Valuation assets in excess of actuarial accrued liabilities indicate that sufficient assets exist to fund the future pension benefits of the current members and benefit recipients, whereas, excess liabilities requires future funding or investment performance in excess of the actuarial assumed investment returns. • The schedule of employer contributions in accordance with GASB Statement No. 25 (page 25) presents historical trend information regarding the value of total annual contributions required to be paid by employers and the actual performance of employers in meeting this requirement. • The note to required supplemental information provides explanatory detail to aid in understanding the required supplemental schedules. FINANCIAL HIGHLIGHTS 2009 Net assets held in trust for pension benefits totaled $ 179,219,472 as of December 31, 2009 for an increase of $28,410,846 or 18.8%% as compared with December 31, 2008. This increase in net assets primarily resulted from cumulative investment gains during the year. • The Plan's funding objective is to meet long-term benefit obligations to the extent possible. As of December 31, 2009, the date of the latest actuarial valuation, the funded ratio of the Plan was 83.3%. In general, this means that for every dollar of pension benefits due, the Plan has approximately $0.83 of net assets available for payment. The Plan's funding ratio decreased by 3.3% as compared with the funding ratio for December 31, 2008. The decrease in the funding ratio is primarily attributed to a decline in the actuarial value of investments that was impacted by the 2008 investment loss. • Total increase to the Plan's net assets (page 11) amounted to $28,410,846 for the year 2009 consisting of an investment income of $29,480,946, as offset by plan payments net of contributions of $1,070,100. 3 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2009 • Administrative expenses (deductions to the Plan's net assets, page 11) increased from $104,221 in 2008 to $148,157or approximately $43,936 (42.2%) which primary reflects the net impact of an increase in the asset based costs such as consulting services that is associated with a higher value of assets under management. FINANCIAL HIGHLIGHTS 2008 • Net assets held in trust for pension benefits totaled $150,808,626 as of December 31, 2008 for a decrease of $40,573,866 or 21.2% as compared with December 31, 2007. This decrease in net assets primarily resulted from cumulative investment losses during the year and an increase of $692,022 in benefit payments. • The Plan's funding objective is to meet long-term benefit obligations to the extent possible. As of December 31, 2008, the date of the latest actuarial valuation, the funded ratio of the Plan was 86.6%. In general, this means that for every dollar of pension benefits due, the Plan has approximately $0.87 of net assets available for payment. The Plan's funding ratio decreased by 8.0% as compared with the funding ratio for December 31, 2007. The decrease in the funding ratio is primarily attributed to a decline in the value of investments. • Total decrease to the Plan's net assets (page 11) amounted to $40,573,866 for the year 2007 consisting of an investment loss of $38,697,158, and plan payments net of contributions of 1,876,708. • Administrative expenses (deductions to the Plan's net assets, page 11) decreased from $147,232 in 2007 to $104,221 or approximately $43,011 (29.2%) which primary reflected the net impact of a decrease in the cost of actuarial services and the reclassification of certain fees to investment manager and advisory fees. ANALYSIS OF FINANCIAL ACTIVITIES The Plan's funding objective is to meet long-term benefit obligations through investment income and contributions. Accordingly, the receipt of employer contributions and the income from investments provide the reserves needed to finance future retirement benefits. The Metropolitan St. Louis Sewer District's (the District) contributions into the Plan continue to increase as the result of a combination of factors, including an increase in salaries and a lower than anticipated investment performance as measured on an actuarially smoothed basis. Relative to the Public Fund peer group for 2009 and 2008, the Fund was up by 20.8% and down by19.9%, respectively, which ranked in the 34th and 10th percentile, respectively, of the Public Fund universe. Net assets held in trust for pension benefits increased by $28,410,846 in 2009 and decreased by $40,573,866 in 2008. These net assets are used to meet ongoing benefit obligation to the Plan's participants and their beneficiaries. 4 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2009 Required employer contributions as determined by the Plan's actuary increased for 2009 compared to 2008. The item that most significantly increased the required plan contribution by the employer is the decline in the market value of the assets, in particular is the decline in the value of the equity investments. As the years roll forward and total assets and liabilities grow, the Plan's investment income will play a more significant role in funding future retirement benefits - eventually providing 80% - 90% of the necessary funds. Therefore, investment return over the long-term is critical to the funding status of the Plan. In 2009 net investment income of $29,480,946 was higher than the actuarially assumed investment income, and, the 2008 net investment loss of $38,697,158 was significantly lower than