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HomeMy Public PortalAbout2011 Audited Financials THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 Contents Page Independent Auditors’ Report........................................................................ 1 - 2 Management’s Discussion And Analysis ....................................................... 3 - 5 Financial Statements Statements of Plan Net Assets ...........................................................................6 Statements of Changes in Plan Net Assets ........................................................7 Notes to Financial Statements .................................................................... 8 - 16 Supplemental Information Historical Trend Information ...........................................................................17 Investment Returns and Expense Ratios .................................................. 18 - 19 Independent Auditors’ Report To the Board of Trustees of the Metropolitan St. Louis Sewer District St. Louis, Missouri We have audited the accompanying statement of plan net assets of the Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust (the “Plan”) as of December 31, 2011, and the related statement of changes in plan net assets for the year then ended. These financial statements are the responsibility of the Plan Administrator. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Plan, as of December 31, 2010, were audited by other auditors whose report date dated July 29, 2011, expressed an unqualified opinion on those statements. We conducted our audit 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 that our audit provides a reasonable basis for our opinion. In our opinion, the 2011 financial statements referred to above present fairly, in all material respects, the plan net assets as of December 31, 2011, and the changes in plan net assets for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3 through 5 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 required 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. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. To the Board of Trustees of the Metropolitan St. Louis Sewer District Page 2 Our audit was conducted for the purpose of forming an opinion on the Plan’s financial statements as a whole. The accompanying supplementary information, as listed on the accompanying table of contents, is presented for purposes of additional analysis and is not a required part of the financial statements. The accompanying information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has not been subjected to the auditing procedures applied in the audit of the financial statements and accordingly, we do not express an opinion or provide any assurance on it. June 26, 2012 THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Page 3 MANAGEMENT’S DISCUSSION AND ANALYSIS For The Year Ended December 31, 2011 This report consists of a series of financial statements related to The Metropolitan St. Louis Sewer District’s Deferred Compensation Plan and Trust (the Plan). The Statements of Plan Net Assets and the Statements of Changes in Plan Assets (on pages 5 and 6) provide information about this Plan’s net assets and changes in its net assets 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 fiscal year ended December 31, 2011. Please read it in conjunction with the Plan’s financial section. FINANCIAL HIGHLIGHTS Plan Additions, Deductions, and Net Assets Net assets available for plan benefits exceeded $33.9 million at the end of 2011 and the net asset value increased by $1.1 million from that of December 31, 2010, due to the combined impact of an increase in the overall value of equity investments that resulted from an increase in the various stock markets and an increase in participant contributions. Contributions from participants were approximately $2.7 million, which was a slight increase of $50 thousand as compared with prior year contributions. Plan Additions for 2011, 2010, and 2009 (in thousands) 2011 2010 Percent Change 2009 Percent Change Employee Contributions $2,724 $2,675 1.8% $2,685 (.4%) Net Investment Income 238 3,421 (93.0%) 4,837 (29.3%) Total Additions (Subtractions) 2,962 6,096 (51.4%) 7,522 (19.0%) Plan Deduction for 2011, 2010, and 2009 (in thousands) 2011 2010 Percent Change 2009 Percent Change Distribution to Participants $1,886 $2,407 (21.7%) $972 147.6% Net Assets at December 31, 2011, 2010, and 2009 (in thousands) 2011 2010 Percent Change 2009 Percent Change Net Assets $33,973 $32,897 3.3% $29,209 12.6% THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Management’s Discussion And Analysis (Continued) Page 4 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 as follows: Number Of December 31 Participants 2011 637 2010 635 2009 649 Investment Aspects 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 assets allocation as of the last day of the fiscal year ended 2011, 2010, and 2009 follows: THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Management’s Discussion And Analysis (Continued) Page 5 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 the 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 Plans 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: Karl J. Tyminski, Secretary-Treasurer 2350 Market Street St. Louis, MO 63103-2555 Phone: (314) 768-6222 Fax: (314) 768-2701 kjtymi@stlmsd.com THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST See the accompanying notes to financial statements. Page 6 STATEMENTS OF PLAN NET ASSETS For the Years Ended December 31, 2011 2010 ASSETS Investments at fair value: Mutual funds $28,889,815 $28,854,703 Annuity contracts 733,310 739,721 Notes receivable from participants 779,366 670,638 Total investments at fair value 30,402,491 30,265,062 Investments at contract value: Common/collective trust 3,570,598 2,632,225 NET ASSETS HELD IN TRUST FOR PLAN BENEFITS $33,973,089 $32,897,287 THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST See the accompanying notes to financial statements. Page 7 STATEMENTS OF CHANGES IN PLAN NET ASSETS For the Years Ended December 31, 2011 2010 ADDITIONS TO (REDUCTIONS OF) NET ASSETS ATTRIBUTED TO: Investment income: Interest and dividends $ 695,956 $ 723,595 Net appreciation (depreciation) in fair value of investments (457,489) 2,697,468 Total Investment Income 238,467 3,421,063 Less: Investment expenses (300) (300) Net Investment Income 238,167 3,420,763 Employee contributions: Elected deferrals 2,723,859 2,674,626 Total Additions 2,962,026 6,095,389 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Distributions to participants and beneficiaries 1,886,224 2,406,761 NET INCREASE 1,075,802 3,688,628 NET ASSETS AVAILABLE FOR BENEFITS, JANUARY 1 32,897,287 29,208,659 NET ASSETS AVAILABLE FOR BENEFITS, DECEMBER 31 $33,973,089 $32,897,287 THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Page 8 NOTES TO FINANCIAL STATEMENTS December 31, 2011 And 2010 1. Summary of Significant Accounting Policies The significant accounting policies consistently applied by The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust (the “Plan”) in the preparation of the accompanying financial statements are summarized below: Basis of Accounting The financial statements of the Plan are prepared under the accrual basis of accounting. Benefit payments to participants or beneficiaries are recorded upon distribution. 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 Purchases and sales of mutual funds are recorded on the settlement date. Investments in mutual funds and allocated insurance contracts are valued at fair value based on quoted market prices. Investments in unallocated or trust, insurance contracts are valued at contract values reported by the insurance company, which approximate fair value. Notes receivable from participants are valued at the unpaid principal balances plus any accrued but unpaid interest, which approximate fair value. Payment of Benefits Benefits are recorded when paid. Subsequent Events Management has evaluated subsequent events through June 26, 2012, 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 9 2. Description of the Plan The following description of the Plan provides only general information. Participants should refer to the Plan agreement for a complete description of the Plan’s provisions. General The Plan is a defined contribution benefit plan covering substantially all employees of the District. The District’s Board of Trustees established the Plan in September 1996. The first contributions were made in October 1996. Plan provisions are established and may be amended by the District’s Board of Trustees. The District does not contribute to the Plan. 