LAZARD RETIREMENT SERIES INC, 485BPOS, 1998-05-01

LAZARD RETIREMENT SERIES INC
485BPOS, 1998-05-01

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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/

Post-Effective Amendment No. 1 /X/

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

Amendment No. 1 /X/

(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) 632-6000

William G. Butterly III, Esq.
30 Rockefeller Plaza
New York, New York 10020
(Name and Address of Agent for Service)

copy to:

Stuart N. Coleman, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982

It is proposed that this filing will become effective (check appropriate box)

/x/ Immediately upon filing pursuant to paragraph (b)

____ on (date) pursuant to paragraph (b)

____ 60 days after filing pursuant to paragraph (a)(i)

____ on (date) pursuant to paragraph (a)(i)

____ 75 days after filing pursuant to paragraph (a)(ii)

____ on (date) pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

____ this post-effective amendment designates a new effective date for a
previouslt filed post-effective amendment.

<PAGE>

MAY 21, 1998
As revised, October 23, 1998

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 10112
(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 21, 1998, 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.

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<PAGE>

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.

-3-
<PAGE>

TABLE OF CONTENTS
Page
Annual Operating Expenses.................................................. 5
Financial Highlights ...................................................... 6
Description of the Portfolios.............................................. 6
General.................................................................... 7
Investment Objectives and Policies......................................... 7
Investment Considerations and Risks........................................ 16
Management of the Fund and the Portfolios.................................. 20
Purchase of Shares......................................................... 22
Redemption of Shares....................................................... 23
Dividends and Distributions................................................ 23
Taxation................................................................... 24
Organization and Description of Capital Stock.............................. 25
Performance Information.................................................... 26
Appendix A................................................................. 28
Appendix B................................................................. 36

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<PAGE>

ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>

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 PORTFOLIO .75% .25% .60% 1.60%
INTERNATIONAL FIXED-INCOME PORTFOLIO .75% .25% .50% 1.50%
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."

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<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights set forth below have been audited by Anchin, Block &
Anchin LLP, Independent Accountants. Additional financial information, related
notes and report of independent accountants accompany the Statement of
Additional Information, which is available upon request. The Equity Portfolio,
Bantam Value Portfolio, Global Equity Portfolio, International Equity Portfolio,
International Small Cap Portfolio, International Fixed-Income Portfolio and
Strategic Yield Portfolio had not commenced operations as of the date of the
financials and, therefore, no financial data are provided for such Portfolios.

LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LESS DISTRIBUTION FROM
INCOME (LOSS) FROM INVESTMENT AND
OPERATIONS IN EXCESS OF:
REALIZED AND ----------------------
UNREALIZED
NET ASSET GAIN (LOSS)
VALUE INVESTMENT ON TOTAL FROM NET ASSET
BEGINNING OF (INCOME) INVESTMENTS- INVESTMENT INVESTMENT VALUE, END
PERIOD PERIOD LOSS-NET NET OPERATIONS INCOME-NET CAPITAL OF PERIOD
------ ------------ ---------- --- ----------- ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
LAZARD RETIREMENT SMALL CAP PORTFOLIO

YEAR ENDED
11/4/97* TO 12/31/97 .... $10.00 $0.020 $(0.164) $(0.144) $(0.016) -- $9.84
====== ====== ======= ======= ======= == =====
</TABLE>

RATIOS OF AVERAGE NET ASSETS
----------------------------

INVESTMENT PORTFOLIO AVERAGE NET ASSETS
TOTAL INCOME TURNOVER COMMISSION END OF PERIOD
PERIOD RETURN** EXPENSE-NET* NET+ RATE RATE PAID** (000'S)
------ -------- ----------- --- ---- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
LAZARD RETIREMENT SMALL CAP PORTFOLIO

YEAR ENDED
11/4/97 TO 12/31/97 .... (1.4)% 1.50%(a),(b) 0.71% 0.00% $0.0471 $591
===== =========== ===== ===== ======= ====
</TABLE>

- ------------
*Annualized for periods of less than one year.
**Total return represents aggregate total return for the period indicated.
+Commencement of operations.
++The average commission rate paid is applicable for Portfolios that invest
greater than 10% of average assets in equity securities transactions on which
commissions are charged.

(a) If the Investment Manager and Administrator had not waived certain fees and
reimbursed certain expenses and the Portfolios had not paid fees indirectly,
the ratio of expenses to average net assets (and net investment income per
share) would have been 52.55% annualized ($-1.417) for the Small Cap
Portfolio and 23.17% annualized ($-0.376) for the Emerging Markets
Portfolio.

(b) Includes expense reductions. Excluding expense reductions, the ratio of
expenses to average net assets would have been 1.57% annualized for the
Small Cap Portfolio and 1.85% annualized for the Emerging Markets Portfolio.

Further information about each Portfolio's performance is contained in the
Fund's annual report for the fiscal year ended December 31, 1997, which may
be obtained without charge by writing to the address or calling the
appropriate number set forth on the cover page of this Prospectus.

-6-

<PAGE>

LARZARD RETIREMENT EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/4/97* TO
12/31/97 ... $10.00 $0.038 $(0.509) $(0.471) $(0.035) $(0.004) $9.49 (4.7)% 1.80%(a),(b) 1.96% 0.00% $0.0080 $1,429
====== ====== ======= ======= ======= ======= ===== === ============ ==== ==== ======= ======

</TABLE>

-7-

<PAGE>
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 determines 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.

-8-
<PAGE>

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 80% 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 IBCA, Inc. ("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, warrants and American and Global Depositary Receipts.

-9-
<PAGE>

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.

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

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<PAGE>

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.

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

-11-
<PAGE>

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

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<PAGE>

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.

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

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<PAGE>

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."

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.

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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.

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
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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.

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<PAGE>
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.

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<PAGE>
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

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<PAGE>

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, or entering
into,
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<PAGE>

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. 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 portfolio turnover rate of 100% is equivalent to the Portfolio buying
and selling all of the securities in its portfolio once in the course of the
year. 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.

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<PAGE>

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.

YEAR 2000 RISKS--(ALL PORTFOLIOS) Like other mutual funds, financial and
business organizations and individuals around the world, the Fund could be
adversely affected if the computer systems used by the Investment Manager and
the Fund's other service providers do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Investment Manager is taking
steps to address the Year 2000 Problem with respect to the computer systems that
it uses and to obtain assurances that comparable steps are being taken by the
Fund's other major service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact on the
Fund.

