Lazard/Wilmington Capital Allocator
Managed Global Equity Portfolio
Annual Report
December 31, 2012
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Table of Contents
December 31, 2012
Page
Independent Auditor’s Report
1
Portfolio of Investments
2
Statement of Assets and Liabilities
3
Statement of Operations
4
Statement of Changes in Net Assets
5
Financial Highlights
6-7
Notes to Financial Statements
8-17
Independent Auditor’s Report
To Participants and Trustee of
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
We have audited the accompanying financial statements of Lazard/Wilmington Capital Allocator Managed
Global Equity Portfolio (formerly known as Lazard/Wilmington Capital Allocator Global Growth Portfolio)
(“the Portfolio”), which comprise the statement of assets and liabilities, including the portfolio of
investments as of December 31, 2012, and the related statements of operations, of changes in net assets
and the financial highlights for the year then ended. 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.
Auditor’s 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 Portfolio’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 Portfolio’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 Capital Allocator Managed Global Equity Portfolio at December
31, 2012, and the results of its operations, changes in its net assets and the financial highlights for the year
then ended, in accordance with accounting principles generally accepted in the United States of America.
Boston, MA
March 27, 2013
PricewaterhouseCoopers LLP, 125 High Street, Boston, MA 02110
T: (617) 530 5000, F: (617) 530 5001, www.pwc.com/us
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Portfolio of Investments
December 31, 2012
Description
Exchange-Traded Funds — 94.2%
Shares
BLDRS Asia 50 ADR Index Fund
Financial Select Sector SPDR Fund
Guggenheim S&P 500 Equal Weight ETF
iShares Core S&P 500 ETF
iShares Core S&P Mid-Cap ETF
iShares Core S&P Small-Cap ETF
iShares MSCI Canada Index Fund
iShares MSCI Emerging Markets Index Fund
iShares MSCI Italy Capped Index Fund
iShares S&P Europe 350 Index Fund
iShares S&P Global Energy Sector Index
Fund
iShares S&P Global Industrials Index Fund
iShares S&P North American Technology
Sector Index Fund
iShares S&P North American TechnologySoftware Index Fund
iShares Silver Trust (a)
Market Vectors Agribusiness ETF
PowerShares Build America Bond Portfolio
PowerShares DB Oil Fund (a)
PowerShares Financial Preferred Portfolio
PowerShares Senior Loan Portfolio
Description
Value
265
1,480
405
1,770
935
930
1,055
200
1,310
3,945
$
18,934
23,877
95
6,409
260
250
425
685
460
505
370
16,388
7,338
22,423
20,714
11,932
9,226
9,243
Forward Foreign Currency Sale Contracts open at December 31, 2012:
Currency
Counterparty
Expiration
Date
GBP
GBP
SSB
SSB
03/18/13
03/18/13
SPDR Barclays High Yield Bond ETF
SPDR EURO STOXX 50 ETF
SPDR Gold Trust (a)
SPDR S&P 500 ETF Trust
SPDR S&P China ETF
Vanguard FTSE Emerging Markets ETF
Vanguard MSCI European ETF
Vanguard MSCI Pacific ETF
Vanguard Short-Term Corporate Bond ETF
Total Exchange-Traded Funds
(Identified cost $1,543,380)
7,029
24,272
21,595
253,252
95,090
72,735
29,962
8,833
17,620
155,038
495
435
Shares
Value
510
640
245
285
300
5,991
2,070
4,950
520
$
20,757
22,182
39,692
40,618
22,227
266,779
101,099
264,280
41,766
____________
1,651,310
____________
Closed-End Management Investment
Company — 1.2%
JPMorgan European Smaller Companies
Trust PLC
(Identified cost $20,255)
1,799
21,290
____________
127,761
127,761
____________
Short-Term Investment — 7.3%
SSgA U.S. Government Money Market Fund
(Identified cost $127,761) (b), (c)
Total Investments — 102.7%
(Identified cost $1,691,396)
$____________
1,800,361
Liabilities in Excess of Cash and
Other Assets — (2.7)%
(47,627)
____________
Net Assets — 100.0%
$____________
1,752,734
____________
Foreign
Currency Amount
5,013
8,029
Total Forward Foreign Currency Sale Contracts
U.S. $ Cost
on Origination Date
U.S. $
Current Value
$
8,121
13,000
$
8,146
13,048
$
25
48
$
21,121
$
21,194
$
73
(a) Non-income producing security.
