WILMINGTON TRUST COLLECTIVE INVESTMENT TRUST
BALANCED FUND
FINANCIAL STATEMENTS
DECEMBER 31, 2020
WITH
INDEPENDENT AUDITOR'S REPORT
Wilmington Trust Collective Investment Trust
BALANCED FUND
CONTENTS
Independent Auditor's Report ...... 1
Schedule of Investments ...... 3
Statement of Assets and Liabilities ...... 8
Statement of Operations ...... 8
Statement of Changes in Net Assets...... 9
Financial Highlights ...... 10
Notes to the Financial Statements...... 11
INDEPENDENT AUDITOR'S REPORT
Wilmingto n Trust, N.A, Trustee for Wilmington Trust Collective Investment Trust
Report on the Financial Statements
We have audited the accompanying financial statements of Balanced Fund (the "Fund") of Wilmington Trust Collective Investment Trust (the "Trust"), which comprise the statement of assets and liabilities, including the s chedule of investments, as of December 31, 2020, the related statements of operations and changes in net assets, the financial highlights for the year then ended, and the related notes to the financial statements. These financial sta tements and financial highlights are hereinafter collectively referred to as 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 fr ee from 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 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.
A n audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial stat ements. 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 significa nt 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 Fund as of December 31, 2020, the results of its operations, changes in its net assets and its financial highlights for the year then ended, in accordance with accounting principles generally accepted in the United States of America.
1 www.hogantaylor.com
Other Matter
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information for the year ended December 31, 2020, following the schedule of investments, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.
Tulsa, Oklahoma April 30, 2021
2
Wilmington Trust Collective Investment Trust
Balanced Fund
Schedule of Investments December 31, 2020
Principal Amount or Fair Shares Cost Value
Common Stocks - 65.7% Basic Materials - 1.1% Linde Public Limited Company 496 $ 121,543 $ 130,701
Communications - 11.2% Alphabet Inc. Class A 159 161,132 278,670 Amazon.com, Inc. 137 129,289 446,199 Charter Communications, Inc. 180 68,787 119,079 Facebook, Inc. Class A 700 127,478 191,212 Walt Disney Company, The 1,500 186,719 271,770 Total Communications 673,405 1,306,930
Consumer, Cyclical - 8.1% Cummins Inc. 800 152,916 181,680 Delta Air Lines, Inc. 2,100 88,481 84,441 Lululemon Athletica Inc. 429 146,379 149,305 NIKE, Inc. Class B 1,300 107,413 183,911 Target Corporation 1,000 128,838 176,530 The Home Depot, Inc. 300 46,500 79,686 Walmart Inc. 600 60,965 86,490 Total Consumer, Cyclical 731,492 942,043