the actuarially assumed investment income. Overall, the Plan remains adequately funded and any accumulative difference between actuarial liabilities and assets is being amortized and funded over an appropriate period. It is important to remember that the Plan's funding is based on a long time horizon, where temporary ups and downs in the market are expected. The more critical factor is that the Plan be able to meet an expected earnings yield of, on average, 7.5%. The Plan's average return for both 2009 and 2008 was negative 4.6%, which is below the actuarially assumed investment rate of 7.5%, and could, depending on future investment performance, require additional contributions in future years. The Plan continues to retain an investment consultant to identify opportunities to improve investment return. A suggestion made by the investment consultant is that the Plan should more broadly diversify its investment asset base. As such, the Plan added new asset classes that have helped to offset the impact from the significant decline in the value of equity investments that was experienced in 2008. Based upon our latest actuarial valuations for the years ended December 31, 2009 and 2008, the Plan's actuarial value of assets was less than its actuarial value of liabilities by $37,310,076 and $28,387,059, respectively. This means that additional future funding will be needed to continue to reduce this liability. FINANCIAL ANALYSIS The condensed statements of plan net assets as compared to prior years are as follows: December 31, 2009 Change ASSETS Investments at fair value Other assets Total Assets LIABILITIES 2009 2008 $178,867,750 6,016,977 184,884,727 5,665,255 $150,347,966 6,004,424 156,352,390 5,543,764 Amount Percent $28,519,784 19.0% 12,553 .2% $28,532,337 18.2% 121,491 2.2% NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $179,219,472 $150,808,626 $28,410,846 18.8% 5 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2009 ASSETS Investments at fair value Other assets Total Assets LIABILITIES December 31, 2008 2007 $150,347,966 6,004,424 $156,352,390 5,543,764 $190,730,668 2,053,823 192,784,491 1,401,999 2008 Change Amount Percent $40,382,702 3,950,601 (36,432,101) 4,141,765 (21.2)% 192.4 (18.9)% 295.4 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $150,808,626 $191,382,492 ($40,573,866) (21.2)% As previously noted, net assets viewed over time may serve as a useful indication of the Plan's financial position. At the close of calendar years 2009 and 2008, the assets of the Plan exceeded its liabilities with $179,219,472 and $150,808,619, respectively, in net assets held in trust for pension benefits. The net assets are available to meet the Plan's ongoing obligation to the Plan's participants and their beneficiaries. Despite variations in the stock market, management and the Plan's actuary concur that the Plan remains in a sound financial position to meet its obligations to the Plan's participants and beneficiaries. The current financial position is the result of a successful investment program and prudent management practices that have been in place for many years. The condensed statements of changes in plan nets assets as compared to prior years are as follows: For The Years Ended December 31 2009 Change ADDITIONS Net investment income (loss) Employer contributions 2009 2008 Amount Percent $ 29,480,945 ($38,697,158) $68,178,104 176.2 % 8,910,664 7,460,492 1,450,172 19.4 % Total Additions (Reductions) 38,391,609 DEDUCTIONS Benefits paid to retirees and beneficiaries Administrative expenses Total Deductions NET INCREASE (DECREASE) NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, JANUARY 1 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, DECEMBER 31 9,832,606 148,157 (9,980,763) 28,410, 846 150,808,626 (31,236,666) 69,628,276 222.9 % 9,232,979 599,627 6.5 % 104 221 43,936 42.2 % (9,337,200) 643,563 6.9 % (40,573,866) 68,984,713 270.0 % 191,382,492 (40,573,866) 21.2 % $179,219,472 $150,808,626 28,410,847 18.8 % 6 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2009 For the Years Endeded December 31, 2008 Change ADDITIONS Net investment (loss) income Employer contributions Total (Deductions) Additions DEDUCTIONS Benefits paid to retirees and beneficiaries Administrative expenses Total Deductions 2008 2007 $(38,697,158) $ 18,063,136 7,460,492 7,702,456 (31,236,666) 25,765,592 9,232,979 8,540,957 104,221 99,074 9,337,200 8,640,031 NET (DECREASE) INCREASE (40,573,866) NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, JANUARY 1 Amount Percent $(56,760,294) (314.2)% (241,964) (3.1) (57,002,258) (221.2) 692,022 5,147 697,169 8.1 5.2 8.1 17,125,561 (57,699,427) (336.9) 191,3 82,492 174,256,931 17,125,5 61 9.8 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, DECEMBER 31 $150,808,626 $191,382,492 $(40,573,866) (21.2)% As noted above, the funds needed to finance retirement benefits are accumulated through the collection of employer contributions and through earnings on investments (net of investment expense). Total additions (reductions) for the year ended December 31, 2009 and 2008, totaled $38,391,609 and $(31,236,666), respectively. Additions to Plan assets for 20909 exceeded 2008 due to investment gains. The investment section of this report summarizes the results of investment activity for the year ended December 31, 2008. The Plan was created to provide retirement, survivor, and disability benefits to qualified members and their beneficiaries. The cost of such programs includes recurring benefit payments as designated by the Plan, and the cost of administering the Plan. As noted above deductions for the year ended December 31, 2009 totaled $9,980,763, an increase of 6.9% over 2008. The increase in benefits paid resulted primarily from an increase in the number of retirees receiving benefits. Deductions from plan net assets of $9,980,763 were exceeded by additions to plan net assets of $38,391,609 by $28,410,846 for the year ended December 31, 2009. The Plan has consistently managed within its administrative expense budget, with no material variances between planned and actual expenditures. 