HomeMy Public PortalAbout2012 Audited Financials
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2012 and 2011
Contents
Page
Independent Auditors’ Report ..................................................... 1 - 2
Management’s Discussion And Analysis ..................................... 3 - 7
Financial Statements
Statements of Plan Net Position ...................................................... 8
Statements of Changes in Plan Net Position ................................... 9
Notes to Financial Statements ................................................ 10 - 18
Supplemental Information
Expense Ratios .............................................................................. 19
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 Statement of Plan Net Position of The Metropolitan St. Louis
Sewer District Defined Contribution Plan (the Plan) as of December 31, 2012 and 2011, and the
related Statement of Changes in Plan Net Position for the years then ended, which collectively
comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility For The Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Board of Trustees
The Metropolitan St. Louis Sewer District
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
plan net position of The Metropolitan St. Louis Sewer District Defined Contribution Plan as of
December 31, 2012 and 2011, and the changes in plan net position for the years then ended in
accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 3 through 7 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.
Other Information
Our audit was conducted for the purpose of forming an opinion on the Plan’s financial statements.
The supplemental information which includes expense ratios are presented for purposes of additional
analysis and are not a required part of the basic financial statements. The supplemental information
is the responsibility of management and was derived from and relates directly to the underlying
accounting and other records used to prepare the basic financial statements. The supplemental
information has not been subjected to the auditing procedures applied in the audit of the basic
financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
June 18, 2013
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Page 3
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Year Ended December 31, 2012
This report consists of a series of financial statements related to The Metropolitan St. Louis Sewer
District’s Defined Contribution Plan (the Plan). The Statement of Plan Net Position and the
Statement of Changes in Plan Position (on pages 8 and 9) 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 fiscal year ended December 31, 2012 and 2011.
Please read it in conjunction with the Plan’s financial section.
FINANCIAL HIGHLIGHTS 2012
• Effective January 1, 2011, the Plan was established per Ordinance 13180. This plan allows
the Metropolitan St. Louis Sewer District (the District) to encourage its employees to
establish a regular method of savings and to create a fund available for their use at retirement
or in the event of death. Initial participation consisted of twenty-three employees who
transferred balances totaling $70,869 from The Metropolitan St. Louis Sewer District
Employees’ Pension Plan. Per the Ordinance, all new employees are entitled to participate in
the Plan and the employer match. At December 31, the Plan consisted of 134 participants
with account balances nearing $650,000 in net position.
• Total increase to the Plan’s net position (page 9) amounted to $443,906 consisting of Plan
contributions and other additions of $420,158 offset by deductions of $20,642 and net
investment gains of $44,390.
• Administrative expenses (deductions to the Plan’s net position) totaled $20,601. This
consisted primarily of Vanguard record-keeping and compliance testing of $20,150. The
balance was made up of legal fees related to compliance.
FINANCIAL HIGHLIGHTS 2011
• Initial participation in the Plan consisted of twenty-three employees who transferred balances
totaling $70,869 from the Metropolitan St. Louis Sewer District Employees’ Pension Plan. At
December 31, the Plan consisted of 70 participants with account balances totaling over
$203,000 in net position.
• Total increase to the Plan’s net position amounted to $203,721 consisting of Plan
contributions and other additions of $239,482 offset by deductions of $30,568 and net
investment losses of $5,193.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Management’s Discussion And Analysis (Continued)
Page 4
• Administrative expenses (deductions to the Plan’s net position) totaled $25,734. This
consisted primarily of Vanguard record-keeping and compliance testing of $14,843. The
balance was made up of legal fees related to the research, development and spin-off of the
newly created Plan from the Employees’ Pension Plan.
ANALYSIS OF FINANCIAL ACTIVITIES
• The Plan had a fair value gain in investments of $23,691. This included all investment funds
except the Vanguard LifeStrategy Income Fund, which showed a slight loss of $32. The
Vanguard Target Retirement 2045 Fund had the greatest gain in value for any one individual
fund at $4,621. The group of Vanguard Target Retirement Funds, in the aggregate, had a gain
in value of $14,840. These funds also make up nearly 61% of the value in the Plan. See the
chart below for the annual change in value for each fund.
