LAZARD
RETIREMENT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
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LAZARD RETIREMENT SERIES, INC.
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<S> <C>
BOARD OF DIRECTORS
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JOHN J. BURKE RETIRED; FORMER VICE CHAIRMAN AND DIRECTOR,
MONTANA POWER COMPANY
KENNETH S. DAVIDSON MANAGING PARTNER, DAVIDSON CAPITAL MANAGEMENT CORPORATION
NORMAN EIG VICE CHAIRMAN AND MANAGING DIRECTOR, LAZARD FRERES & CO. LLC
CARL FRISCHLING SENIOR PARTNER, KRAMER, LEVIN, NAFTALIS & FRANKEL
HERBERT W. GULLQUIST VICE CHAIRMAN AND MANAGING DIRECTOR, LAZARD FRERES & CO. LLC;
CHIEF INVESTMENT OFFICER, LAZARD ASSET MANAGEMENT
WILLIAM KATZ PRESIDENT AND CHIEF OPERATING OFFICER, BBDO NEW YORK
LESTER Z. LIEBERMAN PRIVATE INVESTOR
RICHARD REISS, JR. MANAGING PARTNER, GEORGICA ADVISERS LLC
JOHN RUTLEDGE PRESIDENT, RUTLEDGE AND COMPANY
OFFICERS
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NORMAN EIG CHAIRMAN OF THE BOARD
HERBERT W. GULLQUIST PRESIDENT
WILLIAM G. BUTTERLY, III VICE PRESIDENT AND SECRETARY
JAMES GIALLANZA TREASURER
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LAZARD RETIREMENT SERIES, INC.
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TABLE OF CONTENTS
Overview ................................................... 2
Growth Charts .............................................. 3
Performance Table .......................................... 5
Portfolio of Investments
Lazard Retirement Equity Portfolio ....................... 6
Lazard Retirement Small Cap Portfolio .................... 7
Lazard Retirement International Equity Portfolio ......... 9
Lazard Retirement Emerging Markets Portfolio ............. 11
Notes to Portfolios of Investments ....................... 13
Statements of
Assets and Liabilities ................................... 15
Operations ............................................... 16
Changes in Net Assets .................................... 17
Financial Highlights ....................................... 21
Notes to Financial Highlights .............................. 23
Notes to Financial Statements .............................. 24
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LAZARD RETIREMENT SERIES, INC.
OVERVIEW
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The bull market that swept through during the second quarter was anything but
routine. While the market continued its climb and major indices rose
dramatically, a huge reversal took place. After many years of growth
outperformance, the beginning of the second quarter saw small caps, cyclicals,
and value stocks begin to rally, and mega-cap growth stocks take a beating. This
resulted in an almost revolutionary broadening of the market. With very few
exceptions, stock prices moved higher across industry sectors, market
capitalizations, and regions. The broadening brought dramatic reversals: for
example, small cap stocks, which had fallen steeply during the first quarter,
advanced a stunning 15.5% during the second quarter. As well, industrial
manufacturing and telecommunications companies also experienced sharp
turnarounds as investors sought out companies likely to benefit from the strong
economy.
This broadened equity rally was ill-received by the bond market, however, which
correctly anticipated the Federal Reserve Bank's increase of its key target
rate, causing a sharp rise in interest rates. Nevertheless, the depth and extent
of the equity markets' rally was by far the more significant event of the last
six months. The strength of global stock markets during the spring boiled down
to two fundamental issues: valuations and earnings. As investors continued their
migration into the mega-cap stocks in the first quarter, the valuation disparity
between this increasingly narrow group of companies and almost all other sectors
became impossible to ignore. The inevitable reversal was most obvious in
technology, where the "cheaper" stocks from that sector dominated, and
better-than-expected profits added to performance at IBM and Hewlett-Packard.
While rising interest rates in the U.S. caused price/earnings ratios to compress
in industries such as pharmaceuticals, industrial companies benefited, as higher
rates are coincident with stronger growth and generally improved commodity
pricing. At the same time, energy stocks continued to outperform the broad
market aided by another wave of consolidation, which included BP Amoco's bid for
ARCO. Industry consolidation and global merger and acquisition activity
continued at full speed, with the notable participation of telecommunications
and financial services companies, while corporate restructuring was highlighted
by the mega-restructuring at both Procter & Gamble and at Hewlett-Packard.
Those invested internationally were also rewarded during the spring, as Asia
rebounded strongly and most markets in Europe began to move back up. Moreover,
European hostile bids were met with an unusually low level of resistance amidst
the region's already busy M&A field. The changing attitude toward such
aggressive maneuvers presented even more opportunities for the value investor,
and the portfolios' European returns outperformed significantly.
Amid Medicare concerns and issues raised by upcoming elections, health care
stocks were one of the few equity disappointments. Still, with careful
selection, value remains to be found in this very profitable sector.
As previously mentioned, the bond market fared poorly amidst the rising interest
rate environment. The anticipation of rising interest rates, in general, coupled
with a robust new issue supply calendar across the corporate, high yield, and
municipal bond sectors, caused bond prices to move lower. The second quarter
marked the first time in 5 years that high-grade bonds posted back-to-back
negative, quarterly returns. However, as bond participants have already
calculated the forthcoming effects of strong economic growth and a modest
increase in inflation, we believe that there are many opportunities for bond
investors, particularly among those sectors that offer yield premiums relative
to government securities.
In the broadening market, holders of diversified portfolios should examine
recent M&A activity closely. The tendency for large growth companies to make
value decisions by opportunistically acquiring smaller companies at remarkably
low valuations has been marked by a focus on the actual financial productivity
of those companies. Similarly, broadly diversified portfolios can flourish,
provided they consider seriously the financial productivity of their holdings.
As always, a comprehensive and intimate knowledge of the companies themselves
will be foremost.
2
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LAZARD RETIREMENT SERIES, INC.
GROWTH CHARTS
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LAZARD RETIREMENT EQUITY PORTFOLIO
The Lazard Retirement Equity Portfolio seeks long-term capital appreciation. The
Portfolio invests primarily in equity securities, principally common stocks, of
relatively large 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.
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT EQUITY
PORTFOLIO AND THE STANDARD & POOR'S 500 STOCK INDEX
[The following table represents a chart in the printed document]
LREP S&P 500
10000 10000
3-18-98 10230 10154.37
Apr-98 10309.79 10256.52
May-98 10250 10080.11
Jun-98 10409.9 10489.56
Jul-98 10199.62 10377.85
Aug-98 9029.72 8874.62
Sep-98 9299.71 9443.39
Oct-98 10219.45 10211.52
Nov-98 10599.61 10830.74
Dec-98 11088.68 11455.03
Jan-99 11319.33 11934.31
Feb-99 10978.61 11563.75
Mar-99 11390.31 12026.86
Apr-99 12022.47 12492.89
May-99 11962.36 12198.68
Jun-99 12403.41 12875.71
LAZARD RETIREMENT SMALL CAP PORTFOLIO
The Lazard Retirement Small Cap Portfolio seeks long-term capital appreciation.
The Portfolio invests primarily in equity securities, principally common stocks,
of relatively small U.S. companies in the range of the Russell 2000 Index that
the Investment Manager believes are undervalued based on their earnings, cash
flow or asset values.
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT
SMALL CAP PORTFOLIO AND THE RUSSELL 2000 INDEX
[The following table represents a chart in the printed document]
LRSCP Russell 2000
10000 10000
11-4-97 9720 9762.77
Dec-97 9855.83 9933.62
Jan-98 9855.83 9776.87
Feb-98 10566.97 10499.77
Mar-98 10957.59 10932.78
Apr-98 10957.59 10993.24
May-98 10446.77 10401.15
Jun-98 10186.65 10422.99
Jul-98 9475.62 9579.25
Aug-98 8285.48 7719.15
Sep-98 8505.88 8323.25
Oct-98 8936.27 8662.67
Nov-98 9376.83 9116.51
Dec-98 9539.05 9680.64
Jan-99 9348.27 9809.39
Feb-99 8847.2 9014.83
Mar-99 8817.12 9155.46
Apr-99 9758.79 9975.79
May-99 10239.9 10121.44
Jun-99 10690.56 10579.13
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
3
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LAZARD RETIREMENT SERIES, INC.
GROWTH CHARTS (CONTINUED)
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LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
The Lazard Retirement 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.
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT INTERNATIONAL EQUITY
PORTFOLIO AND
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST INDEX
[The following table represents a chart in the printed document]
LRIEP MSCI EAFE
10000 10000
9-1-98 9620 9693
Oct-98 10310.14 10703.01
Nov-98 10930.19 11251
Dec-98 11230.11 11695.87
Jan-99 11209.9 11660.78
Feb-99 10909.48 11383.26
Mar-99 11269.49 11857.94
Apr-99 11780 12338.66
May-99 11350.03 11703.59
Jun-99 11819.92 12159.87
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
The Lazard Retirement 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 activities are in emerging
market countries that the Investment Manager believes are undervalued based on
their earnings, cash flow or asset values.
