lazard/wilmington emerging markets portfolio annual report
TRANSCRIPT
Lazard/Wilmington Emerging
Markets Portfolio
Annual Report
With Report of Independent Auditors
December 31, 2019
Lazard/Wilmington Emerging Markets Portfolio
Table of Contents
December 31, 2019
Page
Report of Independent Auditors 1
Portfolio of Investments 2
Statement of Assets and Liabilities 4
Statement of Operations 5
Statement of Changes in Net Assets 6
Financial Highlights 7
Notes to Financial Statements 13
Report of Independent Auditors
To the Trustee of Lazard/Wilmington Emerging Markets Portfolio
We have audited the accompanying financial statements of Lazard/Wilmington Emerging Markets Portfolio (the “Fund”), which comprise the statement of assets and liabilities, including the portfolio of investments, as of December 31, 2019 and the related statements of operations and of changes in net assets for the year then ended and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are hereafter collectively referred to as "financial statements."
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the 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 our 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, we consider internal control relevant to the Fund’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 Fund’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 Lazard/Wilmington Emerging Markets Portfolio as of December 31, 2019, and the results of its operations, changes in its net assets for the year then ended and the financial highlights for each of the periods indicated therein, in accordance with accounting principles generally accepted in the United States of America.
March 31, 2020
PricewaterhouseCoopers LLP, 101 Seaport Boulevard, Suite 500, Boston, MA 02210 T: (617) 530 5000, F:(617) 530 5001, www.pwc.com/us
Lazard/Wilmington Emerging Markets Portfolio
Portfolio of Investments December 31, 2019
The accompanying notes are an integral part of these financial statements.
Description Shares
Fair
Value
Common Stocks | 94.3%
Brazil | 8.8%
Ambev SA ADR 1,668,430 $ 7,774,884
Banco do Brasil SA 3,056,966 40,139,445
BB Seguridade Participacoes SA 2,306,400 21,615,154
CCR SA 4,734,530 22,338,573
Cielo SA 4,574,480 9,518,084 IRB Brasil Resseguros S/A 1,073,200 10,391,314 _______________
111,777,454 _____________
China | 20.0%
AAC Technologies Holdings, Inc. 1,693,970 14,782,537
Anhui Conch Cement Co., Ltd., Class H 2,866,903 20,897,564
Baidu, Inc. Sponsored ADR 102,716 12,983,303
China Construction Bank Corp., Class H 73,129,092 63,159,631
China Merchants Bank Co., Ltd., Class H 2,390,000 12,283,857
China Mobile, Ltd. Sponsored ADR 851,542 35,994,680
China Shenhua Energy Co., Ltd., Class H 4,056,816 8,475,670
CNOOC, Ltd. 8,540,000 14,203,560
ENN Energy Holdings, Ltd. 781,000 8,534,342
Hengan International Group Co., Ltd. 1,766,500 12,581,747
NetEase, Inc. ADR 65,430 20,063,455
Sinopharm Group Co., Ltd., Class H 612,800 2,237,357 Weichai Power Co., Ltd., Class H 13,003,876 27,435,253 _____________
253,632,956 _____________
Egypt | 1.2%
Commercial International Bank Egypt SAE GDR 2,952,002 15,055,210 _____________
Hong Kong | 1.3%
ASM Pacific Technology, Ltd. 1,191,000 16,522,349 _____________
Hungary | 2.2%
OTP Bank Nyrt. 531,893 27,815,367 _____________
India | 10.2%
Axis Bank, Ltd. 1,588,761 16,785,034
Bajaj Auto, Ltd. 237,689 10,606,039
Bharat Petroleum Corp., Ltd. 1,113,585 7,668,771
Bharti Infratel, Ltd. 1,989,028 7,036,181
Coal India, Ltd. 3,197,352 9,467,328
HCL Technologies, Ltd. 1,824,756 14,523,266
Hero MotoCorp, Ltd. 359,576 12,307,158
Infosys, Ltd. Sponsored ADR 1,104,100 11,394,312
Oil and Natural Gas Corp., Ltd. 4,791,512 8,646,158