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.

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<PAGE>

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
$53 billion as of December 31, 1997. 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 relevant Portfolio's
average daily net asset value.

Investment Management
Name of Portfolio 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 Portfolio .75%
International Small Cap Portfolio .75%
Small Cap Portfolio .75%
Strategic Yield Portfolio .75%

The investment management fees are accrued daily and paid monthly. For the
fiscal year ended December 31, 1997, the Investment Manager waived all of its
management fees with respect to the Emerging Markets Portfolio and the Small Cap
Portfolio.

Each Portfolio will bear all expenses not specifically assumed by the Investment

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<PAGE>

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.

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<PAGE>

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.

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<PAGE>

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,

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<PAGE>

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

Management believes that each of the Emerging Markets Portfolio and the Small
Cap Portfolio has qualified for the fiscal year ended December 31, 1997 as a
"regulated investment company" under Subchapter M of the Code. It is intended
that each such Portfolio will continue to so qualify and that each other
Portfolio will qualify as a regulated investment company, if such qualification
is in the best interests of its shareholders. Each Portfolio will be treated as
a separate entity for tax purposes

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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

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<PAGE>

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.

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<PAGE>

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.

The Fund is newly-organized and only three of the Portfolios, the Small-Cap
Portfolio, Emerging Markets Portfolio and Equity Portfolio, recently commenced
operations on November 4, 1997, November 4, 1997, and March 19, 1998,
respectively. However, 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 Institutional Shares of the corresponding Lazard public
funds for various periods ended December 31, 1997 is set forth on "Appendix B".
Such performance information should not be viewed as a substitute for the
Portfolios' own performance nor indicative of the future performance of the
Portfolios. For information regarding the Portfolios' own performance, see
"Financial Highlights" above and the Fund's annual report for the fiscal year
ended December 31, 1997, which may be obtained without charge by writing to the
address or calling the appropriate number set forth on the cover page of this
Prospectus.

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<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 inopportune times or judges market
conditions incorrectly, such

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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.

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<PAGE>

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

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<PAGE>

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

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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

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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.

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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.

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<PAGE>

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.

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<PAGE>

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.

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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 Institutional Shares of 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.

-34-
<PAGE>

The total return and average annual total return for the corresponding Lazard
public funds and securities indices for the indicated periods ended September
30, 1997 were:
<TABLE>
<CAPTION>

NAME OF
PUBLIC FUND TOTAL RETURN AVERAGE ANNUAL TOTAL RETURN
AND INDEX PERIOD ENDED SEPTEMBER 30, 1997 PERIOD ENDED SEPTEMBER 30, 1997
--------------------------------------------------------- -------------------------------------------------
ONE THREE FIVE TEN SINCE ONE THREE FIVE TEN SINCE
YEAR YEAR YEAR YEAR INCEPTION* YEAR YEAR YEAR YEAR INCEPTION*
--------------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lazard
Equity Portfolio 35.75% 104.23% 177.53% 300.66% 331.92% 35.75% 26.87% 22.65% 14.89% 15.20%
Standard & Poor's
500 Index 40.67% 119.80% 157.56% 294.81% 347.21% 40.67% 30.02% 20.83% 14.72% 15.59%

Lazard
International
Equity
Portfolio 25.04% 43.02% 100.94% -- 93.46% 25.04% 12.67% 14.98% -- 11.79%
MSCI EAFE Index 12.18% 28.90% 78.85% -- 63.93% 12.18% 8.83% 12.33% -- 8.71%

Lazard
International
Fixed-Income
Portfolio+ (0.86)% 21.97% 41.90% -- 55.50% (0.86)% 6.84% 7.25% -- 7.74%
Salomon World
Government Bond
Index Ex-US+ (0.85)% 21.51% 38.11% -- 66.17% (0.85)% 6.71% 6.67% -- 8.96%

Lazard
Strategic
Yield
Portfolio 9.76% 35.91% 50.85% -- 67.01% 9.76% 10.77% 8.57% -- 8.92%
One Month
LIBOR USD
Fixed Index 5.58% 18.03% 26.78% -- 32.20% 5.58% 5.68% 4.86% -- 4.76%

Lazard
Small Cap
Portfolio 42.53% 90.27% 209.65% -- 241.09% 42.53% 23.91% 25.36% -- 23.03%
Russell 2000
Stock Index 33.19% 85.91% 154.16% -- 169.78% 33.19% 22.96% 20.51% -- 18.25%

Lazard
International
Small Cap
Portfolio 15.56% 21.35% -- -- 33.51% 15.56% 6.66% -- -- 7.83%
Salomon EMI
Index Ex-US 0.35% 10.26% -- -- 31.57% 0.35% 3.31% -- -- 7.42%

Lazard
Emerging
Markets
Portfolio 18.00% 13.03% -- -- 31.79% 18.00% 4.17% -- -- 8.97%
IFC Investable
Total Return
Index 5.39% (12.00)% -- -- 5.20% 5.39% (4.17)% -- -- 1.59%

Lazard
Global Equity
Portfolio 29.76% -- -- -- 37.80% 29.76% -- -- -- 20.20%
MSCI World Index 24.12% -- -- -- 33.91% 24.12% -- -- -- 18.24%

Lazard
Bantam Value
Portfolio 57.94% -- -- -- 92.84% 57.94% -- -- -- 51.83%
Russell 2000
Stock Index 33.19% -- -- -- 43.08% 33.19% -- -- -- 25.38%

</TABLE>

- ----------

* 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 $10
million and $2.57 billion as of September 30, 1997. 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 Fixed
Rate 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.

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.

