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Home My Public Portal AboutPension Plan 2007 Audited FinancialsTHE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN FINANCIAL REPORT (Audited) Year Ended December 31, 2007 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________________________FINANCIAL REPORT ____________________________________________________________________________Contents Page INDEPENDENT AUDITORS' REPORT 1 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 FINANCIAL STATEMENTS Statements of Plan Net Assets 11 Statements of Changes in Plan Net Assets 12 Notes to Financial Statements 13 REQUIRED SUPPLEMENTAL INFORMATION Schedule of Funding Progress 25 Schedule of Emplo yer Contribut io ns in Accordance with GASB Statement No. 25 25 Note to Required Supplemental Informat io n 26 STATISTICAL SECTION (Unaudited) Performance and Net Asset Value 28 Historical Trend Information: Revenues by Source 29 Expenses by Type 30 Member Count 31 Graphs: Total Benefit Payments 32 Employer Contribut io ns 32 Total Benefit Recipients 33 Top Ten Investment Holdings 34 Schedule of Invest me nt Managers and Advisor Fees 35 Hocbschild, Bloom & Company LLP C('liil1('d Public AC('OI Ll11 ant::; Consultant!:> Ulld Advisors INDEPENDENT AUDITORS' REPORT November 12, 2008 Board of Trustees THE METROPOLITAN ST. LOUIS SEWER DISTRICT We have audited the accompanying statements of plan net assets of THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN (the Plan) as of December 31 , 2007 and 2006, and the related statements of changes in plan net assets for the years then ended. These finan cial statements are the responsibility of the Plan's management. Our responsibility is to express an opin ion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those stan dards require that we plan and perform the audits to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circum stances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal con trol over financial reporting. Accordingly, we express no such opinion. An audit also includes examin ing, on a test basis, evidence supporting the amounts and disclosures in the financial statements , assess ing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opmlon. In our opinion, the financial statements referred to above present fairly, in all material respects, the plan net assets as of December 31, 2007 and 2006, and the changes in plan net assets for the years then ended, in conformity with U.S. generally accepted accounting principles. The management 's discussion and analysis (the MD&A) and the schedules of funding progress and em ployer contributions (the schedules), as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures to the MD&A and the schedules, which con sisted principally of inquiries of management regarding the methods of measurement and presentation o 16JnU Che..lerfield Parkway "cst. Suite 125. Chestedield.Missouri 63017 -~~29. ()3(1-532-~525. Fa., 636-532-91155 o moo Washington S<luarc. 1'.0_ nux 1~57. "a<;hill~t()n. I\lis..ouri o3n'Jn-R~57 .(.)(l-2J<J-.t7X5, r'ill. (.30-239-S-WN ww\~.hhdp .clIlll I'O l,A R 15 -", ~ k m !>e J' Pol.u I' hll~rTl al j <>n .l l "1111 rlll n, i l1 P r 1l1l'II",1 L Ij am i 111I"m~l l()n 3 1 ( Il lCS of the required supplementary information. However, we did not audit the information and express no opinion on it. The statistical data included in the statistical section of this report has not been subjected to the auditing procedures applied in the audits ofthe basic financial statements and, accordingly, we express no opin ion on them. ~e~;t~ )LP CERTIFIED PUBLIC ACCOUNTANTS ~ Page 2 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________FOR THE YEAR ENDED DECEMBER 31, 2007 ___________________________________________________________________________________ Page 3 As management of The Metropolitan St. Lo uis Sewer District Employees’ Pension Plan (the Plan),we offer readers of the Plan’s financial statements this Management’s Discussion and Analysis (MD&A)of the financial act ivit ies o f t he Plan for the year ended December 31, 2007. This MD&A is intended to supplement the Plan’s financial statements, and we encourage readers to consider the informatio n pre- sented here in conjunct io n wit h t hose statements, which begin on page 11. OVERVIEW OF THE FINANCIAL STATEMENTS The fo llo wing MD&A is intended to serve as an introduction to the Plan’s financial statements. The ba- sic financial statements are: 1)Statements of plan net assets 2)Statements of changes in plan net assets 3)Notes to financial statements This report also contains required supplemental information to the basic financial statements which pro- vides actuarial informat io n fo r use in analyzing the funded status of the Plan and includes: 1)Schedule of funding progress 2)Schedule of employer contribut io ns in accordanc e with GASB Statement No. 25 3)Note to required supplemental informatio n Certain revenues, expenses associated with administering the Plan,and other trend data are presented immediately fo llowing the note to required supplemental informat io n in t he statistical sect io n of this re- port. The basic financial statements contained in this report are described below: •The statement of plan net assets is a point in t ime snapshot of account balances at year-end. It reports the assets available for future payments to retirees, and any current liabilit ies that are owed as of the statement date. The result ing net assets value [assets -liabilit ies = net assets] represents the value of assets held in trust for pension benefit s. •The statements of changes in plan net assets displays the effect of pension fund transactions that occurred during the fiscal year [additions -deductions = net increase (decrease) in net assets]. This net increase (decrease) in net assets reflects the change in the net assets value of the state- ment s of plan net assets fro m t he prior year to the current year. Both statements are in comp li- ance with Governmental Account ing Standards Board (GASB) Pronouncements. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________FOR THE YEAR ENDED DECEMBER 31, 2007 ___________________________________________________________________________________ Page 4 •The notes to financial statements are an integral part of the financial statements and provide ad- ditional informat io n t hat is essent ia l fo r a comprehensive understanding of t he data provided in the financial statements. These notes describe the accounting and administrative po licies under which the Plan operates, and provide addit io nal le vels o f detail for selected financial statement it ems. See notes to financial statements beginning on page 13 of this report. Because of the long-term nature of a defined benefit pension plan, financial statements alone cannot pro- vide sufficient informat io n to properly reflect the ongo ing plan perspective. Therefore, in addit io n t o the financial statements explained above, this financial report includes two additio nal schedules ent it led “re- quired supplemental information”. •The schedule of funding progress (page 25)includes actuarial informat io n about the status of the Plan fro m an o ngo ing, long-term perspect ive and the progress made in accumulat ing sufficient assets to pay pensio n benefits when due. Valuat io n assets in excess o f actuarial accrued liabili- ties indicate that sufficient assets exist to fund the future pension benefits o f t he current me mbers and benefit recipients, whereas, excess liabilit ies requires future funding or invest me nt perform- ance in excess of the actuarial assumed invest me nt ret urns. •The schedule of emplo yer contributions in accordance wit h GASB Statement No. 25 (page 25) presents historical trend informat io n regarding the value of total annual contributions required to be paid by emplo yers and the actual perfo rmance of emplo yers in meeting this requirement. •The note to required supplemental information provides explanatory detail to aid in understand- ing the required supplemental schedules. FINANCIAL HIGHLIGHTS 2007 •Net assets held in trust for pension benefits totaled $191,382,492 as of December 31, 2007 for an increase of $17,125,561 or 9.8%as compared with December 31, 2006. This increase in net as- sets primarily resulted fro m cu mulative investment gains during the year that more than offset a $699,174 increase in benefit payments. •The Plan’s funding object ive is to meet long-term benefit obligat io ns to the extent possible. As of December 31, 2007, the date of the latest actuarial valuat io n, the funded ratio of the Plan was 94.6%. In general, this means that for every dollar of pensio n benefits due, the Plan has ap- proximately $0.95 of net assets available for payment. The Plan’s fu nding ratio increased by 3.5%as compared with the funding ratio for December 31, 2006. The increase in the funding ra- tio is attributed to both plan contribut io ns and improved cumulative invest me nt returns. •Total additions to the Plan’s net assets (page 12)amo unted to $25,813,749 fo r the year 2007 con- sist ing of an invest me nt gain of $18,111,293 and emplo yer contributions of $7,702,456. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________FOR THE YEAR ENDED DECEMBER 31, 2007 ___________________________________________________________________________________ Page 5 •Ad ministrative expenses (deductions to the Plan’s net assets, page 12)decreased fro m $150,548 fo r fiscal 2006 to $147,231 fo r 2007 or $3,317 (2.2%)which primary reflected the net impact of a decrease in the cost of actuarial services. FINANCIAL HIGHLIGHTS 2006 •Net assets held in trust for pension benefits totaled $174,256,931 as of December 31, 2006 for an increase of $16,434,354 or 10.4%as compared with December 31, 2005. This increase in net as- sets primarily resulted fro m cu mulative investment gains during the year that more than o ffset a $1,060,367 increase in benefit payments. •The Plan’s funding object ive is to meet long-term benefit obligat io ns to the extent possible. As of December 31, 2006, the date of the latest actuarial valuat io n, the funded ratio of the Plan was 91.1%. In general, this means that for every dollar of pensio n benefits due, the Plan has ap- proximately $0.91 of net assets available for payment. The Plan’s fu nding ratio increased by 2% as compared wit h t he funding ratio for December 31, 2005. The increase in the funding rat io is attributed to both plan contributio ns and improved cumulative invest me nt returns. •During 2006 the Plan cont inued its efforts to more broadly diversify it s investment asset base. Invest me nt asset classes that were added included: real estate. The increased diversificat io n was achieved by lowering the exposure to domest ic large cap commo n stock. •Total additions to the Plan’s net assets (page 12)amo unted to $24,426,685 for the year 2006 con- sist ing of an invest me nt gain of $17,565,462 and emplo yer contributions of $6,861,223. •Ad ministrative expenses (deductions to the Plan’s net assets, page 12)increased fro m $116,986 fo r fiscal 2005 to $150,548 fo r 2006 or $33,562 or 28.7%which primarily reflected an increase in t he cost of actuarial services due to special projects. ANALYSIS OF FINANCIAL ACTIVITIES The Plan’s funding object ive is to meet long-term benefit obligat io ns through investment inco me and contributions. Accordingly, the receipt of employer contribut io ns and the inco me fro m invest me nt s pro- vide the reserves needed to finance future retirement benefits. The Metropolitan St. Louis Sewer District’s (the District)co nt ributions into the Plan continue to in- crease as the result of a combination o f fact ors, including an increase in salaries and a lower than ant ici- pated invest me nt performance as measured on an actuarially smoothed basis. Relative to the Public Fund peer group for 2007 and 2006,the Fund was up 11.2% and 12.3%,respectively, which ranked in the 8t h and 72nd percent ile, respect ively,of the Public Fund universe. Net assets held in t rust for pen- sion benefits increased by $17,125,561 in 2007 and $16,434,354 in 2006. These net assets are used to meet ongoing benefit obligat io n to the Plan’s participants and their beneficiaries. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________FOR THE YEAR ENDED DECEMBER 31, 2007 ___________________________________________________________________________________ Page 6 Required emplo yer contributions as determined by the Plan’s actuary increased for 2007 compared to 2006.Items that effected the current year’s contribut io n include: wage inflat io n. As the years roll fo r- ward and total assets and liabilit ies grow, the Plan’s invest me nt inco me will play a more significant role in funding future retirement benefits -eventually providing 80%-90%of the necessary fu nds. There- fo re, invest me nt return over the long-term is critical to the funding status of the Plan. Net invest me nt inco me o f $18,111,293 in 2007 and $17,565,462 in 2006 was significant ly higher than the actuarially assumed invest me nt inco me. Overall, the Plan is adequately funded and any accumula- tive difference between actuarial liabilit ies and assets is being amortized and funded over an appropriate period. It is important to remember that the Plan’s funding is based on a long time horizon, where tem- porary ups and downs in the market are expected. The more crit ical factor is that the Plan be able to meet an actuarially assumed earnings yield of, on average, 7.5%annual return on invest me nt s fo r both 2007 and 2006. The Plan’s average return for both 2007 and 2006 was 9.9%and 10.6%, respectively, which is above the actuarially assumed investment rate of 7.5%. The Plan cont inues to retain an investment consultant to ident ify opportunit ie s to improve invest me nt return. A suggestion made by the invest me nt consultant is that the Plan should mo re broadly diversify it s invest me nt asset base. As such,the Plan added new asset classes such as emerging equit y invest- ments, market neutral, high yield