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Lazard/Wilmington Emerging Markets

Sudan Free Portfolio

Annual Report

With Report of Independent Auditors

December 31, 2016

Lazard/Wilmington Emerging Markets Sudan Free Portfolio

Table of Contents

December 31, 2016

Page

Report of Independent Auditors 1

Portfolio of Investments 2-3

Statement of Assets and Liabilities 4

Statement of Operations 5

Statement of Changes in Net Assets 6

Financial Highlights 7

Notes to Financial Statements 8-13

PricewaterhouseCoopers LLP, 101 Seaport Boulevard, Suite 500, Boston, MA 02210 T: (617) 530 5000, F: (617) 530 5001, www.pwc.com/us

Report of Independent Auditors

To the Trustee of Lazard/Wilmington Emerging Markets Sudan Free Portfolio:

We have audited the accompanying financial statements of Lazard/Wilmington Emerging Markets Sudan Free Portfolio (“the Portfolio”), which comprise the statement of assets and liabilities, including the portfolio of investments, as of December 31, 2016, 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.

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 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 Emerging Markets Sudan Free Portfolio as of December 31, 2016, 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.

March 31, 2017

1


Portfolio of Investments December 31, 2016

The accompanying notes are an integral part of these financial statements.

Description Shares

Fair Value

Common Stocks | 95.3%

Argentina | 1.6%

YPF SA Sponsored ADR 251,218 $ 4,145,097 _____________

Brazil | 11.1%

Ambev SA ADR 682,095 3,349,086

Banco do Brasil SA 969,158 8,364,411

BB Seguridade Participacoes SA 490,870 4,268,173

CCR SA 786,400 3,856,252

Cielo SA 646,529 5,540,202

Localiza Rent a Car SA 177,075 1,861,771 Natura Cosmeticos SA 162,300 1,147,923 _____________

28,387,818 _____________

China | 15.8%

AAC Technologies Holdings, Inc. 264,500 2,402,995

Baidu, Inc. Sponsored ADR 39,200 6,444,872

China Construction Bank Corp., Class H 15,717,600 12,100,596

China Mobile, Ltd. Sponsored ADR 123,070 6,452,560

China Shenhua Energy Co., Ltd., Class H 1,024,202 1,928,345

CNOOC, Ltd. 1,431,000 1,790,019

NetEase, Inc. ADR 31,680 6,821,971 Weichai Power Co., Ltd., Class H 1,633,423 2,515,065 _____________

40,456,423 _____________

Egypt | 0.8%

Commercial International Bank Egypt SAE GDR 582,567 2,126,370 _____________

Hong Kong | 0.3%

Huabao International Holdings, Ltd. 1,968,000 834,963 _____________

Hungary | 2.0%

OTP Bank Nyrt. 179,504 5,132,401 _____________

India | 8.9%

Axis Bank, Ltd. 627,576 4,163,805

Bajaj Auto, Ltd. 55,033 2,135,803

HCL Technologies, Ltd. 251,208 3,054,322

Hero MotoCorp, Ltd. 77,575 3,466,015

Punjab National Bank 1,414,634 2,401,147 Tata Consultancy Services, Ltd. 219,152 7,641,582 _____________

22,862,674 _____________

Indonesia | 5.7%

PT Astra International Tbk 5,395,900 3,314,238

PT Bank Mandiri (Persero) Tbk 5,085,097 4,368,900

PT Semen Indonesia (Persero) Tbk 2,222,900 1,513,832 PT Telekomunikasi Indonesia (Persero) Tbk

Sponsored ADR 186,400 5,435,424 _____________

14,632,394

Description Shares

Fair Value

Malaysia | 0.6%

British American Tobacco Malaysia Berhad 161,100 $ 1,601,663 ____________

Mexico | 3.2%

America Movil SAB de CV, Class L Sponsored ADR 328,692 4,131,658

Grupo Mexico SAB de CV, Series B 810,311 2,200,346 Kimberly-Clark de Mexico SAB de CV,

Series A 1,004,100 1,808,186 ____________

8,140,190 ____________

Pakistan | 2.5%

Habib Bank, Ltd. 1,016,900 2,652,465

Oil & Gas Development Co., Ltd. 818,378 1,297,644 Pakistan Petroleum, Ltd. 1,294,072 2,343,277 ____________

6,293,386 ____________

Philippines | 0.8%

PLDT, Inc. Sponsored ADR 70,800 1,950,540 ____________

Russia | 10.1%

ALROSA PAO 1,519,325 2,401,150

Gazprom PJSC Sponsored ADR 491,230 2,480,711

LUKOIL PJSC Sponsored ADR 95,497 5,357,382

Magnit PJSC Sponsored GDR 38,726 1,709,753

Mobile TeleSystems PJSC Sponsored ADR 417,775 3,805,930 Sberbank of Russia PJSC 3,572,939 10,082,509 ____________

