HomeMy Public PortalAboutPension Plan 2006 Audited FinancialsTHE METROPOLITAN ST. LOUIS
SEWER DISTRICT EMPLOYEES'
PENSION PLAN
FINANCIAL REPORT
(Audited)
Year Ended December 31, 2006
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
FINANCIAL REPORT
Page
1
3
INDEPENDENT AUDITORS' REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL STATEMENTS
Statements of Plan Net Assets
Statements of Changes in Plan Net Assets
Notes to Financial Statements
11
12
13
REQUIRED SUPPLEMENTAL INFORMATION
Schedule of Funding Progress 25
Schedule of Employer Contributions in Accordance with GASB Statement No. 25 25
Note to Required Supplemental Information 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 Contributions 32
Total Benefit Recipients 33
Top Ten Investment Holdings 34
Schedule of Investment Managers and Advisor Fees 35
Contents
Hochschild, Bloom & Company LLP
Certified Public Accountants
Consultants and Advisors
INDEPENDENT AUDITORS' REPORT
August 14, 2007
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, 2006
and 2005, 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 audit to obtain reasonable assurance about whether the finan-
cial 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 opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the plan
net assets as of December 31, 2006 and 2005, 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
❑ 16100 Chesterfield Parkway West, Suite 125, Chesterfield, Missouri 63017-4829, 636-532-9525, Fax 636-532-9055
❑ 1000 Washington Square, P.O. Box 1457, Washington, Missouri 63090-8457, 636-239-4785, Fax 636-239-5448
www.hbclp.com POLARIS' Member: Polaris International with Firms in Principal U.S. and International Cities
1 f[111110111
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 of the basic financial statements and, accordingly, we express no opin-
ion on them.
4c E`
CERTIFIED PUBLIC ACCOUNTA S
Page 2
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2006
As management of The Metropolitan St. Louis 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 activities of the Plan for the year ended December 31, 2006. This MD&A is intended to
supplement the Plan's financial statements, and we encourage readers to consider the information pre-
sented here in conjunction with those statements, which begin on page 11.
OVERVIEW OF THE FINANCIAL STATEMENTS
The following 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 information for use in analyzing the funded status of the Plan and includes:
1) Schedule of funding progress
2) Schedule of employer contributions in accordance with GASB Statement No. 25
3) Note to required supplemental information
Certain revenues, expenses associated with administering the Plan, and other trend data are presented
immediately following the required supplemental information section in the statistical section of this re-
port.
The basic financial statements contained in this report are described below:
• The statements of plan net assets is a point in time snapshot of account balances at year-end. It
reports the assets available for future payments to retirees, and any current liabilities that are
owed as of the statement date. The resulting net assets value [assets - liabilities = net assets]
represents the value of assets held in trust for pension benefits.
• 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-
ments of plan net assets from the prior year to the current year. Both statements are in compli-
ance with Governmental Accounting Standards Board (GASB) Pronouncements.
Page 3
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2006
• The notes to financial statements are an integral part of the financial statements and provide ad-
ditional information that is essential for a comprehensive understanding of the data provided in
the financial statements. These notes describe the accounting and administrative policies under
which the Plan operates, and provide additional levels of detail for selected financial statement
items. 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 information to properly reflect the ongoing plan perspective. Therefore, in addition to the
financial statements explained above, this financial report includes two additional schedules entitled "re-
quired supplemental information".
• The schedule of funding progress (page 25) includes actuarial information about the status of the
Plan from an ongoing, long-term perspective and the progress made in accumulating sufficient
assets to pay pension benefits when due. Valuation assets in excess of actuarial accrued liabili-
ties indicate that sufficient assets exist to fund the future pension benefits of the current members
and benefit recipients, whereas, excess liabilities requires future funding or investment perform-
ance in excess of the actuarial assumed investment returns.
• The schedule of employer contributions in accordance with GASB Statement No. 25 (page 25)
presents historical trend information regarding the value of total annual contributions required to
be paid by employers and the actual performance of employers in meeting this requirement.
• The note to required supplemental information provides explanatory detail to aid in understand-
ing the required supplemental schedules.
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 from cumulative investment gains during the year that more than offset a
$1,060,367 increase in benefit payments.
• The Plan's funding objective is to meet long-term benefit obligations to the extent possible. As
of December 31, 2006, the date of the latest actuarial valuation, the funded ratio of the Plan was
91.1%. In general, this means that for every dollar of pension benefits due, the Plan has ap-
proximately $0.91 of net assets available for payment. The Plan's funding ratio increased by 2%
as compared with the funding ratio for December 31, 2005. The increase in the funding ratio is
attributed to both employer contributions and improved cumulative investment returns.
• During 2006 the Plan continued its efforts to more broadly diversify its investment asset base.