Tata Consultancy Services, Ltd. 692,715 20,978,997 UPL, Ltd. 1,167,208 9,558,010 _____________
128,971,254 _____________
Indonesia | 4.5%
PT Astra International Tbk 28,114,800 14,024,490
Description Shares
Fair
Value
PT Bank Mandiri (Persero) Tbk 42,068,788 $ 23,257,911
PT Semen Indonesia (Persero) Tbk 882,900 763,177 PT Telekomunikasi Indonesia (Persero) Tbk
Sponsored ADR 657,474 18,738,009 ____________
56,783,587 ____________
Luxembourg | 0.8%
Ternium SA Sponsored ADR 434,446 9,557,812 ____________
Malaysia | 0.3%
British American Tobacco Malaysia Berhad 1,033,200 3,808,986 ____________
Mexico | 3.6%
America Movil SAB de CV, Class L Sponsored ADR 1,699,663 27,194,608
Grupo Mexico SAB de CV, Series B 3,853,772 10,570,229 Kimberly-Clark de Mexico SAB de CV, Series A 4,148,740 8,228,362 ____________
45,993,199 ____________
Pakistan | 0.7%
Habib Bank, Ltd. 2,814,165 2,860,594 Pakistan Petroleum, Ltd. 6,987,466 6,187,719 ____________
9,048,313 ____________
Portugal | 0.8%
Galp Energia SGPS SA 597,706 9,989,657 ____________
Russia | 9.0%
ALROSA PAO (‡) 13,126,947 17,823,020
Gazprom PJSC Sponsored ADR 1,537,333 12,649,176
LUKOIL PJSC Sponsored ADR 208,673 20,696,188
Magnit PJSC Sponsored GDR 761,721 9,182,547
Mobile TeleSystems PJSC Sponsored ADR 1,562,686 15,861,263 Sberbank of Russia PJSC (‡) 9,369,465 38,458,337 ____________
114,670,531 ____________
South Africa | 6.6%
Life Healthcare Group Holdings, Ltd. 5,537,647 9,746,037
Mondi PLC 446,111 10,474,031
Nedbank Group, Ltd. 592,343 9,063,195
PPC, Ltd. 3,467,822 618,989
Sanlam, Ltd. 1,879,336 10,613,700
Shoprite Holdings, Ltd. 1,169,879 10,517,718
Standard Bank Group, Ltd. 902,027 10,840,296
The Bidvest Group, Ltd. 713,739 10,434,980 Vodacom Group, Ltd. 1,428,607 11,760,559 ____________
84,069,505 ____________
South Korea | 14.8%
Hyundai Mobis Co., Ltd. 79,961 17,700,736
KB Financial Group, Inc. 478,819 19,729,107
KT&G Corp. 123,904 10,049,890
2
Lazard/Wilmington Emerging Markets Portfolio
Portfolio of Investments (concluded) December 31, 2019
The accompanying notes are an integral part of these financial statements.
Description Shares
Fair
Value
Samsung Electronics Co., Ltd. 1,263,975 $ 60,988,201
Shinhan Financial Group Co., Ltd. 608,044 22,792,777
SK Hynix, Inc. 516,931 42,062,525 Woongjin Coway Co., Ltd. 175,578 14,134,906 _____________
187,458,142 _____________
Taiwan | 4.5%
Catcher Technology Co., Ltd. 1,036,000 7,845,081
Hon Hai Precision Industry Co., Ltd. 5,374,375 16,278,922 Taiwan Semiconductor Manufacturing Co.,
Ltd. 2,988,404 32,997,356 _____________
57,121,359 _____________
Thailand | 1.4%
Kasikornbank Public Co. Ltd. (‡) 1,889,200 9,523,655 The Siam Cement Public Co. Ltd. (‡) 638,200 8,352,023 _____________
17,875,678 _____________
Turkey | 2.5%
KOC Holding AS 4,179,608 14,276,288 Tupras Turkiye Petrol Rafinerileri AS 817,847 17,432,005 _____________
31,708,293 _____________
United Kingdom | 1.1%
Unilever NV 251,391 14,446,106 _____________
Total Common Stocks (Cost $1,100,056,046) 1,196,305,758 _____________
Short-Term Investments | 5.9%
State Street Institutional U.S. Government Money Market Fund, Administration Class, 1.28% (7 day yield) (Cost $74,898,025) 74,898,025 74,898,025 _____________
Total Investments | 100.2% (Cost $1,174,954,071) $ 1,271,203,783
Liabilities in Excess of Cash and Other Assets | (0.2)% (3,012,035) _____________
Net Assets | 100.0% $ 1,268,191,748 _____________ _____________
Notes to Portfolio of Investments:
(‡) Security valued using Level 2 inputs, based on reference to a similar security which was trading on an active market, under accounting principles generally accepted in the United States of America (“GAAP”) hierarchy – see Note 9 in the Notes to Financial Statements.
