HomeMy Public PortalAbout2013 Audited Financials
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2013 And 2012
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
Historical Trend Information ...........................................................................19
Expense Ratios .................................................................................................20
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, 2013 and 2012, and the
related Statement of Changes in Plan Net Position for the years then ended, and the related notes to
the financial statements, which collectively comprise the Plan’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, 2013 and 2012, 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.
July 28, 2014
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Page 3
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Year Ended December 31, 2013
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, 2013 and 2012.
Please read it in conjunction with the Plan’s financial section.
FINANCIAL HIGHLIGHTS 2013
At December 31, the Plan consisted of 186 participants with account balances over $1.5M in
net position.
Total increase to the Plan’s net position (page 8) amounted to $856,638 consisting of Plan
contributions and other additions of $678,967 offset by deductions of $27,154 and net
investment gains of $204,825.
Administrative expenses (part of the deductions to the Plan’s net position) totaled $24,814.
This consisted of Vanguard record-keeping and compliance testing. There were no legal fees
related to compliance this year.
FINANCIAL HIGHLIGHTS 2012
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 8) amounted to $443,905 consisting of Plan
contributions and other additions of $420,157 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, which totaled
$20,150. The balance was made up of legal fees related to compliance.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Management’s Discussion And Analysis (Continued)
Page 4
ANALYSIS OF FINANCIAL ACTIVITIES
The Plan showed a positive net change of $200,618 when compared to original costs. This
included all investment funds except the Vanguard Total Bond Market Index Investment,
which showed a slight loss of $1,260. The Vanguard Target Retirement 2045 Fund had the
greatest gain in value for any one individual fund at $43,105. The group of Vanguard Target
Retirement Funds, in the aggregate, had a gain in value of $134,243. These funds also make
up 71% of the value in the Plan. See the chart below for the annual change in value for each
fund.
Value at
December 31 Net
Fund Name Cost 2013 Change
Vanguard Tgt Retirement 2045 264,540$ 307,645$ 43,105$ 20.84 %
Vanguard Tgt Retirement 2040 133,400 155,655 22,255 10.55
Vanguard Tgt Retirement 2050 124,760 146,391 21,631 9.91
Vanguard Sm-Cap Index Inv 59,911 79,089 19,178 5.35
Vanguard Tgt Retirement 2025 127,968 144,947 16,979 9.81
Vanguard Tgt Retirement 2035 122,897 139,368 16,471 9.43
Vanguard 500 Index Inv 59,548 74,037 14,489 5.01
Vanguard Mid-Cap Index Fd Inv 46,294 59,115 12,821 4.00
Vanguard Int'l Growth Fund Inv 44,952 52,994 8,042 3.59
Vanguard Tgt Retirement 2030 51,820 57,947 6,127 3.92
Vanguard Windsor II Fund Inv 25,248 30,099 4,851 2.04
Vanguard U.S. Growth Inv 17,261 21,918 4,657 1.48
Vanguard Balanced Ix Inv 22,699 26,296 3,597 1.78
Vanguard Tgt Retirement 2020 34,017 37,544 3,527 2.54
Vanguard Tgt Retirement 2055 31,342 34,529 3,187 2.34
Vanguard Target Retirement Inc 19,919 20,560 641 1.39
Vanguard Tgt Retirement 2015 3,297 3,468 171 0.23
Vanguard Tgt Retirement 2060 2,823 2,970 147 0.20
Vanguard Tgt Retirement 2010 322 324 2 0.02
Vanguard Retirement Savings Trust 36,573 36,573 — 2.48
Vanguard Prime Money Mkt 11,084 11,084 — 0.75
Vanguard Total Bd Mkt Indx Inv 35,860 34,600 (1,260) 2.34
Totals 1,276,535$ 1,477,153$ 200,618$ 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
Value at
December 31 Net
Fund Name Cost 2012 Change
Vanguard Tgt Retirement 2045 104,005$ 108,626$ 4,621$ 17.31 %
Vanguard Tgt Retirement 2050 55,100 57,723 2,623 9.20
Vanguard Tgt Retirement 2040 53,694 56,174 2,480 8.96
Vanguard Tgt 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 Tgt 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 Ix Inv 13,509 14,245 736 2.27
Vanguard Windsor II Fund Inv 10,816 11,535 719 1.84
Vanguard Tgt Retirement 2020 14,106 14,435 329 2.30
Vanguard Tgt 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 Tgt Retirement 2055 4,043 4,091 48 0.65
Vanguard Tgt Retirement 2015 1,051 1,065 14 0.17
Vanguard Retire Savings Trust 26,330 26,330 — 4.20
Vanguard Prime Money Mkt 1,849 1,849 — 0.29
Vanguard LifeStrategy Income Fund 2,555 2,524 (31) 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 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 December 31, 2013 follows:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Management’s Discussion And Analysis (Continued)