-35-
<PAGE>
MAY 20, 1997
As revised, October 23, 1997
PROSPECTUS

LAZARD RETIREMENT
SERIES, INC.
- ------------------------------------

Lazard Retirement Equity Portfolio
Lazard Retirement Small Cap Portfolio
Lazard Retirement International Equity Portfolio
Lazard Retirement Emerging Markets Portfolio

- ----------------------------------

30 Rockefeller Plaza
New York, New York 10112
(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.

- --------------------------------------------------------------------------------

<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 four 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:

-2-
<PAGE>

TABLE OF CONTENTS
Page
Annual Operating Expenses.................................................. 4
Description of the Portfolios.............................................. 5
General................................................................. 5
Investment Objectives and Policies...................................... 5
Investment Considerations and Risks..................................... 9
Management of the Fund and the Portfolios.................................. 12
Purchase of Shares......................................................... 14
Redemption of Shares....................................................... 15
Distribution and Servicing Plan............................................ 15
Dividends and Distributions................................................ 16
Taxation................................................................... 16
Organization and Description of Capital Stock.............................. 17
Performance Information.................................................... 17
Appendix A................................................................. 19
Appendix B................................................................. 25

-3-
<PAGE>

ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>
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 PORTFOLIO .75% .25% .60% 1.60%
SMALL CAP PORTFOLIO .75% .25% .50% 1.50%
EMERGING MARKETS PORTFOLIO 1.00% .25% .55% 1.80%
</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
SMALL CAP PORTFOLIO $15 $48
EMERGING MARKETS PORTFOLIO $18 $57

-4-
<PAGE>

DESCRIPTION OF THE PORTFOLIOS

General

INVESTMENT OBJECTIVES AND POLICIES

-5-
<PAGE>

EQUITY PORTFOLIO

Under normal market conditions, the Portfolio will invest at least 80% 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."

SMALL CAP PORTFOLIO

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

-6-
<PAGE>

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 80% 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."

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 Standard & Poor's Ratings Group ("S&P"), or Moody's
Investors Service, Inc. ("Moody's") (together, the "Rating Agencies"). In
addition, the Portfolio may have substantial investments in American Depositary
Receipts

-7-
<PAGE>

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 Gestion Banque in Paris, Lazard Asset
Management 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.

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 to
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.

-8-
<PAGE>

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."

INVESTMENT CONSIDERATIONS
AND RISKS

-9-
<PAGE>

Objectives and Management Policies--Management Policies" in the Statement of
Additional Information for a further discussion of certain risks.

EQUITY SECURITIES--(All Portfolios) 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 and Emerging
Markets 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.

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.

-10-
<PAGE>

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 Portfolio, 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.

FOREIGN CURRENCY TRANSACTIONS--(International Equity Portfolio and Emerging
Markets 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.

-11-
<PAGE>

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.

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 10112, 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.

-12-
<PAGE>

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
$60 billion as of December 31, 1997. Its clients are both individuals and
institutions, some of whose accounts have investment policies similar to those
of some 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 Management
Name of Portfolio Fee Payable
- --------------- --------------------
Equity Portfolio .75%
Small Cap Portfolio .75%
International Equity Portfolio .75%
Emerging Markets Portfolio 1.00%

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

EQUITY PORTFOLIO--Herbert W. Gullquist and Michael S. Rome

-13-
<PAGE>

SMALL CAP PORTFOLIO--Eileen Alexanderson, Herbert W. Gullquist, Bradley J.
Purcell, Michael S. Rome and Leonard M. Wilson

INTERNATIONAL EQUITY PORTFOLIO--Herbert W. Gullquist and John R. Reinsberg

EMERGING MARKETS PORTFOLIO--Herbert W. Gullquist and John R. Reinsberg

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.

HERBERT W. GULLQUIST. Mr. Gullquist is a Managing Director of the Investment
Manager and has been with the Investment Manager since 1982.

BRADLEY J. PURCELL. Mr. Purcell is a Senior 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

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

PURCHASE OF SHARES

-14-
<PAGE>

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.

REDEMPTION OF SHARES

DISTRIBUTION AND SERVICING PLAN

-15-
<PAGE>

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.

DIVIDENDS AND DISTRIBUTIONS

ALL PORTFOLIOS--Declare and pay dividends from net investment income annually.

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.

-16-
<PAGE>

ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK

PERFORMANCE INFORMATION

From time to time, the Portfolios may advertise their "average annual total
return" and their "total return." THESE FIGURES ARE

-17-
<PAGE>

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.

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, 1997 is set forth on "Appendix B."

-18-
<PAGE>

APPENDIX A

INVESTMENT TECHNIQUES

FOREIGN CURRENCY TRANSACTIONS--(The International Equity Portfolio and Emerging
Markets Portfolio) Foreign currency transactions may be entered into for a
variety of purposes, including: to fix in U.S. dollars, between trade date 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.

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 331/3% 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.

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,

-19-
<PAGE>

or suddenly can become, illiquid. Changes in liquidity may result in
significant, rapid and unpredictable changes in the prices for Derivatives.

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
331/3% 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

-20-
<PAGE>

Commission, a Portfolio may have to set aside permissible liquid assets in a
segregated account to cover its commitments.

CERTAIN PORTFOLIO SECURITIES

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.

-21-
<PAGE>

MONEY MARKET INSTRUMENTS--(All Portfolios) Each Portfolio, unless otherwise
provided, may invest in the following types of Money Market Instruments.

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.

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.

-22-
<PAGE>

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 and Emerging Markets 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 and certain mortgage-related
securities. 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.

-23-
<PAGE>

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.

-24-
<PAGE>

APPENDIX B

-25-
<PAGE>

The total return and average annual total return for the corresponding Lazard
public funds and securities indices for the indicated periods ended December 31,
1997 were:
<TABLE>
<CAPTION>

TOTAL RETURN AVERAGE ANNUAL TOTAL RETURN
NAME OF PUBLIC FUND AND INDEX PERIOD ENDED DECEMBER 31, 1997 PERIOD ENDED DECEMBER 31, 1997
--------------------------------------------------- -----------------------------------------------
ONE THREE FIVE TEN SINCE ONE THREE FIVE TEN SINCE
YEAR YEAR YEAR YEAR INCEPTION* YEAR YEAR YEAR YEAR INCEPTION*
--------------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lazard
Equity Portfolio 25.13% 106.59% 155.41% 386.45% 329.57% 25.13% 27.36% 20.63% 17.14% 14.75%
Standard & Poor's
500 Index 33.36% 125.60% 151.63% 425.67% 356.05% 33.36% 31.15% 20.27% 18.05% 15.42%

Lazard
Small Cap Portfolio 28.06% 92.86% 156.00% -- 233.85% 28.06% 24.47% 20.68% -- 21.57%
Russell
2000 Stock Index 22.36% 83.06% 113.73% -- 160.74% 22.36% 22.33% 16.41% -- 16.80%

Lazard
International
Equity Portfolio 11.84% 46.33% 92.22% -- 85.22% 11.84% 13.53% 13.96% -- 10.50%
MSCI EAFE Index 1.78% 20.05% 71.49% -- 51.00% 1.78% 6.28% 11.39% -- 6.91%

Lazard
Emerging
Markets
Portfolio -9.84% 4.91% -- -- 3.44% -9.84% 1.61% -- -- 0.98%
IFC Investable
Total Return Index -14.85% -14.70% -- -- -15.30% -14.85% -5.16% -- -- -4.68%

</TABLE>

- --------------
* Inception dates are: Lazard Equity Portfolio--June 1, 1987; Lazard Small
Cap Portfolio--October 31, 1991; Lazard International Equity
Portfolio--October 29, 1991; Lazard Emerging Markets Portfolio--July 15,
1994.
** 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 $10 million and $2.57 billion as of
September 30, 1997. 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 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 above returns reflect partial waivers of fees. Without such waivers, the
total returns and average annual total returns would have been lower.