ETF — Exchange-Traded Fund
(b) Security valued using Level 2 inputs, based on reference to a similar GBP — British Pound Sterling
security from the same issuer which was trading on an active
SSB — State Street Bank & Trust Co.
market, under accounting principles generally accepted in the United
States of America (“GAAP”) hierarchy – see Note 2
(c) Registered investment company advised by State Street Global
Advisors.
The accompanying notes are an integral part of these financial statements.
2
Unrealized
Depreciation
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Statement of Assets and Liabilities
December 31, 2012
Assets
Investments in securities, at value (cost $1,691,396)
Receivables for:
Dividends
Units sold
Amount due from Sub-Advisor (Note 3)
Total Assets
$
1,800,361
944
223
15,703
1,817,231
Liabilities
Payables for:
Units redeemed
Investments purchased
Custodian fees (Note 4)
Trustee fees (Note 3)
Servicing fees – Class 2 (Note 3)
Gross unrealized depreciation on forward foreign currency contracts
Other accrued expenses and payables
Total Liabilities
Net Assets
$
Class 1
Net Assets
Units Outstanding
Net Asset Value per Unit
$
$
Class 2
Net Assets
Units Outstanding
Net Asset Value per Unit
$
$
23,918
23,060
7,457
403
339
73
9,247
64,497
1,752,734
1,160,138
75,568
15.35
592,596
38,636
15.34
The accompanying notes are an integral part of these financial statements.
3
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Statement of Operations
For the Year Ended December 31, 2012
Investment Income
Income:
Dividends
Total investment income
$
Expenses:
Investment advisory fees (Note 3)
Custodian fees (Note 4)
Professional fees
Trustee fees (Note 3)
Servicing fees – Class 2 (Note 3)
Other expenses
Total gross expenses
Investment advisory fees waived and expenses reimbursed (Note 3)
Total net expenses
Net investment income
40,293
40,293
8,192
43,577
22,202
1,365
910
539
76,785
(65,680)
11,105
29,188
Net Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Transactions
and Forward Foreign Currency Contracts
Net realized gain (loss) on:
Investments
Foreign currency transactions and forward foreign currency contracts
Total net realized gain on investments, foreign currency transactions and
forward foreign currency contracts
Net change in unrealized appreciation (depreciation) on:
Investments
Foreign currency translations and forward foreign currency contracts
Total net change in unrealized appreciation on investments, foreign currency translations and
forward foreign currency contracts
Net realized and unrealized gain on investments, foreign currency transactions and
forward foreign currency contracts
Net increase in net assets resulting from operations
6,353
(507)
5,846
130,279
(73)
130,206
$
136,052
165,240
The accompanying notes are an integral part of these financial statements.
4
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Statement of Changes in Net Assets
For the Year Ended December 31, 2012
Increase (Decrease) in Net Assets
Operations:
Net investment income
Net realized gain on investments, foreign currency transactions and
forward foreign currency contracts
Net change in unrealized appreciation on investments, foreign currency translations and
forward foreign currency contracts
Net increase in net assets resulting from operations
Unitholder Transactions:
Net proceeds from units sales
Cost of units redeemed
Net increase in net assets from unitholder transactions
Total increase in net assets
Net assets at beginning of year
Net assets at end of year
$
29,188
5,846
130,206
165,240
$
Changes in Units:
Units outstanding at beginning of year
Units sold
Units redeemed
Net increase
Units outstanding at end of year
983,966
(349,581)
634,385
799,625
953,109
1,752,734
70,115
68,573
(24,484)
44,089
114,204
Units in excess of 10% of Portfolio units at December 31, 2012 were held by three of the Portfolio’s
unitholders aggregated 88.94% of the Portfolio’s total units outstanding.
The accompanying notes are an integral part of these financial statements.
