HomeMy Public PortalAbout2016 Audited Financial
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Contents
Page
Independent Auditors’ Report........................................................................ 1 - 2
Management’s Discussion And Analysis ....................................................... 3 - 7
Financial Statements
Statements Of Fiduciary Net Position................................................................8
Statements Of Changes In Fiduciary Net Position ............................................9
Notes To Financial Statements ................................................................ 10 - 18
Supplemental Information
Historical Trend Information ...........................................................................19
Fund Values And Expense Ratios....................................................................20
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 Defined Contribution Plan (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 Defined Contribution Plan 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 7 and supplemental schedules on pages
19 through 20 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
DEFINED CONTRIBUTION PLAN
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”) Defined Contribution Plan (“Plan”). The Statements of Fiduciary Net Position
and the Statements of Changes in Fiduciary Net 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 years ended December 31, 2016 and 2015. Please
read it in conjunction with the Plan’s financial statements.
FINANCIAL HIGHLIGHTS 2016
At December 31, the Plan consisted of 327 participants with account balances just over $4.9M
in net position.
Total increase to the Plan’s net position (page 9) amounted to $1,435,339 consisting of Plan
contributions and other additions of $1,298,838 offset by deductions of $224,325 and net
investment gain of $360,826.
Administrative expenses (part of the deductions to the Plan’s net position) totaled $50,798.
This consisted of Vanguard record-keeping and compliance testing, consultant and accounting
fees.
FINANCIAL HIGHLIGHTS 2015
At December 31, the Plan consisted of 286 participants with account balances just over $3.5M
in net position.
Total increase to the Plan’s net position (page 9) amounted to $1,056,486 consisting of Plan
contributions and other additions of $1,204,333 offset by deductions of $106,835 and net
investment loss of $41,012.
Administrative expenses (part of the deductions to the Plan’s net position) totaled $47,397.
This consisted of Vanguard record-keeping and compliance testing and accounting fees.
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 $312,684 when compared to original costs. The Target
Retirement 2045 Fund had the greatest gain in value for any one individual fund at $67,718.
Value at
December 31, Net % of Current
Fund Name Cost 2016 Change Value
Vanguard Group, Inc.
Target Retirement 2045 Fund 974,787$ 1,042,505$ 67,718$ 21.11 %
Target Retirement 2040 Fund 548,220 589,016 40,796 11.93
Target Retirement 2050 Fund 538,169 577,742 39,573 11.70
500 Index Fund 193,315 230,755 37,440 4.67
Mid-Cap Index Fund 119,594 144,374 24,780 2.92
Small-Cap Index Fund 104,009 127,011 23,002 2.57
Target Retirement 2035 Fund 495,312 517,876 22,564 10.49
Target Retirement 2025 Fund 339,678 355,033 15,355 7.19
Target Retirement 2055 Fund 312,276 327,043 14,767 6.62
Balanced Index Fund 96,578 107,415 10,837 2.17
Target Retirement 2030 Fund 196,171 205,940 9,769 4.17
Target Retirement 2020 Fund 66,010 69,586 3,576 1.41
Target Retirement 2060 Fund 78,495 81,298 2,803 1.65
U.S. Growth Fund 90,030 91,471 1,441 1.85
Windsor II Fund 81,709 82,833 1,124 1.68
Target Retirement 2015 Fund 5,032 5,078 46 0.10
Retirement Savings Trust 118,733 118,733 — 2.40
Prime Money Market Fund 29,542 29,542 — 0.60
Target Retirement Income Fund 24,462 24,406 (56) 0.49
Target Retirement 2010 Fund 2,272 2,214 (58) 0.04
International Growth Fund 86,416 86,267 (149) 1.75
Total Bond Market Index Fund 125,396 122,752 (2,644) 2.49
Totals 4,626,206$ 4,938,890$ 312,684$ 100.00 %
Change in Fund Asset Values - 2016
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Management’s Discussion And Analysis (Continued)
Page 5
Value at
December 31, Net % of Current
Fund Name Cost 2015 Change Value
Vanguard Group, Inc.
