TD Ameritrade Collective Investment Funds for Employee Benefit Plans Retire Funds. Financial Reports Year Ended December 31, 2011

Transcription

1 TD Ameritrade Collective Investment s for Employee Benefit Plans Financial Reports Year Ended December 31, 2011

2 Contents Independent Auditor s Report 1 Financial Statements Statements of Assets and Liabilities 2 Schedules of Portfolio Investments 3-5 Statements of Operations 6 Statements of Changes in Participants Interest 7 Statements of Cash Flows 8-9 Financial Highlights 10 Notes to Financial Statements Other Financial Information (Unaudited) Summary Schedules of Monthly Values Retire Income Summary Schedule of Investment Changes 22 Retire2015 Summary Schedule of Investment Changes 23 Retire2025 Summary Schedule of Investment Changes 24 Retire2035 Summary Schedule of Investment Changes 25 Retire2045 Summary Schedule of Investment Changes 26 Retire2055 Summary Schedule of Investment Changes 27

3 Independent Auditor s Report To The Trust Committee Denver, Colorado We have audited the accompanying statements of assets and liabilities, including the schedules of portfolio investments, of the (the s), which include the Retire Income, Retire2015, Retire2025, Retire2035, Retire2045 and Retire2055 (six of the funds constituting the ), as of December 31, 2011, and the related statements of operations, changes in participants interest, cash flows and financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the s management. Our responsibility is to express an opinion on these financial statements and financial highlights 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 and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing 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 and financial highlights referred to above present fairly, in all material respects, the financial position of the Retire Income, Retire2015, Retire2025, Retire2035, Retire2045 and Retire2055 as of December 31, 2011, and the results of their operations, their cash flows and their financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. 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 basic financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Denver, Colorado March 12,

4 Statements of Assets and Liabilities December 31, 2011 Retire Income ASSETS Investments at fair value (1) 158,296 Retire2015 Retire2025 Retire2035 Retire2045 Retire2055 $ $ 974,932 $ 950,843 $ 1,079,374 $ 337,149 $ 188,546 Cash and cash equivalents Dividend receivable Receivable for participant units issued ,416 3,257 1,428 2,191 Total assets $ 158,842 $ 975,917 $ 954,140 $ 1,083,275 $ 338,757 $ 190,820 LIABILITIES AND PARTICIPANTS' INTEREST LIABILITIES Trustee fee payable - Share Class I $ 13 $ 13 $ 41 $ 81 $ 27 $ 14 Trustee fee payable - Share Class II Sub-advisor fee payable - Share Class II Payable for investments purchased Total liabilities PARTICIPANTS' INTEREST Participants' interest - Share Class I 158, , , , , ,640 Participants' interest - Share Class II , , ,730 17,554 18,161 Total participants' interest 158, , ,766 1,083, , ,801 Total liabilities and participants' interest $ 158,842 $ 975,917 $ 954,140 $ 1,083,275 $ 338,757 $ 190,820 (1) Cost $ 152,197 $ 985,553 $ 914,563 $ 1,037,026 $ 325,532 $ 184,605 See Notes to Financial Statements. 2

5 Schedules of Portfolio Investments December 31, 2011 % of Participants' Interest (1) Retire Income Number of Shares Cost Fair Value % of Participants' Interest (1) Retire2015 Number of Shares Cost Fair Value Short-term money market Federated Treasury Obligation 2.5% 3,935 $ 3,935 $ 3, % 27,074 $ 27,074 $ 27,074 TDBank Institutional MMDA (2) 0.0% % Total short-term money market 2.5% 3,936 3, % 27,075 27,075 Collective investment fund Galliard Capital Management Stable Value Q 16.1% 1,844 24,725 25, % 8, , ,754 Total collective investment fund 16.1% 24,725 25, % 113, ,754 Mutual funds United States stock Spartan Total Market Index 4.7% 207 6,956 7, % 1,772 60,988 63,992 T. Rowe Price Institutional Large-Cap Growth 2.4% 234 3,423 3, % 1,926 29,793 31,044 LSV Conservative Value Equity 2.1% 461 3,278 3, % 4,381 30,666 31,674 Total United States stock 9.2% 13,657 14, % 121, ,710 International stock Aberdeen Emerging Markets Institutional 4.2% 528 6,685 6, % 5,218 70,993 66,326 Dodge & Cox International Stock 3.1% 169 5,463 4, % 1,892 61,045 55,331 Schroder International Alpha 3.1% 554 5,371 4, % 6,253 60,667 54,901 Total international stock 10.4% 17,519 16, % 192, ,558 World stock T. Rowe Price Global Stock 1.6% 163 2,656 2, % 1,587 26,596 25,177 Total world stock 1.6% 2,656 2, % 26,596 25,177 United States bond Dodge & Cox Income 7.5% ,681 11, % 5,202 69,617 69,191 Goldman Sachs Core Fixed Income 7.9% 1,217 11,665 12, % 6,766 68,437 69,820 Harbor High Yield Bond 4.9% 731 7,668 7, % 3,366 36,175 35,641 PIMCO Real Return 16.6% 2,243 25,364 26, % 12, , ,062 Total United States bond 36.9% 56,378 58, % 317, ,714 International bond Fidelity New Markets Income 5.1% 510 7,647 8, % 2,274 36,252 36,000 Legg Mason Global Opportunities Bond 10.9% 1,594 16,504 17, % 8,522 94,753 92,462 Total international bond 16.0% 24,151 25, % 131, ,462 United States real estate Vanguard REIT Index 7.0% 579 9,175 11, % 3,090 55,984 59,482 Total United States real estate 7.0% 9,175 11, % 55,984 59,482 Total mutual funds 81.1% 123, , % 845, ,103 Total investments 99.7% $ 152,197 $ 158, % $ 985,553 $ 974,932 (1) Percentage of participants interest may not recompute as fair value and participants interest are rounded. (2) The percentage of participants' interest is less than 0.05% and therefore rounds to 0.0%. See Notes to Financial Statements. 3