Security Abbreviations:
ADR — American Depositary Receipt
GDR — Global Depositary Receipt
PJSC — Public Joint Stock Company
Portfolio holdings by industry as a percentage of net assets (unaudited):
Common Stocks
Auto Components 1.4 %
Automobiles 2.9
Banks 24.6
Beverages 0.6
Chemicals 0.8
Construction Materials 2.4
Diversified Telecommunication Services 2.0
Electronic Equipment, Instruments & Components 2.4
Entertainment 1.6
Food & Staples Retailing 1.6
Gas Utilities 0.7
Health Care Providers & Services 0.9
Household Durables 1.1
Household Products 0.7
Industrial Conglomerates 1.9
Insurance 3.4
Interactive Media & Services 1.0
IT Services 4.4
Machinery 2.2
Metals & Mining 3.0
Oil, Gas & Consumable Fuels 9.1
Paper & Forest Products 0.8
Personal Products 2.1
Semiconductors & Semiconductor Equipment 7.2
Technology Hardware, Storage & Peripherals 5.4
Tobacco 1.1
Transportation Infrastructure 1.8
Wireless Telecommunication Services 7.2
Sub-total 94.3
Short-Term Investments 5.9 Total Investments 100.2 %
3
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Statement of Assets and Liabilities December 31, 2019
Assets
Investments in securities, at fair value (cost $1,174,954,071) $ 1,271,203,783
Foreign currency, at fair value (cost $113,285) 113,888
Receivables for:
Dividends 1,036,645
Units sold 218,639
Investments sold 32,399
Total Assets 1,272,605,354
Liabilities
Payables for:
Investment advisory fees (Note 4) 2,251,444
Foreign capital gains taxes 1,080,990
Units redeemed 373,215
Trustee fees (Note 4) 254,665
Investments purchased 218,473
Custodian fees 179,597
Professional services 53,434
Unitholders' services fees 1,788
Total Liabilities 4,413,606
Net Assets $ 1,268,191,748
Class A
Net Assets $ 55,356,883
Units Outstanding 2,899,266
Net Asset Value per Unit $ 19.09
Class B
Net Assets $ 64,321,025
Units Outstanding 3,325,249
Net Asset Value per Unit $ 19.34
Class C
Net Assets $ 975,461,295
Units Outstanding 49,776,600
Net Asset Value per Unit $ 19.60
Class D
Net Assets $ 56,665,084
Units Outstanding 2,854,476
Net Asset Value per Unit $ 19.85
Class E
Net Assets $ 105,833,762
Units Outstanding 5,400,096
Net Asset Value per Unit $ 19.60
Class LZ
Net Assets $ 10,553,699
Units Outstanding 538,604
Net Asset Value per Unit $ 19.59
4
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Statement of Operations For the Year Ended December 31, 2019*
Investment Income (Loss)
Income
Dividends (net of foreign withholding taxes of $5,622,657) $ 42,241,798
Total investment income 42,241,798
Expenses
Investment advisory fees (Note 4):
Class A 1,078,669
Class B 1,054,713
Class C 6,386,978
Class D 354,828
Class E 538,713
Trustee fees 1,033,523
Custodian fees 585,416
Professional services 47,296
Unitholders' services fees 27,872
Total expenses 11,108,008
Net investment income (loss) 31,133,790
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency
Net realized gain (loss) on:
Investments (net of foreign capital gains taxes of $1,898,349) 15,130,793
Foreign currency transactions (729,675)
Total net realized gain (loss) on investments and foreign currency 14,401,118
Net change in unrealized appreciation (depreciation) on:
Investments (includes net change in unrealized appreciation (depreciation) of foreign
capital gains taxes of $2,443,199) 160,349,167
Foreign currency translation 13,205
Total net change in unrealized appreciation (depreciation) on investments and foreign currency 160,362,372
Net realized and unrealized gain (loss) on investments and foreign currency 174,763,490
Net increase (decrease) in net assets resulting from operations $ 205,897,280
* The inception date for Class LZ was October 28, 2019.
5
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Statement of Changes in Net Assets For the Year Ended December 31, 2019*
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss) $ 31,133,790
Net realized gain (loss) on investments and foreign currency 14,401,118
Net change in unrealized appreciation (depreciation) on investments and foreign currency 160,362,372
Net increase (decrease) in net assets resulting from operations 205,897,280
Unitholder Transactions (Note 6):
Proceeds from units sold 301,487,651
Cost of units redeemed (469,392,080)
Net increase (decrease) in net assets from unitholder transactions (167,904,429)
Total increase (decrease) in net assets 37,992,851
Net assets at beginning of year 1,230,198,897
Net assets at end of year $ 1,268,191,748
Changes in Units (Note 6):
Units outstanding at beginning of year 74,187,417
Units sold 16,868,430
Units redeemed (26,261,556)
Net increase (decrease) in units (9,393,126)
Units outstanding at end of year 64,794,291
* The inception date for Class LZ was October 28, 2019.
6
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Financial Highlights – Class A Selected data per unit outstanding throughout the year ended December 31, 2019
Net asset value, beginning of year $ 16.25
Income (Loss) from investment operations:
Net investment income (loss) (a) 0.43
Net realized and unrealized gain (loss) 2.41
Total from investment operations 2.84
Net asset value, end of year $ 19.09
Total Return (b) 17.48 %
Ratios and Supplemental Data:
Net assets, end of year (in thousands) $ 55,357
Ratios to average net assets (c):
Total expenses 1.09 %
Net investment income (loss) 2.45 %
(a) Net investment income (loss) has been computed based on the average daily units outstanding.
(b)
Total return calculation is based on the value of a single unit of participation outstanding throughout the year. It
represents the percentage change in the net asset value per unit between the beginning of the year and end of the
year and assumes reinvestment of all distributions, if any. The calculation includes only those expenses charged
directly to the Portfolio. Individual unitholders may incur administration or other fees related to the management
or maintenance of their individual unitholder accounts, which would have the effect of reducing a unitholder's net
return on their investments in the Portfolio. An individual unitholder's return may also vary based on the timing of
capital transactions and fees.
(c)
Ratios to average net assets do not reflect expenses charged directly to the unitholders. An individual unitholder’s
ratios to average net assets may vary based on the timing of unitholder transactions and fees.