500 Index Fund 131,062$ 150,647$ 19,585$ 4.30 %
Small-Cap Index Fund 127,090 143,474 16,384 4.09
Mid-Cap Index Fund 109,270 125,267 15,997 3.58
Target Retirement 2045 Fund 694,120 708,674 14,554 20.23
Target Retirement 2040 Fund 375,446 386,935 11,489 11.04
Target Retirement 2050 Fund 372,889 383,573 10,684 10.95
Balanced Index Fund 69,194 74,299 5,105 2.12
U.S. Growth Fund 81,028 83,643 2,615 2.39
Target Retirement 2025 Fund 243,385 245,728 2,343 7.01
Target Retirement 2030 Fund 127,901 129,400 1,499 3.69
Target Retirement 2020 Fund 79,107 80,526 1,419 2.30
Target Retirement 2035 Fund 331,916 332,322 406 9.49
International Growth Fund 74,390 74,516 126 2.13
Retirement Savings Trust 80,329 80,329 — 2.29
Prime Money Market Fund 143,266 143,266 — 4.09
Target Retirement 2015 Fund 3,865 3,844 (21) 0.11
Target Retirement 2010 Fund 1,569 1,491 (78) 0.04
Target Retirement Income Fund 29,264 28,836 (428) 0.82
Total Bond Market Index Fund 49,385 48,475 (910) 1.38
Target Retirement 2060 Fund 33,463 32,456 (1,007) 0.93
Windsor II Fund 57,098 55,732 (1,366) 1.59
Target Retirement 2055 Fund 192,719 190,118 (2,601) 5.43
Totals 3,407,756$ 3,503,551$ 95,795$ 100.00 %
Change in Fund Asset Values - 2015
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, 2016 follows:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Management’s Discussion And Analysis (Continued)
Page 7
Change
Contributions and Other Additions 1,298,838$ 1,204,333$ $ 94,505
Net Investment Income (Loss)360,826 (41,012) 401,838
Total Additions 1,659,664$ 1,163,321$ $ 496,343
Change
Distributions to Participants 170,202$ 58,463$ $ 111,739
Administrative Expenses and Legal Fees 54,123 48,372 5,751
Total Deductions 224,325$ 106,835$ $ 117,490
Change
Net Increase 1,435,339$ 1,056,486$ $ 378,853
Net Position Restricted for Benefits, January 1 3,503,551 2,447,065 1,056,486
Net Position Restricted for Benefits, December 31 4,938,890$ 3,503,551$ $ 1,435,339
2016 2015
Plan Additions, Deductions, and Net Position are as follows:
Plan Additions
Plan Deductions
Net Position
20152016
2016 2015
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
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 FIDUCIARY NET POSITION
2016 2015
ASSETS
Investments at Fair Value:
Mutual Funds 4,820,157$ 3,423,222$
Investments at Contract Value:
Common/Collective Trust 118,733 80,329
Total Investments 4,938,890 3,503,551
NET POSITION RESTRICTED FOR PLAN BENEFITS 4,938,890$ 3,503,551$
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
See the accompanying Notes To Financial Statements. Page 9
STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION
2016 2015
ADDITIONS TO NET POSITION ATTRIBUTED TO:
Investment Income:
Interest and Dividends on Investments 112,557$ 105,095$
Net Appreciation (Depreciation) in Fair Value of Investments 257,314 (138,891)
Total Investment Income (Loss) 369,871 (33,796)
Less - Investment Managers' and Advisors' Fees 9,045 7,216
Net Investment Income (Loss) 360,826 (41,012)
Contributions and Other Additions:
Employer Contributions 1,240,549 1,160,961
Employee Contributions-Rollovers 9,166 —
Plan Expenses Paid by Employer 49,123 43,372
Total Contributions and Other Additions 1,298,838 1,204,333
Total Additions 1,659,664 1,163,321
DEDUCTIONS FROM NET POSITION ATTRIBUTED TO:
Distributions to Participants and Beneficiaries 170,202 58,463
Administrative Expenses 50,798 47,397
Legal Fees 3,325 975
Total Deductions 224,325 106,835
NET INCREASE 1,435,339 1,056,486
NET POSITION RESTRICTED FOR PLAN BENEFITS, January 1 3,503,551 2,447,065
NET POSITION RESTRICTED FOR PLAN BENEFITS, December 31 4,938,890$ 3,503,551$
For The Years
Ended December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Page 10
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 Defined Contribution Plan’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 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 $26,376 and $13,839 were
recorded in the periods ending December 31, 2016 and 2015, respectively.
