LAZARD RETIREMENT SERIES
================================================================================
-------------------
PROSPECTUS
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May 1, 1999
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Lazard Retirement International Equity Portfolio
Lazard Retirement Emerging Markets Portfolio
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30 Rockefeller Plaza
New York, New York 10112
(800) 823-6300
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THE SHARES DESCRIBED IN THIS PROSPECTUS OR
DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.
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TABLE OF CONTENTS
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CAREFULLY REVIEW THIS IMPORTANT SECTION, WHICH SUMMARIZES EACH PORTFOLIO'S
INVESTMENTS, RISKS
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RISK/RETURN SUMMARY
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5 LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
6 LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
REVIEW THIS SECTION FOR INFORMATION ON INVESTMENT STRATEGIES AND THEIR RISKS.
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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
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8 LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
10 LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
REVIEW THIS SECTION FOR DETAILS ON THE PEOPLE AND ORGANIZATIONS WHO OVERSEE THE
PORTFOLIOS.
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FUND MANAGEMENT
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12 INVESTMENT MANAGER
12 PRINCIPAL PORTFOLIO MANAGERS
12 ADMINISTRATOR
13 DISTRIBUTOR
13 CUSTODIAN
REVIEW THIS SECTION FOR DETAILS ON HOW SHARES ARE VALUED, HOW TO PURCHASE AND
SELL SHARES, RELATED CHARGES AND PAYMENTS OF DIVIDENDS AND DISTRIBUTIONS
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ACCOUNT POLICIES
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14 BUYING SHARES
14 DISTRIBUTION AND SERVICE (12B-1) FEES
14 SELLING SHARES
15 DIVIDENDS, DISTRIBUTIONS AND TAXES
2
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REVIEW THIS SECTION FOR RECENT FINANCIAL INFORMATION.
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16 FINANCIAL HIGHLIGHTS
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WHERE TO READ ABOUT THE PERFORMANCE OF SIMILARLY MANAGED FUNDS.
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18 PERFORMANCE INFORMATION OF PUBLICLY OFFERED
FUNDS--NOT THE PORTFOLIOS
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WHERE TO LEARN MORE ABOUT THE PORTFOLIOS.
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BACK COVER
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LAZARD ASSET MANAGEMENT, A DIVISION OF LAZARD FRE'RES & CO. LLC ("LAZARD
FRE'RES"), SERVES AS EACH PORTFOLIO'S INVESTMENT MANAGER.
- -------------------------------------------------------------------------
The portfolios (each, a "Portfolio") of Lazard Retirement Series, Inc. (the
"Fund") are intended to be funding vehicles for variable annuity contracts ("VA
contracts") and variable life insurance policies ("VLI policies" and, together
with VA contracts, "Policies") offered by the separate accounts of Participating
Insurance Companies. Individuals may not purchase shares directly from the Fund.
The Policies are described in the separate prospectuses issued by the
Participating Insurance Companies over which the Fund assumes no responsibility.
Pursuant to a separate prospectus, Portfolio shares also are offered to
qualified pension and retirement plans and accounts permitting accumulation of
assets on a tax-deferred basis ("Eligible Plans"). Differences in tax treatment
or other considerations may cause the interests of Policy owners and Eligible
Plan participants investing in a Portfolio to conflict. The Fund's Board will
monitor each Portfolio for any material conflicts and determine what action, if
any, should be taken. The investment objective and policies of a Portfolio may
be similar to other funds/portfolios managed or advised by Lazard Asset
Management. However, the investment results of the Portfolio may be higher or
lower than, and there is no guarantee that the investment results of the
Portfolio will be comparable to, any other Lazard fund/portfolio.
3
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THE PORTFOLIOS
The Fund consists of nine separate Portfolios, only two of which, Retirement
International Equity Portfolio and Retirement Emerging Markets Portfolio, are
being offered through this Prospectus. Each Portfolio has its own investment
objective, strategies and risk/return profile and invests in different
securities, depending on its investment objective. Each Portfolio can be
expected to have a different degree of risk and yield or return. Because you
could lose money by investing in a Portfolio, be sure to read all risk
disclosures carefully before investing.
You should be aware that the Portfolios:
o Are not bank deposits
o Are not guaranteed, endorsed or insured by any bank, financial institution or
government entity, such as the Federal Deposit Insurance Corporation
o Are not guaranteed to achieve their stated goals
INFORMATION ON EACH PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMI-ANNUAL REPORT (SEE BACK COVER).