COMPARISON OF $10,000 INVESTMENT IN THE LAZARD RETIREMENT EMERGING MARKETS
PORTFOLIO
AND THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS (FREE) INDEX
[The following table represents a chart in the printed document]
LREMP MSCIEMF
10000 10000
11-4-97 9360 9180
Dec-97 9529.38 9401.22
Jan-98 9027.31 8663.88
Feb-98 9880.83 9568.18
Mar-98 10402.99 9983.4
Apr-98 10362.83 9874.65
May-98 9107.64 8521.42
Jun-98 8494.69 7627.56
Jul-98 8755.48 7869.4
Aug-98 6104.32 5594.04
Sep-98 6576.19 5948.9
Oct-98 7098.33 6575.33
Nov-98 7630.71 7122.19
Dec-98 7351.66 7018.97
Jan-99 6855.42 6905.97
Feb-99 6885.58 6972.95
Mar-99 7857.83 7891.99
Apr-99 8718.42 8868.07
May-99 8486.07 8816.49
Jun-99 9488.61 9817.09
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
4
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LAZARD RETIREMENT SERIES, INC.
PERFORMANCE TABLE
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AVERAGE ANNUAL TOTAL RETURNS FOR CUMULATIVE TOTAL RETURNS FOR
PERIODS ENDED JUNE 30, 1999 PERIODS ENDED JUNE 30, 1999
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ONE SINCE ONE SINCE
YEAR INCEPTION* YTD YEAR INCEPTION*
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Lazard Retirement Equity Portfolio 19.15% 18.21% 11.86% 19.15% 24.03%
Standard & Poor's 500 Stock Index** 22.75% 21.79% 12.38% 22.75% 28.76%
Lazard Retirement Small Cap Portfolio 4.96% 4.12% 12.08% 4.96% 6.91%
Russell 2000 Index** 1.50% 3.44% 9.28% 1.50% 5.79%
Lazard Retirement International Equity Portfolio -- -- 5.25% -- 18.20%
MSCI EAFE Index** -- -- 3.97% -- 21.60%
Lazard Retirement Emerging Markets Portfolio 11.70% (3.12%) 29.06% 11.70% (5.11%)
MSCI Emerging Markets (Free) Index** 28.71% (1.11%) 39.87% 28.71% (1.83%)
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NOTES TO PERFORMANCE TABLE
*Performance is measured from March 18, 1998 for Lazard Retirement Equity
Portfolio, from November 4, 1997 for Lazard Retirement Small Cap Portfolio and
Lazard Retirement Emerging Markets Portfolio, and from September 1, 1998 for
the Lazard Retirement International Equity Portfolio.
The performance for the relevant index is for the comparable period. Portfolio
returns are net of fees and assume reinvestment of dividends and
distributions, if any. Certain expenses of a Portfolio may have been waived
and/or reimbursed by the Investment Manager and/or the Administrator; without
such waiver/reimbursement of expenses the Portfolio's total return would have
been lower.
Past performance is not indicative, nor a guarantee, of future results; the
investment return and principal value of each Portfolio of Lazard Retirement
Series, Inc. will fluctuate, so that an investor's shares in a Portfolio, when
redeemed, may be worth more or less than their original cost. Within the
longer periods illustrated there may have been short-term fluctuations,
counter to the overall trend of investment results, and no single period of
any length may be taken as typical of what may be expected in future periods.
**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 Stock 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 Index is composed of 2,000
common stocks of U.S. companies. The Morgan Stanley Capital International
(MSCI) 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.
This performance data is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective
prospectus.
5
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
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DESCRIPTION SHARES VALUE
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LAZARD RETIREMENT EQUITY PORTFOLIO
COMMON STOCKS--97.8%
AEROSPACE & DEFENSE--2.1%
United Technologies Corp. ..................... 860 $61,651
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BANKING & FINANCIAL SERVICES--17.2%
Bank of New York Company, Inc. ................ 1,890 69,339
BankAmerica Corp. ............................. 953 69,867
Chase Manhattan Corp. ......................... 670 58,039
Citigroup, Inc. ............................... 1,395 66,263
Federal National Mortgage
Association ................................. 900 61,538
Fleet Financial Group, Inc. ................... 1,580 70,112
Mellon Bank Corp. ............................. 1,650 60,019
The Hartford Financial Services
Group, Inc. ................................. 990 57,729
-------
512,906
-------
CHEMICALS & PLASTICS--6.3%
Du Pont (E.I.) de Nemours & Co. ............... 1,425 97,345
Hoechst AG ADR ................................ 1,965 90,390
-------
187,735
-------
COMPUTERS & BUSINESS EQUIPMENT--9.0%
Hewlett-Packard Co. ........................... 1,000 100,500
International Business Machines Corp. ......... 790 102,107
NCR Corp. (a) ................................. 1,320 64,433
-------
267,040
-------
CONGLOMERATES--2.9%
Philip Morris Companies, Inc. ................. 2,180 87,609
-------
DIVERSIFIED--2.3%
Minnesota Mining & Manufacturing
Co .......................................... 800 69,550
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DRUGS & HEALTH CARE--8.9%
Amgen, Inc. (a) ............................... 960 58,440
AstraZeneca Group PLC ADR ..................... 1,185 46,437
Johnson & Johnson ............................. 960 94,080
Merck & Company, Inc. ......................... 880 65,120
-------
264,077
-------
ENERGY--3.1%
Mobil Corp. ................................... 920 91,080
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FOOD & BEVERAGES--8.9%
Cadbury Schweppes PLC ADR ..................... 2,150 57,244
Diageo PLC ADR ................................ 1,300 55,900
Heineken NV ADR ............................... 1,017 52,073
PepsiCo, Inc. ................................. 2,560 99,040
-------
264,257
-------
HOTELS & RESTAURANTS--3.3%
McDonald's Corp. .............................. 2,370 97,911
-------
HOUSEHOLD PRODUCTS--2.3%
Procter & Gamble Co. .......................... 750 66,937
-------
INSURANCE--5.0%
Aetna, Inc. ................................... 1,050 93,909
Allstate Corp. ................................ 1,520 54,530
-------
148,439
-------
MANUFACTURING--2.9%
General Electric Co. .......................... 765 86,445
-------
MULTIMEDIA--2.1%
Gannett Company, Inc. ......................... 855 61,026
-------
OIL & GAS--3.8%
BP Amoco PLC ADR .............................. 500 54,250
Royal Dutch Petroleum Co. ADR ................. 1,000 60,250
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114,500
-------
PAPER PRODUCTS--2.0%
Kimberly-Clark Corp. .......................... 1,040 59,280
-------
RETAIL--5.1%
Federated Department Stores, Inc. (a) ......... 1,200 63,525
Sears, Roebuck & Co. .......................... 1,980 88,234
-------
151,759
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TELECOMMUNICATIONS--8.8%
Ameritech Corp. ............................... 880 64,680
AT&T Corp. .................................... 1,590 88,742
Bell Atlantic Corp. ........................... 1,670 109,176
-------
262,598
-------
UTILITIES--1.8%
Duke Energy Corp. ............................. 1,005 54,647
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TOTAL COMMON STOCKS
(Identified cost $2,486,124) ................ 2,909,447
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TOTAL INVESTMENTS
(Identified cost $2,486,124) (b) ............. 97.8% $2,909,447
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES ................................. 2.2 66,119
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NET ASSETS .................................... 100.0% $2,975,566
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
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DESCRIPTION SHARES VALUE
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LAZARD RETIREMENT SMALL CAP PORTFOLIO
COMMON STOCKS--99.4%
AEROSPACE & DEFENSE--1.6%
AAR Corp. ..................................... 1,500 $34,031
-------
APPAREL & TEXTILES--1.5%
Nautica Enterprises, Inc. (a) ................. 1,100 18,563
Stride Rite Corp. ............................. 1,300 13,406
-------
31,969
-------
AUTO PARTS--2.2%
Dura Automotive Systems,
Inc. (a) .................................... 700 23,275
Tower Automotive, Inc. (a) .................... 900 22,894
-------
46,169
-------
BANKING & FINANCIAL SERVICES--7.9%
Enhance Financial Services Group,
Inc ......................................... 1,900 37,525
Hudson United Bancorp ......................... 1,100 33,687
Independence Community Bank Corp. ............. 2,200 29,700
Southwest Bancorporation of Texas,
Inc. (a) .................................... 1,800 32,400