6 Schedules of Portfolio Investments - Continued December 31, 2011 % of Participants' Interest (1) Retire2025 Number of Shares Cost Fair Value % of Participants' Interest (1) Retire2035 Number of Shares Cost Fair Value Short-term money market Federated Treasury Obligation 2.2% 21,370 $ 21,370 $ 21, % 28,976 $ 28,976 $ 28,976 TDBank Institutional MMDA (2) 0.0% % Total short-term money market 2.2% 21,371 21, % 28,977 28,977 Collective investment fund Galliard Capital Management Stable Value Q 4.0% 2,777 36,391 38, % 1,416 18,374 19,590 Total collective investment fund 4.0% 36,391 38, % 18,374 19,590 Mutual funds United States stock Spartan Total Market Index 10.3% 2,713 90,943 97, % 3, , ,416 T. Rowe Price Institutional Large-Cap Growth 5.0% 2,934 41,616 47, % 4,066 56,690 65,541 LSV Conservative Value Equity 4.7% 6,213 44,802 44, % 8,700 64,111 62,904 Total United States stock 20.0% 177, , % 246, ,861 International stock Aberdeen Emerging Markets Institutional 8.1% 6,059 71,008 77, % 6,893 76,840 87,609 Dodge & Cox International Stock 8.1% 2,632 87,513 76, % 3, , ,421 Schroder International Alpha 8.2% 8,937 84,756 78, % 12, , ,829 Total international stock 24.4% 243, , % 319, ,859 World stock T. Rowe Price Global Stock 3.7% 2,235 39,322 35, % 3,180 56,775 50,432 Total world stock 3.7% 39,322 35, % 56,775 50,432 United States bond Dodge & Cox Income 5.6% 4,051 52,569 53, % 3,715 47,549 49,414 Goldman Sachs Core Fixed Income 5.7% 5,309 51,326 54, % 4,888 46,470 50,443 Harbor High Yield Bond 3.5% 3,186 33,822 33, % 3,574 37,320 37,852 PIMCO Real Return 12.1% 9, , , % 8,553 95, ,834 Total United States bond 26.9% 247, , % 227, ,543 International bond Fidelity New Markets Income 3.5% 2,122 31,905 33, % 2,390 35,126 37,836 Legg Mason Global Opportunities Bond 7.0% 6,164 64,591 66, % 5,074 52,852 55,054 Total international bond 10.5% 96, , % 87,978 92,890 United States real estate Vanguard REIT Index 7.9% 3,900 52,911 75, % 4,219 51,307 81,222 Total United States real estate 7.9% 52,911 75, % 51,307 81,222 Total mutual funds 93.4% 856, , % 989,675 1,030,807 Total investments 99.6% $ 914,563 $ 950, % $ 1,037,026 $ 1,079,374 (1) Percentage of participants interest may not recompute as fair value and participants interest are rounded. (2) The percentage of participants' interest is less than 0.05% and therefore rounds to 0.0%. See Notes to Financial Statements. 4

7 Schedules of Portfolio Investments - Continued December 31, 2011 % of Participants' Interest (1) Retire2045 Number of Shares Cost Fair Value % of Participants' Interest (1) Retire2055 Number of Shares Cost Fair Value Short-term money market Federated Treasury Obligation 2.5% 8,509 $ 8,509 $ 8, % 5,193 $ 5,193 $ 5,193 TDBank Institutional MMDA (2) 0.0% % Total short-term money market 2.5% 8,510 8, % 5,194 5,194 Collective investment fund Galliard Capital Management Stable Value Q 1.0% 234 3,104 3, % Total collective investment fund 1.0% 3,104 3, % Mutual funds United States stock Spartan Total Market Index 13.7% 1,285 43,291 46, % ,652 27,631 T. Rowe Price Institutional Large-Cap Growth 6.7% 1,402 19,614 22, % ,149 13,419 LSV Conservative Value Equity 6.4% 3,013 21,971 21, % 1,822 12,792 13,173 Total United States stock 26.8% 84,876 90, % 50,593 54,223 International stock Aberdeen Emerging Markets Institutional 8.4% 2,232 25,226 28, % 1,313 15,986 16,689 Dodge & Cox International Stock 11.2% 1,293 43,215 37, % ,122 22,946 Schroder International Alpha 11.2% 4,323 40,755 37, % 2,595 24,502 22,782 Total international stock 30.8% 109, , % 65,610 62,417 World stock T. Rowe Price Global Stock 5.2% 1,103 19,659 17, % ,125 10,564 Total world stock 5.2% 19,659 17, % 11,125 10,564 United States bond Dodge & Cox Income 3.6% ,658 12, % 384 5,008 5,103 Goldman Sachs Core Fixed Income 3.6% 1,191 11,403 12, % 504 4,900 5,202 Harbor High Yield Bond 3.5% 1,118 11,705 11, % 820 9,385 9,665 PIMCO Real Return 7.1% 2,027 22,766 23, % 606 6,415 6,421 Total United States bond 17.8% 57,532 60, % 25,708 26,391 International bond Fidelity New Markets Income 3.6% ,341 12, % 392 5,952 6,204 Legg Mason Global Opportunities Bond 4.1% 1,284 13,457 13, % 516 5,478 5,599 Total international bond 7.7% 24,798 26, % 11,430 11,803 United States real estate Vanguard REIT Index 7.9% 1,395 17,857 26, % ,403 17,397 Total United States real estate 7.9% 17,857 26, % 14,403 17,397 Total mutual funds 96.2% 313, , % 178, ,795 Total investments 99.7% $ 325,532 $ 337, % $ 184,605 $ 188,546 (1) Percentage of participants interest may not recompute as fair value and participants interest are rounded. (2) The percentage of participants' interest is less than 0.05% and therefore rounds to 0.0%. See Notes to Financial Statements. 5