Consumer, Non-cyclical - 9.5% Abbott Laboratories 700 41,527 76,643 Anthem, Inc. 200 62,719 64,218 Eli Lilly and Company 700 87,557 118,188 Johnson & Johnson 800 106,331 125,904 Medtronic Public Limited Company 1,400 143,026 163,996 PayPal Holdings, Inc. 700 94,335 163,940 PepsiCo, Inc. 400 50,217 59,320 Procter & Gamble Company, The 350 43,255 48,699 UnitedHealth Group, Inc. 569 120,561 199,537 Zoetis Inc. 500 67,682 82,750 Total Consumer, Non-cyclical 817,210 1,103,195
Energy - 1.6% ConocoPhillips 1,000 44,889 39,990 EOG Resources, Inc. 800 43,477 39,896 PrairieSky Royalty Ltd. 262 5,138 2,094 Schlumberger N.V. 4,600 90,246 100,418 Total Energy 183,750 182,398
See Notes to the Financial Statements. 3 Wilmington Trust Collective Investment Trust
Balanced Fund
Schedule of Investments (continued) December 31, 2020
Principal Amount or Fair Shares Cost Value
Financials - 10.9% Bank of America Corporation 9,800 $ 247,190 $ 297,038 Citigroup Inc. 1,500 87,991 92,490 Discover Financial Services 2,100 130,883 190,113 JPMorgan Chase & Company 1,000 104,116 127,070 Morgan Stanley 3,900 200,197 267,267 The PNC Financial Services Group, Inc. 500 65,343 74,500 Visa Inc. Class A 990 91,186 216,543 Total Financials 926,906 1,265,021
Industrials - 7.5% Deere & Company 400 67,120 107,620 Honeywell International Inc. 1,100 163,668 233,970 Norfolk Southern Corporation 800 130,912 190,088 Rockwell Automation, Inc. 800 180,236 200,648 Stanley Black & Decker, Inc. 200 35,483 35,712 Union Pacific Corporation 500 101,414 104,110 Total Industrials 678,833 872,148
Technology - 15.0% Adobe Inc. 136 32,332 68,016 Advanced Micro Devices, Inc. 800 54,923 73,368 Apple Inc. 5,200 256,089 689,988 Micron Technology, Inc. 1,200 53,428 90,216 Microsoft Corporation 2,260 156,392 502,669 NVIDIA Corporation 222 30,960 115,928 QUALCOMM, Inc. 1,000 68,523 152,340 Salesforce.com, Inc. 250 44,904 55,633 Total Technology 697,551 1,748,158
Utilities - 0.8% NextEra Energy, Inc. 1,248 90,172 96,283 Total Common Stocks 4,920,862 7,646,877
Corporate Bonds - 11.2% Communications - 1.4% Comcast Corporation, 4.15%, 10/15/2028 67,000 66,781 80,653 Verizon Communications Inc., 4.125%, 3/16/2027 48,000 56,850 56,577 Vodafone Group Public Limited Company, 4.375%, 5/30/2028 19,000 22,672 22,756 Total Communications 146,303 159,986
See Notes to the Financial Statements. 4 Wilmington Trust Collective Investment Trust
Balanced Fund
Schedule of Investments (continued) December 31, 2020
Principal Amount or Fair Shares Cost Value
Consumer, Non-cyclical - 1.1% Abbott Laboratories, 3.75%, 11/30/2026 39,000 $ 45,588 $ 45,686 Keurig Dr Pepper Inc., 4.597%, 5/25/2028 19,000 23,008 23,125 PepsiCo, Inc., 2.625%, 7/29/2029 57,000 62,844 62,924 Total Consumer, Non-cyclical 131,440 131,735
Energy - 2.0% BP Capital Markets p.l.c., 3.279%, 9/19/2027 92,000 100,856 103,300 Canadian Natural Resources Limited, 3.8%, 4/15/2024 52,000 52,650 56,633 Noble Energy, Inc., 3.9%, 11/15/2024 70,000 71,069 78,115 Total Energy 224,575 238,048