The Portfolios offered in this Prospectus will invest primarily in equity
securities, including common stocks, preferred stocks and convertible securities
of both U.S. and non-U.S. issuers. The Investment Manager seeks to identify
undervalued securities based on earnings, cash flow and asset values. The
Investment Manager focuses on individual stock selection rather than on general
stock market trends.
Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolios' performance may sometimes be
higher or lower than that of other types of funds (such as those emphasizing
growth stocks).
4
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RISK/RETURN SUMMARY
===============================================================================
LAZARD RETIREMENT
INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The Portfolio invests primarily in equity securities, principally common stocks,
of relatively large, non-U.S. companies (those whose total market value is more
than $1 billion) that the Investment Manager believes are undervalued based on
their earnings, cash flow or asset values.
In choosing stocks for the Portfolio, the Investment Manager looks for
established companies in economically developed countries. The percentage of the
Portfolio's assets invested in particular geographic sectors may shift from time
to time based on the Investment Manager's judgment. Ordinarily, the Portfolio
invests in at least three different foreign countries.
PRINCIPAL INVESTMENT RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The Portfolio's performance will be influenced by
political, social and economic factors affecting non-U.S. companies. These risks
include changes in currency exchange rates, a lack of adequate company
information, political instability and differing auditing and legal standards.
The value of your investment in the Portfolio will go up and down, which means
that you could lose money.
Value stocks involve the risk that they may never reach what the Investment
Manager believes is their full market value. They also may decline in price,
even though in theory they are already underpriced.
The Portfolio is non-diversified and may invest a greater percentage of its
assets in a particular company compared with other funds. Accordingly, the
Portfolio's securities may be more sensitive to changes in the market value of a
single company or industry.
PERFORMANCE BAR CHART AND TABLE
-------------------------------
As of the date of this prospectus, the Portfolio had not completed a year of
operations. Accordingly, no performance information is provided.
5
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- --------------------------
LAZARD RETIREMENT
EMERGING MARKETS PORTFOLIO
- --------------------------
INVESTMENT OBJECTIVE
The Portfolio seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The Portfolio invests primarily in equity securities, principally common stocks,
of non-U.S. companies whose principal activities are in emerging market
countries that the Investment Manager believes are undervalued based on their
earnings, cash flow or asset values.
Emerging market countries include all countries represented by the Morgan
Stanley Capital International Emerging Markets (Free) Index, which currently
includes: Argentina, Brazil, Chile, China, Colombia, the Czech Republic, Egypt,
Greece, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico,
Morocco, Pakistan, Peru, Philippines, Poland, Russia, Sri Lanka, South Africa,
Taiwan, Thailand, Turkey and Venezuela.
PRINCIPAL INVESTMENT RISKS
The securities markets of emerging market countries can be extremely volatile.
The Portfolio's performance will be influenced by political, social and economic
factors affecting companies in emerging market countries. These risks include
changes in currency exchange rates, a lack of adequate company information,
political instability, and differing auditing and legal standards. In addition,
emerging market countries generally have economic structures that are less
diverse and mature and political systems that are less stable, than those of
developed countries. The value of your investment in the Portfolio will go up
and down, which means that you could lose money.
Value stocks involve the risk that they may never reach what the Investment
Manager believes is their full market value. They also may decline in price,
even though in theory they are already underpriced.
The Portfolio is non-diversified and may invest a greater percentage of its
assets in a particular company compared with other funds. Accordingly, the
Portfolio's securities may be more sensitive to changes in the market value of a
single company or industry.
6
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The accompanying bar chart and table provide some indication of the risks of
investing in the Lazard Retirement Emerging Markets Portfolio by showing the
Portfolio's annual returns and its long-term performance. The bar chart shows
the performance of the Portfolio's shares for its first full calendar year of
operations. The table compares the performance of the Portfolio's shares over
time to that of the Morgan Stanley Capital International (MSCI) Emerging Markets
(Free) Index and the International Finance Corp. (IFC) Investable Total Return
Index, an index of emerging markets securities that represent 65% of market
capital compiled by the International Finance Corporation. Both the bar chart
and table assume reinvestment of dividends and distributions. Performance
information does not reflect the fees and charges imposed at the separate
account level and such charges will have the effect of reducing performance.
Past performance does not indicate how the Portfolio will perform in the future.
