Securities Act File No. 333-22309
Investment Company Act File No. 811-08071
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. 1 /X/
Post-Effective Amendment No. __ / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. / /
(Check appropriate box or boxes)
LAZARD RETIREMENT SERIES, INC.
(Exact Name of Registrant as Specified in Charter)
30 Rockefeller Plaza, New York, New York 10020
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 632-6400
William G. Butterly III, Esq.
30 Rockefeller Plaza
New York, New York 10020
(Name and Address of Agent for Service)
copy to:
Stuart H. Coleman, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement is declared effective.
<PAGE>
LAZARD RETIREMENT SERIES, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part B of
Form N-1A Caption Page
1 Cover Cover Page
2 Synopsis 2
3 Condensed Financial Information 5
4 General Description of Registrant 6
5 Management of the Fund 19
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 25
7 Purchase of Securities Being Offered 22
8 Redemption or Repurchase 22
9 Pending Legal Proceedings *
Items in
Part B of
FORM N-1A
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-3
14 Management of the Fund B-15
15 Control Persons and Principal Holders
of Securities *
16 Investment Advisory and Other Services B-17
17 Brokerage Allocation B-21
18 Capital Stock and Other Securities B-28
19 Purchase, Redemption and Pricing of
Securities Being Offered B-20, B-22
20 Tax Status B-25
21 Underwriters *
22 Calculations of Performance Data B-27
23 Financial Statements *
Items in
Part C of
FORM N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-2
26 Number of Holders of Securities C-2
27 Indemnification C-2
28 Business and Other Connections of
Investment Adviser C-3
29 Principal Underwriters C-14
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-15
- ---------
*Omitted since answer is negative or inapplicable.
<PAGE>
MAY 20, 1997
PROSPECTUS
LAZARD RETIREMENT
SERIES, INC.
Lazard Retirement Equity Portfolio
Lazard Retirement Small Cap Portfolio
Lazard Retirement Bantam Value Portfolio
Lazard Retirement Global Equity Portfolio
Lazard Retirement International Equity Portfolio
Lazard Retirement International Small Cap Portfolio
Lazard Retirement Emerging Markets Portfolio
Lazard Retirement International Fixed-Income Portfolio
Lazard Retirement Strategic Yield Portfolio
30 Rockefeller Plaza
New York, New York 10020
(800) 823-6300
Investors are advised to read this Prospectus and retain it for future
reference.
This Prospectus sets forth concisely information about the Fund and the
Portfolios that a prospective investor should know before investing in a
Portfolio. A Statement of Additional Information dated May 20, 1997, which may
be revised from time to time, containing additional and more detailed
information about the Portfolios, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus. The
Securities and Exchange Commission maintains a Web site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. The Statement of Additional
Information is available without charge and can be obtained by writing or
calling the Fund at the address and telephone number printed above.
- ------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
Lazard Retirement Series, Inc. (the "Fund") is a no-load, open-end
management investment company, known as a mutual fund. By this Prospectus, the
Fund is offering shares of nine portfolios (each, a "Portfolio"), WHICH ARE
OFFERED ONLY TO QUALIFIED PENSION AND RETIREMENT PLANS AND VARIABLE ANNUITY AND
VARIABLE LIFE INSURANCE SEPARATE ACCOUNTS ESTABLISHED BY INSURANCE COMPANIES TO
FUND VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE INSURANCE POLICIES. Shares of
the Portfolios bear certain costs pursuant to a Distribution and Servicing Plan
adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "1940 Act"). For offers to separate accounts, this Prospectus
should be read in conjunction with the prospectus of the separate accounts of
the specific insurance product which should precede or accompany this
Prospectus.
Lazard Asset Management (the "Investment Manager"), a division of Lazard
Freres & Co. LLC ("Lazard Freres"), professionally manages each Portfolio.
The names and investment objectives of the Portfolios are as follows:
LAZARD RETIREMENT EQUITY PORTFOLIO seeks capital appreciation. This
Portfolio invests primarily in equity securities of companies with relatively
large capitalizations that the Investment Manager considers inexpensively priced
relative to the return on total capital or equity.
LAZARD RETIREMENT SMALL CAP PORTFOLIO seeks capital appreciation. This
Portfolio invests primarily in equity securities of companies with market
capitalizations under $1 billion that the Investment Manager considers
inexpensively priced relative to the return on total capital or equity.
LAZARD RETIREMENT BANTAM VALUE PORTFOLIO seeks capital appreciation. This
Portfolio invests primarily in equity securities of companies with market
capitalizations under $500 million that the Investment Manager considers
inexpensively priced relative to the return on total capital or equity and which
it believes are likely to increase market capitalization as a result of growth
or are likely to be the subject of acquisitions or other events.
LAZARD RETIREMENT GLOBAL EQUITY PORTFOLIO seeks capital appreciation. This
Portfolio invests primarily in equity securities of companies with relatively
large capitalizations that are located anywhere in the world which the
Investment Manager considers inexpensively priced relative to the return on
total capital or equity.
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO seeks capital
appreciation. This Portfolio invests primarily in the equity securities of
non-United States companies that the Investment Manager considers inexpensively
priced relative to the return on total capital or equity.
LAZARD RETIREMENT INTERNATIONAL SMALL CAP PORTFOLIO seeks capital
appreciation. This Portfolio invests primarily in equity securities of
non-United States companies with market capitalizations under $1 billion that
the Investment Manager considers inexpensively priced relative to the return on
total capital or equity.
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO seeks capital appreciation.
This Portfolio invests primarily in equity securities of non-United States
issuers located, or doing significant business, in emerging market countries
that the Investment Manager considers inexpensively priced relative to the
return on total capital or equity.
LAZARD RETIREMENT INTERNATIONAL FIXED- INCOME PORTFOLIO seeks high total
return, consisting of current income and capital appreciation, consistent with
what the Investment Manager considers to be prudent investment risk. This
Portfolio invests primarily in foreign fixed-income securities of varying
maturities.
LAZARD RETIREMENT STRATEGIC YIELD PORTFOLIO seeks total return, consisting
of current income and capital appreciation. This Portfolio invests principally
in high- yielding domestic and foreign fixed-income securities. These
securities, which are often referred to as "junk bonds," are subject to greater
risk of loss of principal and interest than higher rated securities and are
considered to be predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal.
<PAGE>
TABLE OF CONTENTS
Annual Operating Expenses................................................
Description of the Portfolios............................................
General...............................................................
Investment Objectives and Policies....................................
Investment Considerations and Risks...................................
Management of the Fund and the Portfolios................................
Purchase of Shares.......................................................
Redemption of Shares.....................................................
Distribution and Servicing Plan..........................................
Dividends and Distributions..............................................
Taxation.................................................................
Organization and Description of Capital Stock............................
Performance Information..................................................
Appendix A...............................................................
Appendix B...............................................................
<PAGE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO
MANAGEMENT 12B-1 OTHER OPERATING
FEES FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
EQUITY PORTFOLIO .75% .25% .50% 1.50%
INTERNATIONAL EQUITY .75% .25% .60% 1.60%
PORTFOLIO
INTERNATIONAL .75% .25% .50% 1.50%
FIXED-INCOME PORTFOLIO
STRATEGIC YIELD PORTFOLIO .75% .25% .50% 1.50%
SMALL CAP PORTFOLIO .75% .25% .50% 1.50%
INTERNATIONAL SMALL CAP PORTFOLIO .75% .25% .80% 1.80%
EMERGING MARKETS PORTFOLIO 1.00% .25% .55% 1.80%
GLOBAL EQUITY PORTFOLIO .75% .25% .60% 1.60%
BANTAM VALUE PORTFOLIO .75% .25% .50% 1.50%
</TABLE>
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming a
5% annual return (cumulatively through the end of each time period):
1 YEAR 3 YEARS
------ -------
EQUITY PORTFOLIO $15 $48
INTERNATIONAL EQUITY PORTFOLIO $16 $51
INTERNATIONAL FIXED-INCOME PORTFOLIO $15 $48
STRATEGIC YIELD PORTFOLIO $15 $48
SMALL CAP PORTFOLIO $15 $48
INTERNATIONAL SMALL CAP PORTFOLIO $18 $57
EMERGING MARKETS PORTFOLIO $18 $57
GLOBAL EQUITY PORTFOLIO $16 $51
BANTAM VALUE PORTFOLIO $15 $48
.............................................................................
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED REPRESENTATIVE OF
FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE INDICATED.
MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH PORTFOLIO'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%
.............................................................................
The purpose of the foregoing table is to assist investors in understanding
the costs and expenses borne by each Portfolio, the payment of which will reduce
investors' annual return. The expenses noted above are based on estimated
amounts for the current fiscal year. The information in the foregoing table does
not reflect deduction of account fees and charges to separate accounts or
related insurance policies that may be imposed by participating insurance
companies. For a further description of the various costs and expenses incurred
in the operation of the Portfolios, see "Management of the Fund and the
Portfolios" and "Distribution and Servicing Plan."
DESCRIPTION OF THE PORTFOLIOS
GENERAL
Shares of the Portfolios are offered only to variable annuity and variable
life insurance separate accounts established by affiliated and unaffiliated life
insurance companies ("Participating Insurance Companies") to fund variable
annuity contracts ("VA contracts") and variable life insurance policies ("VLI
policies" and, together with VA contracts, "Policies"). The Policies are
described in the separate prospectuses and statements of additional information
issued by the Participating Insurance Companies over which the Fund assumes no
responsibility. Portfolio shares also are offered to qualified pension and
retirement plans and accounts permitting accumulation of assets on a
tax-deferred basis ("Eligible Plans" or "Plans").
Differences in tax treatment or other considerations may cause the
interests of Policy owners and Eligible Plan participants to conflict, although
the Fund currently does not foresee any disadvantages to Policy owners or
Eligible Plan participants arising therefrom. Nevertheless, the Fund's Board of
Directors intends to monitor events to identify any material conflicts which may
arise and to determine what action, if any, should be taken in response thereto.
Resolution of an irreconcilable conflict might result in the withdrawal of a
substantial amount of a Portfolio's assets which could adversely affect the
Portfolio's net asset value per share.
INVESTMENT OBJECTIVES AND POLICIES
Each Portfolio has a different investment objective which it pursues
through separate investment policies as described herein. The differences in
objectives and policies among the Portfolios determine the types of portfolio
securities in which each Portfolio invests, and can be expected to affect the
degree of risk to which each Portfolio is subject and its yield or return. The
following investment objectives and related policies and activities of each of
the Portfolios, except as otherwise indicated, are not fundamental and may be
changed by the Board of Directors of the Fund without the approval of the
shareholders. There can be no assurance that any of the Portfolios will achieve
its respective investment objective. The types of portfolio securities in which
each Portfolio may invest are described in greater detail below and under
"Appendix A--Certain Portfolio Securities."
EQUITY PORTFOLIOS--These portfolios will invest principally in equity
securities. These Portfolios will engage in a value- oriented search for equity
securities before they have attracted wide investor interest. The Investment
Manager attempts to identify inexpensive securities through traditional measures
of value, including low price to earnings ratio, high yield, unrecognized
assets, potential for management change and/or the potential to improve
profitability. The Investment Manager focuses on individual stock selection (a
"bottom-up" approach) rather than on forecasting stock market trends (a
"top-down" approach). Risk is tempered by diversification of investments.
EQUITY PORTFOLIO
The Equity Portfolio is a non-diversified portfolio the investment
objective of which is to seek capital appreciation. The Portfolio invests
primarily in equity securities of companies with relatively large
capitalizations that the Investment Manager considers inexpensively priced
relative to the return on total capital or equity.
Under normal market conditions, the Portfolio will invest at least 65% of
its total assets in equity securities, including common stocks, preferred stocks
and convertible securities, as well as warrants to purchase such securities. In
addition, at times judged by the Investment Manager to be appropriate, the
Portfolio may hold up to 20% of its total assets in U.S. Government securities
and debt obligations of domestic corporations rated Baa or better by Moody's
Investors Service, Inc. ("Moody's") or BBB or better by Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, L.P. ("Fitch") and Duff & Phelps
Credit Rating Co. ("Duff" and together with Moody's, S&P and Fitch, the "Rating
Agencies"). Obligations rated Baa /BBB by one or more Rating Agencies are
considered investment grade obligations that may have speculative
characteristics. See "Appendix A--Certain Portfolio Securities--Ratings" for a
description of the ratings of the Rating Agencies. The Portfolio also may invest
without limitation in short-term money market instruments of the types described
in "Appendix A--Money Market Instruments."
The Portfolio also may invest up to 15% of its total assets in foreign
equity or debt securities. See "Investment Considerations and Risks--Foreign
Securities."
In addition, the Portfolio may engage in various investment techniques,
such as options and futures transactions and lending portfolio securities. For a
discussion of the investment techniques and their related risks, see "Investment
Considerations and Risks" and "Appendix A--Investment Techniques" below and
"Investment Objectives and Management Policies-- Management Policies" in the
Statement of Additional Information.
SMALL CAP PORTFOLIO
The Small Cap Portfolio is a non-diversified portfolio the investment
objective of which is to seek capital appreciation. The Portfolio invests
primarily in equity securities of United States companies with market
capitalizations under $1 billion that the Investment Manager considers
inexpensively priced relative to the return on total capital or equity. Market
capitalization of a company's stock is its market price per share times the
number of shares outstanding. The equity securities in which the Portfolio may
invest include common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, rights and warrants and American and Global
Depositary Receipts.
Investments generally are made in equity securities of companies which in
the Investment Manager's opinion have one or more of the following
characteristics (the "Small Cap Factors"): (i) are undervalued relative to their
earnings power, cash flow, and/or asset values; (ii) have an attractive
price/value relationship (i.e., have high returns on equity and/or assets with
correspondingly low price-to-book and/or price-to-asset value as compared to the
market generally or the companies' industry groups in particular), with
expectations that some catalyst will cause the perception of value to change
within a 24-month time horizon; (iii) have experienced significant relative
under performance and are out of favor due to a set of circumstances which are
unlikely to harm a company's franchise or earnings power over the longer term;
(iv) have low projected price-to-earnings or price-to-cash-flow multiples
relative to their industry peer group and/or the market in general; (v) have the
prospect, or the industry in which the company operates has the prospect, to
allow it to be become a larger factor in the business and receive a higher
valuation as such; (vi) have significant financial leverage but have high levels
of free cash flow used to reduce leverage and enhance shareholder value; and
(vii) have a relatively short corporate history with the expectation that the
business may grow to generate meaningful cash flow and earnings over a
reasonable investment horizon.
Under normal conditions, the Portfolio will invest at least 65% of the
value of its total assets in the small capitalization equity securities
described above. Assets not invested in such small capitalization equity
securities generally will be invested in large capitalization equity securities
or debt securities, including cash equivalents. The Portfolio also may invest up
to 15% of its total assets in foreign equity or debt securities. See "Investment
Considerations and Risks--Foreign Securities."
The Investment Manager believes that the issuers of small capitalization
stocks often have sales and earnings growth rates which exceed those of larger
companies, and that such growth rates, in turn, may be reflected in more rapid
share price appreciation. However, investing in smaller capitalization stocks
can involve greater risk than is customarily associated with larger, more
established companies. See "Investment Considerations and Risks--Equity
Securities."
When, in the Investment Manager's judgment, business or financial
conditions warrant, the Portfolio may assume a temporary defensive position and
invest without limitation in large capitalization companies or short-term money
market instruments of the types described in "Appendix A--Money Market
Instruments" or hold its assets in cash.
In addition, the Portfolio may engage in various investment techniques,
such as options and futures transactions and lending portfolio securities. For a
discussion of the investment techniques and their related risks, see "Investment
Considerations and Risks" and "Appendix A--Investment Techniques" below and
"Investment Objectives and Management Policies--Management Policies" in the
Statement of Additional Information.
BANTAM VALUE PORTFOLIO
The Bantam Value Portfolio is a non- diversified portfolio the investment
objective of which is to seek capital appreciation. The Portfolio will invest
primarily in equity securities of companies with market capitalizations under
$500 million that the Investment Manager considers inexpensively priced relative
to the return on total capital or equity. The equity securities in which the
Portfolio may invest include common stocks, preferred stock, securities
convertible into or exchangeable for common stocks, rights and warrants and
American and Global Depositary Receipts. Investments are generally made in
equity securities of companies which, in the Investment Manager's opinion, have
one or more of the characteristics of the Small Cap Factors, as well as a
potential for increasing recognition, market capitalization and value. See
"Small Cap Portfolio" above.
Under normal market conditions, the Portfolio will invest at least 65% of
the value of its total assets in the small capitalization equity securities
described above. Assets not invested in such small capitalization equity
securities generally will be invested in large capitalization equity securities
or debt securities, including cash equivalents. For a description of the risks
associated with investing in small capitalization equity securities, see
"Investment Considerations and Risks-- Equity Securities."
When, in the Investment Manager's judgment, business or financial
conditions warrant, the Portfolio may assume a temporary defensive position and
invest without limit in larger capitalization companies or short-term money
market instruments of the types described in "Appendix A--Money Market
Instruments" or hold its assets in cash.
In addition, the Portfolio may engage in various investment techniques,
such as options and futures transactions and lending portfolio securities. For a
discussion of the investment techniques and their related risks, see "Investment
Considerations and Risks" and "Appendix A--Investment Techniques" below and
"Investment Objectives and Management Policies-- Management Policies" in the
Statement of Additional Information.
GLOBAL EQUITY PORTFOLIO
The Global Equity Portfolio is a non- diversified portfolio the investment
objective of which is to seek capital appreciation. The Portfolio will invest
primarily in equity securities of companies both U.S. and non-U.S. that the
Investment Manager considers inexpensively priced relative to the return on
total capital or equity. The Portfolio engages in a value- oriented search for
equity securities of issuers located anywhere in the world. In selecting
investments for the Portfolio, the Investment Manager attempts to identify
inexpensive markets worldwide, including the United States, through traditional
measures of value, including low price to earnings ratio, high yield,
unrecognized assets, potential for management change and/or potential to improve
profitability. In addition, the Investment Manager seeks to identify companies
that it believes are financially productive and undervalued in those markets.
Under normal market conditions, the Portfolio will invest at least 65% of
the value of its total assets in the equity securities of companies within not
less than four countries, including the United States. The percentage of the
Portfolio's assets invested in particular geographic sectors may shift from time
to time in accordance with the Investment Manager's judgment. With a focus on
stock picking, the country allocation decision is an outgrowth of stock
selection and is used as an overlay and risk control mechanism to enhance
diversification. Nonetheless, the Investment Manager currently intends to invest
not less than 25% of the assets of the Portfolio in securities of U.S. issuers.
For a description of the risks associated with investing in foreign securities,
see "Investment Considerations and Risks--Foreign Securities."
The assets of the Portfolio are expected to be invested principally in
equity securities, including American and Global Depositary Receipts, and in
convertible bonds and other convertible securities. The Portfolio is not
required to invest exclusively in equity securities, and, if deemed advisable,
under normal market conditions, the Portfolio may invest up to 20% of the value
of its total assets in fixed-income securities. The Portfolio will not invest in
fixed-income securities rated lower than investment grade by the Rating
Agencies.
When, in the Investment Manager's judgment, business or financial
conditions warrant, the Portfolio may assume a temporary defensive position and
invest without limit in the equity securities of U.S. companies or short-term
money market instruments of the types described in "Appendix A--Money Market
Instruments" or hold its assets in cash.
In addition, the Portfolio may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions and
lending portfolio securities. For a discussion of the investment techniques and
their related risks, see "Investment Considerations and Risks" and "Appendix
A--Investment Techniques" below and "Investment Objectives and Management
Policies-- Management Policies" in the Statement of Additional Information.
INTERNATIONAL EQUITY PORTFOLIO
The International Equity Portfolio is a non- diversified portfolio the
investment objective of which is to seek capital appreciation. The Portfolio
invests primarily in the equity securities of non- United States companies
(i.e., incorporated or organized outside the United States). The Portfolio is
not required to invest exclusively in common stocks or other equity securities,
and, if deemed advisable, the Portfolio may invest up to 20% of the value of its
total assets in fixed-income securities and short-term money market instruments.
The Portfolio will not invest in fixed-income securities rated lower than
investment grade by the Rating Agencies. In addition, the Portfolio may have
substantial investments in American Depositary Receipts and Global Depositary
Receipts and in convertible bonds and other convertible securities.
The Investment Manager currently intends to invest the Portfolio's assets in
companies based in Continental Europe, the United Kingdom, the Pacific Basin and
in such other areas and countries as the Investment Manager may determine from
time to time. Under normal market conditions, the Portfolio will invest at least
80% of the value of its total assets in the equity securities of companies
within not less than three different countries (not including the United
States). The percentage of the Portfolio's assets invested in particular
geographic sectors may shift from time to time in accordance with the judgment
of the Investment Manager. For a description of the risks associated with
investing in foreign securities, see "Investment Considerations and
Risks--Foreign Securities."
The Investment Manager recognizes that some of the best opportunities are
in securities not generally followed by investment professionals. Thus, the
Investment Manager relies on its research capability and also maintains a
dialogue with foreign brokers and with the management of foreign companies in an
effort to gather the type of "local knowledge" that it believes is critical to
successful investment abroad. To this end, the Investment Manager communicates
with its affiliates, Lazard Freres & Cie. in Paris, Lazard Brothers & Co. Ltd.
in London and Lazard Japan Asset Management K.K. in Tokyo, for information
concerning current business trends, as well as for a better understanding of the
management of local businesses.
When, in the Investment Manager's judgment, business or financial
conditions warrant, the Portfolio may assume a temporary defensive position and
invest without limit in the equity securities of U.S. companies or short-term
money market instruments of the types described in "Appendix A--Money Market
Instruments" or hold its assets in cash or cash equivalents.
In addition, the Portfolio may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions and
lending portfolio securities. For a discussion of the investment techniques and
their related risks, see "Investment Considerations and Risks" and "Appendix
A--Investment Techniques" below and "Investment Objectives and Management
Policies-- Management Policies" in the Statement of Additional Information.
INTERNATIONAL SMALL CAP PORTFOLIO
The International Small Cap Portfolio is a non-diversified portfolio the
investment objective of which is to seek capital appreciation. The Portfolio
will invest primarily in equity securities of non-United States companies with
market capitalizations under $1 billion that the Investment Manager considers
inexpensively priced relative to the return on total capital or equity. Under
normal market conditions, the Portfolio will invest at least 65% of the value of
its total assets in small capitalization equity securities. The Portfolio will
invest in equity securities listed on national or regional securities exchanges
or traded over-the-counter of companies based in Continental Europe, the United
Kingdom, the Pacific Basin, Latin America, Canada and such other areas as the
Investment Manager may determine from time to time. The Portfolio also may
invest in American and Global Depositary Receipts and in convertible bonds and
other convertible securities. In selecting investments for the Portfolio, the
Investment Manager will attempt to ascertain inexpensive markets worldwide
through traditional measures of value, and identify securities within such
undervalued markets which, in the Investment Manager's opinion, have one or more
of the characteristics of the Small Cap Factors listed under "Small Cap
Portfolio." For a description of the risks associated with investing in small
capitalization equity securities, see "Investment Considerations and Risks--
Equity Securities."
Under normal market conditions, the Portfolio will invest at least 65% of
the value of its total assets in the equity securities of companies in not less
than three different countries (not including the United States). The remaining
portion of the assets of the Portfolio may be invested in the same or different
countries. The percentage of the Portfolio's assets in a particular geographic
sector may shift from time to time in accordance with the judgment of the
Investment Manager. See "Investment Consideration and Risks--Foreign
Securities."
When, in the Investment Manager's judgment, business or financial
conditions warrant, the Portfolio may assume a temporary defensive position and
invest without limit in the equity securities of U.S. companies or short-term
money market instruments of the types described in "Appendix A--Money Market
Instruments" or hold its assets in cash.
In addition, the Portfolio may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions and
lending portfolio securities. For a discussion of the investment techniques and
their related risks, see "Investment Considerations and Risks" and "Appendix
A--Investment Techniques" below and "Investment Objectives and Management
Policies-- Management Policies" in the Statement of Additional Information.
EMERGING MARKETS PORTFOLIO
The Emerging Markets Portfolio is a non- diversified portfolio the
investment objective of which is to seek long-term capital appreciation. The
Portfolio will invest primarily in securities of issuers which are located, or
doing significant business, in emerging market countries. Emerging markets
include countries where political and economic trends have produced or are
producing a more stable economic environment, developed or developing financial
markets and investment liquidity. Factors affecting a determination of an
emerging market include a legitimate program to reduce government spending and
deficits and reduce excessive regulation of commercial activity, including
reducing confiscatory tax rates, control of inflation, lower trade barriers,
stability of currency exchange rates, increasing foreign and domestic
investment, privatization of state- owned companies and expansion of developed
financial product exchanges.
Under normal market conditions, the Portfolio will invest at least 65% of
the value of its total assets in securities of companies in not less than three
different countries (not including the United States). The remaining portion of
the assets of the Portfolio may be invested in the same or different countries.
The percentage of the Portfolio's assets invested in particular emerging markets
may shift from time to time in accordance with the Investment Manager's
judgment. Emerging market countries generally will include any countries (i)
having an "emerging stock market" as defined by the International Finance
Corporation; (ii) with low- to middle-income economies according to the World
Bank; or (iii) listed in World Bank publications as developing. Currently, the
countries not included in these categories are Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Netherlands,
New Zealand, Norway, Spain, Sweden, Switzerland, the United Kingdom and the
United States. For a description of the risks associated with investing in
emerging markets, see "Investment Considerations and Risks--Foreign Securities."
The Portfolio invests primarily in equity securities of issuers located, or
doing significant business, in emerging markets including: issuers organized
under the laws of the emerging market country or for which the principal trading
market for such securities is located in the emerging market country or issuers,
wherever organized, when the issuer's principal activities are in the emerging
market country. The Portfolio may invest in closed-end investment companies
investing in emerging market securities. The Portfolio also may invest in
American and Global Depositary Receipts with respect to emerging market
securities.
Although the Portfolio expects to invest principally in equity securities
of emerging markets issuers, there is no requirement that the Portfolio invest
exclusively in equity securities. When, in the Investment Manager's judgment,
business or financial conditions warrant, the Portfolio may invest in
fixed-income securities or assume a temporary defensive position and invest
without limit in the equity securities of U.S. companies or short-term money
market instruments of the types described in "Appendix A--Money Market
Instruments" or hold its assets in cash.
In addition, the Portfolio may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions and
lending portfolio securities. For a discussion of the investment techniques and
their related risks, see "Investment Considerations and Risks" and "Appendix
A--Investment Techniques" below and "Investment Objectives and Management
Policies-- Management Policies" in the Statement of Additional Information.
FIXED-INCOME PORTFOLIOS--These Portfolios will invest principally in fixed-
income securities.
INTERNATIONAL FIXED-INCOME PORTFOLIO
The International Fixed-Income Portfolio is a non-diversified portfolio the
investment objective of which is to seek high total return, consisting of
current income and capital appreciation, consistent with what the Investment
Manager considers to be prudent investment risk. The Portfolio invests primarily
in foreign fixed-income securities of varying maturities, typically greater than
one year. Under normal market conditions, the Investment Manager anticipates
that the effective duration of the Portfolio will be in the range of two to
eight years. The Portfolio's effective duration generally will be shorter than
the Portfolio's average maturity. The Portfolio's effective "duration" is a
measure of the price sensitivity of its investment portfolio, including expected
cash flow, redemptions and mortgage prepayments under a wide range of interest
rate conditions.
The Portfolio seeks high current yields by investing in a portfolio of
fixed-income securities, such as bonds, debentures, notes, convertible debt
obligations, and mortgage-related and asset-back securities, denominated in a
range of foreign currencies and in the U.S. dollar. Under normal market
conditions, the Portfolio will invest at least 65% of the value of its total
assets in the fixed-income securities of companies within, or governments,
political subdivisions, authorities, agencies or instrumentalities of, not less
than three different countries (not including the United States). The Portfolio
has the flexibility to invest in any region of the world. The Investment Manager
currently intends to invest the Portfolio's assets principally in fixed-income
securities of companies within, or governments of, Continental Europe, the
United Kingdom, Canada, the Pacific Basin and in such other areas and countries
as the Investment Manager may determine from time to time, including countries
that are considered emerging market countries at the time of investment. See
"Investment Considerations and Risks--Foreign Securities." The Portfolio also
may invest in American or Global Depositary Receipts issued in relation to a
pool of fixed-income securities in which the Portfolio could invest directly.
At least 85% of the Portfolio's assets will be invested in (i) fixed-income
securities rated investment grade by one or more Rating Agencies; (ii)
commercial paper issued by foreign or U.S. companies rated Prime-2 or better by
Moody's, A or better by S&P, F-2 or better by Fitch or Duff-2 or better by Duff;
or (iii) fixed-income securities or commercial paper that, if unrated, is
determined by the Investment Manager to be of comparable quality. Up to 15% of
the value of the Portfolio's assets may be invested in high yield, high risk
fixed- income securities that are rated below investment grade by the Rating
Agencies or, if unrated, are determined by the Investment Manager to be of
comparable quality. Fixed-income securities rated below investment grade are
considered to be predominantly speculative. The Portfolio has no current
intention of investing more than 5% of its total assets in securities that are
in default. For a description of the special risks associated with investing in
fixed-income securities rated below investment grade, see "Investment
Considerations and Risks--Lower Rated Securities."
When, in the Investment Manager's judgment, business or financial
conditions warrant, the Portfolio may assume a temporary defensive position and
invest without limit in high quality short-term debt securities or short-term
money market instruments of the types described in "Appendix A--Money Market
Instruments" or hold its assets in cash. In addition, the Portfolio may engage
in various investment techniques, such as foreign currency transactions, options
and futures transactions and lending portfolio securities. For a discussion of
the investment techniques and their related risks, see "Investment
Considerations and Risks" and "Appendix A--Investment Techniques" below and
"Investment Objectives and Management Policies--Management Policies" in the
Statement of Additional Information.
STRATEGIC YIELD PORTFOLIO
The Strategic Yield Portfolio is a non-diversified portfolio the
investment objective of which is to seek total return, consisting of current
income and capital appreciation. The Portfolio invests principally in
high-yielding fixed-income securities.
Under normal market conditions, the Portfolio will invest at least 65% of
the value of its total assets in fixed-income securities, such as bonds,
debentures, notes, convertible debt obligations, and mortgage-related and
asset-backed securities, of domestic and foreign issuers. At least 95% of these
obligations when purchased by the Portfolio will have a rating of at least
Caa/CCC by one or more Rating Agencies or, if not rated, will be of comparable
quality as determined by the Investment Manager. See "Investment Considerations
and Risks--Foreign Securities." The Portfolio also may invest in American or
Global Depositary Receipts issued in relation to a pool of fixed-income
securities in which the Portfolio could invest directly.
The Investment Manager expects most of the Portfolio's investment
securities will pay cash income. In a limited number of cases, however, "zero
coupon" or "payment- in-kind" high-yield securities may be purchased when, in
the opinion of the Investment Manager, they offer appropriate value relative to
their risk. See "Appendix A--Certain Portfolio Securities--Zero Coupon
Securities." Capital appreciation may result, for example, from an improvement
in the credit standing of an issuer whose securities are held by the Portfolio
or from a general decline in interest rates or both.
When, in the Investment Manager's judgment, business or financial
conditions warrant, the Portfolio may assume a temporary defensive position and
invest without limit in investment grade debt securities or short-term money
market instruments of the types described in "Appendix A--Money Market
Instruments" or hold its assets in cash.
In addition, the Portfolio may engage in various investment techniques,
such as options and futures transactions, foreign currency transactions and
lending portfolio securities. For a discussion of the investment techniques and
their related risks, see "Investment Considerations and Risks" and "Appendix
A--Investment Techniques" below and "Investment Objectives and Management
Policies--Management Policies" in the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Since each Portfolio will pursue different types of investments,
the risks of investing will vary depending on the Portfolio selected for
investment. Before investing in a Portfolio, each investor should assess the
risks associated with the types of investments made by the Portfolio. The net
asset value per share of each Portfolio should be expected to fluctuate.
Investors should consider each Portfolio as part of an overall investment
program and should invest only if they are willing to undertake the risks
involved. See "Investment Objectives and Management Policies-- Management
Policies" in the Statement of Additional Information for a further discussion of
certain risks.
EQUITY SECURITIES --(All Portfolios, except the International Fixed-Income
Portfolio and Strategic Yield Portfolio) Equity securities fluctuate in value,
often based on factors unrelated to the value of the issuer of the securities,
and such fluctuations can be pronounced. Changes in the value of a Portfolio's
investments will result in changes in the value of its shares and thus the
Portfolio's total return to investors.
The securities of the smaller companies in which the Small Cap,
International Small Cap, Emerging Markets and Bantam Value Portfolios may invest
may be subject to more abrupt or erratic market movements than larger, more
established companies, because these securities typically are traded in lower
volume and the issuers typically are more subject to changes in earnings and
prospects. Smaller capitalization companies often have limited product lines,
markets or financial resources. They may be dependent for management on one or a
few key persons, and can be more susceptible to losses and risks of bankruptcy.
In addition, securities in the small capitalization sector may be thinly traded
(and therefore have to be sold at a discount from current market prices or sold
in small lots over an extended period of time), may be followed by fewer
investment research analysts and may be subject to wider price swings and thus
may create a greater chance of loss than investing in securities of larger
capitalization companies.
FIXED-INCOME SECURITIES -- (All Portfolios) Even though interest-bearing
securities are investments which promise a stable stream of income, the prices
of such securities generally are inversely affected by changes in interest rates
and, therefore, are subject to the risk of market price fluctuations. Certain
portfolio securities, such as those with interest rates that fluctuate directly
or indirectly based on multiples of a stated index, are designed to be highly
sensitive to changes in interest rates and can subject the holders thereof to
extreme reductions of yield and possibly loss of principal.
The values of fixed-income securities also may be affected by changes in
the credit rating or financial condition of the issuer. Certain portfolio
securities, such as those rated below investment grade by the Rating Agencies,
may be subject to such risk with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated fixed-income
securities. Once the rating of a portfolio security has been changed, the
Portfolio will consider all circumstances deemed relevant in determining whether
to continue to hold the security. See "Appendix A--Certain Portfolio
Securities--Ratings" below and "Appendix" in the Statement of Additional
Information.
FOREIGN SECURITIES--(All Portfolios) Foreign securities markets generally
are not as developed or efficient as those in the United States. Securities of
some foreign issuers are less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in most foreign
securities markets are less than in the United States and, at times, volatility
of price can be greater than in the United States.
Because evidences of ownership of such securities usually are held outside
the United States, the Portfolios will be subject to additional risks which
include possible adverse political and economic developments, seizure or
nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect the payment of principal and interest on the
foreign securities or restrict the payment of principal and interest to
investors located outside the country of the issuer, whether from currency
blockage or otherwise.
With respect to the Emerging Markets, International Fixed-Income and
Strategic Yield Portfolios, emerging market countries have economic structures
that generally are less diverse and mature, and political systems that are less
stable, than those of developed countries. Emerging markets may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many emerging market countries providing
investment opportunities for these Portfolios have experienced substantial, and
in some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain of these countries.
Since foreign securities often are purchased with and payable in currencies
of foreign countries, the value of these assets as measured in U.S. dollars may
be affected favorably or unfavorably by changes in currency rates and exchange
control regulations.
FOREIGN CURRENCY TRANSACTIONS--(All Portfolios, except the Equity
Portfolio, Small Cap Portfolio and Bantam Value Portfolio) Currency exchange
rates may fluctuate significantly over short periods of time. They generally are
determined by the forces of supply and demand in the foreign exchange markets
and the relative merits of investments in different countries, actual or
perceived changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention by U.S. or foreign governments or central banks,
or the failure to intervene, or by currency controls or political developments
in the United States or abroad. See "Appendix A-- Investment Techniques--Foreign
Currency Transactions."
USE OF DERIVATIVES--(All Portfolios) Each Portfolio may invest in
derivatives ("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying asset,
index or interest rate. The Derivatives a Portfolio may use, to the extent
described above, may include options and futures, mortgage-related securities
and asset-backed securities. While Derivatives can be used effectively in
furtherance of the Portfolio's investment objective, under certain market
conditions, they can increase the volatility of the Portfolio's net asset value,
can decrease the liquidity of the Portfolio's securities, and make more
difficult the accurate pricing of the Portfolio's securities. See "Appendix A--
Investment Techniques--Use of Derivatives" below, and "Investment Objectives and
Management Policies-- Management Policies--Derivatives" in the Statement of
Additional Information.
LOWER RATED SECURITIES--(International Fixed-Income Portfolio and Strategic
Yield Portfolio) Each of these Portfolios may invest a portion of its assets in
higher yielding (and, therefore, higher risk) debt securities such as those
rated below investment grade by the Rating Agencies (commonly known as "junk
bonds"). They may be subject to certain risks with respect to the issuing entity
and to greater market fluctuations than certain lower yielding, higher rated
fixed-income securities. The retail secondary market for these securities may be
less liquid than that of higher rated securities; adverse conditions could make
it difficult at times for the Portfolio to sell certain securities or could
result in lower prices than those used in calculating the Portfolio's net asset
value. See "Appendix A--Certain Portfolio Securities --Ratings."
PORTFOLIO TURNOVER--(All Portfolios) No Portfolio will consider portfolio
turnover to be a limiting factor in making investment decisions. The Investment
Manager anticipates that, under normal market conditions, the portfolio turnover
rate of each of the Bantam Value Portfolio, Emerging Markets Portfolio, Equity
Portfolio, Global Equity Portfolio, International Equity Portfolio,
International Small Cap Portfolio and Small Cap Portfolio will not exceed 100%.
The annual portfolio turnover rate of the International Fixed- Income Portfolio
and Strategic Yield Portfolio may exceed 200% (but is not expected to exceed
300%). A 200% portfolio turnover rate is greater than that of most other
investment companies. A high rate of portfolio turnover involves correspondingly
greater transaction expenses than a lower rate, which expenses are borne by the
Portfolio and its shareholders and may result in the realization of substantial
net short-term capital gains.
NON-DIVERSIFIED PORTFOLIOS--(All Portfolios) Each Portfolio is classified
as a "non-diversified" investment company, which means that the proportion of
the Portfolio's assets that may be invested in the securities of a single issuer
is not limited by the 1940 Act. A "diversified" investment company is required
by the 1940 Act generally, with respect to 75% of its total assets, to invest
not more than 5% of such assets in the securities of a single issuer. Since a
relatively high percentage of each Portfolio's assets may be invested in the
securities of a limited number of issuers, some of which may be within the same
industry, the Portfolio's securities may be more sensitive to changes in the
market value of a single issuer or industry. However, to meet Federal tax
requirements, at the close of each quarter no Portfolio may have more than 25%
of its total assets invested in any one issuer and, with respect to 50% of its
total assets, more than 5% of its total assets invested in any one issuer. These
limitations do not apply to U.S. Government securities.
