TD Ameritrade Trust Company Collective Investment Funds for Employee Benefit Plans Sunrise Retirement Funds

Transcription

1 TD Ameritrade Trust Company Collective Investment Funds for Employee Benefit Plans Financial Reports May 31, 2014 (Liquidation Date)

2 Contents Independent Auditor s Report 1-2 Financial Statements Statements of Assets and Liabilities 3 Statements of Operations 4 Statements of Changes in Participants' Interest 5 Financial Highlights 6 Notes to Financial Statements 7-9 Other Financial Information (Unaudited) Summary Schedules of Monthly Values 10 Sunrise Retirement Balanced Equity Fund Summary Schedule of Investment Changes 11 Sunrise Retirement Balanced Fund Summary Schedule of Investment Changes 12 Sunrise Retirement Diversified Equity Fund Summary Schedule of Investment Changes 13 Sunrise Retirement Diversified Income Fund Summary Schedule of Investment Changes 14

3 Independent Auditor s Report To the Trust Committee TD Ameritrade Trust Company Collective Investment Funds for Employee Benefit Plans Denver, Colorado Report on the Financial Statements We have audited the accompanying financial statements of the Sunrise Retirement Balanced Equity Fund, Sunrise Retirement Balanced Fund, Sunrise Retirement Diversified Equity Fund, and Sunrise Retirement Diversified Income Fund (four of the funds constituting the TD Ameritrade Trust Company Collective Investment Funds for Employee Benefit Plans), which comprise the statements of assets and liabilities, as of May 31, 2014 (liquidation date), and the related statements of operations, changes in participants interest and the financial highlights for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Sunrise Retirement Balanced Equity Fund, Sunrise Retirement Balanced Fund, Sunrise Retirement Diversified Equity Fund, and Sunrise Retirement Diversified Income Fund as of May 31, 2014 (liquidation date), and the results of their operations, and their financial highlights for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Other Matter Our audits were conducted for the purpose of forming an opinion on the basic financial statements as a whole. The other financial information is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Denver, Colorado September 29,

5 Statements of Assets and Liabilities May 31, 2014 (1) Sunrise Sunrise Sunrise Sunrise Retirement Retirement Retirement Retirement Balanced Balanced Diversified Diversified Equity Fund Fund Equity Fund Income Fund Participants' Interest $ - $ - $ - $ - (1) Liquidation Date See Notes to Financial Statements. 3

6 Statements of Operations Year Ended May 31, 2014 (1) Sunrise Retirement Balanced Equity Fund Sunrise Retirement Balanced Fund Sunrise Retirement Diversified Equity Fund Sunrise Retirement Diversified Income Fund Investment income: Dividends $ 292,953 $ 272,136 $ 96,722 $ 216,364 Total investment income 292, ,136 96, ,364 Expenses: Sub-advisor fees 33,222 34,620 9,601 24,599 Audit fees 4,313 4,989 2,271 3,526 Trustee fees 15,728 16,702 5,268 11,712 Total expenses 53,263 56,311 17,140 39,837 Net investment income 239, ,825 79, ,527 Realized and unrealized gain on investments: Net realized gain on investments sold 2,404,859 2,256, ,439 1,155,142 Net change in unrealized depreciation on investments (1,294,123) (1,264,680) (408,129) (655,708) Net realized and unrealized gain on investments 1,110, , , ,434 Net increase in participants' interest resulting from operations $ 1,350,426 $ 1,207,267 $ 525,892 $ 675,961 (1) Liquidation Date See Notes to Financial Statements. 4

7 Statements of Changes in Participants' Interest Year Ended May 31, 2014 (1) Sunrise Retirement Balanced Sunrise Retirement Balanced Sunrise Retirement Sunrise Retirement Diversified Equity Fund Fund Diversified Equity Fund Income Fund Units Amount Units Amount Units Amount Units Amount Participants' interest at beginning of period 724,724 $ 9,868, ,078 $ 10,918, ,585 $ 2,448, ,610 $ 7,586,871 Increase in participants' interest resulting from operations: Net investment income 239, ,825 79, ,527 Net realized gain on investments sold 2,404,859 2,256, ,439 1,155,142 Net change in unrealized depreciation on investments (1,294,123) (1,264,680) (408,129) (655,708) Net increase in participants' interest resulting from operations 1,350,426 1,207, , ,961 Increase (decrease) in participants' interest from participating unit transactions: Issuance of units 263,757 3,908, ,781 5,595, ,593 3,383, ,070 3,772,787 Redemption of units (988,481) (15,128,052) (1,158,859) (17,720,951) (448,178) (6,357,088) (796,680) (12,035,619) Net (decrease) in participants' interest from participating unit transactions (724,724) (11,219,129) (784,078) (12,125,677) (200,585) (2,974,082) (538,610) (8,262,832) Participants' interest at end of period - $ - - $ - - $ - - $ - (1) Liquidation Date See Notes to Financial Statements. 5

