LAZARD RETIREMENT SERIES INC, 485BPOS, 1999-04-21

LAZARD RETIREMENT SERIES INC
485BPOS, 1999-04-21

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Securities Act File No. 333-22309
Investment Company Act File No. 811-08071
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Post-Effective Amendment No. 3
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 3
(Check appropriate box or boxes)

LAZARD RETIREMENT SERIES, INC.
(Exact Name of Registrant as Specified in Charter)

30 Rockefeller Plaza, New York, New York 10112
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (212) 632-6000

William G. Butterly III, Esq.
30 Rockefeller Plaza
New York, New York 10112
(Name and Address of Agent for Services)

copy to:

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

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

- ---- immediately upon filing pursuant to paragraph (b)

X on May 1, 1999 pursuant to paragraph (b)
- ----

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

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

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

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

If appropriate, check the following box:

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

<PAGE>

LAZARD RETIREMENT SERIES

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Prospectus

May 1, 1999

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Lazard Retirement Equity Portfolio
Lazard Retirement Small Cap Portfolio
Lazard Retirement Bantam Value Portfolio
Lazard Retirement Global Equity Portfolio
Lazard Retirement International Equity Portfolio
Lazard Retirement International
Small Cap Portfolio
Lazard Retirement Emerging Markets Portfolio
Lazard Retirement International
Fixed-Income Portfolio
Lazard Retirement Strategic Yield Portfolio

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

30 Rockefeller Plaza
New York, New York 10112
(800) 823-6300

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.

<PAGE>

TABLE OF CONTENTS
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Risk/Return Summary

Carefully review this important section, which summarizes each Portfolio's
investments, risks and past performance.

5 Lazard Retirement Equity Portfolio

6 Lazard Retirement Small Cap Portfolio

8 Lazard Retirement Bantam Value Portfolio

9 Lazard Retirement Global Equity Portfolio

10 Lazard Retirement International Equity Portfolio

11 Lazard Retirement International Small Cap Portfolio

12 Lazard Retirement Emerging Markets Portfolio

14 Lazard Retirement International Fixed-Income Portfolio

15 Lazard Retirement Strategic Yield Portfolio

Investment Objectives, Strategies and Risks

Review this section for information on investment strategies and their risks.

16 Lazard Retirement Equity Portfolio

17 Lazard Retirement Small Cap Portfolio

19 Lazard Retirement Bantam Value Portfolio

21 Lazard Retirement Global Equity Portfolio

23 Lazard Retirement International Equity Portfolio

25 Lazard Retirement International Small Cap Portfolio

27 Lazard Retirement Emerging Markets Portfolio

29 Lazard Retirement International Fixed-Income Portfolio

31 Lazard Retirement Strategic Yield Portfolio

Fund Management

Review this section for details on the people and organizations who oversee the
Portfolios.

33 Investment Manager

34 Principal Portfolio Managers

35 Administrator

35 Distributor

35 Custodian

2
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Account Policies

Review this section for details on how shares are valued, how to purchase and
sell shares, related charges and payments of dividends and distributions.

36 Buying Shares

36 Distribution and Service (12b-1) Fees

36 Selling Shares

37 Dividends, Distributions and Taxes

38 Financial Highlights

Review this section for recent financial information.

41 Performance Information of Publicly Offered Funds--not the
Portfolios.

Where to read about the performance of similarly managed funds.

Back Cover

Where to learn more about the Portfolios.

Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard
Freres"), 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, each with its own investment
objective, strategies and risk/return profile. Each Portfolio 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).

EQUITY PORTFOLIOS--These Portfolios 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 Equity Portfolios' performance may sometimes
be higher or lower than that of other types of funds (such as those emphasizing
growth stocks).

FIXED-INCOME PORTFOLIOS--These Portfolios will invest in a variety of both U.S.
and non-U.S. fixed-income securities. The Investment Manager focuses on
individual security selection in fixed-income markets. The risks associated with
each Portfolio will vary. Each investor should review carefully the risks
associated with each Portfolio.

4
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RISK/RETURN SUMMARY
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Lazard Retirement
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 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.

Principal Investment Risks

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.

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
Small Cap 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 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.

In choosing stocks for the Portfolio, the Investment Manager looks for smaller,
well managed U.S. companies that have the potential to grow.

Principal Investment Risks

While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price. Small companies carry additional risks because their
earnings tend to be less predictable, their share prices more volatile and their
securities less liquid than larger, more established companies. The value of
your investment in the Portfolio will go up and down, which means that you could
lose money.

6
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The accompanying bar chart and table provide some indication of the risks of
investing in the Lazard Retirement Small Cap 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 Russell 2000 Index, an unmanaged index of smaller
capitalization common stocks. 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

[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]

Year-by-Year Total Returns as of 12/31

1998

(3.22)%
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Best quarter: 12/31/98 12.15%
Worst quarter: 9/30/98 (16.50)%
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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 (3.22)% (3.99)%
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Russell 2000 Index (2.55)% (2.74)%
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Lazard Retirement
Bantam Value Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

The Portfolio invests primarily in equity securities, principally common stocks,
of small U.S. companies with market capitalizations under $500 million that the
Investment Manager believes are undervalued based on their earnings, cash flow
or asset values.