* * *

-26-

<PAGE>
MAY 1, 1998
PROSPECTUS

LAZARD RETIREMENT
SERIES, INC.

- ------------------------------------

Lazard Retirement Small Cap Portfolio
Lazard Retirement Emerging Markets
Portfolio

- ------------------------------------

30 Rockefeller Plaza
New York, New York 10112

(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 1, 1998, 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.

- --------------------------------------------------------------------------------

<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 two 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:

-2-

<PAGE>

TABLE OF CONTENTS
Page

Annual Operating Expenses................................................. 4
Financial Highlights...................................................... 5
Description of the Portfolios............................................. 6
General................................................................ 6
Investment Objectives and Policies..................................... 6
Investment Considerations and Risks.................................... 9
Management of the Fund and the Portfolios................................. 11
Purchase of Shares........................................................ 13
Redemption of Shares...................................................... 14
Distribution and Servicing Plan........................................... 14
Dividends and Distributions............................................... 15
Taxation.................................................................. 15
Organization and Description of Capital Stock............................. 16
Performance Information................................................... 17
Appendix A................................................................ 19
Appendix B................................................................ 24

-3-
<PAGE>

ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)

TOTAL PORTFOLIO
MANAGEMENT 12b-1 OTHER OPERATING
FEES FEES EXPENSES EXPENSES
------------ -------- --------- ------------
SMALL CAP PORTFOLIO .75% .25% .50% 1.50%
EMERGING MARKETS PORTFOLIO 1.00% .25% .55% 1.80%

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
------ -------
SMALL CAP PORTFOLIO $15 $47
EMERGING MARKETS PORTFOLIO $18 $57

- --------------------------------------------------------------------------------
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%.
- --------------------------------------------------------------------------------

-4-
<PAGE>

FINANCIAL HIGHLIGHTS

LAZARD RETIREMENT SERIES, INC.

FINANCIAL HIGHLIGHTS

- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM AND
INCOME (LOSS) FROM INVESTMENT OPERATIONS IN EXCESS OF:
---------------------------------------- ---------------------------
REALIZED AND
UNREALIZED
NET ASSET GAIN (LOSS)
VALUE, INVESTMENT ON TOTAL FROM
BEGINNING OF INCOME INVESTMENTS- INVESTMENT INVESTMENT
PERIOD PERIOD (LOSS)-NET NET OPERATIONS INCOME-NET CAPITAL
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

LAZARD RETIREMENT SMALL CAP PORTFOLIO

11/4/97* to 12/31/97 $10.00 $0.020 $(0.164) $(0.144) $(0.016) --

LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO

11/4/97* to 12/31/97 $10.00 $0.038 $(0.509) $(0.471) $(0.035) (.004)

RATIOS TO AVERAGE NET ASSETS
----------------------------

NET ASSET PORTFOLIO AVERAGE NET ASSETS,
VALUE, END TOTAL INVESTMENT TURNOVER COMMISSION END OF PERIOD
OF PERIOD RETURN++ EXPENSES-NET+ INCOME-NET+ RATE RATE PAID** (000'S)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

LAZARD RETIREMENT SMALL CAP PORTFOLIO

11/4/97* to 12/31/97 $9.84 (1.4)% 1.50%(a),(b) 0.71% 0.00% $0.0471 $591

LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO

11/4/97* to 12/31/97 $9.49 (4.71)% 1.80%(a),(b) 1.96% 0.00% $0.0080 $1,429

</TABLE>

- ----------
+ Annualized for periods of less than one year.

++ Total return represents aggregate total return for the period indicated.
* Commencement of operations.

** The average commission rate paid is applicable for Portfolios that invest
greater than 10% of average assets in equity securities transactions on which
commissions are charged.

(a)If the Investment Manager and Administrator had not waived certain fees and
reimbursed certain expenses and the Portfolios had not paid fees indirectly,
the ratio of expenses to average net assets (and net investment income per
share) would have been 52.55% annualized ($-1.417) for the Small Cap
Portfolio and 23.17% annualized ($-0.376) for the Emerging Markets Portfolio.

(b)Includes expense reductions. Excluding expense reductions, the ratio of
expenses to average net assets would have been 1.57% annualized for the Small
Cap Portfolio and 1.85% annualized for the Emerging Markets Portfolio.

Further information about each such Portfolio's performance is contained in the
Fund's annual report for the fiscal year ended December 31, 1997, which may be
obtained without charge by writing to the address or calling the appropriate
number set forth on the cover page of this Prospectus.

-5-
<PAGE>

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."

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.

-6-
<PAGE>

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 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.

EMERGING MARKETS PORTFOLIO

-7-
<PAGE>

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.

-8-

<PAGE>

INVESTMENT CONSIDERATIONS
AND RISKS

EQUITY SECURITIES--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.

FIXED-INCOME SECURITIES--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. 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--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

-9-
<PAGE>

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 Portfolio, 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 the Portfolio 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.

FOREIGN CURRENCY TRANSACTIONS--(Emerging Markets Portfolio only) 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--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 include options and futures. 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, 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.

PORTFOLIO TURNOVER--Neither 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 Emerging Markets Portfolio and Small Cap Portfolio will not exceed
100%. A high rate of portfolio turnover involves correspondingly great
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.

-10-
<PAGE>

NON-DIVERSIFIED 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 neither 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--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--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.

YEAR 2000 RISKS--Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by the Investment Manager and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." The Investment Manager is taking steps to address the Year 2000
Problem with respect to the computer systems that it uses and to obtain
assurances that comparable steps are being taken by the Fund' other major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.