7 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2009 Investment Performance - 2009 The following are a few characteristics and achievements for the Plan for the year ending December 31, 2009: • The Plan ended the year with $179,219,472 in net assets. • The Plan's performance for the year was 20.8% compared to the passive policy index of 19.6%, and the average five-year return was 5.1% compared to the passive policy index of 4.2%. • The District retains an independent investment consultant to monitor the investment performance of the Plan and identify opportunities for improved returns. The recommendation of the investment consultant has been to more broadly diversify the investment asset base of the Plan. • The asset allocation compared to the December 31, 2009 actual allocation was as follows: Proposed Actual Asset Class Target Range 2009 2008 Equities: Domestic Large -Cap Stocks 20.0% 16-24% 19.1% 17.3% Domestic Small -Cap Stocks 10.0 8 - 12 9.7 8.4 International Developed Markets Stocks 10.0 8 - 12 9.5 9.3 International Emerging Markets Stocks 3.0 2 - 5 3.3 2.3 Fixed Income: Domestic Core Bonds 20.0 16 - 24 14.8 20.3 High Yield Bonds 5.0 3 - 7 5.3 4.5 Global Bonds 8.0 6 - 10 7.9 9.4 Other: Global Tactical 10.0 8-12 10.2 9.9 Real Estate 5.0 3 - 7 3.9 5.9 Market Neutral 5.0 3 - 7 5.6 6.5 Cash Equivalents 0.0 0.0 6.8 2.1 Absolute Return 4.0 3-7 3.9 4.1 All asset classes have been rebalanced when needed during the year in order to maintain a weighting consistent with the strategic allocation ranges. The large -cap stocks were diversified between active value, active growth, and passive core strategies. The fund had a 60% large -cap growth value and 40% large -cap growth allocation which added value to the fund during the year as value stocks outperformed growth stocks. 8 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2009 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 the Plan's participants and their beneficiaries. REQUEST FOR INFORMATION This financial report is designed to provide the Board of Trustees, our members, ratepayers, investment managers, and creditors 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 financial information should be addressed to: Karl J. Tyminski, Secretary -Treasurer The Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103-255 E-mail: kjtymi@stlmsd.com 9 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATEMENTS OF PLAN NET ASSETS December 31 2009 2008 ASSETS Investments at fair value: Mutual funds $ 76,113,440 $ 58,922,082 Corporate obligations 30,129,155 34,749,104 Domestic common stocks 21,199,474 16,734,623 U.S. Treasury and agency obligations 9,689,256 5,326,542 Foreign obligations 7,609,646 7,426,150 Collective investment fund 17,083,798 18,709,555 Money market funds 14,108,201 6,678,377 Municipal obligations 796,981 817,529 Foreign stocks 1,940,458 984,004 Domestic preferred stock 197,341 Total investments 178,867,750 150,347,966 Receivables: Due from brokers for forward currency exchange contracts 5,238,726 5,195,803 Due from brokers for pending sales securities sold 109,433 57,416 Interest and dividends receivable 668,818 751,205 Total Receivables 6,016,977 6,004,424 Total Assets 184,884,727 156,352,390 LIABILITIES Due to brokers for forward currency exchange contracts 5,370,387 5,140,015 Due to brokers for securities purchased 122,096 138,858 Accrued expenses 172,772 264,891 Total liabilities 5,665,255 5,543,764 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS See notes to financial statements $179,219,472 $150,808,626 10 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATEMENTS OF CHANGES IN PLAN NET ASSETS For The Years Ended December 31 2009 2008 ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Net appreciation (depreciation) in fair value of investments $ 26,442,207 $(41,855,346) Interest and dividends 3,690,046 3,872,588 Total Investment Income (Loss) 30,132,253 (37,982,758) Less — Investment managers and advisor fees 651,308 714,400 Net Investment Income (Loss) 29,480,945 (38,697,158) Employer contributions 8,910,664 7,460,492 Total Additions (Reductions) 38,391,609 (31,236,666) DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to retirees & beneficiaries 9,832,606 9,232,979 Administrative expenses 148,157 104,221 Total Deductions 9,980,763 9,337,200 NET INCREASE (DECREASE) NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, January 1 NET ASSETS HELD N TRUST FOR PENSION BENEFITS, December 31 See notes to financial statements 28,410,846 (40,573,866) 150,808,626 191,382,492 $179,219,472 $150,808,626 11 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE A — DESCRIPTION OF PLAN The following brief description of THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN(the Plan) is provided for general information purposes only. Members should refer to the Plan ordinance for more complete