Value at
December 31 Net
Fund Name Cost 2012 Change
Vanguard Target Retirement 2045 104,005$ 108,626$ 4,621$ 17.32 %
Vanguard Target Retirement 2050 55,100 57,723 2,623 9.20
Vanguard Target Retirement 2040 53,694 56,174 2,480 8.96
Vanguard Target Retirement 2025 64,312 66,723 2,411 10.64
Vanguard Sm-Cap Index Inv 35,437 37,766 2,329 6.02
Vanguard 500 Index Inv 29,514 31,357 1,843 5.00
Vanguard Target Retirement 2035 43,026 44,704 1,678 7.13
Vanguard Mid-Cap Index Fd Inv 25,378 26,707 1,329 4.26
Vanguard Int'l Growth Fund Inv 22,273 23,081 808 3.68
Vanguard Balanced Index Inv 13,509 14,245 736 2.27
Vanguard Windsor II Fund Inv 10,816 11,535 719 1.84
Vanguard Target Retirement 2020 14,106 14,435 329 2.30
Vanguard Target Retirement 2030 16,795 17,119 324 2.73
Vanguard U.S. Growth Inv 4,337 4,658 321 0.74
Vanguard Target Retirement Inc 11,183 11,494 311 1.83
Vanguard LifeStrategy Growth Fund 12,940 13,245 305 2.11
Vanguard Total Bd Mkt Indx Inv 34,408 34,665 257 5.53
Vanguard LifeStrategy Conserv Growth 10,379 10,511 132 1.68
Vanguard LifeStrategy Mod Growth 6,515 6,619 104 1.06
Vanguard Target Retirement 2055 4,043 4,091 48 0.65
Vanguard Target Retirement 2015 1,051 1,066 15 0.17
Vanguard Prime Money Mkt 1,849 1,849 - 0.29
Vanguard Retirement Savings Trust 26,330 26,330 - 4.20
Vanguard LifeStrategy Income Fund 2,555 2,523 (32) 0.40
Totals 603,555$ 627,246$ 23,691$ 100.00 %
Change in Fund Asset Values
% of Current
Value
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Management’s Discussion And Analysis (Continued)
Page 5
Change in Fund Asset Values
Value at
December 31 Net
Fund Name Cost 2011 Change
Vanguard Target Retirement 2045 24,620$ 23,851$ (769)$ 12.31 %
Vanguard Target Retirement 2050 13,462 13,031 (431) 6.73
Vanguard Target Retirement 2040 9,824 9,716 (108) 5.02
Vanguard Target Retirement 2025 27,346 26,101 (1,245) 13.47
Vanguard Sm-Cap Index Inv 18,591 17,356 (1,235) 8.96
Vanguard 500 Index Inv 12,459 12,116 (343) 6.25
Vanguard Target Retirement 2035 10,590 10,154 (436) 5.24
Vanguard Mid-Cap Index Fd Inv 13,100 12,276 (824) 6.34
Vanguard Int'l Growth Fund Inv 12,931 11,083 (1,848) 5.72
Vanguard Balanced Index Inv 7,430 7,367 (63) 3.80
Vanguard Windsor II Fund Inv 3,842 3,782 (60) 1.95
Vanguard Target Retirement 2020 1,064 1,048 (16) 0.54
Vanguard Target Retirement 2030 6,638 6,369 (269) 3.29
Vanguard U.S. Growth Inv 2,221 2,093 (128) 1.08
Vanguard Target Retirement Inc 4,713 4,699 (14) 2.43
Vanguard LifeStrategy Growth Fund 7,127 6,666 (461) 3.44
Vanguard Total Bd Mkt Indx Inv 9,554 9,767 213 5.04
Vanguard LifeStrategy Conserv Growth 4,960 4,864 (96) 2.51
Vanguard LifeStrategy Mod Growth 2,706 2,591 (115) 1.34
Vanguard Target Retirement 2055 - - - -
Vanguard Target Retirement 2015 - - - -
Vanguard Prime Money Mkt 549 549 - 0.28
Vanguard Retirement Savings Trust 7,041 7,041 - 3.63
Vanguard LifeStrategy Income Fund 1,225 1,216 (9) 0.63
Totals 201,993$ 193,736$ (8,257)$ 100.00 %
% of Current
Value
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Management’s Discussion And Analysis (Continued)
Page 6
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 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 2012 follows:
$382,153
61%
$32,899
5%
$28,178
4%
$34,665
6%
$14,245
2%
$47,551
8%
$64,474
10%
$23,081
4%Target
LifeStrategy
Capital
Preservation
Fixed Income
Balanced
Large Cap
Small/Mid Cap
International
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Management’s Discussion And Analysis (Continued)
Page 7
2012 2011 Percent
Change
Contributions and Other Additions 420,158$ 239,482$ 75%
Net Investment Gain/Loss 44,390 (5,193) -955%
Total Additions 464,548 234,289 98%
2012 2011 Percent
Change
Distribution to Participants 41 4,834 -99%
Administrative Expenses 20,601 25,734 -20%
Total Deductions 20,642 30,568 -32%
2012 2011 Percent
Change
Net Increase 443,906 203,721 118%
Net Position Restricted for Plan Benefits, January 1 203,721 - 100%
Net Position Restricted for Plan Benefits, December 31 647,627$ 203,721$ 218%
Plan Additions, Deductions, and Net Position are as follows:
Plan Additions for 2012, 2011