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, any amount not previously reduced or withheld from their total compensation. In accordance with the Internal Revenue Code Section 457 as amended, the Plan limits an individual’s annual contribution (adjusted annually) not to exceed $16,500 for the years ended December 31, 2011 and 2010. If the employee is over the age of 50, they can contribute an additional catch-up contribution up to $5,500 for the years ended December 31, 2011 and 2010. Underutilization catch-up of two times the standard annual deferral applies within the three years prior to normal retirement, less amounts deferred under the Plan. Amounts contributed by employees are deferred for federal and state income tax purposes until received as a withdrawal or distribution from the Plan. 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, 2011 and 2010, approximately 637 and 635 participants, respectively, actively participated in the Plan. THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Notes To Financial Statements (Continued) Page 10 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. Loans may not extend beyond a term of five years except for the purchase of a principal residence. Loans are secured by the balance of the participant’s account, bear interest at interest rates ranging from 4.25% to 9.25%, and are due at varying dates through February 2039. Principal and interest are paid ratably through payroll deductions. Investment Options Upon enrollment in the Plan, a participant may direct elective contributions and rollovers in any of the investment options available. The investment options consist of mutual funds and common/collective trust funds. 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: Vanguard Windsor II Fund, Vanguard Index 500 Fund, and Vanguard U.S. Growth Fund – Investment objective is long-term capital appreciation. Diversification option: Vanguard Small-Cap and Mid-Cap Index Fund and Vanguard International Growth Fund – Investment objective is long-term capital appreciation. Life Strategy option: Vanguard Life Strategy Growth Fund, Vanguard Life Strategy Moderate Growth Fund, Vanguard Life Strategy Conservative Growth Fund, and Vanguard Life Strategy Income Fund – During the fourth quarter of 2011, the Vanguard LifeStrategy Funds removed the Asset Allocation Fund and the Short-Term Investment Grade Fund from their allocation which will then become passive only. With the elimination of the Asset Allocation Fund, the LifeStrategy Funds will target a more consistent risk profile. As a result of this announcement, NEPC (the District’s Investment Advisor for the 457 Plan & Defined Contribution Plan) has issued a “Hold” recommendation on the funds. NEPC defines a hold recommendation as: Serious issues have surfaced which bring into question the viability of the product. Bond option: Vanguard Total Bond Market Index Fund – Investment objective is income stability and conservation of principal. Balanced option: Vanguard Balanced Index Fund – Investment objective is income, conservation of principal, and long-term growth. Stable Value option: Vanguard Retirement Savings Trust – 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 11 Money Market option: Vanguard Prime Money Market Fund – Investment objective is income while maintaining safety of principal. Target retirement option: Vanguard Target Retirement 2005-2050 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 All general administrative costs of the Plan are paid by The Metropolitan St. Louis Sewer District (the “District”), except those attributable to participants’ choice of optional investments or optional forms of benefit payments. These expenses are charged to the respective participants’ account balance. THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Notes To Financial Statements (Continued) Page 12 3. Investments Investments held by the custodians in the Plan’s name were as follows: December 31, 2011 2010 Mutual funds: Vanguard Group, Inc. Windsor II Fund $ 5,749,083 * $ 5,601,754 * Index 500 Fund 3,649,974 * 3,501,145 * Balanced Index Fund 3,453,057 * 3,698,326 * Total Bond Market Index Fund 2,992,208 * 2,496,035 * Vanguard U.S. Growth Fund 2,329,268 * 2,296,150 * Vanguard LifeStrategy Moderate Growth Fund 1,889,959 * 2,110,646 * Vanguard International Growth Fund 1,590,623 1,810,215 * Vanguard Mid-Cap Index Fund 1,490,398 1,649,966 * Vanguard Small-Cap Index Fund 1,475,902 1,699,212 * Vanguard LifeStrategy Growth Fund 