8 Statements of Operations Year Ended December 31, 2011 Retire Income Retire2015 Retire2025 Retire2035 Retire2045 Retire2055 Investment income: Dividends $ 6,576 $ 24,176 $ 35,788 $ 31,071 $ 8,946 $ 4,529 Total investment income 6,576 24,176 35,788 31,071 8,946 4,529 Expenses: Sub-advisor fees - Share Class II Trustee fees - Share Class I Trustee fees - Share Class II Total expenses 225 1,472 2,148 1, Net investment income 6,351 22,704 33,640 29,788 8,599 4,348 Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments sold 9, ,897 5, (62) Net change in unrealized appreciation on investments (13,666) (15,674) (91,626) (67,363) (20,861) (12,532) Net realized and unrealized gain (loss) on investments (4,595) (14,803) (27,729) (62,312) (20,656) (12,594) Net increase (decrease) in participants' interest resulting from operations $ 1,756 $ 7,901 $ 5,911 $ (32,524) $ (12,057) $ (8,246) See Notes to Financial Statements. 6

9 Statements of Changes in Participants' Interest Year Ended December 31, 2011 Retire Income Retire2015 Retire2025 Units Amount Units Amount Units Amount Participants' interest at beginning of year 13,037 $ 143,742 26,310 $ 288, ,293 $ 1,318,444 From operations: Net investment income 6,351 22,704 33,640 Net realized gain on investments sold 9, ,897 Net change in unrealized appreciation on investments (13,666) (15,674) (91,626) Net increase in participants' interest resulting from operations 1,756 7,901 5,911 From participating unit transactions: Issuance of units - Share Class I 17, ,153 8, ,364 6,119 66,648 Issuance of units - Share Class II , ,756 22, ,416 Redemption of units - Share Class I (16,725) (188,822) (772) (8,820) (60,236) (671,193) Redemption of units - Share Class II - - (4,766) (52,711) (599) (6,460) Net increase (decrease) from participating unit transactions 1,065 13,331 62, ,589 (32,636) (370,589) Participants' interest at end of year 14,102 $ 158,829 88,738 $ 975,696 89,657 $ 953,766 Retire2035 Retire2045 Retire2055 Units Amount Units Amount Units Amount Participants' interest at beginning of year 90,385 $ 934,246 29,454 $ 293,100 12,623 $ 125,420 From operations: Net investment income 29,788 8,599 4,348 Net realized gain (loss) on investments sold 5, (62) Net change in unrealized appreciation on investments (67,363) (20,861) (12,532) Net decrease in participants' interest resulting from operations (32,524) (12,057) (8,246) From participating unit transactions: Issuance of units - Share Class I 14, ,343 5,274 52,342 8,355 81,684 Issuance of units - Share Class II 8,331 87, ,155 1,248 11,817 Redemption of units - Share Class I (4,118) (44,067) (30) (289) (2,146) (19,566) Redemption of units - Share Class II (1,059) (11,186) (349) (3,526) (32) (308) Net increase from participating unit transactions 17, ,442 5,811 57,682 7,425 73,627 Participants' interest at end of year 107,732 $ 1,083,164 35,265 $ 338,725 20,048 $ 190,801 See Notes to Financial Statements. 7

10 Statements of Cash Flows Year Ended December 31, 2011 Retire Income Retire2015 Retire2025 Cash Flows from Operating Activities Net increase in participants' interest resulting from operations: $ 1,756 $ 7,901 $ 5,911 Adjustments to reconcile net increase in participants' interest resulting from operations to net cash provided by (used in) operating activities: Purchases of investments (208,624) (759,903) (339,397) Proceeds from sales of investments 189,046 57, ,728 Net realized gain on investments sold (9,071) (871) (63,897) Net change in unrealized appreciation on investments 13,666 15,674 91,626 Changes in assets and liabilities: Dividend receivable ,227 Trustee fee payable - Share Class I - 8 (48) Trustee fee payable - Share Class II Sub-advisor fee payable - Share Class II Payable for investments purchased (30) (57) (376) Net cash provided by (used in) operating activities (12,937) (679,453) 372,838 Cash Flows from Financing Activities Issuance of units - Share Class I 202, ,364 66,648 Issuance of units - Share Class II - 640, ,416 Change in receivable for participant units issued (394) (136) (2,416) Redemptions of units - Share Class I (188,822) (8,820) (671,193) Redemptions of units - Share Class II - (52,711) (6,460) Net cash provided by (used in) financing activities 12, ,453 (373,005) Net decrease in cash and cash equivalents - - (167) Cash and cash equivalents: Beginning of year End of year $ - $ - $ 212 See Notes to Financial Statements. 8