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
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 11
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 established by the District’s Board of Trustees through
Ordinance 13180 and became effective January 1, 2011 and is a qualified plan under Section
401(a) of the Internal Revenue Code. The following regular, full-time permanent 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 elected 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.
The 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.
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
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 12
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 Metropolitan St. Louis Sewer District Deferred
Compensation Plan and Trust) pursuant to The Metropolitan St. Louis Sewer District
Deferred Compensation Plan and Trust; 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.
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 (“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.
Employee Contributions The Plan will accept a rollover of an eligible rollover distribution
from an eligible retirement plan if the Plan Administrator approves the transaction as meeting
the Plan’s rules. This is called a “Rollover Contribution” and for the years ended December
31, 2016 and 2015, $9,166 and $0 were eligible rollover distributions into the Plan,
respectively.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 13
Vesting
As of any time before the normal retirement age of a participant (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%
Normal retirement age is defined as the first day of the month coinciding with or next
following a person’s 65th birthday and completion of 60 months of continuous service. The
amount credited to the Participant’s Employer Matching Contributions Account shall be fully
vested at all times.
Investment Options
Upon enrollment in the Plan, a participant directs employer contributions in any of the
investment options available. The investment options consist of mutual funds and a
common/collective trust fund. Employer contributions may be allocated to the Vanguard
accounts, in 1% increments, as the participant directs.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 14
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
Upon a participant’s severance from service, 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.
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 future 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 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.
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.
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:
Mutual Funds:2016 2015
Vanguard Group, Inc.
Target Retirement 2045 Fund 1,042,505$ * 708,674$ *
Target Retirement 2040 Fund 589,016 * 386,935 *
Target Retirement 2050 Fund 577,742 * 383,573 *
Target Retirement 2035 Fund 517,876 * 332,322 *
Target Retirement 2025 Fund 355,033 * 245,728 *
Target Retirement 2055 Fund 327,043 * 190,118 *
500 Index Fund 230,755 150,647
Target Retirement 2030 Fund 205,940 129,400
Mid-Cap Index Fund 144,374 125,267
Small-Cap Index Fund 127,011 143,474
Total Bond Market Index Fund 122,752 48,475
Balanced Index Fund 107,415 74,299
U.S. Growth Fund 91,471 83,643
International Growth Fund 86,267 74,516
Windsor II Fund 82,833 55,732
Target Retirement 2060 Fund 81,298 32,456
Target Retirement 2020 Fund 69,586 80,526
Prime Money Market Fund 29,542 143,266
Target Retirement Income Fund 24,406 28,836
Target Retirement 2015 Fund 5,078 3,844
Target Retirement 2010 Fund 2,214 1,491
Total Mutual Funds 4,820,157 3,423,222
Common/Collective Trust:
Vanguard Group, Inc.
Retirement Savings Trust 118,733 80,329
Total Investments 4,938,890$ 3,503,551$
December 31,
* Represents 5% or more of the Plan’s net position as of December 31, 2016 or 2015, respectively.
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 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:
AveragePercentage
Effective of Debt
Plan Investments Fair Percentage Duration Not
With Debt Securities Value of Debt in Years Rated
December 31, 2016:
Vanguard Group, Inc.
Target Retirement 2045 Fund 1,042,505$ 10% 6.49 0.01%
Target Retirement 2040 Fund 589,016 12% 6.48 0.14%
Target Retirement 2050 Fund 577,742 10% 6.48 0.00%
Target Retirement 2035 Fund 517,876 19% 6.48 0.19%
Target Retirement 2025 Fund 355,033 34% 6.48 0.28%
Target Retirement 2055 Fund 327,043 10% 6.48 0.00%
Target Retirement 2030 Fund 205,940 26% 6.48 0.26%
Total Bond Market Index Fund 122,752 98% 6.02 0.57%
Retirement Savings Trust 118,733 91% 2.81 0.00%
Balanced Index Fund 107,415 39% 6.01 3.55%
Target Retirement 2060 Fund 81,298 10% 6.47 0.00%
Target Retirement 2020 Fund 69,586 42% 6.29 0.27%
Prime Money Market Fund 29,542 3%*0.00%
Target Retirement Income Fund 24,406 68% 5.55 0.28%
Target Retirement 2015 Fund 5,078 53% 5.80 0.95%
Target Retirement 2010 Fund 2,214 67% 5.59 0.22%
* 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
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 17
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.
