HomeMy Public PortalAbout2016 Audited Financial
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
DEFERRED COMPENSATION PLAN
AND TRUST
FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
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
CliftonLarsonAllen LLP
CLAconnect.com
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 2016 financial statements of The Metropolitan St. Louis Sewer
District Deferred Compensation Plan and Trust (the Plan), which comprise the statement of fiduciary
net position as of December 31, 2016, and the related statement of changes in fiduciary net position for
the year 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 2016 financial statements based on our audit. We
conducted our audit 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 2016 financial statements referred to above present fairly, in all material respects,
the fiduciary net position of the Plan as of December 31, 2016, and the changes in fiduciary net position
for the year then ended, in accordance with accounting principles generally accepted in the United
States of America.
Other Matters
The financial statements of The Metropolitan St. Louis Sewer District Deferred Compensation Plan and
Trust as of December 31, 2015, were audited by predecessor auditors whose report dated July 6,
2016, expressed an unmodified opinion on those financial statements.
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 3 through 6 and supplemental schedules on pages
20 through 22 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.
CliftonLarsonAllen LLP
St. Louis, Missouri
August 29, 2017
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 3
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Years Ended December 31, 2016 and 2015
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, 2016 and 2015. Please
read it in conjunction with the Plan’s financial statements.
FINANCIAL HIGHLIGHTS 2016
Net position restricted for plan benefits exceeded $54.9M at the end of 2016 and the net
position value increased by approximately $4.9M from that of December 31, 2015, due to an
increase in participant contributions and an increase in the overall value of equity investments
that resulted from an increase in the various markets offset by an increase in distributions to
participants and beneficiaries.
Contributions from participants were approximately $3.8M, which was an increase of
$315,495 as compared with prior year contributions.
Distributions to participants and beneficiaries were approximately $2.9M, which was an
increase of $487,045 as compared with prior year distributions.
The increase in the fair value of investments in 2016 was approximately $2.5M whereas the
fair value of investments decreased approximately $1.7M in 2015.
FINANCIAL HIGHLIGHTS 2015
Net position restricted for plan benefits exceeded $50.0M at the end of 2015 and the net
position value increased by approximately $1.1M from that of December 31, 2014, due to an
increase in participant contributions and a decrease in distributions to participants and
beneficiaries offset by a decrease in the overall value of equity investments that resulted from
a decrease in the various markets.
Contributions from participants were approximately $3.5M, which was an increase of
approximately $455,000 as compared with prior year contributions.
Distributions to participants and beneficiaries were approximately $2.4M, which was a
decrease of approximately $1.5M as compared with prior year distributions.
The decrease in the fair value of investments in 2015 was approximately $1.7M whereas the
fair value of investments increased approximately $2.0M in 2014.
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 assets allocation as of December 31, 2016 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:
Number Of Active
December 31, Participants
2016
2015
740
731
2016 2015 Change
Net Investment Income $ 3,944,851 $ 17,327 $ 3,927,524
Contributions and Other Additions 3,962,177 3,584,552 377,625
Total Additions $ 7,907,028 $ 3,601,879 $ 4,305,149
2016 2015 Change
Distributions to Participants $ 2,882,750 $ 2,395,705 $ 487,045
Administrative Expenses and Legal Fees 108,985 103,511 5,474
Total Deductions $ 2,991,735 $ 2,499,216 $ 492,519
2016 2015 Change
Net Increase $ 4,915,293 $ 1,102,663 $ 3,812,630
Net Position Restricted for Benefits, January 1 50,031,817 48,929,154 1,102,663
Net Position Restricted for Benefits, December 31 $ 54,947,110 $ 50,031,817 $ 4,915,293
Net Position
Plan Deductions
Plan Additions
Plan Additions, Deductions, and Net Position are as follows:
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
2016 2015
ASSETS
Investments at Fair Value:
Mutual Funds 49,616,224$ 44,783,043$
Annuity Contracts 463,516 522,022
Total Investments at Fair Value 50,079,740 45,305,065
Investments at Contract Value:
Common/Collective Trust 3,747,612 3,619,703
Total Investments 53,827,352 48,924,768
Notes Receivable from Participants 1,119,758 1,107,049
NET POSITION RESTRICTED FOR PLAN BENEFITS
December 31,
54,947,110$ 50,031,817$
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
2016 2015
ADDITIONS TO NET POSITION ATTRIBUTED TO:
Investment Income:
Interest and Dividends on Investments 1,526,962$ 1,847,769$
Interest Income on Participant Loans 46,419 48,437
Net Appreciation (Depreciation) in Fair Value of Investments 2,513,292 (1,736,633)
Total Investment Income 4,086,673 159,573
Less: Investment Expenses 141,822 142,246
Net Investment Income 3,944,851 17,327
Contributions and Other Additions:
Emplo yee Contributions 3,796,536 3,481,041
Emplo yer Contributions 56,656 —
Plan Expenses Paid by Emplo yer 108,985 103,511
Total Contributions and Other Additions 3,962,177 3,584,552
Total Additions 7,907,028 3,601,879
DEDUCTIONS FROM NET POSITION ATTRIBUTED TO:
Distributions to Participants and Beneficiaries 2,882,750 2,395,705
Administrative Expenses 100,860 100,395
Le gal Fees 8,125 3,116
Total Deductions 2,991,735 2,499,216
NET INCREASE 4,915,293 1,102,663
NET POSITION RESTRICTED FOR BENEFITS, January 1 50,031,817 48,929,154
NET POSITION RESTRICTED FOR BENEFITS, December 31 54,947,110$ 50,031,817$
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, 2016 And 2015
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 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 $957,448 and $1,120,446
were recorded in the periods ended December 31, 2016 and 2015, 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.