Investment asset classes that were added included: real estate. The increased diversification was
achieved by lowering the exposure to domestic large cap common stock.
Page 4
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2006
• Total additions to the Plan's net assets (page 12) amounted to $24,426,685 for the year 2006 con-
sisting of an investment gain of $17,565,462 and employer contributions of $6,861,223.
• Administrative expenses (deductions to the Plan's net assets, page 12) increased from $116,986
for fiscal 2005 to $150,548 for 2006 or approximately $33,562 or 28.7% which primarily re-
flected an increase in the cost of actuarial services due to special projects.
FINANCIAL HIGHLIGHTS 2005
• Net assets held in trust for pension benefits totaled $157,822,577 as of December 31, 2005 for an
increase of $8,769,404 or 5.9% as compared with December 31, 2004. This increase in net as-
sets primarily resulted from cumulative investment gains during the year that more than offset a
$582,946 increase in benefit payments.
• The Plan's funding objective is to meet long-term benefit obligations to the extent possible. As
of December 31, 2005, the date of the latest actuarial valuation, the funded ratio of the Plan was
89.1%. In general, this means that for every dollar of pension benefits due, the Plan has ap-
proximately $0.89 of net assets available for payment. The Plan's funding ratio increased by
4.1% as compared with the funding ratio for December 31, 2004. The increase in the funding ra-
tio is attributed to both plan contributions and improved cumulative investment returns.
• During 2005 the Plan continued its efforts to more broadly diversify its investment asset base.
Investment asset classes that were added included: emerging market equity, high yield fixed in-
come, global fixed income, market neutral, and absolute return strategy. The increased diversifi-
cation was achieved by lowering the exposure to domestic common stock and corporate obliga-
tions. This diversification effort accounts for increased investments of mutual funds, collective
investment funds, and foreign obligations, and accounts for a decreased investment in domestic
common stocks, corporate obligations, and money market investments.
• Total additions to the Plan's net assets (page 12) amounted to $15,667,806 for the year 2005 con-
sisting of an investment gain of $8,475,275 and employer contributions of $7,192,531.
• Administrative expenses (deductions to the Plan's net assets, page 12) decreased from $121,587
for fiscal 2004 to $116,986 for 2005, or approximately $4,600 or 3.8% which reflected the net
impact of a decrease in legal services offset by an increase in the cost of actuarial and record -
keeping services.
ANALYSIS OF FINANCIAL ACTIVITIES
The Plan's funding objective is to meet long-term benefit obligations through investment income and
contributions. Accordingly, the receipt of employer contributions and the income from investments pro-
vide the reserves needed to finance future retirement benefits.
Page 5
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2006
The Metropolitan St. Louis Sewer District's (the District) contributions into the Plan continue to in-
crease over time as the result of a combination of factors, including an increase in salaries and a lower
than anticipated investment performance as measured on an actuarially smoothed basis over a long pe-
riod of years. Relative to the Public Fund peer group for 2006 and 2005, the Fund was up 12.3% and
5.9%, respectively, which ranked in the 72nd and 76` percentile, respectively, of the Public Fund uni-
verse. Net assets held in trust for pension benefits increased by $16,434,354 in 2006 and $8,769,404 in
2005. These net assets are used to meet ongoing benefit obligations to the Plan's participants and their
beneficiaries.
Required employer contributions as determined by the Plan's actuary declined for 2006 compared to
2005. Items that effected the current year's contribution include: wage inflation, the addition of a
$650,000 expense assumption, the net addition of 20 new members, and the adoption of the amendment
extending the application of the prior benefit formula for certain members. These increases were offset
somewhat by a net actuarial experience gain as measured on an actuarial basis. As the years roll for-
ward and total assets and liabilities grow, the Plan's investment income will play a more significant role
in funding future retirement benefits - eventually providing 80% - 90% of the necessary funds. There-
fore, investment return over the long-term is critical to the funding status of the Plan.
In 2006 net investment income of $17,565,462 was significantly higher than the actuarially assumed in-
vestment income, whereas, the 2005 net investment income of $8,475,275 was slightly below the actu-
arially assumed investment income. Overall, the Plan is adequately funded and any accumulative differ-
ence between actuarial liabilities 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 temporary ups
and downs in the market are expected. The more critical factor is that the Plan be able to meet an ex-
pected earnings yield of, on average, 7.5% annual return on investments for both 2006 and 2005. The
Plan's average return for both 2006 and 2005 combined was 9%, which is slightly above the actuarially
assumed investment rate of 7.5%.
The Plan continues to retain an investment consultant to identify opportunities to improve investment
return. A suggestion made by the investment consultant is that the Plan should more broadly diversify
its investment asset base. As such, the Plan added new asset classes such as emerging equity invest-
ments, market neutral, high yield fixed income investments, and absolute return strategy during 2005.