STATE INSURANCE REGULATION--(All Portfolios) The Fund is intended to be a
funding vehicle for VA contracts and VLI policies to be offered by Participating
Insurance Companies and will seek to be offered in as many jurisdictions as
possible. Certain states may have regulations concerning concentration of
investments and purchase and sale of futures contracts, among other techniques.
If applied to the Fund, each Portfolio may be limited in its ability to engage
in such techniques and to manage its portfolio with the flexibility provided
herein. It is the Fund's intention that each Portfolio operate in material
compliance with current insurance laws and regulations, as applied, in each
jurisdiction in which the Portfolio is offered.
SIMULTANEOUS INVESTMENT BY OTHER PORTFOLIOS OR FUNDS--(All Portfolios)
Investment decisions for each Portfolio are made independently from those of the
other portfolios and accounts managed by the Investment Manager. If, however,
such other portfolios or accounts desire to invest in, or dispose of, the same
securities as the Portfolio, available investments or opportunities for sales
will be allocated equitably to each. In some cases, this procedure may adversely
affect the size of the position obtained for or disposed of by a Portfolio or
the price paid or received by a Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIOS
DIRECTORS
The Board of Directors, under applicable laws of the State of Maryland, in
addition to supervising the actions of the Investment Manager, as set forth
below, decides upon matters of general policy.
INVESTMENT MANAGER AND
INVESTMENT MANAGEMENT
AGREEMENT
Lazard Asset Management, 30 Rockefeller Plaza, New York, New York 10020,
has entered into an investment management agreement (the "Management Agreement")
with the Fund on behalf of each of the Portfolios. Pursuant to the Management
Agreement, the Investment Manager regularly will provide the Portfolios with
investment research, advice and supervision and continuously furnish an
investment program for each Portfolio consistent with its investment objectives
and policies, including the purchase, retention and disposition of securities.
The Investment Manager also is responsible for the selection of brokers and
dealers to effect securities transactions and the negotiation of brokerage
commissions, if any. Purchases and sales of securities on a securities exchange
are effected through brokers who charge a negotiated commission for their
services. Brokerage commissions may be paid to Lazard Freres for executing
securities transactions if the use of Lazard Freres is likely to result in price
and execution at least as favorable as those of other qualified brokers or
dealers. The allocation of brokerage transactions also may take into account a
broker's sales of Portfolio shares. See "Portfolio Transactions" in the
Statement of Additional Information.
The Investment Manager is a division of Lazard Freres, a New York limited
liability company, which is registered as an investment adviser with the
Securities and Exchange Commission (the "Commission") and is a member of the New
York, American and Midwest Stock Exchanges. Lazard Freres provides its clients
with a wide variety of investment banking, brokerage and related services. The
Investment Manager provides investment management services to the Fund's other
portfolios and client discretionary accounts with assets totaling approximately
$38.1 billion as of December 31, 1996. Its clients are both individuals and
institutions, some of whose accounts have investment policies similar to those
of several of the Portfolios.
The Fund has agreed to pay the Investment Manager an investment management
fee at the annual rate set forth below as a percentage of the average daily
value of the net assets of the relevant Portfolio:
Investment
Name of Portfolio Management
Fee Payable
Bantam Value Portfolio .75%
Emerging Markets Portfolio 1.00%
Equity Portfolio .75%
Global Equity Portfolio .75%
International Equity Portfolio .75%
International Fixed-Income .75%
Portfolio
International Small Cap .75%
Portfolio
Small Cap Portfolio .75%
Strategic Yield Portfolio .75%
The investment management fees are accrued daily and paid monthly.
Each Portfolio will bear all expenses not specifically assumed by the
Investment Manager, including, among others, the fee payable to the Investment
Manager, the fees of the Directors who are not "affiliated persons" of the
Investment Manager, the expenses of all Directors, the fees and out- of-pocket
expenses of the Fund's custodian and the transfer and dividend disbursing agent
and the fee payable under the Distribution and Servicing Plan. See "Distribution
and Servicing Plan." Expenses attributable to a particular Portfolio are charged
against the assets of that Portfolio; other expenses of the Fund are allocated
among the Portfolios on the basis determined by the Board of Directors,
including, but not limited to, proportionately in relation to the net assets of
each Portfolio. For a more detailed description of the expenses to be borne by
the Portfolios, see "Management" and "Distribution and Servicing Plan" in the
Statement of Additional Information.
PRINCIPAL PORTFOLIO MANAGERS
The names of the principal persons employed by or associated with the
Investment Manager who are primarily responsible for the day-to-day management
of the assets of each of the Portfolios are as follows:
BANTAM VALUE PORTFOLIO--Eileen Alexanderson, Herbert W. Gullquist, Bradley
J. Purcell, Michael S. Rome and Leonard M. Wilson
EMERGING MARKETS PORTFOLIO--Herbert W. Gullquist and John R. Reinsberg
EQUITY PORTFOLIO--Herbert W. Gullquist and Michael S. Rome
GLOBAL EQUITY PORTFOLIO--Herbert W. Gullquist, John R. Reinsberg and
Michael S. Rome
INTERNATIONAL EQUITY PORTFOLIO--Herbert W. Gullquist and John R. Reinsberg
INTERNATIONAL FIXED-INCOME PORTFOLIO-- Thomas F. Dunn and Ira O. Handler
INTERNATIONAL SMALL CAP PORTFOLIO-- Herbert W. Gullquist and John R.
Reinsberg
SMALL CAP PORTFOLIO--Eileen Alexanderson, Herbert W. Gullquist, Bradley J.
Purcell, Michael S. Rome and Leonard M. Wilson
STRATEGIC YIELD PORTFOLIO--Thomas F. Dunn and Ira O. Handler
BIOGRAPHICAL INFORMATION OF PRINCIPAL PORTFOLIO MANAGERS
Eileen Alexanderson. Ms. Alexanderson is a Managing Director of the
Investment Manager where she has been employed since 1979.
Thomas F. Dunn. Mr. Dunn is a Managing Director of the Investment Manager
and has been with the Investment Manager since January 1, 1995. Prior thereto,
he was a Senior Vice President of Goldman Sachs Asset Management.
Herbert W. Gullquist. Mr. Gullquist is a Managing Director of the
Investment Manager and has been with the Investment Manager since 1982.
Ira O. Handler. Mr. Handler is a Senior Vice President of the Investment
Manager and has been a Global & Emerging Fixed- Income Portfolio Manager of the
Investment Manager since 1992.
Bradley J. Purcell. Mr. Purcell is a Vice President of the Investment
Manager and has been with the Investment Manager since 1991.
John R. Reinsberg. Mr. Reinsberg is a Managing Director of the Investment
Manager and has been with the Investment Manager since 1992.
Michael S. Rome. Mr. Rome is a Managing Director of the Investment Manager
and has been with the Investment Manager since 1991.
Leonard M. Wilson. Mr. Wilson has been a Senior Vice President of the
Investment Manager since 1988.
ADMINISTRATOR
State Street Bank and Trust Company ("State Street"), located at 225
Franklin Street, Boston, Massachusetts 02110, serves as each Portfolio's
administrator pursuant to an Administration Agreement with the Fund.
DISTRIBUTOR
Under the terms of a distribution agreement with the Fund, Lazard Freres
acts as distributor for the Portfolios.
CUSTODIAN; TRANSFER AND DIVIDEND DISBURSING AGENT
State Street has been retained to act as Custodian of the Portfolios'
investments. Boston Financial Data Services Inc., an affiliate of State Street,
serves as the Fund's Transfer and Dividend Disbursing Agent. Neither the
Custodian nor the Transfer Agent has any part in deciding any of the Portfolio's
investment policies or which securities are to be purchased or sold for any
Portfolios. Subject to the supervision of the Fund's Board of Directors, the
Custodian may enter into subcustodial arrangements on behalf of any of the
Portfolios for the holding of foreign securities.
PURCHASE OF SHARES
INDIVIDUALS MAY NOT PLACE PURCHASE ORDERS DIRECTLY WITH THE FUND.
INDIVIDUALS SHOULD CONSULT A PARTICIPATING INSURANCE COMPANY, THE ADMINISTRATOR
OF AN ELIGIBLE PLAN OR A FINANCIAL INTERMEDIARY FOR INFORMATION ON THE PURCHASE
OF PORTFOLIO SHARES. THE FUND DOES NOT ISSUE SHARE CERTIFICATES.
Purchase orders received by the Participating Insurance Company or Eligible
Plan on a given business day will be effected at the net asset value of the
applicable Portfolio determined on such business day if the orders are received
by the Fund on the next business day in accordance with applicable requirements.
It is each Participating Insurance Company's or Eligible Plan administrator's or
trustee's responsibility to transmit purchase orders in accordance with
applicable requirements.
Fund shares are sold on a continuous basis. Net asset value ordinarily is
determined as of 4:00 p.m. (New York Time) on each day during which the New York
Stock Exchange is open for trading. For purposes of determining net asset value,
options and futures contracts will be valued 15 minutes after the close of
trading on the floor of the New York Stock Exchange. Net asset value per share
is computed by dividing the value of the net assets of each Portfolio (i.e., the
value of its assets less liabilities) by the total number of shares outstanding.
Equity securities typically are valued based on market value, or where market
quotations are not readily available, based on fair value as determined in good
faith by the Board. Debt securities having remaining maturities of 60 days or
less are valued on an amortized cost basis unless the Board determines that such
method does not represent fair value. Other debt securities are valued using
available market quotations or at fair value which may be determined by one or
more pricing services. For further information regarding the methods employed in
valuing each Portfolio's investments, see "Determination of Net Asset Value" in
the Statement of Additional Information.
REDEMPTION OF SHARES
Portfolio shares may be redeemed at any time by the separate accounts of
the Participating Insurance Companies or by Eligible Plans. INDIVIDUALS MAY NOT
PLACE REDEMPTION ORDERS DIRECTLY WITH THE FUND. Redemption requests received by
the Participating Insurance Company or Eligible Plan on a given business day
will be effected at the net asset value of the applicable Portfolio determined
on such business day if the requests are received by the Fund in proper form and
in accordance with applicable requirements on the next business day. It is each
Participating Insurance Company's or Eligible Plan administrator's or trustee's
responsibility to properly transmit redemption requests in accordance with
applicable requirements. The value of the shares redeemed may be more or less
than their original cost, depending on the Portfolio's then-current net asset
value.
The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the Commission.
DISTRIBUTION AND SERVICING PLAN
Shares of the Portfolios are subject to a Distribution and Servicing Plan,
adopted pursuant to Rule 12b-1 under the 1940 Act. Under the Distribution and
Servicing Plan, each Portfolio pays Lazard Freres for advertising, marketing and
distributing the Portfolio's shares and for the provision of certain services to
the holders of Portfolio shares at an annual rate of .25 of 1% of the
Portfolio's average daily net assets. Lazard Freres may make payments to
Participating Insurance Companies for providing these services to Policy owners
or to certain financial institutions, securities dealers and other industry
professionals (collectively, "Service Agents") for providing these services to
Eligible Plan participants. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. The fee payable for such
services is intended to be a "service fee" as defined in the NASD Conduct Rules.
Depending on a Participating Insurance Company's corporate structure and
applicable state law, Lazard Freres may make payments to the Participating
Insurance Company's affiliated broker-dealer or other affiliated company rather
than the Participating Insurance Company itself.
From time to time, Lazard Freres may defer or waive receipt of fees under
the Distribution and Servicing Plan while retaining the ability to be paid by
the Fund under the Distribution and Servicing Plan thereafter. The fees payable
to Lazard Freres under the Distribution and Servicing Plan for advertising,
marketing and distributing Portfolio shares and for payments to Participating
Insurance Companies and Service Agents are payable without regard to actual
expenses incurred.
DIVIDENDS AND DISTRIBUTIONS
INTERNATIONAL FIXED-INCOME PORTFOLIO AND STRATEGIC YIELD PORTFOLIO--Declare
dividends from net investment income daily. Dividends ordinarily are paid five
business days prior to the end of each month. The earnings for Saturdays,
Sundays and holidays are declared as dividends on the next business day.
EQUITY PORTFOLIO, BANTAM VALUE PORTFOLIO, EMERGING MARKETS PORTFOLIO,
GLOBAL EQUITY PORTFOLIO, INTERNATIONAL EQUITY PORTFOLIO, INTERNATIONAL SMALL CAP
PORTFOLIO AND SMALL CAP PORTFOLIO-- Declare and pay dividends from net
investment income annually.
APPLICABLE TO ALL PORTFOLIOS--Net realized capital gains, if any, generally
will be distributed once a year, but each Portfolio may make distributions on a
more frequent basis to comply with the distribution requirements of the Internal
Revenue Code of 1986, as amended (the "Code"), in all events in a manner
consistent with the provisions of the 1940 Act. No Portfolio will make
distributions from net realized capital gains unless capital loss carryovers, if
any, have been utilized or have expired. Shares begin accruing dividends on the
day the purchase order is received in proper form by the Transfer Agent.
Dividends and distributions will be invested in additional shares of the same
Portfolio at net asset value and credited to the shareholder's account on the
payment date or, at the shareholder's election, paid in cash.
TAXATION
Each Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Code. Each Portfolio will be treated as a separate entity
for tax purposes and thus the provisions of the Code applicable to regulated
investment companies generally will be applied to each Portfolio separately,
rather than to the Fund as a whole. In addition, net capital gains, net
investment income, and operating expenses will be determined separately for each
Portfolio. By qualifying as a regulated investment company under the Code, a
Portfolio will not be subject to Federal income taxes with respect to net
investment income and net capital gains distributed to its shareholders.
Section 817(h) of the Code and regulations thereunder set standards for
diversification of the investments underlying Policies in order for the Policies
to be treated as life insurance. These requirements, which are in addition to
diversification requirements applicable to the Portfolios under Subchapter M of
the Code, may affect the composition of a Portfolio's investments. Since the
shares of the Portfolios currently are sold to segregated asset accounts
underlying such Policies, each Portfolio intends to comply with the
diversification requirements as set forth in the regulations.
By meeting these and other requirements, the Participating Insurance
Companies, rather than the Policy owners, should be subject to tax on
distributions received with respect to Portfolio shares. The tax treatment on
distributions made to a Participating Insurance Company will depend on the
Participating Insurance Company's tax status.
Dividends and distributions made by the Portfolios to Eligible Plans are
not taxable to the Plans or to the participants thereunder. The Portfolios will
be managed without regard to tax ramifications.
Since the Fund's shareholders are the Participating Insurance Companies,
their separate accounts and Eligible Plans, no discussion is included herein as
to the Federal income tax consequences to Policy owners and Eligible Plan
participants. For information concerning the Federal income tax consequences,
Policy owners should consult the applicable prospectus of the separate account
of the Participating Insurance Company and Eligible Plan participants should
consult the Plan's administrator or trustee.
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Fund consists of five hundred million
shares of common stock, $.001 par value. To date, the Fund's Board of Directors
has authorized a total of ten Portfolios. Each Portfolio is a separate pool of
assets constituting, in effect, a separate fund with its own investment
objectives and policies. A shareholder in a Portfolio will be entitled to its
pro rata share of all dividends and distributions arising from that Portfolio's
assets and, upon redeeming shares of that Portfolio, will receive the
then-current net asset value of that Portfolio represented by the redeemed
shares. See "Purchase of Shares" and "Redemption of Shares." The Fund is
empowered to establish, without shareholder approval, additional portfolios
which may have different investment objectives, policies or restrictions. All
shares of the Fund will be validly issued, fully paid and non-assessable. Each
share has one vote.
In accordance with current law, the Fund anticipates that a Participating
Insurance Company issuing a VA contract or VLI policy or an Eligible Plan that
participates in the Fund will request voting actions from Policy holders or Plan
participants and will vote shares in proportion to the voting instructions
received. For further information on voting rights, Policy holders should refer
to the prospectus for their Policies and Plan participants should consult the
Plan's administrator or trustee.
Maryland law does not require annual meetings of shareholders except under
certain specified circumstances and it is anticipated that shareholder meetings
will be held only when required by Federal or Maryland law. A meeting of
shareholders will be called, however, for the purpose of voting upon the
question of removal of a director of the Fund, upon the written request of
holders of not less than ten percent of all votes entitled to be cast at the
meeting. The Fund will assist shareholders in communications concerning the
removal of any director of the Fund.
PERFORMANCE INFORMATION
From time to time, the Portfolios may advertise their "average annual total
return" and their "total return." THESE FIGURES ARE BASED ON HISTORICAL EARNINGS
AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. These total returns show
the investment results of the Portfolio over a specified period of time (such as
one, five or ten years, or the period of time since commencement of operations,
if shorter) and assume the reinvestment of all distributions and dividends. Both
types of total return are computed in the same manner, except that the "average
annual total return" requires the additional step of determining the annual rate
of return required for the initial investment to equal the "total return" at the
end of the relevant period.
In addition, from time to time, the Fund may advertise "yield" and "actual
distribution rate" quotations for one or more Portfolios. A Portfolio's "yield"
for any 30-day period is computed by dividing the net investment income per
share earned during such period by the maximum public offering price per share
on the last day of the period, and then annualizing such 30-day yield in
accordance with a formula prescribed by the Commission which provides for
compounding on a semi-annual basis. A Portfolio's "actual distribution rate" is
computed in the same manner as yield except that actual income dividends
declared per share during the period in question is substituted for net
investment income per share.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance. Performance information of any
Portfolio should not be compared with other funds that offer their shares
directly to the public since the figures provided do not reflect charges imposed
by Participating Insurance Companies under their VA contracts or VLI policies.
The yield and total return for a Portfolio should be distinguished from the rate
of return of a corresponding sub-account or investment division of a separate
account of a Participating Insurance Company, which rate will reflect the
deduction of additional charges, including mortality and expense risk charges,
and therefore will be lower. Variable annuity contract holders and variable life
insurance policy holders should consult the prospectus for their contract or
policy.
Although the Fund is newly-organized and the Portfolios do not yet have
their own performance records, each Portfolio has the same investment objectives
and follows substantially the same investment policies as a corresponding
publicly offered series of The Lazard Funds, Inc., which is an open- end
investment company. These Lazard public funds have the same portfolio managers
as the corresponding Portfolios offered in this Prospectus. Historical
performance information for the corresponding Lazard public funds for various
periods ended December 31, 1996 is set forth on "Appendix B."
<PAGE>
APPENDIX A
INVESTMENT TECHNIQUES
FOREIGN CURRENCY TRANSACTIONS -- (All Portfolios, except the Bantam Value
Portfolio, Equity Portfolio and Small Cap Portfolio) Foreign currency
transactions may be entered into a variety of purposes, including: to fix in
U.S. dollars, between trade and settlement date, the value of a security the
Portfolio has agreed to buy or sell; to hedge the U.S. dollar value of
securities the Portfolio already owns, particularly if it expects a decrease in
the value of the currency in which the foreign security is denominated; or to
gain exposure to the foreign currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the Portfolio's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Portfolio agreeing to
exchange an amount of a currency it did not currently own for another currency
at a future date in anticipation of a decline in the value of the currency sold
relative to the currency the Portfolio contracted to receive in the exchange.
The Portfolio's success in these transactions will depend principally on the
Investment Manager's ability to predict accurately the future exchange rates
between foreign currencies and the U.S. dollar.
BORROWING MONEY -- (All Portfolios) Each Portfolio is permitted to borrow
to the extent permitted under the 1940 Act, which permits an investment company
to borrow in an amount up to 33-1/3% of the value of its total assets. Each
Portfolio currently intends to borrow money only from banks for temporary or
emergency (not leveraging) purposes, in an amount up to 15% of the value of its
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of a Portfolio's total assets, the
Portfolio will not make any additional investments.
USE OF DERIVATIVES -- (All Portfolios) Each Portfolio may invest in the
types of Derivatives enumerated under "Investment Consideration and Risks-- Use
of Derivatives." These instruments and certain related risks are described more
specifically under "Investment Objectives and Management Policies--Management
Policies--Derivatives" in the Statement of Additional Information.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
Portfolio as a whole. Derivatives permit the Portfolio to increase or decrease
the level of risk, or change the character of the risk, of its portfolio by
making investments in specific securities.
Derivatives may entail investment exposures that are greater than their
cost would suggest, meaning that a small investment in Derivatives could have a
large potential impact on the Portfolio's performance.
If the Portfolio invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Portfolio's return
or result in a loss. The Portfolio also could experience losses if its
Derivatives were poorly correlated with its other investments or if the
Portfolio were unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and unpredictable changes
in the prices for Derivatives.
Although neither the Fund nor any Portfolio will be a commodity pool,
certain Derivatives subject the Portfolio to the rules of the Commodity Futures
Trading Commission which limit the extent to which the Portfolio can invest in
such Derivatives. The Portfolio may invest in futures contracts and options with
respect thereto for hedging purposes without limit. However, the Portfolio may
not invest in such contracts and options for other purposes if the sum of the
amount of initial margin deposits and premiums paid for unexpired options with
respect to such contracts, other than for bona fide hedging purposes, exceeds 5%
of the liquidation value of the Portfolio's assets, after taking into account
unrealized profits and unrealized losses on such contracts and options;
provided, however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
Each Portfolio may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options. Each Portfolio may write
(i.e., sell) covered call and put options contracts to the extent of 20% of the
value of its net assets at the time such option contracts are written. When
required by the Commission, a Portfolio will set aside permissible liquid assets
in a segregated account to cover its obligations relating to its transactions in
Derivatives. To maintain this required cover, the Portfolio may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES -- (All Portfolios) Each Portfolio may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. The
Portfolio continues to be entitled to payments in amounts equal to the interest,
dividends or other distributions payable on the loaned securities which affords
the Portfolio an opportunity to earn interest on the amount of the loan and on
the loaned securities' collateral. Loans of portfolio securities may not exceed
33-1/3% of the value of the Portfolio's total assets, and the Portfolio will
receive collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. Such loans are
terminable by the Portfolio at any time upon specified notice. The Portfolio
might experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Portfolio.
FORWARD COMMITMENTS -- (All Portfolios) Each Portfolio may purchase
securities on a forward commitment or when-issued basis, which means that
delivery and payment take place a number of days after the date of the
commitment to purchase. The payment obligation and the interest rate receivable
on a forward commitment or when-issued security are fixed when the Portfolio
enters into the commitment, but the Portfolio does not make payment until it
receives delivery from the counterparty. The Portfolio will commit to purchase
such securities only with the intention of actually acquiring the securities,
but the Portfolio may sell these securities before the settlement date if it is
deemed advisable. When required by the Commission, a Portfolio may have to set
aside permissible liquid assets in a segregated account to cover its
commitments.
CERTAIN PORTFOLIO SECURITIES
CONVERTIBLE SECURITIES -- (All Portfolios) Convertible securities may be
converted at either a stated price or stated rate into underlying shares of
common stock. Convertible securities have characteristics similar to both
fixed-income and equity securities. Convertible securities generally are
subordinated to other similar but non- convertible securities of the same
issuer, although convertible bonds, as corporate debt obligations, enjoy
seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock, of the same issuer. Because of the
subordination feature, however, convertible securities typically have lower
ratings than similar non-convertible securities.
DEPOSITARY RECEIPTS -- (All Portfolios) Each Portfolio may invest in the
securities of foreign issuers in the form of American Depositary Receipts
("ADRs") and Global Depositary Receipts ("GDRs"). These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. GDRs are receipts issued outside the United States,
typically by non-United States banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in the United States securities markets and GDRs in bearer form
are designed for use outside the United States.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES --
(All Portfolios) Each Portfolio may invest in obligations issued or guaranteed
by one or more foreign governments or any of their political subdivisions,
agencies or instrumentalities that are determined by the Investment Manager to
be of comparable quality to the other obligations in which the Portfolio may
invest. Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank.
WARRANTS -- (All Portfolios) A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the corporation's capital stock at a set price for a specified period of
time. A Portfolio may invest up to 5% of its total assets in warrants, except
that this limitation does not apply to warrants purchased by the Portfolio that
are sold in units with, or attached to, other securities.
MORTGAGE-RELATED SECURITIES -- (International Fixed-Income Portfolio and
Strategic Yield Portfolio) Mortgage-related securities are a form of Derivative
collateralized by pools of mortgages. The mortgage-related securities which may
be purchased include those with fixed, floating and variable interest rates,
those with interest rates that change based on multiples of changes in interest
rates and those with interest rates that change inversely to changes in interest
rates, as well as stripped mortgage-backed securities. Stripped mortgage-backed
securities usually are structured with classes that receive different
proportions of interest and principal distributions on a pool of mortgage-backed
securities or whole loans. A common type of stripped mortgage-backed security
will have one class receiving some of the interest and most of the principal
from the mortgage collateral, while the other class will receive most of the
interest and the remainder of the principal. Although certain mortgage- related
securities are guaranteed by a third party or otherwise similarly secured, the
market value of the security, which may fluctuate, is not secured. If a
mortgage- related security is purchased at a premium, all or part of the premium
may be lost if there is a decline in the market value of the security, whether
resulting from changes in interest rates or prepayments on the underlying
mortgage collateral.
The mortgage-related securities in which these Portfolios may invest also
include multi-class pass through certificates secured principally by mortgage
loans on commercial properties. These mortgage- related securities are
structured similarly to mortgage-related securities secured by pools of
residential mortgages. Commercial lending, however, generally is viewed as
exposing the lender to a greater risk of loss than one- to four-family
residential lending. Commercial lending, for example, typically involves larger
loans to single borrowers or groups of related borrowers than residential one-
to four-family mortgage loans. In addition, the repayment of loans secured by
income producing properties typically is dependent upon the successful operation
of the related real estate project and the cash flow generated therefrom.
Consequently, adverse changes in economic conditions and circumstances are more
likely to have an adverse impact on mortgage-related securities secured by loans
on commercial properties than on those secured by loans on residential
properties.
Each of these Portfolios also may invest in subordinated mortgage-related
securities ("Subordinated Securities"), which are issued or sponsored by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers. Subordinated
Securities have no governmental guarantee, and are subordinated in some manner
as to the payment of principal and/or interest to the holders of more senior
mortgage-related securities arising out of the same pool of mortgages. The
holders of Subordinated Securities typically are compensated with a higher
stated yield than are the holders of more senior mortgage-related securities. On
the other hand, Subordinated Securities typically subject the holder to greater
risk than senior mortgage-related securities and tend to be rated in a lower
rating category, and frequently a substantially lower rating category, than the
senior mortgage-related securities issued in respect of the same pool of
mortgages. Subordinated Securities generally are likely to be more sensitive to
changes in prepayment and interest rates and the market for such securities may
be less liquid than is the case for traditional fixed- income securities and
senior mortgage-related securities.
As with other interest-bearing securities, the prices of certain
mortgage-related securities are inversely affected by changes in interest rates.
However, although the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the security are more likely
to be prepaid. For this and other reasons, a mortgage-related security's stated
maturity may be shortened by unscheduled prepayments on the underlying
mortgages, and, therefore, it is not possible to predict accurately the
security's return to the Portfolio. Moreover, with respect to stripped
mortgage-backed securities, if the underlying mortgage securities experience
greater than anticipated prepayments of principal, the Portfolio may fail to
fully recoup its initial investment even if the securities are rated in the
highest rating category by a nationally recognized statistical rating
organization. During periods of rapidly rising interest rates, prepayments of
mortgage-related securities may occur at slower than expected rates. Slower
prepayments effectively may lengthen a mortgage-related security's expected
maturity which generally would cause the value of such security to fluctuate
more widely in response to changes in interest rates. Were the prepayments on
the Portfolio's mortgage-related securities to decrease broadly, the Portfolio's
effective duration, and thus sensitivity to interest rate fluctuations, would
increase. For further discussion concerning the investment considerations
involved, see "Investment Considerations and Risks--Fixed-Income Securities" and
"Appendix A--Certain Portfolio Securities--Illiquid Securities" below.
ASSET-BACKED SECURITIES--(International Fixed-Income Portfolio and
Strategic Yield Portfolio) Asset-backed securities are a form of Derivative. The
securitization techniques used for asset-backed securities are similar to those
used for mortgage-related securities. These securities include debt securities
and securities with debt-like characteristics. The collateral for these
securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital account receivables. The Portfolio may
invest in these and other types of asset-backed securities that may be developed
in the future.
Asset-backed securities present certain risks that are not presented by
mortgage-related securities. Primarily, these securities may provide the
Portfolio with a less effective security interest in the related collateral than
do mortgage-related securities. Therefore, there is the possibility that
recoveries on the underlying collateral may not, in some cases, be available to
support payments on these securities.
ZERO COUPON AND STRIPPED U.S. TREASURY SECURITIES--(Strategic Yield
Portfolio) The Portfolio may invest in zero coupon U.S. Treasury securities,
which are Treasury notes and Bonds that have been stripped of their unmatured
interest coupons, the coupons themselves and receipts or certificates
representing interests in such stripped debt obligations and coupons. Zero
coupon securities also are issued by corporations and financial institutions
which constitute a proportionate ownership of the issuer's pool of underlying
U.S. Treasury securities. A zero coupon security pays no interest to its holder
during its life and is sold at a discount to its face value at maturity. The
market prices of zero coupon securities generally are more volatile than the
market prices of securities that pay interest periodically and are likely to
respond to a greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
INVESTMENT COMPANIES -- (All Portfolios) Each Portfolio may invest, to the
extent permitted under the 1940 Act, in securities issued by investment
companies which principally invest in securities of the type in which the
Portfolio invests. Investments in the securities of investment companies may
involve duplication of advisory fees and certain other expenses.
MONEY MARKET INSTRUMENTS -- (All Portfolios) Each Portfolio, unless
otherwise provided, may invest in the following types of Money Market
Instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury securities
that differ in their interest rates, maturities and times of issuance. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury; others
by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not so obligated by law.
FOREIGN GOVERNMENT SECURITIES. (All Portfolios) Securities issued or
guaranteed by a foreign government or its agencies or instrumentalities.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio buys, and
the seller agrees to repurchase, a security at a mutually agreed upon time and
price (usually within seven days). The repurchase agreement thereby determines
the yield during the purchaser's holding period, while the seller's obligation
to repurchase is secured by the value of the underlying security. Repurchase
agreements could involve risks in the event of a default or insolvency of the
other party to the agreement, including possible delays or restrictions upon the
Portfolio's ability to dispose of the underlying securities. The Portfolio may
enter into repurchase agreements with certain banks or non-bank dealers.
BANK OBLIGATIONS. The Portfolio may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, the Portfolio may be subject to
additional investment risks that are differing in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. See "Investment Considerations and Risks--Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven days)
at a stated interest rate.
Banker's acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short- term credit needs. The commercial
paper of U.S. issuers or foreign issuers (in the case of the International
Equity Portfolio, International Fixed-Income Portfolio, International Small Cap
Portfolio, Emerging Markets Portfolio, Strategic Yield Portfolio and Global
Equity Portfolio) purchased by the Portfolio will consist only of direct
obligations which, at the time of their purchase, are (a) rated not lower than
Prime- 1 by Moody's, A-1 by S&P, Fitch-1 by Fitch or Duff-1 by Duff, (b) issued
by companies having an outstanding debt issue currently rated at least Aa/AA by
one or more Rating Agencies, or (c) if unrated, determined by the Investment
Manager to be of comparable quality to those rated obligations which may be
purchased by the Portfolio.
PARTICIPATION INTERESTS. Each Portfolio may purchase from financial
institutions participation interests in securities in which the Portfolio may
invest. A participation interest gives the Portfolio an undivided interest in
the security in the proportion that the Portfolio's participation interest bears
to the total principal amount of the security. These instruments may have fixed,
floating or variable rates of interest with remaining maturities of 13 months or
less. If the participation interest is unrated, or has been given a rating below
that which is permissible for purchase by the Portfolio, the participation
interest will be collateralized by U.S. Government securities, or, in the case
of unrated participation interests, the Investment Manager must have determined
that the instrument is of comparable quality to those instruments in which the
Portfolio may invest.
ILLIQUID SECURITIES -- (All Portfolios) Each Portfolio may invest up to 15%
of the value of its net assets in securities as to which a liquid trading market
does not exist, provided such investments are consistent with the Portfolio's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, certain mortgage-related
securities, and, with respect to the International Fixed-Income Portfolio and
Strategic Yield Portfolio, certain privately negotiated, non-exchange traded
options and securities used to cover such options. As to these securities, the
Portfolio is subject to a risk that should the Portfolio desire to sell them
when a ready buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's net assets could be
adversely affected.
RATINGS -- (All Portfolios) Securities rated Baa by Moody's are considered
medium grade obligations; they are neither highly protected nor poorly secured,
and are considered by Moody's to have speculative characteristics. Bonds rated
BBB by S&P, Fitch and Duff are investment grade and regarded as having adequate
capacity to pay interest and repay principal; however, adverse changes in
economic conditions and circumstances are more likely to have an adverse impact
on these bonds and, therefore, impair timely payment. Securities rated Ba by
Moody's are judged to have speculative elements; their future cannot be
considered as well assured and often the protection of interest and principal
payments may be very moderate. Securities rated BB by S&P, Fitch and Duff are
regarded as having predominantly speculative characteristics and, while such
obligations have less near-term vulnerability to default than other speculative
grade debt, they face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. Securities rated Caa by
Moody's or CCC by S&P, Fitch and Duff are of poor standing and may be in default
or there may be present elements of danger with respect to principal or
interest. Securities rated C by Moody's are regarded as having extremely poor
prospects of ever attaining any real investment standing. Securities rated D by
S&P, Fitch and Duff are in default, and payment of interest and/or repayment of
principal is in arrears. Such securities, though high yielding, are
characterized by great risk. See "Appendix" in the Statement of Additional
Information for a general description of securities ratings.
The Rating Agencies' ratings represent their opinions as to the quality of
the obligations which they undertake to rate. Ratings are relative and
subjective and, although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risks of
such obligations. Although these ratings may be an initial criterion for
selection of portfolio investments, the Investment Manager also will evaluate
these securities and the ability of the issuers of such securities to pay
interest and principal. The Portfolio's ability to achieve its investment
objective may be more dependent on the Investment Manager's credit analysis than
might be the case for a fund that invested in higher rated securities.
APPENDIX B
Set forth below is total return and average annual total return information
for publicly offered series of The Lazard Funds, Inc., which correspond to the
Portfolios offered in this Prospectus, calculated as described under
"Performance Information," and for an appropriate securities index. Investors
should not consider this performance data as an indication of the future
performance of the Portfolios offered in this Prospectus. The performance
figures below reflect the deduction of the historical fees and expenses paid by
the Lazard public funds, and not those to be paid by the Portfolios. The figures
also do not reflect the deduction of charges or expenses attributable to VA
contracts or VLI policies. Policy owners should refer to the applicable
insurance company disclosure documents for information on such charges and
expenses. Additionally, although it is anticipated that each Portfolio and its
corresponding Lazard public fund will hold similar securities, their investment
results are expected to differ. In particular, differences in asset size and in
cash flow resulting from purchases and redemptions of Portfolio shares may
result in different security selections, differences in the relative weightings
of securities or differences in the price paid for particular portfolio
holdings.
The total return and average annual total return for the corresponding
Lazard public funds and securities indices for the indicated periods ended
December 31, 1996 were:
<TABLE>
<CAPTION>
Name of Public Fund Total Return Average Annual Total Return
and Index Period Ended Period Ended
December 31, 1996 December 31, 1996
One Three Five Since One Three Five Since
Year Years Years Inception* Year Years Years Inception*
------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 19.9% 72.0% 114.8% 243.3% 19.9% 19.8% 16.5% 13.8%
Standard & Poor's 500 Index** 23.0% 71.4% 103.1% 242.2% 23.0% 19.7% 15.2% 13.7%
Lazard Small Cap Portfolio 23.9% 53.6% 149.3% 160.7% 23.9% 15.4% 20.0% 20.4%
Russell 2000 Index** 16.5% 46.9% 106.8% 113.2% 16.5% 13.7% 15.6% 15.8%
Lazard Bantam Value Portfolio N/A N/A N/A 33.3% N/A N/A N/A N/A
Russell 2000 Index** N/A N/A N/A 13.1% N/A N/A N/A N/A
Lazard Global Equity Portfolio N/A N/A N/A 15.8% N/A N/A N/A N/A
MSCI World Index** N/A N/A N/A 12.8% N/A N/A N/A N/A
Lazard International Equity Portfolio 15.6% 31.0% 60.3% 65.6% 15.6% 9.4% 9.9% 10.3%
EAFE Index** 6.0% 27.1% 48.0% 48.4% 6.0% 8.3% 8.2% 7.9%
Lazard International Small Cap Portfolio 15.6% 12.4% N/A 22.2% 15.6% 4.0% N/A 6.7%
Salomon EMI Index Ex-US** 7.2% 22.4% N/A 30.3% 7.2% 7.0% N/A 9.0%
Lazard Emerging Markets Portfolio 23.6% N/A N/A 14.7% 23.6% N/A N/A 5.7%
IFC Investable Total Return Index** 9.3% N/A N/A -0.5% 9.3% N/A N/A -0.2%
Lazard International Fixed-Income Portfolio+ 5.5% 31.3% 54.9% 61.0% 5.5% 9.5% 9.1% 9.7%
Salomon World Gov't Bond Index Ex-U.S.** 4.1% 31.9% 60.2% 71.2% 4.1% 9.7% 9.9% 11.0%
Lazard Strategic Yield Portfolio++ 13.7% 26.2% 54.6% 57.8% 13.7% 8.1% 9.1% 9.1%
LIBOR USD Fix Index** 5.6% 17.6% 26.2% 27.3% 5.6% 5.6% 4.8% 4.7%
----------------
* Inception dates are: Lazard Equity Portfolio--June 1, 1987;
Lazard Small Cap Portfolio--October 31, 1991; Lazard Bantam
Value Portfolio--March 1, 1996; Lazard Global Equity
Portfolio--January 3, 1996; Lazard International Equity
Portfolio--October 29, 1991; Lazard International Small Cap
Portfolio--December 1, 1993; Lazard Emerging Markets
Portfolio--July 15, 1994; Lazard International Fixed-Income
Portfolio--November 8, 1991; and Lazard Strategic Yield
Portfolio--October 1, 1991.