7
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Financial Highlights – Class B Selected data per unit outstanding throughout the year ended December 31, 2019
Net asset value, beginning of year $ 16.45
Income (Loss) from investment operations:
Net investment income (loss) (a) 0.43
Net realized and unrealized gain (loss) 2.46
Total from investment operations 2.89
Net asset value, end of year $ 19.34
Total Return (b) 17.57 %
Ratios and Supplemental Data:
Net assets, end of year (in thousands) $ 64,321
Ratios to average net assets (c):
Total expenses 0.98 %
Net investment income (loss) 2.41 %
(a) Net investment income (loss) has been computed based on the average daily units outstanding.
(b)
Total return calculation is based on the value of a single unit of participation outstanding throughout the year. It
represents the percentage change in the net asset value per unit between the beginning of the year and end of the
year and assumes reinvestment of all distributions, if any. The calculation includes only those expenses charged
directly to the Portfolio. Individual unitholders may incur administration or other fees related to the management
or maintenance of their individual unitholder accounts, which would have the effect of reducing a unitholder's net
return on their investments in the Portfolio. An individual unitholder's return may also vary based on the timing of
capital transactions and fees.
(c)
Ratios to average net assets do not reflect expenses charged directly to the unitholders. An individual unitholder’s
ratios to average net assets may vary based on the timing of unitholder transactions and fees.
8
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Financial Highlights – Class C Selected data per unit outstanding throughout the year ended December 31, 2019
Net asset value, beginning of year $ 16.65
Income (Loss) from investment operations:
Net investment income (loss) (a) 0.46
Net realized and unrealized gain (loss) 2.49
Total from investment operations 2.95
Net asset value, end of year $ 19.60
Total Return (b) 17.72 %
Ratios and Supplemental Data:
Net assets, end of year (in thousands) $ 975,461
Ratios to average net assets (c):
Total expenses 0.89 %
Net investment income (loss) 2.57 %
(a) Net investment income (loss) has been computed based on the average daily units outstanding.
(b)
Total return calculation is based on the value of a single unit of participation outstanding throughout the year. It
represents the percentage change in the net asset value per unit between the beginning of the year and end of the
year and assumes reinvestment of all distributions, if any. The calculation includes only those expenses charged
directly to the Portfolio. Individual unitholders may incur administration or other fees related to the management
or maintenance of their individual unitholder accounts, which would have the effect of reducing a unitholder's net
return on their investments in the Portfolio. An individual unitholder's return may also vary based on the timing of
capital transactions and fees.
(c)
Ratios to average net assets do not reflect expenses charged directly to the unitholders. An individual unitholder’s
ratios to average net assets may vary based on the timing of unitholder transactions and fees.
9
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Financial Highlights – Class D Selected data per unit outstanding throughout the year ended December 31, 2019
Net asset value, beginning of year $ 16.85
Income (Loss) from investment operations:
Net investment income (loss) (a) 0.49
Net realized and unrealized gain (loss) 2.51
Total from investment operations 3.00
Net asset value, end of year $ 19.85
Total Return (b) 17.80 %
Ratios and Supplemental Data:
Net assets, end of year (in thousands) $ 56,665
Ratios to average net assets (c):
Total expenses 0.79 %
Net investment income (loss) 2.71 %
(a) Net investment income (loss) has been computed based on the average daily units outstanding.
(b)
Total return calculation is based on the value of a single unit of participation outstanding throughout the year. It
represents the percentage change in the net asset value per unit between the beginning of the year and end of the
year and assumes reinvestment of all distributions, if any. The calculation includes only those expenses charged
directly to the Portfolio. Individual unitholders may incur administration or other fees related to the management
or maintenance of their individual unitholder accounts, which would have the effect of reducing a unitholder's net
return on their investments in the Portfolio. An individual unitholder's return may also vary based on the timing of
capital transactions and fees.
(c)
Ratios to average net assets do not reflect expenses charged directly to the unitholders. An individual unitholder’s
ratios to average net assets may vary based on the timing of unitholder transactions and fees.
10
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Financial Highlights – Class E Selected data per unit outstanding throughout the year ended December 31, 2019
Net asset value, beginning of year $ 16.64
Income (Loss) from investment operations:
Net investment income (loss) (a) 0.46
Net realized and unrealized gain (loss) 2.50
Total from investment operations 2.96
Net asset value, end of year $ 19.60
Total Return (b) 17.79 %
Ratios and Supplemental Data:
Net assets, end of year (in thousands) $ 105,834
Ratios to average net assets (c):
Total expenses 0.84 %
Net investment income (loss) 2.53 %
(a) Net investment income (loss) has been computed based on the average daily units outstanding.
(b)
Total return calculation is based on the value of a single unit of participation outstanding throughout the year. It
represents the percentage change in the net asset value per unit between the beginning of the year and end of the
year and assumes reinvestment of all distributions, if any. The calculation includes only those expenses charged
directly to the Portfolio. Individual unitholders may incur administration or other fees related to the management
or maintenance of their individual unitholder accounts, which would have the effect of reducing a unitholder's net
return on their investments in the Portfolio. An individual unitholder's return may also vary based on the timing of
capital transactions and fees.
(c)
Ratios to average net assets do not reflect expenses charged directly to the unitholders. An individual unitholder’s
ratios to average net assets may vary based on the timing of unitholder transactions and fees.
11
The accompanying notes are an integral part of these financial statements.