11 Statements of Cash Flows - Continued Year Ended December 31, 2011 Retire2035 Retire2045 Retire2055 Cash Flows from Operating Activities Net decrease in participants' interest resulting from operations: $ (32,524) $ (12,057) $ (8,246) Adjustments to reconcile net decrease in participants' interest resulting from operations to net cash used in operating activities: Purchases of investments (259,935) (67,419) (95,087) Proceeds from sales of investments 51,145 2,379 19,264 Net realized (gain) loss on investments sold (5,051) (205) 62 Net change in unrealized appreciation on investments 67,363 20,861 12,532 Changes in assets and liabilities: Dividend receivable Trustee fee payable - Share Class I Trustee fee payable - Share Class II Sub-advisor fee payable - Share Class II Payable for investments purchased (109) (26) (8) Net cash used in operating activities (178,185) (56,252) (71,435) Cash Flows from Financing Activities Issuance of units - Share Class I 149,343 52,342 81,684 Issuance of units - Share Class II 87,352 9,155 11,817 Change in receivable for participant units issued (3,257) (1,428) (2,191) Redemptions of units - Share Class I (44,067) (289) (19,566) Redemptions of units - Share Class II (11,186) (3,526) (308) Net cash provided by financing activities 178,185 56,254 71,436 Net increase in cash and cash equivalents Cash and cash equivalents: Beginning of year End of year $ - $ 2 $ 1 See Notes to Financial Statements. 9

12 Financial Highlights Year Ended December 31, 2011 Retire Income Retire2015 Retire2025 Retire2035 Retire2045 Retire2055 Share Class I Share Class I Share Class I Share Class I Share Class I Share Class I Selected per unit data Unit value beginning of year $ $ $ $ $ 9.95 $ 9.94 Income from investment operations: Net investment income (a) Net realized and unrealized gain (loss) on investments (0.09) (0.33) (0.42) (0.57) (0.62) (0.68) Total from investment operations (0.13) (0.28) (0.35) (0.41) Unit value end of year $ $ $ $ $ 9.60 $ 9.53 Total return (b) 2.09% 0.63% (1.20)% (2.71)% (3.52)% (4.12)% Ratios and supplemental data Participants' interest, end of year $ 158,774 $ 154,203 $ 472,550 $ 965,434 $ 321,171 $ 172,640 Ratio of net investment income to average participants' interest 2.81% 3.58% 2.61% 2.77% 2.69% 2.69% participants' interest (b) Ratio of expenses to average participants' interest (b) 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% Retire2015 Retire2025 Retire2035 Retire2045 Retire2055 Share Class II Share Class II Share Class II Share Class II Share Class II Selected per unit data Unit value beginning of year $ $ $ $ $ 9.78 Income from investment operations: Net investment income (a) Net realized and unrealized gain (loss) on investments (0.38) (0.48) (0.60) (0.63) (0.72) Total from investment operations 0.05 (0.15) (0.30) (0.36) (0.42) Unit value end of year $ $ $ $ 9.65 $ 9.36 Total return (b) 0.46% (1.39)% (2.91)% (3.60)% (4.29)% Ratios and supplemental data Participants' interest, end of year $ 821,493 $ 481,216 $ 117,730 $ 17,554 $ 18,161 Ratio of net investment income to average 3.88% 3.02% 2.86% 2.66% 3.13% participants' interest (b) Ratio of expenses to average participants' interest (b) 0.30% 0.30% 0.30% 0.30% 0.30% (a) Net investment income per share was calculated using the average shares method. (b) Does not reflect the assumption of audit fees by the Sub-Advisor, see Note 4. The Trustee was the only participant in Share Class II of the Retire Income as of and for the year ended December 31, As such, the Trustee has elected not to present the financial highlights for Share Class II of the Retire Income. See Notes to Financial Statements. 10

13 Notes to Financial Statements Note 1. Organization The (the s) are collective investment funds established under the Declaration of Trust establishing the TD Ameritrade Trust Company (TDATC, referred to herein as the Trustee) Collective Investment s for Employee Benefit Plans to provide for the collective investment and reinvestment of assets of qualified employer sponsored retirement plans. The s are intended to liquidate and terminate prior to May 31, TDATC serves as the trustee, custodian, transfer agent, and recordkeeper for the s. Rogerscasey (referred to herein as the Sub-Advisor) provides investment subadvisory services for the s. Each fund offers two share classes, Share Class I and Share Class II, which differ by their allocation of class specific expenses. The following describes the individual s, as set forth in the Declaration of Trust: Retire Income : This fund may be appropriate for investors who have retired or have begun withdrawing portions of their investment in the fund s target year, The Retire Income primarily invests in a combination of U.S. and non-u.s. stocks and bonds, REITs, and cash equivalents through mutual funds, commingled funds, exchange-traded funds, individual securities, and money market vehicles. Under normal circumstances, this fund s strategic asset class targets include: Rebalancing Target Range Fixed income 59% +/- 15% U.S. equity 15% +/- 6% International equity 13% +/- 4% REITs 10% +/- 3% Cash equivalents 3% Retire2015 : This fund may be appropriate for investors who will retire or will begin withdrawing portions of their investment in the fund s target year, The Retire2015 primarily invests in a combination of U.S. and non-u.s. stocks and bonds, REITs, and cash equivalents through mutual funds, commingled funds, exchange-traded funds, individual securities, and money market vehicles. Under normal circumstances, this fund s strategic asset class targets include: Rebalancing Target Range Fixed income 48% +/- 15% U.S. equity 21% +/- 8% International equity 20% +/- 6% REITs 8% +/- 3% Cash equivalents 3% 11