1,096,518 1,188,075 Vanguard Prime Money Market Fund 1,003,927 1,034,387 Vanguard LifeStrategy Conservative Growth Fund 634,423 617,675 Vanguard LifeStrategy Income Fund 403,245 392,825 Target Retirement 2010 Fund 246,302 204,966 Target Retirement 2025 Fund 210,884 63,681 Target Retirement 2015 Fund 131,740 82,935 Target Retirement 2020 Fund 112,809 52,251 Target Retirement 2030 Fund 110,438 86,786 Target Retirement Income 104,736 45,698 Target Retirement 2040 Fund 96,346 66,536 Target Retirement 2035 Fund 46,217 48,809 Target Retirement 2045 Fund 35,155 29,334 Target Retirement 2050 Fund 29,722 77,295 Target Retirement 2005 Fund 6,881 - Total Mutual Funds 28,889,815 28,854,703 Common/collective trust: Vanguard Group, Inc. Retirement Savings Trust 3,570,598 * 2,632,225 (Continued) THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Notes To Financial Statements (Continued) Page 13 December 31, 2011 2010 Annuity contracts: Lincoln National Life Fixed earnings option: Lincoln National Fixed $ 360,962 $ 353,509 Variable earnings option: Special Opportunity Fund 141,794 151,130 Growth & Income Fund 128,540 128,392 Trend Fund 31,538 29,460 Capital Appreciation Fund 23,660 8,505 International Fund 23,507 24,791 Social Awareness Fund 10,747 10,792 Midcap Growth 6,135 6,450 Equity-Income Fund 3,235 3,355 Global Growth 2,717 3,015 Money Market Fund 475 20,321 Total Annuity Contracts 733,310 739,721 $33,193,723 $32,226,649 * Represents 5% or more of the Plan’s net assets at December 31, 2011 and 2010. 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 METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Notes To Financial Statements (Continued) Page 14 The tables below provide information on the duration and credit ratings associated with the Plan’s investment in debt-backed mutual funds, excluding obligations of the U.S. Government or obligations explicitly guaranteed by the U.S. government within these funds at December 31, 2011 and 2010: Debt Securities Interest Rate and Credit Risk Plan Investments Fair Not Average Effective Duration With Debt Securities Value Rated In Years December 31, 2011: Vanguard Group, Inc. Balanced Index Fund $3,453,057 yes 5.10 Total Bond Market Index Fund 2,992,208 yes 5.10 ** Prime Money Market Fund 1,003,927 yes 0.15 Life Strategy Moderate Growth Fund 1,889,959 yes 5.10 Retirement Savings Trust 3,570,598 yes 2.62 Life Strategy Conservative Growth Fund 634,423 yes 5.10 Life Strategy Income Fund 403,245 yes 4.10 Target Retirement 2005 Fund 6,881 yes 6.10 Target Retirement 2010 Fund 246,302 yes 5.80 Target Retirement 2015 Fund 131,740 yes 5.30 Target Retirement 2020 Fund 112,809 yes 5.10 Target Retirement 2025 Fund 210,884 yes 5.10 Target Retirement 2030 Fund 110,438 yes 5.10 Target Retirement 2035 Fund 46,217 yes 5.10 Target Retirement 2040 Fund 96,346 yes 5.10 Target Retirement 2045 Fund 35,155 yes 5.10 Target Retirement 2050 Fund 29,722 yes 5.10 Target Retirement Income 104,736 yes 6.10 Lincoln National Life yes Fixed (annuity contracts) 360,962 yes * Lincoln Money Market Fund 475 yes * * Information is unavailable for this mutual fund. **See First Tier section in the SEC Rule 2a-7 Money Market Reform. THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Notes To Financial Statements (Continued) Page 15 Plan Investments Fair Not Average Effective Duration With Debt Securities Value Rated In Years December 31, 2010: Vanguard Group, Inc. Balanced Index Fund $ 3,698,326 yes 5.00 Total Bond Market Index Fund 2,496,035 yes 5.00 Prime Money Market Fund 1,034,387 yes 0.15 Life Strategy Moderate Growth Fund 2,110,646 yes 5.00 Retirement Savings Trust 2,632,225 yes 2.73 Life Strategy Conservative Growth Fund 617,675 yes 3.80 Life Strategy Income Fund 392,825 yes 4.10 Target Retirement 2010 Fund 204,966 yes 4.90 Target Retirement 2015 Fund 82,935 yes 4.80 Target Retirement 2020 Fund 52,251 yes 5.00 Target Retirement 2025 Fund 63,681 yes 5.00 Target Retirement 2030 Fund 86,786 yes 5.00 Target Retirement 2035 Fund 48,809 yes 5.00 Target Retirement 2040 Fund 66,536 yes 5.00 Target Retirement 2045 Fund 29,334 yes 5.00 Target Retirement 2050 Fund 77,295 yes 5.00 Target Retirement Income 45,698 yes 5.00 Lincoln National Life yes Fixed (Annuity Contracts) 353,508 yes * Lincoln Money Market Fund 20,321 yes * * Information is unavailable for this mutual fund. 4. Risks and Uncertainties The Plan invests in various investment securities. 