FINANCIAL STATEMENTS Stable Value Portfolio of the Wilmington Trust Fiduciary Services Company Collective Investment Trust for Employee Benefit Plans Year Ended With Report of Independent Auditors
Financial Statements Year Ended T A B L E OF C O N T E N T S Report of Independent Auditors... 1 Statement of Assets and Liabilities... 2 Statement of Operations... 3 Statement of Changes in Net Assets... 4 Notes to Financial Statements... 5
KPMG LLP 1601 Market Street Philadelphia, PA 19103-2499 Independent Auditors Report To the Trustee and Participating Plans of the Stable Value Portfolio of the Wilmington Trust Fiduciary Services Company Collective Investment Trust for Employee Benefit Plans: We have audited the accompanying financial statements of the Stable Value Portfolio of the Wilmington Trust Fiduciary Services Company Collective Investment Trust for Employee Benefit Plans (the Portfolio ) as of, which comprise the statement of assets and liabilities as of, and the related statements of operations and changes in net assets 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 U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Stable Value Portfolio of the Wilmington Trust Fiduciary Services Company Collective Investment Trust for Employee Benefit Plans, as of, and the results of its operations and changes in net assets, for the year then ended, in conformity with U.S. generally accepted accounting principles. September 23, 2013 KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative ( KPMG International ), a Swiss entity.
Statement of Assets and Liabilities Assets Investment in GIC Portfolio of the Wilmington Trust Fiduciary Services Company (818,277.62 units), at fair value (cost $28,436,758) $ 21,266,618 Receivable for participant units sold 24,004 Total assets 21,290,622 Liabilities Payable for investments purchased 24,004 Accrued expenses 18,605 Total liabilities 42,609 Net assets reflecting all investments at fair value 21,248,013 Adjustments from fair value to contract value for fully benefit responsive investment contracts 7,553,939 Net assets (equivalent to $18.537 per unit based on on 1,553,736 units outstanding) $ 28,801,952 See accompanying notes to financial statements. 2
Statement of Operations Year ended Expenses Management and other operating expenses $ 262,825 Net investment loss (262,825) Realized and unrealized gain (loss) on investments Net realized gain on investments 476,167 Net change in unrealized depreciation on investments (209,901) Net realized and unrealized gain on investments 266,266 Net increase in net assets resulting from operations $ 3,441 See accompanying notes to financial statements. 3
Statement of Changes in Net Assets Year ended Increase in net assets resulting from operations: Net investment loss $ (262,825) Net realized gain on investments 476,167 Net change in unrealized depreciation on investments (209,901) Net increase in net assets resulting from operations 3,441 Fund Share Transactions: Proceeds from units issued 11,902,209 Value of units redeemed (24,475,272) Decrease in net assets resulting from fund share transactions (12,573,063) Net decrease in net assets (12,569,622) Net assets: Net assets, beginning of year 41,371,574 Net assets, end of year $ 28,801,952 Change in number of units outstanding: Number of units outstanding at the beginning of the year 2,232,038 Number of units issued during the year 642,113 Number of units redeemed during the year (1,320,415) Number of units outstanding at the end of the year 1,553,736 See accompanying notes to financial statements. 4
NOTES TO FINANCIAL STATEMENTS Note 1 Organization Wilmington Trust Fiduciary Services Company Collective Investment Trust for Employee Benefit Plans, formerly named UBS Fiduciary Trust Company Collective Investment Trust for Employee Benefit Plans (the "Trust") was created pursuant to a declaration of trust dated February 2, 1987, as last amended October 10, 2008. The Trust is organized and governed by the laws of the state of New Jersey, except to the extent pre-empted or superseded by the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or other governing federal law. Wilmington Trust Fiduciary Services Company (the "Trustee") serves as the Trustee of the Trust. The purpose of the Trust is to allow plan sponsors of retirement plans which qualify for exemption from federal income taxation pursuant to Section 501(a) of the Internal Revenue Code, as amended (the "Code"), by reason of qualifying under Section 401(a) of the Code; tax-exempt governmental plans under Section 414(d) or Section 818(a)(6) of the Code; eligible deferred compensation plans under Section 457(b) of the Code established by a government employer; or group trusts or separate accounts consisting solely of assets of the foregoing, collectively to invest plan assets in investments under the Trust. The Trust consists of separate investment portfolios with differing investment objectives, which are available for investment by