14 Notes to Financial Statements Retire2025 : This fund may be appropriate for investors who will retire or will begin withdrawing portions of their investment in the fund s target year, The Retire2025 primarily invests in a combination of U.S. and non-u.s. stocks and bonds, REITs, and cash equivalents through mutual funds, commingled funds, exchange-traded funds, individual securities, and money market vehicles. Under normal circumstances, this fund s strategic asset class targets include: Rebalancing Target Range Fixed income 36% +/- 13% U.S. equity 27% +/- 9% International equity 27% +/- 8% REITs 7% +/- 3% Cash equivalents 3% Retire2035 : This fund may be appropriate for investors who will retire or will begin withdrawing portions of their investment in the fund s target year, The Retire2035 primarily invests in a combination of U.S. and non-u.s. stocks and bonds, REITs, and cash equivalents through mutual funds, commingled funds, exchange-traded funds, individual securities, and money market vehicles. Under normal circumstances, this fund s strategic asset class targets include: Rebalancing Target Range Fixed income 27% +/- 12% U.S. equity 34% +/- 9% International equity 29% +/- 8% REITs 7% +/- 3% Cash equivalents 3% Retire2045 : This fund may be appropriate for investors who will retire or will begin withdrawing portions of their investment in the fund s target year, The Retire2045 primarily invests in a combination of U.S. and non-u.s. stocks and bonds, REITs, and cash equivalents through mutual funds, commingled funds, exchange-traded funds, individual securities, and money market vehicles. Under normal circumstances, this fund s strategic asset class targets include: Rebalancing Target Range Fixed income 18% +/- 8% U.S. equity 41% +/- 10% International equity 32% +/- 9% REITs 6% +/- 2% Cash equivalents 3% 12

15 Notes to Financial Statements Retire2055 : This fund may be appropriate for investors who will retire or will begin withdrawing portions of their investment in the fund s target year, The Retire2055 primarily invests in a combination of U.S. and non-u.s. stocks and bonds, REITs, and cash equivalents through mutual funds, commingled funds, exchange-traded funds, individual securities, and money market vehicles. Under normal circumstances, this fund s strategic asset class targets include: Rebalancing Target Range Fixed income 13% +/- 8% U.S. equity 45% +/- 10% International equity 35% +/- 9% REITs 4% +/- 2% Cash equivalents 3% Note 2. Summary of Significant Accounting Policies The following is a summary of the significant accounting policies followed by the s in the preparation of the accompanying financial statements. Principles of accounting: The s follow 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. Use of estimates: The preparation of financial statements in conformity with GAAP required the s Trustee to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Cash and cash equivalents: The s consider all highly liquid instruments with original maturities of three months or less to be cash equivalents. Cash balances of the s and other affiliated entities are combined into a deposit account provided by an affiliate of the Trustee. The balance of the deposit account is in excess of federally insured limits; however, the s do not believe they are exposed to any significant credit risk. Investment valuation: The s record investments at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The s utilize valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Assets and liabilities recorded at fair value are categorized within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are described below: Level 1 - Unadjusted quoted prices in active markets for identical assets that the s have the ability to access at the measurement date. The s do not adjust the quoted price for these investments, even in situations where the s hold a large position and a sale could reasonably impact the quoted price. The type of investments included in Level 1 includes listed money market vehicles and listed mutual funds. 13

16 Notes to Financial Statements Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset, either directly or indirectly. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement. Level 3 - Inputs are unobservable for the asset and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation. Investments which are included in this category include investments in collective investment funds. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The s assess the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with the s accounting policies regarding the recognition of transfers between levels of the fair value hierarchy. For the year ended December 31, 2011, the only transfer among levels was a reclassification of the s investments in collective investment fund from level 2 to level 3 because of redemption restrictions put in place by the investee fund s adviser. The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. A description of the valuation techniques applied to the s major categories of assets measured at fair value on a recurring basis follows. Short-term money market - Short-term investments are valued at cost, which approximates fair value. Mutual funds - Mutual s are valued at their daily net asset value. Collective investment fund - Depending on the redemption options available, as a practical expedient it may be possible that for investments in other funds, the reported net asset value (NAV) represents fair value based on observable data such as ongoing redemption and/or subscription activity. In these cases, the NAV is considered as a Level 2 input. However, certain funds may provide the manager with the ability to suspend or postpone redemptions (a gate), or a (lock-in period) upon initial subscription, within which the s may not redeem in a timely manner. If there is an imposition of a gate, if a lock-in period in excess of 3 months is remaining at the balance sheet date, or if the s may not redeem its holding in the fund within 3 months or less, the Trustee's ability to validate or verify the NAV through redeeming is impaired, and the investment is classified as Level 3. All investments in collective investment funds are classified as Level 3 by the s as of December 31,

17 Notes to Financial Statements The following table represents the s fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2011: Fair Value Measurements Quoted Prices Significant in Active Other Significant Fair Value at Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2011 (Level 1) (Level 2) (Level 3) Retire Income : Short-term money market $ 3,936 $ 3,936 $ - $ - Mutual funds 128, , Collective investment fund 25, ,505 Retire2015 : Short-term money market 27,075 27, Mutual funds 833, , Collective investment fund 114, ,754 Retire2025 : Short-term money market 21,371 21, Mutual funds 891, , Collective investment fund 38, ,411 Retire2035 : Short-term money market 28,977 28, Mutual funds 1,030,807 1,030, Collective investment fund 19, ,590 Retire2045 : Short-term money market 8,510 8, Mutual funds 325, , Collective investment fund 3, ,233 Retire2055 : Short-term money market 5,194 5, Mutual funds 182, , Collective investment fund