Plan Deductions for 2012, 2011
Net Position for 2012, 2011
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 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:
Brenda Schaefer, Secretary-Treasurer
The Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103-2555
E-mail: bschaefer@stlmsd.com
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
See the accompanying notes to financial statements. Page 8
STATEMENTS OF PLAN NET POSITION
2012 2011
ASSETS
Investments at fair value:
Mutual Funds 600,916$ 186,695$
Investments at contract value:
Common/collective trust 26,330 7,041
Total Investments 627,246 193,736
Receivables
Employer Contributions 20,381 9,985
Total Receivables 20,381 9,985
NET POSITION RESTRICTED FOR PLAN BENEFITS 647,627$ 203,721$
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
See the accompanying notes to financial statements. Page 9
STATEMENTS OF CHANGES IN PLAN NET POSITION
2012 2011
ADDITIONS TO NET POSITION ATTRIBUTED TO:
Investment income:
Net appreciation (depreciation) in fair value of
investments 32,207$ (8,504)$
Interest and dividends 12,900 3,559
Total Investment gain (loss)45,107 (4,945)
Less - investment managers' and advisors' fees 717 248
Net Investment gain (loss)44,390 (5,193)
Contributions and Other Additions:
Employer contributions 419,948 167,298
Transfers from Employee's Pension Plan 210 70,869
Other Additions - 1,315
Total Contributions and Other Additions 420,158 239,482
Total Additions 464,548 234,289
DEDUCTIONS FROM NET POSITION ATTRIBUTED TO:
Distributions to participants and beneficiaries 41 4,834
Administrative expenses 20,601 25,734
Total Deductions 20,642 30,568
NET INCREASE 443,906 203,721
NET POSITION RESTRICTED FOR PLAN BENEFITS,
January 1 203,721 -
NET POSITION RESTRICTED FOR PLAN BENEFITS,
December 31 647,627$ 203,721$
For the Years
Ended December 31
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Page 10
NOTES TO FINANCIAL STATEMENTS
December 31, 2012 And 2011
1. Summary of Accounting Policies
The following accounting policies, which conform to generally accepted accounting
principles, have been used consistently in the preparation of The Metropolitan St. Louis
Sewer District’s Defined Contribution Plan’s (the Plan) financial reports.
Basis of Accounting
The financial reports of the Plan are prepared under the accrual method of accounting.
Estimates and Assumptions
The preparation of financial reports in conformity with generally accepted accounting
principles requires management 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 reports and the reported amounts of additions and deductions during the
reporting period. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan’s investments in mutual funds 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.
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 (losses) of $262 and ($248) are
included in net appreciation (depreciation) in fair value of investments for the periods ended
December 31, 2012 and 2011, respectively.
Payment of Benefits
Benefits are recorded when paid.
Subsequent Events
Management has evaluated subsequent events through June 18, 2013, the date through which
the financial statements were available for issue.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 11
2. Description of 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 benefit plan established by the District’s Board of Trustees
through Ordinance 13180 and became effective January 1, 2011. The following employees
are eligible to participate in the Plan: (i) employees first hired on or after January 1, 2011, and
(ii) employees hired prior to January 1, 2011 who elect to terminate participation in the
Metropolitan St. Louis Sewer District Employees’ Pension Plan, effective as of April 1, 2011,
in accordance with the provisions of such Pension Plan, and (iii) employees rehired on or after
January 1, 2011 who are not eligible to accrue benefits under the Metropolitan St. Louis
Sewer District Employees’ Pension Plan. An employee shall become a participant in the Plan
on the first day on which he performs an hour of service for the District.