information. The Plan is a noncontributory single employer defined benefit plan providing retirement benefits as well as death and disability benefits. As a condition of employment, all full-time employees of The Metropolitan St. Louis Sewer District (the District) are covered by the Plan. Membership in the Plan consists of: December 31 Increase 2009 2008 (Decrease) Active plan members 938 885 53 Retirees and beneficiaries currently receiving benefits 550 532 18 Terminated members entitled to receive benefits 192 196 (4) 1,680 1,613 67 The District's Board of Trustees, primarily to improve benefits to members, amends the Plan, established on November 1, 1967. A Pension Committee consisting of two members of the District's Board of Trustees, two elected employee members and four members of the District's management staff administer the Plan. A committee of the District's Board of Trustees, with the aid of an investment advisor, reviews and evaluates the Plan's investments and the related rates of return on a periodic basis. The Plan is exempt from the requirements of the Employee Retirement Income Security Act of 1974 and, as such, is not subject to the Act's reporting requirements. All benefits vest after five years of credited service. Members retiring at or after age 65 with five or more years credited service are entitled to a pension benefit. The Plan permits early retirement with reduced benefits beginning at age 55 if the member has completed 60 months of employment. Ordinance No. 10664 provides for unreduced retirement benefits to any member whose combined age and term of service is equal to 75. Effective January 1, 1999, Ordinance No. 10491 amended the Plan benefits formula. The annual benefit payable became 1.40% of final average earnings plus 0.40% of final average earnings that are in excess of covered earnings multiplied by the period of years and months of credited service not to exceed 35 years. Also, the annual reduction for early retirement was revised from 5% to 2% prior to age 60 and from 2.5% to 1% after age 60. 12 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE A — DESCRIPTION OF PLAN (Continued) Ordinance No. 10664, effective January 1, 2000, amended the plan benefits formula to 1.45% of final average earnings plus 0.4% of final average earnings that are in excess of covered earnings multiplied by the period of years and months of credited service not to exceed 35 years. This ordinance also provided for a survivor's benefit for vested members who have not yet reached their normal retirement date or earned 75 points. The survivor's benefit is equal to the greater of 50% of the member's monthly accrued retirement benefit as of the date of death, or 15% of the monthly earnings and the member's monthly accrued retirement benefit actuarially reduced under the 100% joint and survivor annuity option. Members are also able to select a Contingent Annuity Pop -Up option. This option allows the member to elect a survivor annuity for life, with the provision that if the beneficiary should predecease the member, the benefit shall increase to the amount payable had the survivor option not been selected. Ordinance Number 10872, effective January 1, 2001, further amended the Plan to extend the cost of living increases for retirees from a maximum of 30% to 45% of the original benefit. Effective August 1, 2004, Ordinance No. 11781 amended the plan to change the benefit formula to 1.7% of final average earnings plus 0.4% of final average earnings that are in excess of covered earnings multiplied by the period of years and months of credited service not to exceed 35 years without including accrued sick leave. A member who retires between August 1, 2004 and July 1, 2007 is entitled to select the greater of the above or the benefit calculated under the 1.45%/1.85% benefit formula including accrued sick leave. Sick leave is paid out at 1.25% per year of service times the amount of leave accrued. Also, the Plan was amended to provide the retiring member with a 10% partial lump sum payment option. The balance of the distribution will be paid in accordance with any one of the other payment options available under the Plan. The retirement benefit payable to a member who retires after the normal retirement date is the greater of a) the benefit that would have been payable on the normal retirement date plus a special annual retirement benefit provided by the accumulated value, at 4% per annum interest, of the monthly benefit that would have been received prior to the postponed retirement date or b) the benefit determined as of the postponed retirement date under the normal formula. 13 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied by the Plan in the preparation of the accompanying financial statements are summarized as follows: 1. Basis of Accounting The Plan's financial statements are prepared using the accrual basis of accounting. Employer contributions are recognized as revenues in the period when due and the District's Trustees have made a formal commitment to provide the contribution. Benefits are recognized when due and payable in accordance with the terms of the Plan. Plan expenses are recorded when the corresponding liabilities are incurred regardless of when payment is made. Investment purchases and sales are recorded on a trade -date basis. 2. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management and the Plan's actuary to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions to and deductions from net assets during the reporting period. Actual results could differ from those estimates. 