25,837,435 ____________

South Africa | 8.6%

Bid Corp., Ltd. 11,490 205,099

Imperial Holdings, Ltd. 187,009 2,484,239

Life Healthcare Group Holdings, Ltd. 706,122 1,676,132

Nedbank Group, Ltd. 133,988 2,323,223

PPC, Ltd. 1,737,147 699,476

Sanlam, Ltd. 461,905 2,115,505

Shoprite Holdings, Ltd. 289,724 3,617,080

Standard Bank Group, Ltd. 225,482 2,491,446

The Bidvest Group, Ltd. 180,315 2,379,692

Vodacom Group, Ltd. 185,909 2,062,986 Woolworths Holdings, Ltd. 397,205 2,054,027 ____________

22,108,905 ____________

South Korea | 12.8%

Coway Co., Ltd. 34,064 2,490,356

Hanwha Life Insurance Co., Ltd. 361,941 1,956,843

Hyundai Mobis Co., Ltd. 17,693 3,867,323

KB Financial Group, Inc. 112,209 3,976,275

KT&G Corp. 16,105 1,346,750

Samsung Electronics Co., Ltd. 6,354 9,479,970

Shinhan Financial Group Co., Ltd. 150,526 5,639,428

2


Portfolio of Investments (concluded) December 31, 2016


Description Shares

Fair

Value

SK Hynix, Inc. 108,508 $ 4,015,820 _____________

32,772,765 _____________

Taiwan | 4.7%

Hon Hai Precision Industry Co., Ltd. 773,478 2,020,753 Taiwan Semiconductor Manufacturing

Co., Ltd. 1,767,158 9,951,881 _____________

11,972,634 _____________

Thailand | 1.4%

Kasikornbank Public Co. Ltd. 374,300 1,855,273 The Siam Cement Public Co. Ltd. 124,000 1,724,410 _____________

3,579,683 _____________

Turkey | 4.4%

Akbank TAS 1,106,359 2,453,068

KOC Holding AS 503,506 1,970,111

Tupras-Turkiye Petrol Rafinerileri AS 93,229 1,870,184

Turk Telekomunikasyon AS 674,563 1,009,865

Turkcell Iletisim Hizmetleri AS 637,341 1,761,908 Turkiye Is Bankasi AS, C Shares 1,409,618 2,070,323 _____________

11,135,459 _____________

Total Common Stocks (Cost $244,096,997) 243,970,800 _____________

Short-Term Investment | 4.8%

State Street Institutional U.S. Government Money Market Fund, Administration Class, 0.17% (7 day yield) (Cost $12,362,088) 12,362,088 12,362,088 _____________

Total Investments | 100.1% (Cost $256,459,085) $ 256,332,888

Liabilities in Excess of Cash and Other Assets | (0.1)% (224,142) _____________

Net Assets | 100.0% $ 256,108,746 _____________ _____________

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): Auto Components 1.5 % Automobiles 3.5 Banks 28.2 Beverages 1.3 Chemicals 0.3 Construction Materials 1.5 Distributors 1.0 Diversified Telecommunication Services 2.5 Electronic Equipment, Instruments & Components 1.7 Food & Staples Retailing 2.2 Health Care Providers & Services 0.7 Household Durables 1.0 Household Products 0.7 Industrial Conglomerates 1.7 Insurance 3.3 Internet Software & Services 5.2 IT Services 6.3 Machinery 1.0 Metals & Mining 1.8 Multiline Retail 0.8 Oil, Gas & Consumable Fuels 8.3 Personal Products 0.4 Road & Rail 0.7 Semiconductors & Semiconductor Equipment 5.5 Technology Hardware, Storage & Peripherals 3.7 Tobacco 1.1 Transportation Infrastructure 1.5 Wireless Telecommunication Services 7.9

Subtotal 95.3 Short-Term Investment 4.8

Total Investments 100.1 %

3



Statement of Assets and Liabilities December 31, 2016

Assets

Investments in securities, at fair value (cost $256,459,085) $ 256,332,888

Foreign currency, at fair value (cost $60,067) 60,032

Cash 10

Receivables for:

Investments sold 594,504

Dividends 209,526

Total Assets 257,196,960

Liabilities

Payables for:

Investment advisory fees (Note 4) 532,047

Investments purchased 220,586

Foreign capital gains taxes 191,500

Trustee fees (Note 4) 64,361

Custodian fees (Note 5) 48,448

Professional services 28,945

Unitholders' services fees (Note 5) 2,327

Total Liabilities 1,088,214

Net Assets $ 256,108,746

Class A

Net Assets $ 256,108,746

Units Outstanding 16,251,391

Net Asset Value per Unit $ 15.76

4



Statement of Operations For the Year Ended December 31, 2016

Investment Income (Loss)