participating plans. An eligible plan may join the Trust, subject to the Trustee s acceptance, and become a participating plan by executing participation materials specified by the Trustee. On May 16, 2012, Wilmington Trust Corporation was acquired by M&T Bank Corporation, under which Wilmington Trust Corporation merged with a subsidiary of M&T Bank Corporation, resulting in Wilmington Trust Corporation becoming a wholly owned subsidiary of M&T Bank Corporation. The Trustee is a wholly owned subsidiary of Wilmington Trust Retirement and Institutional Services Company, which, in turn, is a wholly owned subsidiary of Wilmington Trust Corporation. The Trustee is responsible for maintaining and administering the Trust and its various portfolios and also serves as the investment adviser (the "Investment Adviser") to the portfolios. Stable Value Portfolio (the "Portfolio") is one of the portfolios of the Trust. The Portfolio was created during January 1999 by the Trustee, with the objective to generate a total return in excess of the average yield to maturity of the Bank of America/Merrill Lynch one-year Treasury Note index. The Portfolio invests substantially all of its assets in the GIC Portfolio of the Trust (the "Underlying Fund"). The Trustee has appointed UBS Global Asset Management (Americas) Inc. as sub-adviser to the Portfolio. UBS Financial Services Inc. is the custodian of the Portfolio. The performance of the Portfolio is directly affected by the performance of the GIC Portfolio of the Trust. The GIC Portfolio financial statements are attached to this report and should be read in conjunction with the Portfolio s financial statements. Note 2 Significant Accounting Policies The financial statements have been prepared in conformity with U.S. generally accepted accounting principles and the Trust agreement which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 5
NOTES TO FINANCIAL STATEMENTS (continued) Valuation of Investment Investment in the Underlying Fund is carried at fair value as determined by the Portfolio s pro rata interest in the net assets of the Underlying Fund based on financial data supplied by the Underlying Fund. The Trustee considers all relevant information available at the time the Portfolio values its investment. The Trustee has assessed factors including, but not limited to the Underlying Fund s compliance with ASC 820, Fair Value Measurements and Disclosures, price transparency and valuation procedures in place, contributions and withdrawals activity, and existence or absence of certain withdrawal restrictions. The resulting net gains or losses are reflected in the statement of operations. The performance of the Portfolio is directly affected by the performance of the Underlying Fund. Security Transactions and Related Investment Income and Expense Security transactions are accounted for on the trade date (the date the order to buy or sell is executed). Realized gains and losses from investment in the underlying fund are determined on a weighted average basis whereby cost is reduced in proportion to the withdrawal in relation to the fair value of the investment at the date of withdrawal. Units Issued and Redeemed Unit purchases and redemptions are transacted at the net asset value per unit of the Portfolio determined as of the close of each business day. The Portfolio issues new shares and repurchases outstanding shares on a daily basis at the net asset value per unit. Each participating plan may withdraw, in whole or in part, amounts from its capital account, upon notice to the Trustee. Investment income earned is retained in the Portfolio and included in the determination of unit values. Expenses The Portfolio is one of the portfolios in the Trust, and accordingly, expenses which cannot be directly attributed to the Portfolio are apportioned among the portfolios in the Trust. In accordance with the declaration of Trust, the Trustee may charge the Portfolio for audit and valuation fees incurred. Certain Trust expenses may be borne by the Trustee. Income Taxes The Trust is a qualified Trust under Section 401(a) of the Code and as such, no provision for income taxes is required. It is intended that the Trust and the Portfolio be exempt from taxation under Section 501(a) of the Code and qualify as a "group trust" under Revenue Ruling 81-100 and other applicable Internal Revenue Service rules and regulations. ASC 740-10, Accounting for Uncertainty in Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740-10 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Portfolio's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet a more-likely-than-not threshold would be recorded as a tax expense. The Trustee has evaluated uncertain tax positions in the United States and all major foreign jurisdictions for all open tax years for the 6