Staten Island Bancorp, Inc. ................... 1,900 34,200
-------
167,512
-------
BUILDING & CONSTRUCTION--1.0%
Apogee Enterprises, Inc. ...................... 1,600 21,500
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BUSINESS SERVICES AND SUPPLIES--3.2%
CDI Corp. (a) ................................. 1,200 40,875
HA-LO Industries, Inc. (a) .................... 2,400 23,700
United Stationers, Inc. (a) ................... 100 2,206
-------
66,781
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CHEMCIALS & PLASTICS--0.6%
H.B. Fuller Co. ............................... 200 13,675
-------
COMMERCIAL SERVICES--3.8%
Inacom Corp. (a) .............................. 3,500 44,188
Nielsen Media Research, Inc. .................. 900 26,325
Pittston Brink's Group ........................ 400 10,700
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81,213
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COMPUTERS & BUSINESS EQUIPMENT--3.0%
Bell & Howell Co. (a) ......................... 900 34,031
Sequent Computer Systems, Inc. (a) ............ 1,700 30,175
-------
64,206
-------
DRUGS & HEALTH CARE--2.8%
Perrigo Co. (a) ............................... 1,600 12,200
Sierra Health Services, Inc. (a) .............. 1,100 15,881
West Pharmaceutical Services, Inc. ............ 800 31,400
-------
59,481
-------
ELECTRICAL EQUIPMENT--2.5%
Anixter International, Inc. (a) ............... 1,800 32,850
MagneTek, Inc. (a) ............................ 1,900 20,069
-------
52,919
-------
ELECTRONICS--5.9%
Credence Systems Corp. (a) .................... 1,300 48,262
Kemet Corp. (a) ............................... 1,600 36,700
Tektronix, Inc. ............................... 1,300 39,244
-------
124,206
-------
FOOD & BEVERAGES--4.9%
American Italian Pasta Co., Class A (a) ....... 1,200 36,450
Aurora Foods, Inc. (a) ........................ 1,800 31,500
Ralcorp Holdings, Inc. (a) .................... 2,200 35,337
-------
103,287
-------
GAS EXPLORATION--1.9%
Barrett Resources Corp. (a) ................... 1,050 40,294
-------
HOMEBUILDERS--1.1%
Toll Brothers, Inc. (a) ....................... 1,100 23,581
-------
HOTELS & RESTAURANTS--1.4%
Prime Hospitality Corp. (a) ................... 2,400 28,800
-------
HOUSEHOLD APPLIANCES & HOME
FURNISHINGS--3.5%
Bassett Furniture Industries, Inc. ............ 1,100 25,163
Furniture Brands International, Inc. (a) ...... 1,300 36,237
Harman International Industries, Inc. ......... 300 13,200
-------
74,600
-------
INDUSTRIAL & MACHINERY--6.7%
Applied Power, Inc. Class A ................... 700 19,119
JLG Industries, Inc. .......................... 2,100 42,787
OmniQuip International, Inc. .................. 1,300 10,238
Regal-Beloit Corp. ............................ 1,300 30,712
Watts Industries, Inc., Class A ............... 2,000 38,375
-------
141,231
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
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DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------------------
LAZARD RETIREMENT SMALL CAP PORTFOLIO (CONTINUED)
INSURANCE--8.2%
Arthur J. Gallagher & Co. ..................... 700 $34,650
E.W. Blanch Holdings, Inc. .................... 400 27,275
ESG Re, Ltd. .................................. 1,900 28,500
Frontier Insurance Group, Inc. ................ 1,700 26,138
HCC Insurance Holdings, Inc. .................. 1,500 34,031
Radian Group, Inc. ............................ 479 23,381
-------
173,975
-------
LEISURE TIME--0.8%
Carmike Cinemas, Inc., Class A (a) ............ 1,100 17,531
-------
MANUFACTURING--1.5%
Mark IV Industries, Inc. ...................... 1,500 31,688
-------
MEDICAL PRODUCTS--3.4%
Invacare Corp. ................................ 1,300 34,775
Varian Medical Systems, Inc. .................. 1,500 37,875
-------
72,650
-------
OFFICE FURNISHINGS--1.6%
Interface, Inc., Class A ...................... 3,900 33,637
-------
OIL & GAS--2.8%
Devon Energy Corp. ............................ 900 32,175
Helmerich & Payne, Inc. ....................... 1,150 27,384
-------
59,559
-------
PAPER PRODUCTS--3.4%
Chesapeake Corp. .............................. 1,000 37,438
The Standard Register Co. ..................... 1,100 33,825
-------
71,263
-------
PRINTING--1.8%
Bowne & Company, Inc. ......................... 1,300 16,900
Electronics for Imaging, Inc. (a) ............. 400 20,550
-------
37,450
-------
PUBLISHING--4.8%
Banta Corp. ................................... 1,200 25,200
Pulitzer, Inc. ................................ 1,000 48,563
World Color Press, Inc. (a) ................... 1,000 27,500
-------
101,263
-------
REAL ESTATE--3.0%
FelCor Suite Hotels, Inc. ..................... 1,600 33,200
Glenborough Realty Trust, Inc. ................ 1,700 29,750
-------
62,950
-------
RETAIL--4.7%
CompUSA, Inc. (a) ............................. 1,900 14,131
Great Atlantic & Pacific Tea Company,
Inc ......................................... 1,100 37,194
Oakley, Inc. (a) .............................. 900 6,413
Pier 1 Imports, Inc. .......................... 2,500 28,125
The Elder-Beerman Stores Corp. (a) ............ 2,000 14,625
-------
100,488
-------
TELECOMMUNICATIONS EQUIPMENT--2.5%
Allen Telecom, Inc. (a) ....................... 3,200 34,400
Oak Industries, Inc. (a) ...................... 400 17,475
-------
51,875
-------
TRANSPORTATION--2.5%
Budget Group, Inc., Class A (a) ............... 1,800 22,163
CNF Transportation, Inc. ...................... 800 30,700
-------
52,863
-------
UTILITIES--2.9%
Avista Corp. .................................. 1,900 30,875
Calpine Corp. (a) ............................. 300 16,200
Sierra Pacific Resources ...................... 400 14,550
-------
61,625
-------
TOTAL COMMON STOCKS
(Identified cost $1,925,270) ................ 2,104,272
---------
TOTAL INVESTMENTS
(Identified cost $1,925,270) (b) ............ 99.4% $2,104,272
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES ................................. 0.6 13,276
----- -------
NET ASSETS .................................... 100.0% $2,117,548
===== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
COMMON STOCKS--92.1%
AUSTRALIA--2.4%
Broken Hill Proprietary Company, Ltd. ......... 1,340 $15,502
Westpac Banking Corporation, Ltd. ............. 600 3,887
-------
TOTAL AUSTRALIA ............................... 19,389
-------
DENMARK--0.8%
Unidanmark, Class A ........................... 100 6,655
-------
FINLAND--1.0%
Merita, Ltd., Class A ......................... 710 4,033
UPM-Kymmene OYJ ............................... 140 4,329
-------
TOTAL FINLAND ................................. 8,362
-------
FRANCE--13.2%
Alcatel ....................................... 80 11,257
Axa SA ........................................ 80 9,756
Banque Nationale de Paris ..................... 160 13,327
Cie de Saint Gobain ........................... 75 11,945
Elf Aquitaine SA .............................. 95 13,936
Michelin, Class B ............................. 120 4,907
Rhone-Poulenc SA .............................. 285 13,018
Suez Lyonnaise des Eaux ....................... 55 9,916
Vivendi ....................................... 245 19,838
-------
TOTAL FRANCE .................................. 107,900
-------
GERMANY--9.0%
Allianz AG .................................... 30 8,319
DaimlerChrysler AG ............................ 100 8,659
Deutsche Telekom AG ........................... 110 4,615
Hoechst AG .................................... 265 11,993
Metro AG ...................................... 213 13,218
Siemens AG .................................... 160 12,337
Thyssen Krupp AG (a) .......................... 250 5,497
VEBA AG ....................................... 150 8,814
-------
TOTAL GERMANY ................................. 73,452
-------
HONG KONG--1.3%
HSBC Holdings, Ltd. ADR ....................... 30 10,943
-------
ITALY--4.2%
Ente Nazionale Idrocarburi SPA (ENI) .......... 1,850 11,042
San Paolo-Imi SPA ............................. 670 9,117
Telecom Italia SPA ............................ 2,640 14,315
-------
TOTAL ITALY ................................... 34,474
-------
JAPAN--19.9%
Asahi Breweries, Ltd. ......................... 1,000 12,450
Canon, Inc. ADR ............................... 400 11,650
Fuji Bank, Ltd. ............................... 1,000 6,977
Industrial Bank of Japan, Ltd. ................ 1,000 7,936
Japan Tobacco, Inc. ........................... 1 11,077
Kao Corporation ADR ........................... 35 9,832
Nintendo Co. .................................. 660 11,485
Nippon Telegraph & Telephone Corp. ............