** The performance data of the indices have been prepared from sources and
data that the Investment Manager believes to
be reliable, but no representation is made as to their
accuracy. These indices are unmanaged and have no fees or
costs. The S&P 500(R)Index is a market
capitalization-weighted index of 500 common stocks, designed to measure
performance of the broad domestic economy through changes
in the aggregate market value of 500 stocks representing
all major industries. The Russell 2000(R)Index is composed
of 2,000 common stocks of U.S. companies with market
capitalizations ranging between $23 million and $2.23
billion as of September 30, 1996. The Morgan Stanley
Capital International (MSCI) World Index is an arithmetic,
market value-weighted average return net of dividends
taxation, which is derived from equities of EAFE Index
countries plus equities from Canada and the United
States. The Morgan Stanley Capital International, Europe,
Australia and Far East Index (EAFE Index) is a broadly
diversified international index composed of the equity
securities of approximately 1,000 companies located outside
the United States. The Salomon Extended Market Index
(EMI) Ex-US represents the bottom 20% based on market
capitalization of the universe of institutionally
available global securities of non-U.S. companies with a
market capitalization greater than $100 million. The IFC
Investable Total Return Index is a market
capitalization-weighted index of emerging markets securities that
represent approximately 65% of all securities based on
market capitalization compiled by the International Finance
Corporation. The Salomon World Government Bond Index
Ex-US is a market capitalization-weighted index of
institutionally traded fixed rate non- U.S. dollar
government bonds, fully hedged into U.S. dollars. The
London Interbank Offered Rate-US dollar Fix Index is an
average derived from sixteen quotations provided by banks
determined by the British Bankers Association.
+ Effective January 1, 1993, Lazard International
Fixed-Income Portfolio, formerly Lazard Global Fixed-Income
Portfolio, was renamed to reflect changes in certain
non-fundamental investment policies of the public fund. The
performance of the public fund is now measured by the
index "excluding U.S." Performance of the index "Since
Inception" shown above is a blended return of the index
"including U.S." and the index "excluding U.S." for the
applicable periods.
++ Effective May 1, 1993, Lazard Strategic Yield Portfolio, formerly Lazard
High-Yield Portfolio, was renamed to reflect changes in certain
non-fundamental investment policies of the public fund.
</TABLE>
The above returns reflect partial waivers of fees. Without such waivers,
the total returns and average annual total returns would have been lower.
* * *
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
LAZARD RETIREMENT SERIES, INC.
30 Rockefeller Plaza
New York, New York 10020
(800) 823-6300
STATEMENT OF ADDITIONAL INFORMATION
MAY 20, 1997
Lazard Retirement Series, Inc. (the "Fund") is a no-load,
open-end management investment company known as a mutual fund. This Statement of
Additional Information, which is not a prospectus, supplements and should be
read in conjunction with the current Prospectus of the Fund, dated May 20,
1997, as it may be revised from time to time, relating to the following nine
portfolios (individually, a "Portfolio" and collectively, the "Portfolios"):
Lazard Retirement Bantam Lazard Retirement International
Value Portfolio Fixed-Income Portfolio
Lazard Retirement Emerging Lazard Retirement International
Markets Portfolio Small Cap Portfolio
Lazard Retirement Equity Lazard Retirement Small Cap
Portfolio Portfolio
Lazard Retirement Global Lazard Retirement Strategic Yield
Equity Portfolio Portfolio
Lazard Retirement International Equity
Portfolio
SHARES OF THE PORTFOLIOS ARE OFFERED ONLY TO VARIABLE ANNUITY AND VARIABLE
LIFE INSURANCE SEPARATE ACCOUNTS ESTABLISHED BY INSURANCE COMPANIES
("PARTICIPATING INSURANCE COMPANIES") TO FUND VARIABLE ANNUITY CONTRACTS AND
VARIABLE LIFE INSURANCE POLICIES (COLLECTIVELY, "POLICIES") AND QUALIFIED
PENSION AND RETIREMENT PLANS AND ACCOUNTS PERMITTING ACCUMULATION OF ASSETS ON A
TAX-DEFERRED BASIS (COLLECTIVELY, "ELIGIBLE PLANS") OUTSIDE THE SEPARATE ACCOUNT
CONTEXT.
Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard
Freres"), serves as the investment manager (the "Investment Manager") to each of
the Portfolios.
To obtain a copy of the Fund's Prospectus, please write or call the Fund at
the address and telephone number given above.
<PAGE>
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies..........................
Investment Restrictions................................................
Management.............................................................
Determination of Net Asset Value.......................................
Portfolio Transactions.................................................
Redemption of Shares...................................................
Distribution and Servicing Plan........................................
Dividends and Distributions............................................
Taxation...............................................................
Performance Information................................................
Organization and Description of Capital Stock..........................
Counsel and Independent Auditors.......................................
Appendix...............................................................
<PAGE>
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTIONS IN THE FUND'S PROSPECTUS ENTITLED "DESCRIPTION OF THE
PORTFOLIOS" AND "APPENDIX."
PORTFOLIO SECURITIES
DEPOSITARY RECEIPTS. (All Portfolios) These securities may be purchased
through "sponsored" or "unsponsored" facilities. A sponsored facility is
established jointly by the issuer of the underlying security and a depositary,
whereas a depositary may establish an unsponsored facility without participation
by the issuer of the deposited security. Holders of unsponsored depositary
receipts generally bear all the costs of such facilities and the depositary of
an unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited security or
to pass through voting rights to the holders of such receipts in respect of the
deposited securities.
MUNICIPAL OBLIGATIONS. (Strategic Yield Portfolio) Municipal obligations
are debt obligations issued by states, territories and possessions of the United
States and the District of Columbia and their political subdivisions, agencies
and instrumentalities, or multistate agencies or authorities. Municipal
obligations bear fixed, floating or variable rates of interest. Certain
municipal obligations are subject to redemption at a date earlier than their
stated maturity pursuant to call options, which may be separated from the
related municipal obligations and purchased and sold separately. The Portfolio
also may acquire call options on specific municipal obligations. The Portfolio
generally would purchase these call options to protect the Portfolio from the
issuer of the related municipal obligation redeeming, or other holder of the
call option from calling away, the municipal obligation before maturity.
Municipal obligations generally include debt obligations issued to obtain
funds for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Industrial
development bonds, in most cases, are revenue bonds and generally do not carry
the pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal obligations include municipal
lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities.
While, in general, municipal obligations are tax exempt securities having
relatively low yields as compared to taxable, non-municipal obligations of
similar quality, certain municipal obligations are taxable obligations, offering
yields comparable to, and in some cases greater than, the yields available on
other permissible Portfolio investments. Dividends received by shareholders on
Portfolio shares which are attributable to interest income received by the
Portfolio from municipal obligations generally will be subject to Federal income
tax. The Portfolio will invest in municipal obligations, the ratings of which
correspond with the ratings of other permissible Portfolio investments. The
Portfolio currently intends to invest no more than 25% of its assets in
municipal obligations. However, this percentage may be varied from time to time
without shareholder approval.
REPURCHASE AGREEMENTS. (All Portfolios) The Fund's custodian or
sub-custodian will have custody of, and will hold in a segregated account,
securities acquired by a Portfolio under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange Commission
(the "Commission") to be loans by the Portfolio that enters into them. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement, the
Portfolio will enter into repurchase agreements only with domestic banks with
total assets in excess of $1 billion, or primary government securities dealers
reporting to the Federal Reserve Bank of New York, with respect to securities of
the type in which the Portfolio may invest, and will require that additional
securities be deposited with it if the value of the securities purchased should
decrease below the resale price.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS. (All
Portfolios) These instruments include variable amount master demand notes, which
are obligations that permit a Portfolio to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Portfolio, as
lender, and the borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus accrued interest,
at any time. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, the Portfolio's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating agencies, and
the Portfolio may invest in them only if at the time of an investment the
borrower meets the criteria set forth in the Prospectus for other commercial
paper issuers.
CONVERTIBLE SECURITIES. (All Portfolios) Although to a lesser extent than
with fixed-income securities, the market value of convertible securities tends
to decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion feature, the
market value of convertible securities tends to vary with fluctuations in the
market value of the underlying common stock. A unique feature of convertible
securities is that as the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and so may
not experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the value
of the underlying common stock. While no securities investments are without
risk, investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.
Convertible securities are investments that provide for a stable stream of
income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible securities
may default on their obligations. A convertible security, in addition to
providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance of
capital appreciation, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.
ILLIQUID SECURITIES. (All Portfolios) When purchasing securities that have
not been registered under the Securities Act of 1933, as amended, and are not
readily marketable, a Portfolio will endeavor, to the extent practicable, to
obtain the right to registration at the expense of the issuer. Generally, there
will be a lapse of time between the Portfolio's decision to sell any such
security and the registration of the security permitting sale. During any such
period, the price of the securities will be subject to market fluctuations.
However, where a substantial market of qualified institutional buyers has
developed for certain unregistered securities purchased by the Portfolio
pursuant to Rule 144A under the Securities Act of 1933, as amended, the
Portfolio intends to treat such securities as liquid securities in accordance
with procedures approved by the Fund's Board. Because it is not possible to
predict with assurance how the market for specific restricted securities sold
pursuant to Rule 144A will develop, the Fund's Board has directed the Investment
Manager to monitor carefully each Portfolio's investments in such securities
with particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a period of
time, qualified institutional buyers cease purchasing restricted securities
pursuant to Rule 144A, a Portfolio's investing in such securities may have the
effect of increasing the level of illiquidity in its investment portfolio during
such period.
MORTGAGE-RELATED SECURITIES. (International Fixed-Income Portfolio and
Strategic Yield Portfolio)
GOVERNMENT-AGENCY SECURITIES--Mortgage-related securities issued by the
Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA is a wholly-owned
U.S. Government corporation within the Department of Housing and Urban
Development. GNMA certificates also are supported by the authority of GNMA to
borrow funds from the U.S. Treasury to make payments under its guarantee.
GOVERNMENT-RELATED SECURITIES--Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of FNMA and are not backed by or entitled to the full faith and
credit of the United States. FNMA is a government-sponsored organization owned
entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates (also
known as "Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of the
United States created pursuant to an Act of Congress, which is owned entirely by
Federal Home Loan Banks. Freddie Macs are not guaranteed by the United States or
by any Federal Home Loan Bank and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder
to timely payment of interest, which is guaranteed by FHLMC. FHLMC guarantees
either ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
PRIVATE ENTITY SECURITIES--These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers. Timely payment
of principal and interest on mortgage-related securities backed by pools created
by non-governmental issuers often is supported partially by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. The insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. There can be no assurance that the
private insurers or mortgage poolers can meet their obligations under the
policies, so that if the issuers default on their obligations the holders of the
security could sustain a loss. No insurance or guarantee covers the Portfolio or
the price of the Portfolio's shares. Mortgage-related securities issued by
non-governmental issuers generally offer a higher rate of interest than
government-agency and government-related securities because there are no direct
or indirect government guarantees of payment.
REITS. (The Bantam Value Portfolio, Equity Portfolio, Global Equity
Portfolio and Small Cap Portfolio) Each of these Portfolios may invest an
unlimited amount of its assets in Real Estate Investment Trusts ("REITS"),
although each currently intends to limit its investments in REITS to no more
than 5% of its net assets. Each Portfolio intends to invest in listed equity
REITS, which own properties, and listed mortgage REITS, which make short-term
construction and development mortgage loans or which invest in long-term
mortgages or mortgage pools. Accordingly, the Portfolio may be subject to the
considerations associated with the direct ownership of real estate because of
the Portfolio's ability to invest in the securities of companies that own,
construct, manage or sell residential, commercial or industrial real estate.
These include declines in the value of real estate, factors related to general
and local economic conditions, overbuilding and increased competition, increases
in property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, limitations on rents, changes in neighborhood values, the
appeal of properties to tenants, and increases in interest rates. The value of
securities of companies that service the real testate industry also may be
affected by such risks.
In addition, equity REITS may be affected by any changes in the value of
the underlying property owned by the trusts, while mortgage REITS may be
affected by the quality of any credit extended. Further, equity and mortgage
REITS are dependent upon management skill, are not diversified and are therefore
subject to the risk of financing single or a limited number of projects. REITS
are also subject to heavy cash flow dependency, defaults by borrowers,
self-liquidation and the possibility of failing to qualify for tax free
pass-through of income under the Internal Revenue Code of 1986, as amended (the
"Code"), and to maintain exemption under the Investment Company Act of 1940, as
amended (the "1940 Act").
INVESTMENT COMPANIES. (All Portfolios) Each Portfolio may invest in
securities issued by other investment companies. Under the 1940 Act, a
Portfolio's investment in such securities, subject to certain exceptions,
currently is limited to (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Portfolio's net assets with respect to any one
investment company and (iii) 10% of the Portfolio's net assets in the aggregate.
MANAGEMENT POLICIES
LENDING PORTFOLIO SECURITIES. (All Portfolios) In connection with its
securities lending transactions, a Portfolio may return to the borrower or a
third party which is unaffiliated with the Portfolio, and which is acting as a
"placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.
The Commission currently requires that the following conditions must be met
whenever portfolio securities are loaned: (1) the Portfolio must receive at
least 100% cash collateral from the borrower; (2) the borrower must increase
such collateral whenever the market value of the securities rises above the
level of such collateral; (3) the Portfolio must be able to terminate the loan
at any time; (4) the Portfolio must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions payable on the loaned
securities, and any increase in market value; (5) the Portfolio may pay only
reasonable custodian fees in connection with the loan; and (6) while voting
rights on the loaned securities may pass to the borrower, the Fund's Board must
terminate the loan and regain the right to vote the securities if a material
event adversely affecting the investment occurs.
DERIVATIVES. (All Portfolios, except the International Equity Portfolio and
Small Cap Portfolio) Each of these Portfolios may invest in Derivatives (as
defined in the Prospectus) for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Portfolio to invest
than "traditional" securities would.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with Derivatives purchased on an exchange.
By contrast, no clearing agency guarantees over-the-counter Derivatives.
Therefore, each party to an over-the-counter Derivative bears the risk that the
counterparty will default. Accordingly, the Investment Manager will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by
the Portfolio. Over- the-counter Derivatives are less liquid than
exchange-traded Derivatives since the other party to the transaction may be the
only investor with sufficient understanding of the Derivative to be interested
in bidding for it.
FUTURES TRANSACTIONS--IN GENERAL. (All Portfolios) Each Portfolio may enter
into futures contracts in U.S. domestic markets, such as the Chicago Board of
Trade and the International Monetary Market of the Chicago Mercantile Exchange,
or, if permitted as described in the Prospectus, on exchanges located outside
the United States, such as the London International Financial Futures Exchange
and the Sydney Futures Exchange Limited. Foreign markets may offer advantages
such as trading opportunities or arbitrage possibilities not available in the
United States. Foreign markets, however, may have greater risk potential than
domestic markets. For example, some foreign exchanges are principal markets so
that no common clearing facility exists and an investor may look only to the
broker for performance of the contract. In addition, any profits a Portfolio
might realize in trading could be eliminated by adverse changes in the exchange
rate, or the Portfolio could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are traded
on domestic exchanges and those which are not. Unlike trading on domestic
commodity exchanges, trading on foreign commodity exchanges is not regulated by
the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to the Portfolio which
could adversely affect the value of the Portfolio's net assets. Although a
Portfolio intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid market
will exist for any particular contract at any particular time. Many futures
exchanges and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods during the
trading day. Futures contract prices could move to the limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting the Portfolio to
substantial losses.
Successful use of futures by a Portfolio also is subject to the Investment
Manager's ability to predict correctly movements in the direction of the
relevant market, and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the transaction being
hedged and the price movements of the futures contract. For example, if a
Portfolio uses futures to hedge against the possibility of a decline in the
market value of securities held in its portfolio and the prices of such
securities instead increase, the Portfolio will lose part or all of the benefit
of the increased value of securities which it has hedged because it will have
offsetting losses in its futures positions. Furthermore, if in such
circumstances the Portfolio has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. The Portfolio may have
to sell such securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Commission, a
Portfolio may be required to segregate permissible liquid assets in connection
with its commodities transactions in an amount generally equal to the value of
the underlying commodity. The segregation of such assets will have the effect of
limiting the Portfolio's ability otherwise to invest those assets.
SPECIFIC FUTURES TRANSACTIONS. Each Portfolio, except the International
Fixed-Income Portfolio, may purchase and sell stock index futures contracts. A
stock index future obligates the Portfolio to pay or receive an amount of cash
equal to a fixed dollar amount specified in the futures contract multiplied by
the difference between the settlement price of the contract on the contract's
last trading day and the value of the index based on the stock prices of the
securities that comprise it at the opening of trading in such securities on the
next business day.
The Emerging Markets Portfolio, Global Equity Portfolio, International
Fixed- Income Portfolio, International Small Cap Portfolio and Strategic Yield
Portfolio may purchase and sell interest rate futures contracts. An interest
rate future obligates the Fund to purchase or sell an amount of a specific debt
security at a future date at a specific price.
Each Portfolio, except the Equity Portfolio, Bantam Value Portfolio and
Small Cap Portfolio, may purchase and sell currency futures. A currency future
obligates the Portfolio to purchase or sell an amount of a specific currency at
a future date at a specific price.
OPTIONS--IN GENERAL. (All Portfolios) Each Portfolio may purchase and write
(i.e., sell) call or put options with respect to specific securities. A call
option gives the purchaser of the option the right to buy, and obligates the
writer to sell, the underlying security or securities at the exercise price at
any time during the option period, or at a specific date. Conversely, a put
option gives the purchaser of the option the right to sell, and obligates the
writer to buy, the underlying security or securities at the exercise price at
any time during the option period, or at a specified date.
A covered call option written by a Portfolio is a call option with respect
to which the Portfolio owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. A put option written by a
Portfolio is covered when, among other things, cash or liquid securities having
a value equal to or greater than the exercise price of the option are placed in
a segregated account with the Fund's custodian to fulfill the obligation
undertaken. The principal reason for writing covered call and put options is to
realize, through the receipt of premiums, a greater return than would be
realized on the underlying securities alone. A Portfolio receives a premium from
writing covered call or put options which it retains whether or not the option
is exercised.
There is no assurance that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist for any particular option
or at any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, at times have rendered certain of the
clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, a Portfolio is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
SPECIFIC OPTIONS TRANSACTIONS. All Portfolios, except the International
Fixed-Income Portfolio, may purchase and sell call and put options in respect of
specific securities (or groups or "baskets" of specific securities) or stock
indices listed on national securities exchanges or traded in the
over-the-counter market. An option on a stock index is similar to an option in
respect of specific securities, except that settlement does not occur by
delivery of the securities comprising the index. Instead, the option holder
receives an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. Thus, the effectiveness of
purchasing or writing stock index options will depend upon price movements in
the level of the index rather than the price of a particular stock.
Each Portfolio, except the Equity Portfolio, Bantam Value Portfolio and
Small Cap Portfolio, may purchase and sell call and put options on foreign
currency. These options convey the right to buy or sell the underlying currency
at a price which is expected to be lower or higher than the spot price of the
currency at the time the option is exercised or expires.
Each Portfolio may purchase cash-settled options on interest rate swaps,
interest rate swaps. The Emerging Markets Portfolio, Global Equity Portfolio,
International Equity Portfolio, International Fixed-Income Portfolio and
Strategic Yield Portfolio may purchase interest rate swaps denominated in
foreign currency. Each Portfolio, except the International Fixed-Income
Portfolio, may purchase equity index swaps in pursuit of its investment
objective. Interest rate swaps involve the exchange by a Portfolio with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating-rate payments for fixed-rate payments) denominated in
U.S. dollars or foreign currency. Equity index swaps involve the exchange by the
Portfolio with another party of cash flows based upon the performance of an
index or a portion of an index of securities which usually includes dividends. A
cash-settled option on a swap gives the purchaser the right, but not the
obligation, in return for the premium paid, to receive an amount of cash equal
to the value of the underlying swap as of the exercise date. These options
typically are purchased in privately negotiated transactions from financial
institutions, including securities brokerage firms.
Successful use by a Portfolio of options will be subject to the Investment
Manager's ability to predict correctly movements in the prices of individual
stocks, the stock market generally, foreign currencies or interest rates. To the
extent the Investment Manager's predictions are incorrect, the Portfolio may
incur losses.
FUTURE DEVELOPMENTS. The relevant Portfolios may take advantage of
opportunities in the area of options and futures contracts and options on
futures contracts and any other Derivatives which are not presently contemplated
for use by the Portfolio or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Portfolio's investment objective and legally permissible for the Portfolio.
Before entering into such transactions or making any such investment, the
Portfolio will provide appropriate disclosure in the Prospectus or Statement of
Additional Information.
FORWARD COMMITMENTS. Securities purchased on a forward commitment or when-
issued basis are subject to changes in value (generally changing in the same
way, i.e., appreciating when interest rates decline and depreciating when
interest rates rise) based upon the public's perception of the creditworthiness
of the issuer and changes, real or anticipated, in the level of interest rates.
Securities purchased on a forward commitment or when-issued basis may expose a
Portfolio to risks because they may experience such fluctuations prior to their
actual delivery. Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when the
Portfolio is fully or almost fully invested may result in greater potential
fluctuation in the value of the Portfolio's net assets and its net asset value
per share.
INVESTMENT CONSIDERATIONS AND RISKS
LOWER RATED SECURITIES. (International Fixed-Income Portfolio and Strategic
Yield Portfolio) Each of these Portfolios is permitted to invest in securities
rated Ba by Moody's Investors Service, Inc. ("Moody's") or BB by Standard &
Poor's Ratings Group ("S&P"), Fitch Investors Service, L.P. ("Fitch") and Duff &
Phelps Credit Rating Co. ("Duff" and together with the other rating agencies,
the "Rating Agencies"), and as low as the lowest rating assigned by the Rating
Agencies. Such securities, though higher yielding, are characterized by risk.
See "Description of the Portfolios--Investment Considerations and
Risks--Lower Rated Securities" in the Prospectus for a discussion of certain
risks and the "Appendix" for a general description of the Rating Agencies'
ratings. Although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
securities. The Portfolio will rely on the Investment Manager's judgment,
analysis and experience in evaluating the creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities. These securities generally are considered by the Rating
Agencies to be, on balance, predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in the
higher rating categories.
Companies that issue certain of these securities often are highly leveraged
and may not have available to them more traditional methods of financing.
Therefore, the risk associated with acquiring the securities of such issuers
generally is greater than is the case with the higher rated securities. For
example, during an economic downturn or a sustained period of rising interest
rates, highly leveraged issuers of these securities may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations also may be affected adversely by specific
corporate developments, forecasts, or the unavailability of additional
financing. The risk of loss because of default by the issuer is significantly
greater for the holders of these securities because such securities generally
are unsecured and often are subordinated to other creditors of the issuer.
Because there is no established retail secondary market for many of these
securities, the Portfolio anticipates that such securities could be sold only to
a limited number of dealers or institutional investors. To the extent a
secondary trading market for these securities does exist, it generally is not as
liquid as the secondary market for higher rated securities. The lack of a liquid
secondary market may have an adverse impact on market price and yield and the
Portfolio's ability to dispose of particular issues when necessary to meet the
Portfolio's liquidity needs or in response to a specific economic event such as
a deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for the
Portfolio to obtain accurate market quotations for purposes of valuing its
portfolio and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play a
greater role in valuation because less reliable, objective data may be
available.
These securities may be particularly susceptible to economic downturns. It
is likely that an economic recession could disrupt severely the market for such
securities and may have an adverse impact on the value of such securities. In
addition, it is likely that any such economic downturn could adversely affect
the ability of the issuers of such securities to repay principal and pay
interest thereon and increase the incidence of default for such securities.
The Portfolio may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. The Portfolio
has no arrangement with any persons concerning the acquisition of such
securities, and the Investment Manager will review carefully the credit and
other characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also apply to
lower rated zero coupon securities and pay-in-kind bonds, in which the Strategic
Yield Portfolio may invest. Pay-in-kind bonds pay interest through the issuance
of additional securities. Zero coupon securities and pay-in-kind bonds carry an
additional risk in that, unlike bonds which pay interest throughout the period
to maturity, the Portfolio will realize no cash until the cash payment date
unless a portion of such securities are sold and, if the issuer defaults, the
Portfolio may obtain no return at all on its investment.
INVESTMENT RESTRICTIONS
Each Portfolio has adopted investment restrictions numbered 1 through 8 as
fundamental policies, which cannot be changed, as to a Portfolio, without
approval by the holders of a majority (as defined in the 1940 Act) of such
Portfolio's outstanding voting shares. However, the amendment of these
restrictions to add an additional Portfolio, which amendment does not
substantively affect the restrictions with respect to an existing Portfolio,
will not require approval as described in the preceding sentence. Investment
restrictions numbered 9 through 12 are not fundamental policies and may be
changed, as to a Portfolio, by vote of a majority of the Fund's Board of
Directors at any time. None of the Portfolios may:
1. Invest more than 25% of the value of its total assets in
the securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Invest in commodities, except that a Portfolio may purchase
and sell options, forward contracts, futures contracts, including those relating
to indices, and options on futures contracts or indices.
3. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but a Portfolio may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate or real estate investment trusts.
4. Borrow money, except to the extent permitted
under the 1940 Act (which currently limits borrowing to more than 33-1/3%
of the value of the Portfolio's total assets). For purposes of this Investment
Restriction, the entry into options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or indices
shall not constitute borrowing.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, a Portfolio may
lend its portfolio securities in an amount not to exceed 33-1/3% of the value of
its total assets. Any loans of portfolio securities will be made according to
guidelines established by the Commission and the Fund's Board.
6. Act as an underwriter of securities of other issuers,
except to the extent a Portfolio may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of portfolio
securities.
7. Issue any senior security (as such term is defined in
Section 18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restrictions Nos. 2, 4, 10 and 11 may be deemed to give rise to a
senior security.
8. Purchase securities on margin, but a Portfolio may make
margin deposits in connection with transactions on options, forward contracts,
futures contracts, including those relating to indices, and options on futures
contracts or indices.
9. Invest in the securities of a company for the purpose of
exercising management or control, but the Portfolio will vote the securities it
owns as a shareholder in accordance with its views.
10. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
11. Purchase, sell or write puts, calls or
combinations thereof, except as described in the Prospectus and Statement
of Additional Information.
12. Enter into repurchase agreements providing for settlement
in more than seven days after notice or purchase securities which are illiquid,
if, in the aggregate, more than 15% of the value of its net assets would be so
invested.
* * *
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
In addition, each Portfolio has adopted the following policies as
non-fundamental policies. Each Portfolio intends (i) to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code and (ii) to comply in all material respects with insurance laws and
regulations that the Fund has been advised are applicable to investments of
separate accounts of Participating Insurance Companies. As non-fundamental
policies, these policies may be changed by vote of a majority of the Fund's
Board of Directors at any time.
MANAGEMENT
The Directors and officers of the Fund and their principal occupations
during the past five years are set forth below. Unless otherwise specified, the
address of each of the following persons is 30 Rockefeller Plaza, New York, New
York 10020.
<PAGE>
Name, Address and Position with Principal Occupation During
Age Registrant Past 5 Years
Norman Eig* (55) Chairman of the Managing Director (formerly
Board General Partner), Lazard
Freres.
Herbert W. Gullquist* President, Managing Director (formerly
(58) Director General Partner), Lazard
Freres.
John J. Burke (67) Director Vice Chairman, Director,
50 Burning Tree Lane Montana Power Company.
Butte, MT 59701
Kenneth S. Davidson Director Managing Partner, Davidson
(51) Weil Associates; Director,
Davidson Weil Associates Blackthorn Fund N.V. and
767 Fifth Avenue, Ottertail Valley Railroad.
43RD Floor
New York, NY 10153
Carl Frischling* (58) Director Senior Partner, Kramer,
(58) Levin, Naftalis, Nessen,
170 East 83rd Street Kamin & Frankel; from 1992 to
New York, NY 10028 1994, Senior Partner, Reid &
Priest; from 1979 to 1992,
Senior Partner, Spengler
Carlson Grubar Brodsky &
Frischling.
Lester Z. Lieberman (65) Director Private Investor; Member of
25 Vreeland Road the Board of Directors of
Florham Park, NJ Dowel Associates, Chairman of
07932 the Boards of Trustees of
Newark Beth Israel Medical
Center and Irvington General
Hospital; Member of the New
Jersey State Investment
Council; prior to 1994,
Member of the Boards of
Directors of United Jersey
Bank, N.A. and Clarkson
University.
Richard Reiss, Jr. (52) Director Managing Partner, Cumberland
1114 Avenue of the Americas Associates, an investment
New York, NY 10036 manager.
John Rutledge (47) Director President, Rutledge &
One Greenwich Company, an economics and
Office Park investment advisory firm;
51 Weaver Street Chairman, Claremont
Greenwich, CT Economics Institute.
06831
William Katz (43) Director President and Chief Operating
1285 Avenue of the Officer of BBDO, an
Americas advertising agency; from May
New York, NY 10019 1994 to February 1996,
General Manager of BBDO; prior
thereto, Executive Vice President
and Senior Account Director of
BBDO.
William G. Butterly, Vice President, Vice President, Legal Affairs
III (35) Secretary of the Investment Manager;
30 Rockefeller Plaza prior to May 1993, attorney
New York, NY 10020 with Shearman & Sterling.
Gus Coutsouros (33) Treasurer Certified Public Accountant,
30 Rockefeller Plaza Vice President and Assistant
New York, Ny 10020 Controller of the Investment
Manager; prior to June
1992, Manager, National
Securities and Research Corp.
- -----------
* An "interested person" of the Fund as defined in the 1940 Act.
<PAGE>
The Fund has adopted a Distribution and Servicing Plan with respect to
shares of the Portfolios. So long as the Plan remains in effect, the Directors
who are not "interested persons" of the Fund, as defined in the 1940 Act, will
be selected and nominated by the Directors who are not "interested persons" of
the Fund.
The Fund pays its Directors its allocable share of the
aggregate of a fixed fee of $20,000 per annum and a per meeting fee of $1,000
for the Fund and The Lazard Funds, Inc., and reimburses them for their expenses.
The estimated aggregate amount of compensation to be paid to each Director by
the Fund and by The Lazard Funds, Inc. for which such person also is a
Director for the year ending December 31, 1997, Was as follows:
Total Compensation From
Aggregate Compensation The Fund and The
Name of Director from the Fund Lazard Funds, Inc.
Norman Eig N/A N/A
Herbert W. Gullquist N/A N/A
John J. Burke $4,000 $28,000
Lester Z. Lieberman $4,000 $28,000
Richard Reiss, Jr. $4,000 $28,000
John Rutledge $4,000 $28,000
Kenneth S. Davidson $4,000 $28,000
Carl Frischling $4,000 $28,000
William Katz $4,000 $28,000
INVESTMENT MANAGER AND INVESTMENT MANAGEMENT AGREEMENT
Lazard Asset Management, 30 Rockefeller Plaza, New York, New York 10020,
has entered into an investment management agreement (the "Management Agreement")
with the Fund on behalf of the Portfolios. Pursuant to the Management Agreement,
the Investment Manager regularly provides each Portfolio with investment
research, advice and supervision and furnishes continuously an investment
program for each Portfolio consistent with its investment objectives and
policies, including the purchase, retention and disposition of securities.
The Investment Manager is a division of Lazard Freres, a New York
limited liability company, which is registered as an investment adviser with the
Commission and is a member of the New York, American and Midwest Stock
Exchanges. Lazard Freres provides its clients with a wide variety of investment
banking and related services, including investment management. It is a major
underwriter of corporate securities, conducts a broad range of trading and
brokerage activities in corporate and governmental bonds and stocks and acts as
a financial adviser to utilities. The Investment Manager provides investment
management services to client discretionary accounts with assets as of December
31, 1996 totaling approximately $38.1 billion. Its clients are both individuals
and institutions, some of whose accounts have investment policies similar to
those of several of the Portfolios.
Under the terms of the Management Agreement, the Investment Manager will
pay the compensation of all personnel of the Fund, except the fees of Directors
of the Fund who are not employees or affiliated persons of the Investment
Manager. The Investment Manager will make available to the Portfolios such of
the Investment Manager's members, directors, officers and employees as are
reasonably necessary for the operations of each Portfolio, or as may be duly
elected officers or directors of the Fund. Under the Management Agreement, the
Investment Manager also pays each Portfolio's office rent and provides
investment advisory research and statistical facilities and all clerical
services relating to research, statistical and investment work. The Investment
Manager, including its employees who serve the Portfolios, may render investment
advice, management and other services to others.
As compensation for its services, each of the Portfolios has agreed to pay
the Investment Manager an investment management fee, accrued daily and payable
monthly, at the annual rates set forth below as a percentage of the average
daily value of the net assets of the relevant Portfolio:
Bantam Value International Fixed-Income
Portfolio--.75% Portfolio--.75%
Emerging Markets International Small Cap
Portfolio--1.00% Portfolio--.75%
Equity Portfolio--.75% Small Cap Portfolio--.75%
Global Equity Strategic Yield Portfolio--.75%
Portfolio--.75%
International Equity
Portfolio--.75%
The Management Agreement provides that the relevant Portfolio pays all of
its expenses that are not specifically assumed by the Investment Manager.
Expenses attributable to each Portfolio will be charged against the assets of
that Portfolio. Other expenses of the Fund will be allocated among the
Portfolios in a manner which may, but need not, be proportionate in relation to
the net assets of each Portfolio. Expenses payable by each of the Portfolios
include, but are not limited to, clerical salaries, brokerage and other expenses
of executing portfolio transactions; legal, auditing or accounting expenses;
trade association dues; taxes or governmental fees; the fees an expenses of any
person providing administrative services to the Fund; the fees and expenses of
the custodian and transfer agent of the Fund; clerical expenses of issue,
redemption or repurchase of shares of the Portfolio; the expenses and fees for
registering and qualifying securities for sale; the fees of Directors of the
Fund who are not employees or affiliated persons of the Investment Manager or
its affiliates; travel expenses of all Directors, officers and employees;
insurance premiums; and the cost of preparing and distributing reports and
notices to shareholders.
As to each Portfolio, the Management Agreement is subject to annual
approval by (i) the Fund's Board or (ii) vote of a majority (as defined in the
1940 Act) of the outstanding voting securities of such Portfolio, provided that
in either event the continuance also is approved by a majority of the Directors
who are not "interested persons" (as defined in the 1940 Act) of the Fund or the
Investment Manager, by vote cast in person at a meeting called for the purpose
of voting on such approval. The Management Agreement was approved by the sole
shareholder of each Portfolio on April 30, 1997. The Management Agreement was
approved by the Fund's Board, including a majority of the Directors who are not
"interested persons" of any party to the Management Agreement, at a meeting held
on April 30, 1997. As to each Portfolio, the Management Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by vote
of the holders of a majority of the shares of such Portfolio, or, upon not less
than 90 days' notice, by the Investment Manager. The Management Agreement will
terminate automatically, as to the relevant Portfolio, in the event of its
assignment (as defined in the 1940 Act).
ADMINISTRATOR AND CUSTODIAN
The Fund has engaged State Street Bank and Trust Company ("State Street"),
225 Franklin Street, Boston, Massachusetts 02110, to provide certain
administrative services to the Portfolios. Each Portfolio will bear the cost of
such administrative expenses at the annual rate of $37,500 plus .02% of the
average daily net assets of the Portfolio.
State Street also acts as the Fund's custodian. As the Fund's custodian,
State Street, among other things, maintains a custody account or accounts in the
name of each Portfolio; receives and delivers all assets for each Portfolio upon
purchase and upon sale or maturity; collects and receives all income and other
payments and distributions on account of the assets of each Portfolio and
disburses the Portfolio's assets in payment of its expenses. The custodian does
not determine the investment policies of any Portfolio or decide which
securities any Portfolio will buy or sell.
DISTRIBUTOR
Lazard Freres serves as the distributor of shares of each of the Fund's
Portfolios and conducts a continuous offering pursuant to a "best efforts"
arrangement. As the distributor, it accepts purchase and redemption orders for
shares of the Portfolios. In addition, the distribution agreement obligates
Lazard Freres to pay certain expenses in connection with the offering of the
shares of the Portfolios. After the prospectus and periodic reports have been
prepared, set in type and mailed to shareholders, Lazard Freres also will pay
for the printing and distribution of copies thereof used in connection with the
offering to prospective investors.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each Portfolio is determined by State Street
on each day the New York Stock Exchange is open for trading. The New York Stock
Exchange is ordinarily closed on the following national holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Net asset value per share is determined by
dividing the value of the total assets of the Portfolio, less all liabilities,
by the total number of Portfolio shares outstanding.
The value of securities, other than options listed on national securities
exchanges and debt securities maturing in 60 days or less, is determined as of
the close of regular trading on the New York Stock Exchange. Options on stock
and stock indices traded on national securities exchanges are valued as of the
close of options trading on such exchanges (which is currently 4:10 p.m., New
York time). Debt securities maturing in 60 days or less are valued at amortized
cost, except where to do so would not reflect accurately their fair value, in
which case such securities would be valued at their fair value as determined
under the supervision of the Board of Directors. Each security for which the
primary market is on a national securities exchange is valued at the last sale
price on the principal exchange on which it is traded, or, if no sales are
reported on such exchange on that day, at the closing bid price.
Any security held by a Portfolio for which the primary market is the
National Association of Securities Dealers Automated Quotations National Market
System is valued at the last sale price as quoted by such system or, in the
absence of any sale on the valuation date, at the closing bid price. Any other
unlisted security for which current over-the-counter market quotations or bids
are readily available is valued at its last quoted bid price or, if available,
the mean of two such prices.
All other securities and other assets for which current market quotations
are not readily available are valued at fair value as determined in good faith
by the Fund's Board of Directors and in accordance with procedures adopted by
the Board of Directors. The portfolio securities of any of the Portfolios also
may be valued on the basis of prices provided by a pricing service when such
prices are believed by the Investment Manager to reflect the fair market value
of such securities.
The Bantam Value Portfolio, International Small Cap Portfolio and Small Cap
Portfolio invest primarily in equity securities of companies with relatively
small market capitalizations. Because of the difference between the bid and
asked prices of over-the-counter securities, there may be an immediate reduction
in the net asset value of the shares of the Bantam Value Portfolio,
International Small Cap Portfolio or Small Cap Portfolio after such Portfolio
has completed a purchase of securities that will be valued by the relevant
Portfolio at their bid price, since those securities usually will have been
purchased at or near the asked price.
Trading in securities on European and Far Eastern securities exchanges and
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 New York
Stock Exchange 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. Furthermore, trading takes place in Japanese markets
on certain Saturdays and in various foreign markets on days which are not
business days in New York and on which the net asset value of a Portfolio is not
calculated. Each Portfolio calculates net asset value per share, and therefore
effects sales, redemptions and repurchases of its shares, as of the close of
regular trading on the New York Stock Exchange once on each day on which the New
York Stock Exchange is open. Such calculation may not take place
contemporaneously with the determination of the prices of the majority of the
portfolio securities used in such calculation. If events materially affecting
the value of such securities occur between the time when their price is
determined and the time when the Portfolio's net asset value is calculated, such
securities will be valued at fair value as determined in good faith by the Board
of Directors.
PORTFOLIO TRANSACTIONS
GENERAL
Subject to the supervision of the Board of Directors, the Investment
Manager is primarily responsible for the investment decisions and the placing of
portfolio transactions for each Portfolio. In selecting brokers or dealers to
execute portfolio transactions on behalf of a Portfolio, the Investment Manager
seeks the best overall terms available, taking into account such factors as
price, size of order, difficulty of execution and skill required of the
executing broker. While the Investment Manager will generally seek reasonably
competitive spreads or commissions, the Portfolios will not necessarily be
paying the lowest spread or commission available.