Recently Issued Accounting Standards
During calendar year 2016, the Plan implemented Governmental Accounting Standards Board
(“GASB”) Statement No. 72, Fair Value Measurement and Application. This Statement
supersedes selected paragraphs and footnotes and amends selected paragraphs in various
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 10
Statements of the Governmental Accounting Standards Board. The primary objective of this
Statement is to improve financial reporting by state and local governments by clarifying the
definition of fair value for financial reporting purposes, establishing general principles for
measuring fair value, providing additional fair value application guidance, and enhancing
disclosures about fair value measurements. The disclosures required by this Statement are
presented in Footnote 4, Fair Value Measurement and Application.
Subsequent Events
Management has evaluated subsequent events through August 29, 2017, the date through
which the financial statements were available for issue.
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 $18,000 for the years ended December 31, 2016 and 2015. 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, 2016 and 2015.
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. Employees
are not permitted to take advantage of both special options in the same year.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 11
Based on a District audit of deferred compensation plan contributions, it was determined that
not all of the Vanguard election deferrals matched the percentages being deducted by the
District. To adjust for this discrepancy, in 2016 the District contributed $56,657, representing
25% of the missed 2011-2015 deferral contributions for those employees affected, to the
impacted employees’ accounts. In addition, $10,643 in interest was also contributed to the
employees’ accounts.
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, 2016 and 2015, 740 and 731 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, 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 12
Vanguard offers participants in the Plan the following investment options:
Equity option (Large Cap): Vanguard Windsor II Fund, Vanguard 500 Index Fund, and
Vanguard U.S. Growth Fund - Investment objective is long-term capital appreciation.
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.
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 - 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): Vanguard Target Retirement 2010-2060 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
Reclassifications
Certain amounts in the 2015 financial statements have been reclassified to conform with the
2016 presentation. These reclassifications do not affect net assets available for benefits as
previously reported.
3. Investments
Investment Balances
Investments held by custodians in the Plan’s name are as follows:
2016 2015
Mutual Funds:
Vanguard Group, Inc.
Windsor II Fund 8,714,375$ * 8,104,711$ *
500 Index Fund 7,514,295 * 6,600,302 *
Balanced Index Fund 4,743,095 * 4,025,918 *
U.S. Growth Fund 4,370,927 * 4,857,609 *
Total Bond Market Index Fund 3,492,248 * 2,654,549 *
Mid-Cap Index Fund 3,087,977 * 2,624,550 *
Target Retirement 2025 Fund 2,459,312 2,392,133
Small-Cap Index Fund 2,412,321 2,424,519
Target Retirement 2020 Fund 2,341,653 2,050,649
International Growth Fund 1,987,702 2,028,576
Prime Money Market Fund 1,802,269 1,693,619
Target Retirement 2035 Fund 1,473,888 1,149,190
Target Retirement 2030 Fund 1,226,969 1,029,532
Target Retirement 2045 Fund 894,336 613,047
Target Retirement 2040 Fund 791,929 666,825
Target Retirement 2015 Fund 738,833 679,306
Target Retirement 2010 Fund 553,479 536,227
Target Retirement 2050 Fund 440,290 291,959
Target Retirement Income Fund 435,731 294,180
Target Retirement 2055 Fund 80,885 39,500
Target Retirement 2060 Fund 53,710 26,142
Total Mutual Funds 49,616,224 44,783,043
Common/collective trust:
Vanguard Group, Inc.