The District’s Board of Trustees, primarily to improve benefits to members, amends the Plan
in all its respects. 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.
This Plan is intended to provide a means whereby the District may provide retirement benefits
to eligible employees and encourage such employees to establish a regular method of savings,
thereby providing a measure of financial security for such employees and their beneficiaries
upon retirement or in the event of death or disability.
Contributions
Employer Basic Contributions. For each payroll period, the District contributes an amount
equal to 7% of the covered compensation earned during such period by each participant
entitled to an allocation of such contribution.
Employer Matching Contributions. For each payroll period, the District contributes an
amount equal to 50% of the covered compensation of such participant withheld as an annual
deferral (as defined in the Deferred Compensation Plan) pursuant to the Deferred
Compensation Plan; provided that, before-tax contributions in excess of 4% of the covered
compensation of the participant for the payroll period shall not be considered for purposes of
Employer Matching Contributions. Employer Matching Contributions shall be up to the
maximum amount of compensation that may be taken into account for the Plan year.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 12
In no event shall the sum of the employer contributions and employee contributions
allocated to the account of a participant for the Plan year exceed the lesser of:
(a) The amount specified in the applicable Internal Revenue Code, as adjusted annually
for any applicable increases in the cost of living.
(b) 100% of the participant’s compensation for such year.
The compensation limit referred to in (b) shall not apply to any contribution from medical
benefits after separation from service.
Participant Accounts
The Plan administrator shall establish and maintain a separate individual account for each
participant (which may consist of various sub-accounts established by the Plan Administrator)
to reflect the participant’s share of contributions made and the income, loss, appreciation and
depreciation attributable to the account. The Plan Administrator shall keep accurate records
of all contributions, receipts, investment distributions and all other transactions. The amount
credited to the individual account of a participant from time to time as of the most recent
valuation date shall constitute the entire interest of the participant in the Plan.
Vesting
As of any time before the normal retirement age of a participant, the first day of the month
coinciding with or next following a person’s sixty-fifth birthday and completion of sixty
months of continuous service (other than upon death or permanent disability), the vested
percentage of the amounts credited to the participant’s employer basic contributions account
shall be determined in accordance with the following schedule:
Months of Service Vested Percentages
Less than 12 0%
12 but less than 24 20%
24 but less than 36 40%
36 but less than 48 60%
48 but less than 60 80%
60 100%
The amount credited to the employer matching contributions account shall be fully vested at
all times.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 13
Investment Options
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.
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.
Money Market option: Vanguard Prime Money Market Fund - Investment objective is
income while maintaining safety of principal.
Target retirement option: Vanguard Target Retirement 2015-2055 Fund - Investment
objective is capital appreciation and current income consistent with its current asset
allocation.
Payment of Benefits
Upon the severance from service of a participant, the amount credited to his/her individual
account shall be payable to the extent such that it is vested. The value of a participant’s
vested individual account balance shall be distributed as soon as administratively feasible.
The amount payable to a participant shall be the vested amount credited to his/her individual
account as of the valuation date immediately preceding such distribution. This amount shall
be distributed in any one or a combination of the following forms as the participant may elect:
(a) In one lump sum payment; or
(b) In annual, quarterly or monthly installments.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 14
Forfeited Accounts
Upon a participant’s severance from service, the unvested amount credited to his/her
individual account shall be forfeited and credited to the employer basic contributions account
and shall be used to reduce employer basic contributions. If a participant is rehired before
incurring two consecutive years break-in service, the amount previously forfeited will be
restored. If rehired after two consecutive years break-in service, the amounts previously
forfeited will not be restored.