Target Retirement 2045 Fund 708,674$ 10% 6.24 0.30%
Target Retirement 2040 Fund 386,935 11% 6.23 0.42%
Target Retirement 2050 Fund 383,573 10% 6.24 0.35%
Target Retirement 2035 Fund 332,322 18% 6.23 0.45%
Target Retirement 2025 Fund 245,728 33% 6.24 0.49%
Target Retirement 2055 Fund 190,118 10% 6.24 0.31%
Prime Money Market Fund 143,266 4% * 0.93%
Target Retirement 2030 Fund 129,400 25% 6.24 0.51%
Target Retirement 2020 Fund 80,526 40% 6.17 0.52%
Retirement Savings Trust 80,329 94% 2.78 0.10%
Balanced Index Fund 74,299 39% 5.79 4.30%
Total Bond Market Index Fund 48,475 97% 5.79 1.43%
Target Retirement 2060 Fund 32,456 10% 6.24 0.31%
Target Retirement Income Fund 28,836 65% 5.43 0.36%
Target Retirement 2015 Fund 3,844 49% 5.68 0.93%
Target Retirement 2010 Fund 1,491 62% 5.47 0.83%
* Information is unavailable for this security.
The average effective duration only applies to the debt portion of the investment.
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 $4,820,157 and $3,423,222, respectively, are valued using
quoted market prices (Level 1 inputs).
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
Notes To Financial Statements (Continued)
Page 18
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, the Trustee shall liquidate the
assets and disburse all funds to participants or their beneficiaries.
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.
8. Tax Status
The Plan received a favorable determination letter from the Internal Revenue Service (“IRS”)
on May 21, 2014, in which the IRS stated that the Plan, as then designed, was in compliance
with the applicable requirements of the Code.
SUPPLEMENTAL INFORMATION
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
See the accompanying independent auditors’ report. Page 19
HISTORICAL TREND INFORMATION
Employer Distributions To
For The Contributions, Rollovers, Participants
Years Ended And Expenses Paid Net Investment And Plan Increase
December 31, By Employer Income (Loss) Expenses In Net Position
2016 1,298,838$ 360,826$ 224,325$ 1,435,339$
2015 1,204,333 (41,012) 106,835 1,056,486
2014 907,020 134,513 98,732 942,801
2013 678,967 204,824 27,154 856,637
2012 420,158 44,390 20,642 443,906
2011 239,482 (5,193) 30,568 203,721
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFINED CONTRIBUTION PLAN
See the accompanying independent auditors’ report. Page 20
FUND VALUES AND 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 2016
Vanguard Group, Inc.
Target Retirement 2045 Fund 1,042,505$ 0.16 %
Target Retirement 2040 Fund 589,016 0.16
Target Retirement 2050 Fund 577,742 0.16
Target Retirement 2035 Fund 517,876 0.15
Target Retirement 2025 Fund 355,033 0.14
Target Retirement 2055 Fund 327,043 0.16
500 Index Fund 230,755 0.16
Target Retirement 2030 Fund 205,940 0.15
Mid-Cap Index Fund 144,374 0.20
Small-Cap Index Fund 127,011 0.20
Total Bond Market Index Fund 122,752 0.16
Retirement Savings Trust 118,733 0.53
Balanced Index Fund 107,415 0.22
U.S. Growth Fund 91,471 0.46
International Growth Fund 86,267 0.46
Windsor II Fund 82,833 0.33
Target Retirement 2060 Fund 81,298 0.16
Target Retirement 2020 Fund 69,586 0.14
Prime Money Market Fund 29,542 0.10
Target Retirement Income Fund 24,406 0.13
Target Retirement 2015 Fund 5,078 0.14
Target Retirement 2010 Fund 2,214 0.13
Vanguard Total/Average Ratio 4,938,890$ 0.21 %
Expense
Ratio