Lazard/Wilmington Emerging Markets Portfolio
Financial Highlights – Class LZ Selected data per unit outstanding throughout the period October 28, 2019 (commencement of operations) through December 31, 2019
Net asset value, beginning of period $ 18.36
Income (Loss) from investment operations:
Net investment income (loss) (a) 0.06
Net realized and unrealized gain (loss) 1.17
Total from investment operations 1.23
Net asset value, end of period $ 19.59
Total Return (b) 6.70 %
Ratios and Supplemental Data:
Net assets, end of year (in thousands) $ 10,554
Ratios to average net assets (c):
Total expenses 0.15 %
Net investment income (loss) 1.75 %
(a) Net investment income (loss) has been computed based on the average daily units outstanding.
(b) Total return calculation is based on the value of a single unit of participation outstanding throughout the period. It represents
the percentage change in the net asset value per unit between the beginning of the period and end of the period and
assumes reinvestment of all distributions, if any. The calculation includes only those expenses charged directly to the Portfolio.
Individual unitholders may incur administration or other fees related to the management or maintenance of their
individual unitholder accounts, which would have the effect of reducing a unitholder's net return on their investments in the
Portfolio. An individual unitholder's return may also vary based on the timing of capital transactions and fees. Return for a
period of less than one year is not annualized. (c) Ratios to average net assets do not reflect expenses charged directly to the unitholders. An individual unitholder’s ratios
to average net assets may vary based on the timing of unitholder transactions and fees. Annualized for a period of less than
one year.
12
Lazard/Wilmington Emerging Markets Portfolio
Notes to Financial Statements
December 31, 2019
(1) Organization Lazard/Wilmington Collective Trust (the "Trust") is a trust formed pursuant to a Declaration of Trust dated August 2, 1999, as
amended and/or restated from time to time and governed by the laws of the State of Delaware. The Lazard/Wilmington Emerging
Markets Portfolio (the “Portfolio”) is a portfolio of the Trust. This report includes only the financial statements of the Portfolio. The
financial statements of other portfolios within the Trust, if any, are presented separately. The Portfolio's investment objective is to
achieve long-term capital appreciation by investing primarily in equity and equity-related securities of issuers that are located, or do
significant business, in emerging market countries.
Wilmington Trust, National Association, a related party of the Trust, is the Trustee of the Trust and is responsible for maintaining and
administering the Trust and the Portfolio. Lazard Asset Management LLC (the "Sub-Advisor"), a subsidiary of Lazard Frères & Co.
LLC, provides sub-advisory services for the investment assets of the Portfolio. State Street Bank and Trust Company (the
“Custodian”) is the Custodian of the Portfolio and is responsible for custody of the Portfolio's assets and providing transfer agent,
recordkeeping and accounting functions. The custodian and unitholders' services fees are accrued daily and paid monthly.
According to the Offering Memorandum, the Portfolio is divided into three classes, which shall be identical except as to expenses to
be borne by a particular class. Additional classes may be added by the Trustee in its discretion. As of December 31, 2019, the
Portfolio had six funded classes, Class A, Class B, Class C, Class D, Class E and Class LZ (commenced operation from October 28,
2019).
(2) Significant Accounting Policies The accompanying financial statements are presented in conformity with GAAP. The Portfolio is an investment company and
therefore applies specialized accounting guidance in accordance with Accounting Standards Codification Topic 946. The following is
a summary of significant accounting policies consistently followed by the Portfolio in the preparation of the financial statements: (a) Valuation of Investments
Equity securities traded on a securities exchange or market, including exchange-traded option contracts, rights and warrants, are
valued at the last reported sales price (for domestic equity securities) or the closing price (for foreign equity securities) on the
exchange or market on which the security is principally traded or, for securities trading on the NASDAQ National Market System
("NASDAQ"), the NASDAQ Official Closing Price. If there is no available closing price for a foreign equity security, the last reported
sales price is used. If there are no reported sales of a security on the valuation date, the security is valued at the most recent quoted bid
price on such date reported by such principal exchange or market. Investments in money market funds are valued at the fund’s net
asset value (“NAV”) per share. Calculation of the Portfolio’s NAV may not take place contemporaneously with the determination of the prices of portfolio assets used
in such calculation. Trading on non-US securities exchanges and in over-the-counter markets may be completed before the close of
business on each business day in New York (i.e., a day on which the New York Stock Exchange (the "NYSE") is open). In addition,
non-US securities trading generally, or in a particular country or countries, may not take place on all business days in New York and
on which the NAV of the Portfolio is calculated. The Sub-Advisor may evaluate a variety of factors to determine the fair value of securities for which market quotations are determined
not to be readily available or reliable. These factors include, but are not limited to, the type of security, the value of comparable
securities, observations from financial institutions and relevant news events. Input from the Sub-Advisor’s portfolio managers/analysts
also will be considered.