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.

-11-
<PAGE>

INVESTMENT MANAGER AND
INVESTMENT MANAGEMENT
AGREEMENT

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
$53.0 billion as of December 31, 1997. Its clients are both individuals and
institutions, some of whose accounts have investment policies similar to those
of the Portfolios.

Investment Management
Name of Portfolio Fee Payable
- ----------------- ---------------------
Emerging Markets Portfolio 1.00%
Small Cap 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.

-12-
<PAGE>

PRINCIPAL PORTFOLIO MANAGERS

SMALL CAP 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

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.

HERBERT W. GULLQUIST. Mr. Gullquist is a Managing Director of the Investment
Manager and has been with the Investment Manager since 1982.

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

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 either Portfolio's
investment policies or which securities are to be purchased or sold for either
Portfolio. 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

-13-
<PAGE>

REDEMPTION OF SHARES

DISTRIBUTION AND
SERVICING PLAN

-14-
<PAGE>

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.

DIVIDENDS AND DISTRIBUTIONS

Each Portfolio declares and pays dividends from net investment income annually.

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. Neither 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

-15-
<PAGE>

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.

ORGANIZATION AND
DESCRIPTION OF CAPITAL
STOCK

-16-
<PAGE>

PERFORMANCE
INFORMATION

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 a
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.

The Small Cap and Emerging Markets Portfolios only recently commenced operations
on November 4, 1997. However, 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 Institutional Shares of the corresponding Lazard
public funds for various periods ended December 31, 1997 is set forth on
"Appendix B." SUCH PERFORMANCE INFORMATION SHOULD NOT BE VIEWED AS A SUBSTITUTE
FOR THE PORTFOLIOS'

-17-

<PAGE>

OWN PERFORMANCE NOR INDICATIVE OF THE FUTURE PERFORMANCE OF THE PORTFOLIOS. For
information regarding the Emerging Markets Portfolio's and the Small Cap
Portfolio's own performance, see "Financial Highlights" above and the Fund's
annual report for the fiscal year ended December 31, 1997, which may be obtained
without charge by writing to the address or calling the appropriate number set
forth on the cover page of this Prospectus.

-18-
<PAGE>

APPENDIX A

INVESTMENT TECHNIQUES

FOREIGN CURRENCY TRANSACTIONS--(Emerging Markets Portfolio only) Foreign
currency transactions may be entered into for 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.

BORROWING MONEY--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--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.

-19-

<PAGE>

LENDING PORTFOLIO SECURITIES--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--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.

-20-

<PAGE>

CERTAIN PORTFOLIO SECURITIES

CONVERTIBLE SECURITIES--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--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--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--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.

INVESTMENT COMPANIES--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--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

-21-

<PAGE>

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. 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. Each 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.

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 Emerging Markets Portfolio)
purchased by the Portfolio will consist only of direct obligations which, at the
time of their

-22-

<PAGE>

purchase, are (a) rated not lower than Prime-1 by Moody's Investors Service,
Inc. ("Moody's") A-1 by Standard & Poor's Ratings Group ("S&P"), Fitch-1 by
Fitch IBCA, Inc. ("Fitch") or Duff-1 by Duff & Phelps Credit Rating Co.
("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.

ILLIQUID SECURITIES--(Both 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, and repurchase agreements providing for
settlement in more than seven days after notice. 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--Each Portfolio may invest in debt securities rated Baa/BBB or better by
the Rating Agencies to the extent described above. 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. 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 security.

-23-

<PAGE>

APPENDIX B

-24-
<PAGE>

The total return and average annual total return for the Institutional Shares of
the corresponding Lazard public funds and securities indices for the indicated
periods ended December 31, 1997 were:

<TABLE>
<CAPTION>
NAME OF PUBLIC FUND TOTAL RETURN AVERAGE ANNUAL TOTAL RETURN
AND INDEX PERIOD ENDED DECEMBER 31, 1997 PERIOD ENDED DECEMBER 31, 1997
------------------ ------------------------------------- ----------------------------------
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 Small Cap Portfolio 28.06% 92.86% 156.00% 233.85% 28.06% 24.47% 20.68% 21.57%
Russell 2000 Index** 22.36% 83.06% 113.73% 160.74% 22.36% 22.33% 16.41% 16.80%
Lazard Emerging Markets Portfolio (9.84)% 4.91% N/A 3.44% (9.84)% 1.61% N/A 0.98%
IFC Investable Total Return Index** (14.85)% (14.70)% N/A (15.30)% (14.85)% (5.16)% N/A (4.68)%

</TABLE>

- ----------
*Inception dates for the Institutional Shares are: Lazard Small Cap
Portfolio--October 31, 1991; and Lazard Emerging Markets Portfolio--July 15,
1994.

**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 Russell 2000(R) Index is composed of 2,000 common stocks of U.S.
companies with an average market capitalization of approximately $467 million
as of December 31, 1997. 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 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.

-25-

<PAGE>
MAY 1, 1998

PROSPECTUS

LAZARD RETIREMENT
SERIES, INC.

- ------------------------------------

Lazard Retirement Equity Portfolio
Lazard Retirement Small Cap Portfolio

- ----------------------------------

30 Rockefeller Plaza
New York, New York 10112
(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 1, 1998, 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.

- ------------------------------------

-1-

<PAGE>

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:

-2-

<PAGE>

TABLE OF CONTENTS
Page
Annual Operating Expenses................................................. 4
Financial Highlights...................................................... 5
Description of the Portfolios............................................. 6
General................................................................ 6
Investment Objectives and Policies..................................... 6
Investment Considerations and Risks.................................... 8
Management of the Fund and the Portfolios................................. 11
Purchase of Shares........................................................ 13
Redemption of Shares...................................................... 13
Distribution and Servicing Plan........................................... 14
Dividends and Distributions............................................... 14
Taxation.................................................................. 15
Organization and Description of Capital Stock............................. 15
Performance Information................................................... 16
Appendix A................................................................ 18
Appendix B................................................................ 23

-3-

<PAGE>

ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)

TOTAL PORTFOLIO
MANAGEMENT 12B-1 OTHER OPERATING
FEES FEES EXPENSES EXPENSES
------------ -------- --------- ------------
EQUITY PORTFOLIO .75% .25% .50% 1.50%
SMALL CAP PORTFOLIO .75% .25% .50% 1.50%

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
SMALL CAP 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."