Income

Dividends (net of foreign withholding taxes of $825,148) $ 5,937,449

Total investment income 5,937,449

Expenses

Investment advisory fees (Note 4) 2,133,906

Custodian fees (Note 5) 252,755

Trustee fees (Note 4) 224,622

Professional services 62,420

Unitholders' services fees (Note 5) 14,125

Total gross expenses 2,687,828

Investment advisory fees waived (Note 4) (104,678)

Total net expenses 2,583,150

Net investment income (loss) 3,354,299

Net Realized and Unrealized Gain (Loss) on Investments and Foreign

Currency Transactions

Net realized gain (loss) on:

Investments (net of foreign capital gains taxes of $108,122) (8,546,653)

Foreign currency transactions (105,690)

Total net realized gain (loss) on investments and foreign currency transactions (8,652,343)

Net change in unrealized appreciation (depreciation) on:

Investments (includes net change in unrealized appreciation (depreciation) of foreign

capital gains taxes of $20,556) 47,883,879

Foreign currency translations 6,209

Total net change in unrealized appreciation (depreciation) on investments and foreign

currency translations 47,890,088

Net realized and unrealized gain (loss) on investments and foreign currency transactions 39,237,745

Net increase (decrease) in net assets resulting from operations $ 42,592,044

5



Statement of Changes in Net Assets For the Year Ended December 31, 2016

Increase (Decrease) in Net Assets

Operations:

Net investment income (loss) $ 3,354,299

Net realized gain (loss) on investments and foreign currency transactions (8,652,343)

Net change in unrealized appreciation (depreciation) on investments and

foreign currency translations 47,890,088

Net increase (decrease) in net assets resulting from operations 42,592,044

Unitholder Transactions:

Proceeds from units sold 39,063,400

Cost of units redeemed (1,564,000)

Net increase (decrease) in net assets from unitholder transactions 37,499,400

Total increase (decrease) in net assets 80,091,444

Net assets at beginning of year 176,017,302

Net assets at end of year $ 256,108,746

Changes in Units:

Class A

Units outstanding at beginning of year 13,550,636

Units sold 2,820,765

Units redeemed (120,010)

Net increase (decrease) in units 2,700,755

Units outstanding at end of year 16,251,391

6



Financial Highlights - Class A Selected data per unit outstanding throughout the year ended December 31, 2016

Net asset value, beginning of year $ 12.99

Income (loss) from investment operations:

Net investment income (loss) (a) 0.22

Net realized and unrealized gain (loss) 2.55

Total from investment operations 2.77

Net asset value, end of year $ 15.76

Total Return (b) 21.32 %

Ratios and Supplemental Data:

Net assets, end of year (in thousands) $ 256,109

Ratios to average net assets (c):

Net expenses 1.15 %

Gross expenses 1.20 %

Net investment income (loss) 1.49 %

(a) Net investment income (loss) has been computed based on the average daily units outstanding.

(b)

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 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 capital transactions and fees.

7


Notes to Financial Statements

December 31, 2016

(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 Trust is currently comprised of two

portfolios: Lazard/Wilmington Emerging Markets Portfolio and Lazard/Wilmington Emerging Markets Sudan Free Portfolio (the

"Portfolio"). This report includes only the financial statements of the Portfolio. The financial statements of Lazard/Wilmington

Emerging Markets Portfolio 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 ("WTNA"), 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.

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, 2016, the

Portfolio had one funded class, Class A.

(2) Significant Accounting Policies The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States

of America (“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 Market values for securities listed on the New York Stock Exchange ("NYSE"), NASDAQ national market or other US or foreign

exchanges or markets are generally based on the last reported sales price on the exchange or market on which the security is

principally traded on each valuation date; securities not traded on the valuation date are valued at the most recent quoted bid price. The Portfolio values NASDAQ-traded securities at the NASDAQ Official Closing Price, which may not be the last reported sales

price in certain instances. 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 Europe, Latin and South America and Far East securities exchanges and in over-the-counter markets

ordinarily is completed well before the close of business on each business day in New York (i.e., a day on which the NYSE is open).

In addition, European or Far Eastern 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.

8


Notes to Financial Statements (continued)

December 31, 2016

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 on 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 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 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 unrealized) from the

applicable portfolio securities. (c) Foreign Currency Translation 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 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 US

dollar equivalent amounts actually received or paid. Net change in unrealized appreciation (depreciation) on foreign currency

translations 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 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 interpretation of country-specific taxation of dividend income and related amounts reclaimable.

(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 unitholders

are required to report their respective portion of the Portfolio’s US 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.