13
Lazard/Wilmington Emerging Markets Portfolio
Notes to Financial Statements (continued)
December 31, 2019
If a significant event materially affecting the value of securities occurs between the close of the exchange or market on which the
security is principally traded and the time when the Portfolio’s NAV is calculated, or when current market quotations otherwise are
determined not to be readily available or reliable (including restricted or other illiquid securities such as certain derivative
instruments), such securities will be valued at their fair value as determined by, or in accordance with procedures approved by, the
Sub-Advisor. Non-US securities may trade on days when the Portfolio is not open for business, thus affecting the value of the
Portfolio’s assets on days when Portfolio unitholders may not be able to buy or sell Portfolio units. (b) Portfolio Securities Transactions and Investment Income Portfolio securities transactions are accounted for as of the trade date. Realized gain (loss) on sales of investments are recorded on a
specific identification basis. Dividend income is recorded on the ex-dividend date except for certain dividends from non-US securities
where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Portfolio.
Interest income, if any, is accrued daily. The Portfolio's income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are allocated proportionally each day between the classes based upon the relative net assets of each class. The Portfolio may be subject to taxes imposed by non-US countries in which it invests. Such taxes are generally based upon income
earned or capital gains (realized and/or unrealized). The Portfolio accrues and applies such taxes to net investment income, net
realized gains and net unrealized gains concurrent with the recognition of income earned or capital gains (realized and/or unrealized)
from the applicable portfolio securities.
(c) Foreign Currency The accounting records of the Portfolio are maintained in US dollars. Portfolio securities and other assets and liabilities denominated
in a foreign currency are translated daily into US dollars at the prevailing rates of exchange. Purchases and sales of securities, income
receipts and expense payments are translated into US dollars at the prevailing exchange rates on the respective transaction dates. The Portfolio does not isolate the portion of operations resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in their market prices. Such fluctuations are included in net realized and unrealized gain (loss) on
investments. Net realized gain (loss) on foreign currency transactions represent net foreign currency gain (loss) from disposition of
foreign currencies, currency gain (loss) realized between the trade and settlement dates on securities, and the difference between the
amount of dividends, interest and foreign withholding taxes recorded on the Portfolio's accounting records and the US dollar
equivalent amounts actually received or paid. Net change in unrealized appreciation (depreciation) on foreign currency translation
reflects the impact of changes in exchange rates on the value of assets and liabilities, other than investments in securities, during the
period. (d) Tax Reclaims Receivable
Tax reclaims receivable, if any, are recorded on the ex-dividend date based upon the Trustee’s interpretation of country-specific
taxation of dividend income, which may be subject to change due to changes in country-specific tax regulations regarding amounts
reclaimable or the Trustee’s interpretation of country-specific taxation of dividend income and related amounts reclaimable.
14
Lazard/Wilmington Emerging Markets Portfolio
Notes to Financial Statements (continued)
December 31, 2019
(e) Income Taxes
The Portfolio intends to continue to be exempt from taxation under section 501(a) of the Internal Revenue Code and qualify as a group
trust under IRS Revenue Ruling 81-100 and any amendments thereto, and other applicable IRS rules and regulations. No provision for
federal income taxes is made in the financial statements of the Portfolio.
Management has analyzed the Portfolio tax positions, and has concluded that no liability for unrecognized tax benefits should be
recorded related to uncertain tax positions taken on tax returns filed for any open tax years (or expected to be taken on future tax
returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitations.
(f) Distributions to Unitholders
Net investment income and net realized gains are retained by the Portfolio.
(g) Estimates
The preparation of financial statements in conformity with GAAP requires management 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 amounts of increases and decreases in net assets resulting from operations during the reporting period. Actual results
could differ from those estimates.
(h) Net Asset Value
NAV per unit for each class of the Portfolio is determined each day the NYSE is open for trading as of the close of regular trading on
the NYSE (generally 4:00 p.m. Eastern time). The Portfolio will not treat an intraday unscheduled disruption in NYSE trading as a
closure of the NYSE, and will price its units as of 4:00 p.m., if the particular disruption directly affects only the NYSE. NAV per unit
is determined by dividing the value of the total assets of the Portfolio represented by such class, less all liabilities, by the total number
of Portfolio units of such class outstanding.
(3) Short Term Investments
Cash is held by the Custodian which, as contracted on behalf of the Portfolio, sweeps on each business day into the State Street
Institutional U.S. Government Money Market Fund, a registered open-end management investment company under the Investment
Company Act of 1940, as amended, which is included in the Portfolio of Investments.
(4) Sub-Advisor and Trustee Fees
Pursuant to the Sub-Advisor Agreement, the Sub-Advisor regularly provides the Portfolio with investment research, advice and supervision and furnishes continuously an investment program consistent with its investment objectives and policies, including the purchase, retention and disposition of securities, and provides the Portfolio with administrative, operational and compliance assistance
services. For its services provided to the Portfolio, the Sub-Advisor earns an investment advisory fee at an annual rate of 0.95%,
0.85%, 0.75%, 0.65% and 0.70% of the average daily net assets for Class A, Class B, Class C, Class D and Class E respectively. The Sub-Advisor does not charge an investment advisory fee on Class LZ net assets. The investment advisory fees are accrued daily and
paid quarterly.