Financials - 2.9% Air Lease Corporation, 3%, 2/1/2030 28,000 26,696 28,745 Bank of America Corporation, 4.2%, 8/26/2024 61,000 61,797 68,288 Citigroup Inc., 3.668%, 7/24/2028 20,000 22,597 22,674 JPMorgan Chase & Company, 2.739%, 10/15/2030 53,000 57,016 57,629 Kimco Realty Corporation, 1.9%, 3/1/2028 50,000 49,466 51,642 MetLife, Inc., 6.4%, 12/15/2036 44,000 49,411 56,911 The PNC Financial Services Group, Inc., 2.6%, 7/23/2026 42,000 46,405 46,109 Total Financials 313,388 331,998
Industrials - 1.2% FedEx Corporation, 4.25%, 5/15/2030 19,000 22,817 23,085 Lockheed Martin Corporation, 3.55%, 1/15/2026 40,000 45,538 45,436 Northrop Grumman Corporation, 4.4%, 5/1/2030 19,000 23,411 23,584 Raytheon Technologies Corporation, 3.125%, 5/4/2027 41,000 45,557 45,988 Total Industrials 137,323 138,093
Technology - 1.6% Apple Inc., 1.65%, 5/11/2030 62,000 63,554 63,855 Microsoft Corporation, 2.4%, 8/8/2026 57,000 62,065 62,186 Oracle Corporation, 2.8%, 4/1/2027 57,000 62,290 62,864 Total Technology 187,909 188,905
Utilities - 1.0% Dominion Energy, Inc., 3.375%, 4/1/2030 20,000 22,819 22,782 Eastern Energy Gas Holdings, LLC, 3%, 11/15/2029 41,000 45,583 45,420 Sempra Energy, 3.4%, 2/1/2028 40,000 44,977 45,557 Total Utilities 113,379 113,759 Total Corporate Bonds 1,254,317 1,302,524
See Notes to the Financial Statements. 5 Wilmington Trust Collective Investment Trust
Balanced Fund
Schedule of Investments (continued) December 31, 2020
Principal Amount or Fair Shares Cost Value
Real Estate Investment Trust - 0.5% Financial - 0.5% American Tower Corporation 250 $ 52,697 $ 56,115
U.S. Treasury Bond and Notes - 19.0% U.S. Treasury Inflation Indexed Bond, 0.25%, 1/15/2025 91,246 93,450 98,455 U.S. Treasury Note, 2.25%, 4/30/2021 62,000 62,030 62,429 U.S. Treasury Note, 1.375%, 10/15/2022 78,000 77,681 79,737 U.S. Treasury Note, 1.625%, 11/15/2022 55,000 54,966 56,532 U.S. Treasury Note, 2.125%, 12/31/2022 142,000 140,448 147,652 U.S. Treasury Note, 1.75%, 5/15/2023 181,000 176,699 187,886 U.S. Treasury Note, 2.25%, 1/31/2024 587,000 623,076 624,513 U.S. Treasury Note, 1.5%, 9/30/2024 543,000 568,589 568,602 U.S. Treasury Note, 0.25%, 5/31/2025 372,000 371,294 371,288 Total U.S. Treasury Bond and Notes 2,168,233 2,197,094
Money Market Fund - 3.3% State Street Institutional Treasury Plus Money Market Fund - Premier Class 388,897 388,897 388,897 Total Investments - 99.7% $ 8,785,006 11,591,507 Other Assets and Liabilities, Net - 0.3% 33,898 Net Assets - 100% $ 11,625,405
The following is a summary of the fair value of the investments in the Fund based on the inputs used to value them as of December 31, 2020 (see Note 3):
Fair Value Measurements Level 1 Level 2 Level 3 Total
Common Stocks $ 7,646,877 $ - $ - $ 7,646,877 Corporate Bonds - 1,302,524 - 1,302,524 Real Estate Investment Trust 56,115 - - 56,115 U.S. Treasury Bond and Notes - 2,197,094 - 2,197,094 Money Market Fund 388,897 - - 388,897 Total $ 8,091,889 $ 3,499,618 $ - $ 11,591,507
Concentration of Ownership: As of December 31, 2020, the Fund had three unitholders holding 10% or more of the outstanding units of the Fund, and aggregated to 45.0% of the Fund's total units outstanding.