Whenever a transfer of assets is made, transaction costs are incurred that will lower the investment re-
turn during the initial transition period.
Based upon our latest actuarial valuations for the years ended December 31, 2006 and 2005, the Plan's
actuarial value of assets was less than its actuarial value of liabilities by $16,675,000 and $19,309,000,
respectively. An improvement of $2,634,000. 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 follows:
Page 6
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2006
ASSETS
Investments at fair value
Other assets
Total Assets
December 31 2006 Change
2006 2005
$174,086,388
7,496,267
181,582,655
LIABILITIES 7,325,724
NET ASSETS HELD IN TRUST
FOR PENSION BENEFITS $174,256,931
Amount Percent
157,201,364 16,885,024 10.7%
7,376,246 120,021 1.6
164,577,610 17,005,045 10.3
6,755,033 570,691 8.4
157,822,577 16,434,354 10.4%
December 31
2005 2004
ASSETS
Investments at fair value $157,201,364
Other assets 7,376,246
Total Assets 164,577,610
LIABILITIES 6,755,033
NET ASSETS HELD IN TRUST
FOR PENSION BENEFITS $157,822,577
2005 Change
Amount Percent
148,647,491 8,553,873 5.8%
554,774 _6,821.472 1,229.6
149,202,265 15,375,345 10.3
149,092 6,605,941 4,430.8
149,053,173
8,769,404 5.9%
As previously noted, net assets viewed over time may serve as a useful indication of the Plan's financial
position. At the close of calendar years 2006 and 2005, the assets of the Plan exceeded its liabilities
with $174,256,931 and $157,822,577, respectively, in net assets held in trust for pension benefits. The
net assets are available to meet the Plan's ongoing obligation to the Plan's participants and their benefi-
ciaries.
Despite variations in the stock market, management and the Plan's actuary concur that the Plan remains
in a sound financial position to meet its obligations to the Plan's participants and beneficiaries. The cur-
rent financial position 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 follows:
Page 7
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2006
ADDITIONS
Net investment income
Employer contributions
Total Additions
For The Years
Ended December 31 2006 Change
2006 2005 Amount Percent
$ 17,565,462
6,861,223
24,426,685
8,475,275 9,090,187 107.3%
7,192,531 (331,308) (4.6)
15,667,806 8,758,879 55.9
DEDUCTIONS
Benefits paid to retirees and beneficiaries 7,841,783 6,781,416 1,060,367 15.6
Administrative 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
ADDITIONS
Net investment income
Employer contributions
Total Additions
DEDUCTIONS
Benefits paid to retirees and beneficiaries
Administrative expenses
Total Deductions
NET INCREASE
NET ASSETS HELD IN TRUST FOR
PENSION BENEFITS, JANUARY 1
For The Years
Ended December 31
2005 2004
$ 8,475,275 11,551,937
7,192,531 6,797,077
15,667,806 18,349,014
6,781,416
116,986
6,898,402
8,769,404
149,053,173
6,198,470
121,587
6.320,057
12,028,957
137,024,216
10.4%
2005 Change
Amount Percent
(3,076,662) (26.6%)
395,454 5.8
(2,681,208) (14.6)
582,946 9.4
(4,601) (3.8)
578,345 9.2
(3,259,553) (27.1)
12,028,957 8.8
NET ASSETS HELD IN TRUST FOR
PENSION BENEFITS, DECEMBER 31 $157,822,577 149,053,173 8,769,404 5.9%
Page 8
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2006
As noted above, the funds needed to finance retirement benefits are accumulated through the collection
of employer contributions and through investment income (net of managers and advisor fees). Total ad-
ditions for the years ended December 31, 2006 and 2005, totaled $24,426,685 and $15,667,806, respec-
tively.
Additions to Plan assets for 2006 exceeded 2005 due to investment gains. The investment section of this
report summarizes the results of investment activity for the year ended December 31, 2006.
The Plan was created to provide retirement, survivor, and disability benefits 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 for the year ended December 31, 2006 totaled $7,992,331, an increase of
15.9% over 2005. The increase in benefits paid resulted primarily from an increase in the number of
retirees receiving benefits. Deductions from plan net assets of $7,992,331 were exceeded by additions
to plan net assets of $24,426,685 by $16,434,354 for the year ended December 31, 2006. The Plan has
consistently managed within its administrative expense budget, with no material variances between
planned and actual expenditures.
Investment Performance - 2006
The following are a few characteristics and achievements for the Plan for the year ending December 31,
2006:
• The Plan ended the year with $174,256,931 in net assets.
• The Plan's performance for the year was 12.3% compared to the passive policy index of 12.9%,
and the average five-year return was 7.8% compared to the passive policy index of 7.5%.