fixed inco me investments,and abso lut e return strategy during 2005, and cont inues to seek effect ive opportunit ie s to diversify the asset base. Based upon our latest actuarial valuat io ns fo r the years ended December 31, 2007 and 2006, the Plan’s actuarial value of assets was less than it s actuarial value of liabilit ie s by $10,477,707 and $16,674,606, respectively.The unfunded actuarial accrued liability decreased by $6,196,899 or 37.2% Additional future funding will be needed to continue to reduce this liability. FINANCIAL ANALYSIS The condensed statements of plan net assets as compared to prior years are as fo llo ws: December 31 2007 Change 2007 2006 Amount Percent ASSETS Invest me nt s at fair value $190,730,668 174,086,388 16,644,280 9.6% Other assets 2,053,823 7,496,267 (5,442,444)(72.6) Total Assets 192,784,491 181,582,655 11,201,836 6.2 LIABILITIES 1,401,999 7,325,724 (5,923,725)(80.9) NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $191,382,492 174,256,931 17,125,561 9.8% THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________FOR THE YEAR ENDED DECEMBER 31, 2007 ___________________________________________________________________________________ Page 7 December 31 2006 Change 2006 2005 Amount Percent ASSETS Invest me nt s at fair value $174,086,388 157,201,364 16,885,024 10.7% Other assets 7,496,267 7,376,246 120,021 1.6 Total Assets 181,582,655 164,577,610 17,005,045 10.3 LIABILITIES 7,325,724 6,755,033 570,691 8.4 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $174,256,931 157,822,577 16,434,354 10.4% As previously noted, net assets viewed over time may serve as a useful indicatio n of the Plan’s financial position. At the close of calendar years 2007 and 2006, the assets of the Plan exceeded its liabilities with $191,382,492 and $174,256,931, respectively, in net assets held in trust for pension benefit s. The net assets are available to meet the Plan’s ongoing obligatio n to the Plan’s participants and their benefi- ciaries. Despite variat io ns in the stock market, management and the Plan’s actuary concur that the Plan remains in a sound financial posit io n t o meet its obligations to the Plan’s part ic ipants and beneficiaries. The cur- rent financial posit io n is the result of a successful investment program and prudent management prac- tices that have been in place for many years. The condensed statements of changes in plan nets assets as compared to prior years are as fo llo ws: For The Years Ended December 31 2007 Change 2007 2006 Amount Percent ADDITIONS Net invest me nt inco me $18,111,293 17,565,462 545,831 3.1% Employer contribut io ns 7,702,456 6,861,223 841,233 12.3 Total Addit io ns 25,813,749 24,426,685 1,387,064 5.7 DEDUCTIONS Benefit s paid to retirees and beneficiaries 8,540,957 7,841,783 699,174 8.9 Ad ministrative expenses 147,231 150,548 (3,317 )(2.2) Total Deductions 8,688,188 7,992,331 695,857 8.7 NET INCREASE 17,125,561 16,434,354 691,207 4.2 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, JANUARY 1 174,256,931 157,822,577 16,434,354 10.4 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, DECEMBER 31 $191,382,492 174,256,931 17,125,561 9.8% THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________FOR THE YEAR ENDED DECEMBER 31, 2007 ___________________________________________________________________________________ Page 8 For The Years Ended December 31 2006 Change 2006 2005 Amount Percent ADDITIONS Net invest me nt inco me $ 17,565,462 8,475,275 9,090,187 107.3% Employer contribut io ns 6,861,223 7,192,531 (331,308 )(4.6) Total Addit io ns 24,426,685 15,667,806 8,758,879 55.9 DEDUCTIONS Benefit s paid to retirees and beneficiaries 7,841,783 6,781,416 1,060,367 15.6 Ad ministrative expenses 150,548 116,986 33,562 28.7 Total Deductions 7,992,331 6,898,402 1,093,929 15.9 NET INCREASE 16,434,354 8,769,404 7,664,950 87.4 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, JANUARY 1 157,822,577 149,053,173 8,769,404 5.9 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, DECEMBER 31 $174,256,931 157,822,577 16,434,354 10.4% As noted above, the funds needed to finance retirement benefit s are accumulated through the collection of employer contribut io ns and through earnings on invest me nt s (net of investment expense). Total addi- tions for the years ended December 31, 2007 and 2006, totaled $25,813,749 and $24,426,685, respec- tively. Invest me nt gains fo r 2007 exceeded 2006. The investment section of this report summarizes the results of investment activit y fo r the year ended December 31, 2007. The Plan was created to provide retirement, survivor,and disabilit y be nefits to qualified members and their beneficiaries. The cost of such programs includes recurring benefit payments as designated by the Plan, and the cost of administering the Plan. As noted above deductions fo r the year ended December 31, 2007 totaled $8,688,188, an increase of 8.7%over 2006. The increase in benefit s paid resulted primarily fro m a n increase in the number of re- tirees receiving benefits. Deductions from plan net assets of $8,688,188 were exceeded by additions to plan net assets of $25,813,749 by $17,125,561 fo r the year ended December 31, 2007. The Plan has consistent ly ma naged within its administrative expense budget, with no material variances between planned and actual expenditures. Investment Performance -2007 The fo llo wing are a few characterist ic s and achievements for the Plan for the year ending December 31, 2007: THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________FOR THE YEAR ENDED DECEMBER 31, 2007 ___________________________________________________________________________________ Page 9 •The Plan ended the year with $191,382,492 in net assets. •The Plan’s performance for the year was 9.9% compared to the passive policy index of 8.3%, and the average five-year return was 11.9% compared to the passive po licy index o f 11.6%. •The District retains an independent invest me nt consultant to monitor the invest me nt performance of the Plan and ident ify opportunit ie s fo r improved returns. The recommendat io n of the invest- ment consultant has been to more broadly diversify the investment asset base of the Plan. •The strategic asset allocat io n compared to the December 31, 2007 actual allocat io n was as fo l- lo ws: Proposed Actual Asset Class Target Range 2007 2006 Equities: Domestic Large-Cap Stocks 20%16 -24 19.6 20.1 Domestic Small-Cap Stocks 10 8 -12 9.2 10.3 International Developed Markets Stocks 10 8 -12 9.7 10.7 International Emerging Markets Stocks 3 2 -5 3.5 4.0 Fixed Inco me: Domestic Core Bonds 20 16 -24 19.2 17.0 Global Bonds 8 6 -10 8.1 7.5 High Yield Bonds 5 3 -7 4.5 4.8 Other: Global Tactical 10 8 -12 9.7 9.8 Real Estate 5 3 -7 5.1 5.0 Market Neutral 5 3 -7 5.6 4.9 Absolute Return 4 3 -7 3.9 3.9 Cash Equivalents - - 1.9 2.0 The large-cap stocks were diversified between active value, active growth,and passive core strategies. This allocation adds value to the fu nd during the year by adding diversification. The purpose of emplo ying a Global Tactical allocation manager is to provide an additio nal layer of di- versificat io n with the twin goals of increasing return and decreasing risk. Global Tact ic al asset alloca- tion managers have the abilit y t o invest in more than one asset class and full authorit y t o adjust the weight ing of the asset classes under their discret io n. The Abso lut e Return allocat io n invest me nt objective is to achieve attractive long-term, risk-adjusted, returns in a variet y o f capital market condit io ns. The fund-of-fu nds portfo lio should achieve this object- tive by purchasing invest me nt fu nds that utilize a broad range of absolut e return oriented invest me nt strategies. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________FOR THE YEAR ENDED DECEMBER 31, 2007 ___________________________________________________________________________________ Page 10 The Plan Administrator and the Consultant will review the Plan’s asset allocat io n quarterly to determine if the allocat io n is consistent with the established exposure ranges. If an asset class is at or beyond the maximum/minimum range as determined at the quarterly asset allocat io n review, the Plan Administra- tor, with the assistance o f t he Consultant, will develop a plan to rebalance the allocatio n to target. At a minimum, a rebalancing plan will move the allocation to the midpo int between the maximum/minimum limit vio lated and the target allocat io n. The Plan Administrator and the Consultant will consider market conditions and transact io n costs, as well as any other relevant factors when rebalancing, but shall have a predisposition to transfer funds fro m asset classes that are outperforming to asset classes that are under- performing. FIDUCIARY RESPONSIBILITIES The Board of Trustees and senior management are fiduciaries of the Plan and Trust. Fiduciaries are charged wit h t he responsibilit y o f assuring that the assets of the Plan are used exclusively for the benefit of the Plan’s participants and their beneficiaries. REQUEST FOR INFORMATION This financial report is designed to provide the Board of Trustees, our members, ratepayers, invest me nt managers, and creditors with an overview of the Plan’s finances and accountabilit y fo r the money re- ceived. Questions concerning any of the information provided in this report or requests for addit io nal financial information should be addressed to or emailed to: Karl J. Tyminski, Secretary-Treasurer The Metropolitan St. Louis Sewer District 2350 Market Street St.Lo uis, MO 63103-2555 or kjtymi@st lmsd.co m THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN ______________________________________________________STATEMENTS OF PLAN NET ASSETS 2007 2006 ASSETS Investments at fair value: Mutual funds 79,191,173$ 77,536,014 Corporate obligations 28,293,559 26,337,175 Collective investment fund 20,541,658 17,280,027 Domestic common stocks 17,271,953 22,889,423 U.S. Treasury and agency obligations 16,025,339 11,648,884 Money market funds 13,344,451 5,287,224 Foreign obligations 12,547,217 10,690,513 Foreign stocks 1,989,958 1,395,726 Municipal obligations 1,356,398 871,216 Domestic preferred stock 168,962 147,333 Principal cash - 2,853 Total Investments 190,730,668 174,086,388 Receivables: Due from brokers for forward currency exchange contracts 1,120,647 6,787,476 Due from brokers for securities sold 69,684 3,173 Interest and dividends receivable 863,492 705,618 Total Receivables 2,053,823 7,496,267 Total Assets 192,784,491 181,582,655 LIABILITIES Due to brokers for forward currency exchange contracts 1,096,610 6,897,613 Due to brokers for securities purchased 152,391 249,764 Accrued expenses 152,998 178,347 Total Liabilities 1,401,999 7,325,724 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS (a schedule of funding progress is presented on page 25)191,382,492$ 174,256,931 See notes to financial statements___________________________________________________________________ Page 11 December 31 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN _______________________________________________________________STATEMENTS OF CHANGES IN PLAN NET ASSETS 2007 2006 ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Net appreciation in fair value of investments 12,823,681$ 12,617,522 Interest and dividends 5,932,903 5,496,319 Total Investment Income 18,756,584 18,113,841 Less - Investment managers and advisor fees 645,291 548,379 Net Investment Income 18,111,293 17,565,462 Employer contributions 7,702,456 6,861,223 Total Additions 25,813,749 24,426,685 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to retirees and beneficiaries 8,540,957 7,841,783 Administrative expenses 147,231 150,548 Total Deductions 8,688,188 7,992,331 NET INCREASE 17,125,561 16,434,354 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, JANUARY 1 174,256,931 157,822,577 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, DECEMBER 31 191,382,492$ 174,256,931 See notes to financial statements______________________________________________________________ Page 12 Ended December 31 For The Years THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 13 NOTE A -DESCRIPTION OF PLAN The fo llo wing brief descript io n of THE METROPOLITAN ST. LOUIS SEWER DISTRICT EM- PLOYEES’ PENSION PLAN (the Plan) is provided for general informat io n purposes only. Members should refer to the Plan ordinance for more complete informat io n. The Plan is a noncontributory single employer defined benefit plan providing retirement benefit s as well as death and disabilit y be nefits. As a condit io n o f e mp lo yment, all full-time emplo yees of The Metro- politan St. Louis Sewer Dist rict (the District) are covered by the Plan. Membership in t he Plan consists of: December 31 Increase 2007 2006 (Decrease) Retirees and beneficiaries current ly receiving benefits 504 481 23 Terminated members ent it led to receive benefit s 198 199 (1 ) Act ive plan members 811 798 13 Total 1,513 1,478 35 The District’s Board of Trustees, primarily to improve benefits to members, amends the Plan, estab- lished on November 1, 1967. A Pensio n Co mmittee consist ing of two members of the District’s Board of Trustees, two elected emplo yee members,and four members o f t he District’s management staff ad- minister the Plan. A committee of the District’s Board of Trustees, with the aid of an investment advi- sor, reviews and evaluates the Plan’s invest ments and the related rates of return on a periodic basis. The Plan is exempt from the requirements of the Employee Ret ir ement Income Securit y Act of 1974 and, as such, is not subject to the Act’s reporting requirements. All benefit s vest after five years of credited service. Members retiring at or after age 65 with five or mo re years credited service are ent it led to a pension benefit. The Plan permits early ret ir ement with re- duced benefits beginning at age 55 if the member has completed 60 months of employment. Ordinance No. 10664 provides for unreduced retirement benefits to any member whose combined age and term of service is equal to 75. Effect