See Notes to the Financial Statements. 6 Wilmington Trust Collective Investment Trust
Balanced Fund
Schedule of Investments (continued) December 31, 2020
Supplementary Information: Total investment purchases, sales proceeds, and realized gain for the year ended December 31, 2020, were:
Purchases Sales Realized at Cost Proceeds Gain
Investments $ 8,023,256 $ 11,293,944 $ 1,205,988
See Notes to the Financial Statements. 7 Wilmington Trust Collective Investment Trust
Balanced Fund
Statement of Assets and Liabilities December 31, 2020 Assets Investments in securities, at fair value (cost $8,785,006) $ 11,591,507 Receivable for fund units sold 34,580 Dividends and interest receivable 21,153 Total assets 11,647,240 Liabilities and Net Assets Accrued expenses 21,835 Net assets $ 11,625,405
Statement of Operations For the year ended December 31, 2020 Investment income Dividends (net of withholding taxes of $93) $ 118,350 Interest 77,303 Total investment income 195,653 Expenses Trustee, sub-advisor and service provider fees 48,876 Professional services and other operating expenses 8,715 Total expenses 57,591 Net investment income 138,062 Net realized gain on: Investments 1,205,988 Net change in unrealized appreciation on: Investments 310,516 Net realized and unrealized gain on investments 1,516,504 Net increase in net assets resulting from operations $ 1,654,566
See Notes to the Financial Statements. 8 Wilmington Trust Collective Investment Trust
Balanced Fund
Statement of Changes in Net Assets For the year ended December 31, 2020 Increase in net assets resulting from operations Net investment income $ 138,062 Net realized gain on investments 1,205,988 Net change in unrealized appreciation on investments 310,516 Net increase in net assets resulting from operations 1,654,566 Fund unit transactions Proceeds from units issued Class 0IM 1,088,224 Class 45 9,496 Class 60 360,179 Class R 538,606 Total proceeds from units issued 1,996,505 Value of units redeemed Class 0IM (1,128,984) Class 45 (70,941) Class 60 (3,176,254) Class R (586,419) Total value of units redeemed (4,962,598) Decrease in net assets resulting from fund unit transactions (2,966,093) Decrease in net assets (1,311,527) Net assets, beginning of year 12,936,932 Net assets, end of year $ 11,625,405
See Notes to the Financial Statements. 9 Wilmington Trust Collective Investment Trust
Balanced Fund
Financial Highlights For the year ended December 31, 2020 Per Unit Operating Performance Class 0IM Class 45 Class 60 Class R Net asset value, beginning of year $ 112.19 $ 104.49 $ 108.72 $ 110.02 Income from investment operations: (1) Net investment income 1.63 0.49 0.34 0.99 (1) Net realized and unrealized gain on investments 13.83 12.72 13.23 13.48 Total income from investment operations 15.46 13.21 13.57 14.47 Net asset value, end of year $ 127.65 $ 117.70 $ 122.29 $ 124.49 Total Return 13.78% 12.64% 12.48% 13.15% Supplemental Data Ratio to average net assets: Expenses 0.10% 1.11% 1.25% 0.65% Net investment income 1.42% 0.46% 0.30% 0.89% Fund Unit Activity Units, beginning of year 71,348 1,351 27,278 16,590 Issued 9,564 89 3,282 4,822 Redeemed (10,124) (662) (26,313) (5,518) Units, end of year 70,788 778 4,247 15,894
(1) Based on average units outstanding.
See Notes to the Financial Statements. 10 Wilmington Trust Collective Investment Trust
Balanced Fund
Notes to the Financial Statements
December 31, 2020
Note 1 – Organization
Wilmington Trust Collective Investment Trust (the "Trust") is intended to constitute an exempt trust under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and a group trust within the meaning of Rev. Rul. 81-100, as clarified and amended. The Trust is exempt from registration under the Investment Company Act of 1940, as amended, and the Securities Act of 1933, as amended. Wilmington Trust, N.A. ("WTNA" or the "Trustee") serves as the Trustee of the Trust.
The Trustee is responsible for maintaining and administering the Trust and the Balanced Fund (the "Fund") and also serves as the investment manager (the "Investment Manager") to the Fund. M&T Bank Corporation is the ultimate parent of the Trustee. State Street Bank and Trust Company provides custody, transfer agency, and accounting services for the Fund.
The purpose of the Trust is to allow collective investments by plan sponsors of retirement plans which qualify for exemption from federal income taxation pursuant to Section 501(a) of 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; group trusts or separate accounts consisting solely of assets of the foregoing; and other investors eligible for participation in the Trust. The Trust consists of separate funds 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 documents specified by the Trustee. Not all funds within the Trust are presented herein.