Retirement Savings Trust 3,747,612 * 3,619,703 *
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, 2016 or 2015, 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
$463,516 and $522,022 at December 31, 2016 and 2015, respectively. The Lincoln National
Life option was phased out in 1992, and any balances represent undistributed participant
balances. This option is no longer available to new participants or for current deferrals.
Categories of Asset Risk - Debt Securities Interest Rate and Credit Risk
The Plan will minimize the risk that the market value of securities in the portfolio will fall due
to changes in general interest rates by selecting mutual funds for the investment portfolio that
manage credit quality and duration of fixed income investments.
The Plan will minimize credit risk, the risk of loss due to failure of the security issuer or
backer, by selecting mutual funds for the investment portfolio that manage their respective
fund under a predetermined average credit risk investment management policy.
The following tables provide information on the duration and credit ratings associated with
the Plan’s investments with debt securities, excluding obligations of the U.S. Government or
obligations explicitly guaranteed by the U.S. Government within these funds at December 31,
2016 and 2015:
2016 2015
Annuity Contracts:
Lincoln National Life
Fixed Earnings Option:
Fixed Account 174,967$ 169,124$
Variable Earnings Option:
Growth & Income Fund 146,999 146,932
Special Opportunity Fund 141,550 129,783
Capital Appreciation Fund — 35,347
Social Awareness Fund — 18,450
Mid-Cap Growth — 10,509
Global Growth — 4,508
Equity-Income Fund — 4,224
International Fund — 2,690
Money Market Fund — 455
Total Annuity Contracts 463,516 522,022
Total Investments 53,827,352$ 48,924,768$
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 15
Credit Quality Percentage of Total Plan Investments-2016
Average Percentage
Effective of Debt
Plan Investments Fair Percentage Duration Not
With Debt Securities Value of Debt In Years Rated
December 31, 2016:
Vanguard Group, Inc.
Balanced Index Fund 4,370,927$ 39% 6.01 3.55%
Retirement Savings Trust 3,747,612 91% 2.81 0.00%
Total Bond Market Index Fund 3,492,248 98% 6.02 0.57%
Target Retirement 2025 Fund 2,412,321 34% 6.48 0.28%
Target Retirement 2020 Fund 2,341,653 42% 6.29 0.27%
Prime Money Market Fund 1,802,269 3% * 0.00%
Target Retirement 2035 Fund 1,473,888 19% 6.48 0.19%
Target Retirement 2030 Fund 1,226,969 26% 6.48 0.26%
Target Retirement 2045 Fund 738,833 10% 6.49 0.01%
Target Retirement 2040 Fund 791,929 12% 6.48 0.14%
Target Retirement 2015 Fund 894,336 53% 5.80 0.95%
Target Retirement 2010 Fund 553,479 67% 5.59 0.22%
Target Retirement 2050 Fund 435,731 10% 6.48 0.00%
Target Retirement Income Fund 440,290 68% 5.55 0.28%
Target Retirement 2055 Fund 80,885 10% 6.48 0.00%
Target Retirement 2060 Fund 53,710 10% 6.47 0.00%
Lincoln National Life
Fixed (Annuity Contracts)174,967 * * *
* Information is unavailable for this security.
The average effective duration only applies to the debt portion of the investment.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 16
Credit Quality Percentage of Total Plan Investments-2015
Average Percentage
Effective of Debt
Plan Investments Fair Percentage Duration Not
With Debt Securities Value of Debt In Years Rated
December 31, 2015:
Vanguard Group, Inc.
Balanced Index Fund 4,025,918$ 39% 5.79 4.30%
Retirement Savings Trust 3,619,703 94% 2.78 0.10%
Total Bond Market Index Fund 2,654,549 97% 5.79 1.43%
Target Retirement 2025 Fund 2,392,133 33% 6.24 0.49%
Target Retirement 2020 Fund 2,050,649 40% 6.17 0.52%
Prime Money Market Fund 1,693,619 4% * 0.93%
Target Retirement 2035 Fund 1,149,190 18% 6.23 0.45%
Target Retirement 2030 Fund 1,029,532 25% 6.24 0.51%
Target Retirement 2015 Fund 679,306 49% 5.68 0.93%
Target Retirement 2040 Fund 666,825 11% 6.23 0.42%
Target Retirement 2045 Fund 613,047 10% 6.24 0.30%
Target Retirement 2010 Fund 536,227 62% 5.47 0.83%
Target Retirement Income Fund 294,180 65% 5.43 0.36%
Target Retirement 2050 Fund 291,959 10% 6.24 0.35%
Target Retirement 2055 Fund 39,500 10% 6.24 0.31%
Target Retirement 2060 Fund 26,142 10% 6.24 0.31%
Lincoln National Life
Fixed (Annuity Contracts) 169,124 * * *
Money Market Fund 455 * * *
* Information is unavailable for this security.