3. Method Used to Value Investments The Plan's investment assets, which are trusteed by U.S. Bank, N.A., are reported at fair value as determined and certified by the Trustee. Investments traded on a national exchange are valued at reported sales prices. Investments that do not have an established market are reported at estimated fair value. The money market fund is reported at cost, which approximates fair value. NOTE C — CASH AND INVESTMENTS 1. Categories of Asset Risk The Plan is authorized to invest in: • Equity Investments: Common stocks of corporations, mutual funds, or commingled equity funds (Domestic and International, both within defined limits); however, the investments in equities cannot exceed 53% of total investments. 14 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE C — CASH AND INVESTMENTS (Continued) 1. Categories of Asset Risk (Continued) • Fixed Income Investments: U.S. government and agency securities, corporate bonds, debentures, notes, or other evidence of indebtedness assumed or guaranteed by corporations (Domestic and International, both within defined limits); however, the investment in fixed income cannot exceed 41% of total investments. • Short-term Securities: Commercial paper, treasury bills, certificates of deposit, and/or money market funds. • Real Estate Investments: Real estate investment trusts and multi -employer property trusts; however the investment in real estate cannot exceed 7% of total investments. • Global Tactical Asset Allocation, Market Neutral, and Absolute Return: These investment strategies help diversify the investment portfolio while increasing return and decreasing risk. These investments cannot exceed 12%, 7%, and 7% of total investments, respectively. • Futures Contracts: Currency forward contracts for the purpose of currency risk management of non-U.S. investments. The fair value of investments managed consisted of the following: December 31 2009 2008 Investments, at fair value Mutual Funds $ 76,113,440 $ 58,922,082 Corporate obligations 30,129,155 34,749,104 Domestic common stocks 21,199,474 16,734,623 U.S. Treasury and agency obligations 9,689,256 5,326,542 Foreign obligations 7,609,646 7,426,150 Collective investment fund 17,083,798 18,709,555 Money market funds 14,108,201 6,678,377 Municipal obligations 796,981 817,529 Foreign stocks 1,940,458 984,004 Domestic preferred stock 197,341 - Total Investments $178,867,750 $150,347,966 15 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE C — CASH AND INVESTMENTS (Continued) 2. Interest Rate Risk The Plan had the following debt securities and maturities: December 31, 2009 Weighted Average Maturity Investment Type Fair Value (Years) Corporate obligations $30,129,155 4.19 U.S. Treasury and agency obligations 9,689,256 6.79 Foreign obligations 7,609,646 5.67 Municipal obligations 796,981 0.08 $48,225,038 Portfolio weighted average maturity 4.89 December 31, 2008 Weighted Average Maturity Investment Type Fair Value (Years) Corporate obligations $34,749,104 4.21 U.S. Treasury and agency obligations 5,326,542 5.82 Foreign obligations 7,426,150 5.52 Municipal obligations 817,529 1.77 $48,319,325 Portfolio weighted average maturity 4.55 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: • Structuring the investment portfolio so that securities mature to meet cash requirements for benefit payments, thereby avoiding the need to sell securities on the open market prior to maturity. • Monitoring fixed income investment managers performance to be sure the fixed income portion of the investment portfolio is managed to predetermined indexes. 16 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE C — CASH AND INVESTMENTS (Continued) 3. Credit Risk The Plan will minimize credit risk, the risk of loss due to failure of the security issuer or backer, by: • Pre -qualifying the financial institutions, broker/dealers, intermediaries, and advisors with which the Plan will do business; and • Diversifying the portfolio so that potential losses on individual securities will be minimized. The following tables provide information on the credit ratings associated with the Plan's investments in debt securities: Credit Rating By Investment as of December 31, 2009 S&P Rating AAA AA A BBB BB B CCC Not Rated Total U.S. Treasury & Agency Obligations $9,689.256 Municipal Obligations $152.940 644,041 Corporate Obligations $ 5,173,969 2,288,968 9,336,852 3,694,050 2,662,162 5,552,469 1,248,495 172,190 Foreign Obligations $2,760,368 395,950 2,592,230 778,153 417,727 665,218 Totals $17.776.533 3,328,959 11,929,082 4,472,203 3,079,889 6,217,687 1,248,495 172,190 $9,689,256 $796,981 $30,129,155 $7,609,646 $48,225,038 Credit Rating By Investment as of December 31, 2008 U.S. Treasury S & P & Agency Rating Obligations AAA $5,326,542 AA A BBB BB B CCC Not Rated Municipal Obligations $177,978 489,239 150,312 Corporate Obligations $ 7,709,188 4,745,697 12,339,435 4,493,941 2,062,219 2,847,416 515,203 36,005 Foreign Obligations $2,724,668 959,013 2,524,190 577,183 240,324 400,772 Totals $15,938,376 6,193,949 15,013,937 5,071,124 2,302,543 3,248,188 515,203 36,005 Total $5,326,542 $817,529 $34,749,104 $7,426,150 $48,319,325 17 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE C — CASH AND INVESTMENTS (Continued) 4. Foreign Currency Risk Foreign Currency Risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. The