Purchases and sales of portfolio securities on a securities exchange are
effected by the Investment Manager through brokers who charge a negotiated
commission for their services based on the quality and quantity of execution
services provided by the broker in the light of generally prevailing rates.
Orders may be directed to any broker including, to the extent and in the manner
permitted by applicable law, Lazard Freres. In the over-the-counter market,
securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price that includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount.
To the extent consistent with applicable provisions of the 1940 Act and the
rules adopted by the Commission thereunder, the Fund's Board has determined that
securities transactions for a Portfolio may be executed through Lazard Freres
if, in the judgment of the Investment Manager, the use of Lazard Freres is
likely to result in price and execution at least as favorable as those of other
qualified brokers or dealers, and if, in the transaction, Lazard Freres charges
the Portfolio a rate consistent with that charged to comparable unaffiliated
customers in similar transactions.
Purchase and sale orders for securities held by a Portfolio may be combined
with those for other Portfolios in the interest of the most favorable net
results for all. When the Investment Manager determines that a particular
security should be bought for or sold by more than one Portfolio, the Investment
Manager undertakes to allocate those transactions between the participants
equitably.
RESEARCH AND STATISTICAL INFORMATION
When it can be done consistently with the policy of obtaining the best
overall terms available, the Investment Manager may select brokers or dealers
who supply market quotations to the Fund's custodian for valuation purposes, or
who supply research, market and statistical information to the Investment
Manager. Although such research, market and statistical information may be
useful to the Investment Manager, it is only supplementary to the Investment
Manager's own research efforts, since the information must still be analyzed,
weighed and reviewed by the Investment Manager's staff. Information so received
will be in addition to, and not in lieu of, the services required to be
performed by the Investment Manager under the Management Agreement with the Fund
on behalf of the Portfolios. Such information may be useful to the Investment
Manager in providing services to both the Portfolios and clients other than the
Portfolios, and, conversely, supplemental information obtained by the placement
of business of other clients may be useful to the Investment Manager in carrying
out its obligations to the Portfolios. In addition, when it can be done
consistently with the above stated policy, the Investment Manager may place
orders with brokers and dealers (i) who refer persons to the Investment Manager
for the purpose of purchasing shares of the Portfolios or (ii) who provide
services to the Fund at no fee or for a reduced fee.
REDEMPTION OF SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PROSPECTUS ENTITLED "REDEMPTION OF SHARES."
REDEMPTION COMMITMENT. The Fund has committed to pay in cash all redemption
requests by any shareholder of record, limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the value of a Portfolio's net assets
at the beginning of such period. Such commitment is irrevocable without the
prior approval of the Commission. In the case of requests for redemption in
excess of such amount, the Fund's Board reserves the rights to make payments in
whole or part in securities (which may include non-marketable securities) or
other assets of the Portfolio in case of an emergency or any time a cash
distribution would impair the liquidity of the Portfolio to the detriment of the
existing shareholders. In such event, the securities would be valued in the same
manner as the Portfolio's investments are valued. If the recipient sold such
securities, brokerage charges might be incurred.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closings), (b) when trading
in the markets the Portfolio ordinarily utilizes is restricted, or when an
emergency exists as determined by the Commission so that disposal of the
Portfolio's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Commission by order
may permit to protect the Portfolio's shareholders.
DISTRIBUTION AND SERVICING PLAN
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PROSPECTUS ENTITLED "DISTRIBUTION AND SERVICING PLAN."
Rule 12b-1 (the "Rule") adopted by the Commission under the 1940 Act
provides, among other things, that an investment company may bear expenses of
distributing its shares only pursuant to a plan adopted in accordance with the
Rule. The Fund's Board has adopted such a plan (the "Distribution and Servicing
Plan"), pursuant to which the Fund pays Lazard Freres for advertising, marketing
and distributing shares of the Portfolios and for the provision of certain
services to the holders of shares of the Portfolios. Lazard Freres may make
payments to Participating Insurance Companies for providing these services to
Policy owners and to certain financial institutions, securities dealers and
other industry professionals (collectively, "Service Agents") for providing
these services to Eligible Plan participants. The Fund's Board determined, in
the exercise of its business judgment, that the Fund's Distribution and
Servicing Plan is reasonably likely to benefit the Fund, Policy owners and
Eligible Plan participants.
A quarterly report of the amounts expended under the Distribution Servicing
Plan, and the purposes for which such expenditures were incurred, must be made
to the Board for its review. In addition, the Distribution and Servicing Plan
provides that it may not be amended to increase materially the costs which
holders of shares of a Portfolio may bear for distribution pursuant to the
Distribution and Servicing Plan without such shareholders' approval and that
other material amendments of the Distribution and Servicing Plan must be
approved by the Board and by the Board members who are not "interested persons"
(as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Distribution and Servicing Plan or in
any agreements entered into in connection with the Distribution and Servicing
Plan, by vote cast in person at a meeting called for the purpose of considering
such amendments. The Distribution and Servicing Plan is subject to annual
approval by such vote cast in person at a meeting called for the purpose of
voting on the Distribution and Servicing Plan. The Distribution and Servicing
Plan was so approved on April 30, 1997. As to a Portfolio, the Distribution
and Servicing Plan may be terminated at any time by vote of a majority of the
Board members who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Distribution and Servicing Plan or in
any agreements entered into in connection with the Distribution and Servicing
Plan or by vote of the holders of a majority of the shares of the relevant
Portfolio.
DIVIDENDS AND DISTRIBUTIONS
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PROSPECTUS ENTITLED "DIVIDENDS AND DISTRIBUTIONS."
The Fund intends to declare as a dividend on the outstanding shares of each
of the International Fixed-Income Portfolio and the Strategic Yield Portfolio
substantially all of the Portfolio's net investment income at the close of each
business day to shareholders of record at 4:00 p.m. (New York time). Net
investment income for a Saturday, Sunday or holiday will be included in the
dividend declared on the previous business day. Dividends declared on the shares
of the International Fixed-Income Portfolio and Strategic Yield Portfolio will
be paid five business days prior to the end of each month. Shareholders who
redeem all their shares of any of these Portfolios prior to a dividend payment
date will receive, in addition to the redemption proceeds, any dividends that
are declared but unpaid. Shareholders of any of these Portfolios who redeem only
a portion of their shares will be entitled to all dividends that are declared by
unpaid on the redeemed shares on the next dividend payment date.
Dividends from net investment income on the Equity Portfolio, International
Equity Portfolio, Small Cap Portfolio, International Small Cap Portfolio,
Emerging Markets Portfolio, Global Equity Portfolio and Bantam Value Portfolio
generally will be declared and paid at least annually and may be declared and
paid twice annually.
Dividends will be calculated at the same time and in the same manner and
will be of the same amount for each Portfolio.
Investment income for a Portfolio includes, among other things, interest
income, accretion of market and original issue discount and amortization of
premium and, in the case of the Equity Portfolio, International Equity
Portfolio, Small Cap Portfolio, International Small Cap Portfolio, Emerging
Markets Portfolio, Global Equity Portfolio and Bantam Value Portfolio, also
would include dividends.
With respect to all of the Portfolios, net realized capital gains, if any,
will be distributed at least annually and may be declared and paid twice
annually. Dividends and distributions on shares of a Portfolio will be invested
in additional shares of the same Portfolio at net asset value and credited to
the shareholder's account on the payment date or, at the shareholder's election,
paid in cash.
TAXATION
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PROSPECTUS ENTITLED "TAXATION."
Each Portfolio intends to qualify as a regulated investment company under
the Code and to continue to so qualify as long as such qualification is in the
best interests of its shareholders. As a regulated investment company, a
Portfolio will pay no Federal income tax on net investment income and net
realized securities gains to the extent that such income and gains are
distributed to shareholders in accordance with applicable provisions of the
Code. To qualify as a regulated investment company, the Portfolio must
distribute at least 90% of its net income (consisting of net investment income
and net short-term capital gain) to its shareholders, derive less than 30% of
its annual gross income from gains on the sale of securities held for less than
three months, and meet certain asset diversification and other requirements. The
term "regulated investment company" does not imply the supervision of management
of investment practices or policies by any government agency.
Any dividend or distribution paid shortly after an investor's purchase may
have the effect of reducing the net asset value of the shares below the cost of
the investment. Such a dividend or distribution would be a return of investment
in an economic sense, although taxable as stated in the Prospectus. In addition,
the Code provides that if a shareholder holds shares of a Portfolio for six
months or less and has received a capital gain distribution with respect to such
shares, any loss incurred on the sale of such shares will be treated as
long-term capital loss to the extent of the capital gain distribution received.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gains and losses. However, all or a portion of the gain or
loss realized from the disposition of foreign currency, non-U.S. dollar
denominated debt instruments, and certain financial futures and options, may be
treated as ordinary income or loss under Section 988 of the Code. In addition,
all or a portion of the gain realized from the disposition of certain market
discount bonds will be treated as ordinary income under Section 1276 of the
Code. Finally, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section 1258
of the Code. "Conversion transactions" are defined to include certain forward,
futures, option and straddle transactions, transactions marketed or sold to
produce capital gains, or transactions described in Treasury regulations to be
issued in the future.
Under Section 1256 of the Code, gain or loss realized by a Portfolio from
certain financial futures and options transactions (other than those taxed under
Section 988 of the Code) will be treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss. Gain or loss will arise upon the
exercise or lapse of such futures and options as well as from closing
transactions. In addition, any such futures or options remaining unexercised at
the end of the Portfolio's taxable year will be treated as sold for their then
fair market value, resulting in additional gain or loss to the Portfolio
characterized in the manner described above.
Offsetting positions held by a Portfolio involving financial futures and
options may constitute "straddles." Straddles are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of straddles
in governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, overrides or modifies the provisions of Sections 988 and 1256 of
the Code. As such, all or a portion of any short- or long-term capital gain from
certain "straddle" transactions may be recharacterized as ordinary income.
If a Portfolio were treated as entering into straddles by reason of its
future or options transactions, such straddles could be characterized as "mixed
straddles" if the futures or options transactions comprising such straddles were
governed by Section 1256 of the Code. The Portfolio may make one or more
elections with respect to "mixed straddles." Depending upon which election is
made, if any, the results to the Portfolio may differ. If no election is made,
to the extent the straddle rules apply to positions established by the
Portfolio, losses realized by the Portfolio will be deferred to the extent of
unrealized gain in any offsetting positions. Moreover, as a result of the
straddle and conversion transaction rules, short-term capital loss on straddle
positions may be recharacterized as long-term capital loss, and long-term
capital gain may be recharacterized as short-term capital gain or ordinary
income.
If a Portfolio invests in an entity that is classified as a "passive
foreign investment company" ("PFIC") for Federal income tax purposes, the
operation of certain provisions of the Code applying to PFICs could result in
the imposition of certain Federal income taxes on the Portfolio. In addition,
gain realized from the sale or other disposition of PFIC securities may be
treated as ordinary income under Section 1291 of the Code.
Investment by a Portfolio in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders by causing a Portfolio to recognize
income prior to the receipt of cash payments. For example, the Portfolio could
be required to recognize annually a portion of the discount (or deemed discount)
at which such securities were issued and to distribute an amount equal to such
income in order to maintain its qualification as a regulated investment company.
In such case, the Portfolio may have to dispose of securities which it might
otherwise have continued to hold in order to generate cash to satisfy these
distribution requirements.
Shareholders of the Fund will be variable annuity and variable life
insurance separate accounts established by insurance companies to fund Policies
and Eligible Plans. The Secretary of the Treasury may in the future issue
additional regulations or revenue rulings that will prescribe the circumstances
in which a Policy owner's control of the investments of a separate account may
cause the Policy owner, rather than the insurance company, to be treated as the
owner of assets of the separate account. Failure to comply with Section 817(h)
of the Code or any regulation thereunder, or with any regulations or revenue
rulings on Policy owner control, if promulgated, would cause earnings regarding
a Policy owner's interest in the separate account to be includable in the Policy
owner's gross income in the year earned.
The Fund will not report dividends paid to Eligible Plans to the Internal
Revenue Service ("IRS"). Generally, distributions from Eligible Plans, except
those representing returns of non-deductible contributions thereto, will be
taxable as ordinary income and, if made prior to the time the participant
reaches age 59-1/2, generally will be subject to an additional tax equal to 10%
of the taxable portion of the distribution. If the distribution from an Eligible
Plan (other than certain governmental or church plans) for any taxable year
following the year in which the participant reaches age 70-1/2 is less than the
"minimum required distribution" for that taxable year, an excise tax equal to
50% of the deficiency may be imposed by the IRS. The administrator, trustee or
custodian of such a Plan will be responsible for reporting distributions from
the Plan to the IRS. Participants in Eligible Plans will receive a disclosure
statement describing the consequences of a distribution from the Plan from the
administrator, trustee or custodian of the Plan prior to receiving the
distribution. Moreover, certain contributions to an Eligible Plan in excess of
the amounts permitted by law may be subject to an excise tax. For more
information concerning the Federal income tax consequences, Policy owners should
refer to the prospectus for their contracts or policies and Eligible Plan
participants should consult the Plan's administrator or trustee.
PERFORMANCE INFORMATION
Yield is computed in accordance with a standardized method which involves
determining the net change in the value of a hypothetical pre-existing Portfolio
account having a balance of one share at the beginning of a seven calendar day
period for which yield is to be quoted, dividing the net change by the value of
the account at the beginning of the period to obtain the base period return, and
annualizing the results (i.e., multiplying the base period return by 365/7). The
net change in the value of the account reflects the value of additional shares
and fees that may be charged to shareholder accounts, in proportion to the
length of the base period and the Portfolio's average account size, but does not
include realized gains and losses or unrealized appreciation and depreciation.
Effective annualized yield is computed by adding 1 to the base period return
(calculated as described above), raising that sum to a power equal to 365
divided by 7, and subtracting 1 from the result.
Current yield is computed pursuant to a formula which operates as follows:
The amount of the relevant Portfolio's expenses accrued for the 30-day period
(net of reimbursements) is subtracted from the amount of the dividends and
interest earned (computed in accordance with the regulatory requirements) by
such Portfolio during the period. That result is then divided by the product of:
(a) the average daily number of such Portfolio's shares outstanding during the
period that were entitled to receive dividends, and (b) the net asset value per
share on the last day of the period less any undistributed earned income per
share reasonably expected to be declared as a dividend shortly thereafter. The
quotient is then added to 1, and that sum is raised to the 6th power, after
which 1 is subtracted. The current yield is then arrived at by multiplying the
result by 2.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
Total return is calculated by subtracting the amount of the relevant
Portfolio's net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect to
the reinvestment of dividends and distributions during the period), and dividing
the result by the net asset value per share at the beginning of the period.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic or financial conditions, developments
and/or events, and also may refer to Morningstar ratings and related analyses
supporting the rating. From time to time, advertising materials for the Fund may
refer to, or include, commentary by the Fund's portfolio managers relating to
their investment strategy, asset growth of the Portfolios, current or past
business, political, economic or financial conditions and other matters of
general interest to shareholders.
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
The Fund is a Maryland corporation organized on February 13,
1997 as an open-end investment company. The authorized capital stock of the
Fund consists of five hundred million (500,000,000) shares of common stock,
$.001 par value per share. To date, the Fund's Board of Directors has authorized
the issuance of ten Portfolios which each consist of fifty million
(50,000,000) shares of common stock. The Board of Directors may, in the future,
create additional portfolios or classes of shares.
Each share of a portfolio and class is normally entitled to one vote for
all purposes. Generally, shares of a portfolio and class vote as a single series
or class on matter, such as the election of Directors, that affect each
portfolio and class in substantially the same manner. As to matters affecting a
portfolio differently, such as approval of the Management Agreement and changes
in investment policy, shares of the portfolio vote as a separate series.
All shares, when issued and paid for in accordance with the terms of the
offering, will be fully paid and non-assessable by the Fund. Shares of a
Portfolio are of one class and have equal rights as to dividends and in
liquidation. Shares of a Portfolio have no preemptive, subscription or
conversion rights and are freely transferable.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of the shares of the Fund
offered hereby will be passed upon by Stroock & Stroock & Lavan LLP, 180 Maiden
Lane, New York, New York 10038-4982.
ABA Seymour Schneidman Financial Services Group, a division of Anchin,
Block & Anchin LLP, has been selected as the independent auditors for the Fund.
<PAGE>
APPENDIX
Description of certain ratings.
S&P
BOND RATINGS
AAA
Bonds rated AAA have the highest rating assigned to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade bonds. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payment.
B
Bonds rated B have a greater vulnerability to default but presently have
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Bonds rated CCC have a current identifiable vulnerability to default, and
are dependent upon favorable business, financial and economic conditions to meet
timely payments of interest and repayment of principal. In the event of adverse
business, financial or economic conditions to meet timely payments of interest
and repayment of principal. In the event of adverse business, financial or
economic conditions, they are not likely to have the capacity to pay interest
and repay principal.
CC
The rating CC is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC- rating.
D
Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
S&P's letter ratings may be modified by the additional of a plus or a minus
sign, which is used to show relative standing within the major ratings
categories, except in the AAA (Prime Grade) category.
COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Issues assigned an A rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with the numbers 1, 2 and
3 to indicate the relative degree of safety.
A-1
This designation indicates the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics are denoted within a plus sign (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
Moody's
BOND RATINGS
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities of fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa
Bond which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
the categories below B. The modifier 1 indicates a rating for the security in
the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
COMMERCIAL PAPER RATINGS
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers of P-1 paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained.
Fitch
BOND RATINGS
The ratings represent Fitch's assessment of the issuer's ability to meet
the obligations of a specific debt issue or class of debt. The ratings take into
consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds which are rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds which are rated AA are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+.
A
Bonds which are rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bond which are rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have an adverse impact on these
bonds and, therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
BB
Bonds which are rated BB are considered speculative. The obligor's ability
to pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service requirements.
B
Bonds which are rated B are considered highly speculative. While bonds in
this class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds which are rated CCC have certain identifiable characteristics, which,
if not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.
Plus (+) and minus (S) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category.
SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis than bond ratings on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+
EXCEPTIONALLY STRONG CREDIT QUALITY. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
Duff
BOND RATINGS
AAA
Bonds rated AAA are considered highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated BBB are considered to have below average protection factors but
still considered sufficient for prudent investment. Considerable variability in
risk exists during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as likely
to meet obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company fortunes. Overall
quality may move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating within
this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such bonds may
be in default or have considerable uncertainty as to timely payment of interest,
preferred dividends and/or principal. Protection factors are narrow and risk can
be substantial with unfavorable economic or industry conditions and/or with
unfavorable company developments.
Plus (+) and minus (S) signs are used with a rating symbol (except AAA) to
indicate the relative position of a credit within the rating category.
COMMERCIAL PAPER RATING
The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarding as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor.
<PAGE>
<TABLE>
<CAPTION>
LAZARD RETIREMENT SERIES, INC.
Statement of Assets and Liabilities
May 13, 1997
Lazard Lazard Lazard
Retirement Retirement Retirement
Bantam Value Emerging Markets Equity
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
ASSETS
Cash $10 $10 $99,980
Deferred organizational and
registration expenses - - 40,502
-------- ------- --------
Total Assets 10 10 140,482
LIABILITIES
Accrued expenses - - 40,502
-------- --------- ---------
Net Assets
Paid-in Capital $10 $10 $ 99,980
======== ========= =========
Shares of Capital Stock Outstanding* 1 1 9,998
======== ========= =========
Lazard Lazard Lazard Lazard
Retirement Lazard Retirement Retirement Lazard Retirement
Global Retirement International International Retirement Strategic
Equity International Fixed-Income Small Cap Small Cap Yield
Portfolio Equity Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $10 $99,980 $ 10 $10 $99,980 $10
Deferred organizational and
registration expenses - 40,502 - - 40,502 -
------- --------- -------- ------ --------- -----
Total Assets 10 140,482 10 10 140,482 10
LIABILITIES
Accrued expenses - 40,502 - - 40,502 -
-------- --------- -------- ------- -------- -------
Net Assets
Paid-in Capital $10 $ 99,980 $10 $10 $ 99,980 $10
======== ========= ======== ======= =========== =======
Shares of Capital Stock Outstanding* 1 9,998 1 1 9,998 1
======== ========== ======== ======= ========== =======
- -------
* $.001 par value, 500,000,000 shares authorized.
See Notes to the Statement of Assets and Liabilities.
</TABLE>
<PAGE>
LAZARD RETIREMENT SERIES, INC.
NOTES TO THE STATEMENT OF ASSETS AND LIABILITIES
NOTE 1 - Organization:
Lazard Retirement Series, Inc. (the "Fund") was organized as a Maryland
corporation on February 13, 1997 and has had no operations since that date
other than matters relating to its organization and registration as an
open-end investment company under the Investment Company Act of 1940 and the
Securities Act of 1933 consisting of nine portfolios and the initial sale and
issuance of shares (the "Initial Shares") to Lazard Freres & Co. LLC.
NOTE 2 - Deferred Organizational and Registration Expenses:
Expenses incurred by the Fund in connection with its organization and
registration have been allocated among the portfolios in proportion to the
amounts received for the Initial Shares and are included in accrued expenses.
The organization expenses will be amortized from the date operations commence
over a period for which it is expected that a benefit will be realized, not to
exceed five years. The registration expenses will be charged against paid-in
capital. If any of the Initial Shares are redeemed during the amortization
period by any holder thereof, the redemption proceeds will be reduced by any
unamortized organization expenses and by the registration expenses in the same
proportion as the number of Initial Shares being redeemed bears to the number of
Initial Shares outstanding at the time of the redemption.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To The Board of Directors and Shareholder of
Lazard Retirement Series, Inc.
We have audited the accompanying statement of assets and liabilities of
Lazard Retirement Series, Inc. comprised of Lazard Retirement Bantam Value
Portfolio, Lazard Retirement Emerging Markets Portfolio, Lazard Retirement
Equity Portfolio, Lazard Retirement Global Equity Portfolio, Lazard Retirement
International Equity Portfolio, Lazard Retirement International Fixed-Income
Portfolio, Lazard Retirement International Small Cap Portfolio, Lazard
Retirement Small Cap Portfolio and Lazard Retirement Strategic Yield Portfolio
as of May 13, 1997. The financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on the financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether this financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the respective portfolios of
Lazard Retirement Series, Inc. at May 13, 1997, in conformity with generally
accepted accounting principles.
New York, New York
May 14, 1997
Anchin, Block & Anchin LLP
<PAGE>
LAZARD RETIREMENT SERIES, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in the Statement of
Additional Information:
(1) Statement of Assets and Liabilities as of May 13, 1997
(2) Report of Anchin, Block & Anchin LLP, Independent Auditors,
dated May 14, 1997.
(b) Exhibits:
(1)(a) Articles of Incorporation
(1)(b) Articles of Amendment
(2) By-Laws, as amended
(5) Investment Management Agreement
(6) Distribution Agreement
(8) Custody Agreement
(9)(a) Administration Agreement
(9)(b) Form of Fund Participation Agreement
(10) Opinion, including consent, of Stroock & Stroock &
Lavan LLP
(11) Consent of Independent Auditors
(15) Distribution and Servicing Plan
Item 25. Persons Controlled by or Under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders
Common Stock Interests
par value $.001 per share
Lazard Retirement Bantam 1
Value Portfolio
Lazard Retirement Emerging 1
Markets Portfolio
Lazard Retirement Equity 1
Portfolio
Lazard Retirement Global 1
Equity Portfolio
Lazard Retirement Inter- 1
national Equity Portfolio
Lazard Retirement Inter- 1
national Fixed-Income
Portfolio
Lazard Retirement Inter- 1
national Small Cap
Portfolio
Lazard Retirement Small 1
Cap Portfolio
Lazard Retirement Strategic 1
Yield Portfolio
Item 27. Indemnification
Reference is made to Article SEVENTH of the Registrant's Articles of
Incorporation filed as Exhibit 1 hereto and to Section 2-418 of the Maryland
General Corporation Law. The application of these provisions is limited by
Article VIII of the Registrant's By-Laws filed as Exhibit 2 hereto and by the
following undertaking set forth in the rules promulgated by the Securities and
Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnificaetion against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Reference also is made to the Distribution Agreement filed as Exhibit
6 hereto.
Item 28. Business and Other Connections of Investment Advisers.
The description of the Investment Manager under the Caption
"Management" in the Prospectus and in the Statement of Additional
Information consituting Parts A and B, respectively, of this
Registration Statement is incorporated by reference hrein.
Following is a list of the General Members of Lazard Freres & Co. LLC,
together with thier other business connections which are of
substantial nature during the previous two years:
Name and Address of Company with
Name of General Member which General Member is Connected Capacity
William Araskog None
F. Harlan Batrus Mutual of America Capital Management Corp. Director
666 Fifth Avenue
New York, New York 10103
Ryan Labs, Inc. Director
350 Albany Street
New York, New York 10280
David G. Braunschvig None
Patrick J. Callahan, Jr. Berry Metal Co. Director
Route 68
Harmony, Pennsylvania 16307
BT Capital Corp. Director
280 Park Avenue
New York, New York 10017
Lee Brass Co. (Prior to 3/1/95) Director
P.O. Box 1229
Anniston, Alabama 36202
Michigan Wheel Corp. Director
1501 Buchanan Avenue
Southwest Grand Rapids, Michigan 49507
Rotation Dynamics Corp. Director
15 Salt Creek Lane
Suite 316
Hinsdale, Illinois 60521
Somerset Technologies, Inc. Director
P.O. Box 791
New Brunswick, New Jersey 08903
GAR Holding Co. (Prior to 4/1/96) Director
600 Union Street
Ashland, Ohio 44805
Michel David-Weill BSN Gervais Danone (Proior to 8/1/96) Director
1260130 Rue Jules Gruesde
Levallois-Perret (Hauts de Seine)
France 92303
Credit Mobilier Industriel Chairman of
(Prior to 8/1/96) the Board
(SOVAC)
19-21 Rue de la Bienfaisance
75008 Paris, France
The Dannon Company, Inc. Director
22-11 38th Avenue
Long Island City, New York 11101
Eurafrance President and
12 Avenue Percier Chairman of
75008 Paris, France the Board
Exor Group Director
19 Avenue Montaigne
75008 Paris, France
Euralux Director
8 Rue Ste-Zithe
2763 Luxembourg
Fiat S.P.A. (Prior to 8/1/96) Director
Corso Marconi 10
10125 Torino
Italy
Group Danone Director
7 Rue de Teheran
75008 Paris, France
ITT Industries, Inc. Director
320 Park Avenue
New York, New York 10022
La France S.A. Director
7 & 9 Boulevard Haussmann
75009 Paris, France
La France-Iard Director
7 & 9 Boulevard Haussmann
75009 Paris, France
La France-Vie Director
7 & 9 Boulevard Haussmann
75009 Paris, France
Lazard Brothers & Co., Limited Director
21 Moorfields
London EC2P-2HT
England
Pearson plc Director
Millbank Tower
London SWI P4QZ
Publicis S.A. Director
133 Champs-Ezlysees
75008 Paris, France
S.A. de la Rue Imperiale de Lyon Director
49, Rue de la Republique
Lyon (Rhone) 69002
France
John V. Doyle None
Charles R. Dreifus None
Thomas F. Dunn Goldman, Sach & Co. Senior
(Prior to 1/1/95) Portfolio
85 Broadway Street Manager
New York, New York 10004
Norman Eig The Lazard Funds, Inc. Director,
30 Rockefeller Plaza Chairman
New York, New York 10020
The Emerging World Trust Fund Limited Director
30 Rockefeller Plaza
New York, New York 10020
Lazard Pension Management, Inc. Director
30 Rockefeller Plaza
New York, New York 10020
Peter R. Ezersky None
Jonathan F. Foster None
Albert H. Garner None
James S. Gold Smart & Final Inc. Director
4700 South Boyle Avenue
Los Angeles, California 90058
Jeffrey A. Golman None
Steven J. Golub Mineral Technologies Inc. Director
405 Lexington Avenue
New York, New York 10174-1901
Herbert W. Gullquist The Lazard Funds, Inc. Director,
30 Rockefeller Plaza President
New York, New York 10020
The Emerging World Trust Fund Limited Director
30 Rockefeller Plaza
New York, New York 10020
Lazard Freres Asset Director,
Management (Canada), Inc. President
30 Rockefeller Plaza
New York, New York 10020
Lazard Pension Management, Inc. Director,
30 Rockefeller Plaza President
New York, New York 10020
Thomas R. Haack None
J. Ira Harris Manpower Inc. Director
5301 North Ironwood Road
Milwaukee, Wisconsin 53201
Caremark International, Inc. Director
(Prior to 9/20/96)
2215 Sanders Road
Northbrook, Illinois 60062
Brinker International Inc. Director
6820 LBJ Freeway
Dallas, Texas 75240
Melvin L. Heineman Lazard Freres & Co., Ltd Director
21 Moorsfields
London EC2P 2HT
England
Lazard Pension Management, Inc. Director
30 Rockefeller Plaza
New York, New York 10020
Kenneth M. Jacobs None
Jonathan H. Kagan Continental Cablevision, Inc. Director
Pilot House
54 Lewis Wharf
Boston, Massachusetts 02110
Firearms Training Systems, Inc. Director
7340 McGinnis Ferry Road
Suwanee, Georgia 301274
La Salle Re Ltd. Director
Cumberland House
One Victoria Street
P.O. HM 1502
Hamilton Hm FX
Bermuda
Patient Education Media, Inc. Director
1271 Avenue of the Americas
New York, New York 10020
Phar-Mor Inc. (Prior to 1/1/96 Director
20 Federal Plaza West
Youngstown, OH 44501
Tyco Toys, Inc. Director
6000 Midlantic Drive
Mount Laurel, New Jersey 08054
James L. Kempner Lazard Freres & Co. Capital Markets
30 Rockefeller Plaza
New York, NY 10020
Sandra A. Lamb None
Edgar D. Legaspi None
Michael S. Liss Bear Stearns & Co. Senior
(Prior to 10/1/95) Portfolio
245 Park Avenue Manager
New York, New York 10004
William R. Loomios, Jr. Englehard Hanovia Inc. Director
280 Park Avenue
3rd Floor - West Wing
New York, New York 10017
Minorco S.A. Director
Boite Postal 185
L-2011 Luxembourg
Minorco (U.S.A.) Inc. Director
30 Rockefeller Plaza
Suite 4212
New York, NY 10112
Terra Industries, Inc. Director
600 4th Street
Sioux City, Iowa 51101
J. Robert Lovejoy Lazard Freres & Co. Capital Markets
30 Rockefeller Plaza
New York, NY 10020
Matthew, J. Lustig None
Philippe L. Magistretti None
Damon Mezzacappa Corporate Property Investors Director
30 Rockefeller Plaza
New York, New York 10020
Christina A. Mohr Loehmann's Holdings Inc. Director
2500 Halsey Street
Bronx, New York 10461
United Retail Group, Inc. Director
365 West Passaic Street
Rochelle Park, New Jersey 07662
Robert P. Morgenthau Lazard Freres Asset Management Director,
(Canada), Inc. Vice
30 Rockefeller Plaza President
New York, New York 10020
Steven J. Niemczyk None
Hamish W. M. NortoN None
Jonathan O'Herron Trigen Energy Corporation Director
1 Water Street
White Plains, New York 10601
James A. Paduano Donovan Data Systems, Inc. Director
666 Fifth Avenue
New York, New York 10019
Pilgrim Electronics, Inc.
(Prior to 4/1/95) Director
60 Beaver Brook Road
Danbury, Connecticut 06810
Secure Products Inc. Director
47 Maple Street
Summit, NJ 07901
Louis Perlmutter None
Robert E. Poll, Jr. None
Lester Pollack Continental Cablevision, Inc. Director
Pilot House
54 Louis Wharf
Boston Massachusetts 02210
CNA Financial Corp. (Prior to 3/1/95) Director
CNA Plaza
Chicago, Illinois 60685
Firearms Training Systems, Inc. Director
7340 McGinnis Ferry Road
Suwaanee, Georgia 30174
Kaufman & Broad Home Corp. Director
11601 Wilshire Boulevard
Los Angeles, California 90025-1748
La Salle Re Ltd. Director
Cumberland House
One Victoria Street
P.O. HM FX
Bermuda
Loews Corporation (Prior to 1/1/96) Director
666 Fifth Avenue
New York, New York 10103
Paramount Communications, Inc. Director
(Prior to 3/1/95)
15 Columbus Circle
New York, New York 10023
Parlex Corp. Director
145 Milk Street
Metuen, Massachusetts 01844
Polaroid Corp. Director
549 Technology Square
Cambridge, Massachusetts 02139
SD Holding (Bermuda) Ltd. Director
Hurst Holme
Trott Road
Hamilton HMII
Bermuda
Sphere Drake Acquisitions (U.K.) Ltd. Director
52-24 Leadenhall Street
London EC3A 2BJ
England
Sphere Drake Holding Ltd. Director
52-24 Leadenhall Street
London EC3A 2BJ
England
Sphere Drake Ltd. Director
52-24 Leadenhall Street
London EC3A 2BJ
England
Sun America Inc. Director
11601 Wilshire Boulevard
Los Angeles, CA 90025
Tidewater Inc. Director
1440 Canal Street
Suite 2100
New Orleans, Louisianna 70112
Michael J. Price None
Steven L. Rattner Falcon Holding Group L.P. Director
10900 Wilshire Boulevard
Los Angeles, California 90024
John R. Reese Owosso Corp. Director
312 West Main Street
Owosso, Michigan 48867
Owosso Gan, Inc. Director
312 West Main Street
Owosso, Michigan 48867
John R. Reinsberg None
Louis G. Rice None
Luis E. Rinaldini Cedar Fair Management Co. Director
(Prior to 3/1/95)
CN 5006 Causeway Drive
Sandusky, Ohio 44870
Bruno M. Roger CAP Gemini Sogeti Director
6, Bid Jean Pain a Grenoble (38005)
France
Carnaud Metal Box Packaging Director
(Prior to 8/1/96)
153, Rue de Courcelles a Paris 17eme
France
Compagnie De Credit Director
121, Boulevard Haussmann a Paris Seme
France
Compagnie De Saint-Gobain Director
Les Miroirs
18 Avenue d'Alsace
Paris la Defense (92096)
France
Eurafrance Director
12, Avenue Percier a Paris Seme
France
Financiere Et Industrielle Gaz Director
Et Eaux
3, Rue Jacques Bingen a Paris 17eme
France
Fonds Partenaires Gestion (F.P.G.) Director
121, Boulevard Haussmann a Paris Seme
France
Lazard, Burlkin, Kuna & Co. Director
(Prior to 1/1/96)
Ulmenstrasse 37-39
60325 Frankfurt am Main
Federal Republic of Germany
Lazard & Co. GmbH Director
Ulmenstrasse 37-39
60325 Frankfurt am Main
Federal Republic of Germany
LVMH-Moet Hennessy Louis Vuitton Director
30, Avenue Hoche a Paris 8eme
France
Marine-Wendel Director
189, Rue Taitbout a Paris 9eme
France
Midial (Prior to 1/1/96) Director
192, Avenue Charles de Gaulle
Neuille S/Sein (92200)
France
Pinault-Printemps-Redoute Director
61, Rue Caumartin
75009 Paris
PSA Finance Holding (Prior to 1/1/96) Director
75, av. de la Grande Armee a Paris 16eme
France
Sidel Director
66, Rue de Miromesnil
75008 Paris
Societe Centrale Puour L'Industrie Director
9, Avenue Hoche a Paris 8eme
France
Societe Financiere Generale Director
Immobiliere (S.F.G.I.)
23, rue de I'Arcasde a Paris 8eme
France
Sofina (Belgique) Director
Rue de Naples, 38-B-1050 Bruzelles
Sogeti S.A. (Prior to 8/1/96) Director
6, bld Jean Pain a Grenoble (38005)
France
Sovac (Prior to 8/1/96) Director
19-21, rue de la Bienfaisance a Paris 8eme
France
Sovaclux S.A. Director
14 rue Aldringen - Luxembourg
Thomson S.A. Director
51 esplanade du General de Gaulle
La Defense 10-92800 Puteaux
France
Thomson CSF Director
51 Esplanade du General de Gaulle
La Defense 10-92800 Puteaux
France
U.A.P. Director
9, place Vendome
75001 Paris
Felix G. Rohatyn Crown Cork & Seal Co., Inc. Director
9300 Ashton Road
Philadelphia, PA 19136
General Instrument Corp. Director
181 West Madison Street
Chicago, Illinois 60602
Howmet Turbine Components Corp. Director
(Prior to 1/1/96)
221 West Webster Avenue
Mouskegon, Michigan 49440
Pechiney S.A. (Prior to 3/1/95) Director
23 Rue Balzac
75008 Paris, France
Pfizer Inc. Director
235 East 42nd Street
New York, New York 10017-5755
Michael S. Rome None
Gerald Rosenfeld Case Corporation Director
700 State Street
Racine, Wisconsin 53404
Peter L. Smith Dixie Yarns Inc. Director
1100 Watkins Street
Chattanooga, Tennessee 37401
Arthur P. Solomon None
Michael B. Solomon Charming Shoppes Inc. Director
450 Winks Lane
Bensalem, Pennsylvania 19020
Edouard M. Stern Mainz Holdings Limited Director
P.O. Box 3161
Roadtown Tortola BVI
Penthievre Holdings B.V. Director
Jupiter Straat 158
2130 Ah Hoofddorp Netherlands
Paul A. Street GE Capital (Prior to 10/1/94) Senior Vice
260 Long Ridge Road President
Stamford, Connecticut 06927
Lazard Asia Ltd. Director
80 Raffles Place
22-20 UOB Plaza II
Singapore 048624
John S. Tamagni Western Holdings Inc. Director
(Prior to 9/20/96)
1491 Tyrell Lane
Boise, Idaho 83706
David L. Tashjian None
J. Mikesell Thomas First National Bank of Chicago Executive
(Prior to 1/1/95) Vice
One First National Plaza President
Chicago, Illinois 60603
Donald A. Wagner None
Ali E. Wambold The Albert Fisher Group plc Director
Fisher House
61 Thames Street
Windsor, Berkshire SO4 IQW
England
Lazard Brothers & Co., Ltd. Director
21 Moorfields
London EC2P 2HT
England
Lazard Burklin, Kuna & Co. Director
(Prior to 3/1/95)
Ulmeastrasse 37039
60325 Frankfurt and Main
Federal Republic of Germany
Lazard Freres & Co., Ltd. Director
21 Moorfields
London EC2P 2HT
England
Lazard S.P.A. Director
Plazza Meda, 3
Milano, Italy 20121
Tomkins PLC Director
East Putney House
84 Upper Richmond Road
London SW15 2ST
England, UK
Michael A. Wildish None
Kendrick P. Wilson III American Buildings Company Director
State Docks Road
Eufaula, Alabama 36027
Bank United Director
3200 Southwest Freeway
Houston, Texas 77027
ITT Corp. Director
1330 Avenue of the Americas
New York, NY 10019
Meigher Communications, Inc. Director
100 Avenue of Americas
New York, NY 10013
Alexander E. Zagoreos Drayton Korea Investment Trust Director
11 Devenshire Square
London EC2M 4YR
The Egypt Trust Director
One Rockefeller Plaza
New York, NY 10020
The Emerging World Trust Fund Limited Director
One Rockefeller Plaza
New York, NY 10020
Fleming Continental European Director
Investment Trust
25 Copthall Avenue
London EC2R 7DR
Gartmore Emerging Pacific Director
Investment Trust
Gartmore House
16-18 Monument Street
London EC3R 8AJ
Greek Progress Fund Director
Ergobank
5, Evripidou
40-44, Praxit, Elous
105-61 Athens
Greece
Latin American Investment Trust Director
Exchange House
Primrose Street
London EC2A 2NY
Merlin Green International Director
Investment Trust
Knightsbridge House
197 Knightsbridge
London SW7 1RB
New Zealand Investment Director
23 Cathedral Yard
Exeter
Devon EX1 1HB
Taiwan Opportunities Fund Director
c/o Martin-Currie
20 Castle Terrace
Edinburgh EHI 2ES
U.K.