NOTES TO FINANCIAL STATEMENTS (continued) Portfolio since the Portfolio's inception and has determined that the Portfolio s tax positions are deemed to be "morelikely-than-not" as of. In the event that the Portfolio incurs any tax liabilities in the future, the tax liabilities and the corresponding tax expense will be recorded on the statement of assets and liabilities and statement of operations, respectively. The Trust's Federal fiduciary tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service. The Portfolio did not accrue any interest or penalties related to uncertain tax liabilities as of. The Trustee is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. New Accounting Pronouncement In May 2012, the FASB issued ASU No. 2012-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS")". ASU 2012-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2012-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity, and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2012-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2012. Note 3 Fair Value Measurements In accordance with ASC 820, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Portfolio s investments are categorized based on the priority of the inputs to the valuation technique into a threelevel fair value hierarchy. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Financial assets and liabilities are recorded based on the three levels of the fair value hierarchy as follows: Level 1 - Level 2 - Level 3 - Unadjusted quoted prices in active markets at the measurement date for identical securities Other prices in markets that are not active or based on quoted prices for similar assets or liabilities, or for which all significant inputs are observable, directly or indirectly. Significant unobservable inputs (including the Trustee's own assumptions in determining the value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. 7
NOTES TO FINANCIAL STATEMENTS (continued) The Portfolio assumes any transfers between levels occur at beginning of the year. The following is a summary of the inputs used as of, in valuing the Portfolio s assets carried at fair value: Level 1 Level 2 Level 3 Total Assets: GIC Portfolio of the Wilmington Trust Fiduciary Services Company $ - $ 21,266,618 $ - $ 21,266,618 Total assets $ - $ 21,266,618 $ - $ 21,266,618 During the year ended, the Portfolio did not hold any Level 1 or 3 securities. There were no transfers in or out of any of the fair value hierarchy levels during the year. Note 4 Related Party Transactions The Portfolio is invested in a collective fund managed by UBS Global Asset Management. With respect to related party transactions, all transactions were executed at the net asset value, on the transaction date, as with any other participant in the underlying collective fund. The Trustee is a non-depository bank that provides trust and custodial services for ERISA-qualified retirement plans as well as trust and investment services to smaller business pension and retirement plans. The Trustee is responsible for managing the Trust's investment and business affairs. For such services provided by the Trustee to the Trust, the Trustee receives Trustee fees, which are not charged to the Portfolio but to the plans themselves or their plan sponsor. Note 5 Indemnification The Trust's organizational documents provide limited indemnification for the Trustee, its participants, directors, officers, employees, and agents against liabilities arising in connection with the performance of their duties to the Trust. The Trust's maximum exposure under this arrangement is unknown as this would be dependent on future claims that may be made against the Trust. The risk of material loss from such claims is considered remote. Note 6 Investments During the year ended, the aggregate cost of purchases and proceeds from sales of investments were $6,907,073 and $19,753,201, respectively. 8
NOTES TO FINANCIAL STATEMENTS (continued) Note 7 Per Unit Operating Performance (for a unit outstanding throughout the year) Net asset value, beginning of year $ 18.535 Income from investment operations: (1) Net investment loss (0.139) Net realized and unrealized gain on investment transactions 0.141 Total income from investment operations 0.002 Net asset value, end of year $ 18.537 Total Return 0.01% Ratio to average net assets: (2)(3) Expenses 0.75% Net investment loss (0.75)% (1) Based on average units outstanding. (2) The ratios do not include Trustee fees which are calculated and paid outside the Trust. Please refer to Related Party Transactions in the Notes to financial Statements. (3) Does not include expenses of the Underlying Fund. An individual investor s ratio and return may vary from the above based on the timing of capital transactions. Note 8 Subsequent Events The Trustee has evaluated the effects of subsequent events on the Portfolio s financial statements through September 23, 2013, which is the date the financial statements were available to be issued, and has determined that there are no material subsequent events that would require disclosure or adjustment in the Portfolio's financial statements through this date. 9