PERFORMANCE BAR CHART AND TABLE
-------------------------------
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31
1998
(22.85%)
[the above is the bar chart data]
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Best quarter: 12/31/98 11.78%
Worst quarter: 9/30/98 (22.58)%
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AVERAGE ANNUAL TOTAL RETURNS
(for the periods ending December 31, 1998)
Inception Date Past Year Since Inception
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PORTFOLIO 11/4/97 (22.85)% (23.31)%
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MSCI EMERGING MARKETS
(FREE) INDEX (25.34)% (26.32)%
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IFC Investable
TOTAL RETURN INDEX (22.02)% (21.69)%
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7
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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
===============================================================================
Ticker Symbol: N/A
INVESTMENT OBJECTIVE AND STRATEGIES
The International Equity Portfolio seeks long-term capital appreciation. The
Portfolio invests primarily in equity securities, principally common stocks, of
relatively large non-U.S. companies (those whose total market value is more than
$1 billion) that the Investment Manager believes are undervalued based on their
earnings, cash flow or asset values.
The Portfolio generally invests at least 80% of its total assets in equity
securities of companies located in at least three different non-U.S. countries.
The allocation of the Portfolio's assets among geographic sectors may shift from
time to time based on the Investment Manager's judgment and its analysis of
market conditions. However, the Investment Manager currently intends to invest
the Portfolio's assets primarily in companies based in developed markets.
The Portfolio may invest up to 20% of its total assets in investment grade
fixed-income securities and short-term money market instruments. The Portfolio
may engage, to a limited extent, in various investment techniques, such as
options and futures transactions, foreign currency transactions and lending
portfolio securities.
The Portfolio typically sells a stock when it is no longer considered a value
company, appears less likely to benefit from the current market and economic
environment, shows deteriorating fundamentals or falls short of the Investment
Manager's expectations.
RISK FACTORS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. The value of your investment in the Portfolio will
go up and down, which means that you could lose money.
The Portfolio's performance will be influenced by political, social and economic
factors affecting companies around the world. These risks include changes in
currency exchanges rates, a lack of adequate company information, political
instability, and differing auditing and legal standards.
Value stocks involve the risk that they may never reach what the Investment
Manager believes is their full market value. They also may decline in price,
even though in theory they are already underpriced.
Under adverse market conditions, the Portfolio could invest some or all of its
assets in money market securities. The Portfolio would do this only in seeking
to avoid losses, but this could reduce the benefit from any upswing in the
market and may result in the Portfolio not achieving its investment objective.
8
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While the Portfolio may engage in options and futures transactions primarily to
hedge its portfolio, it may also use these transactions to increase returns;
however, there is the risk that these transactions sometimes may reduce returns
or increase volatility. In addition, derivatives, such as options and futures,
can be illiquid and highly sensitive to changes in their underlying security,
interest rate or index and, as a result, can be highly volatile. As such, a
small investment in certain derivatives could have a potentially large impact on
the Portfolio's performance.
The Portfolio is non-diversified and may invest a greater percentage of its
assets in a particular company compared with other funds. Accordingly, the
Portfolio's securities may be more sensitive to changes in the market value of a
single company or industry.
9
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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
================================================================================
Ticker Symbol: N/A
INVESTMENT OBJECTIVE AND STRATEGIES
The Emerging Markets Portfolio seeks long-term capital appreciation. The
Portfolio invests primarily in equity securities, principally common stocks, of
non-U.S. companies whose principal business activities are located in emerging
market countries that the Investment Manager believes are undervalued based on
their earnings, cash flow or asset values. Emerging market countries include all
countries represented by the Morgan Stanley Capital International Emerging
Markets (Free) Index, which currently includes: Argentina, Brazil, Chile, China,
Colombia, the Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Israel,
Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland,
Russia, Sri Lanka, South Africa, Taiwan, Thailand, Turkey and Venezuela.
The Portfolio generally invests at least 65% of its total assets in equity
securities, including American and Global Depositary Receipts, of companies
whose principal business activities are located in emerging market countries.
The Portfolio invests at least 65% of its total assets in equity securities of
companies in at least three different non-U.S. countries. The allocation of the
Portfolio's assets among emerging market countries may shift from time to time
based on the Investment Manager's judgment and its analysis of market
conditions. However, the Portfolio is likely to focus on companies in Latin
America, the Pacific Basin and Europe.
The Portfolio may invest in closed-end investment companies that invest in
emerging market securities. When the Investment Manager believes it is
warranted, the Portfolio may invest, without limitation, in high quality
fixed-income securities or the equity securities of U.S. companies.
The Portfolio may engage, to a limited extent, in various investment techniques,
such as options and futures transactions, foreign currency transactions and
lending portfolio securities.