5
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Financial Highlights – Class 1
Selected data per unit outstanding throughout the year
Net asset value, beginning of year
Income from investment operations:
Net investment income (a)
Net realized and unrealized gain
Total from investment operations
Net asset value, end of year
Total Return (b)
(c)
0.28
1.48
1.76
$ 15.35
12.95%
Ratios and Supplemental Data:
Net assets, end of year (in thousands)
Ratios to average net assets (c):
Net expenses
Gross expenses
Net investment income
Portfolio turnover rate
(a)
(b)
Year Ended
December 31, 2012
$ 13.59
$
1,160
0.80%
5.58%
1.97%
99.61%
Net investment income has been computed based on average daily units outstanding.
Certain expenses of the Portfolio have been waived or reimbursed by the Sub-Advisor; without such waiver/reimbursement of
expenses, the Portfolio's return would have been lower. 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 reinvestments of all distributions, if any. The calculation includes only
those expenses charged directly to the Portfolio. Individual participants may incur administration or other fees related to the
management or maintenance of their individual participant accounts, which would have the effect of reducing a participant's net
return on their investments in the Portfolio.
The calculation includes only those expenses charged directly to the Portfolio, and does not include expenses charged to any
funds in which the Portfolio invests.
The accompanying notes are an integral part of these financial statements.
6
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Financial Highlights – Class 2
Selected data per unit outstanding throughout the Period
Net asset value, beginning of period
Income from investment operations:
Net investment income (a)
Net realized and unrealized gain
Total from investment operations
Net asset value, end of period
For the Period
January 18, 2012* to
December 31, 2012
$ 14.14
0.36
0.84
1.20
$ 15.34
Total Return (b)
8.49 %
Ratios and Supplemental Data:
Net assets, end of period (in thousands)
Ratios to average net assets (c), (d):
Net expenses
Gross expenses
Net investment income
Portfolio turnover rate
*
(a)
(b)
(c)
(d)
$
593
0.85 %
5.75 %
2.61 %
99.61 %
The inception date for Class 2 was January 18, 2012.
Net investment income has been computed based on average daily units outstanding.
Certain expenses of the Portfolio have been waived or reimbursed by the Sub-Advisor; without such waiver/ reimbursement of
expenses, the Portfolio's return would have been lower. 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 reinvestments of all distributions, if any. The calculation includes only
those expenses charged directly to the Portfolio. Individual participants may incur administration or other fees related to the
management or maintenance of their individual participant accounts, which would have the effect of reducing a participant's net
return on their investments in the Portfolio. A period of less than one year is not annualized.
The calculation includes only those expenses charged directly to the Portfolio, and does not include expenses charged to any
funds in which the Portfolio invests.
Annualized for a period of less than one year.
The accompanying notes are an integral part of these financial statements.
7
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements
December 31, 2012
____________________________________________________________________________________
(1)
Organization
Lazard/Wilmington Capital Allocator Series Collective Trust (the "Trust") is a trust organized under the laws of
the Commonwealth of Massachusetts and formed pursuant to a Declaration of Trust dated February 13, 2007, as
amended and restated on August 20, 2009 and April 1, 2012 and now governed by the laws of the State of
Delaware. The Trust is currently comprised of two portfolios: Lazard/Wilmington Capital Allocator Managed
Global Equity Portfolio (the "Portfolio") (formerly, Lazard/Wilmington Capital Allocator Global Growth
Portfolio) and Lazard/Wilmington Capital Allocator Managed Global Diversified Portfolio (formerly,
Lazard/Wilmington Capital Allocator Global Balanced Portfolio). This report includes only the results of the
Portfolio. The financial statements of Lazard/Wilmington Capital Allocator Managed Global Diversified
Portfolio are presented separately. The Portfolio's investment objective is to achieve long-term capital
appreciation by investing primarily in Underlying Funds (open-end and closed-end investment companies,
exchange-traded funds and exchanged-traded notes) that invest primarily in domestic small-, mid- and large cap
equity asset classes and international equity asset classes, including emerging markets. Please refer to the
financial statements of each company and fund in which the Portfolio invests for disclosure of its investment
objective, accounting policies and investment holdings. The Portfolio commenced operations on July 1, 2009.
The inception date for Class 2 was January 18, 2012.