-4-

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights set forth below have been audited by ABA Seymour
Schneidman Financial Services Group, a division of Anchin, Block & Anchin LLP,
Independent Accountants. Additional financial information, related notes and
report of independent accountants accompany the Statement of Additional
Information, which is available upon request. The Equity Portfolio had not
commenced operations as of the date of the financials and, therefore, no
financial data are provided for such Portfolio.

LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>

LAZARD RETIREMENT SMALL CAP PORTFOLIO

11/4/97* to 12/31/97 $10.00 $0.020 $(0.164) $(0.144) $(0.016) --

RATIOS TO AVERAGE NET ASSETS
----------------------------

LAZARD RETIREMENT SMALL CAP PORTFOLIO

11/4/97* to 12/31/97 $9.84 (1.4)% 1.50%(a),(b) 0.71% 0.00% $0.0471 $591

</TABLE>

- ----------

+ Annualized for periods of less than one year.
++ Total return represents aggregate total return for the period indicated.
* Commencement of operations.
** The average commission rate paid is applicable for Portfolios that invest
greater than 10% of average assets in equity securities transactions on which
commissions are charged.
(a)If the Investment Manager and Administrator had not waived certain fees and
reimbursed certain expenses and the Small Cap Portfolio had not paid fees
indirectly, the ratio of expenses to average net assets (and net investment
income per share) would have been 52.55% annualized ($-1.417) for the Small
Cap Portfolio.
(b)Includes expense reductions. Excluding expense reductions, the ratio of
expenses to average net assets would have been 1.57% annualized for the Small
Cap Portfolio.

Further information about the Small Cap Portfolio's performance is contained in
the Fund's annual report for the fiscal year ended December 31, 1997, which may
be obtained without charge by writing to the address or calling the appropriate
number set forth on the cover page of this Prospectus.

-5-

<PAGE>

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").

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 either 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."

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.

-6-

<PAGE>

EQUITY PORTFOLIO

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 IBCA, Inc. ("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."

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.

-7-

<PAGE>

INVESTMENT CONSIDERATIONS
AND RISKS

EQUITY SECURITIES--Equity securities fluctuate in value, often based on factors

-8-

<PAGE>

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 Portfolio 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.

FOREIGN SECURITIES -- 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.

-9-

<PAGE>

USE OF DERIVATIVES--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 each 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.

PORTFOLIO TURNOVER--Neither 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
both the Equity Portfolio and Small Cap Portfolio will not exceed 100%. 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.

-10-

<PAGE>

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.

YEAR 2000 RISKS--Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by the Investment Manager and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." The Investment Manager is taking steps to address the Year 2000
Problem with respect to the computer systems that it uses and to obtain
assurances that comparable steps are being taken by the Fund's other major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.

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

-11-

<PAGE>

Investment Management
Name of Portfolio Fee Payable
- --------------- --------------------
Equity Portfolio .75%
Small Cap 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

EQUITY PORTFOLIO--Herbert W. Gullquist and Michael S. Rome

SMALL CAP PORTFOLIO--Eileen Alexanderson, Herbert W. Gullquist, Bradley J.
Purcell, Michael S. Rome and Leonard M. Wilson

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.

HERBERT W. GULLQUIST. Mr. Gullquist is a Managing Director of the Investment
Manager and has been with the Investment Manager since 1982.

BRADLEY J. PURCELL. Mr. Purcell is a Vice President of the Investment Manager
and has been with the Investment Manager since 1991.

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

-12-

<PAGE>

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 either Portfolio's
investment policies or which securities are to be purchased or sold for either
Portfolio. Subject to the supervision of the Fund's Board of Directors, the
Custodian may enter into subcustodial arrangements on behalf of either of the
Portfolios for the holding of foreign securities.

PURCHASE OF SHARES

REDEMPTION OF SHARES

-13-

<PAGE>

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.

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.

DIVIDENDS AND
DISTRIBUTIONS

Each Portfolio declares and pays dividends from net investment income annually.

-14-

<PAGE>

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

ORGANIZATION AND
DESCRIPTION OF CAPITAL
STOCK

-15-

<PAGE>

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.

PERFORMANCE
INFORMATION

-16-

<PAGE>

information of a 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.

The Small Cap Portfolio and the Equity Portfolio only recently commenced
operations, on November 4, 1997 and March 19, 1998, respectively. However, 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 Institutional Shares of
the corresponding Lazard public funds for various periods ended December 31,
1997 is set forth on "Appendix B." SUCH PERFORMANCE INFORMATION SHOULD NOT BE
VIEWED AS A SUBSTITUTE FOR THE PORTFOLIOS' OWN PERFORMANCE NOR INDICATIVE OF THE
FUTURE PERFORMANCE OF THE PORTFOLIOS. For information regarding the Small Cap
Portfolio's own performance, see "Financial Highlights" above and the Fund's
annual report for the fiscal year ended December 31, 1997, which may be obtained
without charge by writing to the address or calling the appropriate number set
forth on the cover page of this Prospectus.

-17-

<PAGE>

APPENDIX A

INVESTMENT TECHNIQUES

FOREIGN CURRENCY TRANSACTIONS--(Equity Portfolio) Foreign currency transactions
may be entered into for 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.

-18-

<PAGE>

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.

LENDING PORTFOLIO SECURITIES--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.

-19-

<PAGE>

CERTAIN PORTFOLIO SECURITIES

MONEY MARKET INSTRUMENTS--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

-20-

<PAGE>

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. 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.

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 purchased by the Portfolio will consist only of direct
obligations which, at the time of their purchase, are (a) rated not

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<PAGE>

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.

ILLIQUID SECURITIES--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 and repurchase agreements providing for settlement in
more than seven days after notice. 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--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. See "Appendix" in the
Statement of Additional Information for a general description of securities
ratings.

-22-

<PAGE>

APPENDIX B

Set forth below is total return and average annual total return information for
the Institutional Shares of 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 Institutional Shares of 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. Moreover, the Equity
Portfolio is a non-diversified fund, while Lazard Equity Portfolio is a
diversified fund. See "Description of the Portfolios--Investment Considerations
and Risks--Non-Diversified Portfolios."