RISK FACTORS
The securities markets of emerging market countries can be extremely volatile.
The value of your investment in the Portfolio will go up and down, which means
that you could lose money.
The Portfolio's performance will be influenced by political, social and economic
factors affecting companies in emerging market countries. These risks include
changes in currency exchange rates, a lack of adequate company information,
political instability, and differing auditing and legal standards. In addition,
emerging market countries generally have economic structures that are less
diverse and mature, and political systems that are less stable, than those of
developed countries. Emerging markets may be more volatile than the markets of
more mature economies; however, such markets may provide higher rates of return
to investors.
10
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Under adverse market conditions, the Portfolio could invest some or all of its
assets in money market securities. The Portfolio would do this only in seeking
to avoid losses, but this could reduce the benefit from any upswing in the
market and may result in the Portfolio not achieving its investment objective.
While the Portfolio may engage in options and futures transactions primarily to
hedge its portfolio, it may also use these transactions to increase returns;
however, there is the risk that these transactions sometimes may reduce returns
or increase volatility. In addition, derivatives, such as options and futures,
can be illiquid and highly sensitive to changes in their underlying security,
interest rate or index and, as a result, can be highly volatile. As such, a
small investment in certain derivatives could have a potentially large impact on
the Portfolio's performance.
The Portfolio is non-diversified and may invest a greater percentage of its
assets in a particular company compared with other funds. Accordingly, the
Portfolio's securities may be more sensitive to changes in the market value of a
single company or industry.
11
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FUND MANAGEMENT
INVESTMENT MANAGER
Lazard Asset Management, 30 Rockefeller Plaza, New York, New York 10112, serves
as the Investment Manager of the Portfolios. 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 client discretionary accounts with assets
totaling approximately $64 billion as of March 31, 1999. 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. The investment management fees are accrued daily
and paid monthly. For the fiscal year ended December 31, 1998, the Investment
Manager waived all of its management fees with respect to those Portfolios
indicated below.
Effective Annual Rate of
Investment Management Investment Management
Name of Portfolio Fee Payable Fee Paid After Waiver
- --------------- -------------------- ---------------------
International Equity Portfolio .75% 0%
Emerging Markets Portfolio 1.00% 0%
PRINCIPAL PORTFOLIO MANAGERS
All of the Portfolios are managed on a team basis. The names of the principal
persons who are primarily responsible for the day-to-day management of the
assets of each of the Portfolios are as follows:
INTERNATIONAL EQUITY PORTFOLIO--Herbert W. Gullquist and John R. Reinsberg
(each since inception)
EMERGING MARKETS PORTFOLIO--Herbert W. Gullquist and John R. Reinsberg (each
since inception)
HERBERT W. GULLQUIST. Mr. Gullquist has been Vice Chairman of the Investment
Manager since 1997 and a Managing Director and Chief Investment Officer of the
Investment Manager since 1982. He joined the Investment Manager in November,
1982.
JOHN R. REINSBERG. Mr. Reinsberg is a Managing Director of the Investment
Manager. He joined the Investment Manager in January, 1992.
ADMINISTRATOR
State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as each Portfolio's administrator.
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DISTRIBUTOR
Lazard Freres acts as distributor for the Portfolios.
CUSTODIAN
State Street acts as custodian of the Portfolio's investments. State Street may
enter into subcustodial arrangements on behalf of the Portfolios for the holding
of foreign securities.
YEAR 2000 ISSUES
Each Portfolio 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 from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on the
Portfolios, the Investment Manager is working to avoid such problems and to
obtain assurances from service providers that they are taking similar steps.
While the Portfolios cannot predict at this time the degree of impact, it is
possible that foreign markets will be less prepared than U.S. ones.
13
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ACCOUNT POLICIES
BUYING SHARES
Portfolio shares are offered only to separate accounts of Participating
Insurance Companies. INDIVIDUALS MAY NOT PURCHASE SHARES DIRECTLY FROM THE FUND.
Policy owners should consult the applicable prospectus of the separate account
of the Participating Insurance Company for more information about buying
Portfolio shares.
The price for Portfolio shares is the Portfolio's net asset value per share
(NAV), which is generally calculated as of the close of trading on the New York
Stock Exchange (normally 4:00 p.m. Eastern time) every day the exchange is open.
Purchase orders from separate accounts received in proper form by the
Participating Insurance Company on a given business day are priced at the NAV
calculated on such day, provided that the order and Federal Funds in the net
amount of such order is received by the Fund in proper form on the next business
day. The Participating Insurance Company is responsible for properly
transmitting purchase orders and Federal Funds.