18 Notes to Financial Statements Financial instruments classified as Level 3 in the fair value hierarchy represent the s investments in financial instruments in which the Trustee has used at least one significant unobservable input in the valuation model. The following table presents a reconciliation of activity for the Level 3 financial instruments: Retire Income Retire2015 Retire2025 Retire2035 Balance, beginning of year $ - $ - $ - $ - Transfers into Level 3 22,544 33,142 54,074 15,799 Net realized gain on investments sold , Net change in unrealized appreciation on investments (18,122) 1,354 (275) 353 Purchases of investments 34,299 86,818 13,570 4,333 Proceeds from sales of investments (14,162) (6,641) (30,356) (948) Balance, end of year $ 25,505 $ 114,754 $ 38,411 $ 19,590 Retire2045 Retire2055 Balance, beginning of year $ - $ - Transfers into Level 3 2, Net realized gain on investments sold 1 1 Net change in unrealized appreciation on investments 62 8 Purchases of investments Proceeds from sales of investments (20) (57) Balance, end of year $ 3,233 $ 557 The total change in unrealized appreciation on investments included in the statements of operations attributable to Level 3 investments still held as of December 31, 2011 includes: Retire Income $ 780 Retire2015 Retire2025 1,629 2,020 Retire2035 1,216 Retire Retire Investment transactions, interest, and dividends: Investment transactions are recorded on trade date. Realized gains and losses on investment transactions are determined on the average lot cost method and are included as net realized gain on investments sold in the accompanying statements of operations. The difference between the cost and the fair value of open investments is reflected as unrealized appreciation (depreciation) on investments, and any change in that amount from the prior period are reflected in the accompanying statements of operations. Interest income is recognized under the accrual basis. Dividend income is recognized on the ex-dividend date. 16

19 Notes to Financial Statements Allocation of income and expenses: Income, audit expenses, and the gains/losses of each fund are allocated on a pro-rata basis to each class of shares, except for trustee, sub-advisor, and if applicable, qualified custodian fees, which are unique to each class of shares. Federal income taxes: Each is a "group trust" that meets the requirements of ASC 740 Income Taxes (ASC 740), and is exempt from taxation under ASC 740; therefore, no federal income tax provision is required. 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 s tax returns to determine whether the tax positions are more-likely-than-not of being 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. For the year ended December 31, 2011, management has determined that there are no material uncertain tax positions. The s file income tax returns in U.S. federal jurisdiction, and various states. The current and prior three tax years generally remain subject to examination by U.S. federal and most state tax authorities. Participant transactions: The unit values of the s are determined at the close of each business day when the New York Stock Exchange is 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 s are reflected in the computation of the daily unit value and are realized by the participants upon withdrawal from the s. Net investment income and net realized gains are reinvested, and thus, there are no distributions of net investment income or net realized gains to participants. Subsequent events: The s have evaluated subsequent events for potential recognition and/or disclosure through March 12, 2012, the date the financial statements were available to be issued. Recently adopted accounting pronouncements: In January 2010, the FASB issued an amendment to the guidance on determining fair value which requires new disclosures and reasons for significant transfers of financial assets and liabilities between Levels 1 and 2. This amendment also clarifies that fair value measurement disclosures are required for each class of financial assets and liabilities, and disclosures about inputs and valuation techniques are required for both Level 2 and Level 3 measurements. It further clarifies that the reconciliation of Level 3 measurements should separately present purchases, sales, issuances, and settlements instead of netting these changes. With respect to matters other than Level 3 measurements, the amendment was effective for periods beginning on or after December 15, 2009, guidance related to Level 3 measurements was effective for periods beginning on or after December 15, The adoption of this amendment did not have a material impact on the s financial statements. Recently issued accounting pronouncements: In May 2011, the FASB issued an amendment to the guidance pertaining to fair value measurements that included a common definition of fair value and information to assist entities to measure and disclose fair value with regards to U.S. GAAP and International Financial Reporting Standards convergence issues. This guidance becomes effective for periods beginning after December 15, The s are currently evaluating the impact this amendment may have on the s financial statements. 17

20 Notes to Financial Statements Note 3. Investments In accordance with ASC 946, Financial Services Investment Companies, the s are required to provide additional qualitative disclosures for each investment in another non-registered fund whose fair value constitutes more than five percent of each s participants interest balance. For investments in other non-registered funds that are less than five percent, the s may aggregate those investments. The s have decided to disclosure those investments individually. As of December 31, 2011, investments in other non-registered funds are as follows: % of TD Ameritrade Collective Participants' Investment Redemptions Investment Investee Interest Objective Permitted Retire Income Retire2015 Retire2025 Retire2035 Retire2045 Retire2055 Galliard Capital Management Stable Value Q 16.1% Fixed Income Daily* Galliard Capital Management 11.8% Fixed Income Daily* Stable Value Q Galliard Capital Management Fixed Income Daily* Stable Value Q 4.0% Galliard Capital Management Fixed Income Daily* Stable Value Q 1.8% Galliard Capital Management Fixed Income Daily* Stable Value Q 1.0% Galliard Capital Management Fixed Income Daily* Stable Value Q 0.3% * The general partner or sponsor of the respective investment partnership reserves the right to require a 12-month notice for withdrawal of assets from the investee fund by the Trustee. Requests for redemptions by the s participants are not subject to this restriction. Information about the investee funds portfolio was not available as of the date these financial statements were issued. Note 4. Related-Party Transactions For liquidity and administrative purposes, the s seek to maintain approximately 3% of their assets in cash or an equivalent. The mandatory cash component for the s could have been comprised of a bank depository account provided by an affiliate of the Trustee or a short-term money market fund. The short-term money market fund alternative provided is the Federated Treasury Obligation, which is not an affiliate of the Trustee. 18