World Trust Fund Director
Kredietrust
11 rue Aldringen
Luxembourg 1-2960
Item 29. Principal Underwriters
(a) Lazard Freres & Co. LLC, through its division Lazard Asset
Management, currently serves as an investment adviser to the following
invesetment companies: Target Portfolio Trust; The Accessor Funds;
Fortis Series Fund, Inc.; and the Managers Funds.
(b) William R. Araskog, F. Harlan Batrus, David G. Braunschvig, Patrick J.
Callahan, Jr., Michael David-Weill, John V. Doyle, Charles R. Dreifus,
Thomas F. Dunn, Norman Eig, Peter R. Ezersky, Jonathan F. Foster,
Albert H. Garner, James S. Gold, Jeffrey A. Golman, Steven J. Golub,
Herbert W. Gullquist, Thomas R. Haack, J. Ira Harris, Melvin L.
Heineman, Kenneth M. Jacobs, Jonathan H. Kagan, James L. Kempner,
Sandra A. Lamb, Edgar D. Legaspi, Michael S. Liss, William E. Loomis,
Jr., J. Robert Lovejoy, Matthew J. Lustig, POhilippe L. Magistretti,
Damon Mezzacappa, Christina A. Mohr, Robert P. Morgenthau, Steven J.
Niemczyk, Hamish W. M. Norton, Jonathan O'Herron, James A. Paduano,
Louis Perlmutter, Robert E. Poll, Jr., Lester Pollack, Michael J.
Price, Steven L. Rattner, John R. Reese, John R. Reinsberg, Louis G.
Rice, Luis E. Rinaldini, Bruno M. Roger, Felix G. Rohatyn, Michael S.
Rome, Gerard Rosenfeld, Peter L. Smith, Arthur P. Solomon, Michael B.
Solomon, Edouard M. Stern, Paul A. Street, John S. Tamagni, David L.
Tashjian, Joseph M. Thomas, Donald A. Wagner, Ali E. Wambold, Michael
A. Wildish, Kendrick R. Wilson, III and Alexander E. Zagoreos are the
general members of Lazard Freres & Co. LLC. Mr. David-Weill is the
senior member of Lazard Freres & Co. LLC. The address of all such
members is 30 Rockefeller Plaza, New York, New York 10020.
(c) Not applicable.
Item 30. Location of Accounts and Records
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder are maintained as follows: Journals, ledgers,
securities records and other original records are maintained primarily
at the offices of the Registrant's Custodian, State Street Bank &
Trust Company. All other records so required to be maintained are
maintained at the offices of Lazard Freres & Co. LLC, 30 Rockefeller
Plaza, New York, New York 10020.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
Registrant hereby undertakes
(1) to file a post-effective amendment, using financial
statements which need not be certified, within four to six
months from the effective date of Registrant's 1933 Act
Registration Statement.
(2) to call a meeting of shareholders for the purpose of voting
upon the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10%
of the Registrant's outstanding shares of common stock and
in connection with such meeting to comply with the
provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.
(3) To furnish each person to whom a prospectus is delivered
with a copy of the Fund's latest Annual Report to
Shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, and State of New York, on the 19th day
of May, 1997.
LAZARD RETIREMENT SERIES, INC.
(Registrant)
By: /S/HERBERT W. GULLQUIST
Herbert W. Gullquist, President
POWER OF ATTORNEY
Each person whose signature appears below on this Registration
Statement hereby constitutes and appoints William G. Butterly III and Gus
Coutsouros, and each of them, with full power to act without the other, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities (until revoked in writing) to sign any and all amendments to this
Registration Statement (including post-effective amendments and amendments
thereto), and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing ratifying and
confirming all that said attorneys-in-fact and agents or any of them or their or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/S/Herbert W. Gullquist President (Principal May 19, 1997
Herbert W. Gullquist Executive, Financial
and Accounting Officer)
and Director
/S/Norman Eig Director May 19, 1997
Norman Eig
/s/ John J. Burke Director May 19, 1997
John J. Burke
/s/ Lester Z. Lieberman Director May 19, 1997
Lester Z. Lieberman
/s/ Richard Reiss, Jr. Director May 19, 1997
Richard Reiss, Jr.
/s/ John Rutledge Director May 19, 1997
John Rutledge
/s/ Kenneth S. Davidson Director May 19, 1997
Kenneth S. Davidson
/s/ Carl Frischling Director May 19, 1997
Carl Frischling
/s/ William Katz Director May 19, 1997
William Katz
<PAGE>
LAZARD RETIREMENT SERIES, INC.
Pre-Effective Amendment No.1 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
----------------
EXHIBITS
----------------
INDEX TO EXHIBITS
Page
(1)(a) Articles of Incorporation..........................
(1)(b) Articles of Amendment..............................
(2) By-laws, as amended................................
(5) Investment Management Agreement....................
(6) Distribution Agreement.............................
(8) Custody Agreement..................................
(9)(a) Administration Agreement...........................
(9)(b) Form of Fund Participation Agreement...............
(10) Opinion, including consent, of Stroock & Stroock
& Lavan LLP........................................
(11) Consent of Independent Auditors....................
(15) Distribution and Servicing Plan....................
EXHIBIT (1)(A)
ARTICLES OF INCORPORATION
OF
LAZARD RETIREMENT SERIES, INC.
FIRST: The undersigned, David Stephens, whose address is 180 Maiden Lane,
New York, New York 10038-4982, being at least eighteen years of age, hereby
forms a corporation under the Maryland General Corporation Law.
SECOND: The name of the corporation (hereinafter called the "corporation")
is Lazard Retirement Series, Inc.
THIRD: The corporation is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase
or otherwise acquire, hold, pledge, sell, assign, transfer,
lend, write options on, exchange, distribute or otherwise
dispose of and deal in and with securities of every nature,
kind, character, type and form, including without limitation
of the generality of the foregoing, all types of stocks,
shares, futures contracts, bonds, debentures, notes, bills
and other negotiable or non-negotiable instruments,
obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests,
evidences of ownership, guarantees, warrants, options or
evidences of indebtedness issued or created by or guaranteed
as to principal and interest by any state or local government
or any agency or instrumentality thereof, by the United
States Government or any agency, instrumentality, territory,
district or possession thereof, by any foreign government or
any agency, instrumentality, territory, district or
possession thereof, by any corporation organized under the
laws of any state, the United States or any territory or
possession thereof or under the laws of any foreign country,
bank certificates of deposit, bank time deposits, bankers'
acceptances and commercial paper; to pay for the same in cash
or by the issue of stock, including treasury stock, bonds or
notes of the corporation or otherwise; and to exercise any
and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of every
kind and description, including without limitation, the right
to consent and otherwise act with respect thereto, with power
to designate one or more persons, firms, associations or
corporations to exercise any of said rights, powers and
privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise
subjecting as security the assets of the corporation;
(d) to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, shares of stock of the corporation,
including shares of stock of the corporation in fractional
denominations, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of shares
of stock of the corporation any funds or property of the
corporation whether capital or surplus or otherwise, to the
full extent now or hereafter permitted by the laws of the
State of Maryland;
(e) to conduct its business, promote its purposes and
carry on its operations in any and all of its branches and
maintain offices both within and without the State of
Maryland, in any States of the United States of America, in
the District of Columbia and in any other parts of the world;
and
(f) to do all and everything necessary, suitable,
convenient, or proper for the conduct, promotion and
attainment of any of the businesses and purposes herein
specified or which at any time may be incidental thereto or
may appear conducive to or expedient for the accomplishment
of any of such businesses and purposes and which might be
engaged in or carried on by a corporation incorporated or
organized under the Maryland General Corporation Law, and to
have and exercise all of the powers conferred by the laws of
the State of Maryland upon corporations incorporated or
organized under the Maryland General Corporation Law.
The foregoing provisions of this Article THIRD shall be construed both
as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specific purposes and powers shall not be held to limit
or restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of these
Articles of Incorporation; provided, that the corporation shall not conduct any
business, promote any purpose, or exercise any power or privilege within or
without the State of Maryland which, under the laws thereof, the corporation may
not lawfully conduct, promote, or exercise.
FOURTH: The post office address of the principal office of the
corporation within the State of Maryland, and the name and address of the
resident agent of the corporation within the State of Maryland, is The
Corporation Trust Incorporated, a Maryland corporation, 32 South Street,
Baltimore, Maryland 21202.
FIFTH: (1) The total number of shares of stock which the corporation
has authority to issue is five hundred million (500,000,000) shares of Common
Stock, all of which are of a par value of one tenth of one cent ($.001) each.
(2) The aggregate par value of all the authorized shares of stock is
five hundred thousand dollars ($500,000.00).
(3) The Board of Directors of the corporation is authorized, from time
to time, to fix the price or the minimum price or the consideration or minimum
consideration for, and to authorize the issuance of, the shares of stock of the
corporation and securities convertible into shares of stock of the corporation.
(4) The Board of Directors of the corporation is authorized, from time
to time, to classify or to reclassify, as the case may be, any unissued shares
of stock of the corporation by setting or changing the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption of the stock.
(5) Subject to the power of the Board of Directors to classify and
reclassify unissued shares, the shares of each class of stock of the corporation
shall have the following preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption:
(a) (i) All consideration received by the
corporation for the issuance or sale of shares together
with all income, earnings, profits and proceeds thereof,
shall irrevocably belong to such class for all purposes,
subject only to the rights of creditors and to the effect of
the conversion of shares of any class of stock into another
class of stock of the corporation, and are herein referred to
as "assets belonging to" such class.
(ii) The assets belonging to such class
shall be charged with the liabilities of the corporation in
respect of such class and with such class's share of the
general liabilities of the corporation, in the latter case in
proportion that the net asset value of such class bears to the
net asset value of all classes. The determination of the Board
of Directors shall be conclusive as to the allocation of
liabilities, including accrued expenses and reserves, to a
class.
(iii) Dividends or distributions on shares
of each class, whether payable in stock or cash, shall be paid
only out of earnings, surplus or other assets belonging to
such class.
(iv) In the event of the liquidation or
dissolution of the corporation, stockholders of each class
shall be entitled to receive, as a class, out of the assets of
the corporation available for distribution to stockholders,
the assets belonging to such class and the assets so
distributable to the stockholders of such class shall be
distributed among such stockholders in proportion to the
number of shares of such class held by them.
(b) A class may be invested with one or more
other classes in a common investment portfolio.
Notwithstanding the provisions of paragraph (5)(a) of
this Article FIFTH, if two or more classes are invested
in a common investment portfolio, the shares of each
such class of stock of the corporation shall be subject
to the following preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption, and, if
there are other classes of stock invested in a different
investment portfolio, shall also be subject to the provisions
of paragraph (5)(a) of this Article FIFTH at the portfolio
level as if the classes invested in the common investment
portfolio were one class:
(i) The income and expenses of the investment
portfolio shall be allocated among the classes
invested in the investment portfolio in accordance with the
number of shares outstanding of each such class or as
otherwise determined by the Board of Directors.
(ii) As more fully set forth in this
paragraph (5)(b) of Article FIFTH, the liabilities and
expenses of the classes invested in the same investment
portfolio shall be determined separately from those of each
other and, accordingly, the net asset value, the dividends and
distributions payable to holders, and the amounts
distributable in the event of liquidation of the corporation
to holders of shares of the corporation's stock may vary from
class to class invested in the same investment portfolio.
Except for these differences and certain other differences set
forth in this paragraph (5) of Article FIFTH or elsewhere in
these Articles of Incorporation, the classes invested in the
same investment portfolio shall have the same preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
conditions of redemption.
(iii) The dividends and distributions of
investment income and capital gains with respect to the
classes invested in the same investment portfolio shall be in
such amounts as may be declared from time to time by the Board
of Directors, and such dividends and distributions may vary
among the classes invested in the same investment portfolio to
reflect differing allocations of the expenses of the
corporation among the classes and any resultant differences
between the net asset values per share of the classes, to such
extent and for such purposes as the Board of Directors may
deem appropriate. The allocation of investment income, capital
gains, expenses and liabilities of the corporation among the
classes shall be determined by the Board of Directors in a
manner that is consistent with applicable law.
(c) Except as set forth below, on each matter
submitted to a vote of the stockholders, each holder of
a share of stock shall be entitled to one vote for each share
standing in his name on the books of the corporation
irrespective of the class thereof. All holders of shares of
stock shall vote as a single class
except as may otherwise be required by law pursuant to
any applicable order, rule or interpretation issued by
the Securities and Exchange Commission, or otherwise,
or except with respect to any matter which affects only one or
more classes of stock, in which case only the holders of
shares of the class or classes affected shall be entitled to
vote.
(d) The proceeds of the redemption of the shares
of any class of stock of the corporation may be reduced
by the amount of any contingent deferred sales charge or
other charge (which charges may vary within and among the
classes) payable on such redemption pursuant to the terms of
issuance of such shares, all in accordance with the Investment
Company Act of 1940, as amended, and applicable rules and
regulations of the National Association of Securities Dealers,
Inc. ("NASD").
(e) At such times as may be determined by the
Board of Directors (or with the authorization of the
Board of Directors, by the officers of the corporation)
in accordance with the Investment Company Act of 1940,
as amended, applicable rules and regulations
thereunder and applicable rules and regulations of the NASD
and reflected in the corporation's current registration
statement, shares of a particular class of stock of the
corporation may be automatically converted into shares of
another class of stock of the corporation based on the
relative net asset values of such classes at the time of
conversion, subject, however, to any conditions of conversion
that may be imposed by the Board of Directors (or with the
authorization of the Board of Directors, by the officers of
the corporation) and reflected in the corporation's current
registration statement as aforesaid.
Except as provided above, all provisions of the Articles of Incorporation
relating to stock of the corporation shall apply to shares of, and to the
holders of, all classes of stock.
(6) Notwithstanding any provisions of the Maryland General Corporation
Law requiring a greater proportion than a majority of the votes of stockholders
entitled to be cast in order to take or authorize any action, any such action
may be taken or authorized upon the concurrence of a majority of the aggregate
number of votes entitled to be cast thereon.
(7) The presence in person or by proxy of the holders of one-third of
the shares of stock of the corporation entitled to vote (without regard to
class) shall constitute a quorum at any meeting of the stockholders, except with
respect to any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more classes of
stock, in which case the presence in person or by proxy of the holders of
one-third of the shares of stock of each class required to vote as a class on
the matter shall constitute a quorum.
(8) The corporation may issue shares of stock in fractional
denominations to the same extent as its whole shares, and shares in fractional
denominations shall be shares of stock having proportionately to the respective
fractions represented thereby all the rights of whole shares, including, without
limitation, the right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the corporation, but excluding
the right to receive a stock certificate evidencing a fractional share.
(9) No holder of any shares of any class of the corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any shares
of any class which the corporation proposes to issue, or any rights or options
which the corporation proposes to issue or to grant for the purchase of shares
of any class or for the purchase of any shares, bonds, securities, or
obligations of the corporation which are convertible into or exchangeable for,
or which carry any rights to subscribe for, purchase, or otherwise acquire
shares of any class of the corporation; and any and all of such shares, bonds,
securities or obligations of the corporation, whether now or hereafter
authorized or created, may be issued, and may be reissued or transferred if the
same have been reacquired, and any and all of such rights and options may be
granted by the Board of Directors to such persons, firms, corporations and
associations, and for such lawful consideration, and on such terms, as the Board
of Directors in its discretion may determine, without first offering the same,
or any thereof, to any said holder.
SIXTH: (1) The number of directors of the corporation, until such
number shall be increased or decreased pursuant to the by-laws of the
corporation, is one. The number of directors shall never be less than the
minimum number prescribed by the Maryland General Corporation Law.
(2) The names of the persons who shall act as directors of the
corporation until the first annual meeting or until their successor or
successors are duly chosen and qualify are as follows:
Norman Eig
Herbert W. Gullquist
(3) The initial by-laws of the corporation shall be adopted by the
directors at their organizational meeting or by their informal written action,
as the case may be. Thereafter, the power to make, alter, and repeal the by-laws
of the corporation shall be vested exclusively in the Board of Directors of the
corporation.
(4) Any determination made in good faith by or pursuant to the
direction of the Board of Directors, as to: the amount of the assets, debts,
obligations, or liabilities of the corporation or belonging to, or attributable
to any class of shares of the corporation; the amount of any reserves or charges
set up and the propriety thereof; the time of or purpose for creating such
reserves or charges; the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged
or shall be then or thereafter required to be paid or discharged); the value of
any investment or fair value of any other asset of the corporation; the amount
of net investment income; the number of shares of stock outstanding; the
estimated expense in connection with purchases or redemptions of the
corporation's stock; the ability to liquidate investments in orderly fashion;
the extent to which it is practicable to deliver a cross-section of the
portfolio of the corporation in payment for any such shares, or as to any other
matters relating to the issue, sale, purchase, redemption and/or other
acquisition or disposition of investments or shares of the corporation, or the
determination of the net asset value of shares of the corporation shall be final
and conclusive, and shall be binding upon the corporation and all holders of its
shares, past, present and future, and shares of the corporation are issued and
sold on the condition and understanding that any and all such determinations
shall be binding as aforesaid.
SEVENTH: (1) To the fullest extent that limitations on the liability
of directors and officers are permitted by the Maryland General Corporation Law,
no director or officer of the corporation shall have any liability to the
corporation or its stockholders for money damages. This limitation on liability
applies to events occurring at the time a person serves as a director or officer
of the corporation whether or not such person is a director or officer at the
time of any proceeding in which liability is asserted.
(2) The corporation shall indemnify and advance expenses to its
currently acting and its former directors to the fullest extent that
indemnification of directors and advancement of expenses to directors is
permitted by the Maryland General Corporation Law. The corporation shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law. The board of
directors may, through a by-law, resolution or agreement, make further
provisions for indemnification of directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation Law.
(3) No provision of this Article SEVENTH shall be effective to protect
or purport to protect any director or officer of the corporation against any
liability to the corporation or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
(4) References to the Maryland General Corporation Law in this Article
SEVENTH are to the law as from time to time amended. No amendment to the
Articles of Incorporation of the corporation shall affect any right of any
person under this Article SEVENTH based on any event, omission or proceeding
prior to such amendment.
EIGHTH: (1) Any holder of shares of stock of the corporation may
require the corporation to redeem and the corporation shall be obligated to
redeem at the option of such holder all or any part of the shares of the
corporation owned by said holder, at the redemption price, pursuant to the
method, upon the terms and subject to the conditions hereinafter set forth:
(a) The redemption price per share shall be the net
asset value per share determined at such time or times as the
Board of Directors of the corporation shall designate in
accordance with any provision of the Investment Company Act of
1940, as amended, any rule or regulation thereunder or
exemption or exception therefrom, or any rule or regulation
made or adopted by any securities association registered under
the Securities Exchange Act of 1934.
(b) Net asset value per share of a class shall be
determined by dividing:
(i) The total value of the assets
belonging to such class or, in the case of a
class invested in a common investment
portfolio with other classes, such class's
proportionate share of the total value of
the assets belonging to the common
investment portfolio, such value determined
as provided in Subsection (c) below less,
to the extent determined by or pursuant to
the direction of the Board of Directors, all
debts, obligations and liabilities of such
class (which debts, obligations and
liabilities shall include, without
limitation of the generality of the
foregoing, any and all debts, obligations,
liabilities, or claims, of any and every
kind and nature, fixed, accrued and
otherwise, including the estimated accrued
expenses of management and supervision,
administration and distribution
and any reserves or charges for any or all
of the foregoing, whether for taxes,
expenses or otherwise) but excluding such
class' liability upon its shares and its
surplus, by
(ii) The total number of shares of
such class outstanding.
The Board of Directors is empowered, in its absolute
discretion, to establish other methods for determining such
net asset value whenever such other methods are deemed by it
to be necessary in order to enable the corporation to comply
with, or are deemed by it to be desirable provided they are
not inconsistent with, any provision of the Investment
Company Act of 1940, as amended, or any rule or regulation
thereunder.
(c) In determining for the purposes of these
Articles of Incorporation the total value of the assets
of the corporation at any time, investments and any
other assets of the corporation shall be valued in such
manner as may be determined from time to time by the
Board of Directors.
(d) Payment of the redemption price by the
corporation may be made either in cash or in securities
or other assets at the time owned by the corporation or
partly in cash and partly in securities or other assets at the
time owned by the corporation. The value of any part of such
payment to be made in securities or other assets of the
corporation shall be the value employed in determining the
redemption price. Payment of the redemption price shall be
made on or before the seventh day following the day on which
the shares are properly presented for redemption hereunder,
except that delivery of any securities included in any such
payment shall be made as promptly as any necessary transfers
on the books of the issuers whose securities are to be
delivered may be made.
The corporation, pursuant to resolution of the Board
of Directors, may deduct from the payment made for any shares
redeemed a liquidating charge not in excess of five percent
(5%) of the redemption price of the shares so redeemed, and
the Board of Directors may alter or suspend any such
liquidating charge from time to time.
(e) Redemption of shares of stock by the corporation
is conditional upon the corporation having funds or property
legally available therefor.
(2) The corporation, either directly or through an agent, may
repurchase its shares, out of funds legally available therefor, upon such terms
and conditions and for such consideration as the Board of Directors shall deem
advisable, by agreement with the owner at a price not exceeding the net asset
value per share as determined by the corporation at such time or times as the
Board of Directors of the corporation shall designate, less a liquidating charge
not to exceed five percent (5%) of such net asset value, if and as fixed by
resolution of the Board of Directors of the corporation from time to time, and
take all other steps deemed necessary or advisable in connection therewith.
(3) The corporation, at its option, pursuant to resolution of the
Board of Directors, may cause the redemption, upon the terms set forth in such
resolution and in paragraphs (1) (a) through (e) and paragraph (4) of this
Article EIGHTH, of shares of stock owned by stockholders whose shares have an
aggregate net asset value of less than such amount as may be fixed from time to
time by the Board of Directors. Notwithstanding any other provision of this
Article EIGHTH, if certificates representing such shares have been issued, the
redemption price need not be paid by the corporation until such certificates are
presented in proper form for transfer to the corporation or the agent of the
corporation appointed for such purpose; however, the redemption shall be
effective, in accordance with the resolution of the Board of Directors,
regardless of whether or not such presentation has been made.
(4) The obligations set forth in this Article EIGHTH may be suspended
or postponed as may be permissible under the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(5) The Board of Directors may establish other terms and conditions
and procedures for redemption, including requirements as to delivery of
certificates evidencing shares, if issued.
NINTH: All persons who shall acquire stock or other securities of the
corporation shall acquire the same subject to the provisions of the
corporation's Charter, as from time to time amended.
TENTH: From time to time any of the provisions of the Charter of the
corporation may be amended, altered or repealed, including amendments which
alter the contract rights as expressly set forth in the Charter of any class of
stock outstanding, and other provisions authorized by the Maryland General
Corporation Law at the time in force may be added or inserted in the manner and
at the time prescribed by said Law, and all rights at any time conferred upon
the stockholders of the corporation by its Charter are granted subject to the
provisions of this Article and the reservation of the right to amend the Charter
herein contained.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated: February 13, 1997
David Stephens, Incorporator
EXHIBIT (1)(B)
ARTICLES OF AMENDMENT
LAZARD RETIREMENT SERIES, INC.
LAZARD RETIREMENT SERIES, INC., a Maryland corporation having its
principal office in the State of Maryland at 32 South Street, Baltimore,
Maryland (hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by striking
paragraph (1) of Article FIFTH of the Articles of Incorporation in its entirety
and inserting in lieu thereof the following:
(1) The total number of shares of stock which the corporation has
authority to issue is five hundred million (500,000,000) shares of Common Stock,
all of which are of a par value of one tenth of one cent ($.001) each.
Until such time as the Board of Directors shall provide otherwise in
accordance with paragraph (4) of this Article, all of the authorized shares of
Common Stock of the Corporation are classified as follows:
PORTFOLIO SHARES AUTHORIZED
Lazard Retirement Bantam Value Portfolio 50,000,000
Lazard Retirement Emerging Markets Portfolio 50,000,000
Lazard Retirement Emerging World Funds Portfolio 50,000,000
Lazard Retirement Equity Portfolio 50,000,000
Lazard Retirement Global Equity Portfolio 50,000,000
Lazard Retirement International Equity Portfolio 50,000,000
Lazard Retirement International Fixed-Income Portfolio 50,000,000
Lazard Retirement International Small Cap Portfolio 50,000,000
Lazard Retirement Small Cap Portfolio 50,000,000
Lazard Retirement Strategic Yield Portfolio 50,000,000
-----------
Total 500,000,000
<PAGE>
SECOND: These Articles of Amendment were approved by at least a
majority of the entire Board of Directors of the Corporation, and no stock
entitled to be voted on the matter was outstanding or subscribed for at the time
of approval.
The undersigned President of the Corporation acknowledges these
Articles of Amendment to be the corporate act of the Corporation and states that
to the best of his knowledge, information and belief, the matters and facts set
forth in these Articles with respect to the authorization and approval of the
amendment of the Corporation's charter are true in all material respects, and
that this statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Lazard Retirement Series, Inc. has caused this
instrument to be signed in its name and on its behalf by its President, and
witnessed by its Vice President and Secretary, on the 30th day of April, 1997.
THE LAZARD FUNDS, INC.
By:_______________________________
Herbert W. Gullquist, President
WITNESS:
- ---------------------------
William G. Butterly, III
Vice President and Secretary
EXHIBIT (2)
BY-LAWS
OF
LAZARD RETIREMENT SERIES, INC.
(A Maryland Corporation)
-----------
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing shares
of stock shall set forth thereon the statements prescribed by Section 2-211 of
the Maryland General Corporation Law ("General Corporation Law") and by any
other applicable provision of law and shall be signed by the Chairman of the
Board or the President or a Vice President and countersigned by the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be
sealed with the corporate seal. The signatures of any such officers may be
either manual or facsimile signatures and the corporate seal may be either
facsimile or any other form of seal. In case any such officer who has signed
manually or by facsimile any such certificate ceases to be such officer before
the certificate is issued, it nevertheless may be issued by the corporation with
the same effect as if the officer had not ceased to be such officer as of the
date of its issue.
No certificate representing shares of stock shall be issued for any
share of stock until such share is fully paid, except as otherwise authorized in
Section 2-206 of the General Corporation Law.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Board of Directors may require, in its discretion, the owner
of any such certificate or the owner's legal representative to give bond, with
sufficient surety, to the corporation to indemnify it against any loss or claim
that may arise by reason of the issuance of a new certificate.
2. SHARE TRANSFERS. Upon compliance with provisions restricting the
transferability of shares of stock, if any, transfers of shares of stock of the
corporation shall be made only on the stock transfer books of the corporation by
the record holder thereof or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the corporation or with a
transfer agent or a registrar, if any, and on surrender of the certificate or
certificates for such shares of stock properly endorsed and the payment of all
taxes due thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of Directors may fix, in
advance, a date as the record date for the purpose of determining stockholders
entitled to notice of, or to vote at, any meeting of stockholders, or
stockholders entitled to receive payment of any dividend or the allotment of any
rights or in order to make a determination of stockholders for any other proper
purpose. Such date, in any case, shall be not more than 90 days, and in case of
a meeting of stockholders not less than 10 days, prior to the date on which the
meeting or particular action requiring such determination of stockholders is to
be held or taken. In lieu of fixing a record date, the Board of Directors may
provide that the stock transfer books shall be closed for a stated period but
not to exceed 20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of, or to vote at, a meeting of
stockholders, such books shall be closed for at least 10 days immediately
preceding such meeting. If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders: (1) The record date for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day on which
the notice of meeting is mailed or the day 30 days before the meeting, whichever
is the closer date to the meeting; and (2) The record date for the determination
of stockholders entitled to receive payment of a dividend or an allotment of any
rights shall be at the close of business on the day on which the resolution of
the Board of Directors declaring the dividend or allotment of rights is adopted,
provided that the payment or allotment date shall not be more than 60 days after
the date on which the resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share of stock" or "shares of stock" or "stockholder" or
"stockholders" refers to an outstanding share or shares of stock and to a holder
or holders of record of outstanding shares of stock when the corporation is
authorized to issue only one class of shares of stock and said reference also is
intended to include any outstanding share or shares of stock and any holder or
holders of record of outstanding shares of stock of any class or series upon
which or upon whom the Charter confers such rights where there are two or more
classes or series of shares or upon which or upon whom the General Corporation
Law confers such rights notwithstanding that the Charter may provide for more
than one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder.
5. STOCKHOLDER MEETINGS.
ANNUAL MEETINGS. If a meeting of the stockholders of the corporation
is required by the Investment Company Act of 1940, as amended, to elect the
directors, then there shall be submitted to the stockholders at such meeting the
question of the election of directors, and a meeting called for that purpose
shall be designated the annual meeting of stockholders for that year. In other
years in which no action by stockholders is required for the aforesaid election
of directors, no annual meeting need be held.
SPECIAL MEETINGS. Special stockholder meetings for any purpose may be
called by the Board of Directors or the President and shall be called by the
Secretary for the purpose of removing a Director whenever the holders of shares
entitled to at least ten percent of all the votes entitled to be cast at such
meeting shall make a duly authorized request that such meeting be called.
The Secretary shall call a special meeting of stockholders for all
other purposes whenever the holders of shares entitled to at least a majority of
all the votes entitled to be cast at such meeting shall make a duly authorized
request that such meeting be called. Such request shall state the purpose of
such meeting and the matters proposed to be acted on thereat, and no other
business shall be transacted at any such special meeting. The Secretary shall
inform such stockholders of the reasonably estimated costs of preparing and
mailing the notice of the meeting, and upon payment to the corporation of such
costs, the Secretary shall give notice in the manner provided for below.
PLACE AND TIME. Stockholder meetings shall be held at such place,
either within the State of Maryland or at such other place within the United
States, and at such date or dates as the directors from time to time may fix.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written or printed
notice of all meetings shall be given by the Secretary and shall state the time
and place of the meeting. The notice of a special meeting shall state in all
instances the purpose or purposes for which the meeting is called. Written or
printed notice of any meeting shall be given to each stockholder either by mail
or by presenting it to the stockholder personally or by leaving it at his or her
residence or usual place of business not less than 10 days and not more than 90
days before the date of the meeting, unless any provisions of the General
Corporation Law shall prescribe a different elapsed period of time, to each
stockholder at his or her address appearing on the books of the corporation or
the address supplied by the stockholder for the purpose of notice. If mailed,
notice shall be deemed to be given when deposited in the United States mail
addressed to the stockholder at his or her post office address as it appears on
the records of the corporation with postage thereon prepaid. Whenever any notice
of the time, place or purpose of any meeting of stockholders is required to be
given under the provisions of these by-laws or of the General Corporation Law, a
waiver thereof in writing, signed by the stockholder and filed with the records
of the meeting, whether before or after the holding thereof, or actual
attendance or representation at the meeting shall be deemed equivalent to the
giving of such notice to such stockholder. The foregoing requirements of notice
also shall apply, whenever the corporation shall have any class of stock which
is not entitled to vote, to holders of stock who are not entitled to vote at the
meeting, but who are entitled to notice thereof and to dissent from any action
taken thereat.
STATEMENT OF AFFAIRS. The President of the corporation or, if the
Board of Directors shall determine otherwise, some other executive officer
thereof, shall prepare or cause to be prepared annually a full and correct
statement of the affairs of the corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year, which shall be
filed at the principal office of the corporation in the State of Maryland.
QUORUM. At any meeting of stockholders, the presence in person or by
proxy of stockholders entitled to cast one-third of the votes thereat shall
constitute a quorum. In the absence of a quorum, the stockholders present in
person or by proxy, by majority vote and without notice other than by
announcement, may adjourn the meeting from time to time, but not for a period
exceeding 120 days after the original record date until a quorum shall attend.
ADJOURNED MEETINGS. A meeting of stockholders convened on the date for
which it was called (including one adjourned to achieve a quorum as provided in
the paragraph above) may be adjourned from time to time without further notice
to a date not more than 120 days after the original record date, and any
business may be transacted at any adjourned meeting which could have been
transacted at the meeting as originally called.
CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting: the President, a Vice President or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the stockholders.
The Secretary of the corporation or, in his or her absence, an Assistant
Secretary, shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present the chairman of the meeting shall appoint
a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether for the purposes of determining the
stockholder's presence at a meeting, or whether by waiving notice of any
meeting, voting or participating at a meeting, expressing consent or dissent
without a meeting or otherwise. Every proxy shall be executed in writing by the
stockholder or by his or her duly authorized attorney-in- fact or be in such
other form as may be permitted by the Maryland General Corporation Law,
including documents conveyed by electronic transmission and filed with the
Secretary of the corporation. A copy, facsimile transmission or other
reproduction of the writing or transmission may be substituted for the original
writing or transmission for any purpose for which the original transmission
could be used. No unrevoked proxy shall be valid after 11 months from the date
of its execution, unless a longer time is expressly provided therein. The
placing of a stockholder's name on a proxy pursuant to telephonic or
electronically transmitted instructions obtained pursuant to procedures
reasonably designed to verify that such instructions have been authorized by
such stockholder shall constitute execution of such proxy by or on behalf of
such stockholder.
INSPECTORS OF ELECTION. The directors, in advance of any meeting, may,
but need not, appoint one or more inspectors to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath to execute faithfully the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum and the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the person presiding at the meeting
or any stockholder, the inspector or inspectors, if any, shall make a report in
writing of any challenge, question or matter determined by him or them and
execute a certificate of any fact found by him or them.
VOTING. Each share of stock shall entitle the holder thereof to one
vote, except in the election of directors, at which each said vote may be cast
for as many persons as there are directors to be elected. Except for election of
directors, a majority of the votes cast at a meeting of stockholders, duly
called and at which a quorum is present, shall be sufficient to take or
authorize action upon any matter which may come before a meeting, unless more
than a majority of votes cast is required by the corporation's Articles of
Incorporation. A plurality of all the votes cast at a meeting at which a quorum
is present shall be sufficient to elect a director.
6. INFORMAL ACTION. Any action required or permitted to be taken at a
meeting of stockholders may be taken without a meeting if a consent in writing,
setting forth such action, is signed by all the stockholders entitled to vote on
the subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action and such consent and
waiver are filed with the records of the corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed under the direction of a Board of Directors. The
use of the phrase "entire board" herein refers to the total number of directors
which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be a natural person
of full age. A director need not be a stockholder, a citizen of the United
States or a resident of the State of Maryland. The initial Board of Directors
shall consist of two persons. Thereafter, the number of directors constituting
the entire board shall never be less than three or the number of stockholders,
whichever is less. At any regular meeting or at any special meeting called for
that purpose, a majority of the entire Board of Directors may increase or
decrease the number of directors, provided that the number thereof shall never
be less than three or the number of stockholders, whichever is less, nor more
than fifteen and further provided that the tenure of office of a director shall
not be affected by any decrease in the number of directors.
3. ELECTION AND TERM. The first Board of Directors shall consist of
the directors named in the Articles of Incorporation and shall hold office until
the first meeting of stockholders or until their successors have been elected
and qualified. Thereafter, directors who are elected at a meeting of
stockholders, and directors who are elected in the interim to fill vacancies and
newly created directorships, shall hold office until their successors have been
elected and qualified, as amended. Newly created directorships and any vacancies
in the Board of Directors, other than vacancies resulting from the removal of
directors by the stockholders, may be filled by the Board of Directors, subject
to the provisions of the Investment Company Act of 1940, as amended. Newly
created directorships filled by the Board of Directors shall be by action of a
majority of the entire Board of Directors then in office. All vacancies to be
filled by the Board of Directors may be filled by a majority of the remaining
members of the Board of Directors, although such majority is less than a quorum
thereof.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board of Directors
shall fix, except that the first meeting of a newly elected Board of Directors
shall be held as soon after its election as the directors conveniently may
assemble.
PLACE. Meetings shall be held at such place within or without the
State of Maryland as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the President or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Whenever any notice of the
time, place or purpose of any meeting of directors or any committee thereof is
required to be given under the provisions of the General Corporation Law or of
these by- laws, a waiver thereof in writing, signed by the director or committee
member entitled to such notice and filed with the records of the meeting,
whether before or after the holding thereof, or actual attendance at the meeting
shall be deemed equivalent to the giving of such notice to such director or such
committee member.
QUORUM AND ACTION. During such times when the Board of Directors shall
consist of more than one director, a quorum for the transaction of business at
meetings of the Board of Directors shall consist of one-third of the entire
Board of Directors, but in no event less than two directors. A majority of the
directors present, whether or not a quorum is present, may adjourn a meeting to
another time and place. Except as otherwise specifically provided by the
Articles of Incorporation, the General Corporation Law or these by-laws, the
action of a majority of the directors present at a meeting at which a quorum is
present shall be the action of the Board of Directors.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, or the President or any other director chosen by the Board,
shall preside at all meetings.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed
for cause or without cause by the stockholders, who may elect a successor or
successors to fill any resulting vacancy or vacancies for the unexpired term of
the removed director or directors.
6. COMMITTEES. The Board of Directors may appoint from among its
members an Executive Committee and other committees composed of one or more
directors and may delegate to such committee or committees, in the intervals
between meetings of the Board of Directors, any or all of the powers of the
Board of Directors in the management of the business and affairs of the
corporation, except the power to amend the by-laws, to approve any merger or
share exchange which does not require stockholder approval, to authorize
dividends, to issue stock (except to the extent permitted by law) or to
recommend to stockholders any action requiring the stockholders' approval. In
the absence of any member of any such committee, the members thereof present at
any meeting, whether or not they constitute a quorum, may appoint a member of
the Board of Directors to act in the place of such absent member.