8 Financial Highlights Year Ended May 31, 2014 (1) Sunrise Retirement Balanced Equity Fund Sunrise Retirement Balanced Fund Sunrise Retirement Diversified Equity Fund Sunrise Retirement Diversified Income Fund Selected per unit data Unit value beginning of period $ $ $ $ Income from investment operations (b) : Net investment income (a) Net realized and unrealized gain on investments Total from investment operations Distributions Unit value end of period $ - $ - $ - $ - Total return (b) 13.36% 11.27% 16.71% 8.87% Ratios and supplemental data Participants' interest, end of period $ - $ - $ - $ - Ratio of net investment income to average participants' interest 2.29% 1.94% 2.27% 2.26% Ratio of expenses to average participants' interest (c) 0.51% 0.51% 0.49% 0.51% (a) (b) (c) Net investment income per unit was calculated using the average shares method. Due to timing of participant unit transactions the per unit amounts and total return presented may not agree with the aggregate gains and losses as presented on the statements of operations. Such percentages are after Sub-Advisory fee waivers. The Sub-Advisor voluntarily waived a portion of the sub-advisor fee equal to 0.22% of the average participants' interest of each Fund. Note: The last day of capital activity was May 20, Amounts prior to final redemption were as follows: Participants' Interest Participants' Interest Per Unit Sunrise Retirement Balanced Equity Fund $ 5,772,859 $ Sunrise Retirement Balanced Fund 5,650, Sunrise Retirement Diversified Equity Fund 1,722, Sunrise Retirement Diversified Income Fund 5,598, (1) Liquidation Date See Notes to Financial Statements. 6

9 Notes to Financial Statements Note 1. Organization The (the Funds) were collective investment funds established under the Declaration of Trust establishing the TD Ameritrade Trust Company Collective Investment Funds for Employee Benefit Plans (Declaration of Trust) to provide for the collective investment and reinvestment of assets of qualified employer sponsored retirement plans. TD Ameritrade Trust Company (TDATC, referred to herein as the Trustee) served as the trustee, custodian, transfer agent, and record-keeper for the Funds. Pentegra Trust Company (referred to herein as the Sub-Advisor) provided investment subadvisory services for the Funds. The following describes the individual Funds, as set forth in the Declaration of Trust: Sunrise Retirement Balanced Equity Fund: The fund targeted 70% of its assets in a diversified mix of equity mutual funds and 30% in fixed-income mutual funds. The equity allocation included mutual funds that invest in U.S. large-cap, mid-cap and small-cap equity securities, as well as non-u.s. equity securities. The fixed-income exposure was invested in intermediate-term, fixed-income, and money market mutual funds. Sunrise Retirement Balanced Fund: The fund targeted 55% of its assets in a diversified mix of equity mutual funds and 45% in fixed-income mutual funds. The equity allocation included mutual funds that invest in U.S. large-cap, mid-cap, and small-cap equity securities, as well as non-u.s. equity securities. The fixed-income exposure was invested in intermediate-term, fixed-income, and money market mutual funds. Sunrise Retirement Diversified Equity Fund: The fund targeted to be 97% invested in a diversified mix of equity mutual funds, including mutual funds that invest in U.S. large-cap, mid-cap and small-cap equity securities, as well as non-u.s. equity securities. The balance was invested in a money market portfolio. Sunrise Retirement Diversified Income Fund: The fund targeted 40% of its assets in a diversified mix of equity mutual funds and 60% in fixed-income mutual funds. The equity allocation included mutual funds that invest in U.S. large-cap, mid-cap and small-cap equity securities, as well as non-u.s. equity securities. The fixed-income exposure was invested in intermediate-term fixed-income, and money market mutual funds. On May 31, 2014, the Funds were liquidated, and were then terminated on June 18, There was no activity within the Funds during the period from May 31, 2014 (the Liquidation Date) through June 18, No adjustments to the assets or liabilities of the Funds were required as a result of the liquidations as (a) the investments were already reflected at their fair values, (b) receivables and other assets were already reflected at their net realizable values and (c) no additional expenses were incurred in relation to the liquidation. Note 2. Summary of Significant Accounting Policies The following is a summary of the significant accounting policies followed by the Funds in the preparation of the accompanying financial statements. Principles of accounting: The accompanying financial statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP), as established by the Financial Accounting Standards Board (FASB), to ensure consistent reporting of financial condition and results of operations. 7