21 Notes to Financial Statements In the event the audit fee impacts the s unit value as determined on a daily basis, by an amount greater than $0.005 per unit, the Sub-Advisor will assume such audit fees. In addition, if the audit fees caused the s total expenses, including the expense of the underlying assets, to exceed 2% annually, the Sub-Advisor will assume such audit fees. For the year ended December 31, 2011, the Sub- Advisor has assumed the following amount of audit fees: Retire Income $ 3,000 Retire2015 3,000 Retire2025 3,000 Retire2035 3,000 Retire2045 3,000 Retire2055 3,000 Such amounts are not reflected on the statements of operations and are not included in the calculation of the daily unit value. Note 5. Fees The Trustee charges the s a fee equal to 0.10% for Share Class I and 0.30% for Share Class II per annum of net assets (participants interest) held by external participants applicable to each respective share class. This fee accrues on a daily basis and is paid monthly in arrears. From the Trustee Fee, 0.20% of this fee is paid to the Sub-Advisor for sub-advisory services provided to the s for Share Class II, which is presented on the statements of operations. Note 6. Indemnifications In the normal course of business, the s enter into contracts that contain a variety of representations and warranties that provide indemnifications under certain circumstances. The s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the s that have not yet occurred. The s expect the risk of future obligation under these indemnifications to be remote. 19

22 Other Financial Information (Unaudited)

23 Summary Schedules of Monthly Values (Unaudited) Year Ended December 31, 2011 Retire Income Retire2015 Retire2025 Share Class I Share Class I Share Class I Units Outstanding Unit Value Units Outstanding Unit Value Units Outstanding Unit Value Month-end: December 31, ,032 $ ,724 $ ,436 $ January 31, , , , February 28, , , , March 31, , , , April 30, , , , May 31, , , , June 30, , , , July 31, , , , August 31, , , , September 30, , , , October 31, , , , November 30, , , , December 31, , , , Retire Income Retire2015 Retire2025 Share Class II Share Class II Share Class II Units Outstanding Unit Value Units Outstanding Unit Value Units Outstanding Unit Value Month-end: December 31, $ ,586 $ ,857 $ January 31, , , February 28, , , March 31, , , April 30, , , May 31, , , June 30, , , July 31, , , August 31, , , September 30, , , October 31, , , November 30, , , December 31, , ,

24 Summary Schedules of Monthly Values (Unaudited) - Continued Year Ended December 31, 2011 Retire2035 Retire2045 Retire2055 Share Class I Share Class I Share Class I Units Outstanding Unit Value Units Outstanding Unit Value Units Outstanding Unit Value Month-end: December 31, ,908 $ ,202 $ ,898 $ 9.94 January 31, , , , February 28, , , , March 31, , , , April 30, , , , May 31, , , , June 30, , , , July 31, , , , August 31, , , , September 30, , , , October 31, , , , November 30, , , , December 31, , , , Retire2035 Retire2045 Retire2055 Share Class II Share Class II Share Class II Units Outstanding Unit Value Units Outstanding Unit Value Units Outstanding Unit Value Month-end: December 31, ,477 $ ,252 $ $ 9.78 January 31, , , February 28, , , March 31, , , April 30, , , May 31, , , June 30, , , July 31, , , , August 31, , , , September 30, , , , October 31, , , , November 30, , , , December 31, , , ,

25 Retire Income Summary Schedule of Investment Changes (Unaudited) Year Ended December 31, 2011 Purchases (in shares) Cost of Investments Purchases Aberdeen Emerging Markets Institutional 644 $ 9,435 Dodge & Cox Income 1,178 15,740 Dodge & Cox International Stock 260 9,385 Federated Treasury Obligation 6,069 6,069 Fidelity New Markets Income ,126 Galliard Capital Management Stable Value Q 2,506 34,299 Goldman Sachs Core Fixed Income 1,554 15,542 Harbor High Yield Bond 914 9,970 Legg Mason Global Opportunities Bond 1,987 21,560 LSV Conservative Value Equity 600 4,717 PIMCO Real Return 2,767 32,327 Schroder International Alpha 856 9,317 Spartan Total Market Index 246 9,396 T. Rowe Price Global Stock 227 4,135 T. Rowe Price Institutional Large-Cap Growth 273 4,647 Vanguard REIT Index ,960 Redemptions (in shares) Realized Gain (Loss) Redemptions Aberdeen Emerging Markets Institutional 640 $ 579 Dodge & Cox Income 1, Dodge & Cox International Stock 283 (515) Federated Treasury Obligation 5,870 - Fidelity New Markets Income Galliard Capital Management Stable Value Q 2, Goldman Sachs Core Fixed Income 1, Harbor High Yield Bond Legg Mason Global Opportunities Bond 1,712 1,177 LSV Conservative Value Equity PIMCO Real Return 2,320 2,143 Schroder International Alpha 951 (565) Spartan Total Market Index T. Rowe Price Global Stock T. Rowe Price Institutional Large-Cap Growth Vanguard REIT Index 572 $ 1,729 9,071 22