7. INFORMAL ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all members
of the Board of Directors or any such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of the Board or any
such committee.
Members of the Board of Directors or any committee designated thereby
may participate in a meeting of such Board or committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and shall have a
President, a Secretary and a Treasurer, who shall be elected by the Board of
Directors, and may have such other officers, assistant officers and agents as
the Board of Directors shall authorize from time to time. Any two or more
offices, except those of President and Vice President, may be held by the same
person, but no person shall execute, acknowledge or verify any instrument in
more than one capacity, if such instrument is required by law to be executed,
acknowledged or verified by two or more officers.
Any officer or agent may be removed by the Board of Directors
whenever, in its judgment, the best interests of the corporation will be served
thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation in the State of
Maryland prescribed by the General Corporation Law is 32 South Street, c/o The
Corporation Trust Incorporated, Baltimore, Maryland 21202. The name and address
of the resident agent in the State of Maryland prescribed by the General
Corporation Law are: The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202.
The corporation shall maintain, at its principal office in the State
of Maryland prescribed by the General Corporation Law or at the business office
or an agency of the corporation, an original or duplicate stock ledger
containing the names and addresses of all stockholders and the number of shares
of each class held by each stockholder. Such stock ledger may be in written form
or any other form capable of being converted into written form within a
reasonable time for visual inspection.
The corporation shall keep at said principal office in the State of
Maryland the original or a certified copy of the by-laws, including all
amendments thereto, and shall duly file thereat the annual statement of affairs
of the corporation prescribed by Section 2-313 of the General Corporation Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and shall be in such form and contain such other words and/or
figures as the Board of Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation or any series thereof shall be
fixed, and shall be subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the by-laws is vested
exclusively in the Board of Directors of the corporation.
ARTICLE VIII
INDEMNIFICATION
1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation shall
indemnify its directors to the fullest extent that indemnification of directors
is permitted by the law. The corporation shall indemnify its officers to the
same extent as its directors and to such further extent as is consistent with
law. The corporation shall indemnify its directors and officers who while
serving as directors or officers also serve at the request of the corporation as
a director, officer, partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the same extent as its directors and, in the case of officers,
to such further extent as is consistent with law. The indemnification and other
rights provided by this Article shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person. This Article shall not protect any such
person against any liability to the corporation or any stockholder thereof to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct").
2. ADVANCES. Any current or former director or officer of the
corporation seeking indemnification within the scope of this Article shall be
entitled to advances from the corporation for payment of the reasonable expenses
incurred by him in connection with the matter as to which he is seeking
indemnification in the manner and to the fullest extent permissible under the
General Corporation Law. The person seeking indemnification shall provide to the
corporation a written affirmation of his good faith belief that the standard of
conduct necessary for indemnification by the corporation has been met and a
written undertaking to repay any such advance if it should ultimately be
determined that the standard of conduct has not been met. In addition, at least
one of the following additional conditions shall be met: (a) the person seeking
indemnification shall provide a security in form and amount acceptable to the
corporation for his or her undertaking; (b) the corporation is insured against
losses arising by reason of the advance; or (c) a majority of a quorum of
directors of the corporation who are neither "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor parties
to the proceeding ("disinterested non-party directors"), or independent legal
counsel, in a written opinion, shall have determined, based on a review of facts
readily available to the corporation at the time the advance is proposed to be
made, that there is reason to believe that the person seeking indemnification
will ultimately be found to be entitled to indemnification.
3. PROCEDURE. At the request of any person claiming indemnification
under this Article, the Board of Directors shall determine, or cause to be
determined, in a manner consistent with the General Corporation Law, whether the
standards required by this Article have been met. Indemnification shall be made
only following: (a) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be indemnified was not
liable by reason of disabling conduct or (b) in the absence of such a decision,
a reasonable determination, based upon a review of the facts, that the person to
be indemnified was not liable by reason of disabling conduct by (i) the vote of
a majority of a quorum of disinterested non- party directors or (ii) an
independent legal counsel in a written opinion.
4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and agents who
are not officers or directors of the corporation may be indemnified, and
reasonable expenses may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940, as amended.
5. OTHER RIGHTS. The Board of Directors may make further provision
consistent with law for indemnification and advance of expenses to directors,
officers, employees and agents by resolution, agreement or otherwise. The
indemnification provided by this Article shall not be deemed exclusive of any
other right, with respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance or other agreement
or resolution of stockholders or disinterested non-party directors or otherwise.
6. AMENDMENTS. References in this Article are to the General
Corporation Law and to the Investment Company Act of 1940 as from time to time
amended. No amendment of the by-laws shall affect any right of any person under
this Article based on any event, omission or proceeding prior to the amendment.
Dated: February 13, 1997
Amended: April 30, 1997
EXHIBIT (5)
LAZARD RETIREMENT SERIES, INC.
INVESTMENT MANAGEMENT AGREEMENT
Agreement, made the 30th day of April, 1997, between Lazard Retirement
Series, Inc., a Maryland corporation (the "Fund"), on behalf of the portfolios
named on Schedule 1 hereto, as such Schedule may be revised from time to time
(each, a "Portfolio"), and Lazard Asset Management, a division of Lazard Freres
& Co. LLC, a New York limited liability company (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), authorized to reclassify and issue any unissued shares to any number of
additional classes or series each having its own investment objective, policies
and restrictions; and
WHEREAS, the Fund desires to retain the Investment Manager to render
investment advisory services to each Portfolio and the Investment Manager is
willing to render such investment advisory services;
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints the Investment Manager to act as manager
of each Portfolio for the period and on the terms set forth in this Agreement.
The Investment Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided.
2. Subject to the supervision of the Board of Directors of the Fund,
the Investment Manager shall manage the investment operations of each Portfolio
and the assets of each Portfolio, including the purchase, retention and
disposition thereof, in accordance with the Portfolio's investment objective,
policies and restrictions as stated in the Fund's Prospectus (hereinafter
defined) and subject to the following understandings:
(a) The Investment Manager shall provide supervision
of each Portfolio's investments and determine from time to
time what investments or securities will be purchased,
retained, sold or loaned by the Portfolio, and what portion
of the assets will be invested or held uninvested as cash.
(b) The Investment Manager shall use its best
judgment in the performance of its duties under this
Agreement.
(c) The Investment Manager, in the performance of its
duties and obligations under this Agreement, shall act in
conformity with the Articles of Incorporation, By-Laws and
Prospectus of the Fund and with the instructions and
directions of the Board of Directors of the Fund and will
conform to and comply with the requirements of the 1940 Act
and all other applicable federal and state laws and
regulations.
(d) The Investment Manager shall determine the
securities to be purchased or sold by each Portfolio and will
place orders pursuant to its determinations with or through
such persons, brokers or dealers (including Lazard Freres &
Co. LLC) to carry out the policy with respect to brokerage as
set forth in the Fund's Prospectus or as the Fund's Board of
Directors may direct from time to time. In providing a
Portfolio with investment supervision, it is recognized that
the Investment Manager will give primary consideration to
securing the most favorable price and efficient execution.
On occasions when the Investment Manager
deems the purchase or sale of a security to be in the best
interest of a Portfolio as well as other clients,
the Investment Manager, to the extent permitted by applicable
laws and regulations, may aggregate the securities to be so
sold or purchased in order to obtain the most favorable price
or lower brokerage commissions and efficient execution. In
such event, allocation of the securities so purchased or sold,
as well as the expenses incurred in the transaction, will
be made by the Investment Manager in the manner it
considers to be the most equitable and consistent with
its fiduciary obligations to the Portfolio and to
such other clients.
(e) The Investment Manager shall render to the Fund's
Board of Directors such periodic and special reports with
respect to each Portfolio's securities transactions as the
Board may reasonably request.
(f) The Investment Manager shall provide the
Fund's custodian on each business day with information
relating to all transactions concerning a Portfolio's assets.
(g) The investment management services of the
Investment Manager to the Portfolios under this
Agreement are not to be deemed exclusive, and the
Investment Manager shall be free to render similar
services to others.
3. The Fund has delivered to the Investment Manager copies of each of
the following documents and will deliver to it all future amendments and
supplements, if any:
(a) Articles of Incorporation of the Fund, filed
with the State Department of Assessments and Taxation
of Maryland (such Articles of Incorporation, as in
effect on the date hereof and as amended from time to
time, are herein called the "Articles of Incorporation");
(b) By-Laws of the Fund (such By-Laws, as in
effect on the date hereof and as amended from time to
time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of
Directors of the Fund authorizing the appointment of
the Investment Manager and approving the form of this
Agreement;
(d) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A (the
"Registration Statement"), as filed with the Securities and
Exchange Commission (the "Commission") relating to the Fund
and shares of the Fund's Common Stock;
(e) Notification of Registration of the Fund
under the 1940 Act on Form N-8A as filed with the
Commission; and
(f) Prospectus of the Fund (such prospectus, as
currently in effect and as amended or supplemented
from time to time, being herein called the
"Prospectus").
4. The Investment Manager shall authorize and permit any of the
general members, officers and employees of the Investment Manager, and any of
the directors, officers and employees of any of its affiliates, who may be
elected as Directors or officers of the Fund to serve in the capacities in which
they are elected. All services to be furnished by the Investment Manager under
this Agreement may be furnished through the medium of any such general members,
directors, officers or employees of the Investment Manager or any of its
affiliates.
5. The Investment Manager shall keep the books and
records of the Fund and the Portfolios required to be maintained
by it pursuant to this Agreement and by the Fund pursuant to the rules under
the 1940 Act. The Investment Manager agrees that all records which it maintains
for the Fund or the Portfolios are the property of the Fund or the relevant
Portfolio and it will surrender promptly to the Fund or such Portfolio any of
such records upon the request of the Fund or such Portfolio. The Investment
Manager further agrees to preserve such records prescribed by Rule 31a-2 under
the 1940 Act.
6. The Investment Manager will bear all of its expenses incurred in
connection with the services to be rendered by the Investment Manager to the
Portfolios under this Agreement, including without limitation, the compensation
of all personnel of the Fund and the Investment Manager, except the fees of
Directors of the Fund who are not affiliated persons of the Investment Manager.
The Fund or the relevant Portfolio assumes and will pay all other
expenses in connection with the Fund or such Portfolio not assumed by the
Investment Manager, including but not limited to:
(a) the fees and expenses of Directors who are
not affiliated persons of the Investment Manager or
any of its affiliates;
(b) the fees and expenses of the Fund's
administrator, if any;
(c) the fees and expenses of the custodian which
relate to (i) the custodial function and the
recordkeeping connected therewith, (ii) the maintenance of the
required accounting records of the Fund, (iii) the pricing of
the shares of the Portfolio, including the cost of any pricing
service or services which may be retained pursuant to the
authorization of the Directors of the Fund, and (iv) for both
mail and wire orders, the cashiering function in connection
with the issuance and redemption of the Portfolio's
securities;
(d) the fees and expenses of the Fund's transfer
agent, which may be the custodian, which relate to
the maintenance of, and communications with respect
to, each stockholder account;
(e) the charges and expenses of legal counsel
and independent accountants for the Fund;
(f) brokers' commissions, any issue or transfer
taxes and any other charges in connection with
portfolio transactions on behalf of the Portfolio;
(g) all taxes and corporate fees payable by the
Fund or the Portfolio to federal, state or other
governmental agencies, and all costs of maintaining
corporate existence;
(h) the allocable share of the fees of any trade
association of which the Fund may be a member;
(i) the cost of share certificates, if any,
representing shares of the Portfolio;
(j) the fees and expenses involved in registering and
maintaining registrations of the Fund and of its shares with
the Commission, and, if required, qualifying the shares of the
Portfolio under state securities laws, including the
preparation and printing of the Fund's registration statements
and prospectuses for filing under federal and state securities
laws for such purposes;
(k) all expenses of stockholders' and Directors'
meetings and of preparing, printing and mailing
prospectuses and reports to stockholders in quantities
required for distribution to the stockholders, and
communications expenses with respect to individual
stockholder accounts;
(l) the cost of obtaining fidelity insurance and
any liability insurance covering the Directors and
officers of the Fund as such;
(m) litigation and indemnification expenses and
other extraordinary expenses not incurred in the
ordinary course of the Fund's business;
(n) expenses of issue, repurchase or redemption
of shares of the Fund;
(o) fees payable to the Investment Manager
hereunder;
(p) interest expenses of the Fund;
(q) fees of accounting and pricing services of
the Fund; and
(r) all other expenses properly payable by the
Fund.
7. For the services provided to the Portfolios and the expenses
assumed pursuant to this Agreement, each Portfolio will pay monthly to the
Investment Manager as full compensation therefor a management fee, accrued
daily, at the annual rate set forth opposite the Portfolio's name on Schedule 1
hereto.
8. The Investment Manager shall not be liable for any error of
judgment or for any loss suffered by a Portfolio in connection with the matters
to which this Agreement relates, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. The Federal securities laws may impose liabilities even, under
certain circumstances, on persons who act in good faith, and therefore nothing
herein shall in any way constitute a waiver or limitation of any right which a
Portfolio may have under any Federal securities law.
9. As to each Portfolio, this Agreement shall continue until the date
set forth opposite such Portfolio's name on Schedule 1 hereto (the "Reapproval
Date") and thereafter shall continue automatically for successive annual periods
ending on the day of each year set forth opposite the Portfolio's name on
Schedule 1 hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board of Directors or
(ii) vote of a majority (as defined in the 1940 Act) of such Portfolio's
outstanding voting securities, provided that in either event its continuance
also is approved by a majority of the Fund's Directors who are not "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such approval.
As to each Portfolio, this Agreement may be terminated at any time, without
payment of penalty by the Portfolio, on 60 days' written notice to the
Investment Manager by vote of the Board of Directors of the Fund, or by vote of
a majority (as defined by the 1940 Act) of the outstanding voting securities of
such Portfolio. This Agreement shall automatically terminate, as to the relevant
Portfolio, in the event of its assignment (as defined by the 1940 Act).
10. Nothing in this Agreement shall limit or restrict the right of any
general member, officer or employee of the Investment Manager or any director,
officer or employee of any of its affiliates who may also be a Director, officer
or employee of the Fund to engage in any other business or to devote his time
and attention in part to the management or other aspects of any business,
whether of a similar or dissimilar nature, nor limit or restrict the right of
the Investment Manager to engage in any other business or to render services of
any kind to any other corporation, firm, individual or association.
11. During the term of this Agreement, the Fund agrees to furnish to
the Investment Manager at its principal office all prospectuses, proxy
statements, reports to stockholders, sales literature, or other material
prepared for distribution to stockholders of the Fund or the public, which refer
in any way to the Investment Manager, prior to use thereof and not to use such
material if the Investment Manager reasonably objects in writing within five
business days (or such other time as may be mutually agreed) after receipt
thereof. In the event of termination of this Agreement, the Fund will continue
to furnish to the Investment Manager copies of any of the above-mentioned
materials which refer in any way to the Investment Manager. The Fund shall
furnish or otherwise make available to the Investment Manager such other
information relating to the business affairs of the Fund as the Investment
Manager at any time, or from time to time, reasonably requests in order to
discharge its obligations hereunder.
12. This Agreement may be amended by mutual consent, but the consent
of the Fund must be approved in conformity with the requirements of the 1940
Act.
13. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (1) to the Investment Manager at 30 Rockefeller Plaza,
New York, New York 10020, Attention: Secretary, or (2) to the Fund at 30
Rockefeller Plaza, New York, New York 10020, Attention: President.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
LAZARD RETIREMENT SERIES, INC.
By:_________________________________
LAZARD ASSET MANAGEMENT,
a division of Lazard Freres & Co. LLC
By:_________________________________
<PAGE>
SCHEDULE 1
Annual Fee
as a Percentage
of Average Reapproval Reapproval
Name of Portfolio Daily Net Assets Date Day
Lazard Retirement Bantam
Value Portfolio .75%
Lazard Retirement Emerging
Markets Portfolio 1.00%
Lazard Retirement Emerging
World Funds Portfolio .75%
Lazard Retirement Equity
Portfolio .75%
Lazard Retirement Global
Equity Portfolio .75%
Lazard Retirement International
Equity Portfolio .75%
Lazard Retirement International
Fixed-Income Portfolio .75%
Lazard Retirement International
Small Cap Portfolio .75%
Lazard Retirement Small Cap
Portfolio .75%
Lazard Retirement Strategic
Yield Portfolio .75%
EXHIBIT (6)
DISTRIBUTION AGREEMENT
AGREEMENT made this 30th day of April, 1997, between Lazard Retirement
Series, Inc., a Maryland corporation (the "Fund"), and Lazard Freres & Co. LLC,
a New York limited liability company (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), authorized to reclassify and issue any unissued shares to any number of
additional classes or series, each having its own investment objective, policies
and restrictions (each such class to be hereinafter referred to as a
"Portfolio"), and it is in the interest of the Fund to offer the shares of each
Portfolio for sale continuously;
WHEREAS, the Fund and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of shares of $.001 par
value common stock of the Fund (the "Common Stock") representing interests in
each Portfolio, to commence after the effectiveness of the Fund's registration
statement filed pursuant to the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act.
NOW, THEREFORE, the parties agree as follows:
Section 1. APPOINTMENT OF THE DISTRIBUTOR. The Fund hereby appoints
the Distributor as its exclusive agent to sell and to arrange for the sale of
the shares of Common Stock of each Portfolio, including both issued shares and
authorized but unissued shares, on the terms and for the period set forth in
this Agreement and the Distributor hereby accepts such appointment and agrees to
act hereunder.
Section 2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell, as agent for the Fund, from time
to time during the term of this Agreement, the Common Stock of each Portfolio
upon the terms described in the Prospectus. As used in this Agreement, the term
"Prospectus" shall mean the prospectus included as part of the Fund's
registration statement, as such Prospectus may be amended or supplemented from
time to time, and the term "Registration Statement" shall mean the Registration
Statement most recently filed from time to time by the Fund with the Securities
and Exchange Commission and effective under the 1933 Act and the 1940 Act, as
such Registration Statement is amended by any amendments thereto at the time in
effect.
(b) Upon the commencement of each Portfolio's operations, the
Distributor will hold itself available to receive orders, satisfactory to the
Distributor, for the purchase of shares of the Common Stock of the Portfolio and
will accept such orders on behalf of the Fund as of the time of receipt of such
orders and will transmit such orders as are so accepted to the Fund's transfer
and dividend disbursing agent as promptly as practicable. Purchase orders shall
be deemed effective at the time and in the manner set forth in the Prospectus.
(c) The offering price of shares of the Common Stock of each Portfolio
shall be the net asset value (as determined as set forth in the Prospectus) per
share of the Common Stock next determined following receipt of an order, plus
postage and other charges, if any, determined as set forth in the Prospectus.
The Fund shall furnish the Distributor, with all possible promptness, an advice
of each computation of the net asset value of each Portfolio.
(d) The Distributor shall not be obligated to sell any certain number
of shares of the Common Stock of any Portfolio and nothing herein contained
shall prevent the Distributor from entering into like distribution arrangements
with other investment companies so long as the performance of its obligations
hereunder is not impaired thereby.
(e) The Distributor is authorized on behalf of the Fund to purchase
shares of the Common Stock of any Portfolio presented to it by dealers at the
price determined in accordance with, and in the manner set forth in, the
Prospectus.
Section 3. DUTIES OF THE FUND.
(a) The Fund agrees to sell shares of the Common Stock of any
Portfolio so long as Common Stock is available for sale; and to deliver
certificates for, or cause the Fund's transfer and dividend disbursing agent to
issue non-negotiable share deposit receipts evidencing, such shares of Common
Stock registered in such names and amounts as the Distributor has requested in
writing, as promptly as practicable after receipt by the Fund of the net asset
value thereof and written request of the Distributor therefor.
(b) The Fund shall keep the Distributor fully informed with regard to
its affairs and shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of shares of the Common
Stock of the Portfolios, and this shall include one certified copy, upon request
by the Distributor, of all financial statements prepared for the Fund by
independent accountants and such reasonable number of copies of its most current
Prospectus and annual and interim reports as the Distributor may request and
shall cooperate fully in the efforts of the Distributor to sell and arrange for
the sale of shares of the Common Stock of the Portfolios and in the performance
of the Distributor under this Agreement.
(c) The Fund shall take, from time to time, all necessary action to
fix the number of authorized shares of Common Stock and such steps, including
payment of the related filing fee, as may be necessary to register the same
under the 1933 Act to the end that there will be available for sale such number
of shares of Common Stock as the Distributor may be expected to sell. The Fund
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in the Registration Statement or Prospectus, or necessary in order that
there may be no omission to state a material fact in the Registration Statement
or Prospectus which omission would make the statements therein misleading.
Section 4. EXPENSES.
(a) The Fund shall bear all costs and expenses of the continuous
offering of its shares of Common Stock in connection with: (i) fees and
disbursements of its counsel and independent accountants; (ii) the preparation,
filing and printing of any Registration Statements and/or Prospectuses required
by and under the federal securities laws; and (iii) the preparation and mailing
of annual and interim reports, Prospectuses and proxy materials to stockholders.
(b) The Distributor shall bear (i) the costs and expenses of
preparing, printing and distributing any materials not prepared by the Fund and
other materials used by the Distributor in connection with its offering of
shares of Common Stock for sale to the eligible investors described in the
Prospectus, including the additional cost of printing copies of the Prospectus
and of annual and interim reports to stockholders other than copies thereof
required for distribution to stockholders or for filing with any federal
securities authorities, (ii) any expenses of advertising and promotion incurred
by the Distributor in connection with such offering and (iii) the expenses of
registration or qualification of the Distributor as a broker or dealer under
federal or state laws and the expenses of continuing such registration or
qualification.
Section 5. INDEMNIFICATION.
(a) The Fund will indemnify and hold harmless the Distributor and each
person, if any, who controls the Distributor within the meaning of the 1940 Act
against any losses, claims, damages or liabilities to which the Distributor or
such controlling person may become subject, under the 1940 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Fund's Registration Statement,
Prospectus or any other written sales material prepared by the Fund which is
utilized by the Distributor in connection with the sale of shares of Common
Stock or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or (in the case of
the Registration Statement and Prospectus) necessary to make the statements
therein not misleading or (in the case of such other sales material) necessary
to make the statements therein not misleading in the light of the circumstances
under which they were made; and will reimburse the Distributor and each such
controlling person for any legal or other expenses reasonably incurred by the
Distributor or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Fund will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Statement or Prospectus in conformity with written information
furnished to the Fund by the Distributor specifically for use therein; and
PROVIDED, FURTHER, that nothing herein shall be so construed as to protect the
Distributor against any liability to the Fund or its security holders to which
the Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of the
reckless disregard ("disabling conduct") by the Distributor of its obligations
and duties under this Agreement. This indemnity agreement will be in addition to
any liability which the Fund may otherwise have. Any indemnification hereunder
(unless ordered by a court) shall be made by the Fund only as authorized in the
specific case upon a determination that indemnification of the Distributor is
proper in the circumstances and that the Distributor is not liable by reason of
disabling conduct. Such determination shall be made (i) by the Board of
Directors, by a majority vote of a quorum which consists of Directors who are
neither "interested persons" of the Fund as defined in Section 2(a)(19) of the
1940 Act nor parties to the proceeding, or (ii) if the required quorum is not
obtainable or if a quorum of such Directors so directs, by independent legal
counsel in a written opinion.
(b) The Distributor will indemnify and hold harmless the Fund, each of
its directors and officers and each person, if any, who controls the Fund within
the meaning of the 1940 Act, against any losses, claims, damages or liabilities
to which the Fund or any such director, officer or controlling person may become
subject, under the 1940 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, Prospectus or any sales material not
prepared by the Fund which is utilized in connection with the sale of shares of
Common Stock or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or (in
the case of the Registration Statement and Prospectus) necessary to make the
statements therein not misleading or (in the case of such other sales material)
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, in the case of the Registration
Statement and Prospectus to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in conformity with written information furnished to the Fund by the Distributor
specifically for use therein; and the Distributor will reimburse any legal or
other expenses reasonably incurred by the Fund or any such director, officer or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which the Distributor may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from liability
which it may have to any indemnified party otherwise than under this Section. In
case any such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Section 6. COMPLIANCE WITH SECURITIES LAWS. The Fund represents that
it is registered as an open-end management investment company under the 1940
Act, and agrees that it will comply with all of the provisions of the 1940 Act
and of the rules and regulations thereunder. The Fund and the Distributor each
agree to comply with all of the applicable terms and provisions of the 1940 Act
and the 1933 Act. The Distributor agrees to comply with all of the applicable
terms and provisions of the Securities Exchange Act of 1934, as amended.
Section 7. SUSPENSION OF SALES. The Fund shall have the right to
suspend the sales of shares of the Common Stock of one or more Portfolios and
the authority of the Distributor to accept orders for shares of the Common Stock
of any such Portfolio if the Board of Directors of the Fund determines that it
is in the best interest of the Fund or the Portfolio to do so. In that event,
the Distributor may make such sales as are necessary to cover unconditional
orders accepted by it prior to the suspension.
Section 8. DURATION AND TERMINATION OF THIS Agreement. As to each
Portfolio, this Agreement shall continue until the date set forth opposite such
Portfolio's name on Schedule 1 hereto (the "Reapproval Date") and thereafter
shall continue automatically for successive annual periods ending on the day of
each year set forth opposite the Portfolio's name on Schedule 1 hereto (the
"Reapproval Day"), provided such continuance is specifically approved at least
annually by (i) the Fund's Board of Directors or (ii) vote of a majority (as
defined in the 1940 Act) of such Portfolio's outstanding voting securities,
provided that in either event its continuance also is approved by a majority of
the Fund's Directors who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. As to each Portfolio, this Agreement
may be terminated at any time, without payment of penalty by the Portfolio, on
60 days' written notice to the Distributor by vote of the Board of Directors of
the Fund or by vote of a majority (as defined by the 1940 Act) of the
outstanding voting securities of such Portfolio. This Agreement shall
automatically terminate, as to the relevant Portfolio, in the event of its
assignment (as defined by the 1940 Act).
Section 9. AMENDMENTS OF THIS AGREEMENT. This Agreement may be amended
by the parties only if such amendment is specifically approved by (i) the Board
of Directors of the Fund, and (ii) a majority of those Directors of the Fund who
are not parties to this Agreement or interested persons of any such party and
who have no direct or indirect financial interest in this Agreement, cast in
person at a meeting called for the purpose of voting on such approval.
Section l0. NOTICES. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (l) to the Distributor at 30 Rockefeller Plaza, New York, New
York 10020, Attention: Secretary, or (2) to the Fund at 30 Rockefeller Plaza,
New York, New York 10020, Attention: President.
Section 11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LAZARD FRERES & CO. LLC
By:__________________________
LAZARD RETIREMENT SERIES, INC.
By:__________________________
<PAGE>
EXHIBIT A
NAME OF PORTFOLIO REAPPROVAL DATE REAPPROVAL DAY
Lazard Retirement Bantam
Value Portfolio
Lazard Retirement Emerging
Markets Portfolio
Lazard Retirement Emerging
World Funds Portfolio
Lazard Retirement Equity
Portfolio
Lazard Retirement Global
Equity Portfolio
Lazard Retirement International
Equity Portfolio
Lazard Retirement Internatoinal
Fixed-Income Portfolio
Lazard Retirement International
Small Cap Portfolio
Lazard Retirement Small Cap
Portfolio
Lazard Retirement Strategic
Yield Portfolio
EXHIBIT (8)
CUSTODIAN CONTRACT
Between
LAZARD RETIREMENT SERIES, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
1. Employment of Custodian and Property to be Held By
It.............................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States.........2
2.1 Holding Securities....................................2
2.2 Delivery of Securities................................2
2.3 Registration of Securities............................4
2.4 Bank Accounts.........................................5
2.5 Availability of Federal Funds.........................5
2.6 Collection of Income..................................5
2.7 Payment of Fund Monies................................6
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased.......................7
2.9 Appointment of Agents.................................7
2.10 Deposit of Fund Assets in U.S. Securities System......7
2.11 Fund Assets Held in the Custodian's Direct
Paper System..........................................9
2.12 Segregated Account....................................9
2.13 Ownership Certificates for Tax Purposes..............10
2.14 Proxies..............................................10
2.15 Communications Relating to Portfolio Securities......10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States....................11
3.1 Appointment of Foreign Sub-Custodians................11
3.2 Assets to be Held....................................11
3.3 Foreign Securities Systems...........................11
3.4 Holding Securities...................................11
3.5 Agreements with Foreign Banking Institutions.........12
3.6 Access of Independent Accountants of the Fund........12
3.7 Reports by Custodian.................................12
3.8 Transactions in Foreign Custody Account..............12
3.9 Liability of Foreign Sub-Custodians..................13
3.10 Liability of Custodian...............................13
3.11 Reimbursement for Advances...........................13
3.12 Monitoring Responsibilities..........................14
3.13 Branches of U.S. Banks...............................14
3.14 Tax Law..............................................14
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund.........................................14
5. Proper Instructions...........................................15
6. Actions Permitted Without Express Authority...................15
7. Evidence of Authority.........................................16
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.............16
9. Records.......................................................16
10. Opinion of Fund's Independent Accountants.....................17
11. Reports to Fund by Independent Public Accountants.............17
12. Compensation of Custodian.....................................17
13. Responsibility of Custodian...................................17
14. Effective Period, Termination and Amendment...................19
15. Successor Custodian...........................................19
16. Interpretive and Additional Provisions........................20
17. Additional Funds..............................................20
18. Massachusetts Law to Apply....................................21
19. Prior Contracts...............................................21
20. Reproduction of Documents.....................................21
21. Shareholder Communications....................................21
<PAGE>
CUSTODIAN CONTRACT
This Contract between Lazard Retirement Series, Inc., a corporation
organized and existing under the laws of Maryland , having its principal place
of business at 30 Rockefeller Plaza, New York, New York 10020 hereinafter called
the "Fund", and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian".
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in nine series,
Lazard Retirement Equity Portfolio, Lazard Retirement Small Cap Portfolio,
Lazard Retirement Bantam Value Portfolio, Lazard Retirement Global Equity
Portfolio, Lazard Retirement International Equity Portfolio, Lazard Retirement
International Small Cap Portfolio, Lazard Retirement Emerging Markets Portfolio,
Lazard Retirement International Fixed-Income Portfolio, Lazard Retirement
Strategic Yield Portfolio and Lazard Retirement Emerging Worlds Funds Portfolio
(such series together with all other series subsequently established by the Fund
and made subject to this Contract in accordance with paragraph 17, being herein
referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets
of the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund representing interests in the Portfolios, ("Shares") as may be issued
or sold from time to time. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Directors of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE
FUND HELD BY THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and
physically segregate for the account of each Portfolio all
non-cash property, to be held by it in the United States
including all domestic securities owned by such Portfolio,
other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a
securities depository or in a book-entry system authorized
by the U.S. Department of the Treasury and certain federal
agencies (each, a "U.S. Securities System") and (b)
commercial paper of an issuer for which State Street Bank
and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian (the "Direct Paper System")
pursuant to Section 2.11.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by
the Custodian or in a U.S. Securities System account of the
Custodian or in the Custodian's Direct Paper book entry system account
("Direct Paper System Account") only upon receipt of Proper
Instructions from the Fund on behalf of the applicable Portfolio, which
may be continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such securities for the account of the
Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Portfolio;
3) In the case of a sale effected through a U.S.
Securities System, in accordance with the provisions
of Section 2.10 hereof;
4) To the depository agent in connection with tender or
other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise
become payable; provided that, in any such case, the
cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into
the name of the Portfolio or into the name of any
nominee or nominees of the Custodian or into the name
or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for
exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount
or number of units; PROVIDED that, in any such case,
the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of
the Portfolio, to the broker or its clearing agent,
against a receipt, for examination in accordance with
"street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of
such securities prior to receiving payment for such
securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities,
the surrender thereof in the exercise of such
warrants, rights or similar securities or the
surrender of interim receipts or temporary securities
for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Portfolio, BUT ONLY against
receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund on behalf
of the Portfolio, which may be in the form of cash or
obligations issued by the United States government,
its agencies or instrumentalities, except that in
connection with any loans for which collateral is to
be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department
of the Treasury, the Custodian will not be held liable
or responsible for the delivery of securities owned
by the Portfolio prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio,
the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio,
the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating
to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding
account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described from time to time in the currently
effective prospectus and statement of additional
information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders
of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, BUT ONLY upon
receipt of, in addition to Proper Instructions from
the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or
an Assistant Secretary, specifying the securities of
the Portfolio to be delivered, setting forth the
purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by
the Custodian (other than bearer securities) shall be
registered in the name of the Portfolio or in the name of
any nominee of the Fund on behalf of the Portfolio or of
any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, UNLESS the Fund has
authorized in writing the appointment of a nominee to be
used in common with other registered investment companies
having the same investment adviser as the Portfolio, or in
the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the
Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however,
the Fund directs the Custodian to maintain securities in
"street name", the Custodian shall utilize its best efforts
only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis
only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in
the name of each Portfolio of the Fund, subject only to
draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Portfolio,
other than cash maintained by the Portfolio in a bank
account established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940. Funds held by
the Custodian for a Portfolio may be deposited by it to its
credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it
may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust
company and the funds to be deposited with each such bank
or trust company shall on behalf of each applicable
Portfolio be approved by vote of a majority of the Board of
Directors of the Fund. Such funds shall be deposited by
the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund on behalf of each applicable Portfolio
and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such Portfolio
as of specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received in
payment for Shares of such Portfolio which are deposited
into the Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all
income and other payments with respect to registered
domestic securities held hereunder to which each Portfolio
shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer
domestic securities if, on the date of payment by the
issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected,
to such Portfolio's custodian account. Without limiting
the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. Income due each
Portfolio on securities loaned pursuant to the provisions of Section
2.2 (10) shall be the responsibility of the Fund. The Custodian will
have no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian
of the income to which the Portfolio is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options,
futures contracts or options on futures contracts for
the account of the Portfolio but only (a) against the
delivery of such securities or evidence of title to
such options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States
or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a custodian
and has been designated by the Custodian as its agent
for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form
for transfer; (b) in the case of a purchase effected
through a U.S. Securities System, in accordance with
the conditions set forth in Section 2.10 hereof; (c)
in the case of a purchase involving the Direct Paper
System, in accordance with the conditions set forth
in Section 2.11; (d) in the case of repurchase
agreements entered into between the Fund on behalf of
the Portfolio and the Custodian, or another bank, or
a broker-dealer which is a member of NASD, (i)
against delivery of the securities either in
certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with
such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with written
evidence of the agreement by the Custodian to
repurchase such securities from the Portfolio or (e)
for transfer to a time deposit account of the Fund in
any bank, whether domestic or foreign; such transfer
may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to
Proper Instructions from the Fund as defined in
Article 5;
2) In connection with conversion, exchange or surrender
of securities owned by the Portfolio as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by
the Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred
by the Portfolio, including but not limited to the
following payments for the account of the Portfolio:
interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the
Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing
documents of the Fund;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt
of, in addition to Proper Instructions from the Fund
on behalf of the Portfolio, a certified copy of a
resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer
of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to
whom such payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract,
in any and every case where payment for
purchase of domestic securities for the account of a
Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific
written instructions from the Fund on behalf of such
Portfolio to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the
Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 2 as the Custodian
may from time to time direct; PROVIDED, however, that the
appointment of any agent shall not relieve the Custodian
of its responsibilities or liabilities hereunder.
2.10 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by
a Portfolio in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein
as "U.S. Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to
the following provisions:
1) The Custodian may keep securities of the Portfolio in
a U.S. Securities System provided that such
securities are represented in an account ("Account")
of the Custodian in the U.S. Securities System which
shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to
securities of the Portfolio which are maintained in a
U.S. Securities System shall identify by book-entry
those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for
the account of the Portfolio upon (i) receipt of
advice from the U.S. Securities System that such
securities have been transferred to the Account, and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall
transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S.
Securities System that payment for such securities
has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for the
account of the Portfolio shall identify the Portfolio,
be maintained for the Portfolio by the Custodian and
be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's transactions in
the U.S. Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio
with any report obtained by the Custodian on the U.S.
Securities System's accounting system, internal
accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on
behalf of the Portfolio the initial or annual
certificate, as the case may be, required by Article
14 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for the benefit of the Portfolio for any loss or
damage to the Portfolio resulting from use of the
U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or
from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against
the U.S. Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim
against the U.S. Securities System or any other
person which the Custodian may have as a consequence
of any such loss or damage if and to the extent that
the Portfolio has not been made whole for any such
loss or damage.
2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain securities owned
by a Portfolio in the Direct Paper System of the Custodian
subject to the following provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of
Proper Instructions from the Fund on behalf of the
Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
an account ("Account") of the Custodian in the Direct Paper
System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to
securities of the Portfolio which are maintained in
the Direct Paper System shall identify by book-entry
those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for
the account of the Portfolio upon the making of an
entry on the records of the Custodian to reflect such
payment and transfer of securities to the account of
the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon
the making of an entry on the records of the
Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from
the account of the Portfolio, in the form of a written
advice or notice, of Direct Paper on the next
business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies
of daily transaction sheets reflecting each day's
transaction in the U.S. Securities System for the
account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.
2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions from the Fund on behalf of each
applicable Portfolio establish and maintain a segregated
account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions
of any agreement among the Fund on behalf of the
Portfolio, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding
escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of
segregating cash or government securities in connection
with options purchased, sold or written by the Portfolio
or commodity futures contracts or options thereon purchased
or sold by the Portfolio, (iii) for the purposes of
compliance by the Portfolio with the procedures required
by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, BUT ONLY, in
the case of clause (iv), upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary
or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it
and in connection with transfers of securities.
2.14 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed
by the registered holder of such securities, if the
securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are
to be voted, and shall promptly deliver to the Portfolio
such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject
to the provisions of Section 2.3, the Custodian shall
transmit promptly to the Fund for each Portfolio all
written information (including, without limitation,
pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund on behalf of the Portfolio
and the maturity of futures contracts purchased or sold by the
Portfolio) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Portfolio shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE
FUND HELD OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby
authorizes and instructs the Custodian to employ as
sub-custodians for the Portfolio's securities and other
assets maintained outside the United States the foreign
banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions",
as defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Directors, the
Custodian and the Fund may agree to amend Schedule A
hereto from time to time to designate additional foreign
banking institutions and foreign securities depositories
to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease
the employment of any one or more such sub-custodians for
maintaining custody of the Portfolio's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the
securities and other assets maintained in the custody of
the foreign sub-custodians to: (a) "foreign securities",
as defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund
may determine to be reasonably necessary to effect the
Portfolio's foreign securities transactions. The Custodian
shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.