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 Statement of Plan Net Assets. THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Notes To Financial Statements (Continued) Page 16 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. 5. 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 those investments as defined by the Plan. Transactions in such investments qualify as party-in-interest transactions which are exempt from the prohibited transaction rules. 6. Tax Status The Plan received a favorable determination letter from the Internal Revenue Service 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 Page 17 SUPPLEMENTAL INFORMATION HISTORICAL TREND INFORMATION For The Distributions To Increase Years Ended Employee Net Investment Participants (Decrease) December 31 Contributions Income (Loss) And Beneficiaries In Net Assets 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 2009 2,685,427 4,837,406 (972,044) 6,550,789 2008 2,723,760 (7,663,384) (1,168,917) (6,108,541) 2007 2,595,532 1,500,519 (1,442,611) 2,653,440 2006 2,479,067 2,790,431 (1,405,638) 3,863,860 2005 2,203,103 1,311,662 (670,007) 2,844,758 2004 2,050,893 1,909,831 (792,780) 3,167,944 2003 2,041,688 2,746,391 (1,238,629) 3,549,450 2002 2,133,784 (2,095,283) (1,819,333) (1,780,832) THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Page 18 INVESTMENT RETURNS AND EXPENSE RATIOS An independent investment consultant, New England Pension Consultants, 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 performance for the years 2011 and 2010 as compared to the appropriate benchmarks as well as their current expense ratios: Returns Net of Fees* Funds / Benchmarks Expense Ratios 2011 2010 Prime Money Market Investment Retirement Savings Trust 90-day T-Bills Bankers Trust 3-Year Guaranteed Investment Contract Rate 0.20 0.31 0.0 3.0 .1 2.4 0 0.1 3.0 .1 3.4 0 Total Bond Market Index BarCap US Aggregate Bond Index 0.22 7.6 7.8 6.4 6.5 Balanced Index Fund 60% Standard & Poor’s 500/ 40% BarCap Agg Index 0.26 4.1 4.7 13.1 12.1 Life Strategy Income Dow Jones U.S. Moderate Conservative Portfolio 0.13 3.8 5.1 9.2 11.9 Life Strategy Conservative Growth Dow Jones U.S. Moderate Conservative Portfolio 0.15 1.8 2.6 11.1 11.9 Life Strategy Moderate Growth Dow Jones U.S. Moderate Portfolio 0.16 .3 1.4 13.3 11.9 Life Strategy Growth Russell 1000 0.17 -2.3 1.4 15.1 16.7 Vanguard 500 Index Standard & Poor’s 500 Index 0.17 2.0 2.1 14.9 15.1 Windsor II Fund Russell 1000 Value Index 0.35 2.7 .4 10.6 15.5 U.S. Growth Russell 1000 Growth Index 0.44 -.7 2.6 11.5 16.7 Mid Cap Index Russell Mid Cap Index 0.26 -2.1 -1.9 25.5 25.7 Small Cap Index Russell 2000 Index 0.31 -2.8 -2.8 27.7 27.8 International Growth Inv Citigroup PMI EPAC Index MSCI EAFE Index Redemption Fee: 2% if held< 2 mos 0.47 -13.7 -13.7 15.7 11.2 Vanguard Target Retirement Income Vanguard Retirement Income Benchmark 0.17 5.3 5.3 9.4 9.4 THE METROPOLITAN ST. LOUIS SEWER DISTRICT DEFERRED COMPENSATION PLAN AND TRUST Page 19 INVESTMENT RETURNS AND EXPENSE RATIOS (CONTINUED) Returns Net of Fees* Funds / Benchmarks Expense Ratios 2011 2010 Vanguard Target Retirement 2005 (Closed 2011) Vanguard Target 2005 Benchmark 0.17 5.1 4.9 9.7 10.0 Vanguard Target Retirement 2010 Vanguard Target 2010 Benchmark 0.17 3.4 3.2 11.4 11.6 Vanguard Target Retirement 2015 Vanguard Target 2015 Benchmark 0.17 1.7 1.5 12.5 12.6 Vanguard Target Retirement 2020 Vanguard Target 2020 Benchmark 0.17 .6 .9 13.1 13.3 Vanguard Target Retirement 2025 Vanguard Target 2025 Benchmark 0.18 -.4 0.0 13.8 13.9 Vanguard Target Retirement 2030 Vanguard Target 2030 Benchmark 0.18 -1.3 -.9 14.4 14.5 Vanguard Target Retirement 2035 Vanguard Target 2035 Benchmark 0.19 -2.2 -1.9 15.1 15.2 Vanguard Target Retirement 2040 Vanguard Target 2040 Benchmark 0.19 -2.5 -2.1 15.2 15.2 Vanguard Target Retirement 2045 Vanguard Target 2045 Benchmark 0.19 -2.5 -2.1 15.2 15.2 Vanguard Target Retirement 2050 Vanguard Target 2050 Benchmark 0.19 -2.5 -2.1 15.2 15.2 Vanguard Target Retirement 2055 Vanguard Target 2055 Benchmark 0.19 -2.3 -2.1 15.2 15.2 *The returns shown above are net of fees as reported by the managers. Certain participants with assets valued at $733,310 and $739,721 in 2011 and 2010, respectively, are invested in a series of fixed and variable rate annuity contracts sponsored by Lincoln National Life Insurance Company. 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.