Each Portfolio's investments are generally valued based on market value, or
where market quotations are not readily available, based on fair value as
determined in good faith by the Fund's board. Foreign securities held by a
Portfolio may trade on days when the Portfolio does not calculate its NAV and
thus affect the Portfolio's NAV on days when shareholders have no access to the
Portfolio.
DISTRIBUTION AND SERVICE (12B-1) FEES
The Fund has adopted a plan under rule 12b-1 that allows each Portfolio to pay
Lazard Freres a fee at the annual rate of .25% of the value of the Portfolio's
average daily net assets for the sale of its shares and for services provided to
shareholders. Because these fees are paid out of the Portfolio's assets on an
on-going basis, over time these fees will increase the cost of a shareholder's
investment and may cost shareholders more than paying other types of sales
charges.
SELLING SHARES
Portfolio shares may be sold at any time by the separate accounts of the
Participating Insurance Companies. INDIVIDUALS MAY NOT PLACE SELL ORDERS
DIRECTLY WITH THE FUND. Redemption orders from separate accounts received in
proper form by the Participating Insurance Company on a given business day are
priced at the NAV calculated on such day, provided that the order is received by
the Fund in proper form on the next business day. The Participating Insurance
Company is responsible for properly transmitting redemption orders. Policy
owners should consult the applicable prospectus of the separate account of the
Participating Insurance Company for more information about selling Portfolio
shares.
14
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DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio will declare and pay dividends from net investment income
annually but may declare and pay dividends twice annually.
Each Portfolio generally will distribute any net capital gains that it has
realized once per year but it may distribute these gains twice annually.
Distributions will be reinvested in the relevant Portfolio unless instructed
otherwise by the relevant Participating Insurance Company.
Portfolio dividends and distributions are taxable to most investors. Since each
Portfolio's shareholders are the Participating Insurance Companies and their
separate accounts, no discussion is included as to the Federal income tax
consequences to Policy owners. For this information, Policy owners should
consult the applicable prospectus of the separate account of the Participating
Insurance Company.
Participating Insurance Companies should consult their tax advisers about
federal, state and local tax consequences.
15
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FINANCIAL HIGHLIGHTS
The tables below describe each Portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single Portfolio
share. "Total return" shows how much your investment in a Portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. The information in the tables has been
independently audited by Anchin, Block & Anchin LLP, whose report, along with
the Portfolios' financial statements, is included in the Fund's annual report
which is available upon request. Keep in mind that fees and charges imposed by
Participating Insurance Companies, which are not reflected in the tables, would
reduce the investment returns that are shown.
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD:
PERIOD FROM
9/1/98* TO
12/31/98
----------
Net asset value, beginning of period ....................... $ 10.00
------
Income (loss) from investment operations:
Net investment income (loss) ............................. (0.04)
Net realized and unrealized gain (loss) .................. 1.27
------
Total from investment operations ........................... 1.23
------
Less distributions from and in excess of:
Net investment income .................................... --
Net realized gains ....................................... --
------
Total distributions ...................................... --
------
Net asset value, end of period ............................. $ 11.23
======
TOTAL RETURN (A) ........................................... 12.3%
RATIOS AND SUPPLEMENTAL DATA:
Net asset value, end of period (000s) ...................... $ 513
Ratios to average net assets:
Net expenses (b) ......................................... 1.60%
Gross expenses (b) ....................................... 48.67%
Net investment income (b) ................................ (0.58)%
Portfolio turnover rate .................................... 7%
SEE NOTES TO FINANCIAL HIGHLIGHTS.
16
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FINANCIAL HIGHLIGHTS (CONTINUED)
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
PERIOD FROM
YEAR ENDED 11/4/97* TO
12/31/98 12/31/97
---------- ----------
Net asset value, beginning of period ............... $ 9.49 $ 10.00
------ ------
Income (loss) from investment operations:
Net investment income (loss) ..................... 0.06 0.04
Net realized and unrealized gain (loss) .......... (2.23) (0.51)
------ ------
Total from investment operations ................... (2.17) (0.47)
------ ------
Less distributions from and in excess of:
Net investment income ............................ (0.06) (0.04)
Net realized gains ............................... -- --
------ ------
Total distributions .............................. (0.06) (0.04)
------ ------
Net asset value, end of period ..................... $ 7.26 $ 9.49
====== ======
TOTAL RETURN (A) ................................... (22.9)% (4.7)%
RATIOS AND SUPPLEMENTAL DATA:
Net asset value, end of period (000s) .............. $ 1,249 $ 1,429
Ratios to average net assets:
Net expenses (b) ................................. 1.80% 1.80%
Gross expenses (b) ............................... 14.37% 23.17%
Net investment income (b) ........................ 0.83% 1.96%
Portfolio turnover rate ............................ 44% 0%
Notes to Financial Highlights:
* Commencement of operations.