Administrative Expenses
The general administrative expenses shall be paid by the District. These expenses consist of
legal and accounting expenses as well as the administration of the Plan. Expenses attributable
to a participant’s choice of optional investments are charged to the respective participant’s
account.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 15
3. Investments
Investment balances
Investments held by custodians in the Plan’s name are as follows:
2012 2011
ASSETS
Mutual Funds
Vanguard Target Retirement 2045 Fund Total 108,626$ *23,851$ *
Vanguard Target Retirement 2025 Fund Total 66,723 *26,101 *
Vanguard Target Retirement 2050 Fund Total 57,723 *13,031 *
Vanguard Target Retirement 2040 Fund Total 56,174 *9,716
Vanguard Target Retirement 2035 Fund Total 44,704 *10,154
Vanguard Small-Cap Index Fund Investor Shares Total 37,766 *17,356 *
Vanguard Total Bond Market Index Fund Investor Shares Total 34,665 *9,767
Vanguard 500 Index Fund Investor Shares Total 31,357 12,116 *
Vanguard Mid-Cap Index Fund Investor Shares Total 26,707 12,276 *
Vanguard International Growth Fund Investor Shares Total 23,081 11,083 *
Vanguard Target Retirement 2030 Fund Total 17,119 6,369
Vanguard Target Retirement 2020 Fund Total 14,435 1,048
Vanguard Balanced Index Fund Investor Shares Total 14,245 7,367
Vanguard LifeStrategy Growth Fund Total 13,245 6,666
Vanguard Windsor II Fund Investor Shares Total 11,535 3,782
Vanguard Target Retirement Income Fund Total 11,494 4,699
Vanguard LifeStrategy Conservative Growth Fund Total 10,511 4,864
Vanguard LifeStrategy Moderate Growth Fund Total 6,619 2,591
Vanguard U.S. Growth Fund Investor Shares Total 4,658 2,093
Vanguard Target Retirement 2055 Fund Total 4,091 -
Vanguard LifeStrategy Income Fund Total 2,523 1,216
Vanguard Prime Money Market Fund Total 1,849 549
Vanguard Target Retirement 2015 Fund Total 1,066 -
600,916 186,695
Investments, at contract value
Vanguard Retirement Savings Trust 26,330 7,041
Total Investments 627,246$ 193,736$
For the Years
Ended December 31,
* Represents 5% or more of the Plan’s net position as of December 31, 2012 and 2011.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 16
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 table provides 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, 2012 and 2011:
S & P Average
Value at Average Effective
Debt-Backed December 31 Credit Not Duration
Mutual Funds 2012 Rating Rated in Years
December 31, 2012:
Vanguard Target Retirement 2045 108,626$ AA yes 5.00
Vanguard Target Retirement 2025 66,723 AA yes 5.00
Vanguard Target Retirement 2050 57,723 AA yes 5.00
Vanguard Target Retirement 2040 56,174 AA yes 5.00
Vanguard Target Retirement 2035 44,704 AA yes 5.00
Vanguard Total Bond Market Index Inv 34,665 AA yes 5.10
Vanguard Retirement Savings Trust 26,330 AA yes 2.65
Vanguard Target Retirement 2030 17,119 AA yes 5.00
Vanguard Target Retirement 2020 14,435 AA yes 5.00
Vanguard Balanced Index Inv 14,245 AA yes 5.10
Vanguard LifeStrategy Growth Fund 13,245 AA yes 5.00
Vanguard Target Retirement Inc 11,494 AA yes 6.10
Vanguard LifeStrategy Conservative Growth Fund 10,511 AA yes 5.00
Vanguard LifeStrategy Moderate Growth Fund 6,619 AA yes 5.00
Vanguard Target Retirement 2055 4,091 AA yes 5.00
Vanguard LifeStrategy Income Fund 2,523 AA yes 5.00
Vanguard Prime Money Market 1,849 AA yes 0.15
Vanguard Target Retirement 2015 1,066 AA yes 5.40
Credit Quality Percentage of Total Mutual Fund
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 17
S & P Average
Value at Average Effective
Debt-Backed December 31 Credit Not Duration
Mutual Funds 2011 Rating Rated in Years
December 31, 2011:
Vanguard Target Retirement 2025 26,101$ AA yes 5.10
Vanguard Target Retirement 2045 23,851 AA yes 5.10
Vanguard Target Retirement 2050 13,031 AA yes 5.10
Vanguard Target Retirement 2035 10,154 AA yes 5.10
Vanguard Total Bd Mkt Indx Inv 9,767 AA yes 5.10
Vanguard Target Retirement 2040 9,716 AA yes 5.10
Vanguard Balanced Ix Inv 7,367 AA yes 5.10
Vanguard Retirement Savings Trust 7,041 AA yes 2.62
Vanguard Target Retirement 2030 6,369 AA yes 5.10
Vanguard LifeStrategy Conserv Growth 4,864 AA yes 5.10
Vanguard Target Retirement Inc 4,699 AA yes 6.10
Vanguard LifeStrategy Mod Growth 2,591 AA yes 5.10
Vanguard LifeStrategy Income Fund 1,216 AA yes 4.10
Vanguard Target Retirement 2020 1,048 AA yes 5.10
Vanguard Prime Money Mkt 549 AA yes 0.15
Credit Quality Percentage of Total Mutual Fund
4. 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 Statement of Plan Net Position.