ive January 1, 1999, Ordinance No. 10491 amended the Plan’s benefit s fo r- mula. The annual benefit payable became 1.4% of final average earnings plus 0.4% of final average earnings that are in excess of covered earnings multiplied by the period of years and mo nt hs of credited service not to exceed 35 years. Also, the annual reduction for early retirement was revised fro m 5% to 2% prior to age 60 and from 2.5% to 1% after age 60. Ordinance No. 10664, effective January 1, 2000, amended the Plan’s benefits formula to 1.45% of final average earnings plus 0.4% of final average earnings that are in excess of covered earnings mult iplie d by t he period of years and months of credited service not to exceed 35 years. This ordinance also pro- vided for a survivor’s benefit for vested members who have not yet reached their normal retirement date or earned 75 points. The survivor’s benefit is equal to the greater of 50% of the member’s mont hly ac- crued retirement benefit as o f t he date of death, or 15% of the monthly earnings and the member’s mo nt hly accrued retirement benefit actuarially reduced under the 100% joint and survivor annuit y o p- THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 14 NOTE A -DESCRIPTION OF PLAN (Continued) tion. Members are also able to select a Contingent Annuity P op-Up option. This option allows the member to elect a survivor annuit y fo r life, with the provisio n t hat if the beneficiary should predecease the member, the benefit shall increase to the amount payable had the survivor option not been selected. Ordinance Number 10872, effect ive January 1, 2001, further amended the Plan to extend the cost of liv- ing increases for retirees fro m a ma ximum o f 30% to 45% of the original benefit . Effect ive August 1, 2004, Ordinance No. 11781 amended the Plan to change the benefit formula to 1.7% of final average earnings plus 0.4% of final average earnings that are in excess of covered earnings mu l- tiplied by the period of years and months of credited service not to exceed 35 year s without including accrued sick leave. A member who retires between August 1, 2004 and July 1, 2007 is ent it led to select the greater of the above or the benefit calculated under the 1.45%/1.85% benefit formula including ac- crued sick leave. Sick leave is paid out at 1.25% per year of service times the amount of leave accrued. Also, the Plan was amended to provide the retiring member with a 10% partial lump sum payment op- tion. The balance of the distribut io n will be paid in accordance wit h any one of the other payment op- tions available under the Plan. The retirement benefit payable to a member who retires after the normal retir ement date is the greater of a) the benefit that would have been payable on the normal ret ir ement date plus a special annual ret ir e- ment benefit provided by the accumulated value, at 4% per annum interest, of the monthly benefit that would have been received prior to the postponed retirement date or b) the benefit determined as of the postponed retirement date under the normal formula. NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied by the Plan in t he preparation of the acco mpanying financial statements are summarized as fo llo ws: 1.Basis of Accounting The Plan’s financial statements are prepared using the accrual basis of accounting. Em- ployer contribut io ns are recognized as revenues in the period when due and the District’s Trustees have made a formal co mmit ment to provide the contribut io n. Benefit s are rec- ognized when due and payable in accordance with the terms of the Plan. Plan expenses are recorded when the corresponding liabilit ies are incurred regardless of when payment is made.Invest me nt purchases and sales are recorded on a trade-date basis. 2.Use of Estimates The preparation of financial statements in conformity w it h U.S. generally accepted ac- counting principles requires management and the Plan’s actuary to make est imates and assumptions that affect the reported amounts of assets and liabilit ies and disclo sure of THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 15 NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.Use of Estimates (Continued) contingent assets and liabilit ies at the date of the financial statements and the reported amounts of addit io ns to and deductions fro m net assets during the reporting period. Ac- tual results could differ fro m t hose estimates. 3.Method Used to Value Investments The Plan’s invest me nt assets, which are trusteed by U.S.Bank, N.A., are reported at fair value as determined and cert ified by the Trustee. Investments traded on a national ex- change are valued at reported sales prices. Investments that do not have an established market are reported at estimated fair value. The money market fund is reported at cost, which approximates fair value. NOTE C -CASH AND INVESTMENTS 1.Categories of Asset Risk The Plan is authorized to invest in: •Equity Invest me nt s: Common stocks of corporations, mutual funds, or commingled equity fu nds (Domest ic and Internat io nal, both within defined limit s);however, the investment in equit ie s cannot exceed 53%of total investments. •Fixed Inco me Invest me nt s: U.S.government and agency securit ie s,corporate bonds, debentures, notes,or other evidence of indebtedness assumed or guaranteed by corpo- rations (Domestic and International, both within defined limits);however, the invest- ment in fixed inco me cannot exceed 41% of total investments. •Short-term Securities: Commercial paper, treasury bills, certificates of deposit s, and/or money market funds. •Real Estate Invest me nt s:Real estate invest me nt trusts and mu lt i-employer property trusts; however, the invest me nt in real estate cannot exceed 7% of total invest me nt s. •Global Tactical Asset Allo cat io n, Market Neutral, and Abso lut e Return: These in- vestment strategies help diversify the invest me nt portfolio while increasing return and decreasing risk. These invest me nt s cannot exceed 12%, 7%, and 7% of total invest- ments, respectively. •Futures Contracts: Currency forward contracts for the purpose of currency risk man- agement of non-U.S. investments. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 16 NOTE C -CASH AND INVESTMENTS (Continued) 1.Categories of Asset Risk (Continued) The fa ir value of investments managed consisted of the follo wing: December 31 2007 2006 Invest me nt s at fair value: Mutual funds: Domestic equity $ 28,030,598 28,086,030 Foreign equity 25,232,194 25,581,205 Balanced 18,532,206 17,068,435 Fixed inco me 7,396,175 6,800,344 Corporate obligat io ns 28,293,559 26,337,175 Collect ive invest me nt fu nd s: Equity market neutral 10,715,369 8,546,512 Real estate 9,826,289 8,733,515 Domestic commo n stocks 17,271,953 22,889,423 U.S. Treasury and agency obligat io ns 16,025,339 11,648,884 Money market funds 13,344,451 5,287,224 Foreig n obligat io ns 12,547,217 10,690,513 Foreign stocks 1,989,958 1,395,726 Municipal o bligat io ns 1,356,398 871,216 Domestic preferred stock 168,962 147,333 Principal cash - 2,853 Total Invest me nt s $190,730,668 174,086,388 2.Interest Rate Risk The Plan had the fo llo wing debt securities and maturities: December 31, 2007 Weighted Average Investment Type Fair Value Maturity (Years) Corporate obligat io ns $28,293,559 3.88 U.S. Treasury and agency obligat io ns 16,025,339 4.81 Foreign obligat io ns 12,547,217 3.69 Municipal obligat io ns 1,356,398 2.25 $58,222,513 Portfo lio weighted average maturit y 4.05 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 17 NOTE C -CASH AND INVESTMENTS (Continued) 2.Interest Rate Risk (Continued) December 31, 2006 Weighted Average Investment Type Fair Value Maturit y (Years) Corporate obligat io ns $26,337,175 3.51 U.S. Treasury and agency obligat io ns 11,648,884 6.80 Foreign obligat io ns 10,690,513 4.23 Municipal obligat io ns 871,216 2.57 $49,547,788 Portfo lio weighted average maturit y 4.42 The Plan will minimize the risk that the market value of securitie s in the portfolio will fall due to changes in general interest rates by: •Structuring the investment portfolio so that securities mature to meet cash require- ments for benefit payments, thereby avoid ing the need to sell securit ies on the open market prior to maturity. •Monitoring fixed income investment managers performance to be sure the fixed in- come portion of the invest me nt portfolio is managed to predetermined indexes. 3.Credit Risk The Plan will minimize credit risk, the risk of loss due to failure of the security issuer or backer, by: •Pre-qualifying the financial inst it utions, broker/dealers, intermediaries, and advisors with which the Plan will do business; and •Diversifying the portfo lio so that potential lo sses on individual securit ie s will be minimized. The fo llo wing tables provide information on the credit ratings associated with the Plan’s investments in debt securities: THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 18 NOTE C -CASH AND INVESTMENTS (Continued) 3.Credit Risk (Continued) Credit Rating By Investment As Of December 31, 2007 U.S. Treasury S&P And Agency Municipal Corporate Foreign Rating Obligations Obligations Obligations Obligations Totals AAA $16,025,339 768,713 9,836,800 7,110,047 33,740,899 AA - 587,685 4,041,275 576,620 5,205,580 A - - 5,294,242 3,210,272 8,504,514 BBB - - 3,103,884 176,185 3,280,069 BB - - 376,340 924,356 1,300,696 B - - 5,200,580 484,800 5,685,380 CCC - - 440,438 - 440,438 Not Rated - - - 64,937 64,937 Total $16,025,339 1,356,398 28,293,559 12,547,217 58,222,513 Credit Rating By Investment As Of December 31, 2006 U.S. Treasury S&P And Agency Municipal Corporate Foreign Rating Obligations Obligations Obligations Obligations Totals AAA $11,648,884 871,216 7,820,946 6,717,618 27,058,664 AA - -3,009,616 202,931 3,212,547 A - - 7,370,670 1,827,140 9,197,810 BBB - - 1,464,031 817,369 2,281,400 BB - - 908,424 513,567 1,421,991 B - - 5,344,382 611,888 5,956,270 CCC - - 419,106 - 419,106 Total $11,648,884 871,216 26,337,175 10,690,513 49,547,788 4.Foreign Currency Risk Foreign Currency Risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. The Plan’s policy is to allow the individual investme nt managers to decide what action to take regarding their respective portfolio ’s foreign cur- rency exposure. The fo llowing tables demonstrate the Plan’s current level o f fo reign cur- rency exposure: THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 19 NOTE C -CASH AND INVESTMENTS (Continued) 4.Foreign Currency Risk (Continued) Foreign Currency Exposures By Asset Class In U.S. Dollars As Of December 31, 2007 Foreign Currency Equities Obligations Totals Australian Dollar $ - 1,896,101 1,896,101 Brazil Real - 529,147 529,147 British Pound Sterling - 1,028,126 1,028,126 Canadian Dollar - 789,292 789,292 Indonesia Rupiah - 395,208 395,208 Malaysian Ringgit - 723,967 723,967 Mexican Peso - 669,280 669,280 New Z eala nd Dollar - 621,346 621,346 Norwegian Krone - 767,972 767,972 Polish Zloty - 1,138,968 1,138,968 Singapore Dollar - 1,055,877 1,055,877 South Africa Rand - 682,761 682,761 Swedish Krona - 1,319,772 1,319,772 Not denominated in a foreign currency 1,989,958 929,400 2,919,358 $1,989,958 12,547,217 14,537,175 Foreign Currency Exposures By Asset Class In U.S.Dollars As Of December 31, 2006 Foreign Currency Equities Obligations Totals Australian Dollar $ - 1,366,149 1,366,149 Brazil Real - 327,845 327,845 British Pound Sterling - 517,291 517,291 Canadian Dollar - 988,785 988,785 Euro - 1,454,969 1,454,969 Indonesia Rupiah - 281,652 281,652 Malaysian Ringgit - 274,188 274,188 Mexican Peso - 638,867 638,867 New Zealand Dollar - 454,025 454,025 Polish Zloty - 917,000 917,000 Singapore Dollar - 908,602 908,602 South Africa Rand - 635,952 635,952 Swedish Krona - 902,884 902,884 Taiwan Baht - 138,003 138,003 Not denominated in a foreign currency 1,395,726 884,301 2,280,027 $1,395,726 10,690,513 12,086,239 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 20 NOTE C -CASH AND INVESTMENTS (Continued) 5.Open Foreign Currency Exchange Contracts in U.S. Dollars Open Contracts As Of December 31, 2007 Aggregate Fair Cost Delivery Unrealized Unrealized Value Value Dates Appreciation Depreciation Foreign currency exchange contracts purchased: Canadian Dollar $139,825 $139,131 1/24/2008 $ 694 - Foreign currency ex- change contracts so ld: British Pounds 957,479 980,822 3/20/2008 23,343 - $24,037 - Open Contracts As Of December 31, 2006 Aggregate Fair Cost Delivery Unrealized Unrealized Value Value Dates Appreciat io n Depreciation Foreign currency exchange contracts purchased: Au stralian Do llar $1,365,203 $1,365,068 5/18/2007 $ 135 - British Pound Sterling 514,876 512,575 3/19/2007 2,301 - Euro 820,540 783,023 3/23/2007 37,517 - and 590,309 593,338 5/25/2007 - 3,029 New Zealand Dollar 441,042 432,551 5/18/2007 8,491 - Foreign currency ex- change contracts so ld: Japanese Yen 2,914,420 2,972,000 5/24/2007 57,580 - and 581,508 593,338 5/25/2007 11,830 - Thailand Baht 198,331 193,643 1/26/2007 - 4,688 $117,854 7,717 The fair value of open currency forward contracts, including any unrealized appreciatio n or depreciat io n, is recorded in the statements of plan net assets as amounts due from/to brokers for securities so ld/purchased. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 21 NOTE C -CASH AND INVESTMENTS (Continued) 5.Open Foreign Currency Exchange Contracts in U.S. Dollars (Continued) Based upon the advice of the Plan’s invest me nt consultant and the Plan’s invest me nt po l- icy and guidelines, the invest me nt s in currency forward contracts do not, in t he Plan’s judgment, have any legal risk. The currency forward contracts are executed through large money center banks with credit rating standards. The credit risk exposure could be with the bank counterparty. Depending on the bank, the degree of credit risk could vary. Based on the assessment of the Plan’s investment manager trading the account and the Plan’s investme nt consultant, the risk is minima l. NOTE D -INVESTMENTS GREATER THAN 5% OF NET ASSETS HELD IN TRUST FOR PENSION BENEFITS Investments which exceed 5% or more of net assets held in trust for pensio n benefits are as fo llo ws: December 31 2007 2006 Morgan Stanley Inst it utional Internat io nal Equit y $18,547,348 18,634,162 GMO Global Balanced Asset Allocation 18,532,206 17,068,436 First American Prime Money Market 13,344,451 - Vanguard Windsor II Fund 12,491,093 13,461,504 Pyramis US Equity Market Neutral 10,715,369 - CIGNA Small-Cap Fund 10,070,073 9,154,727 UBS Real Estate Separate Account 9,826,289 8,733,515 NOTE E -CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE Ordinances establishing the Plan provide for actuarially determined annual contributions by the District that are sufficient to pay benefit s when due. The Entry Age Normal funding method is used to deter- mine contribut io ns. Contribut ions of $7,673,240 and $6,847,278, excluding certain professio nal fees paid by the District, were made to the Plan in 2007 and 2006, respectively. These annual contribut io ns were made in accor- dance with actuarially determined contributio n requirements based on actuarial valuat io ns performed at January 1, 2007 and 2006,respectively, and consisted of: THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 22 NOTE E -CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE (Continued) For The Years Ended December 31 2007 2006 Normal cost $5,617,087 4,660,812 Amortizat io n of the unfunded actuarial accrued liability 1,520,811 1,708,749 7,137,898 6,369,561 Interest factor of 7.5% 535,342 477,717 Current Year Contribution Due Fro m T he District As Calculated By The Plan’s Actuary $7,673,240 6,847,278 Certain professio nal fees, included in administrative expenses,are paid by the District and are recog- nized as contributions to the Plan and totaled $29,216 and $13,945 fo r the years ended December 31, 2007 and 2006, respectively. The District provides office space, utilities, and other services to the Plan at no cost. Other costs of administering the Plan are financed from plan net assets. NOTE F -FUNDED STATUS AND FUNDING PROGRESS The funded status of t he Plan as of January 1, 2008, the most recent actuarial valuation date, and Janu- ary 1, 2007 is as fo llo ws (dollar amounts in t housands): Valuation For The Entry Age Actuarial Actuarial UAAL As A Years Actuarial Accrued Unfunded Annual Percentage Beginning Value Liability AAL Funded Covered Of Covered January 1 Of Assets (AAL) (UAAL) Ratio Payroll Payroll 2008 $185,356 $195,834 $10,478 94.6%$43,640 24.0% 2007 170,757 187,432 16,675 91.1 42,113 39.6 The schedules of funding progress, presented as required supplemental information fo llo wing the notes to financial statements, present multi-year trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. Addit io nal information as o f t he latest actuarial valuation fo llo ws: THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________NOTES TO FINANCIAL STATEMENTS __________________________________________________________________________________ Page 23 NOTE F -FUNDED STATUS AND FUNDING PROGRESS (Continued) Valuat io n dates January 1, 2008 and 2007 Actuarial cost method Entry Age Normal Amortizat io n met hod Level do llar closed Amortizat io n period 20 year period Asset valuat io n met hod Three-ye ar average of adjusted market values Post-retirement cost-of-living CPI with maximum 3% of current benefit or $50 if less, and benefit increases lifet ime maximum 45% in the original benefit or $750 if less Actuarial assumpt io ns: Invest me nt rate of return 7.5% per annum (1) Projected salary increases 5.5% per annum (1) Social Security wage base 4.5% per annum increase (1) (1) Includes inflat io n co mponent of 3%. NOTE G -RISK MANAGEMENT The Plan is exposed to various risks of loss related to natural disasters, errors and omissions, loss of a s- sets, torts, etc. The Plan has chosen to cover such losses through the purchase of commercial insurance. There have been no material insurance claims filed or paid during the past three fiscal years. NOTE H -RISKS AND UNCERTAINTIES The Plan invests in various investment securit ie s. Invest me nt securit ies are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securit ie s, it is at least reasonably possible that changes in t he values of invest me nt securities will occur in t he near term, and that such changes could materially affect the amounts reported in the stat ements of plan net assets. Actuarial present value of accumulated plan benefits are reported based on certain assumptions pertain- ing to interest rates, inflat io n rates, and emplo yee demographics, all o f which are subject to change. Due to uncertaint ie s inherent in the est imat io ns and assumpt io ns process, it is at least reasonably possible that changes in these est imates and assumpt io ns in the near term would be material to the financial stat e- ments. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN _______________________________________REQUIRED SUPPLEMENTAL INFORMATION __________________________________________________________________________________ Page 24 REQUIRED SUPPLEMENTAL INFORMATION SECTION THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN _______________________________________REQUIRED SUPPLEMENTAL INFORMATION __________________________________________________________________________________ Page 25 Six-year historical trend informat io n about the Plan is presented herewith as required supplemental in- fo rmat io n. This informat io n is intended to help users assess the Plan’s fu nding status on a going- concern basis, assess progress made in accumulat ing sufficient assets to pay benefits when due, and make co mpar isons wit h other plans. SCHEDULE OF FUNDING PROGRESS (dollars in thousands) Valuation For The Entry Age Actuarial Actuarial UAAL As A Years Actuarial Accrued Unfunded Annual Percentage Beginning Value Liability AAL Funded Covered Of Covered January 1 Of Assets (AAL) (UAAL) Ratio Payroll Payroll 2008 $185,356 $195,834 $10,478 94.6%$43,640 24.0% 2007 170,757 187,432 16,675 91.1 42,113 39.6 2006 158,321 177,630 19,309 89.1 40,144 48.1 2005 142,986 168,237 25,251 85.0 39,382 64.2 2004 133,966 159,444 25,478 84.0 37,637 67.7 2003 129,783 150,405 20,622 86.3 38,868 53.1 Analysis of the dollar amounts of plan net assets, AAL, and UAAL in iso lation can be misleading. Ex- pressing plan net assets as a percentage of the AAL provides one indication of the Plan’s funding status on a going-concern basis. Analysis o f t his percentage over time indicates whether the Plan is beco ming financially stronger or weaker. Generally, the greater this percentage, the stronger the Plan. Trends in the UAAL and annual covered payroll are both affected by inflat io n. Expressing the UAAL as a percentage of annual covered payroll approximately adjusts for the effects of inflatio n and aids analysis of the Plan’s progress made in accumulat ing sufficient assets to pay benefits when due. Gener- ally, the smaller this percentage, the stronger the Plan. SCHEDULE OF EMPLOYER CONTRIBUTIONS IN ACCORDANCE WITH GASB STATE- MENT NO. 25 For The Annual Contribution As Years Ended Required Actual Percentage A Percentage Of December 31 Contribution Contributions Contributed Covered Payro ll 2007 $7,260,259 $7,702,456 105.7%17.7% 2006 7,015,905 6,861,223 97.6 16.3 2005 6,980,026 7,192,531 102.9 17.9 2004 6,384,774 6,797,077 106.1 17.3 2003 5,385,572 6,002,479 111.3 15.9 2002 4,370,579 4,789,473 109.3 12.7 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN _______________________________________REQUIRED SUPPLEMENTAL INFORMATION __________________________________________________________________________________ Page 26 NOTE TO REQUIRED SUPPLEMENTAL INFORMATION Annual Required Contribution (ARC) The ARC applicable to the Plan’s year ended each year on December 31 in accordance with GASB Statement No. 25 requires blending o f t he actuarial valuat io ns. The ARC is presented each year using the aggregate of the District’s ARCs for the portions of the District’s fiscal years that overlap the Plan’s fiscal year. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN __________________________________________________________STATISTICAL (Unaudited) __________________________________________________________________________________ Page 27 STATISTICAL SECTION (Unaudited) THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN __________________________________________________________STATISTICAL (Unaudited) __________________________________________________________________________________ Page 28 Performance And Net Asset Value (NAV) Year NAV 12/31 Total Plan Performance 1998 $ 113,031,089 11.5% 1999 125,365,457 10.9 2000 125,256,835 (0.1) 2001 123,040,018 (1.8) 2002 113,176,548 (8.0) 2003 137,024,216 21.1 2004 149,053,173 8.8 2005 157,822,577 5.9 2006 174,256,931 10.4 2007 191,382,492 9.8 Net Asset Value (NAV) 12/31 $191.4$174.3$157.8$149.1$137.0 $113.2$123.0$125.3$125.4$113.0 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Millions THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN __________________________________________________________STATISTICAL (Unaudited) __________________________________________________________________________________ Page 29 Revenues by Source Year Employer Contributions Employer Contributions As A Percentage Of Covered Payroll Investment Income (Net)Total 1998 $ 2,810,289 8.1%$ 11,898,138 $ 14,708,427 1999 2,968,216 8.1 12,758,125 15,726,341 2000 2,986,650 7.9 831,238 3,817,888 2001 3,971,540 10.6 (1,878,456)2,093,084 2002 4,789,473 12.7 (9,726,380) (4,936,907) 2003 6,002,479 15.9 23,559,415 29,561,894 2004 6,797,077 17.3 11,551,937 18,349,014 2005 7,192,531 17.9 8,475,275 15,667,806 2006 6,861,223 16.3 17,565,462 24,426,685 2007 7,702,456 17.7 18,111,293 25,813,749 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN __________________________________________________________STATISTICAL (Unaudited) __________________________________________________________________________________ Page 30 Expenses by Type Year Benefit Payments Administrative Expenses Total 1998 $ 2,874,930 $ 186,891 $ 3,061,821 1999 3,250,637 141,336 3,391,973 2000 3,694,444 232,066 3,926,510 2001 4,211,174 98,727 4,309,901 2002 4,830,167 96,396 4,926,563 2003 5,607,334 106,892 5,714,226 2004 6,198,470 121,587 6,320,057 2005 6,781,416 116,986 6,898,402 2006 7,841,783 150,548 7,992,331 2007 8,540,957 147,231 8,688,188 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN __________________________________________________________STATISTICAL (Unaudited) __________________________________________________________________________________ Page 31 Member Count Year Retirees And Beneficiaries Currently Receiving Benefits Terminated Members Entitled To Receive Benefits Active Plan Members Total 1998 406 145 942 1,493 1999 410 151 934 1,495 2000 428 164 890 1,482 2001 443 175 855 1,473 2002 459 182 829 1,470 2003 482 194 788 1,464 2004 490 190 808 1,488 2005 460¹198 780²1,438 2006 481¹199 798²1,478 2007 504¹198 811²1,513 ¹ New actuarial census excluded individuals covered by insurance policy. ² New actuarial census excludes members with less than six months of service. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN __________________________________________________________STATISTICAL (Unaudited) __________________________________________________________________________________ Page 32 Employer Contributions $2,810.3 $2,968.2 $2,986.7 $3,971.5 $4,789.5 $6,002.5 $6,797.1 $7,192.5 $6,861.2 $7,702.5 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (Dollar Am ounts in Millions) Tota l Benefit Payments $2,874.9 $3,250.6 $3,694.4 $4,211.2 $4,830.2 $5,607.3 $6,198.5 $6,781.4 $7,841.8 $8,541.0 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (Dollar A mo unts in Millions ) THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN __________________________________________________________STATISTICAL (Unaudited) __________________________________________________________________________________ Page 33 Total Benefit R ecipents 406 410 428 443 459 482 490 460 481 504 0 100 200 300 400 500 600 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Ne w actua ri al censu s f or 2005 through 2007 e xcluded individuals cove re d by insura nce policy. THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN ______________________________________________________________________________________________STATISTICAL SECTION ______________________________________________________________________________________________________________________ Page 34 Top 10 Investment Holdings As Of December 31, 2007 As Of December 31, 2006 Holding Market Value Percentage Of Plan Market Value Percentage Of Plan Morgan Stanley Institutional International Equity $ 18,547,348 9.7%$18,634,162 10.7% GMO Global Balanced Asset Allocation 18,532,206 9.7 17,068,435 9.8 First American Prime Money Market 13,344,451 7.0 5,007,770 2.9 Vanguard W indsor II Fund 12,491,093 6.5 13,461,504 7.7 Pyramis U.S. Equity Market Neutral 10,715,369 5.6 8,546,512 4.9 CIGNA Small-Cap Fund 10,070,073 5.3 9,154,727 5.3 UBS Real Estate Separate Account 9,826,289 5.1 8,733,515 5.0 PIMCO All Asset Fund 7,396,175 3.9 6,800,344 3.9 Morgan Stanley Emerging Markets Fund 6,684,846 3.5 6,947,043 4.0 Vanguard 500 Index Fund 5,469,432 2.9 5,469,799 3.1 TOTALS $113,077,282 59.2%$99,823,811 57.3% THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES’ PENSION PLAN __________________________________________________________STATISTICAL (Unaudited) __________________________________________________________________________________ Page 35 Schedule Of Investment Managers And Advisor Fees For The Years Ended December 31, 2007 And 2006 2007 2006 Managers Fees: Income Research Management $ 118,975 $ 106,859 UBS Real Estate Separate Account 87,707 19,630 Waddell & Reed 80,486 71,376 Brandywine Asset Management 65,765 56,684 Fidelity Investments 64,913 75,770 PENN Capital Management 64,760 60,410 ARK Asset Managers 60,763 63,210 Buford, Dickson, Harper, & Sparrow 47,769 33,237 Total Managers Fees 591,138 487,176 Advisor Fees: NEPC Investment Advisor 54,153 61,203 TOTAL $ 645,291 $ 548,379