Plan's policy is to allow the individual investment manager to decide what action to take regarding their respective portfolio's foreign currency exposure. The following table demonstrates the Plan's current level of foreign currency exposure: Foreign Currency Exposure By Asset Class In U.S. Dollars as of December 31, 2009 Currency Australian dollar Brazil Real British Pound Sterling Canadian Dollar Euro Indonesia Rupiah Malaysian Ringgit Mexican Peso New Zealand Dollar Polish Zloty South Africa Rand Swedish Krona Not Denominated in a foreign currency Foreign Equities Obligations Totals $1,336,667 $1,336,667 563,371 563,371 623,246 623,246 361,840 361,840 98,002 98,002 417,727 417,727 698,381 698,381 528,724 528,724 531,661 531,661 669,211 669,211 228,031 228,031 341,614 341,614 1,940,458 1,211,171 3,151,629 $1,940,458 $7,609,646 $9,550,104 18 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE C — CASH AND INVESTMENTS (Continued) 4. Foreign Currency Risk (Continued) Foreign Currency Exposure By Asset Class In U.S. Dollars as of December 31, 2008 Foreign Currency Equities Obligations Totals Australian dollar $ $1,364,347 $1,364,347 Brazil Real 393,338 393,338 British Pound Sterling 745,662 745,662 Canadian Dollar 387,700 387,700 Indonesia Rupiah 282,921 282,921 Malaysian Ringgit 764,371 764,371 Mexican Peso 574,819 574,819 New Zealand Dollar 504,379 504,379 Polish Zloty 654,209 654,209 South Africa Rand 342,014 342,014 Swedish Krona 319,374 319,374 Not Denominated in a foreign currency 984,004 1,093,016 2,077,020 $984,004 $7,426,150 $8,410,154 19 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE C - CASH AND INVESTMENTS (Continued) 5. Open Foreign Currency Exchange Contracts in U.S. Dollars : OPEN CONTRACTS AS OF DECEMBER 31, 2009 Fair Aggregate Delivery Unrealized Unrealized Value Cost Value Dates Appreciation Depreciation Foreign Currency Exchange Contracts Purchased: Australian Dollar $ 93,031 $ 93,031 2/8/2010 $ - $ British Pound 1,401,636 1,360,031 3/3/2010 41,605 - Canadian Dollar 142,131 137,902 2/2/2010 4,229 - New Zealand Dollar 30,563 30,963 2/10/2010 400 Norwegian Krone 852,475 869,880 1/15/2010 17,405 South Korean Won 661,141 619,667 1/7/2010 41,474 - Swedish Krona 480,171 500,080 1/25/2010 19,909 Turkish Lira 506,181 556,235 3/17/2010 50,054 Foreign Currency Exchange Contracts Sold: Australian Dollar 426,090 523,406 2/8/2010 - 93,316 Canadian Dollar 22,008 24,668 2/2/2010 - 2,660 Euro 46,570 56,748 3/3/2010 178 New Zeland Dollar 139,762 172,800 2/10/201 - 33,038 Norwegian Krone 147,827 152,282 1/15/2010 - 4,455 South Korean Won 117,571 117,649 1/7/2010 78 Swedish Krona 171,561 165,037 1/25/2010 6,524 Totals $93,832 $225,493 20 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE C — CASH AND INVESTMENTS (Continued) 5. Open Foreign Currency Exchange Contracts in U.S. Dollars (Continued): OPEN CONTRACTS AS OF DECEMBER 31, 2008 Fair Aggregate Delivery Unrealized Unrealized Value Cost Value Dates Appreciation Depreciation Foreign Currency Exchange Contracts Purchased: Australian Dollar $ 133,862 $ 133,682 1/9/2009 $ 180 $ - British Pound 612,721 691,796 1/22/2009 - 79,075 British Pound 506,088 537,788 3/12/2009 - 31,700 Canadian Dollar 399,352 395,431 1/24/2009 3,921 New Turkish Lira 185,926 223,886 1/26/2009 - 37,960 Euro 2,151,796 2,093,279 3/6/2009 58,518 New Zealand Dollar 136,165 133,424 3/17/2009 2,741 - Norwegian Krone 130,675 132,076 1/26/2009 1,401 Foreign Currency Exchange Contracts Sold: British Pounds 770,871 612,721 1/22/2009 158,150 New Turkish Lira 168,340 185,926 1/26/2009 17,586 Totals $223,510 $167,722 The fair value of open currency forward contracts, including any unrealized appreciation or depreciation, is recorded in the statements of plan net assets as amounts due from/to brokers for securities sold/purchased. Based upon the advice of the Plan's investment consultant and the Plan's investment policy and guidelines, the investments in currency forward contracts do not, in the Plans' judgment, have any legal risk. The currency forward contracts are executed through large money center banks with credit rating standards. The credit risk exposure could be with the bank counterparty. Depending on the bank, the degree of credit risk could vary. Based on the assessment of the Plan's investment manager trading the account and Plan's investment consultant, the risk is minimal. 21 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE D — INVESTMENTS GREATER THAN 5% OF NET ASSETS HELD IN TRUST FOR PENSION BENEFITS Investments which exceed 5% or more of net assets held in trust for pension benefits are as follows: December 31 2009 2008 GMO Global Balanced Asset Allocation $18,285,997 $14,940,962 Morgan Stanley Inst. International Equity 17,078,227 14,048,692 First American Prime Money Market 13,966,544 <5% Vanguard Windsor II Fund 11,693,186 9,195,040 Pyramid US Equity Market Neutral 10,169,363 9,721,941 CIGNA Small Cap Fund 9,602,961 <5% UBS Real Estate <5% 8,987,614 NOTE E — CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE Ordinances establishing the Plan provide for actuarially determined annual contributions by the District that are sufficient to pay benefits when due. The Entry Age Normal funding method is used to determine contributions. Contributions of $8,859,535 and $7,426,602 excluding certain professional fees paid by the District, were made to the Plan in 2009 and 2008, respectively. These contributions were made in accordance with actuarially determined