The investment objective of the Fund is to generate a total return in excess of the Dow Jones US Moderate Allocation Index benchmark over a full market cycle. WTNA has engaged Atalanta Sosnoff Capital, LLC (the "Sub-Advisor") to provide investment advice and recommendations with respect to investment of the Fund's assets. While the Trustee generally relies on the Sub-Advisor to manage the Fund's assets, the Trustee maintains ultimate fiduciary authority over the management of, and investments made in, the Fund. The Sub-Advisor is engaged pursuant to a sub-advisor agreement.
Note 2 – Significant Accounting Policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Fund is an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic No. 946.
Net Asset Value ("NAV") – Units of each fee class of the Fund are valued each day on which the New York Stock Exchange ("NYSE") is open for trading in accordance with the valuation procedures established by the Trustee. The NAV per unit is calculated as of the close of trading on the NYSE (generally, 4:00 p.m. U.S. Eastern time). The NAV per unit is computed by dividing the total fair value of the assets of a Fund, less its liabilities, by the total number of units outstanding at the time of such computation. Investment income earned is reinvested in the Fund and included in the determination of unit values.
11 Wilmington Trust Collective Investment Trust
Balanced Fund
Notes to the Financial Statements (continued)
December 31, 2020
Fund Unit Transactions – The Fund sells new units and repurchases outstanding units on a daily basis. Unit purchases and redemptions are transacted at the NAV per fee class of the Fund determined as of the close of business each day. A summary of the Fund unit activity for the Fund is included with its Financial Highlights.
The Fund requires the plan sponsor to provide advance written notice of five business days for plan sponsor directed withdrawals which will exceed $1 million or 10% of the assets invested in the Fund.
Investment Valuation – Investments are valued at their current fair value determined as follows:
Securities – Securities, other than bonds, listed on a securities exchange, market or automated quotation system for which quotations are readily available are valued at the closing price on the primary exchange or market on which they are traded on the day of valuation or, if there is no such reported sale on the valuation date, at the most recent bid quotation on the principal exchange. If a market price is not readily available or if such price is deemed unreliable, it will be valued at fair value in accordance with valuation procedures established by the Trustee. The Trustee's determination of fair value involves consideration of a number of subjective factors, and therefore, no single standard for determining fair value will apply.
Corporate Bonds – The fair value of corporate bonds is estimated using various techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (when observable), and other industry recognized techniques. Although most corporate bonds are categorized in level 2 of the fair value hierarchy, in instances when lower relative weight is placed on transaction prices, quotations, or other similar observable inputs, they are categorized in level 3.
When the valuation methods described above are not reflective of fair value, investments are valued at fair value following procedures and/or guidelines determined by or under the direction of the valuation committee established by the Trustee. In light of the judgment involved in fair value decisions, there can be no assurance that a fair value assigned to a particular investment is accurate.
Cash and Cash Equivalents – The Fund considers all highly liquid instruments with original maturities of three months or less at the acquisition date to be cash equivalents.
Investment Transactions and Investment Income – The Fund records security transactions on a trade date basis. Dividend income is recorded on the ex-dividend date. Net realized gains and losses on investments are determined by the first-in, first-out method. Interest income and expenses are recorded daily on the accrual basis.
Fee Classes and Allocations – The Fund offers multiple fee classes. Not all fee classes are available for investment by all plans. Each class is allocated expenses on the basis of expense loads assigned to that class. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each unit class based on the units outstanding for the fee class in proportion to the total outstanding units.
Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
12 Wilmington Trust Collective Investment Trust
Balanced Fund
Notes to the Financial Statements (continued)
December 31, 2020
Guarantees and Indemnifications – Under the Fund's organizational documents, each trustee, officer, employee and agent of the Trust is indemnified, to the extent permitted by law, against certain liabilities that may arise in the performance of their duties to the Fund.
Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts and the Trustee believes the risk of loss to be remote.
Income Tax Status – The Trust has received a determination from the Internal Revenue Service that the Trust is exempt from federal income taxation under Section 501(a) of the Code. Accordingly, no federal income tax provision is required.