Wilmington Trust Retirement and Institutional Services Company (the "Trustee"), an indirect subsidiary of M&T
Bank Corporation, is the Trustee of the Trust and is responsible for certain administrative functions. Lazard Asset
Management LLC (the "Sub-Advisor"), a wholly-owned subsidiary of Lazard Frères & Co. LLC, provides subadvisory services for the investment assets of the Portfolio. State Street Bank & Trust Company (the
“Custodian”) is the Custodian of the Portfolio and is responsible for custody of the Portfolio's assets and
providing transfer agent, record keeping and accounting functions.
According to the Offering Memorandum, the Portfolio initially will be divided into five 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, 2012, the Portfolio had two classes, Class 1 and Class 2.
(2)
Significant Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America (“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 from operations during the reporting
period. Actual results could differ from those estimates. Refer to the financial statements of each fund in which
the Portfolio invests for disclosure of its accounting policies and investment strategy.
Events or transactions occurring after year end through March 27, 2013, which is the date the financial
statements were available to be issued, have been evaluated by management in the preparation of the financial
statements. There has been no significant event which requires disclosures in the financial statements.
The following is a summary of the significant accounting policies consistently followed by the Portfolio in the
preparation of the financial statements:
8
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements (continued)
December 31, 2012
_______________________________________________________________________________________
(a) Valuation of Investments
The investment valuation policy of the Portfolio is to value investments at fair value, which is generally
determined as the amount that could reasonably be expected to be realized from an orderly disposition of
securities and other financial instruments over a reasonable period of time. By its nature, a fair value price is a
good faith estimate of the valuation in a current sale and may not reflect an actual market price.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the
Portfolio discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation
techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest
priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3
measurements). The three-level hierarchy of inputs is summarized below.
• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Portfolio has the
ability to access at the measurement date.
• Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or
indirectly, including inputs in markets that are not considered to be active.
• Level 3 – Prices determined using significant unobservable inputs. In situations where quoted prices or
observable inputs were unavailable (for example, when there was little or no market activity
for an investment at the end of the period), unobservable inputs may have been used. Unobservable
inputs reflect the Sub-Advisor’s own assumptions about the factors market participants would use
in valuing a portfolio instrument, and would be based on the best information available.
Equity investments for which market quotations are readily available (including registered investment companies
that are exchange traded) are valued at the last reported sale price on their principal exchange on valuation date,
or official close price for certain markets and are categorized as Level 1 in the hierarchy. If no sales are reported
for that day, investments are valued at the last published sale price, the mean between the last reported bid and
asked prices or at fair value as determined in good faith by the Trustee. Short-term investments (with 60 days or
less to maturity), if any, are stated at amortized cost, which approximates fair value investments in registered
investment companies (other than those that are exchange traded) or collective investment funds, if any, are
valued at their respective net asset value. Investments in registered investment companies are categorized as
Level 1 in the hierarchy, while short-term investments and investments in collective investment funds are
typically categorized as Level 2 in the hierarchy.
The Valuation Committee of the Sub-Advisor, which meets periodically under the direction of 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 analysts also will be considered. Under these circumstances, when quoted prices
for similar securities are used, securities are categorized as Level 2 in the hierarchy. When observable inputs are
limited and assumptions are used in determining fair value, securities are categorized as Level 3 in the hierarchy.
9
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements
December 31, 2012
____________________________________________________________________________________
If a significant event 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 net asset value 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 values
as determined by, or in accordance with procedures approved by, the Trustee.
Changes in valuation techniques may result in transfers into or out of the current assigned level within the
hierarchy. During the year ended December 31, 2012, there were no transfers into or out of Level 1 or Level 2.
The following is a summary of the inputs used, as of December 31, 2012, involving the Portfolio’s assets carried
at fair value. The inputs or methodologies used for valuing investments may not be an indication of the risks
associated with investing in those underlying funds.