• The District retains an independent investment consultant to monitor the investment performance
of the Plan and identify opportunities for improved returns. The recommendation of the invest-
ment consultant has been to more broadly diversify the investment asset base of the Plan.
• The Plan diversified its investment asset base in 2006 by adding the following asset class: real
estate.
• The strategic asset allocation compared to the December 31, 2006 actual allocation was as fol-
lows:
Page 9
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2006
Proposed Actual
Asset Class Target Range 2006 2005
Equities:
Domestic Large Cap Stocks 27% 22 - 32 25.2 30.1
Domestic Small Cap Stocks 10 7 - 13 10.3 10.0
International Developed Markets Stocks 10 7 - 13 10.7 10.3
International Emerging Markets Stocks 3 0 - 5 4.0 3.5
Fixed Income:
Domestic Core Bonds 27 22 - 32 21.7 18.6
High Yield Bonds 5 3 - 7 4.8 4.9
Global Bonds 8 5 - 11 7.5 7.7
Other:
Real Estate 5 3 - 7 5.0 0.0
Market Neutral 5 3 - 7 4.9 5.1
Cash Equivalents - - 2.0 0.8
Absolute Return - 3.9 9.0
All asset classes have been rebalanced when needed during the year in order to maintain a weighting
consistent with the strategic allocation ranges.
The large cap stocks were diversified between active value, active growth, and passive core strategies.
The fund had a 60% large cap growth value and 40% large cap growth allocation which added value to
the fund during the year as value stocks outperformed growth stocks.
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 the Plan's participants and their beneficiaries.
REQUEST FOR INFORMATION
This financial report is designed to provide the Board of Trustees, our members, ratepayers, investment
managers, and creditors with an overview of the Plan's finances and accountability for the money re-
ceived. Questions concerning any of the information provided in this report or requests for additional
financial information should be addressed or e-mailed to:
Karl J. Tyminski, Secretary -Treasurer
The Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103-2555
or
kjtymi@stlmsd.com
Page 10
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATEMENTS OF PLAN NET ASSETS
December 31
2006 2005
ASSETS
Investments at fair value:
Mutual funds $ 77,536,014 75,436,974
Corporate obligations 26,337,175 26,084,256
Domestic common stocks 22,889,423 21,913,290
Collective investment fund 17,280,027 7,970,172
U.S. Treasury and agency obligations 11,648,884 10,309,696
Foreign obligations 10,690,513 9,088,213
Money market funds 5,287,224 2,746,945
Foreign stocks 1,395,726 1,268,6778
Municipal obligations 871,216 2,243,786
Domestic preferred stock 147,333 137,804
Principal cash 2,853 1,550
Total Investments 174,086,388 157,201,364
Receivables:
Due from brokers for forward currency exchange contracts 6,787,476 6,434,193
Due from brokers for securities sold 3,173 312,937
Interest and dividends receivable 705,618 629,116
Total Receivables 7,496,267 7,376,246
Total Assets 181,582,655 164,577,610
LIABILITIES
Due to brokers for forward currency exchange contracts 6,897,613 6,603,060
Due to brokers for securities purchased 249,764 93
Accrued expenses 178,347 151,880
Total Liabilities 7,325,724 6,755,033
NET ASSETS HELD IN TRUST FOR PENSION
BENEFITS (a schedule of funding progress is
presented on page 25)
$ 174,256,931 157,822,577
See notes to financial statements
Page 11
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATEMENTS OF CHANGES IN PLAN NET ASSETS
For The Years
Ended December 31
2006 2005
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 12,617,522 3,992,427
Interest and dividends 5,496,319 4,989,390
Total Investment Income 18,113,841 8,981,817
Less - Investment managers and advisor fees 548,379 506,542
Net Investment Income 17,565,462 8,475,275
Employer contributions 6,861,223 7,192,531
Total Additions 24,426,685 15,667,806
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to retirees and beneficiaries 7,841,783 6,781,416
Administrative expenses 150,548 116,986
Total Deductions 7,992,331 6,898,402
NET INCREASE
16,434,354 8,769,404
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS,
JANUARY I 157,822,577 149,053,173
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS,
DECEMBER 31 $ 174,256,931 157,822,577
See notes to financial statements
Page 12
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF PLAN
The following brief description of THE METROPOLITAN ST. LOUIS SEWER DISTRICT EM-
PLOYEES' PENSION PLAN (the Plan) is provided for general information purposes only. Members
should refer to the Plan ordinance for more complete information.
The Plan is a noncontributory single employer defined benefit plan providing retirement benefits as well
as death and disability benefits. As a condition of employment, all full-time employees of The Metro-
politan St. Louis Sewer District (the District) are covered by the Plan.