contribution requirements based on actuarial valuations performed at January 1, 2009 and 2008, respectively, and consisted of: For The Years Ended December 31, 2009 2008 Normal Cost $ 5,651,150 $ 5,793,713 Amortization of the unfunded actuarial accrued liability 2,590,278 1,113,824 Inflation factor of 7.5% Current Year Contribution Due From The District As Calculated By The Plan's Actuary 8,241,428 6,907,537 618,107 518,065 $ 8,859,535 $ 7,425,602 22 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE E — CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE (Continued) Certain professional fees, included in administrative expenses are paid by the District and are recognized as contributions to the Plan and totaled $51,129 and $34,890 for the years ended December 31, 2009 and 2008. The District provides office space, utilities, and other services to the plan at no cost. Other costs of administering the Plan are financed from plan net assets. NOTE F — FUNDED STATUS AND FUNDING PROGRESS The funded status of the Plan as of January 1, 2010 the most recent actuarial valuation date, and January 1, 2009 s as follows (dollar amounts in thousands): Valuation for the Actuarial Years Beginning January 1 Actuarial Value of Assets Entry Age Actuarial Accrued Liability (AAL) Unfunded AAL (UAAL) Funded Ratio Annual Covered Payroll UAAL as a Percentage of Covered Payroll 2010 $185,753 $223,063 $37,310 83.3% $52,267 71.4% 2009 183,679 212,066 28,387 86.6% 48,077 59.0% The schedules of funding progress, presented as required supplemental information following the notes to financial statements, present multi -year trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation follows: Valuation dates Actuarial cost method Amortization method Amortization period Asset valuation method Post -retirement cost of living benefit increases January 1, 2010 and 2009 Entry Age Normal Level dollar closed 20 year period 3 -year average of adjusted market values CPI with maximum 3% of current benefit of $50 if less, and lifetime maximum 45% in the original benefit or $750 if less. 23 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE F — FUNDED STATUS AND FUNDING PROGRESS (Continued) Actuarial assumptions: Investment rate of return 7.5% per annum (1) Projected salary increases based on years of service years of service 0 10.0% (1) 1 7.5% (1) 2 5.0% (1) 3+ 4.5% (1) Social Security wage base 4.0% per annum increase (1) (1) Includes inflation component of 3% NOTE G — RISK MANAGEMENT The Plan is exposed to various risks of loss related to natural disasters, errors and omissions, loss of assets, torts, etc. The Plan has chosen to cover such losses through the purchase of commercial insurance. There has been no material insurance claim filed or paid during the past three fiscal years. NOTE H — RISKS AND UNCERTAINTIES The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. 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 changes could materially affect the amounts reported in the statements of plan net assets. Actuarial present value of accumulated plan benefits are reported based on certain assumptions pertaining to interest rates, inflation rates, and employee demographics, all of which are subject to change. Due to uncertainties inherent in the estimations and assumptions process, it is at least reasonably possible that changes in these estimates and assumptions in the near term would be material to the financial statements. NOTE I — SUBSEQUENT EVENTS Subsequent to year end the District trustees tentatively approved a 401(k) style pension for employees who begin January 1, 2011 and thereafter. Current MSD employees will remain in the District's tradition pension plan. 24 THE MET OPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN REQUIRED SUPPLEMENTAL INFORMATION DECEMBER 31, 2009AND 2008 REQUIRED SUPPLEMENTAL INFORMATION SECTION THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN REQUIRED SUPPLEMENTAL INFORMATION DECEMBER 31, 2009AND 2008 Six -year historical trend information about the Plan is presented herewith as required supplementary information. This information is intended to help users assess Plan funding status on a going -concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons with other plans. SCHEDULE OF FUNDING IN PROGRESS (dollars in thousands) Valuation Entry For The Age UAAL As Actuarial Actuarial A Years Actuarial Accrued Unfunde Annual Percentage Beginning Value of Liability d AAL Funded Covered of Covered January 1 Assets (AAL) (UAAL) Ratio Payroll Payroll 2010 $185,753 $223,063 $37,310 83.3 % $52,267 71.4% % 2009 183,679 212,066 28,387 86.6 48,077 59.0 2008 185,356 195,834 10,478 94.6 43,640 24.0 2007 170,757 187,432 16,675 91.1 42,113 39.6 2006 158,321 177,630 19,309 89.1 40,144 48.1 2005 142,986 168,237 25,251 85.0 39,382 64.1 Analysis of the dollar amounts of plan net assets, AAL, and UAAL in isolation can be misleading. Expressing plan net assets as a percentage of the AAL provides one indication of Plan funding status on a going -concern basis. Analysis of this percentage over time indicates whether the Plan is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the Plan. Trends in the UAAL and annual covered payroll are both affected by inflation. Expressing the UALL as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of Plan progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the Plan. SCHEDULE OF EMPLOYER CONTRIBUTIONS IN ACCORDANCE WITH GASB STATEMENT NO.25 For The Years