Description
Assets:
Exchange-Traded Funds
Closed-End Investment
Management Company
Short-Term Investment
Total
Liabilities:
Other Financial Instruments*
Forward Currency
Contracts
Unadjusted Quoted
Prices in Active
Markets for Identical
Investments
Significant Other
Observable Inputs
Significant
Unobservable
Inputs
(Level 1)
(Level 2)
(Level 3)
$
1,651,310
$
—
$
21,290
—
1,672,600
$
—
Balance as of
December 31, 2012
$
—
$
1,651,310
$
—
127,761
127,761
$
—
—
—
$
21,290
127,761
1,800,361
$
(73)
$
—
$
(73)
* Other financial instruments are derivative instruments which are valued at their unrealized appreciation/depreciation.
(b) Foreign Currency Translation
The accounting records of the Portfolio are maintained in U.S. dollars. Portfolio securities and other assets and
liabilities denominated in a foreign currency are translated daily into U.S. dollars at the prevailing rates of
exchange. Purchases and sales of securities, income receipts and expense payments are translated into U.S.
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
represents net foreign currency gain (loss) from disposition of foreign currencies, currency gain (loss) realized
between the trade and settlement dates on securities transactions, and the difference between the amount of
dividends, interest and foreign withholding taxes recorded on the Portfolio’s accounting records and the U.S.
dollar equivalent amounts actually received or paid. Net change in unrealized appreciation (depreciation) on
foreign currency reflects the impact of changes in exchange rates on the value of assets and liabilities, other than
investments in securities, during the period.
10
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements (continued)
December 31, 2012
_______________________________________________________________________________________
The Portfolio may use forward foreign currency contracts to facilitate transactions in foreign securities or as a
hedge again either specific transactions or portfolio positions. Such contracts are valued based upon the
applicable forward exchange rates and any resulting unrealized gains or losses are recorded in the Portfolio’s
financial statements. The Portfolio records realized gains or losses at the time the forward contract is
extinguished by entry into a closing transaction or by delivery of the currency. Risks in foreign currency
contracts arise from the possible inability of counterparties to meet the contracts’ terms and from movements in
currency values.
(c) Cash and Cash Equivalents
Cash is held by the Custodian and, as contracted on behalf of the Portfolio, sweeps cash into the SSgA U.S.
Government Money Market Fund.
(d) Portfolio Securities Transactions and Investment Income
Portfolio securities transactions are accounted for on trade date. The cost of securities delivered and the net
realized gain (loss) on securities sold are determined using the identified cost basis. Dividend income is recorded
on the ex-dividend date or when the Portfolio becomes aware of dividend distributions. Distributions received
from underlying funds retain the character of income as earned by the underlying funds. Interest income is
recorded on an accrual basis.
(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. The participants are required to report their respective portion of the Portfolio's U.S.
taxable income or loss in their own income tax returns and are liable for any related taxes thereon. Accordingly,
no provision for federal income taxes is made in the financial statements of the Portfolio.
The Portfolio has adopted the authoritative guidance for uncertainty in income taxes and recognizes a tax benefit
from an uncertain position only if it is more likely than not that the position is sustainable, based solely on its
technical merits and consideration of the relevant taxing authority’s widely understood administrative practices
and precedents. If this threshold is met, the Portfolio measures the tax benefit as the largest amount of benefit
that is greater than fifty percent likely of being realized upon ultimate settlement. As of December 31, 2012,
management has reviewed the Portfolio's current tax position and has determined that no position for income tax
is required in the Portfolio's financial statements. The Sub-Advisor has reviewed the Portfolio’s tax positions for
all open tax years (current and prior), and has determined that no provision for income tax is required in the
Portfolio’s financial statements.
(f) Distribution to Participants
Net investment income and net realized gains are retained by the Portfolio.
11
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements (continued)
December 31, 2012
_______________________________________________________________________________________
(g) Accounting Pronouncement
In December 2011, the Financial Accounting Standards Board ("FASB") issued an amendment to GAAP that
requires additional information regarding financial instruments and derivative instruments that are offset or
subject to an enforceable master netting arrangement or similar agreement. In January 2013, the FASB issued an
additional amendment to GAAP that clarifies the scope of transactions that are subject to the disclosures about
offsetting. The amendments are effective, for the Portfolio, on January 1, 2013. The Trustee does not anticipate
that the adoption of the amendment will have a material effect on the Portfolio’s financial statements.