3.3 FOREIGN SECURITIES SYSTEMS. Except as may otherwise be
agreed upon in writing by the Custodian and the Fund,
assets of the Portfolios shall be maintained in a clearing
agency which acts as a securities depository or in a
book-entry system for the central handling of securities
located outside of the United States (each a "Foreign
Securities System") only through arrangements implemented
by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign
Securities Systems and U.S. Securities Systems are
collectively referred to herein as the "Securities
Systems"). Where possible, such arrangements shall
include entry into agreements containing the provisions set
forth in Section 3.5 hereof.
3.4 HOLDING SECURITIES. The Custodian may hold securities
and other non-cash property for all of its customers,
including the Fund, with a foreign sub-custodian in a
single account that is identified as belonging to the
Custodian for the benefit of its customers, provided
however, that (i) the records of the Custodian with
respect to securities and other non-cash property of the
Fund which are maintained in such account shall identify by
book-entry those securities and other non-cash property
belonging to the Fund and (ii) the Custodian shall require
that securities and other non-cash property so held by the
foreign sub-custodian be held separately from any assets
of the foreign sub-custodian or of others.
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each
agreement with a foreign banking institution shall provide
that: (a) the assets of each Portfolio will not be subject
to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their
safe custody or administration; (b) beneficial ownership
for the assets of each Portfolio will be freely
transferable without the payment of money or value other
than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to
each applicable Portfolio; (d) officers of or auditors
employed by, or other representatives of the Custodian,
including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given
access to the books and records of the foreign banking
institution relating to its actions under its agreement
with the Custodian; and (e) assets of the Portfolios held
by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon
request of the Fund, the Custodian will use its best
efforts to arrange for the independent accountants of the
Fund to be afforded access to the books and records of any
foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to
the performance of such foreign banking institution under
its agreement with the Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the
Fund from time to time, as mutually agreed upon,
statements in respect of the securities and other assets of
the Portfolio(s) held by foreign sub-custodians, including
but not limited to an identification of entities having
possession of the Portfolio(s) securities and other assets
and advices or notifications of any transfers of
securities to or from each custodial account maintained by
a foreign banking institution for the Custodian on behalf
of each applicable Portfolio indicating, as to securities
acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as
otherwise provided in paragraph (b) of this Section 3.8,
the provision of Sections 2.2 and 2.7 of this Contract
shall apply, MUTATIS MUTANDIS to the foreign securities of
the Fund held outside the United States by foreign
sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for
securities received for the account of each applicable
Portfolio and delivery of securities maintained for the
account of each applicable Portfolio may be effected in
accordance with the customary established securities
trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against
a receipt with the expectation of receiving later payment
for such securities from such purchaser or dealer. (c)
Securities maintained in the custody of a foreign
sub-custodian may be maintained in the
name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees
to hold any such nominee harmless from any liability as a
holder of record of such securities.
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement
pursuant to which the Custodian employs a foreign banking
institution as a foreign sub-custodian shall require the
institution to exercise reasonable care in the performance
of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage,
cost, expense, liability or claim arising out of or in
connection with the institution's performance of such
obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian
with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage,
cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss,
damage, cost, expense, liability or claim.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for
the acts or omissions of a foreign banking institution to
the same extent as set forth with respect to sub-custodians
generally in this Contract and, regardless of whether
assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of
a U.S. bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.10, in delegating
custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for
any loss due to such delegation, except such loss as may
result from (a) political risk (including, but not limited
to, exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil strife
or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not
caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the
Custodian and State Street London Ltd. have exercised
reasonable care.
3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the
Custodian to advance cash or securities for any purpose
for the benefit of a Portfolio including the purchase or
sale of foreign exchange or of contracts for foreign
exchange, or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection
with the performance of this Contract, except such as may
arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable
Portfolio shall be security therefor and should the Fund
fail to repay the Custodian promptly, the Custodian shall
be entitled to utilize available cash and to dispose of
such Portfolios assets to the extent necessary to obtain
reimbursement.
3.12 MONITORING RESPONSIBILITIES. The Custodian shall furnish
annually to the Fund, during the month of June,
information concerning the foreign sub-custodians employed
by the Custodian. Such information shall be similar in
kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition,
the Custodian will promptly inform the Fund in the event
that the Custodian learns of a material adverse change in
the financial condition of a foreign sub-custodian or any
material loss of the assets of the Fund or in the case of
any foreign sub-custodian not the subject of an exemptive
order from the Securities and Exchange Commission is
notified by such foreign sub-custodian that there appears
to be a substantial likelihood that its shareholders'
equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholders' equity
has declined below $200 million (in each case computed in
accordance with generally accepted U.S. accounting
principles).
3.13 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth
in this Contract, the provisions hereof shall not apply
where the custody of the Portfolios assets are maintained
in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment
Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such
branch as a sub-custodian shall be governed by paragraph 1
of this Contract. (b) Cash held for each Portfolio of the
Fund in the United Kingdom shall be maintained in an
interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject
to the direction of the Custodian, State Street London
Ltd. or both.
3.14 TAX LAW. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on
the Fund or the Custodian as custodian of the Fund by the
tax law of the United States of America or any state or
political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the
obligations imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of jurisdictions other
than those mentioned in the above sentence, including
responsibility for withholding and other taxes,
assessments or other governmental charges, certifications
and governmental reporting. The sole responsibility of
the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any
claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such
information.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
OF THE FUND
The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for Shares of that Portfolio
issued or sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Directors
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.12.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses
of handling securities or other similar items
relating to its duties under this Contract, PROVIDED
that all such payments shall be accounted for to the
Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Directors of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT
AND CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such Portfolio
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Portfolio shall be made at the time or times
described from time to time in the Fund's currently effective prospectus related
to such Portfolio.
9. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of the Fund
and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian under
this Contract; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such inadequacies, the reports shall so state.
12. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
13. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Fund on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; PROVIDED,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio, as
required by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not with respect to a Portfolio act under Section 2.11
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors has approved the initial use
of the Direct Paper System by such Portfolio; PROVIDED FURTHER, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
15. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board of Directors of the Fund, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Directors of the Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Directors shall have been delivered
to the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, PROVIDED that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Articles of Incorporation
of the Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
17. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to Lazard Retirement Equity Portfolio, Lazard Retirement Small Cap
Portfolio, Lazard Retirement Bantam Value Portfolio, Lazard Retirement Global
Equity Portfolio, Lazard Retirement International Equity Portfolio, Lazard
Retirement International Small Cap Portfolio, Lazard Retirement Emerging Markets
Portfolio, Lazard Retirement International Fixed-Income Portfolio, Lazard
Retirement Strategic Yield Portfolio and Lazard Retirement Emerging Worlds Funds
Portfolio with respect to which it desires to have the Custodian render services
as custodian under the terms hereof, it shall so notify the Custodian in
writing, and if the Custodian agrees in writing to provide such services, such
series of Shares shall become a Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
20. REPRODUCTION OF DOCUMENTS
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
21. SHAREHOLDER COMMUNICATIONS
Securities and Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to respond to requests by issuers
of securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If the Fund tells the Custodian "yes" or does not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or accounts established by the Fund. For the Fund's protection, the Rule
prohibits the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below whether the
Fund consent or object by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's
name, address, and share positions.
NO [ ] The Custodian is not authorized to release the
Fund's name, address, and share positions.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 30th day of April, 1997.
ATTEST LAZARD RETIREMENT SERIES, INC.
By
ATTEST STATE STREET BANK AND TRUST COMPANY
By
Executive Vice President
<PAGE>
SCHEDULE A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Lazard Retirement
Series, Inc. for use as sub-custodians for the Fund's securities and other
assets:
(Insert banks and securities depositories)
Certified:
Fund's Authorized Officer
Date:
<PAGE>
DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
AGREEMENT between Lazard Retirement Series, Inc. (the "Customer") and
State Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain
assets of the Customer pursuant to a certain Custodian Agreement (the "Custodian
Agreement") dated as of April 30, 1997;
WHEREAS, State Street has developed and utilizes proprietary
accounting and other systems, including State Street's proprietary Multicurrency
HORIZONR Accounting System, in its role as custodian of the Customer, and
maintains certain Customer-related data ("Customer Data") in databases under the
control and ownership of State Street (the "Data Access Services"); and
WHEREAS, State Street makes available to the Customer certain Data
Access Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
parties agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
a. SYSTEM. Subject to the terms and conditions of this Agreement,
State Street hereby agrees to provide the Customer with access to State Street's
Multicurrency HORIZONR Accounting System and the other information systems
(collectively, the "System") as described in Attachment A, on a remote basis for
the purpose of obtaining reports, solely on computer hardware, system software
and telecommunication links, as listed in Attachment B (the "Designated
Configuration") of the Customer, or certain third parties approved by State
Street that serve as investment advisors or investment managers of the Customer
(the "Investment Advisor") and solely with respect to the Customer or on any
designated substitute or back-up equipment configuration with State Street's
written consent, such consent not to be unreasonably withheld.
b. DATA ACCESS SERVICES. State Street agrees to make available to the
Customer the Data Access Services subject to the terms and conditions of this
Agreement and data access operating standards and procedures as may be issued by
State Street from time to time. The ability of the Customer to originate
electronic instructions to State Street on behalf of the Customer in order to
(i) effect the transfer or movement of cash or securities held under custody by
State Street or (ii) transmit accounting or other information (such transactions
are referred to herein as "Client Originated Electronic Financial
Instructions"), and (iii) access data for the purpose of reporting and analysis,
shall be deemed to be Data Access Services for purposes of this Agreement.
c. ADDITIONAL SERVICES. State Street may from time to time agree to
make available to the Customer additional Systems that are not described in the
attachments to this Agreement. In the absence of any other written agreement
concerning such additional systems, the term "System" shall include, and this
Agreement shall govern, the Customer's access to and use of any additional
System made available by State Street and/or accessed by the Customer.
2. NO USE OF THIRD PARTY SOFTWARE
State Street and the Customer acknowledge that in connection with the
Data Access Services provided under this Agreement, the Customer will have
access, through the Data Access Services, to Customer Data and to functions of
State Street's proprietary systems; provided, however that in no event will the
Customer have direct access to any third party systems-level software that
retrieves data for, stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
a. DESIGNATED EQUIPMENT; DESIGNATED LOCATION. The System and the Data
Access Services shall be used and accessed solely on and through the Designated
Configuration at the offices of the Customer or the Investment Advisor located
in New York, New York ("Designated Location").
b. DESIGNATED CONFIGURATION; TRAINED PERSONNEL. State Street shall be
responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and the Customer agree
that each will engage or retain the services of trained personnel to enable both
parties to perform their respective obligations under this Agreement. State
Street agrees to use commercially reasonable efforts to maintain the System so
that it remains serviceable, provided, however, that State Street does not
guarantee or assure uninterrupted remote access use of the System.
c. SCOPE OF USE. The Customer will use the System and the Data Access
Services only for the processing of securities transactions, the keeping of
books of account for the Customer and accessing data for purposes of reporting
and analysis. The Customer shall not, and shall cause its employees and agents
not to (i) permit any third party to use the System or the Data Access Services,
(ii) sell, rent, license or otherwise use the System or the Data Access Services
in the operation of a service bureau or for any purpose other than as expressly
authorized under this Agreement, (iii) use the System or the Data Access
Services for any fund, trust or other investment vehicle without the prior
written consent of State Street, (iv) allow access to the System or the Data
Access Services through terminals or any other computer or telecommunications
facilities located outside the Designated Locations, (v) allow or cause any
information (other than portfolio holdings, valuations of portfolio holdings,
and other information reasonably necessary for the management or distribution of
the assets of the Customer) transmitted from State Street's databases, including
data from third party sources, available through use of the System or the Data
Access Services to be redistributed or retransmitted to another computer,
terminal or other device for other than use for or on behalf of the Customer or
(vi) modify the System in any way, including without limitation, developing any
software for or attaching any devices or computer programs to any equipment,
system, software or database which forms a part of or is resident on the
Designated Configuration.
d. OTHER LOCATIONS. Except in the event of an emergency or of a
planned System shutdown, the Customer's access to services performed by the
System or to Data Access Services at the Designated Location may be transferred
to a different location only upon the prior written consent of State Street. In
the event of an emergency or System shutdown, the Customer may use any back-up
site included in the Designated Configuration or any other back-up site agreed
to by State Street, which agreement will not be unreasonably withheld. The
Customer may secure from State Street the right to access the System or the Data
Access Services through computer and telecommunications facilities or devices
complying with the Designated Configuration at additional locations only upon
the prior written consent of State Street and on terms to be mutually agreed
upon by the parties.
e. TITLE. Title and all ownership and proprietary rights to the
System, including any enhancements or modifications thereto, whether or not made
by State Street, are and shall remain with State Street.
f. NO MODIFICATION. Without the prior written consent of State Street,
the Customer shall not modify, enhance or otherwise create derivative works
based upon the System, nor shall the Customer reverse engineer, decompile or
otherwise attempt to secure the source code for all or any part of the System.
g. SECURITY PROCEDURES. The Customer shall comply with data access
operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and to
access the Data Access Services. The Customer shall have access only to the
Customer Data and authorized transactions agreed upon from time to time by State
Street and, upon notice from State Street, the Customer shall discontinue remote
use of the System and access to Data Access Services for any security reasons
cited by State Street; provided, that, in such event, State Street shall, for a
period not less than 180 days (or such other shorter period specified by the
Customer) after such discontinuance, assume responsibility to provide accounting
services under the terms of the Custodian Agreement.
h. INSPECTIONS. State Street shall have the right to inspect the use
of the System and the Data Access Services by the Customer and the Investment
Advisor to ensure compliance with this Agreement. The on-site inspections shall
be upon prior written notice to Customer and the Investment Advisor and at
reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Customer's or the Investment Advisor's business.
4. PROPRIETARY INFORMATION
a. PROPRIETARY INFORMATION. The Customer acknowledges and State Street
represents that the System and the databases, computer programs, screen formats,
report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
Access Services and through the use of the System (other than which is
independently available to the Customer, are/or becomes part of the public
domain or are legally required to be made available to the public) constitute
copyrighted, trade secret, or other proprietary information of substantial value
to State Street. Any and all such information provided by State Street to the
Customer shall be deemed proprietary and confidential information of State
Street (hereinafter "Proprietary Information"). The Customer agrees that it will
hold such Proprietary Information in confidence and secure and protect it in a
manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder. The Customer further
acknowledges that State Street shall not be required to provide the Investment
Advisor with access to the System unless it has first received from the
Investment Advisor an undertaking with respect to State Street's Proprietary
Information in the form of Attachment C to this Agreement. The Customer shall
use all commercially reasonable efforts to assist State Street in identifying
and preventing any unauthorized use, copying or disclosure of the Proprietary
Information or any portions thereof or any of the logic, formats or designs
contained therein.
b. COOPERATION. Without limitation of the foregoing, the Customer
shall advise State Street immediately in the event the Customer learns or has
reason to believe that any person to whom the Customer has given access to the
Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Agreement, and the Customer will, at its expense,
co-operate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
c. INJUNCTIVE RELIEF. The Customer acknowledges that the disclosure of
any Proprietary Information, or of any information which at law or equity ought
to remain confidential, will immediately give rise to continuing irreparable
injury to State Street inadequately compensable in damages at law. In addition,
State Street shall be entitled to obtain immediate injunctive relief against the
breach or threatened breach of any of the foregoing undertakings, in addition to
any other legal remedies which may be available.
d. SURVIVAL. The provisions of this Section 4 shall survive the
termination of this Agreement.
5. LIMITATION ON LIABILITY
a. LIMITATION ON AMOUNT AND TIME FOR BRINGING ACTION. The Customer
agrees any liability of State Street to the Customer or any third party arising
out of State Street's provision of Data Access Services or the System under this
Agreement shall be limited to the amount paid by the Customer for the preceding
24 months for such services. In no event shall State Street be liable to the
Customer or any other party for any special, indirect, punitive or consequential
damages even if advised of the possibility of such damages. No action,
regardless of form, arising out of this Agreement may be brought by the Customer
more than two years after the Customer has knowledge that the cause of action
has arisen.
b. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE MADE BY STATE STREET. IN NO EVENT WILL STATE STREET BE
LIABLE TO THE CUSTOMER OR ANY OTHER PARTY FOR ANY CONSEQUENTIAL OR INCIDENTAL
DAMAGES WHICH MAY ARISE FROM THE CUSTOMER'S ACCESS TO THE SYSTEM OR USE OF
INFORMATION OBTAINED THEREBY.
c. THIRD-PARTY DATA. Organizations from which State Street may obtain
certain data included in the System or the Data Access Services are solely
responsible for the contents of such data, and State Street shall have no
liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
d. REGULATORY REQUIREMENTS. As between State Street and the Customer,
the Customer shall be solely responsible for the accuracy of any accounting
statements or reports produced using the Data Access Services and the System and
the conformity thereof with any requirements of law.
e. FORCE MAJEURE. Neither party shall be liable for any costs or
damages due to delay or nonperformance under this Agreement arising out of any
cause or event beyond such party's control, including without limitation,
cessation of services hereunder or any damages resulting therefrom to the other
party, or the Customer as a result of work stoppage, power or other mechanical
failure, computer virus, natural disaster, governmental action, or communication
disruption.
6. INDEMNIFICATION
The Customer agrees to indemnify and hold State Street harmless from
any loss, damage or expense including reasonable attorney's fees, (a "loss")
suffered by State Street arising from (i) the negligence or willful misconduct
in the use by the Customer of the Data Access Services or the System, including
any loss incurred by State Street resulting from a security breach at the
Designated Location or committed by the Customer's employees or agents of the
Customers and (ii) any loss resulting from incorrect Client Originated
Electronic Financial Instructions. State Street shall be entitled to rely on the
validity and authenticity of Client Originated Electronic Financial Instructions
without undertaking any further inquiry as long as such instruction is
undertaken in conformity with security procedures established by State Street
from time to time.
7. FEES
Fees and charges for the use of the System and the Data Access
Services and related payment terms shall be as set forth in the Custody Fee
Schedule in effect from time to time between the parties (the "Fee Schedule").
Any tariffs, duties or taxes imposed or levied by any government or governmental
agency by reason of the transactions contemplated by this Agreement, including,
without limitation, federal, state and local taxes, use, value added and
personal property taxes (other than income, franchise or similar taxes which may
be imposed or assessed against State Street) shall be borne by the Customer. Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. TRAINING. State Street agrees to provide training, at a designated
State Street training facility or at the Designated Location, to the Customer's
personnel in connection with the use of the System on the Designated
Configuration. The Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time to
enable all operators of the System and the Data Access Services, designated by
the Customer, to receive the training offered by State Street pursuant to this
Agreement.
b. INSTALLATION AND CONVERSION. State Street shall be responsible for
the technical installation and conversion ("Installation and Conversion") of the
Designated Configuration. The Customer shall have the following responsibilities
in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the
timely acquisition and maintenance of the hardware and
software that attach to the Designated Configuration in order
to use the Data Access Services at the Designated Location.
(ii) State Street and the Customer each agree that
they will assign qualified personnel to actively participate
during the Installation and Conversion phase of the System
implementation to enable both parties to perform their
respective obligations under this Agreement.
9. SUPPORT
During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. TERM OF AGREEMENT. This Agreement shall become effective on the
date of its execution by State Street and shall remain in full force and effect
until terminated as herein provided.
b. TERMINATION OF AGREEMENT. Either party may terminate this Agreement
(i) for any reason by giving the other party at least one-hundred and eighty
days' prior written notice in the case of notice of termination by State Street
to the Customer or thirty days' notice in the case of notice from the Customer
to State Street of termination; or (ii) immediately for failure of the other
party to comply with any material term and condition of the Agreement by giving
the other party written notice of termination. In the event the Customer shall
cease doing business, shall become subject to proceedings under the bankruptcy
laws (other than a petition for reorganization or similar proceeding) or shall
be adjudicated bankrupt, this Agreement and the rights granted hereunder shall,
at the option of State Street, immediately terminate with notice to the
Customer. This Agreement shall in any event terminate as to any Customer within
90 days after the termination of the Custodian Agreement applicable to such
Customer.
c. TERMINATION OF THE RIGHT TO USE. Upon termination of this Agreement
for any reason, any right to use the System and access to the Data Access
Services shall terminate and the Customer shall immediately cease use of the
System and the Data Access Services. Immediately upon termination of this
Agreement for any reason, the Customer shall return to State Street all copies
of documentation and other Proprietary Information in its possession; provided,
however, that in the event that either party terminates this Agreement or the
Custodian Agreement for any reason other than the Customer's breach, State
Street shall provide the Data Access Services for a period of time and at a
price to be agreed upon by the parties.
11. MISCELLANEOUS
a. ASSIGNMENT; SUCCESSORS. This Agreement and the rights and
obligations of the Customer and State Street hereunder shall not be assigned by
either party without the prior written consent of the other party, except that
State Street may assign this Agreement to a successor of all or a substantial
portion of its business, or to a party controlling, controlled by, or under
common control with State Street.
b. SURVIVAL. All provisions regarding indemnification, warranty,
liability and limits thereon, and confidentiality and/or protection of
proprietary rights and trade secrets shall survive the termination of this
Agreement.
c. ENTIRE AGREEMENT. This Agreement and the attachments hereto
constitute the entire understanding of the parties hereto with respect to the
Data Access Services and the use of the System and supersedes any and all prior
or contemporaneous representations or agreements, whether oral or written,
between the parties as such may relate to the Data Access Services or the
System, and cannot be modified or altered except in a writing duly executed by
the parties. This Agreement is not intended to supersede or modify the duties
and liabilities of the parties hereto under the Custodian Agreement or any other
agreement between the parties hereto except to the extent that any such
agreement specifically refers to the Data Access Services or the System. No
single waiver or any right hereunder shall be deemed to be a continuing waiver.
d. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, unlawful, or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired.
e. GOVERNING LAW. This Agreement shall be interpreted and construed in
accordance with the internal laws of The Commonwealth of Massachusetts without
regard to the conflict of laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date hereof.
STATE STREET BANK AND TRUST COMPANY
By: ------------------------------
Title: ------------------------------
Date: ------------------------------
LAZARD RETIREMENT SERIES, INC.
By: ------------------------------
Title: Executive Vice President
Date: ------------------------------
<PAGE>
ATTACHMENT A
Multicurrency HORIZON(RM) Accounting System
SYSTEM PRODUCT DESCRIPTION
I. The Multicurrency HORIZON(RM) Accounting System is designed to
provide lot level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general ledger
entries; 2) calculation of daily income and expense; 3) reconciliation of daily
activity with the trial balance, and 4) appropriate automated feeding mechanisms
to (i) domestic and international settlement systems, (ii) daily, weekly and
monthly evaluation services, (iii) portfolio performance and analytic services,
(iv) customer's internal computing systems and (v) various State Street provided
information services products.
II. GLOBALQUEST(RM) GlobalQuest(RM) is designed to provide customer
access to the following information maintained on The Multicurrency HORIZON(RM)
Accounting System: 1) cash transactions and balances; 2) purchases and sales; 3)
income receivables; 4) tax refund; 5) daily priced positions; 6) open trades; 7)
settlement status; 8) foreign exchange transactions; 9) trade history; and 10)
daily, weekly and monthly evaluation services.
III. SAFIRE(SM). SaFiRe(SM) is designed to provide the customer with
the ability to prepare its own financial reports by permitting the customer to
access customer information maintained on the Multicurrency HORIZONR Accounting
System, to organize such information in a flexible reporting format and to have
such reports printed on the customer's desktop or by its printing provider.
<PAGE>
ATTACHMENT B
Designated Configuration
<PAGE>
ATTACHMENT C
Undertaking
The undersigned understands that in the course of its employment as
Investment Advisor to Lazard Retirement Series, Inc. (the "Customer") it will
have access to State Street Bank and Trust Company's ("State Street")
Multicurrency HORIZON Accounting System and other information systems
(collectively, the "System").
The undersigned acknowledges that the System and the databases,
computer programs, screen formats, report formats, interactive design
techniques, documentation, and other information made available to the
Undersigned by State Street as part of the Data Access Services provided to the
Customer and through the use of the System (other than which is independently
available to the Customer, are/or becomes part of the public domain or are
legally required to be made available to the public) constitute copyrighted,
trade secret, or other proprietary information of substantial value to State
Street. Any and all such information provided by State Street to the Undersigned
shall be deemed proprietary and confidential information of State Street
(hereinafter "Proprietary Information"). The Undersigned agrees that it will
hold such Proprietary Information in confidence and secure and protect it in a
manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder.
The Undersigned will not attempt to intercept data, gain access to
data in transmission, or attempt entry into any system or files for which it is
not authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the
System and access to the Data Access Services shall terminate and the
Undersigned shall immediately cease use of the System and the Data Access
Services. Immediately upon notice by State Street for any reason, the
Undersigned shall return to State Street all copies of documentation and other
Proprietary Information in its possession.
LAZARD ASSET MANAGEMENT
By: ----------------
Title: ----------------
Date: ----------------
<PAGE>
ATTACHMENT D
Support
During the term of this Agreement, State Street agrees to provide the
following on-going support services:
a. TELEPHONE SUPPORT. The Customer Designated Persons may contact
State Street's HORIZON(RM) Help Desk and Customer Assistance Center between the
hours of 8 a.m. and 6 p.m. (Eastern time) on all business days for the purpose
of obtaining answers to questions about the use of the System, or to report
apparent problems with the System. From time to time, the Customer shall provide
to State Street a list of persons, not to exceed five in number, who shall be
permitted to contact State Street for assistance (such persons being referred to
as "the Customer Designated Persons").
b. TECHNICAL SUPPORT. State Street will provide technical support to
assist the Customer in using the System and the Data Access Services. The total
amount of technical support provided by State Street shall not exceed 10
resource days per year. State Street shall provide such additional technical
support as is expressly set forth in the fee schedule in effect from time to
time between the parties (the "Fee Schedule"). Technical support, including
during installation and testing, is subject to the fees and other terms set
forth in the Fee Schedule.
c. MAINTENANCE SUPPORT. State Street shall use commercially reasonable
efforts to correct system functions that do not work according to the System
Product Description as set forth on Attachment A in priority order in the next
scheduled delivery release or otherwise as soon as is practicable.
d. SYSTEM ENHANCEMENTS. State Street will provide to the Customer any
enhancements to the System developed by State Street and made a part of the
System; provided that, sixty (60) days prior to installing any such enhancement,
State Street shall notify the Customer and shall offer the Customer reasonable
training on the enhancement. Charges for system enhancements shall be as
provided in the Fee Schedule. State Street retains the right to charge for
related systems or products that may be developed and separately made available
for use other than through the System.
e. CUSTOM MODIFICATIONS. In the event the Customer desires custom
modifications in connection with its use of the System, the Customer shall make
a written request to State Street providing specifications for the desired
modification. Any custom modifications may be undertaken by State Street in its
sole discretion in accordance with the Fee Schedule.
f. LIMITATION ON SUPPORT. State Street shall have no obligation to
support the Customer's use of the System: (1) for use on any computer equipment
or telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Customer has modified the System in
breach of this Agreement.
EXHIBIT (9)(a)
ADMINISTRATION AGREEMENT
Agreement dated as of April 30, 1997 by and between State Street Bank
and Trust Company, a Massachusetts trust company (the "Administrator"), and
Lazard Retirement Series, Inc. (the "Fund").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain the Administrator to furnish
certain administrative services to the Fund, and the Administrator is willing to
furnish such services on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints the Administrator to act as administrator
with respect to the Fund for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein.
The Fund consists of the portfolio(s) and/or class(es) of shares (each
an "Investment Fund") listed in Schedule A to this Agreement. In the event that
the Fund establishes one or more additional Investment Funds with respect to
which it wishes to retain the Administrator to act as administrator hereunder,
the Fund shall notify the Administrator in writing. Upon written acceptance by
the Administrator, such Investment Fund shall become subject to the provisions
of this Agreement to the same extent as the existing Investment Funds, except to
the extent that such provisions (including those relating to the compensation
and expenses payable by the Fund and its Investment Funds) may be modified with
respect to each additional Investment Fund in writing by the Fund and the
Administrator at the time of the addition of the Investment Fund.
2. DELIVERY OF DOCUMENTS
The Fund will promptly deliver to the Administrator copies of each of
the following documents and all future amendments and supplements, if any:
a. The Fund's charter document and by-laws;
b. The Fund's currently effective registration statement under
the Securities Act of 1933, as amended (the "1933 Act") and the 1940 Act and the
Fund's Prospectus(es) and Statement(s) of Additional Information relating to all
Investment Funds and all amendments and supplements thereto as presently in
effect;
c. Certified copies of the resolutions of the Board of
Directors of the Fund (the "Board") authorizing (1) this Agreement and (2)
certain individuals on behalf of the Fund to (a) give instructions to the
Administrator pursuant to this Agreement and (b) sign checks and pay expenses;
d. A copy of the investment advisory agreement between the
Fund and its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem necessary or appropriate
in the proper performance of its duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Fund that:
a. It is a Massachusetts trust company, duly organized,
validly existing and in good standing under the laws of The Commonwealth of
Massachusetts, and has all power and authority necessary to own or hold its
property, to perform its administrative services and to conduct its business as
described in this Agreement;
b. All requisite corporate proceedings have been
taken to authorize it to enter into and perform this Agreement;
c. No legal or administrative proceedings have been
instituted or threatened which would impair the Administrator's
ability to perform its duties and obligations under this
Agreement; and
d. Its entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Administrator that:
a. It is a corporation, duly organized and existing
and in good standing under the laws of Maryland;
b. It has the corporate power and authority under
applicable laws and by its charter document and by-laws to enter into and
perform this Agreement;
c. All requisite proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. It is an investment company properly registered
under the 1940 Act;
e. A registration statement under the 1933 Act and the
1940 Act has been filed and will be effective and remain effective
during the term of this Agreement. The Fund also warrants to the Administrator
that as of the date of commencement of this Agreement, all necessary filings, if
any, under the securities laws of the states in which the Fund offers or sells
its shares have been made;
f. No legal or administrative proceedings have been
instituted or threatened which would impair the Fund's ability to perform its
obligations under this Agreement;
g. Its entrance into this Agreement shall not cause
a material breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to it; and
h. As of the close of business on the date of this
Agreement, the Fund is authorized to issue shares of capital stock,
and it offers shares in the authorized amounts as set forth in Schedule A to
this Agreement.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services subject to the
control, supervision and direction of the Fund and to review and correction by
the Fund's auditors and legal counsel and in accordance with procedures which
may be established from time to time between the Fund and the Administrator:
a. Oversee the maintenance by the Fund's custodian
of certain books and records of the Fund as required under Rule
31a-1(b) of the 1940 Act;
b. Prepare the Fund's federal, state and local
income tax returns for review by the Fund's independent
accountants and filing by the Fund's treasurer;
c. Review the calculation, submit for approval and
arrange for payment of the Fund's expenses;
d. Prepare for review and approval by officers of the
Fund financial information for the Fund's semi-annual and annual
reports, proxy statements and other communications required or otherwise to be
sent to Fund shareholders, and arrange for the printing and dissemination of
such reports and communications to shareholders;
e. Prepare for review by an officer of and legal counsel
for the Fund, the Fund's periodic financial reports required to be
filed with the Securities and Exchange Commission ("SEC") on Form N-SAR and
financial information required by Form N-1A and such other reports, forms or
filings as may be mutually agreed upon;
f. Prepare reports relating to the business and
affairs of the Fund as may be mutually agreed upon and not otherwise prepared
by the Fund's investment adviser, custodian, counsel or auditors;
g. Oversee and review calculations of fees paid to
the investment adviser, the custodian and the transfer agent;
h. Consult with the Fund's officers, independent
accountants, legal counsel, custodian and transfer agent in
establishing the accounting policies of the Fund;
i. Respond to or refer to the Fund's officers or
transfer agent, shareholder inquiries relating to the Fund;
j. Provide periodic testing of portfolios to assist
the Fund's adviser in complying with Internal Revenue Code
mandatory qualification requirements, the requirements of the
1940 Act and Fund prospectus limitations as may be mutually
agreed upon; and
k. Prepare Rule 24f-2 Notices.
The Administrator will also provide the office facilities and the personnel
required by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Fund such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee schedule approved by the parties
and initially set forth in Schedule B to this Agreement. The fees are to be
billed monthly and shall be due and payable upon receipt of the invoice. Upon
the termination of this Agreement before the end of any month, the fee for the
part of the month before such termination shall be prorated according to the
proportion which such part bears to the full monthly period and shall be payable
upon the date of termination of this Agreement. In addition, the Fund shall
reimburse the Administrator for its reasonable out-of-pocket costs incurred in
connection with this Agreement.
The Fund agrees to promptly reimburse the Administrator for
any equipment and supplies specially ordered by or for the exclusive use of the
Fund through the Administrator and for any other expenses not contemplated by
this Agreement that the Administrator may incur on the Fund's behalf at the
Fund's request or as consented to by the Fund.
The Fund will bear all expenses that are incurred in its operation and
not specifically assumed by the Administrator. Expenses to be borne by the Fund,
include, but are not limited to: organizational expenses; cost of services of
independent accountants and outside legal and tax counsel (including such
counsel's review of the Fund's registration statement, proxy materials, federal
and state tax qualification as a regulated investment company and other reports
and materials prepared by the Administrator under this Agreement); cost of any
services contracted for by the Fund directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Fund; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director\trustee or
employee of the Fund; costs incidental to the preparation, printing and
distribution of the Fund's registration statements and any amendments thereto
and shareholder reports; cost of typesetting and printing of prospectuses; cost
of preparation and filing of the Fund's tax returns, Form N-1A and Form N-SAR,
and all notices, registrations and amendments associated with applicable federal
and state tax and securities laws; all applicable registration fees and filing
fees required under federal and state securities laws; fidelity bond and
directors' and officers' liability insurance; and cost of independent pricing
services used in computing the Fund's net asset value.
The Administrator is authorized to and may employ or associate with
such person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Fund for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
7. INSTRUCTIONS AND ADVICE
At any time the Administrator may apply to any officer of the Fund for
instructions and may consult with outside counsel for the Fund or the auditors
for the Fund at the expense of the Fund, or with its own legal counsel with
respect to any matter arising in connection with the services to be performed by
the Administrator under this Agreement. The Administrator shall not be liable
and shall be indemnified by the Fund for any action taken or omitted by it in
good faith in reliance upon any such instructions or advice or upon any paper or
document reasonably believed by it to be genuine and to have been signed by the
proper person or persons. The Administrator shall not be held to have notice of
any change of authority of any person until receipt of written notice thereof
from the Fund. Nothing in this paragraph shall be construed as imposing upon the
Administrator any obligation to seek such instructions or advice, or to act in
accordance with such advice when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Administrator shall have
no liability for any error of judgement or mistake of law or for any loss or
damage resulting from the performance or nonperformance of its duties hereunder
unless solely caused by or resulting from the negligence or willful misconduct
of the Administrator, its officers or employees. The Administrator shall not be
liable for consequential damages under any provision of this Agreement or for
any consequential damages arising out of any act or failure to act hereunder. In
any event, the Administrator's liability under this Agreement shall be limited
to its total annual compensation earned and fees paid hereunder during the
preceding eighteen months for any liability or loss suffered by the Fund
including, but not limited to, any liability relating to qualification of the
Fund as a regulated investment company or any liability relating to the Fund's
compliance with any federal or state tax or securities statute, regulation or
ruling.
The Fund shall indemnify and hold the Administrator harmless from all
loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Fund, provided that this indemnification shall not apply
to actions or omissions of the Administrator, its officers or employees in cases
of its or their own negligence or willful misconduct.
The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain counsel,
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Fund shall have specifically
authorized the retaining of such counsel or (ii) the Administrator shall have
determined in good faith that the retention of such counsel is required as a
result of a conflict of interest.
The indemnification contained herein shall survive the termination of
this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law, it
will keep confidential all records and information in its possession relating to
the Fund or its shareholders or shareholder accounts and will not disclose the
same to any person except at the request or with the written consent of the
Fund.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Fund assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it provided, however, that the foregoing does not limit the Administrator's
responsibility to the Fund for the performance of its duties under this
Agreement as determined in accordance with Section 8 of this Agreement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Fund shall
at all times remain the property of the Fund, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Administrator further agrees
that all records which it maintains for the Fund pursuant to Rule 31a-1 under
the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under
the 1940 Act unless any such records are earlier surrendered as provided above.
Records shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Fund are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Fund from
time to time, have no authority to act or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on April 30, 1997. The Agreement
shall remain in effect for a period of one year from the effective date, and
shall automatically renew thereafter for periods of one year unless terminated
in writing by either party at the end of such period or thereafter on sixty (60)
days' prior written notice. Termination of this Agreement with respect to any
given Investment Fund shall in no way affect the continued validity of this
Agreement with respect to any other Investment Fund. Upon termination of this
Agreement, the Fund shall pay to the Administrator such compensation and any
reimbursable expenses as may be due under the terms hereof as of the date of
such termination, including reasonable out-of-pocket expenses associated with
such termination. This Agreement may be modified or amended from time to time by
mutual written agreement of the parties hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Fund: Lazard Asset Management, 30 Rockefeller Plaza, New York, New York 10020,
Attn: Gus Coutsouros, Treasurer, fax: (212) 698-1156; if to the Administrator:
State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy,
Massachusetts 02171, Attn: Sharon Baker Morin, Vice President and Counsel, fax:
(617) 985-2497.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party, except that the Administrator
may assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by or under common control with
the Administrator.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Administrator and their respective successors and permitted
assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the Provision of Administrative Services and supersedes
all previous representations, warranties or commitments regarding the services
to be performed hereunder whether oral or in writing. This Agreement is
independent of and shall not be deemed to supersede any provisions of the
Custodian Contract between the Fund and the Administrator.
17. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed by
the waiving party.
18. FORCE MAJEURE
The Administrator shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its control,
including without limitation, work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action or communication
disruption, nor shall any such failure or delay give the Fund the right to
terminate this Agreement, provided that the Administrator uses commercially
reasonable efforts to resume performance as soon as possible.
19. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
20. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the date first written
above.
LAZARD RETIREMENT SERIES, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
STATE STREET BANK AND TRUST COMPANY
By:_______________________________________
Name: Ronald E. Logue
Title: Executive Vice President
<PAGE>
ADMINISTRATION AGREEMENT
LAZARD RETIREMENT SERIES, INC.
SCHEDULE A
LISTING OF INVESTMENT FUNDS AND AUTHORIZED SHARES
Investment Fund Authorized Shares
Lazard Retirement Bantam Value Portfolio 50 Million
Lazard Retirement Emerging Markets Portfolio 50 Million
Lazard Retirement Equity Portfolio 50 Million
Lazard Retirement Global Equity Portfolio 50 Million
Lazard Retirement International Equity Portfolio 50 Million
Lazard Retirement International Fixed-Income Portfolio 50 Million
Lazard Retirement International Small Cap Portfolio 50 Million
Lazard Retirement Small Cap Portfolio 50 Million
Lazard Retirement Strategic Yield Portfolio 50 Million
Lazard Retirement Emerging Worlds Funds Portfolio 50 Million
<PAGE>
ADMINISTRATION AGREEMENT
LAZARD RETIREMENT SERIES, INC.