Subsequent Events – The Trustee has evaluated the effect of subsequent events on the Fund's financial statements through April 30, 2021, which is the date the financial statements were available to be issued, and has determined that there are no material subsequent events, except as noted below, that would require disclosure or adjustment in the Fund's financial statements through this date.
Effective March 22, 2021, the Trustee has engaged The Northern Trust Company as the Custodian of the Fund. The Northern Trust Company will also provide transfer agent, recordkeeping and accounting services.
Note 3 – Fair Value Measurements
Fair value is defined as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date.
Various inputs are used in determining the fair value of the Fund's investments. The Trustee has performed an analysis of the significance and character of these inputs to the fair value determination. These inputs are summarized in the three broad levels listed below:
• Level 1 – Quoted prices in active markets for identical investments. • Level 2 – Other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, and others). • Level 3 – Significant unobservable inputs (including the Trustee's own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. A summary of the inputs used as of December 31, 2020, in valuing the Fund's assets carried at fair value is included in Note 2.
The aggregate fair value of the investments in the Fund, by input level used as of December 31, 2020, is included following the Fund's Schedule of Investments.
In March 2017, FASB issued Accounting Standards Update ("ASU") 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities, to amend the
13 Wilmington Trust Collective Investment Trust
Balanced Fund
Notes to the Financial Statements (continued)
December 31, 2020
amortization period for certain purchased callable debt securities held at a premium. The amortization period for the premium is shortened to the earliest call date. ASU 2017-08 does not require an accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years beginning after December 15, 2019. The Fund has adopted ASU 2017-08, which did not have a material impact on the Fund's financial position or the results of its operations, and had no impact on the Fund's net assets.
Note 4 – Fees and Expenses
Trustee, Sub-Advisor and Service Provider Fees
All asset-based fees are based upon the net assets as determined at the end of each preceding business day as set forth in the table below (in basis points). Except as otherwise noted, all asset-based fees are paid from the assets of the Fund.
Fee Class Trustee Fee Sub-Advisor Fee Service Provider Fee
Class 0IM 3 0 0
Class 45 13 45 on the first $50 million 45 30 on the next $50 million 25 thereafter
Class 60 13 45 on the first $50 million 60 30 on the next $50 million 25 thereafter
Class R 13 45 on the first $50 million 0 30 on the next $50 million 25 thereafter
Trustee Fee – The Trustee receives an annual fee for trustee and administrative services provided to the Fund. Trustee fees, except as noted below with respect to Class 0IM, are based upon the average daily value of the Fund and are accrued daily, paid quarterly in arrears and charged against the assets invested in the Fund.
Plans invested in Class 0IM have agreed to pay external fees that are paid either by redemption of Fund units or paid directly by the plan sponsor. Portions of external fees are paid to the Sub-Advisor for investment advisory services provided to the Fund. External fees are based on the fair value as of the last business day of the previous month end and paid monthly in advance.
Sub-Advisor Fee – The Sub-Advisor is compensated for its investment advisory services provided to the Fund. Management fees for each class, except as noted below with respect to Class 0IM, are based upon the average daily value of the Fund and are accrued daily, paid quarterly in arrears and charged against the assets invested in the Fund.
Plans in Class 0IM (or their plan sponsors) paid a management fee of 45 basis points based on the month-end values of the Fund and are paid quarterly in arrears. These fees are not reflected in the Fund's expense ratio. For Class 0IM, the actual expense ratio including management fees incurred would be 55 basis points.
14 Wilmington Trust Collective Investment Trust
Balanced Fund
Notes to the Financial Statements (continued)
December 31, 2020
Service Provider Fee – Service provider fees, if any, are used to compensate other service providers to the Fund, including brokers and financial intermediaries and other parties providing services to retirement plans participating in the Fund. Service provider fees may also be paid to plan service providers, such as third-party administrators and recordkeepers that provide sub-transfer agency, recordkeeping and other administrative services to participating plans invested in the Fund.