(3)
Sub-Advisor Agreement
Under 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 the Portfolio’s
investment objective and policies, including the purchase, retention and disposition of securities. The Portfolio
pays the Sub-Advisor an investment advisory fee at an annual rate of 0.60% of the average daily net assets for
Class 1 and Class 2. The investment advisory fees are accrued daily and paid quarterly. At December 31, 2012,
fees payable to the Sub-Advisor were $876.
The Sub-Advisor has voluntarily agreed to reduce its fees and, if necessary, reimburse the Portfolio if annualized
operating expenses exceed 0.80% and 0.85% of the average daily net assets for Class 1 and Class 2 units,
respectively. For the year ended December 31, 2012, the Sub-Advisor waived all of its fees and reimbursed the
Portfolio $65,680 for such excess expenses.
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 minimum quarter fee is $75,000
for the aggregate of the Portfolio, Lazard/Wilmington Capital Allocator Managed Global Diversified Portfolio,
Lazard/Wilmington Emerging Markets Portfolio and Lazard/Wilmington Emerging Markets Sudan Free Portfolio
($300,000 annual minimum fee). The Trustee fees are accrued daily and paid quarterly. At December 31, 2012,
fees payable to the Trustee were $403.
For certain classes of units, the following servicing fees are paid to third party administrators or other servicing
agents as compensation for certain plan administration and other related expenses associated with an investment
in units:
Class
Class 1
Class 2
Class 3
Servicing Fee
0.00 %
0.25
0.50
At December 31, 2012, servicing fees payable for Class 2 were $339.
(4)
Custody Agreement
The Custodian is responsible for the custody of the Portfolio’s assets and providing transfer agent, record
keeping and accounting functions. For these services the Portfolio pays the Custodian a per annum fee of 0.03%
12
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements (continued)
December 31, 2012
_______________________________________________________________________________________
on the first $50 million of net assets and 0.01% on net assets in excess of $50 million. The minimum annual fee
for the Portfolio is $24,000. In addition, the Portfolio also pays the Custodian holding fees and transaction fees
for its global custody services. At December 31, 2012, fees payable to the Custodian were $7,457.
(5)
Financial Instruments
The Portfolio transacts in derivative instruments including forward foreign currency contracts primarily for
trading purposes with the primary risk exposure being foreign exchange. The Portfolio's use of derivative
instruments involves risks different from, and possibly greater than, the risks associated with investing directly in
securities and other more traditional investments. Derivatives are subject to a number of risks, such as potential
changes in value in response to interest rate changes or other market developments or as a result of the
counterparty's credit quality and the risk that a derivative transaction may not have the anticipated effect.
Derivatives may also involve the risk of mispricing or improper valuation and the risk that changes in the value
of a derivative may not correlate perfectly with the asset, rate, or index underlying the derivative. Derivative
transactions can create investment leverage and may be highly volatile. Use of derivatives other than for hedging
purposes may be considered speculative. When the Portfolio invests in a derivative instrument, it may lose more
than the principal amount invested. Many derivative transactions are entered into "over the counter" (not on an
exchange or contract market); as a result, the value of such a derivative transaction will depend on the ability and
the willingness of the Portfolio's counterparty to perform its obligations under the transaction. A liquid secondary
market may not always exist for the Portfolio's derivative positions at any time. Although the use of derivatives is
intended to complement the Portfolio's performance, it may instead reduce returns and increase volatility. The
measurement of the risks associated with derivative instruments is meaningful only when all related and
offsetting transactions are considered. The Portfolio must set aside liquid assets or engage in other appropriate
measures to cover its obligations under these derivative instruments.
The Portfolio values derivatives at fair value as described below and recognizes changes in fair value currently in
its results of operations. Accordingly, the Portfolio does not follow hedge accounting, even for derivatives
employed as economic hedges.
(a) Forward Contracts
The Portfolio may purchase or sell currencies and/or engage in forward foreign currency transactions in order to
expedite settlement of Portfolio transactions and to manage currency risk. Forward foreign currency contracts are
traded in the inter-bank market conducted directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit requirement and no commissions are charged at
any stage for trades. The Portfolio will account for forward contracts by marking-to-market each day at current
forward contract values. The change in market value is recorded by the Portfolio as an unrealized gain or loss.