10 Notes to Financial Statements Note 2. Summary of Significant Accounting Policies (Continued) Use of estimates: The preparation of financial statements in conformity with GAAP requires the Funds Trustee to make estimates and assumptions that affected the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported results of operations during the reporting period. Actual results could differ from those estimates. Investment valuation: Investments were recorded at fair value. Fair value of investments was based on valuations furnished by one or more pricing services or agents approved by the Trustee. The Trustee and any pricing agents or services selected by the Trustee may have considered and relied upon any regularly published reports of sales, bid, asked, and closing prices and over-the-counter quotations for the values of any listed or unlisted securities, assets, or currencies. Short-term investments were valued at cost, which approximated fair value. Mutual funds were valued at their daily net asset value. Investment transactions, interest, and dividends: Investment transactions were recorded on the trade date. Realized gains and losses on investment transactions were determined on the average lot cost method and are included as net realized gain or loss on investments sold in the accompanying statements of operations. The difference between the cost and the fair value of open investments was reflected as unrealized appreciation (depreciation) on investments, and any change in that amount from the prior period was reflected in the accompanying statements of operations. Interest income was recognized under the accrual basis. Dividend income was recognized on the ex-dividend date. Federal income taxes: Each of the Funds qualified as a group trust and the Funds, as established under the trust, were exempt from taxation. Accordingly, the financial results of the Funds contain no provision for income taxes. The FASB provides guidance for how uncertain tax positions should be recognized, measured, disclosed and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds tax returns to determine whether the tax positions are more-likely-than-not to be sustained when challenged or when examined by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense and liability in the current year. As of the Liquidation Date and for the period from June 1, 2013 through the Liquidation Date, management has determined that there are no material uncertain tax positions. The Funds file income tax returns in U.S. federal jurisdiction. The current and prior tax year remains subject to examination by U.S. federal tax authorities. Statement of cash flows: The Funds have elected not to provide a statement of cash flows as permitted by GAAP as all of the following conditions have been met: a. During the period, substantially all of the Funds investments were carried at fair value and classified as Level 1 or 2 measurements within the fair value hierarchy; b. The Funds had little or no debt during the period; c. The Funds financial statements include a statement of changes in participants interest. 8