Membership in the Plan consists of:
December 31
2006 2005 Increase
Retirees and beneficiaries currently receiving benefits 481 460 21
Terminated members entitled to receive benefits 199 198 1
Active plan members 798 780 18
Total
1,478 1,438 40
The District's Board of Trustees, primarily to improve benefits to members, amends the Plan, estab-
lished on November 1, 1967. 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 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 investments and the related rates of return on a periodic basis. The
Plan is exempt from the requirements of the Employee Retirement Income Security Act of 1974 and, as
such, is not subject to the Act's reporting requirements.
All benefits vest after five years of credited service. Members retiring at or after age 65 with five or
more years credited service are entitled to a pension benefit. The Plan permits early retirement 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. Effective January 1, 1999, Ordinance No. 10491 amended the Plan's benefits for-
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 months of credited
service not to exceed 35 years. Also, the annual reduction for early retirement was revised from 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 multiplied
by the 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 monthly ac-
crued retirement benefit as of the date of death, or 15% of the monthly earnings and the member's
monthly accrued retirement benefit actuarially reduced under the 100% joint and survivor annuity op -
Page 13
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF PLAN (Continued)
tion. Members are also able to select a Contingent Annuity Pop -Up option. This option allows the
member to elect a survivor annuity for life, with the provision that 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, effective January 1, 2001, further amended the Plan to extend the cost of liv-
ing increases for retirees from a maximum of 30% to 45% of the original benefit.
Effective 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 mul-
tiplied by the period of years and months of credited service not to exceed 35 years without including
accrued sick leave. A member who retires between August 1, 2004 and July 1, 2007 is entitled 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 distribution will be paid in accordance with any one of the other payment op-
tions available under the Plan.
The retirement benefit payable to a member who retires after the normal retirement date is the greater of
a) the benefit that would have been payable on the normal retirement date plus a special annual retire-
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 the preparation of the accompanying financial
statements are summarized as follows:
1. Basis of Accounting
The Plan's financial statements are prepared using the accrual basis of accounting. Em-
ployer contributions are recognized as revenues in the period when due and the District's
Trustees have made a formal commitment to provide the contribution. Benefits are rec-
ognized when due and payable in accordance with the terms of the Plan. Plan expenses
are recorded when the corresponding liabilities are incurred regardless of when payment
is made. Investment purchases and sales are recorded on a trade -date basis.
2. Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted ac-
counting principles requires management and the Plan's actuary to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
Page 14
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2. Use of Estimates (Continued)
contingent assets and liabilities at the date of the financial statements and the reported
amounts of additions to and deductions from net assets during the reporting period. Ac-
tual results could differ from those estimates.
3. Method Used to Value Investments
The Plan's investment assets, which are trusteed by U.S. Bank, N.A., are reported at fair
value as determined and certified 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 Investments: Common stocks of corporations, mutual funds, or commingled
equity funds (Domestic and International, both within defined limits); however, the
investment in equities cannot exceed 55% of total investments.
• Fixed Income Investments: U.S. government and agency securities, 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 income cannot exceed 47% of total investments.
• Short-term Securities: Commercial paper, treasury bills, certificates of deposits,
and/or money market funds.
• Real Estate Investments: Real estate investment trusts and multi -employer property
trusts; however, the investment in real estate cannot exceed 7% of total investments.
• Futures Contracts: Currency forward contracts for the purpose of currency risk man-
agement of non-U.S. investments.
The fair value of investments managed consisted of the following:
Page 15
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE C - CASH AND INVESTMENTS (Continued)
1. Categories of Asset Risk (Continued)
December 31
2006 2005
Investments at fair value:
Mutual funds:
Domestic equity $ 28,086,031 40,611,334
Foreign equity 25,581,205 20,240,508
Balanced 17,068,435 -
Fixed income 6,800,343 14,585,132
Corporate obligations 26,337,175 26,084,256
Domestic common stocks 22,889,423 21,913,290
Collective investment funds:
Real estate 8,733,515
Equity market neutral 8,546,512 7,970,172
U.S. Treasury and agency obligations 11,648,884 10,309,696
Foreign obligations 10,690,513 9,088,213
Money market funds 5,287,224 2,746,945
Foreign stocks 1,395,726 1,268,678
Municipal obligations 871,216 2,243,786
Domestic preferred stock 147,333 137,804
Principal cash 2,853 1,550
Total Investments $174,086,388 157,201,364
2. Interest Rate Risk
The Plan had the following debt securities and maturities:
Investment Type
December 31, 2006
Weighted Average
Fair Value Maturity (Years)
Corporate obligations $26,337,175 3.51
U.S. Treasury and agency obligations 11,648,884 6.80
Foreign obligations 10,690,513 4.23
Municipal obligations 871,216 2.57
$49,547,788
Portfolio weighted average maturity 4.42
Page 16
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE C - CASH AND INVESTMENTS (Continued)
2. Interest Rate Risk (Continued)
December 31, 2005
Weighted Average
Investment Type Fair Value Maturity (Years)
Corporate obligations $26,084,256 4.07
U.S. Treasury and agency obligations 10,309,696 2.70
Foreign obligations 9,088,213 4.37
Municipal obligations 2.243,786 2.27
$47,725,951
Portfolio weighted average maturity 3.70
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:
• Structuring the investment portfolio so that securities mature to meet cash require-
ments for benefit payments, thereby avoiding the need to sell securities on the open
market prior to maturity.