15
Lazard/Wilmington Emerging Markets Portfolio
Notes to Financial Statements (continued)
December 31, 2019
The Sub-Advisor has voluntarily agreed to waive its fees and, if necessary, reimburse the Portfolio if the aggregate direct expenses of
the Portfolio, exclusive of taxes, brokerage, interest on borrowings, fees and expenses of “Acquired Funds” and extraordinary
expenses, exceed 1.15%, 1.05%, 0.95% , 0.83%, 0.90% and 0.20% of the average daily net assets for Class A, Class B, Class C, Class
D, Class E and Class LZ respectively. For the year ended December 31, 2019, the Sub-Advisor did not waive or reimburse the
Portfolio for any operating expenses. For purposes of this item, an “Acquired Fund” means any company in which the Portfolio
invests or has invested during the relevant fiscal period that (A) is an investment company or (B) would be an investment company
under section 3(a) of the Investment Company Act (15 U.S.C. 80a-3(a)) but for the exceptions to that definition provided for in
sections 3(c)(1) and 3(c)(7) of the Investment Company Act (15 U.S.C. 80a-3(c)(1) and 80a-3(c)(7)). The Trustee is responsible for certain administrative and financial reporting functions. For these services, the Portfolio pays the
Trustee a per annum fee of 0.10% on the first $500 million of net assets, 0.08% on the next $500 million of net assets and 0.06% on
net assets in excess of $1 billion. The trustee fees are accrued daily and paid quarterly. (5) Investment Transactions The Portfolio may be subject to capital gains taxes levied by foreign governments on net realized gains on sales of securities. For the
year ended December 31, 2019, realized gain (loss) on sales of securities was reported net of $1,898,349 of such capital gains taxes.
At December 31, 2019, unrealized appreciation (depreciation) on investments includes a deferred tax liability of $1,080,990 based on
unrealized appreciation on applicable investments in securities held at year end. The net change in unrealized appreciation
(depreciation) on investments for 2019 includes net change in unrealized appreciation (depreciation) of foreign capital gains taxes of
$2,443,199. (6) Unitholders' Transactions The Portfolio offers units for sale and redemption of its units at the NAV of each class as of the close of each business day.
For the year ended December 31, 2019, the units transactions were as follows:
Class Units Dollar Amounts
Class A
Units sold 1,727,352 $ 29,600,000
Units redeemed (6,574,290) (117,046,984)
Net increase (decrease) in units (4,846,938) $ (87,446,984)
Class B
Units sold 874,881 $ 15,612,572
Units redeemed (9,796,555) (173,966,674)
Net increase (decrease) in units (8,921,674) $ (158,354,102)
Class C
Units sold 11,600,136 $ 207,128,957
Units redeemed (8,151,927) (146,286,360)
Net increase (decrease) in units 3,448,209 $ 60,842,597
16
Lazard/Wilmington Emerging Markets Portfolio
Notes to Financial Statements (continued)
December 31, 2019
Class D
Units sold 496,147 $ 9,059,075
Units redeemed (653,529) (11,892,357)
Net increase (decrease) in units (157,382) $ (2,833,282)
Class E
Units sold 1,620,746 $ 30,000,000
Units redeemed (1,074,691) (20,000,000)
Net increase (decrease) in units 546,055 $ 10,000,000
Class LZ*
Units sold 549,168 $ 10,087,047
Units redeemed (10,564) (199,705)
Net increase (decrease) in units 538,604 $ 9,887,342
Total increase (decrease) in units (9,393,126) $ (167,904,429)
*The inception date for Class LZ was October 28, 2019.
(7) Investment Risks (a) Non-US Securities Risk The Portfolio's performance will be influenced by political, social and economic factors affecting the non-US countries and companies
in which the Portfolio invests. Non-US securities carry special risks, such as less developed or less efficient trading markets, political
instability, a lack of company information, differing auditing and legal standards, and, potentially, less liquidity. (b) Emerging Market Risk Emerging market countries generally have economic structures that are less diverse and mature, and political systems that are less
stable, than those of developed countries. The economies of countries with emerging markets may be based predominantly on only a
few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme debt burdens or
volatile inflation rates. The securities markets of emerging market countries have historically been extremely volatile. These market
conditions may continue or worsen. Investments in these countries may be subject to political, economic, legal, market and currency
risks. The risks may include less protection of property rights and uncertain political and economic policies, the imposition of capital
controls and/or foreign investment limitations by a country, nationalization of businesses and the imposition of sanctions by other
countries, such as the US. Significant devaluation of emerging market currencies against the US dollar may occur subsequent to
acquisition of investments denominated in emerging market currencies.
17
Lazard/Wilmington Emerging Markets Portfolio
Notes to Financial Statements (continued)
December 31, 2019
(c) Foreign Currency Risk Investments denominated in currencies other than US dollars may experience a decline in value, in US dollar terms, due solely to
fluctuations in currency exchange rates. The Portfolio’s currency investments could be adversely affected by delays in, or a refusal to
grant, repatriation of funds or conversion of emerging market currencies. The Sub-Advisor does not intend to actively hedge the
Portfolio’s foreign currency exposure. (d) Unitholder Concentration Risk As of December 31, 2019, the number of unitholders that held units in excess of 10% of the respective Class’ units, and the aggregated
percentages of the total units that those unitholders held of each Class, were as follows:
Class Number of Unitholders Aggregated Percentages
Class A 2 100.00%
Class B 3 100.00%
Class C 3 76.17%
Class D 1 100.00%
Class E 1 100.00%
Class LZ 1 100.00%
(e) Counterparty Default Risk Certain investment techniques the Portfolio may employ involve risk that the counterparty to such instruments will become insolvent
or otherwise default on its obligation to perform as agreed. In the event of such default, the Portfolio may have limited recourse
against the counterparty and may experience delays in the recovery (or loss) of collateral.