Operating Expenses – In addition to the fees described above, the Fund bears expenses related to its operation, including, but not limited to, audit, custody, tax and legal services. Expenses incurred in connection with the investment and reinvestment of Fund assets, including, without limitation, transfer agency fees, brokerage commission and other expenses, are also charged against the Fund.
When assets of the Fund are invested in other investment vehicles, such as other collective funds or Exchange- Traded Funds, those investment vehicles will incur fees and expenses, which will be reflected in the operating results and value of the Fund's investment in such investment vehicle, and are separate and distinct from the fees and expenses of the Fund described above.
Note 5 – Related Party Transactions
The Trustee is a national bank that provides trust and custodial services for tax-advantaged retirement plans as well as trust and investment services to business pension and retirement plans. The Trustee is responsible for managing the Trust's investment and business affairs.
Note 6 – Risks Associated with Investing in the Fund
In the normal course of business, the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the fair value of the investments. The principal risks associated with investing in the Fund are:
• High-Yield Securities. Investments in below investment-grade debt securities and unrated securities of similar credit quality, commonly known as "junk bonds" or "high-yield securities," may be subject to increased interest rate, credit, and liquidity risks.
• Industry and Sector Investing. Concentrating assets in a particular industry, sector of the economy, or markets may increase volatility because the investment will be more susceptible to the impact of market, economic, regulatory, and other factors affecting that industry or sector compared with a more broadly diversified asset allocation.
• Interest Rate. Securities are subject to the risk that changes in interest rates will reduce their market value.
• Issuer. A stake in any individual security is subject to the risk that the issuer of that security performs poorly, resulting in a decline in the security's value. Issuer-related declines may be caused by poor management decisions, competitive pressures, technological breakthroughs, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. Additionally, certain issuers may be more sensitive to adverse issuer, political, regulatory, market, or economic developments.
15 Wilmington Trust Collective Investment Trust
Balanced Fund
Notes to the Financial Statements (continued)
December 31, 2020
• Large Cap. Concentrating assets in large-capitalization stocks may subject the Fund to the risk that those stocks underperform other capitalizations or the market as a whole. Large-cap companies may be unable to respond as quickly as small- and mid-cap companies can to new competitive pressures and may lack the growth potential of those securities. Historically, large-cap companies do not recover as quickly as smaller companies do from market declines.
• Management. Performance is subject to the risk that the sub-advisor's asset allocation and investment strategies do not perform as expected, which may cause the Fund to underperform its benchmark, other investments with similar objectives, or the market in general. The investment is subject to the risk of loss of income and capital invested, and the sub-advisor does not guarantee its value, performance, or any particular rate of return.
• Market/Market Volatility. The market value of the Fund's securities may fall rapidly or unpredictably because of changing economic, political, or market conditions, which may reduce the value of the Fund.
• Mortgage-Backed and Asset-Backed Securities. Investments in mortgage-backed ("MBS") and asset- backed securities ("ABS") may be subject to increased price volatility because of changes in interest rates, issuer information availability, credit quality of the underlying assets, market perception of the issuer, availability of credit enhancement, and prepayment of principal. The value of MBS and ABS may be adversely affected if the underlying borrower fails to pay the loan included in the security.
• Prepayment (Call). The issuer of a debt security may be able to repay principal prior to the security's maturity because of an improvement in its credit quality or falling interest rates. In this event, this principal may have to be reinvested in securities with lower interest rates than the original securities, reducing the potential for income.
• Restricted/Illiquid Securities. Restricted and illiquid securities may fall in price because of an inability to sell the securities when desired. Investing in restricted securities may subject the Fund to higher costs and liquidity risk.
• Value Investing. Value securities may be subject to the risk that these securities cannot overcome the adverse factors the sub-advisor believes are responsible for their low price or that the market may not recognize their fundamental value as the sub-advisor predicted. Value securities are not expected to experience significant earnings growth and may underperform growth stocks in certain markets.
16