ADR ......................................... 240 15,030
Nissan Motor Company, Ltd. (a) ................ 2,000 9,556
Orix Corp. .................................... 200 17,856
Promise Company, Ltd. ......................... 200 11,821
Sony Corp. ADR ................................ 125 13,797
Sumitomo Trust & Banking, Ltd. ................ 3,000 14,433
TDK Corp. ADR ................................. 100 9,206
-------
TOTAL JAPAN ................................... 163,106
-------
NETHERLANDS--4.0%
Heineken NV ................................... 210 10,748
ING Groep NV .................................. 200 10,824
Philips Electronics NV ........................ 110 10,846
-------
TOTAL NETHERLANDS ............................. 32,418
-------
SINGAPORE--2.1%
Overseas-Chinese Banking
Corporation, Ltd. ........................... 1,000 8,343
United Overseas Bank, Ltd. ADR ................ 600 8,388
-------
TOTAL SINGAPORE ............................... 16,731
-------
SPAIN--5.2%
Argentaria, Caja Postal y Banco
Hipotecario de Espana SA .................... 560 12,752
Endesa SA ..................................... 390 8,314
Telefonica SA ................................. 438 21,090
-------
TOTAL SPAIN ................................... 42,156
-------
SWEDEN--5.0%
ABB AB (a) .................................... 100 9,365
Electrolux AB, Series B ....................... 495 10,379
Nordbanken Holding AB ......................... 630 3,688
Svenska Handelsbanken AB, Series A ............ 840 10,093
Volvo AB, Series B ............................ 255 7,405
-------
TOTAL SWEDEN .................................. 40,930
-------
SWITZERLAND--3.4%
Nestle SA ..................................... 4 7,205
Roche Holding AG ADR .......................... 90 9,251
The Swatch Group AG ........................... 4 2,690
Zurich Allied AG .............................. 15 8,527
-------
TOTAL SWITZERLAND ............................. 27,673
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO (CONTINUED)
UNITED KINGDOM--20.6%
Allied Zurich PLC ............................. 565 $ 7,102
AstraZeneca Group PLC ......................... 302 11,776
British American Tobacco PLC .................. 1,180 11,132
British Aerospace PLC ......................... 2,410 15,689
British Energy PLC ............................ 200 1,718
British Petroleum Company PLC ................. 840 15,041
Cadbury Schweppes PLC ......................... 640 4,085
Diageo PLC .................................... 950 9,980
Granada Group PLC ............................. 670 12,409
Great Universal Stores PLC .................... 740 8,253
Imperial Chemical Industries PLC .............. 940 9,283
National Westminster Bank PLC ................. 685 14,522
Prudential Corporation PLC .................... 850 12,527
Royal & Sun Alliance Insurance Group
PLC ......................................... 1,318 11,811
Siebe PLC ..................................... 2,100 9,930
SmithKline Beecham PLC ........................ 500 6,502
Unilever PLC .................................. 794 7,046
-------
TOTAL UNITED KINGDOM .......................... 168,806
-------
TOTAL COMMON STOCKS
(Identified cost $685,641) .................. 752,995
-------
TOTAL INVESTMENTS
(Identified cost $685,641) (b) .............. 92.1% $752,995
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES ................................. 7.9 64,853
----- -------
NET ASSETS .................................... 100.0% $817,848
===== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
COMMON STOCKS--83.7%
ARGENTINA--3.1%
Quilmes Industrial Quinsasa ADR .......... 3,000 $ 37,125
Telefonica de Argentina SA ADR ........... 500 15,687
--------
TOTAL ARGENTINA .......................... 52,812
--------
BRAZIL--4.8%
Companhia Cervejaria Brahma ADR .......... 2,300 26,019
Companhia Energetica de Minas ADR 897 18,720
Embratel Participacoes SA ADR ............ 900 12,487
Souza Cruz SA ............................ 3,500 24,612
Telecomunicacoes Brasileiras SA ADR 390 24
--------
TOTAL BRAZIL ............................. 81,862
--------
CHILE--3.9%
AFP Provida SA ADR ....................... 1,800 39,600
Quinenco SA ADR .......................... 1,860 17,437
Santa Isabel SA ADR ...................... 950 9,619
--------
TOTAL CHILE .............................. 66,656
--------
CZECH REPUBLIC--0.8%
Ceske Energeticke Zavody AS (a) .......... 7,150 14,004
--------
GREECE--1.4%
Hellenic Telecommunication
Organization SA ADR .................... 500 5,531
Hellenic Telecommunication
Organization SA ........................ 833 17,829
--------
TOTAL GREECE ............................. 23,360
--------
HONG KONG--5.8%
China Telecom, Ltd. ADR (a) .............. 400 22,800
Guangshen Railway Company, Ltd.
ADR .................................... 1,800 13,725
Jiangsu Expressway Company, Ltd. ......... 46,000 9,961
Peregrine Investment Holdings, Ltd.
(a), (d) ............................... 14,000 0
Shenzhen Expressway Co. .................. 102,000 21,561
Yue Yuen Industrial Holdings ............. 13,000 29,992
--------
TOTAL HONG KONG .......................... 98,039
--------
HUNGARY--2.1%
Magyar Olaj-es Gazipari RT ............... 700 16,855
Magyar Tavkozlesi RT ADR ................. 700 19,250
--------
TOTAL HUNGARY ............................ 36,105
--------
INDIA--6.7%
Hindalco Industries, Ltd. GDR ............ 1,800 34,650
Larsen & Toubro, Ltd. GDR (c) ............ 1,300 19,695
Mahanagar Telephone Nigam, Ltd.
GDR (c) ................................ 2,900 29,435
State Bank of India GDR (c) .............. 2,500 30,375
--------
TOTAL INDIA .............................. 114,155
--------
ISRAEL--4.1%
Bank Hapoalim ............................ 4,400 11,285
ECI Telecom, Ltd. ADR .................... 1,000 33,187
Supersol, Ltd. ADR ....................... 1,720 25,155
--------
TOTAL ISRAEL ............................. 69,627
--------
MALAYSIA--1.1%
Jaya Tiasa Holdings Berhad ............... 10,000 18,365
--------
MEXICO--17.5%
Carso Global Telecom ..................... 4,000 25,321
Cemex SA de CV (a) ....................... 9,010 44,376
Fomento Economico Mexicano SA de
CV ADR ................................. 900 35,887
Grupo Financiero Banamex Accival
SA de CV (a) ........................... 14,700 37,409
Grupo Financiero Banorte SA de CV
(a) .................................... 9,000 13,169
Grupo Industrial Maseca SA de CV
ADR .................................... 2,900 25,919
Grupo Televisa SA (a) .................... 860 38,539
Kimberly-Clark de Mexico SA .............. 3,800 15,634
Panamerican Beverages, Inc., Class A
ADR .................................... 845 20,122
Pepsi-Gemex SA de CV GDR ................. 2,300 20,987
Tubos de Acero de Mexico SA ADR .......... 1,800 19,575
--------
TOTAL MEXICO ............................. 296,938
--------
PERU--2.0%
Credicorp, Ltd. .......................... 700 7,700
Telefonica del Peru SA ADR ............... 1,720 26,015
--------
TOTAL PERU ............................... 33,715
--------
PHILIPPINES--3.9%
Benpres Holdings Corp. ................... 196,000 46,360
Philippine Long Distance Telephone
Co. ADR ................................ 670 20,184
--------
TOTAL PHILIPPINES ........................ 66,544
--------
POLAND--2.2%
Bank Handlowy W. Warszawie GDR
(c) .................................... 2,300 36,455
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO (CONTINUED)
SOUTH AFRICA--10.3%
Amalgamated Banks of South Africa,
Ltd ......................................... 4,700 $26,600
Barlow, Ltd. .................................. 3,997 23,052
Impala Platinum Holdings, Ltd. ................ 300 7,547
JD Group, Ltd. ................................ 2,736 16,732
Liberty Life Association, Ltd. ................ 1,000 12,811
Naspers, Ltd. ................................. 3,300 19,825
Rembrandt Group, Ltd. ......................... 3,300 27,509
Sanlam, Ltd. (a) .............................. 15,200 18,011
South African Breweries PLC ................... 2,600 22,579
-------
TOTAL SOUTH AFRICA ............................ 174,666
-------
SOUTH KOREA--11.4%
Korea Electric Power Corp. .................... 900 37,399
Korea Telecom Corp. ADR (a) ................... 500 20,000
Pohang Iron & Steel Company, Ltd. ............. 200 24,145
Samsung Electronics Co. GDR (c) ............... 1,046 55,752
SK Telecom Company, Ltd. ADR .................. 3,336 56,711
-------
TOTAL SOUTH KOREA ............................. 194,007
-------
THAILAND--0.7%
Bangkok Expressway Public Company,
Ltd. (a) .................................... 18,000 11,837
-------
UNITED KINGDOM--0.8%
Liberty International PLC (a) ................. 466 3,085
South African Breweries PLC ................... 1,100 9,450
-------
TOTAL UNITED KINGDOM .......................... 12,535
-------
VENEZUELA--1.1%
Compania Anonima Nacional
Telefonos de Venezuela ADR .................. 400 10,900
Mavesa SA ADR ................................. 2,200 7,150
-------
TOTAL VENEZUELA ............................... 18,050
-------
TOTAL COMMON STOCKS
(Identified cost $1,309,666) ................ 1,419,732
-------
PREFERRED STOCKS--8.8%
BRAZIL--8.3%
Banco Itau SA ................................. 50,000 25,699
Celular CRT Participacoes SA (a) .............. 40,800 5,461
Celular CRT Participacoes SA, rights
Exp. 7/5/99 (a) ............................. 17,194 0
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar GDR ..................... 1,300 25,789
Companhia Paranaense de Energia-
Copel ADR ................................... 2,900 24,287
Companhia Riograndense Telecom ................ 40,800 9,898
Telecommunicacoes Brasileiras SA
ADR ......................................... 390 35,173
Telesp de Sao Paulo SA ........................ 116,014 13,760
-------
TOTAL BRAZIL .................................. 140,067
-------
COLOMBIA--0.5%
Banco Ganadero SA ADR ......................... 1,250 9,610
-------
TOTAL PREFERRED STOCKS
(Identified cost $208,730) .................. 149,677
-------
PRINCIPAL
AMOUNT
(000)
----------
REPURCHASE AGREEMENT--6.1%
State Street Bank and Trust Company,
4.70%, 07/01/99, (Dated 06/30/99, collateralized by $100,000 United States
Treasury Note, 6.875%, 05/15/06, with a value of $105,125)
(Identified cost $103,000)................... $ 103 103,000
----------
TOTAL INVESTMENTS
(Identified cost
$1,621,396) (b) ............................. 98.6% $1,672,409
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES ................................. 1.4 23,877
------ ----------
NET ASSETS .................................... 100.0% $1,696,286
====== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) For federal income tax purposes, the aggregate cost, aggregate gross
unrealized appreciation, aggregate gross unrealized depreciation and the net
unrealized appreciation (depreciation) is as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE NET
GROSS GROSS UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ---------------------------------- ------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Retirement Equity $2,486,124 $464,828 $ 41,505 $423,323
Retirement Small Cap 1,925,270 293,964 114,962 179,002
Retirement International Equity 685,641 89,524 22,170 67,354
Retirement Emerging Markets 1,621,396 238,361 187,348 51,013
</TABLE>
(c) Pursuant to Rule 144A of the Securities Act of 1933, these securities may
only be resold in transactions exempt from registration,
normally to qualified institutional buyers. At June 30, 1999, these securities
amounted to $171,712, or 10.1% of net assets, for Lazard Retirement Emerging
Markets Portfolio.
(d) Bankrupt security valued at zero.
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS, FOR THOSE PORTFOLIOS PREVIOUSLY PRESENTED BY COUNTRY:
LAZARD LAZARD
RETIREMENT RETIREMENT
INTERNATIONAL EMERGING
EQUITY MARKETS
PORTFOLIO PORTFOLIO
--------------- -----------
INDUSTRY
Aerospace & Defense .................... 1.9% --%
Automotive ............................. 3.7 --
Banking & Financial Services ........... 22.7 14.2
Brewery ................................ -- 5.6
Broadcasting ........................... -- 2.3
Chemicals & Plastics ................... 2.6 --
Commercial Services .................... 2.4 --
Conglomerates .......................... -- 7.9
Construction & Materials ............... 1.5 3.7
Consumer Goods ......................... 2.5 --
Cosmetics & Toiletries ................. 1.2 --
Drugs & Health Care .................... 3.4 --
Electrical Equipment ................... 5.6 --
Electronics ............................ 1.3 3.3
Food & Beverages ....................... 5.5 7.0
Household Products ..................... 1.3 --
Industrial Construction ................ -- 2.6
Insurance .............................. 7.1 1.8
Leisure/Entertainment .................. 1.5 --
Manufacturing .......................... 4.9 --
Metals ................................. -- 2.5
Oil & Gas .............................. 4.9 1.0
Paper Products ......................... 0.5 0.9
Petroleum Equipment & Services ......... 1.9 --
Printing ............................... -- 1.2
Railroad ............................... -- 0.8
Repurchase Agreement ................... -- 6.1
Retail ................................. 2.6 5.8
Steel .................................. -- 2.6
Telecommunications ..................... 6.7 20.4
Telephone .............................. -- 1.9
Tobacco ................................ 2.7 1.4
Toys & Amusement ....................... 1.4 --
Utilities .............................. 2.3 5.6
---- ----
Total Investments ...................... 92.1% 98.6%
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD LAZARD RETIREMENT RETIREMENT
RETIREMENT RETIREMENT INTERNATIONAL EMERGING
EQUITY SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ---------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost $2,486,124,
$1,925,270, $685,641, and $1,621,396, respectively).............. $ 2,909,447 $ 2,104,272 $752,995 $ 1,672,409
Cash ............................................................. 45,484 11,011 39,422 271
Foreign currency (cost $0, $0, $312, and $8,032,
respectively) ................................................... -- -- 312 8,398
Receivables for:
Investments sold ................................................ -- 59,464 410 2,851
Dividends and interest .......................................... 4,058 1,475 1,647 6,459
Capital stock sold .............................................. -- 9,820 -- 9,173
Due from Manager ................................................. 28,938 37,727 51,041 43,145
Deferred organizational costs .................................... 11,937 10,973 15,164 10,973
----------- ------------ -------- -----------
Total assets ..................................................... 2,999,864 2,234,742 860,991 1,753,679
----------- ------------ -------- -----------
LIABILITIES
Payables for:
Investments purchased ........................................... -- 28,227 1,691 1,216
Capital stock repurchased ....................................... -- 57,294 -- 24,615
Organizational costs ............................................ 15,404 15,404 17,861 15,404
Accrued directors' fees payable .................................. 2,730 2,730 2,730 2,730
Accrued distribution fees payable ................................ 550 396 146 293
Accrued expenses and other payables .............................. 5,614 13,143 20,715 13,135
----------- ------------ -------- -----------
Total liabilities ................................................ 24,298 117,194 43,143 57,393
----------- ------------ -------- -----------
Net assets ....................................................... 2,975,566 2,117,548 817,848 1,696,286
=========== ============ ======== ===========
NET ASSETS
Paid in capital .................................................. 2,455,045 1,912,465 736,904 1,707,191
Undistributed (distributions in excess of) investment
income--net ..................................................... 6,547 512 5,268 8,517
Unrealized appreciation (depreciation) on:
Investments--net ................................................ 423,323 179,002 67,354 51,013
Foreign currency--net ........................................... -- -- (2) (157)
Accumulated realized gain (loss)--net ............................ 90,651 25,569 8,324 (70,278)
----------- ------------ --------- -----------
Net assets ....................................................... $ 2,975,566 $ 2,117,548 $817,848 $ 1,696,286
=========== ============ ========= ===========
Shares of capital stock outstanding* ............................. 240,803 198,367 69,201 180,977
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ......... $ 12.36 $ 10.67 $ 11.82 $ 9.37
</TABLE>
* $0.001 par value, 500,000,000 shares authorized for the Portfolios in total.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD LAZARD RETIREMENT RETIREMENT
RETIREMENT RETIREMENT INTERNATIONAL EMERGING
EQUITY SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- --------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Interest ........................................ $ -- $ 2,066 $ 226 $ 1,121
Dividends ....................................... 23,478 9,690 11,315 17,768
-------- -------- -------- ----------
Total investment income* ......................... 23,478 11,756 11,541 18,889
-------- -------- -------- ----------
EXPENSES:
Management fees ................................. 10,158 6,746 2,668 6,891
Administration fees ............................. 19,011 18,930 18,822 18,888
Distribution fees ............................... 3,386 2,249 889 1,723
Custodian fees .................................. 8,668 11,185 23,180 17,360
Professional services ........................... 15,601 17,185 14,517 18,106
Registration fees ............................... 42 65 75 27
Shareholders' services .......................... 6,645 6,838 6,180 6,728
Directors' fees and expenses .................... 5,427 5,427 5,427 5,427
Shareholders' reports ........................... 4,246 4,481 3,759 4,092
Amortization of organizational expenses ......... 1,767 1,636 2,243 1,636
Other ........................................... 208 408 197 400
-------- -------- -------- ----------
Total expenses before fees waived and expenses
reimbursed ...................................... 75,159 75,150 77,957 81,278
Management fees waived and expenses reim-
bursed .......................................... (39,096) (44,473) (53,709) (50,036)
Administration fees waived ...................... (18,750) (18,750) (18,750) (18,750)
Expense reductions .............................. (382) (683) (1,050) (1,466)
-------- -------- -------- ----------
Expenses--net .................................... 16,931 11,244 4,448 11,026
-------- -------- -------- ----------
INVESTMENT INCOME--NET ........................... 6,547 512 7,093 7,863
-------- -------- -------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY--NET
Realized gain (loss) on:
Investments--net ............................... 96,512 80,874 8,417 (4,968)
Foreign currency--net .......................... -- -- 604 (1,059)
Change in net unrealized appreciation
(depreciation) on:
Investments--net ............................... 205,154 157,482 20,301 375,730
Foreign currency--net .......................... -- -- (1) (140)
-------- -------- -------- ----------
Realized and unrealized gain (loss) on invest-
ments and foreign currency--net ................. 301,666 238,356 29,321 369,563
-------- -------- -------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ...................................... $308,213 $238,868 $ 36,414 $ 377,426
======== ======== ======== ==========
* Net of foreign withholding taxes of: ........... $ 671 $ -- $ 1,368 $ 1,581
======== ======== ======== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT EQUITY PORTFOLIO
----------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998**
------------------ -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income (loss)--net .................................................... $ 6,547 $ 3,231
Realized gain (loss) on investments and foreign currency--net .................... 96,512 (2,724)
Change in unrealized appreciation (depreciation)--net ............................ 205,154 218,169
---------- ----------
Net increase (decrease) in net assets resulting from operations ................... 308,213 218,676
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ...................................................... -- (3,231)
In excess of investment income--net .............................................. -- (2,008)
In excess of realized gains--net ................................................. -- (3,082)
---------- ----------
Net decrease in net assets resulting from distributions ........................... -- (8,321)
---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales .......................................................... 526,112 2,442,944
Net proceeds from reinvestment of distributions .................................. -- 8,321
Cost of shares redeemed .......................................................... (371,780) (148,599)