(f) Sector Risk
Implementation of the Portfolio's investment strategy may, during certain periods, result in the investment of a significant portion of
the Portfolio's assets in a particular market sector, such as information technology companies or companies in the financials sector,
and the Portfolio would be expected to be affected by developments in that sector. Information technology companies generally
operate in intensely competitive markets on a worldwide basis. This level of competition can put pressure on the prices of their
products and services which could adversely affect their profitability. Also, because technological development in many areas
increases at a rapid rate, these companies often produce products with very short life cycles and face the risk of product obsolescence.
Other risks include changes in consumer preferences, competition for qualified personnel, the effects of economic slowdowns,
dependence on intellectual property rights and the impact of government regulation.
Companies in the financials sector can be significantly affected by, among other things: government regulation; changes in interest
rates and/or monetary policy and general economic conditions; the availability and cost of capital; capital requirements; decreased
liquidity in credit markets; and the rate of defaults on corporate, consumer and government debt. Deterioration of the credit markets
generally may cause an adverse impact in a broad range of markets, including the US and international credit and interbank markets
generally, which could affect a wide range of financial institutions and markets. In addition, companies in the financials sector are
often more highly leveraged than other companies, making them inherently riskier.
18
Lazard/Wilmington Emerging Markets Portfolio
Notes to Financial Statements (continued)
December 31, 2019
(8) Contractual Obligations
The Portfolio enters into contracts in the normal course of business that contain a variety of indemnification provisions. The
Portfolio’s maximum exposure under these arrangements is unknown. Management has reviewed the Portfolio’s existing contracts and
expects the risk of loss to be remote. (9) Fair Value Measurements Fair value is defined as the price that the Portfolio would receive to sell an asset, or would pay to transfer a liability, in an orderly
transaction between market participants at the date of measurement. The Fair Value Measurements and Disclosures provisions of
GAAP also establish a framework for measuring fair value, and a three-level hierarchy for fair value measurement that is based upon
the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer, broadly, to the
assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions that market
participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio.
Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the
asset or liability, developed based on the best information available in the circumstances. The fair value measurement level within the
fair value hierarchy for the assets and liabilities of the Portfolio is based on the lowest level of any input that is significant to the
overall fair value measurement. The three-level hierarchy of inputs is summarized below:
• Level 1 – unadjusted quoted prices in active markets for identical assets and liabilities
• Level 2 – other significant observable inputs (including unadjusted quoted prices for similar assets and liabilities, interest rates,
prepayment speeds, credit risk, etc.)
• Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of assets and
liabilities)
Changes in valuation technique may result in transfers into or out of the current assigned level within the hierarchy.
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in these
securities.
19
Lazard/Wilmington Emerging Markets Portfolio
Notes to Financial Statements (concluded)
December 31, 2019
The following table summarizes the valuation of the Portfolio's assets and liabilities by each fair value hierarchy level as of December
31, 2019:
Description
Unadjusted
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Balance as of
December 31, 2019
Common Stocks*
Brazil $ 111,777,454 $ — $ — $ 111,777,454 China 253,632,956 — — 253,632,956
Egypt 15,055,210 — — 15,055,210
Hong Kong 16,522,349 — — 16,522,349 Hungary 27,815,367 — — 27,815,367
India 128,971,254 — — 128,971,254
Indonesia 56,783,587 — — 56,783,587 Luxembourg 9,557,812 — — 9,557,812
Malaysia 3,808,986 — — 3,808,986
Mexico 45,993,199 — — 45,993,199 Pakistan 9,048,313 — — 9,048,313
Portugal 9,989,657 — — 9,989,657
Russia 58,389,174 56,281,357 — 114,670,531 South Africa 84,069,505 — — 84,069,505
South Korea 187,458,142 — — 187,458,142
Taiwan 57,121,359 — — 57,121,359
Thailand — 17,875,678 — 17,875,678
Turkey 31,708,293 — — 31,708,293
United Kingdom 14,446,106 — — 14,446,106 Short-Term Investments 74,898,025 — — 74,898,025
Total $ 1,197,046,748 $ 74,157,035 $ — $ 1,271,203,783
* Please refer to Portfolio of Investments for portfolio holdings by industry.
(10) Subsequent Events Management has evaluated subsequent events affecting the Portfolio through March 31, 2020, the date that these financial statements
were available to be issued, and has determined that there were no subsequent events that required adjustment or disclosure.
The current novel coronavirus (COVID-19) global pandemic and the aggressive responses taken by many governments, including
closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions, as
well as the forced or voluntary closure of, or operational changes to, many retail and other businesses, has had negative impacts, and
in many cases severe negative impacts, on markets worldwide. The effect of the impact of COVID-19 has not been reflected in these
financial statements. It is not known how long such impacts, will or would last, but there could be a prolonged period of global
economic slowdown, which may be expected to impact the Portfolio’s future financial performance and its investments.
20