9



December 31, 2016

Management has analyzed the Portfolio’s tax positions in its major jurisdictions. Based on this review, the Portfolio has identified

uncertain tax positions which may give rise to exposure in various non-US jurisdictions in which it trades, such exposure principally

arising from capital gains withholding taxes. In each case, the application of the tax law is uncertain. Management concluded that such

uncertain tax positions are more-likely-than-not to be sustained upon examination. Therefore, management has concluded that no

liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on tax returns filed for open tax years

(2013-2015), or expected to be taken in the Portfolio’s 2016 tax returns. (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 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, less all liabilities, by the total number of Portfolio units outstanding.

(3) Short Term Investment

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, which is included in the Portfolio of Investments.

(4) Sub-Advisor Fees and Expenses

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 the Portfolio’s investment objectives and policies,

including the purchase, retention and disposition of securities. For its services provided to the Portfolio, the Sub-Advisor earns an

investment advisory fee at an annual rate of 0.95% of the average daily net assets of Class A. The investment advisory fees are accrued

daily and paid quarterly. The Sub-Advisor has voluntarily agreed to reduce its fees and, if necessary, reimburse the Portfolio if annualized operating expenses,

exclusive of taxes, brokerage, interest on borrowings, fees and expenses of “Acquired Funds” and extraordinary expenses, and

excluding other transaction fees, but including the management fee stated in the Sub-Advisor Agreement between the Sub-Advisor

and the Portfolio, exceed 1.15% of the average daily net assets of Class A. 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)).

10



December 31, 2016

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, subject to a minimum quarterly fee of $75,000 for the aggregate of the Portfolio, Lazard/Wilmington

Emerging Markets Portfolio, Lazard/Wilmington Capital Allocator Managed Global Equity Portfolio, Lazard/Wilmington Capital

Allocator Managed Global Diversified Portfolio and Lazard/Wilmington Capital Allocator Managed Global Income Portfolio. The

trustee fees are accrued daily and paid quarterly. (5) Custody Agreement

The Custodian is responsible for the custody of the Portfolio’s assets and providing transfer agent, recordkeeping and accounting

functions. For these services, the Portfolio pays the Custodian a per annum fee of 0.03% on the first $50 million of net assets and

0.01% on net assets in excess of $50 million. The minimum annual custody fee for the Portfolio is $24,000. The Portfolio also pays

the Custodian holding fees and transaction fees for its global custody services. In addition, the Custodian receives a monthly account

services fee computed on the basis of the number of unitholder accounts it maintains for the Portfolio during the month, and is

reimbursed for certain out-of-pocket expenses. The custodian and unitholders' services fees are accrued daily and paid monthly. (6) 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, 2016, realized gain (loss) on sales of securities was reported net of $108,122 of such capital gains taxes. At

December 31, 2016, unrealized appreciation (depreciation) on investments includes a deferred tax liability of $191,500 based on

unrealized appreciation on applicable investments in securities held at year end. The net change in unrealized appreciation

(depreciation) on investments for 2016 includes net change in unrealized appreciation (depreciation) of foreign capital gains taxes of

$20,556.

(7) Unitholders' Transactions The Portfolio offers units for sale and redemption of its units at the NAV of Class A as of the close of each business day. Refer to

Statement of Changes in Net Assets for unitholder activities for the year. (8) 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.

11



December 31, 2016

(b) Emerging Market Risk

Emerging market countries can 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.

(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 Sub-Advisor does not intend to actively hedge the Portfolio’s foreign currency exposure.

(d) Unitholder Concentration Risk Units in excess of 10% of Portfolio units at December 31, 2016 were held by two of the Portfolio’s unitholders and aggregated to

94.08% of the Portfolio’s total units outstanding.

(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. (9) Contractual Obligations

The Portfolio enters into contracts in the normal course of business that contain a variety of indemnifications. 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.

(10) 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:

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Notes to Financial Statements (concluded)

December 31, 2016

• 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.

The following table summarizes the valuation of the Portfolio’s assets and liabilities by each fair value hierarchy level as of December

31, 2016:

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, 2016

Common Stocks*

Russia $ 13,353,776 $ 12,483,659 $ — $ 25,837,435

Other 218,133,365 — — 218,133,365 Short-Term Investment 12,362,088 — — 12,362,088

Total $ 243,849,229 $ 12,483,659 $ — $ 256,332,888

* Please refer to Portfolio of Investments for portfolio holdings by country and industry.

The Portfolio recognizes all transfers between levels as though they were transferred at the beginning of the reporting period. There

were no transfers into or out of Levels 1, 2 or 3 during the year ended December 31, 2016.

(11) Subsequent Events Management has evaluated subsequent events affecting the Portfolio through March 31, 2017, 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.

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