---------- ----------
Net increase (decrease) in net assets from capital stock transactions ............. 154,332 2,302,666
---------- ----------
Total increase (decrease) in net assets ........................................... 462,545 2,513,021
Net assets at beginning of period ................................................. 2,513,021 --
---------- ----------
Net assets at end of period* ...................................................... $2,975,566 $2,513,021
========== ==========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ........................................ 227,507 --
---------- ----------
Shares sold ...................................................................... 45,031 242,014
Shares issued to shareholders from reinvestment of distributions ................. -- 776
Shares repurchased ............................................................... (31,735) (15,283)
---------- ----------
Net increase (decrease) .......................................................... 13,296 227,507
---------- ----------
Shares outstanding at end of period .............................................. 240,803 227,507
========== ==========
* Includes undistributed (distributions in excess of) investment income--net ..... $ 6,547 $ --
========== ==========
</TABLE>
** Portfolio commenced operations on March 18, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT SMALL CAP PORTFOLIO
----------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
------------------ -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income (loss)--net .................................................... $ 512 $ (1,783)
Realized gain (loss) on investments and foreign currency--net .................... 80,874 (55,446)
Change in unrealized appreciation (depreciation)--net ............................ 157,482 30,724
---------- ----------
Net increase (decrease) in net assets resulting from operations ................... 238,868 (26,505)
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ...................................................... -- (270)
In excess of investment income--net .............................................. -- (247)
In excess of realized gains--net ................................................. -- --
---------- ----------
Net decrease in net assets resulting from distributions ........................... -- (517)
---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales .......................................................... 661,528 1,618,594
Net proceeds from reinvestment of distributions .................................. -- 517
Cost of shares redeemed .......................................................... (487,235) (479,176)
---------- ----------
Net increase (decrease) in net assets from capital stock transactions ............. 174,293 1,139,935
---------- ----------
Total increase (decrease) in net assets ........................................... 413,161 1,112,913
Net assets at beginning of period ................................................. 1,704,387 591,474
---------- ----------
Net assets at end of period* ...................................................... $2,117,548 $1,704,387
========== ==========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ........................................ 179,072 60,099
---------- ----------
Shares sold ...................................................................... 69,764 172,507
Shares issued to shareholders from reinvestment of distributions ................. -- 56
Shares repurchased ............................................................... (50,469) (53,590)
---------- ----------
Net increase (decrease) .......................................................... 19,295 118,973
---------- ----------
Shares outstanding at end of period .............................................. 198,367 179,072
========== ==========
* Includes undistributed (distributions in excess of) investment income--net ..... $ 512 $ --
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT INTERNATIONAL
EQUITY PORTFOLIO
----------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998**
------------------ -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income (loss)--net .................................................... $ 7,093 $ (625)
Realized gain (loss) on investments and foreign currency--net .................... 9,021 (3,290)
Change in unrealized appreciation (depreciation)--net ............................ 20,300 47,052
--------- --------
Net increase (decrease) in net assets resulting from operations ................... 36,414 43,137
--------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ...................................................... -- --
In excess of investment income--net .............................................. -- --
In excess of realized gains--net ................................................. -- --
--------- --------
Net decrease in net assets resulting from distributions ........................... -- --
--------- --------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales .......................................................... 315,029 469,985
Net proceeds from reinvestment of distributions .................................. -- --
Cost of shares redeemed .......................................................... (46,191) (526)
--------- --------
Net increase (decrease) in net assets from capital stock transactions ............. 268,838 469,459
--------- --------
Total increase (decrease) in net assets ........................................... 305,252 512,596
Net assets at beginning of period ................................................. 512,596 --
--------- --------
Net assets at end of period* ...................................................... $ 817,848 $512,596
========= ========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ........................................ 45,638 --
--------- --------
Shares sold ...................................................................... 27,636 45,686
Shares issued to shareholders from reinvestment of distributions ................. -- --
Shares repurchased ............................................................... (4,073) (48)
--------- --------
Net increase (decrease) .......................................................... 23,563 45,638
--------- --------
Shares outstanding at end of period .............................................. 69,201 45,638
========= ========
* Includes undistributed (distributions in excess of) investment income--net ..... $ 5,268 $ (1,825)
========= ========
</TABLE>
** Portfolio commenced operations on September 1, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT EMERGING MARKETS
PORTFOLIO
----------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
------------------ -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income (loss)--net .................................................... $ 7,863 $ 10,479
Realized gain (loss) on investments and foreign currency--net .................... (6,027) (66,175)
Change in unrealized appreciation (depreciation)--net ............................ 375,590 (249,436)
---------- ----------
Net increase (decrease) in net assets resulting from operations ................... 377,426 (305,132)
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ...................................................... -- (10,051)
In excess of investment income--net .............................................. -- --
In excess of realized gains--net ................................................. -- --
---------- ----------
Net decrease in net assets resulting from distributions ........................... -- (10,051)
---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales .......................................................... 121,154 242,183
Net proceeds from reinvestment of distributions .................................. -- 10,051
Cost of shares redeemed .......................................................... (51,662) (116,698)
---------- ----------
Net increase (decrease) in net assets from capital stock transactions ............. 69,492 135,536
---------- ----------
Total increase (decrease) in net assets ........................................... 446,918 (179,647)
Net assets at beginning of period ................................................. 1,249,368 1,429,015
---------- ----------
Net assets at end of period* ...................................................... $1,696,286 $1,249,368
========== ==========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ........................................ 172,204 150,628
---------- ----------
Shares sold ...................................................................... 15,031 32,741
Shares issued to shareholders from reinvestment of distributions ................. -- 1,440
Shares repurchased ............................................................... (6,258) (12,605)
---------- ----------
Net increase (decrease) .......................................................... 8,773 21,576
---------- ----------
Shares outstanding at end of period .............................................. 180,977 172,204
========== ==========
* Includes undistributed (distributions in excess of) investment income--net ..... $ 8,517 $ 654
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 3/18/98* TO
6/30/99+ 12/31/98
------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ............. $ 11.05 $ 10.00
------- -------
Income (loss) from Investement operations:
Net investment income ........................... 0.03 0.02
Net realized and unrealized gain (loss) ......... 1.28 1.06
------- -------
Total from investment operations ................ 1.31 1.08
------- -------
Less distributions from and in excess of:
Net investment income ........................... -- ( 0.02)
Net realized gain ............................... -- ( 0.01)
------- -------
Total distributions ............................. -- ( 0.03)
------- -------
Net asset value, end of period ................... $ 12.36 $ 11.05
======= =======
TOTAL RETURN (A) ................................. 11.9% 10.9%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (in thousands) ......... $ 2,976 $ 2,513
Ratios to average net assets:
Net expenses (b) ................................ 1.25% 1.50%
Gross expenses (b) .............................. 5.55% 21.32%
Net investment income (b) ....................... 0.48% 0.53%
Portfolio turnover rate .......................... 15% 40%
</TABLE>