Page 7
Percent
Change
Contributions and Other Additions 678,967$ 420,158$ 62%
Net Investment Gain/Loss 204,824 44,390 361%
Total Additions 883,791 464,548 90%
Percent
Change
Distribution to Participants 2,340$ 41$ 5607%
Administrative Expenses 24,814 20,601 20%
Total Deductions 27,154 20,642 32%
Percent
Change
Net Increase 856,637$ 443,906$ 93%
Net Assets Available for Benefits, January 1 647,627 203,721 218%
Net Assets Available for Benefits, December 31 1,504,264 647,627 132%
2013 2012
Plan Additions, Deductions, and Net Assets are as follows:
Plan Additions
Plan Deductions
Net Assets
20122013
2013 2012
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:
Tim Snoke, Secretary-Treasurer
The Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103-2555
E-mail: tsnoke@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
2013 2012
ASSETS
Investments at fair value:
Mutual Funds 1,440,580$ 600,916$
Investments at contract value:
Common/collective trust 36,573 26,330
Total Investments 1,477,153 627,246
Receivables:
Employer contributions 27,111 20,381
NET POSITION RESTRICTED FOR PLAN BENEFITS 1,504,264$ 647,627$
For The Years
Ended 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
2013 2012
ADDITIONS TO NET POSITION ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments 180,783$ 32,207$
Interest and dividends 25,810 12,900
Total investment income 206,593 45,107
Less - investment managers' and advisors' fees 1,769 717
Net investment income 204,824 44,390
Contributions and Other Additions:
Employer contributions 652,385 398,628
Plan expenses paid by employer 26,582 21,320
Transfers from Employee's Pension Plan — 210
Total Contributions and Other Additions 678,967 420,158
Total Additions 883,791 464,548
DEDUCTIONS FROM NET POSITION ATTRIBUTED TO:
Distributions to participants and beneficiaries 2,340 41
Administrative expenses 24,814 20,601
Total Deductions 27,154 20,642
NET INCREASE 856,637 443,906
NET POSITION RESTRICTED FOR PLAN BENEFITS, January 1 647,627 203,721
NET POSITION RESTRICTED FOR PLAN BENEFITS, December 31 1,504,264$ 647,627$
For The Years
Ended December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Page 10
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 And 2012
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 of $3,852 and $262 are
included in net appreciation in fair value of investments for the periods ended December 31,
2013 and 2012, respectively.
Payment of Benefits
Benefits are recorded when paid.
Subsequent Events
Management has evaluated subsequent events through July 28, 2014, 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. Initial participation
consisted of twenty-three employees who transferred balances totaling $70,869 from the
Metropolitan St. Louis Sewer district Employees’ Pension Plan.
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 withholding 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 (the 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 65th birthday and completion of 60 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 - Investment objective varies by fund ranging
from maximizing income while minimizing growth to minimizing income while
maximizing growth.
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 2010-2060 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 of 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:
ASSETS
Mutual Funds:2013 2012
Vanguard Group, Inc.
Target Retirement 2045 Fund 307,645$ * 108,626$ *
Target Retirement 2040 Fund 155,655 * 56,174 *
Target Retirement 2050 Fund 146,391 * 57,723 *
Target Retirement 2025 Fund 144,947 * 66,723 *
Target Retirement 2035 Fund 139,368 * 44,704 *
Small-Cap Index Fund Investor Shares 79,089 * 37,766 *
500 Index Fund Investor Shares 74,037 * 31,357
Mid-Cap Index Fund Investor Shares 59,115 26,707
Target Retirement 2030 Fund 57,947 17,119
International Growth Fund Investor Shares 52,994 23,081
Target Retirement 2020 Fund 37,544 14,435
Total Bond Market Index Fund Investor Shares 34,600 34,665 *
Target Retirement 2055 Fund 34,529 4,091
Windsor II Fund Investor Shares 30,099 11,535
Balanced Index Fund Investor Shares 26,296 14,245
U.S. Growth Fund Investor Shares 21,918 4,658
Target Retirement Income Fund 20,560 11,494
Prime Money Market Fund 11,084 1,849
Target Retirement 2015 Fund 3,468 1,066
Target Retirement 2060 Fund 2,970 —
Target Retirement 2010 Fund 324 —
LifeStrategy Income Fund — 2,523
LifeStrategy Moderate Growth Fund — 6,619
LifeStrategy Conservative Growth Fund — 10,511
LifeStrategy Growth Fund — 13,245
1,440,580 600,916
Investments, at contract value
Vanguard Retirement Savings Trust 36,573 26,330
Total Investments 1,477,153$ 627,246$
For The Years
Ended December 31,
* Represents 5% or more of the Plan’s net position as of December 31, 2013 and 2012.