When the contract is closed, the Portfolio recognizes a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was closed. The Portfolio will only
enter into forward contracts to sell, for a fixed amount of U.S. dollars or other appropriate currency, an amount of
foreign currency, to the extent that the value of the short forward contract is covered by the underlying value of
securities denominated in the currency being sold. Alternatively, when the Portfolio enters into a forward contract
to sell an amount of foreign currency, the Portfolio’s Custodian will segregate assets in a segregated account of
the Portfolio in an amount not less than the value of the Portfolio’s total assets committed to the consummation
of such forward contracts. If the additional segregated assets placed in the segregated account decline, additional
cash or securities will be placed in the account on a daily basis so that the value of the account will equal the
13
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements (continued)
December 31, 2012
_______________________________________________________________________________________
amount of the Portfolio’s commitments with respect to such contracts.
(b) Fair Value of Derivative Instruments by Risk Category
There were two open forward foreign currency contracts as of December 31, 2012.
Effect of Derivative Instruments on the Statement of Assets and Liabilities – Gross unrealized depreciation on
forward foreign currency contracts:
Derivatives not accounted
for as hedging instruments
Liabilities
Forward foreign currency contracts
$
73
The following table sets forth by certain risk types the Portfolio’s gains (losses) related to derivative activities for
the fiscal year ended December 31, 2012. These gains (losses) should be considered in the context that derivative
contracts may have been executed to economically hedge securities and accordingly, gains or losses on derivative
contracts may offset losses or gains attributable to securities. These gains (losses) are included in “Net realized
gain (loss) from foreign currency transactions and forward foreign currency contracts” or “Net change in
unrealized appreciation (depreciation) on foreign currency translations and forward foreign currency contracts” in
the Statement of Operations:
Effect of Derivative Instruments on the Statement of Operations - Net Realized Gain (Loss) from Foreign Currency
Transactions and Forward Foreign Currency Contracts:
Net Realized Gain from
Foreign Currency Transactions and Forward
Foreign Currency Contracts
Derivatives not accounted for as
hedging instruments
Forward foreign currency contracts
$
80
Effect of Derivative Instruments on the Statement of Operations - Net Change in Unrealized Appreciation
(Depreciation) from Foreign Currency Transactions and Forward Foreign Currency Contracts:
Derivatives not accounted for as
hedging instruments
Net Unrealized Appreciation (Depreciation) from
Foreign Currency Transactions and Forward
Foreign Currency Contracts
Forward foreign currency contracts
$
(73)
During the year ended December 31, 2012, the Portfolio had an average notional amount of $51,146 for forward
foreign currency contracts.
14
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements (continued)
December 31, 2012
_______________________________________________________________________________________
(6)
Investment Transactions
Purchases and sales of securities, excluding short-term investments and including in-kind contributions and
redemptions, if any, for the year ended December 31, 2012 were $1,958,530 and $1,298,168, respectively.
(7)
Participants’ Transactions
The Portfolio offers units for sale and units may be redeemed at the class’ net asset value as of the close of each
business day. The issuance and redemption terms of the Portfolio are consistent with those of the underlying
funds.
For the year ended December 31, 2012, the unit transactions were as follows:
Units
Class 1
Units outstanding at beginning of year
Units sold
Units redeemed
Net increase in units
Units outstanding at end of year
Class 2*
Units outstanding at beginning of period
Units sold
Units redeemed
Net increase in units
Units outstanding at end of period
Dollar Amount
70,115
24,682
(19,229)
5,453
75,568
$
835,521
356,006
(276,329)
79,677
$
915,198
43,891
(5,255)
38,636
38,636
$
$
627,960
(73,252)
554,708
554,708
*The inception date for Class 2 was January 18, 2012.
Units in excess of 10% of Portfolio units at December 31, 2012 were held by three of the Portfolio’s unitholders
aggregated 88.94% of the Portfolio’s total units outstanding.
(8)
Concentration of Investment Risk
(a) Investing in Foreign Markets
The underlying funds may invest in securities of foreign entities and in instruments denominated in foreign
currencies which involve risks not typically associated with investments in domestic securities. Non-domestic
securities carry special risks, such as exposure to currency fluctuations, less developed or less efficient trading
markets, political instability, a lack of company information, differing auditing and legal standards, and,
potentially, less liquidity. The Portfolio’s investments in emerging market countries are exposed to additional
risks. The Portfolio’s performance will be influenced by political, social and economic factors affecting
companies in emerging market countries. 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.