5. 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, the Trustee shall liquidate the
assets and disburse all funds to participants or their beneficiaries.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 18
6. 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 a related party transaction.
7. Tax Status
The plan received a favorable determination letter from the Internal Revenue Service on
January 31, 2012, in which the Internal Revenue Service stated that the plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue Code.
8. Pending GASB Statements
As of the date of the audit report, the Government Accounting Standards Boards (GASB) has
issued the following statement not yet implemented by the Plan:
Statement Number 67, Financial Reporting for Pension Plans - an amendment of GASB
Statement No. 25, was issued June 2012 and will be effective for the Plan with the fiscal year
ending December 31, 2013. The statement establishes standards of financial reporting for
separately issued financial statements related to pensions for governments whose employees
are provided pensions through pension plans that are covered by the scope of the statement.
Management is in the process of determining the effect of the implementation of this
statement on the Plan.
SUPPLEMENTAL INFORMATION
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
See the accompanying independent auditors’ report. Page 19
SUPPLEMENTAL INFORMATION
EXPENSE RATIOS
This asset-based fee is a measure of what it costs an investment company to operate a mutual fund. An
expense ratio is determined through an annual calculation, where a fund's operating expenses are divided
by the average dollar value of its assets under management. Operating expenses are taken out of a fund's
assets, lowering the return in the fund. Lower expense ratios reduce fees coming out of a fund, thus
increasing the fund’s rate of return to the participant. The listing below shows all funds and their asset
value with their corresponding expense ratio.
Value at
December 31
Fund Name 2012
Vanguard Target Retirement 2045 Fund Total 108,626$ 0.19 %
Vanguard Target Retirement 2025 Fund Total 66,723 0.18
Vanguard Target Retirement 2050 Fund Total 57,723 0.19
Vanguard Target Retirement 2040 Fund Total 56,174 0.19
Vanguard Target Retirement 2035 Fund Total 44,704 0.19
Vanguard Small-Cap Index Fund Investor Shares Total 37,766 0.30
Vanguard Total Bond Market Index Fund Investor Shares Total 34,665 0.22
Vanguard 500 Index Fund Investor Shares Total 31,357 0.17
Vanguard Mid-Cap Index Fund Investor Shares Total 26,707 0.24
Vanguard Retirement Savings Trust Total 26,330 0.31
Vanguard International Growth Fund Investor Shares Total 23,081 0.47
Vanguard Target Retirement 2030 Fund Total 17,119 0.18
Vanguard Target Retirement 2020 Fund Total 14,435 0.17
Vanguard Balanced Index Fund Investor Shares Total 14,245 0.24
Vanguard LifeStrategy Growth Fund Total 13,245 0.17
Vanguard Windsor II Fund Investor Shares Total 11,535 0.35
Vanguard Target Retirement Income Fund Total 11,494 0.17
Vanguard LifeStrategy Conservative Growth Fund Total 10,511 0.15
Vanguard LifeStrategy Moderate Growth Fund Total 6,619 0.16
Vanguard U.S. Growth Fund Investor Shares Total 4,658 0.44
Vanguard Target Retirement 2055 Fund Total 4,091 0.19
Vanguard LifeStrategy Income Fund Total 2,523 0.13
Vanguard Prime Money Market Fund Total 1,849 0.16
Vanguard Target Retirement 2015 Fund Total 1,066 0.17
Vanguard Total/Average Ratio 627,246$ 0.22 %
Fund Values and Their Expense Ratios
Expense
Ratio