(a) Total Returns are historical and assume changes in share price,
reinvestments of all dividends and distributions, and no sales charge. Had
certain expenses not been reduced during the periods shown, total returns
would have been lower. Periods of less than one year are not annualized.
(b) Annualized for periods of less than one year.
17
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PERFORMANCE INFORMATION OF PUBLICLY OFFERED SERIES OF THE LAZARD FUNDS,
INC.--THIS IS NOT THE PORTFOLIOS' PERFORMANCE
===============================================================================
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 have the same investment objective and follow substantially the same
investment policies and strategies as the corresponding Portfolios offered in
this Prospectus, and for appropriate securities indices. This is not performance
data for the Portfolios and 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.
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, 1998, as calculated pursuant to SEC guidelines, were:
<TABLE>
<CAPTION>
TOTAL RETURN AVERAGE ANNUAL TOTAL RETURN
NAME OF PUBLIC FUND AND INDEX PERIOD ENDED DECEMBER 31, 1998 PERIOD ENDED DECEMBER 31, 1998 TOTAL ANNUAL
- ----------------------------- --------------------------------------- -------------------------------- OPERATING
ONE THREE FIVE SINCE ONE THREE FIVE SINCE EXPENSES
YEAR YEARS YEARS INCEPTION* YEAR YEARS YEARS INCEPTION* 12/31/98
--------------------------------------- --------------------------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lazard International Equity Portfolio 16.04% 50.09% 70.21% 114.93% 16.04% 14.49% 11.22% 11.26% 0.90%
MSCI EAFE Index** 20.00% 29.52% 55.24% 81.20% 20.00% 9.00% 9.19% 8.65% --
Lazard Emerging Markets Portfolio (23.49%) (14.72%) -- (20.86%) (23.49%) (5.17%) -- (5.10%) 1.28%***
MSCI Emerging Markets Free Index** (25.34%) (30.01%) -- (33.60%) (25.34%) (11.22%) -- (8.70%) --
IFC Investable Total Return Index** (22.02%) (27.28%) -- (33.87%) (22.02%) (10.07%) -- (8.85%) --
</TABLE>
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* Inception dates for Institutional Shares are: Lazard International Equity
Portfolio--October 29, 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 Morgan Stanley Capital International, Europe, Australasia 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 MSCI Emerging Markets Free Index is comprised
of emerging market securities in countries open to non-local investors that
are compiled by Morgan Stanley Capital International. 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.
Effective January 1, 1998, Lazard Emerging Markets Portfolio changed its
comparative index to the MSCI Emerging Markets Free Index from the IFC
Investable Total Return Index. The Investment Manager feels that this index
provides a more accurate comparison given the Portfolio's investment
objective.
***Reflects a partial waiver of fees. Without such waiver, the Total Annual
Operating Expenses would have been higher and the total returns and average
annual total returns would have been lower.
18
<PAGE>
For more information about the Portfolios, the following documents are available
free upon request:
ANNUAL/SEMIANNUAL REPORTS (REPORTS):
The Fund's annual and semi-annual reports to shareholders contain additional
information on each Portfolio's investments. In the annual report, you will find
a broad discussion of the market conditions and investment strategies that
significantly affected each Portfolio's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Portfolios, including their
operations and investment policies. It is incorporated by reference and is
legally considered a part of this prospectus.
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YOU CAN GET FREE COPIES OF REPORTS AND THE SAI, OR REQUEST OTHER INFORMATION AND
DISCUSS YOUR QUESTIONS ABOUT THE PORTFOLIOS BY CONTACTING THE FUND AT:
LAZARD RETIREMENT SERIES, INC.
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10112
TELEPHONE: 1-800-823-6300
HTTP://WWW.LAZARDFUNDS.COM
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You can review the Fund's Reports and the SAI at the Public Reference Room of
the Securities and Exchange Commission. You can get text-only copies:
o For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009 or calling 1-800-SEC-0330.
o Free from the Commission's Website at http://www.sec.gov.
Investment Company Act file no. 811-8071