15
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements (continued)
December 31, 2012
_______________________________________________________________________________________
(b) Underlying Funds
As this Portfolio may make investments in Underlying Funds, participants should consider the methods used to
value the Underlying Funds' investments.
The Underlying Fund's use of derivative instruments involves risks different from, and possibly greater than, the
risks associated with investing directly in securities and other more traditional investments. Derivatives are
instruments whose values are derived from underlying assets, indices, reference rates or a combination of these
factors. Derivatives are subject to a number of risks, such as potential changes in value in response to interest rate
changes or other market developments or as a result of the counterparty's credit quality and the risk that a
derivative transaction may not have the anticipated effect. Derivatives may also involve the risk of mispricing or
improper valuation and the risk that changes in the value of a derivative may not correlate perfectly with the
asset, rate, or index underlying the derivative. Derivative transactions can create investment leverage and may be
highly volatile. Use of derivatives other than for hedging purposes may be considered speculative. When the
Underlying Fund invests in a derivative instrument, it may lose more than the principal amount invested. Many
derivative transactions are entered into "over the counter" (not on an exchange or contract market); as a result, the
value of such a derivative transaction will depend on the ability and the willingness of the Underlying Fund's
counterparty to perform is obligations under the transaction. A liquid secondary market may not always exist for
the Underlying Fund's derivative positions at any time. Although the use of derivatives is intended to
complement the Underlying Fund's performance, it may instead reduce returns and increase volatility. The
measurement of the risks associated with derivative instruments is meaningful only when all related and
offsetting transactions are considered. The Underlying Funds must set aside liquid assets or engage in other
appropriate measures to cover their obligations under these derivative instruments.
The Underlying Funds value derivatives at fair value and recognize changes in fair value currently in their results
of operations. Accordingly, the Underlying Funds do not follow hedge accounting, even for derivatives employed
as economic hedges. Derivative instruments outstanding at year end, if any, are disclosed on the Portfolio of
Investments.
Futures Contracts
The Underlying Funds may use futures contracts to manage exposure to the market. Futures contracts involve, to
varying degrees, credit and market risks. The Underlying Funds enter into futures contracts only on exchanges or
boards of trade where the exchange or board of trade acts as the counterparty to the transaction. Thus, credit risk
on such transactions is limited to the failure of the exchange or board of trade. Losses in value may arise from
changes in the value of the underlying instruments or if there is an illiquid secondary market for the contracts. In
addition, there is the risk that there may not be an exact correlation between a futures contract and the underlying
index or security.
16
Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio
Notes to Financial Statements (concluded)
December 31, 2012
____________________________________________________________________________________
Forward Foreign Currency Contracts
The Underlying Funds may use forward foreign currency contracts to facilitate transactions in foreign securities,
to gain exposure to foreign currency or as a hedge against the foreign currency exposure of either specific
transactions or portfolio positions. When entering into a forward foreign currency contract, the Underlying Funds
agree to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed-upon future
date. Such contracts are valued based upon the difference in the forward exchange rates at the dates of entry into
the contracts and the forward rates at the reporting date. Most forward foreign currency contract transactions are
entered into “over the counter.” The Portfolio assumes the risk of unfavorable or unanticipated changes in the
values of the currencies underlying the transactions. Over-the-counter currency transactions are typically
uncollateralized, and the Portfolio may not be able to recover all or any of its loss on such transactions if the
counterparty should default. Many types of currency transactions are expected to continue to be traded over the
counter even after implementation of the clearing requirements under the Dodd- Frank Wall Street Reform and
Consumer Protection Act.
(9) Contingencies and Commitments
In the normal course of business the Portfolio enters into contracts that contain a variety of representations which
provide general indemnifications. The Portfolio’s maximum exposure under these agreements is unknown as this
would involve future claims that may be made against the Portfolio that have not yet occurred. However, based
on experience, the Portfolio expects the risk of loss to be remote.
17