The average effective duration only applies to the debt portion of the investment.
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 recurring fair value measurements as of December 31, 2016 and
2015:
Mutual fund investments of $49,616,224 and $44,783,043, respectively, are valued
using quoted market prices (Level 1 inputs).
Annuity contract investments of $463,516 and $522,022, 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 Partici pants Increase
Years Ended Expenses Paid Net Investment And Plan (Decrease)
December 31, By Employer Income (Loss) Expenses In Net Position
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
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
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, Pavilion Advisory Group 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 2016 and 2015 as compared to the
appropriate benchmarks, as well as their current expense ratios:
Funds / Benchmarks Expense Ratios 2016 2015
Vanguard Prime Money Market 0.5 0.0
BofA Merrill Lynch 3 Month U.S. T-Bill 0.3 0.1
Vanguard Retirement Savings Trust 1.9 1.9
Ryan 3yr Guaranteed Investment Contract Master 1.4 1.2
Vanguard Total Bond Market Index 2.5 0.3
Vanguard Total Bond Market Index Fund Benchmark 2.8 0.4
Vanguard Balanced Index 8.6 0.4
Vanguard Balanced Index Fund Benchmark 8.8 0.6
Vanguard Windsor II 13.4 -3.2
Russell 1000 Value Index 17.3 -3.8
Vanguard 500 Index 11.8 1.2
Standard & Poor’s 500 12.0 1.4
Vanguard U.S. Growth -0.7 8.5
Russell 1000 Growth Index 7.1 5.7
Vanguard Mid-Cap Index 11.1 -1.5
Vanguard Mid-Cap Index Fund Blended Benchmark 11.2 -1.3
Vanguard Small-Cap Index 18.2 -3.8
Vanguard Small-Cap Index Fund Blended Benchmark 18.3 -3.7
Vanguard International Growth 1.7 -0.7
MSCI AC World Ex USA (Net) 4.5 -5.7
0.20
0.20
0.46
0.46
Returns Net of Fees*
0.16
0.22
0.33
0.16
0.10
0.53
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 returns shown above are net of fees as reported by the managers.
Funds / Benchmarks Ex pense Ratios 2016 2015
Vanguard Target Retirement Income 5.3 -0.2
Vanguard Target Income Composite Index (Net) 5.4 0.1
Vanguard Target Retirement 2010 5.2 -0.2
Vanguard Target 2010 Composite Index (Net) 5.4 0.0
Vanguard Target Retirement 2015 6.2 -0.5
Vanguard Target 2015 Composite Index (Net) 6.4 -0.2
Vanguard Target Retirement 2020 6.9 -0.7
Vanguard Target 2020 Composite Index (Net) 7.2 -0.4
Vanguard Target Retirement 2025 7.5 -0.8
Vanguard Target 2025 Composite Index (Net) 7.7 -0.6
Vanguard Target Retirement 2030 7.9 -1.0
Vanguard Target 2030 Composite Index (Net) 8.1 -0.8
Vanguard Target Retirement 2035 8.3 -1.3
Vanguard Target 2035 Composite Index (Net) 8.6 -1.0
Vanguard Target Retirement 2040 8.7 -1.6
Vanguard Target 2040 Composite Index (Net) 9.0 -1.2
Vanguard Target Retirement 2045 8.9 -1.6
Vanguard Target 2045 Composite Index (Net) 9.1 -1.3
Vanguard Target Retirement 2050 8.9 -1.6
Vanguard Target 2050 Composite Index (Net) 9.1 -1.3
Vanguard Target Retirement 2055 8.9 -1.7
Vanguard Target 2055 Composite Index (Net) 9.1 -1.3
Vanguard Target Retirement 2060 8.8 -1.7
Vanguard Target 2060 Composite Index (Net) 9.1 -1.3
Returns Net of Fees*
0.13
0.13
0.14
0.16
0.14
0.16
0.14
0.15
0.15
0.16
0.16
0.16