Ended Contribution As A December Annual Required Actual Percentage Percentage of 31 Contribution Contribution Contributed _ _ Covered Payroll 2009 $8,859,535 $8,859,535 100.0 % 17.0 % 2008 7,549,421 7,425,602 98.4 15.4 2007 7,260,259 7,702,456 105.7 17.7 2006 7,015,905 6,861,223 100.3 16.3 2005 6,980,026 7,192,531 102.9 17.9 2004 6,384,774 6,797,077 106.1 17.3 2003 5,385,572 6,002,479 111.3 15.9 25 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN REQUIRED SUPPLEMENTAL INFORMATION DECEMBER 31, 2009AND 2008 NO 1'E TO REQUIRED SUPPLEMENTAL INFORMATION Annual Required Contribution (ARC) The ARC applicable to the Plan's year ended each year on December 31 in accordance with GASB Statement No. 25 requires blending of the actuarial valuations. The ARC is presented each year using the aggregate of the District's ARCs for the portions of the District's fiscal years that overlap the Plan's fiscal year. 26 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 STATISTICAL SECTION (UNAUDITED) THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 Performance & NAV Year Net Asset Value (NAV) 12/31 Total Plan Performance 2000 $ 125,256,835 (0.1%) 2001 $ 123,040,018 (1.8%) 2002 $ 113,176,548 (8.0%) 2003 $ 137,024,216 21.1% 2004 $ 149,053,173 8.8% 2005 $ 157,822,577 5.9% 2006 $ 174,256,931 10.4% 2007 $ 191,382,492 10.8% 2008 $ 150,808,625 (21.2%) 2009 $ 179,219,472 18.8% Net Asset Value (NAV) 12/31 $250.0 $200.0 $150.0 $100.0 $50.0 $0.0 $125.3 $123.0 $137.0 $149.1 $157.8 $150.8 $113.2 1 1 $174.3 $191.4 $179.2 i 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 27 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 Revenues by Source Year Employers Contributions Employers Contributions as a Percentage of Covered Payroll Investment Income (Net) Total 2000 $ 2,986,650 7.9% $ 831,238 $ 3,817,888 2001 $ 3,971,540 10.6% $ (1,878,456) $ 2,093,084 2002 $ 4,789,473 12.7% $ (9,726,380) $ (4,936,907) 2003 $ 6,002,479 15.9% $ 23,559,415 $ 29,561,894 2004 $ 6,797,077 17.3% $ 11,551,937 $ 18,349,014 2005 $ 7,192,531 17.9% $ 8,475,275 $ 15,667,806 2006 $ 6,861,223 16.3% $ 17,565,462 $ 24,426,685 2007 $ 7,702,456 17.6% $ 18,111,294 $ 25,813,750 2008 $ 7,460,492 15.4% $ (38,697,158) $ (31,236,666) 2009 $ 8,910,664 17.0% $ 29,480,946 $ 38,391,609 28 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 Expenses by Type Year Benefit Payments Administrative Expense Total 2000 $ 3,694,444 $ 232,066 $ 3,926,510 2001 $ 4,211,174 $ 98,727 $ 4,309,901 2002 $ 4,830,167 $ 96,396 $ 4,926,563 2003 $ 5,607,334 $ 106,892 $ 5,714,226 2004 $ 6,198,470 $ 121,587 $ 6,320,057 2005 $ 6,781,416 $ 116,986 $ 6,898,402 2006 $ 7,841,783 $ 150,548 $ 7,992,331 2007 $ 8,540,957 $ 147,232 $ 8,688,189 2008 $ 9,232,979 $ 104,221 $ 9,337,200 2009 $ 9,832,606 $ 148,157 $ 9,980,763 29 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 Member Count Year Retirees & Beneficiaries Currently Receiving Benefits Terminated Members Entitled to Receive Benefits Active Plan Members Total 2000 428 164 890 1,482 2001 443 175 855 1,473 2002 459 182 829 1,470 2003 482 194 788 1,464 2004 490 190 808 1,488 2005 4601 198 7802 1,438 2006 481' 199 7982 1,478 2007 5041 198 8112 1,513 2008 532' 196 8852 1,613 2009 5501 192 9382 1,680 ' New Actuarial excluded individuals covered by insurance policy. 2 New Actuarial excludes members with less than six months of service 30 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 Total Benefit Payments (Dollar Amounts in Mill ions) $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 3,694.4 I $4,211.2 i $4,830.2 $9,832.6 $9,233.0 $8,541.0 $7,841.8 $6,781.4 $6,198.5 ■ $5,607.3 f♦ 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Employer Contributions (Dollar Ampunts in Milions) $10,000 - $9,000 - $8,000 - $7,000 - $6,000 - $5,000 - $4,000 - $3,000 - $2,000 - $1,000 - $0 AN. Ck, fig: Galt 1 I 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 31 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 Total Benefit Recipents 600 - 500 - 400 300 - 200 7 100 - 0 428 a 443 ■ 459 ■ 482 490 460 481 504 1 532 550 I 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 New actuarial census for 2005 through 2009 excluded individuals covered by insurance policy. 32 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 Top 10 Investment Holdings As of December 31, 2009 Holding Market Value at 12/31/2009 Percentage of Plan GMO Global Balanced Asset Allocation $ 18,285,997 10.2% Morgan Stanley Inst. International Equity 17,078,227 9.5% First American Prime Money Market 13,966,544 7.8% Vanguard Windsor ll Fund 11,693,186 6.5% Fidelity Market Neutral Fund 10,169,363 5.6% CIGNA Small Cap Fund 9,602,961 5.4% PIMCO All Asset Fund 7,068,646 3.9% UBS Real Estate 6,914,435 3.9% Vanguard 500 Index Fund 6,517,900 3.6% Morgan Stanley Emerging Market Fund 5,866,524 3.3% TOTALS $ 107,163,783 59.8% 33 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (UNAUDITED) DECEMBER 31, 2009AND 2008 Schedule of Investment Managers And Advisor Fees For the Years Ended December 31, 2009 and 2008 2009 2008 Managers Fees: Income Research Management $ 111,547 $ 136,901 Fidelity Investments 91,240 90,677 Waddell & Reed 60,058 71,476 Kennedy Capital /ARK Asset Managers 57,666 57,957 PENN Capital Management 63,950 60,168 Brandywine Asset Management 68,094 68,238 Buford, Dickson, Harper, & Sparrow 35,427 44,704 UBS Real Estate Separate Account 78,714 114,709 Total Managers Fees 566,696 644,830 Advisor Fees: NEPC Investment Advisor 84,612 69,570 TOTAL $ 651,308 $ 714,400 34