LAZARD RETIREMENT SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED YEAR ENDED 11/4/97* TO
6/30/99+ 12/31/98 12/31/97
------------ -------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period ............. $ 9.52 $ 9.84 $ 10.00
------- ------- -------
Income (loss) from Investement operations:
Net investment income ........................... -- -- 0.02
Net realized and unrealized gain (loss) ......... 1.15 (0.32) (0.16)
------- ------- --------
Total from investment operations ................ 1.15 (0.32) (0.14)
------- ------- --------
Less distributions from and in excess of:
Net investment income ........................... -- -- ( 0.02)
Net realized gain ............................... -- -- --
------- ------- --------
Total distributions ............................. -- -- ( 0.02)
------- ------- --------
Net asset value, end of period ................... $ 10.67 $ 9.52 $ 9.84
======= ======= ========
TOTAL RETURN (A) ................................. 12.1% (3.2)% (1.4)%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (in thousands) ......... $ 2,118 $ 1,704 $ 591
Ratios to average net assets:
Net expenses (b) ................................ 1.25% 1.50% 1.50%
Gross expenses (b) .............................. 8.35% 16.20% 52.55%
Net investment income (b) ....................... 0.06% (0.18)% 0.71%
Portfolio turnover rate .......................... 36% 61% 0%
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
==============================================================================
LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- ------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED 9/1/98* TO
6/30/99+ 12/31/98
------------ ---------------
<S> <C> <C>
Net asset value, beginning of period ............. $ 11.23 $ 10.00
------- -------
Income (loss) from Investement operations:
Net investment income ........................... 0.12 ( 0.04)
Net realized and unrealized gain (loss) ......... 0.47 1.27
------- -------
Total from investment operations ................ 0.59 1.23
------- -------
Less distributions from and in excess of:
Net investment income ........................... -- --
Net realized gain ............................... -- --
------- -------
Total distributions ............................. -- --
------- -------
Net asset value, end of period ................... $ 11.82 $ 11.23
======= =======
TOTAL RETURN (A) ................................. 5.3% 12.3%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (in thousands) ......... $ 818 $ 513
Ratios to average net assets:
Net expenses (b) ................................ 1.25% 1.60%
Gross expenses (b) .............................. 21.91% 48.67%
Net investment income (b) ....................... 1.99% (0.58)%
Portfolio turnover rate .......................... 10% 7%
</TABLE>
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED YEAR ENDED 11/4/97* TO
6/30/99+ 12/31/98 12/31/97
------------ ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period ............. $ 7.26 $ 9.49 $ 10.00
------ ------- -------
Income (loss) from Investment operations:
Net investment income ........................... 0.04 0.06 0.04
Net realized and unrealized gain (loss) ......... 2.07 (2.23) (0.51)
------ ------- --------
Total from investment operations ................ 2.11 (2.17) (0.47)
------ ------- --------
Less distributions from and in excess of:
Net investment income ........................... -- (0.06) (0.04)
Net realized gain ............................... -- -- --
------- ------- --------
Total distributions ............................. -- (0.06) (0.04)
------- ------- --------
Net asset value, end of period ................... $ 9.37 $ 7.26 $ 9.49
======= ======= ========
TOTAL RETURN (A) ................................. 29.1% (22.9)% (4.7)%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (in thousands) ......... $1,696 $ 1,249 $ 1,429
Ratios to average net assets:
Net expenses (b) ................................ 1.60% 1.80% 1.80%
Gross expenses (b) .............................. 11.79% 14.37% 23.17%
Net investment income (b) ....................... 1.14% 0.83% 1.96%
Portfolio turnover rate .......................... 23% 44% 0%
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
* Commencement of operations
+ Unaudited
(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 waived and/or reimbursed by the Investment Manager
and/or the Administrator 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.
23
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Lazard Retirement Series, Inc. (the "Fund") was incorporated in Maryland on
February 13, 1997 and is registered under the Investment Company Act of 1940
(the "Act"), as amended, as a no-load, open-end management investment company.
The Fund is comprised of nine portfolios (each referred to as 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. Currently, only the following four Portfolios, each of which is
"non-diversified", as defined in the Act, are being offered: Lazard Retirement
Equity Portfolio ("Equity Portfolio"), Lazard Retirement Small Cap Portfolio
("Small Cap Portfolio"), Lazard Retirement International Equity Portfolio
("International Equity Portfolio") and Lazard Retirement Emerging Markets
Portfolio ("Emerging Markets Portfolio"). The Equity Portfolio commenced
operations on March 18, 1998, the International Equity Portfolio commenced
operations on September 1, 1998, the Small Cap Portfolio and the Emerging
Markets Portfolio each commenced operations on November 4, 1997. The other five
Portfolios have issued 20,001 shares at $10 per share, but had not commenced
operations at June 30, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
(A) VALUATION OF INVESTMENTS--Market values for equity securities listed on the
New York Stock Exchange ("NYSE"), other U.S. exchanges or NASDAQ are based on
the last quoted sales prices on the principal exchange on which the security is
traded as of the close of regular trading on the NYSE (normally 4:00 p.m.
Eastern Time) on each valuation date; securities not traded on the valuation
date are valued at the closing bid price. Any securities not listed, for which
current over-the-counter market quotations or bids are readily available, are
valued at the last quoted bid price or, if available, the mean of two such
prices. Securities listed on foreign exchanges are valued at the last quoted
sales price; securities not traded on the valuation date are valued at the
closing bid price.
Bonds and other fixed-income securities are valued on the basis of prices
provided by a pricing service, whose prices are based primarily on institutional
size trading in similar groups of securities, or using brokers' quotations.
Mortgage-backed securities issued by certain government-related organizations
are valued using pricing services or brokers' quotations based on a matrix
system which considers such factors as other security prices, yields and
maturities. Debt securities maturing in sixty days or less are valued at
amortized cost, except where to do so would not accurately reflect their fair
value, in which case such securities are valued at fair value as determined in
good faith in accordance with procedures adopted by the Board of Directors.
Options on stocks 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. Eastern Time). Securities for which market quotations are not readily
available are valued at fair value as determined in good faith using methods
approved by the Board of Directors.
(B) PORTFOLIO SECURITY TRANSACTIONS AND INVESTMENT INCOME--Portfolio security
transactions are accounted for on trade date. Realized gains and losses on sales
of investments are recorded on a specific identification basis and dividend
income is recorded on the ex-dividend date. Interest income is accrued daily.
The Portfolios amortize premiums and accrete discounts on fixed-income
securities using the effective yield method.
(C) REPURCHASE AGREEMENTS--In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to delay due to legal
proceedings and the Portfolio may suffer a loss.
(D) FOREIGN CURRENCY TRANSLATION AND FORWARD FOREIGN CURRENCY CONTRACTS--The
accounting records of the Portfolios are maintained in U.S. dollars. Portfolio
securities and other assets and liabilities denominated in foreign currencies
are translated into U.S. dollars at the prevailing rate of exchange at period
end. Purchases and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the respective
dates of transactions.
The Portfolios do not isolate the portion of operations resulting from changes
in foreign exchange rates on investments from the fluctuations arising from
changes in their market prices. Such fluctuations are included in net realized
and unrealized gain or loss from investments. Net realized exchange gains
(losses) from foreign currency transactions represent net foreign exchange gains
(losses) from forward foreign currency contracts, disposition of
24
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amount of net investment income recorded on the Portfolio's accounting records
and the U.S. dollar equivalent amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities, other than investments in securities, as a result of changes in
exchange rates.
A forward foreign currency contract is an agreement between two parties to buy
or sell currency at a set price on a future date. International Equity Portfolio
and Emerging Markets Portfolio (the "Eligible Portfolios") may enter into
forward foreign currency contracts for risk management. Risk management includes
hedging strategies which serve to reduce an Eligible Portfolio's exposure to
foreign currency fluctuations. Such exposure may exist during the period that a
foreign denominated investment is held, or during the period between the trade
date and settlement date of an investment which is purchased or sold. Upon
entering into these contracts risks may arise from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of the foreign currency relative to the U.S. dollar.
The U.S. dollar value of forward currency contracts is determined using forward
exchange rates provided by a quotation service. Daily fluctuations in the value
of such contracts are recorded as unrealized gains or losses. When the contract
is closed, the Portfolio records a realized gain or loss equal to the difference
between the value at the time it was opened and the value at the time it was
closed. Such gains and losses are disclosed in the realized or unrealized gain
(loss) on foreign currency in the accompanying Statements of Operations.