-23-

<PAGE>

The total return and average annual total return for the Institutional Shares of
the corresponding Lazard public funds and securities indices for the indicated
periods ended December 31, 1997 were:
<TABLE>
<CAPTION>

TOTAL RETURN AVERAGE ANNUAL TOTAL RETURN
NAME OF PUBLIC FUND AND INDEX PERIOD ENDED DECEMBER 31, 1997 PERIOD ENDED DECEMBER 31, 1997
-------------------------------------------- --------------------------------------
ONE THREE FIVE TEN SINCE ONE THREE FIVE TEN SINCE
YEAR YEARS YEARS YEARS INCEPTION* YEAR YEARS YEARS YEARS INCEPTION*
--------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 25.13% 106.59% 155.41% 386.45% 329.57% 25.13% 27.36% 20.63% 17.14% 14.75%
Standard & Poor's 500 Index** 33.36% 125.60% 151.63% 425.67% 356.05% 33.36% 31.15% 20.27% 18.05% 15.42%

Lazard Small Cap Portfolio 28.06% 92.86% 156.00% -- 233.85% 28.06% 24.47% 20.68% -- 21.57%
Russell 2000 Stock Index** 22.36% 83.06% 113.73% -- 160.74% 22.36% 22.33% 16.41% -- 16.80%

</TABLE>

- ----------
*Inception dates are: Lazard Equity Portfolio--June 1, 1987; and Lazard Small
Cap Portfolio--October 31, 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 average market capitalization of approximately
$467 million as of December 31, 1997.

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.

-24-

<PAGE>

LAZARD RETIREMENT SERIES, INC.

30 Rockefeller Plaza

New York, New York 10020
(800) 823-6300

STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1998

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 1, 1998,
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 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

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.

1
<PAGE>

- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------

Investment Objectives and Management Policies..................................3
Investment Restrictions.......................................................13
Management....................................................................15
Determination of Net Asset Value..............................................19
Portfolio Transactions........................................................20
Redemption of Shares..........................................................22
Distribution and Servicing Plan...............................................22
Dividends and Distributions...................................................23
Taxation .....................................................................24
Performance Information.......................................................26
Organization and Description of Capital Stock.................................28
Counsel and Independent Auditors..............................................29
Appendix .....................................................................30

2
<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.

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<PAGE>

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

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<PAGE>

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

5
<PAGE>

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

6
<PAGE>

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.

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<PAGE>

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

8
<PAGE>

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

9
<PAGE>

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.

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<PAGE>

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

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<PAGE>

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 IBCA, Inc. ("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.

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<PAGE>

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

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<PAGE>

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 1 8(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.

14
<PAGE>

* * *

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.

Name, Address and Age Position with Registrant Principal Occupation During Past 5 Years
--------------------- ------------------------ ----------------------------------------
<S> <C> <C>
Norman Eig* (57) Chairman of the Board Managing Director (formerly General Partner),
Lazard Freres.

Herbert W. Gullquist* (60) President, Director Managing Director (formerly General Partner),
Lazard Freres.

John J. Burke (69) Director Vice Chairman, Director, Montana Power Company.
50 Burning Tree Lane
Butte, MT 59701

Kenneth S. Davidson (53) Director Managing Partner, Davidson Weil Associates;
767 Fifth Avenue, 43rd Floor Davidson Weil Associates Director, Blackthorn Fund
Railroad. N.V. and Ottertail Valley
New York, NY 10153

Carl Frischling* (61) Director Senior Partner, Kramer, Levin, Naftalis Nessen,
170 East 83rd Street Kamin & Frankel; from 1992 to 1994, Senior
New York, NY 10028 Partner, Reid & Priest; from 1979 to 1992, Senior
Partner, Spengler Carlson Grubar Brodsky &
Frischling.

Lester Z. Lieberman (67) Director Private Investor; Member of the Board of Directors
25 Vreeland Road of Dowel Associates, Chairman of

</TABLE>

15
<PAGE>

Name, Address and Age Position with Registrant Principal Occupation During Past 5 Years
--------------------- ------------------------ ----------------------------------------
<S> <C> <C>
Florham Park, NJ 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. (54) Director Managing Partner, Cumberland Associates, an
1114 Avenue of the Americas investment manager.
New York, NY 10036

John Rutledge (49) Director President, Rutledge & Company, an economics and
One Greenwich Office Park investment advisory firm; Chairman, Claremont
51 Weaver Street Economics Institute.
Greenwich, CT 06831

William Katz (44) Director President and Chief Operating Officer of BBDO, an
1285 Avenue of the Americas advertising agency; from May 1994 to February New
York, NY 10019 1996, General Manager of BBDO; prior thereto,
Executive Vice President and Senior Account
Director of BBDO.

William G. Butterly, III (37) Vice President, Secretary Senior Vice President, Legal Affairs of the
30 Rockefeller Plaza Investment Manager; prior to May 1993, attorney
New York, NY 10020 with Shearman & Sterling

Gus Coutsouros (35) Treasurer Certified Public Accountant, Vice President and
30 Rockefeller Plaza Assistant Controller of the Investment Manager;
New York, NY 10020 prior to June 1992, Manager, National Securities
and Research Corp.
</TABLE>

- -----------------

* An "interested person" of the Fund as defined in the 1940 Act.

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 aggregate
amount of compensation paid to each Director by the Fund and by The Lazard
Funds, Inc. for which such person also is a Director for the year ended December
31, 1997, was as follows:

16
<PAGE>

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 $0 $24,000
Lester Z. Lieberman $0 $24,000
Richard Reiss, Jr. $0 $23,000
John Rutledge $0 $22,000
Kenneth S. Davidson $0 $24,000
Carl Frischling $0 $24,000
William Katz $0 $11,333

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,
Lazard Asset Management 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.

Lazard Asset Management 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. Lazard Asset Management provides investment
management services to client discretionary accounts with assets as of December
31, 1997 totaling approximately $53 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

17
<PAGE>

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 Portfolio -- .75%
International Fixed-Income Portfolio -- .75%
Emerging Markets Portfolio - 1.00%
International Small Cap Portfolio -- .75%
Equity Portfolio -- .75%
Small Cap Portfolio -- .75%
Global Equity Portfolio -- .75%
Strategic Yield Portfolio -- .75%
International Equity Portfolio -- .75%

The Investment Manager has undertaken to bear with respect to the Emerging
Markets Portfolio and the Small Cap Portfolio total operating expenses in excess
of 1.80% and 1.50%, respectively, of such Portfolio's average net assets.
Pursuant to the terms of the Management Agreement and these arrangements, no
fees were paid by the Emerging Markets Portfolio and the Small Cap Portfolio to
the Investment Manager for the fiscal year ended December 31, 1997.