• Monitoring fixed income investment managers performance to be sure the fixed in-
come portion of the investment 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 institutions, broker/dealers, intermediaries, and advisors
with which the Plan will do business; and
• Diversifying the portfolio so that potential losses on individual securities will be
minimized.
The following tables provide information on the credit ratings associated with the Plan's
investments in debt securities:
Page 17
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE C - CASH AND INVESTMENTS (Continued)
3. Credit Risk (Continued)
Credit Rating By Investment As Of December 31, 2006
S&P
Rating
AAA
AA
A
BBB
BB
B
CCC
U.S. Treasury
And Agency
Obligations
Municipal Corporate Foreign
Obligations Obligations Obligations Totals
$11,648,884 871,216 7,820,946
3,009,616
7,370,670
1,464,031
908,424
5,344,382
419,106
Total $11,648,884 871,216 26,337,175
Credit Rating By Investment As Of December
U.S. Treasury
S&P And Agency Municipal Corporate
Rating Obligations Obligations Obligations
AAA $10,309,696 1,854,276 5,818,050
AA 389,510 2,155,558
A - 7,955,717
BBB 3,898,149
BB 632,241
B 4,979,659
CCC - 644,882
Total $E1,309,6.96 2,243,7$6 26,04 25_6
4. Foreign Currency Risk
6,717,618
202,931
1,827,140
817,369
513,567
611,888
10,690,513
31, 2005
27,058,664
3,212,547
9,197,810
2,281,400
1,421,991
5,956,270
419,106
49,547,788
Foreign
Obligations Totals
5,753,290 23,735,312
203,459 2,748,527
1,581,554 9,537,271
3,898,149
909,522 1,541,763
552,788 5,532,447
87.600 732,482
2,088 213 4712_5,251
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 investment
managers to decide what action to take regarding their respective portfolio's foreign cur-
rency exposure. The following tables demonstrate the Plan's current level of foreign cur-
rency exposure:
Page 18
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
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, 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
Foreign Currency Exposures By Asset Class
In U.S. Dollars As Of December 31, 2005
Foreign
Currency Equities Obligations Totals
Australian Dollar $ - 1,321,048 1,321,048
Brazil Real 587,380 587,380
British Pound Sterling 478,455 478,455
Canadian Dollar - 1,720,493 1,720,493
Euro 1,311,991 1,311,991
Indonesia Rupiah - 176,954 176,954
Mexican Peso - 623,499 623,499
New Zealand Dollar 450,909 450,909
Polish Zloty 837,834 837,834
Singapore Dollar - 673,854 673,854
Taiwan Baht - 120,221 120,221
Not denominated in a
foreign currency 1,268,678 785,575 2,054,253
$1,268,678 9,088,213 10,356,891
Page 19
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE C - CASH AND INVESTMENTS (Continued)
5. Open Foreign Currency Exchange Contracts in U.S. Dollars
Open Contracts As Of December 31, 2006
Foreign currency
exchange contracts
purchased:
Australian Dollar
British Pound Sterling
Euro
New Zealand Dollar
Foreign currency ex-
change contracts sold:
Japanese Yen
Thailand Baht
Foreign currency
exchange contracts
purchased:
Australian Dollar
Euro
New Zealand Dollar
Foreign currency ex-
change contracts sold:
Japanese Yen
Thailand Baht
Fair
Value
$1,365,203
514,876
820,540
590,309
441,042
Aggregate
Cost Delivery Unrealized Unrealized
Value Dates Appreciation Depreciation
$1,365,068
512,575
783,023
593,338
432,551
5/18/2007 $ 135
3/19/2007 2,301
3/23/2007 37,517
and
5/25/2007
5/18/2007 8,491
2,914,420 2,972,000 5/24/2007 57,580
and
593,338 5/25/2007 11,830
193,643 1/26/2007 -
581,508
198,331
Fair
Value
$1,292,824
732,379
526,305
396,776
3,318,974
515,264
116,386
$117,854
Open Contracts As Of December 31, 2005
3,029
4,688
Aggregate
Cost Delivery Unrealized Unrealized
Value Dates Appreciation Depreciation
$1,332,067 1/27/2006 $
753,213 1/27/2006
and
556,756 2/17/2006
398,288 1/27/2006
3,539,000 2/16/2006
and
556,756 2/17/2006
115,775 1/27/2006
220,026
41,492
39,243
20,834
30,451
1,512
611
$261,518 92,651
Page 20
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE C - CASH AND INVESTMENTS (Continued)
5. Open Foreign Currency Exchange Contracts in U.S. Dollars (Continued)
The fair value of open currency forward contracts, including any unrealized appreciation
or depreciation, is recorded in the statements of plan net assets as amounts due from/to
brokers for securities sold/purchased.