SCHEDULE B
FEES AND EXPENSES
EXHIBIT (9)(b)
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the ___ day of ____________, 1997, between
___________________________________________ ("Insurance Company"), a life
insurance company organized under the laws of the State of ________, and LAZARD
RETIREMENT SERIES, INC. (the "Fund"), a corporation organized under the laws of
the State of Maryland, with respect to the Fund's portfolios set forth on
Schedule 1 hereto, as such Schedule may be revised from time to time (each, a
"Portfolio").
ARTICLE I.
DEFINITIONS
1.1. "Act" shall mean the Investment Company Act of 1940, as
amended.
1.2. "Board" shall mean the Board of Trustees of the Fund having the
responsibility for management and control of the Fund.
1.3. "Business Day" shall mean any day for which the Fund calculates net
asset value per share as described in the Fund's Prospectus.
1.4. "Commission" shall mean the Securities and Exchange
Commission.
1.5. "Contract" shall mean a variable annuity contract that uses the Fund
as an underlying investment medium. Individuals who participate under
a group Contract are "Participants".
1.6. "Contractholder" shall mean any entity that is a party to a Contract
with a Participating Company.
1.7. "Disinterested Board Members" shall mean those members of the Board
that are not deemed to be "interested persons" of the Fund, as
defined by the Act.
1.8. "LAM" shall mean Lazard Asset Management, a division of
Lazard Freres & Co. LLC.
1.9. "Participating Companies" shall mean any insurance company (including
Insurance Company), which offers variable annuity and/or variable
life insurance contracts to the public and which has entered into an
agreement with the Fund for the purpose of making Fund shares
available to serve as the underlying investment medium for the
aforesaid Contracts.
1.10. "Prospectus" shall mean the Fund's current prospectus and
statement of additional information, as most recently
filed with the Commission, with respect to the Portfolios.
1.11. "Separate Account" shall mean _____________________ Company Variable
Annuity Separate Account, a separate account established by Insurance
Company in accordance with the laws of the State of __________.
1.12. "Software Program" shall mean the software program used by the Fund
for providing Fund and account balance information including net
asset value per share.
1.13. "Insurance Company's General Account(s)" shall mean the general
account(s) of Insurance Company and its affiliates which invest in
the Fund.
ARTICLE II.
REPRESENTATIONS
2.1. Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b)
it has legally and validly established the Separate Account pursuant
to the __________ Insurance Code for the purpose of offering to the
public certain individual variable annuity contracts; (c) it has
registered the Separate Account as a unit investment trust under the
Act to serve as the segregated investment account for the Contracts;
and (d) each Separate Account is eligible to invest in shares of the
Fund without such investment disqualifying the Fund as an investment
medium for insurance company separate accounts supporting variable
annuity contracts or variable life insurance contracts.
2.2. Insurance Company represents and warrants that (a) the Contracts will
be described in a registration statement filed under the Securities
Act of 1933, as amended ("1933 Act"); (b) the Contracts will be
issued and sold in compliance in all material respects with all
applicable federal and state laws; and (c) the sale of the Contracts
shall comply in all material respects with state insurance law
requirements. Insurance Company agrees to inform the Fund promptly of
any investment restrictions imposed by state insurance law and
applicable to the Fund.
2.3. Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the
Separate Account are, in accordance with the applicable Contracts, to
be credited to or charged against such Separate Account without
regard to other income, gains or losses from assets allocated to any
other accounts of Insurance Company. Insurance Company represents and
warrants that the assets of the Separate Account are and will be kept
separate from Insurance Company's General Account and any other
separate accounts Insurance Company may have, and will not be charged
with liabilities from any business that Insurance Company may conduct
or the liabilities of any companies affiliated with Insurance
Company.
2.4. Fund represents that the Fund is registered with the Commission under
the Act as an open-end, management investment company and possesses,
and shall maintain, all legal and regulatory licenses, approvals,
consents and/or exemptions required for the Fund to operate and offer
its shares as an underlying investment medium for Participating
Companies. The Fund has established nine portfolios and may in the
future establish other portfolios.
2.5. Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify Insurance Company
immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts are
currently, and at the time of issuance will be, treated as life
insurance policies or annuity contracts, whichever is appropriate,
under applicable provisions of the Code, and that it will make every
effort to maintain such treatment and that it will notify the Fund
and LAM immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be
so treated in the future. Insurance Company agrees that any
prospectus offering a Contract that is a "modified endowment
contract," as that term is defined in Section 7702A of the Code, will
identify such Contract as a modified endowment contract (or policy).
2.7. Fund agrees that each Portfolio's assets shall be managed and
invested in a manner that complies with the requirements of Section
817(h) of the Code.
2.8. Insurance Company agrees that the Fund shall be permitted (subject to
the other terms of this Agreement) to make the Portfolios' shares
available to other Participating Companies and contractholders.
2.9. Fund represents and warrants that any of its directors, officers,
employees, investment advisers, and other individuals/entities who
deal with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less
than that required by Rule 17g-1 under the Act. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.10. Insurance Company represents and warrants that all of its employees
and agents who deal with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage in an amount not less than the coverage
required to be maintained by the Fund. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company.
2.11. Insurance Company agrees that LAM shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights
conferred by virtue of this Agreement.
ARTICLE III.
FUND SHARES
3.1. The Contracts funded through the Separate Account will provide for
the investment of certain amounts in the Portfolios' shares.
3.2. Fund agrees to make the shares of its Portfolios available for
purchase at the then applicable net asset value per share by
Insurance Company and the Separate Account on each Business Day
pursuant to rules of the Commission. Notwithstanding the foregoing,
the Fund may refuse to sell the shares of any Portfolio to any
person, or suspend or terminate the offering of the shares of any
Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the
Board, acting in good faith and in light of its fiduciary duties
under federal and any applicable state laws, necessary and in the
best interests of the shareholders of such Portfolio.
3.3. Fund agrees that shares of the Portfolios will be sold only to
Participating Companies, their separate accounts, the general
accounts of those Participating Companies and their affiliates and to
qualified pension and retirement plans. No shares of any Portfolio
will be sold to the general public.
3.4. Fund shall use its best efforts to provide closing net asset value,
dividend and capital gain information for each Portfolio available on
a per-share and Portfolio basis to Insurance Company by ____ p.m.
Eastern Time on each Business Day. Any material errors in the
calculation of net asset value, dividend and capital gain information
shall be reported immediately upon discovery to Insurance Company.
Non-material errors will be corrected in the next Business Day's net
asset value per share for the Portfolio in question.
3.5. At the end of each Business Day, Insurance Company will use the
information described in Section 3.4 to calculate the Separate
Account unit values for the day. Using this unit value, Insurance
Company will process the day's Separate Account transactions received
by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) to determine the net
dollar amount of Portfolio shares which will be purchased or redeemed
at that day's closing net asset value per share for such Portfolio.
The net purchase or redemption orders will be transmitted to the Fund
by Insurance Company by [11:00] a.m. Eastern Time on the Business Day
next following Insurance Company's receipt of that information.
Subject to Sections 3.6 and 3.8, all purchase and redemption orders
for Insurance Company's General Accounts shall be effected at the net
asset value per share of the relevant Portfolio next calculated after
receipt of the order by the Fund or its Transfer Agent.
3.6. Fund appoints Insurance Company as its agent for the limited purpose
of accepting orders for the purchase and redemption of shares of each
Portfolio for the Separate Account. Fund will execute orders for any
Portfolio at the applicable net asset value per share determined as
of the close of trading on the day of receipt of such orders by
Insurance Company acting as agent ("effective trade date"), provided
that the Fund receives notice of such orders by [11:00] a.m. Eastern
Time on the next following Business Day and, if such orders request
the purchase of Portfolio shares, the conditions specified in Section
3.8, as applicable, are satisfied. A redemption or purchase request
for any Portfolio that does not satisfy the conditions specified
above and in Section 3.8, as applicable, will be effected at the net
asset value computed for such Portfolio on the Business Day
immediately preceding the next following Business Day upon which such
conditions have been satisfied.
3.7. Insurance Company will make its best efforts to notify Fund in
advance of any unusually large purchase or redemption orders.
3.8 If Insurance Company's order requests the purchase of Portfolio
shares, Insurance Company will pay for such purchases by wiring
Federal Funds to Fund or its designated custodial account on the day
the order is transmitted. Insurance Company shall make all reasonable
efforts to transmit to the Fund payment in Federal Funds by [12:00
noon] Eastern Time on the Business Day the Fund receives the notice
of the order pursuant to Section 3.5. Fund will execute such orders
at the applicable net asset value per share determined as of the
close of trading on the effective trade date if Fund receives payment
in Federal Funds by [12:00 midnight] Eastern Time on the Business Day
the Fund receives the notice of the order pursuant to Section 3.5. If
payment in Federal Funds for any purchase is not received or is
received by the Fund after [12:00 noon] Eastern Time on such Business
Day, Insurance Company shall promptly upon the Fund's request,
reimburse the Fund for any charges, costs, fees, interest or other
expenses incurred by the Fund in connection with any advances to, or
borrowings or overdrafts by, the Fund, or any similar expenses
incurred by the Fund, as a result of portfolio transactions effected
by the Fund based upon such purchase request. If Insurance Company's
order requests the redemption of Portfolio shares valued at or
greater than $1 million, the Fund will wire such amount to Insurance
Company within seven days of the order.
3.9. Fund has the obligation to ensure that Portfolio shares are
registered with the Commission at all times.
3.10. Fund will confirm each purchase or redemption order made by Insurance
Company. Transfer of Portfolio shares will be by book entry only. No
share certificates will be issued to Insurance Company. Insurance
Company will record shares ordered from Fund in an appropriate title
for the corresponding account.
3.11. Fund shall credit Insurance Company with the appropriate number of
shares.
3.12. On each ex-dividend date of the Fund or, if not a Business Day, on
the first Business Day thereafter, Fund shall communicate to
Insurance Company the amount of dividend and capital gain, if any,
per share of each Portfolio. All dividends and capital gains of any
Portfolio shall be automatically reinvested in additional shares of
the relevant Portfolio at the applicable net asset value per share of
such Portfolio on the payable date. Fund shall, on the day after the
payable date or, if not a Business Day, on the first Business Day
thereafter, notify Insurance Company of the number of shares so
issued.
ARTICLE IV.
STATEMENTS AND REPORTS
4.1. Fund shall provide monthly statements of account as of the end of
each month for all of Insurance Company's accounts by the fifteenth
(15th) Business Day of the following month.
4.2. Fund shall distribute to Insurance Company copies of the Fund's
Prospectuses, proxy materials, notices, periodic reports and other
printed materials (which the Fund customarily provides to its
shareholders) in quantities as Insurance Company may reasonably
request for distribution to each Contractholder and Participant.
4.3. Fund will provide to Insurance Company at least one complete copy of
all registration statements, Prospectuses, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the
Commission or other regulatory authorities.
4.4. Insurance Company will provide to the Fund at least one copy of all
registration statements, Prospectuses, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Contracts or the Separate Account,
contemporaneously with the filing of such document with the
Commission.
ARTICLE V.
EXPENSES
5.1. The charge to the Fund for all expenses and costs of the
Portfolios, including but not limited to management fees,
administrative expenses and legal and regulatory costs, will be made
in the determination of the relevant Portfolio's daily net asset
value per share.
5.2. Except as provided in this Article V and, in particular in the next
sentence, Insurance Company shall not be required to pay directly any
expenses of the Fund or expenses relating to the distribution of its
shares. Insurance Company shall pay the following expenses or costs:
a. Such amount of the production expenses of any Fund
materials, including the cost of printing the Fund's
Prospectus, or marketing materials for prospective
Insurance Company Contractholders and Participants as LAM
and Insurance Company shall agree from time
to time.
b. Distribution expenses of any Fund materials or marketing
materials for prospective Insurance Company Contractholders
and Participants.
c. Distribution expenses of Fund materials or marketing
materials for Insurance Company Contractholders and
Participants.
Except as provided herein and as may be reflected in each
Portfolio's net asset value per share, all other Fund expenses
shall not be borne by Insurance Company.
ARTICLE VI.
EXEMPTIVE RELIEF
6.1. Insurance Company has reviewed a copy of the Application For an Order
of Exemption pending before the Commission under Section 6(c) of the
Act and, in particular, has reviewed the conditions to the requested
relief set forth in the related Notice. As set forth therein,
Insurance Company agrees to report any potential or existing
conflicts promptly to the Board, and in particular whenever contract
voting instructions are disregarded, and recognizes that it will be
responsible for assisting the Board in carrying out its
responsibilities under such application. Insurance Company agrees to
carry out such responsibilities with a view to the interests of
existing Contractholders. Fund agrees to promptly inform Insurance
Company of any additional conditions, if any, imposed by the
Commission in its Order granting the requested relief.
6.2. If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists
with regard to Contractholder investments in the Fund, the Board
shall give prompt notice to all Participating Companies. If the Board
determines that Insurance Company is responsible for causing or
creating said conflict, Insurance Company shall at its sole cost and
expense, and to the extent reasonably practicable (as determined by a
majority of the Disinterested Board Members), take such action as is
necessary to remedy or eliminate the irreconcilable material
conflict. Such necessary action may include, but shall not be limited
to:
a. Withdrawing the assets allocable to the Separate Account from the
Portfolios and reinvesting such assets in a different
investment medium, or submitting the question of whether
such segregation should be implemented to a vote or all
affected Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a
decision by Insurance Company to disregard Contractholder voting
instructions and said decision represents a minority position or
would preclude a majority vote by all Contractholders having an
interest in the Fund, Insurance Company may be required, at the
Board's election, to withdraw the Separate Account's investment in
the Fund.
6.4. For the purpose of this Article, a majority of the Disinterested
Board Members shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no
event will the Fund be required to bear the expense of establishing a
new funding medium for any Contract. Insurance Company shall not be
required by this Article to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a majority
of the Contractholders materially adversely affected by the
irreconcilable material conflict.
6.5. No action by Insurance Company taken or omitted, and no action by the
Separate Account or the Fund taken or omitted as a result of any act
or failure to act by Insurance Company pursuant to this Article VI
shall relieve Insurance Company of its obligations under, or
otherwise affect the operation of, Article V.
ARTICLE VII.
VOTING OF FUND SHARES
7.1. Fund shall provide Insurance Company with copies at no cost to
Insurance Company, of the Fund's proxy material, reports to
shareholders and other communications to shareholders in such
quantity as Insurance Company shall reasonably require for
distributing to Contractholders or Participants.
Insurance Company shall:
a. solicit voting instructions from Contractholders or
Participants on a timely basis and in accordance
with applicable law;
b. vote Portfolio shares in accordance with instructions
received from Contractholders or Participants; and
c. vote Portfolio shares for which no instructions have been
received in the same proportion as Portfolio shares for
which instructions have been received.
Insurance Company agrees at all times to votes its General Account
shares in the same proportion as Portfolio shares for which
instructions have been received from Contractholders or Participants.
Insurance Company further agrees to be responsible for assuring that
voting Portfolio shares for the Separate Account is conducted in a
manner consistent with other Participating Companies.
7.2. Insurance Company agrees that it shall not, without the prior written
consent of the Fund and LAM, solicit, induce or encourage
Contractholders to (a) change or supplement the Fund's current
investment adviser or (b) change, modify, substitute, add to or
delete the Fund from the current investment media for the Contracts.
ARTICLE VIII.
MARKETING AND REPRESENTATIONS
8.1. The Fund or its underwriter shall periodically furnish Insurance
Company with the following documents, in quantities as Insurance
Company may reasonably request:
a. Current Prospectus and any supplements thereto;
b. other marketing materials.
Expenses for the production of such documents shall be
borne by Insurance Company in accordance with Section 5.2 of this
Agreement.
8.2. Insurance Company shall designate certain persons or entities which
shall have the requisite licenses to solicit applications for the
sale of Contracts. No representation is made as to the number or
amount of Contracts that are to be sold by Insurance Company.
Insurance Company shall make reasonable efforts to market
the Contracts and shall comply with all applicable federal and state
laws in connection therewith.
8.3. Insurance Company shall furnish, or shall cause to be furnished, to
the Fund, each piece of sales literature or other promotional
material in which the Fund, its investment adviser or the
administrator is named, at least fifteen Business Days prior to its
use. No such material shall be used unless the Fund approves such
material. Such approval (if given) must be in writing and shall be
presumed not given if not received within ten Business Days after
receipt of such material. The Fund shall use all reasonable efforts
to respond within ten days of receipt.
8.4. Insurance Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the
Fund or any Portfolio in connection with the sale of the Contracts
other than the information or representations contained in the
registration statement or Prospectus, as may be amended or
supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales literature or other promotional material
approved by the Fund.
8.5. Fund shall furnish, or shall cause to be furnished, to Insurance
Company, each piece of the Fund's sales literature or other
promotional material in which Insurance Company or the Separate
Account is named, at least fifteen Business Days prior to its use. No
such material shall be used unless Insurance Company approves such
material. Such approval (if given) must be in writing and shall be
presumed not given if not received within ten Business Days after
receipt of such material. Insurance Company shall use all reasonable
efforts to respond within ten days of receipt.
8.6. Fund shall not, in connection with the sale of Portfolio shares, give
any information or make any representations on behalf of Insurance
Company or concerning Insurance Company, the Separate Account, or the
Contracts other than the information or representations contained in
a registration statement or prospectus for the Contracts, as may be
amended or supplemented from time to time, or in published reports
for the Separate Account which are in the public domain or approved
by Insurance Company for distribution to Contractholders or
Participants, or in sales literature or other promotional material
approved by Insurance Company.
8.7. For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed
for use, in a newspaper, magazine or other periodical, radio,
television, telephone or tape recording, videotape display, signs or
billboards, motion pictures or other public media), sales literature
(such as any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other
communications distributed or made generally available to some or all
agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports and proxy
materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc.
rules, the Act or the 1933 Act.
ARTICLE IX.
INDEMNIFICATION
9.1. Insurance Company agrees to indemnify and hold harmless the Fund,
LAM, any sub-investment adviser of a Portfolio, and their affiliates,
and each of their directors, trustees, general members, officers,
employees, agents and each person, if any, who controls or is
associated with any of the foregoing entities or persons within the
meaning of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section), against any and all losses, claims,
damages or liabilities joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and
any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted) for which the Indemnified Parties may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect to thereof) (i)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in information furnished by
Insurance Company for use in the registration statement or Prospectus
or sales literature or advertisements of the Fund or with respect to
the Separate Account or Contracts, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading; (ii) arise out of or as a result of conduct,
statements or representations (other than statements or
representations contained in the Prospectus and sales literature or
advertisements of the Fund) of Insurance Company or its agents, with
respect to the sale and distribution of Contracts for which Portfolio
shares are an underlying investment; (iii) arise out of the wrongful
conduct of Insurance Company or persons under its control with
respect to the sale or distribution of the Contracts or Portfolio
shares; (iv) arise out of Insurance Company's incorrect calculation
and/or untimely reporting of net purchase or redemption orders; or
(v) arise out of any breach by Insurance Company of a material term
of this Agreement or as a result of any failure by Insurance Company
to provide the services and furnish the materials or to make any
payments provided for in this Agreement. Insurance Company will
reimburse any Indemnified Party in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided, however, that with respect to clauses (i) and (ii) above
Insurance Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or omission or alleged omission made
in such registration statement, prospectus, sales literature, or
advertisement in conformity with written information furnished to
Insurance Company by the Fund specifically for use therein. This
indemnity agreement will be in addition to any liability which
Insurance Company may otherwise have.
9.2. The Fund agrees to indemnify and hold harmless Insurance Company and
each of its directors, officers, employees, agents and each person,
if any, who controls Insurance Company within the meaning of the 1933
Act against any losses, claims, damages or liabilities to which
Insurance Company or any such director, officer, employee, agent or
controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) (1) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the registration statement or Prospectus or sales
literature or advertisements of the Fund; (2) arise out of or are
based upon the omission to state in the registration statement or
Prospectus or sales literature or advertisements of the Fund any
material fact required to be stated therein or necessary to make the
statements therein not misleading; or (3) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement or Prospectus or sales
literature or advertisements with respect to the Separate Account or
the Contracts and such statements were based on information provided
in writing to Insurance Company by the Fund specifically for use
therein; and the Fund will reimburse any legal or other expenses
reasonably incurred by Insurance Company or any such director,
officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Fund will not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
omission or alleged omission made in such Registration Statement,
Prospectus, sales literature or advertisements in conformity with
written information furnished to the Fund by Insurance Company
specifically for use therein. This indemnity agreement will be in
addition to any liability which the Fund may otherwise have.
9.3. The Fund shall indemnify and hold Insurance Company harmless against
any and all liability, loss, damages, costs or expenses which
Insurance Company may incur, suffer or be required to pay due to the
Fund's (1) incorrect calculation of the daily net asset value,
dividend rate or capital gain distribution rate of a Portfolio; (2)
incorrect reporting of the daily net asset value, dividend rate or
capital gain distribution rate; and (3) untimely reporting of the net
asset value, dividend rate or capital gain distribution rate;
provided that the Fund shall have no obligation to indemnify and hold
harmless Insurance Company if the incorrect calculation or incorrect
or untimely reporting was the result of incorrect information
furnished by Insurance Company or information furnished untimely by
Insurance Company or otherwise as a result of or relating to a breach
of this Agreement by Insurance Company. In no event will the Fund be
liable for any consequential, incidental, special or indirect damages
resulting to Insurance Company hereunder.
9.4. Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party under this Article, notify the indemnifying party
of the commencement thereof. The omission to so notify the
indemnifying party will not relieve the indemnifying party from any
liability under this Article IX, except to the extent that the
omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of
the failure to give such notice. In case any such action is brought
against any indemnified party, and it notified the indemnifying party
of the commencement thereof, the indemnifying party will be entitled
to participate therein and, to the extent that it may wish, assume
the defense thereof, with counsel satisfactory to such indemnified
party, and to the extent that the indemnifying party has given notice
to such effect to the indemnified party and is performing its
obligations under this Article, the indemnifying party shall not be
liable for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than
reasonable costs of investigation. Notwithstanding the foregoing, in
any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent.
A successor by law of the parties to this Agreement shall
be entitled to the benefits of the indemnification contained in this
Article IX.
ARTICLE X.
COMMENCEMENT AND TERMINATION
10.1. This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
10.2. This Agreement shall terminate without penalty as to one or more
Portfolios at the option of the terminating party:
a. At the option of Insurance Company or the Fund at any time
from the date hereof upon 180 days' notice, unless a shorter
time is agreed to by the parties;
b. At the option of Insurance Company, if shares of any
Portfolio are not reasonably available to meet the
requirements of the Contracts as determined by Insurance
Company. Prompt notice of election to terminate shall be
furnished by Insurance Company, said termination to be
effective ten days after receipt of notice unless the Fund
makes available a sufficient number of shares to meet the
requirements of the Contracts within said ten-day period;
c. At the option of Insurance Company, upon the institution
of formal proceedings against the Fund by the
Commission, the National Association of Securities Dealers,
Inc. or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which would, in
Insurance Company's reasonable judgment, materially impair
the Fund's ability to meet and perform the Fund's
obligations and duties hereunder. Prompt notice of election
to terminate shall be furnished by Insurance Company with
said termination to be effective upon receipt of notice;
d. At the option of the Fund, upon the institution of formal
proceedings against Insurance Company by the Commission, the
National Association of Securities Dealers, Inc. or any
other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in the Fund's reasonable
judgment, materially impair Insurance Company's ability to
meet and perform Insurance Company's obligations
and duties hereunder. Prompt notice of election to
terminate shall be furnished by the Fund with said
termination to be effective upon receipt of notice;
e. At the option of the Fund, if the Fund shall determine, in
its sole judgment reasonably exercised in good faith, that
Insurance Company has suffered a material adverse change in
its business or financial condition or is the subject of
material adverse publicity and such material adverse change
or material adverse publicity is likely to have a material
adverse impact upon the business and operation of the Fund
or LAM, the Fund shall notify Insurance Company in writing
of such determination and its intent to terminate this
Agreement, and after considering the actions taken by
Insurance Company and any other changes in circumstances
since the giving of such notice, such determination of the
Fund shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day
shall be the effective date of termination;
f. Upon termination of the Investment Management Agreement
between the Fund and LAM or its successors unless Insurance
Company specifically approves the selection of a new Fund
investment adviser. The Fund shall promptly furnish notice
of such termination to Insurance Company;
g. In the event Portfolio shares are not registered, issued or
sold in accordance with applicable federal law, or such law
precludes the use of such shares as the underlying
investment medium of Contracts issued or to be issued by
Insurance Company. Termination shall be effective
immediately upon such occurrence without notice;
h. At the option of the Fund upon a determination by the Board
in good faith that it is no longer advisable and in the best
interests of shareholders for the Fund to continue to
operate pursuant to this Agreement. Termination pursuant to
this Subsection (h) shall be effective upon notice by the
Fund to Insurance Company of such termination;
i. At the option of the Fund if the Contracts cease to qualify
as annuity contracts or life insurance policies, as
applicable, under the Code, or if the Fund reasonably
believes that the Contracts may fail to so qualify;
j. At the option of either party to this Agreement, upon
another party's breach of any material provision of this
Agreement;
k. At the option of the Fund, if the Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law; or
l. Upon assignment of this Agreement, unless made with the
written consent of the non-assigning party.
Any such termination pursuant to this Article X shall not affect the
operation of Article V of this Agreement. Any termination of this
Agreement shall not affect the operation of Article IX of this
Agreement.
10.3. Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, the Fund and LAM may, at the option of the Fund,
continue to make available additional Portfolio shares for so long as
the Fund desires pursuant to the terms and conditions of this
Agreement as provided below, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred
to as "Existing Contracts"). Specifically, without limitation, if the
Fund or LAM so elects to make additional Portfolio shares available,
the owners of the Existing Contracts or Insurance Company, whichever
shall have legal authority to do so, shall be permitted to reallocate
investments in the Portfolio, redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments
under the Existing Contracts. In the event of a termination of this
Agreement pursuant to Section 10.2 hereof, the Fund and LAM, as
promptly as is practicable under the circumstances, shall notify
Insurance Company whether LAM and the Fund will continue to make
Portfolio shares available after such termination. If Portfolio
shares continue to be made available after such termination, the
provisions of this Agreement shall remain in effect and thereafter
either the Fund or Insurance Company may terminate the Agreement, as
so continued pursuant to this Section 10.3, upon prior written notice
to the other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Fund, need not be for
more than six months.
ARTICLE XI.
AMENDMENTS
11.1. Any changes in the terms of this Agreement shall be made by agreement
in writing between Insurance Company and Fund.
ARTICLE XII.
NOTICE
12.1. Each notice required by this Agreement shall be given by certified
mail, return receipt requested, to the appropriate parties at the
following addresses:
Insurance Company:
Fund: Lazard Retirement Series, Inc.
30 Rockefeller Plaza
New York, New York 10020
Attention: Secretary
with copies to: Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Attn: Stuart H. Coleman, Esq.
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII.
MISCELLANEOUS
13.1. This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the
Fund.
ARTICLE XIV.
LAW
14.1 This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
[NAME OF INSURANCE COMPANY]
By:______________________
Attest:_____________________
LAZARD RETIREMENT SERIES, INC.
By:_________________________
Attest:_____________________
<PAGE>
SCHEDULE 1
NAME OF PORTFOLIO
Lazard Retirement Bantam Value Portfolio
Lazard Retirement Emerging Markets Portfolio
Lazard Retirement Emerging World Funds Portfolio
Lazard Retirement Equity Portfolio
Lazard Retirement Global Equity Portfolio
Lazard Retirement International Equity Portfolio
Lazard Retirement International Fixed-Income Portfolio
Lazard Retirement International Small Cap Portfolio
Lazard Retirement Small Cap Portfolio
Lazard Retirement Strategic Yield Portfolio
EXHIBIT 10
May 16, 1997
Lazard Retirement Series, Inc.
30 Rockefeller Plaza
New York, New York 10020
Ladies and Gentlemen:
We have acted as counsel to Lazard Retirement Series, Inc. (the "Fund") in
connection with the preparation of a Registration Statement on Form N-1A,
Registration No. 333-22309 (the "Registration Statement"), covering shares of
common stock (the "Common Stock") of the Fund's portfolios set forth on Schedule
1 hereto (the "Portfolios").
We have examined copies of the Articles of Incorporation, Articles of Amendment
and By-Laws, as amended, of the Fund, the Registration Statement and such other
documents, records, papers, statutes and authorities as we deemed necessary to
form a basis for the opinion hereinafter expressed. In our examination of such
material, we have assumed the genuineness of all signatures and the conformity
to original documents of all copies submitted to us. As to various questions of
fact material to such opinion, we have relied upon statements and certificates
of officers and representatives of the Fund and others.
Attorneys involved in the preparation of this opinion are admitted only to the
bar of the State of New York. As to various questions arising under the laws of
the State of Maryland, we have relied on the opinion of Messrs. Venable, Baetjer
and Howard, LLP, a copy of which is attached hereto. Qualifications set forth in
their opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that (a) the one share of
Lazard Retirement Bantam Value Portfolio, the one share of Lazard Retirement
Emerging Markets Portfolio, the 9,998 shares of Lazard Retirement Equity
Portfolio, the one share of Lazard Retirement Global Equity Portfolio, the one
share of Lazard Retirement International Equity Portfolio, the 9,998 shares of
Lazard Retirement International Fixed-Income Portfolio, the one share of Lazard
Retirement International Small Cap Portfolio, the one share of Lazard Retirement
Strategic Yield Portfolio and the 9,998 shares of Lazard Retirement Small Cap
Portfolio presently issued and outstanding have been validly and legally issued
and are fully paid and nonassessable; and (b) the shares of Common Stock to be
offered for sale pursuant to the Prospectus are, to the extent of the respective
number of shares of each Portfolio of the Fund authorized to be issued by the
Fund in its Charter, duly authorized and, when sold, issued and paid for as
contemplated by the Prospectus and authorized by the Board of Directors of the
Fund, will have been validly and legally issued and will be fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included in
the Registration Statement, and to the filing of this opinion as an exhibit to
any application made by or on behalf of the Fund or any distributor or dealer in
connection with the registration and qualification of the Fund or its Shares
under the securities laws of any state or jurisdiction. In giving such
permission, we do not admit hereby that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN LLP
<PAGE>
SCHEDULE 1
PORTFOLIOS
Lazard Retirement Bantam Value Portfolio
Lazard Retirement Emerging Markets Portfolio
Lazard Retirement Equity Portfolio
Lazard Retirement Global Equity Portfolio
Lazard Retirement International Equity Portfolio
Lazard Retirement International Fixed-Income Portfolio
Lazard Retirement International Small Cap Portfolio
Lazard Retirement Small Cap Portfolio
Lazard Retirement Strategic Yield Portfolio
<PAGE>
[Letterhead of Venable, Baetjer & Howard LLP]
May 16, 1997
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Re: LAZARD RETIREMENT SERIES, INC.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Lazard Retirement Series,
Inc., a Maryland corporation (the "Fund"), in connection with the organization
of the Fund and the issuance of its Lazard Retirement Bantam Value Portfolio,
Lazard Retirement Emerging Markets Portfolio, Lazard Retirement Equity
Portfolio, Lazard Retirement Global Equity Portfolio, Lazard Retirement
International Equity Portfolio, Lazard Retirement International Fixed-Income
Portfolio, Lazard Retirement International Small Cap Portfolio, Lazard
Retirement Small Cap Portfolio and Lazard Retirement Strategic Yield Portfolio
(each, a "Portfolio" and, collectively, the "Shares"), par value $.001 per
share.
As special Maryland counsel for the Fund, we are familiar with its Charter
and Bylaws. We have examined the prospectus included in its Pre-Effective
Amendment No. 1 to the Fund's Registration Statement on Form N-1A, File Nos.
333-22309 and 811-08071 (the "Registration Statement"), substantially in the
form in which it is to become effective (the "Prospectus"). We have further
examined and relied upon a certificate of the Maryland State Department of
Assessments and Taxation to the effect that the Fund is duly incorporated and
existing under the laws of the State of Maryland and is in good standing and
duly authorized to transact business in the State of Maryland.
We have also examined and relied upon such corporate records of the
Fund and other documents and certificates with respect to factual matters as we
have deemed necessary to render the opinion expressed herein. We have assumed,
without independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion and so advise you
that:
1. The Fund is duly organized and validly existing
as a corporation in good standing under the laws
of the State of Maryland.
2. The one share of Lazard Retirement Bantam Value
Portfolio, the one share of Lazard Retirement
Emerging Markets Portfolio, the 9,998 shares of
Lazard Retirement Equity Portfolio, the one share of
Lazard Retirement Global Equity Portfolio, the 9,998
shares of Lazard Retirement International Equity
Portfolio, the one share of Lazard Retirement
International Fixed-Income Portfolio, the one share
of Lazard Retirement International Small Cap
Portfolio, the one share of Lazard Retirement
Strategic Yield Portfolio and the 9,998 shares of
Lazard Retirement Small Cap Portfolio presently
issued and outstanding have been validly and legally
issued and are fully paid and nonassessable.
3. The Shares of the Fund to be offered for sale
pursuant to the Prospectus are, to the extent of
the respective number of Shares of each Portfolio
of the Fund authorized to be issued by the Fund
in its Charter, duly authorized and, when sold,
issued and paid for as contemplated by the
Prospectus and authorized by the Board of
Directors of the Fund, will have been validly
and legally issued and will be fully paid and
nonassessable.
This letter expresses our opinion with respect to the Maryland General
Corporation Law governing matters such as due organization and the authorization
and issuance of stock. It does not extend to the securities or "blue sky" laws
of Maryland, to federal securities laws or to other laws.
You may rely upon our foregoing opinion in rendering your opinion to
the Fund that is to be filed as an exhibit to the Registration Statement. We
consent to the filing of this opinion as an exhibit to the Registration
Statement. This opinion may not be relied upon by any other person or used for
any other purpose without our prior written consent.
Very truly yours,
VENABLE, BAETJER AND HOWARD, LLP
EXHIBIT (11)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Statement of Additional Information
constituting part of Lazard Retirement Series, Inc. Pre-Effective Amendment No.
1 to Registration Statement on Form N-1A of our report dated May 14, 1997,
relating to the financial statement of Lazard Retirement Series, Inc. which
appears in such Statement of Additional Information.
We also consent to the reference to our firm under the caption "Counsel and
Independent Auditors" in the Statement of Additional Information.
Anchin, Block & Anchin LLP
EXHIBIT (15)
LAZARD RETIREMENT SERIES, INC.
DISTRIBUTION AND SERVICING PLAN
INTRODUCTION: It has been proposed that the above-captioned investment
company (the "Fund") adopt a Distribution and Servicing Plan (the "Plan") in
accordance with Rule 12b-1, promulgated under the Investment Company Act of
1940, as amended (the "Act"), with respect to each portfolio of the Fund set
forth on Exhibit A hereto, as such Exhibit may be revised from time to time
(each, a "Portfolio"). Under the Plan, the Fund would pay the Fund's distributor
(the "Distributor") for (a) advertising, marketing and distributing shares of
each Portfolio and (b) providing services to shareholders of each Portfolio. The
Distributor would be permitted to pay third parties in respect of these
services. If this proposal is to be implemented, the Act and said Rule 12b-1
require that a written plan describing all material aspects of the proposed
financing be adopted by the Fund.
The Fund's Board, in considering whether the Fund should implement a
written plan, has requested and evaluated such information as it deemed
necessary to an informed determination as to whether a written plan should be
implemented and has considered such pertinent factors as it deemed necessary to
form the basis for a decision to use assets attributable to the Portfolios'
shares for such purposes.
In voting to approve the implementation of such a plan, the Board
members have concluded, in the exercise of their reasonable business judgment
and in light of their respective fiduciary duties, that there is a reasonable
likelihood that the plan set forth below will benefit the Portfolios and their
shareholders.
THE PLAN: The material aspects of this Plan are as follows:
1. As to each Portfolio, the Fund shall pay to the Distributor a fee
at the annual rate set forth opposite each Portfolio's name on Exhibit A hereto
of the value of the relevant Portfolio's average daily net assets for (i)
advertising, marketing and distributing such shares and (ii) the provision of
personal services to shareholders and/or the maintenance of shareholder
accounts. The Distributor may pay third parties a fee in respect of these
services. The Distributor shall determine the amounts to be paid to third
parties and the basis on which such payments will be made. Payments to third
parties are subject to compliance by each such party with the terms of any
related Plan agreement between it and the Distributor.
2. For the purpose of determining the fees payable under this Plan,
the value of the net assets of a Portfolio's shares shall be computed in the
manner specified in the Fund's charter documents for the computation of net
asset value.
3. The Board shall be provided, at least quarterly, with a written
report of all amounts expended with respect to each Portfolio pursuant to this
Plan. The report shall state the purpose for which the amounts were expended.
4. As to each Portfolio, this Plan will become effective upon approval
by (a) holders of a majority of the Portfolio's outstanding shares, and (b) a
majority of the Board members, including a majority of the Board members who are
not "interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in the operation of this Plan or in any
agreements entered into in connection with this Plan, pursuant to a vote cast in
person at a meeting called for the purpose of voting on the approval of this
Plan.
5. As to each Portfolio, this Plan shall continue for a period of one
year from its effective date, unless earlier terminated in accordance with its
terms, and thereafter shall continue automatically for successive annual
periods, provided such continuance is approved at least annually in the manner
provided in paragraph 4(b) hereof.
6. As to each Portfolio, this Plan may be amended at any time by the
Board, provided that (a) any amendment to increase materially the costs which
the Portfolio may bear pursuant to this Plan shall be effective only upon
approval by a vote of the holders of a majority of the Portfolio's outstanding
shares, and (b) any material amendments of the terms of this Plan shall become
effective only upon approval as provided in paragraph 4(b) hereof.
7. As to each Portfolio, this Plan is terminable without penalty at
any time by (a) vote of a majority of the Board members who are not "interested
persons" (as defined in the Act) of the Fund and have no direct or indirect
financial interest in the operation of this Plan or in any agreements entered
into in connection with this Plan, or (b) vote of the holders of a majority of
the Portfolio's outstanding shares.
Effective: April 30, 1997
<PAGE>
EXHIBIT A
Fee as a
Percentage of
Average Daily
Name of Portfolio Net Assets
Lazard Retirement Bantam Value Portfolio .25%
Lazard Retirement Emerging Markets Portfolio .25%
Lazard Retirement Emerging World Funds Portfolio .25%
Lazard Retirement Equity Portfolio .25%
Lazard Retirement Global Equity Portfolio .25%
Lazard Retirement International Equity Portfolio .25%
Lazard Retirement International Fixed-Income Portfolio .25%
Lazard Retirement International Small Cap Portfolio .25%
Lazard Retirement Small Cap Portfolio .25%
Lazard Retirement Strategic Yield Portfolio .25%