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 last

18
<PAGE>

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

19
<PAGE>

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

20
<PAGE>

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

21
<PAGE>

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.

Brokerage Commissions

In connection with their portfolio securities transactions for the fiscal
year ended December 31, 1997, the Emerging Markets Portfolio and the Small Cap
Portfolio paid brokerage commissions of $4,048 and $716, respectively.

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

22
<PAGE>

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 DISTRIBUTIONSDividends and Distributions

23
<PAGE>

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

24
<PAGE>

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.

25
<PAGE>

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

26
<PAGE>

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

The Small Cap Portfolio and Emerging Markets Portfolio are the only
Portfolios that have completed their first fiscal year and, therefore,
performance data are provided only for such Portfolios.

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 Portfolios 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 l is subtracted. The current yield is then arrived at by multiplying the
result by 2.

The average annual total return for the Small Cap Portfolio and Emerging
Markets Portfolio for the .159 year period ended December 31, 1997 was (1.44%)
and (4.71%),

27
<PAGE>

respectively. 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. With
respect to the Small Cap Portfolio and Emerging Markets Portfolio, the total
return for the period November 4, 1997 (commencement of operations) through
December 31, 1997 was (1.44%) and (4.71%), respectively.

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.

As of April 27, 1998, the following shareholders owned beneficially or of
record 5% or more of the indicated Portfolio's outstanding shares:

Percentage of Total
Name and Address Shares Outstanding
---------------- ------------------

EQUITY PORTFOLIO

Lazard Freres & Co 97.84%
ATTN: Michael R. August
30 Rockefeller Plaza, 57th Floor
New York, NY 10112-0002

28
<PAGE>

SMALL CAP PORTFOLIO

Lazard Freres & Co 71.42%
30 Rockefeller Plaza, 57th Floor
New York, NY 10112-0002

Lazard Freres & Co 14.28%
ATTN: Michael R. August
30 Rockefeller Plaza, 57th Floor
New York, NY 10112-0002

American National Insurance Co.
One Moody Plaza 14th Floor 8.86%
Galveston, TX 77550-7948

Great American Reserve Insurance 5.44%
11825 N. Pennsylvania St.
Carmel, IN 46032-4555

29
<PAGE>

EMERGING MARKETS PORTFOLIO

Lazard Freres & Co 98.28%
30 Rockefeller Plaza 57th Floor
New York, NY 10112-0002

A shareholder who beneficially owns, directly or indirectly, more than 25%
of the Fund's voting securities may be deemed a "control person" (as defined in
the 1940 Act) of the Fund.

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 matters, 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.

Anchin, Block & Anchin, LLP, has been selected as the independent auditors
for the Fund.

30
<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.

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.

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.

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.

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

31
<PAGE>

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.

The rating CC is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC rating.

The rating C is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC- rating.

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.

32
<PAGE>

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.

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.

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.

33
<PAGE>

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.

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.

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.

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

34
<PAGE>

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.

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-l+.

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

35
<PAGE>

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.

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.

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 (-) 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

36
<PAGE>

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.

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.

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.

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.

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.

37
<PAGE>

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 (-) 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.

38
<PAGE>

LAZARD RETIREMENT SERIES, INC.

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements

Financial Highlights for the periods ended December 31, 1997
are included in Part A of the Registration Statement. All other
required financial statements and report of independent auditors
are incorporated into Part B of the Registration Statement by
reference to Registrant's Annual Report on Form N-30D for the
fiscal year ended December 31, 1997.

(b) Exhibits:

(1)(a) Articles of Incorporation1

(1)(b) Articles of Amendment1

(2) By-Laws, as amended1

(5) Investment Management Agreement1

(6) Distribution Agreement1

(8) Custody Agreement1

(9)(a) Administration Agreement1

(9)(b) Form of Fund Participation Agreement1

(10) Opinion, including consent, of Stroock & Stroock &
Lavan LLP1

(11) Consent of Independent Auditors

(15) Distribution and Servicing Plan1

(16) Computations of Performance Information1

(17) Financial Data Schedules2

______________________

1. Incorporated by reference from Registrant's Pre-Effective Amendment
No. 1 filed with the Securities and Exchange Commission on May 19, 1997.

2. Incorporated by reference to Registrant's Annual Report on Form N-SAR
filed on or about February 27, 1998.

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
As of March 31, 1998

Common Stock Interests
par value $.001 per share

Lazard Retirement Bantam 1
Value Portfolio

Lazard Retirement Emerging 5
Markets Portfolio

Lazard Retirement Equity 4
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 6
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 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 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.

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 Director
Corp.
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, Philippe 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.

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 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.

(2) 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 certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and 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 1st day of May, 1998.

LAZARD RETIREMENT SERIES, INC.
(Registrant)

By: /S/HERBERT W. GULLQUIST*
Herbert W. Gullquist, President

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 1, 1998
Herbert W. Gullquist Executive, Financial
and Accounting Officer)
and Director

/S/ Norman Eig* Director May 1, 1998
Norman Eig

/s/ John J. Burke* Director May 1, 1998
John J. Burke

/s/ Lester Z. Lieberman* Director May 1, 1998
Lester Z. Lieberman

/s/ Richard Reiss, Jr.* Director May 1, 1998
Richard Reiss, Jr.

/s/ John Rutledge* Director May 1, 1998
John Rutledge

/s/ Kenneth S. Davidson* Director May 1, 1998
Kenneth S. Davidson

/s/ Carl Frischling* Director May 1, 1998
Carl Frischling

/s/ William Katz* Director May 1, 1998
William Katz

*By:/s/William G. Butterly, III
---------------------------
Attorney-in-fact, William G. Butterly, III

<PAGE>
LAZARD RETIREMENT SERIES, INC.

Post-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

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. Post-Effective Amendment No.
1 to Registration Statement on Form N-1A of our report dated January 31, 1998,
relating to the financial statements and selected per share data and ratios of
Lazard Retirement Series, Inc. which appears in such Statement of Additional
Information. We also consent to the incorporation by reference of our report in
the Prospectus constituting part of such Post-Effective Amendment No. 1 and to
the reference to us under the heading "Financial Highlights" in the Prospectus.

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

May 1, 1998
[/R]