26 Retire2015 Summary Schedule of Investment Changes (Unaudited) Year Ended December 31, 2011 Purchases (in shares) Cost of Investments Purchases Aberdeen Emerging Markets Institutional 4,006 $ 54,505 Dodge & Cox Income 3,992 53,438 Dodge & Cox International Stock 1,495 47,457 Federated Treasury Obligation 22,001 22,001 Fidelity New Markets Income 1,746 27,768 Galliard Capital Management Stable Value Q 6,331 86,818 Goldman Sachs Core Fixed Income 5,148 52,372 Harbor High Yield Bond 2,604 27,762 Legg Mason Global Opportunities Bond 6,500 72,647 LSV Conservative Value Equity 3,409 23,756 PIMCO Real Return 9, ,202 Schroder International Alpha 4,882 46,700 Spartan Total Market Index 1,355 47,096 T. Rowe Price Global Stock 1,239 20,643 T. Rowe Price Institutional Large-Cap Growth 1,472 23,086 Vanguard REIT Index 2,315 42,652 Redemptions (in shares) Realized Gain (Loss) Redemptions Aberdeen Emerging Markets Institutional 294 $ 33 Dodge & Cox Income Dodge & Cox International Stock 108 (46) Federated Treasury Obligation 3,001 - Fidelity New Markets Income 127 (1) Galliard Capital Management Stable Value Q Goldman Sachs Core Fixed Income Harbor High Yield Bond Legg Mason Global Opportunities Bond 481 (24) LSV Conservative Value Equity PIMCO Real Return Schroder International Alpha 363 (61) Spartan Total Market Index T. Rowe Price Global Stock T. Rowe Price Institutional Large-Cap Growth Vanguard REIT Index 165 $

27 Retire2025 Summary Schedule of Investment Changes (Unaudited) Year Ended December 31, 2011 Purchases (in shares) Cost of Investments Purchases Aberdeen Emerging Markets Institutional 1,863 $ 25,336 Dodge & Cox Income 1,547 20,551 Dodge & Cox International Stock ,371 Federated Treasury Obligation 9,426 9,426 Fidelity New Markets Income ,861 Galliard Capital Management Stable Value Q ,570 Goldman Sachs Core Fixed Income 1,976 19,456 Harbor High Yield Bond 1,213 13,339 Legg Mason Global Opportunities Bond 2,461 26,180 LSV Conservative Value Equity 1,959 15,205 PIMCO Real Return 3,954 45,199 Schroder International Alpha 2,793 29,315 Spartan Total Market Index ,335 T. Rowe Price Global Stock ,877 T. Rowe Price Institutional Large-Cap Growth ,263 Vanguard REIT Index 1,102 21,113 Redemptions (in shares) Realized Gain (Loss) Redemptions Aberdeen Emerging Markets Institutional 3,600 $ 10,806 Dodge & Cox Income 2,952 1,235 Dodge & Cox International Stock 1,770 4,251 Federated Treasury Obligation 22,318 - Fidelity New Markets Income 1,443 1,354 Galliard Capital Management Stable Value Q 2,216 1,398 Goldman Sachs Core Fixed Income 3,940 1,510 Harbor High Yield Bond 2, Legg Mason Global Opportunities Bond 4,163 1,764 LSV Conservative Value Equity 4,046 2,525 PIMCO Real Return 6,755 3,434 Schroder International Alpha 5,881 7,641 Spartan Total Market Index 1,667 7,821 T. Rowe Price Global Stock 1, T. Rowe Price Institutional Large-Cap Growth 1,869 5,384 Vanguard REIT Index 2,039 $ 13,420 63,897 24

28 Retire2035 Summary Schedule of Investment Changes (Unaudited) Year Ended December 31, 2011 Purchases (in shares) Cost of Investments Purchases Aberdeen Emerging Markets Institutional 1,461 $ 20,264 Dodge & Cox Income ,334 Dodge & Cox International Stock ,259 Federated Treasury Obligation 7,337 7,337 Fidelity New Markets Income 620 9,714 Galliard Capital Management Stable Value Q 318 4,333 Goldman Sachs Core Fixed Income 1,162 11,536 Harbor High Yield Bond ,272 Legg Mason Global Opportunities Bond 1,347 14,492 LSV Conservative Value Equity 1,897 14,718 PIMCO Real Return 2,332 27,038 Schroder International Alpha 2,631 27,794 Spartan Total Market Index ,929 T. Rowe Price Global Stock ,169 T. Rowe Price Institutional Large-Cap Growth ,395 Vanguard REIT Index ,350 Redemptions (in shares) Realized Gain (Loss) Redemptions Aberdeen Emerging Markets Institutional 273 $ 985 Dodge & Cox Income Dodge & Cox International Stock Federated Treasury Obligation 2,807 - Fidelity New Markets Income Galliard Capital Management Stable Value Q Goldman Sachs Core Fixed Income Harbor High Yield Bond Legg Mason Global Opportunities Bond LSV Conservative Value Equity PIMCO Real Return Schroder International Alpha Spartan Total Market Index T. Rowe Price Global Stock T. Rowe Price Institutional Large-Cap Growth Vanguard REIT Index 154 $ 1,177 5,051 25