Based upon the advice of the Plan's investment consultant and the Plan's investment pol-
icy and guidelines, the investments in currency forward contracts do not, in the 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 investment consultant,
the risk is minimal.
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 pension benefits are as follows:
December 31
2006 2005
Morgan Stanley Inst. International Equity $18,634,162 16,201,002
GMO Global Balanced Asset Allocation 17,068,436 -
Vanguard Windsor II Fund 13,461,504 11,372,004
CIGNA Small Cap Fund 9,154,727 -
UBS Real Estate 8,733,515 -
Vanguard Asset Allocation Fund - 15,596,588
PIMCO All Asset Fund 14,116,020
Fidelity Market Neutral Fund 7,970,172
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 benefits when due. The Entry Age Normal funding method is used to deter-
mine contributions.
Contributions of S6,847,278 and $7,184,531, excluding certain professional fees paid by the District,
were made to the Plan in 2006 and 2005, respectively. These annual contributions were made in accor-
Page 21
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE E - CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE (Continued)
dance with actuarially determined contribution requirements based on actuarial valuations performed at
January 1, 2006 and 2005, respectively, and consisted of:
Normal cost
Amortization of the unfunded actuarial accrued liability
Interest factor of 7.5%
For The Years
Ended December 31
2006 2005
$4,660,812 4,576,505
1,708,749 2,106,780
6,369,561 6,683,285
477,717 501,246
Current Year Contribution Due From The
District As Calculated By The Plan's Actuary $6,847,278 7,184,531
Certain professional fees, included in administrative expenses, are paid by the District and are recog-
nized as contributions to the Plan and totaled $ 13,945 and $8,000 for the years ended December 31,
2006 and 2005, 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 the Plan as of January 1, 2007, the most recent actuarial valuation date, and Janu-
ary 1, 2006 is as follows (dollar amounts 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
2007 S 170,757 $187,432 $ 16,675 91.1% S42,113 39.6%
2006 158,321 177,630 19,309 89.1 40,144 48.1
The schedules of funding progress, presented as required supplemental information following the notes
to the 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.
Additional information as of the latest actuarial valuation follows:
Page 22
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE F - FUNDED STATUS AND FUNDING PROGRESS (Continued)
Valuation date January 1, 2007
Actuarial cost method Entry Age Normal
Amortization method Level dollar closed
Amortization period 20 year period
Asset valuation method Three-year average of adjusted market values
Post -retirement benefit increases 3% of current benefit or $50 if less
Maximum 45% in the original benefit or $750 if less
Actuarial assumptions:
Investment 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 inflation component of 3%.
NOTE G - RISK MANAGEMENT
The Plan is exposed to various risks of loss related to natural disasters, errors and omissions, loss of as-
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 securities. Investment securities are exposed to various risks
such as interest rate, market, and credit risks. 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 changes could materially affect the amounts reported in the statements of
plan net assets.
Actuarial present value of accumulated plan benefits are reported based on certain assumptions pertain-
ing to interest rates, inflation rates, and employee demographics, all of which are subject to change. Due
to uncertainties inherent in the estimations and assumptions process, it is at least reasonably possible that
changes in these estimates and assumptions in the near term would be material to the financial state-
ments.
Page 23
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
REQUIRED SUPPLEMENTAL INFORMATION
REQUIRED SUPPLEMENTAL INFORMATION SECTION
Page 24
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
REQUIRED SUPPLEMENTAL INFORMATION
Six -year historical trend information about the Plan is presented herewith as required supplemental in-
formation. This information is intended to help users assess the Plan's funding status on a going -
concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and
make comparisons with 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
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
2002 133,012 139,336 6,324 95.5 37,600 16.8
Analysis of the dollar amounts of plan net assets, AAL, and UAAL in isolation 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 of this percentage over time indicates whether the Plan is becoming
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 inflation. Expressing the UAAL
as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids
analysis of the Plan's progress made in accumulating 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 Percentage A Percentage Of
December 31 Contribution Contributed Covered Payroll
2006 $7,015,905 97.6% 16.3%
2005 6,980,026 102.9 17.9
2004 6,384,774 106.1 17.3
2003 5,385,572 111.3 15.9
2002 4,370,579 109.3 12.7
2001 3,458,881 114.6 10.6
Page 25
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
REQUIRED SUPPLEMENTAL INFORMATION
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 of the actuarial valuations. 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.