11 Notes to Financial Statements Note 2. Summary of Significant Accounting Policies (Continued) Participant transactions: The unit values of the Funds were determined at the close of each business day that the New York Stock Exchange was open for business. Units could have been issued and redeemed on any business day at the daily unit value. All earnings, gains, and losses of the Funds were reflected in the computation of the daily unit value and were realized by the participants upon redemption from the Funds. Net investment income and net realized gains are reinvested, and thus, there were no distributions of net investment income or net realized gains to participants. Subsequent events: The Trustee, as manager of the Funds, has evaluated the period after the financial statement date through September 29, 2014, the date the financial statements were issued, and has determined that, except for the funds terminated as discussed in Note 1, there are no subsequent events that require recognition or disclosure. Note 3. Related-Party Transactions For liquidity and administrative purposes, the Funds targeted to maintain approximately 3% of their assets in cash or an equivalent. The cash component for the Funds could have been composed of a bank depository account provided by an affiliate of the Trustee or a short-term money market fund. The shortterm money market fund option provided was the Federated Treasury Obligation Fund, which is not an affiliate of the Trustee. In the event the audit fee impacted the Funds unit values as determined on a daily basis, by an amount greater than $0.005 per unit, the Trustee assumed such excess audit fees. In addition, if the audit fees caused the Funds total expenses, including the expenses of the underlying assets, to exceed 2% of average participants interest annually, the Trustee assumed such excess audit fees. For the year ended May 31, 2014, the Trustee did not assume any audit fees. The Sub-Advisor chose to voluntarily waive the sub-advisor fee effective January 1, Note 4. Fees The Trustee charged the Funds a fee equal to 0.70% per annum of net assets (participants interest) held by external participants. This fee was accrued on a daily basis and was paid monthly in arrears. Of this fee, 0.55% was paid to the Sub-Advisor for sub-advisory services provided to the Funds, which is presented on the statements of operations. For the year ended May 31, 2014, the Sub-Advisor waived the following fees: Sunrise Retirement Balanced Equity Fund $ 22,917 Sunrise Retirement Balanced Fund 23,881 Sunrise Retirement Diversified Equity Fund 6,623 Sunrise Retirement Diversified Income Fund 16,969 Such amounts are not reflected on the statements of operations and are not included in the calculation of each Fund s daily unit value. Note 5. Risks and Indemnifications In the normal course of business, the Funds entered into contracts that contain a variety of representations and warranties that provide indemnifications under certain circumstances. The Funds maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. The Funds expect the risk of future obligation under these indemnifications to be remote. 9

12 Other Financial Information (Unaudited)

13 Summary Schedules of Monthly Values (Unaudited) Period from June 1, 2013 through May 20, 2014 (Final Settlement Date) Sunrise Retirement Balanced Equity Sunrise Retirement Diversified Equity Sunrise Retirement Diversified Income Fund Sunrise Retirement Balanced Fund Fund Fund Units Outstanding Unit Value Units Outstanding Unit Value Units Outstanding Unit Value Units Outstanding Unit Value May 31, ,724 $ ,078 $ ,585 $ ,610 $ June 30, , , , , July 31, , , , , August 31, , , , , September 30, , , , , October 31, , , , , November 30, , , , , December 31, , , , , January 31, , , , , February 28, , , , , March 31, , , , , April 30, , , , , May 20, 2014 (1) 373, , , , (1) Final Settlement Date 10

14 Sunrise Retirement Balanced Equity Fund Summary Schedule of Investment Changes (Unaudited) Year Ended May 31, 2014 (1) Purchases Cost of (in shares) Investments Purchases American Beacon Large Cap Value Fund 15,117 $ (424,633) Dodge & Cox Income Fund 34,090 (464,558) Dodge & Cox International Stock Fund 5,925 (248,034) Federated Treasury Obligation Fund 278,102 (278,102) Harbor International Institutional 3,452 (239,725) Loomis Sayles Small Cap Value Fund 13,014 (487,275) PIMCO Total Return Fund 44,292 (478,104) T. Rowe Price Instl Large Cap Growth Fund 15,452 (401,721) Vanguard 500 Index Fund 2,883 (392,837) Vanguard Mid Cap Index Fund 9,158 (383,722) Vanguard Total Bond Market Index Fund 44,440 (473,131) Redemptions Realized (in shares) Gain (Loss) Redemptions American Beacon Large Cap Value Fund 65,931 $ 459,811 Dodge & Cox Income Fund 92,973 1,690 Dodge & Cox International Stock Fund 25, ,802 Federated Treasury Obligation Fund 476,223 - Harbor International Institutional 12, ,611 Loomis Sayles Small Cap Value Fund 46, ,372 PIMCO Total Return Fund 116,983 (13,703) T. Rowe Price Instl Large Cap Growth Fund 70, ,641 Vanguard 500 Index Fund 12, ,942 Vanguard Mid Cap Index Fund 39, ,883 Vanguard Total Bond Market Index Fund 118,758 (190) TDBank USA Institutional MMDA 1 $ - 2,404,859 (1) Liquidation Date 11