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, 2013 and 2012:
Average
Effective
Debt-Backed Fair Not Duration
Mutual Funds Value Rated in Years
December 31, 2013:
Vanguard Group, Inc.
Target Retirement 2045 307,645$ yes 5.68
Target Retirement 2040 155,655 yes 5.68
Target Retirement 2050 146,391 yes 5.68
Target Retirement 2025 144,947 yes 5.68
Target Retirement 2035 139,368 yes 5.67
Target Retirement 2030 57,947 yes 5.68
Target Retirement 2020 37,544 yes 5.68
Retirement Savings Trust 36,573 yes 2.60
Total Bond Market Index Fund Inv 34,600 yes 5.62
Target Retirement 2055 34,529 yes 5.69
Balanced Index Fund Inv 26,296 yes 5.60
Target Retirement Income Fund Total 20,560 yes 5.03
Target Retirement 2015 Fund Total 3,468 yes 5.35
Target Retirement 2060 Fund Total 2,970 yes 5.69
Target Retirement 2010 Fund Total 324 yes 5.11
Credit Quality Percentage of Total Mutual Fund
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 17
Average
Effective
Debt-Backed Fair Not Duration
Mutual Funds Value Rated in Years
December 31, 2012:
Vanguard Group, Inc.
Target Retirement 2045 108,626$ yes 5.00
Target Retirement 2025 66,723 yes 5.00
Target Retirement 2050 57,723 yes 5.00
Target Retirement 2040 56,174 yes 5.00
Target Retirement 2035 44,704 yes 5.00
Total Bond Market Index Inv 34,665 yes 5.10
Retirement Savings Trust 26,330 yes 2.65
Target Retirement 2030 17,119 yes 5.00
Target Retirement 2020 14,435 yes 5.00
Balanced Index Inv 14,245 yes 5.10
LifeStrategy Growth Fund 13,245 yes 5.00
Target Retirement Inc 11,494 yes 6.10
LifeStrategy Conservative Growth Fund 10,511 yes 5.00
LifeStrategy Moderate Growth Fund 6,619 yes 5.00
Target Retirement 2055 4,091 yes 5.00
LifeStrategy Income Fund 2,523 yes 5.00
Prime Money Market 1,849 yes 0.15
Target Retirement 2015 1,066 yes 5.40
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 (IRS) on
January 31, 2012, in which the IRS stated that the plan, as then designed, was in compliance
with the applicable requirements of the Code. An application for another determination letter
was submitted to the IRS in early 2014. The expected response time is between 60 and 145
days. At the time of this publication, the Plan has not received a response.
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, 2014. 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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
See the accompanying independent auditors’ report. Page 19
HISTORICAL TREND INFORMATION
For The Net Distributions to Increase
Years Ended Employer Investment Participants and (Decrease)
December 31 Contributions Gain (Loss) Beneficiaries In Net Assets
2013 652,385$ 204,824$ 2,340$ 856,637$
2012 398,628 44,390 41 443,906
2011 167,298 (5,193) 4,834 203,721
SUPPLEMENTAL INFORMATION
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
See the accompanying independent auditors’ report. Page 20
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 2013
Vanguard Target Retirement 2045 Fund Total 307,645$ 0.18 %
Vanguard Target Retirement 2040 Fund Total 155,655 0.18
Vanguard Target Retirement 2050 Fund Total 146,391 0.18
Vanguard Target Retirement 2025 Fund Total 144,947 0.17
Vanguard Target Retirement 2035 Fund Total 139,368 0.18
Vanguard Small-Cap Index Fund Investor Shares Total 79,089 0.24
Vanguard 500 Index Fund Investor Shares Total 74,037 0.17
Vanguard Mid-Cap Index Fund Investor Shares Total 59,115 0.24
Vanguard Target Retirement 2030 Fund Total 57,947 0.17
Vanguard International Growth Fund Investor Shares Total 52,994 0.48
Vanguard Target Retirement 2020 Fund Total 37,544 0.16
Vanguard Retirement Savings Trust Total 36,573 0.53
Vanguard Total Bond Market Index Fund Investor Shares Total 34,600 0.20
Vanguard Target Retirement 2055 Fund Total 34,529 0.18
Vanguard Windsor II Fund Investor Shares Total 30,099 0.35
Vanguard Balanced Index Fund Investor Shares Total 26,296 0.24
Vanguard U.S. Growth Fund Investor Shares Total 21,918 0.45
Vanguard Target Retirement Income Fund Total 20,560 0.16
Vanguard Prime Money Market Fund Total 11,084 0.17
Vanguard Target Retirement 2015 Fund Total 3,468 0.16
Vanguard Target Retirement 2060 Fund Total 2,970 0.18
Vanguard Target Retirement 2010 Fund Total 324 0.16
Vanguard Total/Average Ratio 1,477,153$ 0.23 %
Fund Values and Their Expense Ratios
Expense
Ratio