(E) FEDERAL INCOME TAXES--The Fund's policy is to continue to have each
Portfolio qualify as a regulated investment company under the Internal Revenue
Code and to distribute all of its taxable income, including any realized net
capital gains to shareholders. Therefore, no federal income tax provision is
required.
At December 31, 1998, the following Portfolios had available for federal income
tax purposes unused realized capital losses which can be used to offset future
realized capital gains. The capital loss carryforwards will expire on December
31, 2006, as follows:
PORTFOLIO AMOUNT
- ---------------------- ----------
Small Cap $50,471
International Equity 697
Emerging Markets 42,202
Under current tax law, certain capital and net foreign currency losses realized
after October 31 within the taxable year may be deferred and treated as
occurring on the first day of the following tax year. For the tax period ended
December 31, 1998, the following Portfolios have elected to defer net capital
and currency losses arising between November 1, 1998 and December 31, 1998, as
follows:
PORTFOLIO AMOUNT
- ---------------------- ---------
Small Cap $4,834
International Equity 748
Emerging Markets 21,263
(F) DIVIDENDS AND DISTRIBUTIONS--The Fund intends to declare and to pay
dividends annually from net investment income on shares of Equity Portfolio,
Small Cap Portfolio, International Equity Portfolio and Emerging Markets
Portfolio. During any particular year, net realized gains from investment
transactions in excess of available capital loss carryforwards would be taxable
to the Portfolio if not distributed. The Portfolios intend to declare and
distribute these amounts annually to shareholders; however, to avoid taxation, a
second distribution may be required.
Income dividends and capital gains distributions are determined in accordance
with federal income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments of foreign currency
transactions. Book and tax differences relating to shareholder distributions
will result in reclassifications and may affect the allocation between
investment income--net, realized gains--net, and paid in capital.
(G) ORGANIZATIONAL EXPENSES--Costs incurred by the Fund in connection with its
organization have been deferred and are being amortized on a straight line basis
over a five-year period from the date of commencement of operations. In the
event that any of the initial shares of any of the Portfolios are redeemed
during such amortization period, the appropriate Portfolio will be reimbursed by
such holder for any unamortized organizational expenses in the same proportion
as the number of shares redeemed bears to the number of initial shares held at
the time of redemption.
(H) ALLOCATION OF EXPENSES--Expenses not directly chargeable to a specific
Portfolio are allocated primarily on the basis of relative net assets.
(I) EXPENSE REDUCTIONS--Portfolios leaving excess cash in demand deposit
accounts may receive credits which are available to offset custody expenses. The
Statements of Operations report gross custody expenses, and report the amount of
such credits separately as an expense reduction.
25
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
(J) STRUCTURED INVESTMENTS--Certain Portfolios may invest in structured
investments whose values are linked either directly or inversely to changes in
foreign currencies, interest rates, commodities, indices, or other underlying
instruments. A Portfolio uses these securities to increase or decrease its
exposure to different underlying instruments and to gain exposure to markets
that might be difficult to invest in through conventional securities. Structured
investments may be more volatile than their underlying instruments, but any loss
is limited to the amount of the original investment.
(K) DELAYED DELIVERY COMMITMENTS--Each Portfolio may purchase or sell securities
on a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered and
paid for are fixed at the time the transaction is negotiated. Collateral
consisting of liquid securities or cash is maintained at the custodian in a
segregated account in an amount at least equal to these commitments.
(L) ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires the Fund to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expense
during the reporting period. Actual results could differ from those estimates.
3. INVESTMENT MANAGEMENT AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into investment management agreements (the "Management
Agreements") with Lazard Asset Management (the "Manager"), a division of Lazard
Freres & Co. LLC, on behalf of each Portfolio. Pursuant to the Management
Agreements, the Manager will regularly provide the Portfolios with investment
research, advice and supervision and furnish continuously an investment program
for each Portfolio consistent with its investment objectives and policies,
including the purchase, retention and disposition of securities. Each of the
Portfolios pays the Manager an investment management fee at the annual rate set
forth below as a percentage of the average daily net assets of the relevant
Portfolio:
ANNUAL
PORTFOLIO RATE
- ---------------------- ----------
Equity 0.75%
Small Cap 0.75%
International Equity 0.75%
Emerging Markets 1.00%
The investment management fees are accrued daily and payable monthly.
The Manager has voluntarily agreed to reduce its fees and, if necessary,
reimburse the following Portfolios if annualized operating expenses exceed the
following percentages of average daily net assets:
ANNUAL
PORTFOLIO OPERATING EXPENSES
- ---------------------- --------------------
Equity 1.25%
Small Cap 1.25%
International Equity 1.25%
Emerging Markets 1.60%
For the period ended June 30, 1999, the Manager waived, in entirety, its
management fee, as well as reimbursed expenses amounting to the following:
REIMBURSED
PORTFOLIO WAIVED FEES EXPENSES
- ---------------------- ------------- -----------
Equity $10,158 $28,938
Small Cap 6,746 37,727
International Equity 2,668 51,041
Emerging Markets 6,891 43,145
The Fund has entered into an administrative agreement with State Street Bank and
Trust Company ("State Street") to provide certain administrative services. Each
Portfolio will bear the cost of such expenses at the annual rate of $37,500 and
0.02% of average assets up to $1 billion plus 0.01% of average assets over $1
billion. State Street has agreed to waive the $37,500 fee for the Equity
Portfolio, Small Cap Portfolio, International Equity Portfolio and Emerging
Markets Portfolio until February 29, 2000 or until each Portfolio reaches net
assets of $50 million, whichever comes first.
The Fund has a distribution agreement with Lazard Freres & Co. LLC ( the
"Distributor" ). The Distributor acts as distributor for shares of each of the
Portfolios and bears the cost of printing and mailing prospectuses to potential
investors and of any advertising expenses incurred in connection with
distribution of shares.
The Distributor provides each Portfolio with distribution services pursuant to a
separate Distribution Plan ( the "Plan") in accordance with Rule 12b-1 under the
Act. Under the Plan, the Distributor is entitled to distribution fees from each
Portfolio. The distribution fee is an asset-based fee to support distribution
efforts and/or servicing of accounts. Each Portfolio will pay a monthly
distribution fee at an annual rate of 0.25% of the average daily net assets of
each Portfolio for such services under the 12b-1 plan adopted by the Fund. The
distribution fee may be retained by the Distributor if a shareholder invests
directly through the Distributor. Usually the fees are paid to external
organizations, such as 401(k) alliance sponsors,
26
<PAGE>
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
discount brokers and bank trust departments, who distribute the Fund to the
public.
Certain Directors of the Fund are Managing Directors of the Manager. The Fund
pays each director who is not an officer of the Manager or an interested
Director its allocable share of a fixed fee of $20,000 per year, plus $1,000 per
meeting attended for the Fund and The Lazard Funds, Inc., a related party, and
reimburses them for travel and out of pocket expenses.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
Purchases and sales of portfolio securities (excluding short-term securities),
for the period ended June 30, 1999 were as follows:
PORTFOLIO PURCHASES SALES
- ---------------------- ----------- -----------
Equity (1) $538,211 $391,666
Small Cap 936,932 611,642
International Equity 330,900 66,368
Emerging Markets 419,037 289,447
(1) Includes purchases and sales of U.S. Government securities of $61,076 and
$0, respectively.
For the period ended June 30, 1999, brokerage commissions were paid to Lazard
Freres & Co. LLC for portfolio transactions executed on behalf of the Portfolios
as follows:
COMMISSIONS
PORTFOLIO PAID
- ---------------------- ------------
Equity $669
Small Cap 109
International Equity 1
Emerging Markets 1
27
<PAGE>
LAZARD RETIREMENT SERIES, INC.
30 Rockefeller Plaza
New York, New York 10112
Telephone: (800) 887-4929
http://www.lazardfunds.com
INVESTMENT MANAGER
Lazard Asset Management
30 Rockefeller Plaza
New York, New York 10112
Telephone: (800) 887-4929
DISTRIBUTOR
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10112
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
Boston Financial Data Services, Inc.
P.O. Box 9363
Boston, Massachusetts 02205-9363
Telephone: (800) 986-3455
INDEPENDENT PUBLIC ACCOUNTANTS
Anchin, Block & Anchin LLP
1375 Broadway
New York, New York 10018
LEGAL COUNSEL
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
<PAGE>
LAZARD
RETIREMENT SERIES
30 Rockefeller Plaza
New York, New York 10112
Telephone (800) 887-4929
http://www.lazardfunds.com
This report is for the information of the stockholders of Lazard Retirement
Series, Inc. Its use in connection with any offering of the Fund's shares is
authorized only in the case of a concurrent or prior delivery of the Fund's
current prospectus.
LAZARD
RETIREMENT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