15 Sunrise Retirement Balanced Fund Summary Schedule of Investment Changes (Unaudited) Year Ended May 31, 2014 (1) Purchases Cost of (in shares) Investments Purchases American Beacon Large Cap Value Fund 17,087 $ (481,299) Dodge & Cox Income Fund 70,625 (961,870) Dodge & Cox International Stock Fund 6,352 (267,627) Federated Treasury Obligation Fund 348,915 (348,915) Harbor International Institutional 3,984 (277,634) Loomis Sayles Small Cap Value Fund 8,436 (312,839) PIMCO Total Return Fund 91,249 (983,526) T. Rowe Price Instl Large Cap Growth Fund 17,734 (463,729) Vanguard 500 Index Fund 4,728 (647,312) Vanguard Mid Cap Index Fund 12,603 (529,498) Vanguard Total Bond Market Index Fund 91,726 (976,330) Redemptions Realized (in shares) Gain (Loss) Redemptions American Beacon Large Cap Value Fund 60,205 $ 415,389 Dodge & Cox Income Fund 174,151 2,234 Dodge & Cox International Stock Fund 22, ,669 Federated Treasury Obligation Fund 566,936 - Harbor International Institutional 12, ,356 Loomis Sayles Small Cap Value Fund 25, ,656 PIMCO Total Return Fund 219,051 (15,730) T. Rowe Price Instl Large Cap Growth Fund 64, ,739 Vanguard 500 Index Fund 16, ,182 Vanguard Mid Cap Index Fund 44, ,441 Vanguard Total Bond Market Index Fund 222,354 8,186 TDBank USA Institutional MMDA 1 $ - 2,256,122 (1) Liquidation Date 12

16 Sunrise Retirement Diversified Equity Fund Summary Schedule of Investment Changes (Unaudited) Year Ended May 31, 2014 (1) Purchases Cost of (in shares) Investments Purchases American Beacon Large Cap Value Fund 17,222 $ (483,081) Dodge & Cox International Stock Fund 7,696 (322,277) Federated Treasury Obligation Fund 150,278 (150,278) Harbor International Institutional 5,063 (351,811) Loomis Sayles Small Cap Value Fund 18,887 (696,918) T. Rowe Price Instl Large Cap Growth Fund 18,259 (475,113) Vanguard 500 Index Fund 2,845 (388,231) Vanguard Mid Cap Index Fund 11,493 (481,086) Redemptions Realized (in shares) Gain (Loss) Redemptions American Beacon Large Cap Value Fund 32,419 $ 155,323 Dodge & Cox International Stock Fund 14,375 96,230 Federated Treasury Obligation Fund 197,824 - Harbor International Institutional 8,614 62,074 Loomis Sayles Small Cap Value Fund 33, ,946 T. Rowe Price Instl Large Cap Growth Fund 34, ,436 Vanguard 500 Index Fund 5, ,582 Vanguard Mid Cap Index Fund 21, ,848 TDBank USA Institutional MMDA 1 $ - 854,439 (1) Liquidation Date 13

17 Sunrise Retirement Diversified Income Fund Summary Schedule of Investment Changes (Unaudited) Year Ended May 31, 2014 (1) Purchases Cost of (in shares) Investments Purchases American Beacon Large Cap Value Fund 7,142 $ (196,609) Dodge & Cox Income Fund 57,100 (777,713) Dodge & Cox International Stock Fund 2,405 (98,405) Federated Treasury Obligation Fund 226,906 (226,906) Harbor International Institutional 966 (65,999) Loomis Sayles Small Cap Value Fund 5,388 (197,933) PIMCO Total Return Fund 74,152 (800,895) T. Rowe Price Instl Large Cap Growth Fund 7,520 (187,770) Vanguard 500 Index Fund 3,218 (429,954) Vanguard Mid Cap Index Fund 3,953 (161,920) Vanguard Total Bond Market Index Fund 74,304 (792,340) Redemptions Realized (in shares) Gain (Loss) Redemptions American Beacon Large Cap Value Fund 27,616 $ 196,027 Dodge & Cox Income Fund 156,472 1,211 Dodge & Cox International Stock Fund 9,080 79,421 Federated Treasury Obligation Fund 376,888 - Harbor International Institutional 3,311 30,177 Loomis Sayles Small Cap Value Fund 17, ,979 PIMCO Total Return Fund 196,802 (14,206) T. Rowe Price Instl Large Cap Growth Fund 29, ,294 Vanguard 500 Index Fund 12, ,943 Vanguard Mid Cap Index Fund 15, ,756 Vanguard Total Bond Market Index Fund 199,705 6,540 TDBank USA Institutional MMDA 1 $ - 1,155,142 (1) Liquidation Date 14