Page 26
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL (Unaudited)
STATISTICAL SECTION (Unaudited)
Page 27
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL SECTION
Performance And Net Asset Valu
Year
Net Asset Value (NAI/) 12/31
Total Plan Performance
1997
$101,384,482
20.8%
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
Net Asset Value (NAV) 12/31
$200.0 -
0
$150.0 - $113.0 $125 4 $125 3 $123 0 $137.0
$101.4 $113.2
$100.0 -
$50.0 -
$0.0
$174.3
$149.1 $157 8
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Page 28
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL SECTION
Revenues By Source
Year
Employer
Contributions
Total Employer
Contributions
As A
Percentage Of
Covered Payroll
Net
Investment
Income (Loss)
Total
1997
$2,734,418
8.5%
$17,463,552
$20,197,970
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
Page 29
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL SECTION
Exaenses By Tvae
Year
Benefit Payments
Administrative
Expense
Total
1997
$2,604,476
$139,050
$2,743,526
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
Page 30
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL SECTION
Member Count
Year
Retirees And
Beneficiaries
Currently
Receiving
Benefits
Terminated
Members
Entitled To
Receive
Benefits
Active Plan
Members
Total
1997
391
137
914
1,442
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
4601
198
7802
1,438
2006
481'
199
7982
1,478
1New actuarial census excluded individuals covered by insurance policy.
2New actuarial census excludes members with less than six months of service.
Page 31
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL SECTION
Total Benefit Payments
(Dollar Amounts in Millions)
$9,000 -
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
$2,604.5
$4,830.2
$4,211.2
$6,781.4
$6,198.5
$5,607.3
$7,841.8
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Employer Contributions
(Dollar Amounts in Millions)
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1
1
1997 1998 1999 2000 2001
co
�A^
4°1
6� •
2002 2003 2004 2005 2006
Page 32
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL SECTION
Total Benefit Recipents
600
500 -
400 -
300 -
200
100
0-
391
406
410
1997 1998 1999
443
459
2000 2001 2002
482
490
2003 2004 2005 2006
New actuarial census for 2006 and 2005 excluded individuals covered by
insurance policy.
Page 33
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL SECTION
Top 10 Investment Holdings
As Of December 31, 2006
As Of December 31, 2005
Holding
Market Value
Percentage
Of Plan
Market Value
Percentage
Of Plan
Morgan Stanley Institutional International Equity
$18,634,162
10.7%
$16,201,002
10.3%
GMO Global Balanced Asset Allocation
17,068,436
9.8
-
-
Vanguard Windsor II Fund
13,461,504
7.7
11,372,004
7.2
Times Square Small Cap Growth Fund
9,154,727
5.3
7,858,637
5.0
UBS Real Estate Separate Account
8,733,515
5.0
-
-
Pyramis Market Neutral Fund
8,546,512
4.9
7,970,172
5.1
Morgan Stanley Emerging Markets Fund
6,947,043
4.0
5,568,605
3.5
PIMCO All Asset Fund
6,800,343
3.9
14,116,020
8.9
Vanguard 500 Index Fund
5,469,799
3.1
4,724,112
3.0
First American Prime Money Market
5,007,770
2.9
2,746,945
1.7
Vanguard Asset Allocation Fund
-
-
15,596,588
9.9
Federal Home Loan Mortgage Corporation DEB 7% due 03/15/2010
-
-
1,324,469
0.8
TOTALS
$99,823,811
57.3%
$87,478,554
55.4%
Page 34
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES' PENSION PLAN
STATISTICAL SECTION
Schedule Of Investment Managers And Advisor Fees
For The Years Ended December 31, 2006 And 2005
2006
Managers fees:
Income Research Management
Fidelity Investments
Waddell & Reed
ARK Asset Managers
PENN Capital Management
Brandywine Asset Management
Buford, Dickson, Harper, & Sparrow
UBS Real Estate Separate Account
Alliance Capital
$ 106,859
75,770
71,376
63,210
60,410
56,684
33,237
19,630
Federated
AMVESCAP
Garner Asset Management
Total Managers Fees
487,176
Advisor fees:
New England Pension Consultants
61,203
Total
$ 548,379
2005
124,652
31,514
71,068
58,498
26,301
52,817
40,215
17,105
9,713
9,127
2,003
443,013
63,529
506,542
Page 35