Principal Investment Risks

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.

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Lazard Retirement
Global 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 companies (those whose total market value is more than $1
billion), both U.S. and non-U.S., 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. Foreign securities include special risks, such as
exposure to currency fluctuations, changing political climate and potentially
less liquidity. The value of your investment in the Portfolio will go up and
down, which means that you could lose money.

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.

9
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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.

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.

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.

10
<PAGE>

Lazard Retirement International
Small Cap 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 small non-U.S. companies in the range of the Morgan Stanley
Capital International Europe, Australasia and Far East Small Cap Index 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 smaller,
well managed non-U.S. companies that have the potential to grow. 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.
Small companies carry additional risks because their earnings tend to be less
predictable, their share prices more volatile and their securities less liquid
than larger, more established companies. The value of your investment in the
Portfolio will go up and down, which means that you could lose money.

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.

11
<PAGE>

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.

12
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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

[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]

Year-by-Year Total Returns as of 12/31

1998

(22.58)%
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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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13
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Lazard Retirement International
Fixed-Income Portfolio

Investment Objective

The Portfolio seeks high total return from a combination of current income and
capital appreciation.

Principal Investment Strategies

The Portfolio invests primarily in non-U.S. fixed-income securities of varying
maturities. The Portfolio generally invests at least 85% of its total assets in
investment grade fixed-income securities and may invest up to 15% of its total
assets in fixed-income securities rated below investment grade ("junk" bonds).
Under normal market conditions, the Portfolio's effective duration will range
between two and eight years.

Principal Investment Risks

While bonds are designed to produce a stable stream of income, their prices move
inversely with changes in interest rates. The Portfolio is subject to credit
risk, or the risk that an issuer of bonds held by the Portfolio fails to make
timely interest or principal payments, potentially reducing the Portfolio's
income or share price. The Portfolio's performance will be influenced by
political, social and economic factors affecting non-U.S. countries. 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.

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.

14
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Lazard Retirement
Strategic Yield Portfolio

Investment Objective

The Portfolio seeks total return from a combination of capital appreciation and
current income.

Principal Investment Strategies

The Portfolio invests in a wide variety of U.S. and non-U.S. fixed-income
securities, including those of emerging markets and non-traditional sectors,
many of which are rated, at the time of purchase, below investment grade ("junk"
bonds).

Principal Investment Risks

While bonds are designed to produce a stable stream of income, their prices move
inversely with changes in interest rates. The Portfolio is subject to credit
risk, or the risk that an issuer of bonds held by the Portfolio fails to make
timely interest or principal payments, potentially reducing the Portfolio's
income or share price. The Portfolio's performance will be influenced by
political, social and economic factors affecting non-U.S. countries. These risks
include changes in currency exchange rates, a lack of adequate company
information, political instability and differing auditing and legal standards.
High yield bonds involve greater credit risk than investment grade bonds. They
tend to be more volatile in price, less liquid and are considered speculative.
The value of your investment in the Portfolio will go up and down, which means
that you could lose money.

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.

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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT EQUITY PORTFOLIO
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Ticker Symbol: N/A

Investment Objective and Strategies

The 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.

The Portfolio generally invests at least 80% of its total assets in equity
securities. The Portfolio may invest up to 20% of its total assets in U.S.
Government securities and investment grade debt obligations of U.S.
corporations. The Portfolio also may invest up to 15% of its total assets in
non-U.S. equity or debt securities that trade in U.S. markets.

The Portfolio may engage, to a limited extent, in various investment techniques,
such as options and futures 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

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
smaller companies). 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.

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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT SMALL CAP PORTFOLIO
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Ticker Symbol: N/A

Investment Objective and Strategies

The 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. The Russell 2000 Index is composed of selected common stocks of small,
generally unseasoned U.S. companies.

The Portfolio generally invests at least 65% of its total assets in equity
securities of small U.S. companies. These securities generally have one or more
of the following characteristics:

o are undervalued relative to their earnings, cash flow or asset
values;

o have an attractive price/value relationship with expectations that
some catalyst will cause the perception of value to change within
two years;

o are out of favor due to circumstances which are unlikely to harm the
company's franchise or earnings power;

o have low projected P/E or price-to-cash flow multiples;

o have the potential to become a larger factor in the company's
business;

o have significant debt but have high levels of free cash flow; and

o have a relatively short corporate history with the expectation that
the business may grow.

The Portfolio may invest up to 15% of its total assets in equity or debt
securities of non-U.S. companies. The Portfolio may engage, to a limited extent,
in various investment techniques, such as options and futures transactions and
lending portfolio securities.

Risk Factors

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Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
larger companies). Small companies carry additional risks because their earnings
tend to be less predictable, their share prices more volatile and their
securities less liquid than larger, more established companies. Some of the
Portfolio's investments will rise and fall based on investor perception only.
Investments in value stocks are subject to the risk that they may never reach
what the portfolio manager believes is their full value. They also may decline
in price, even though in theory they are already undervalued. And, while
investments in value stocks may limit downside risk over time, the Portfolio
may, as a trade-off, produce smaller gains than riskier stock funds.

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.

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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT BANTAM VALUE PORTFOLIO
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Ticker Symbol: N/A

Investment Objective and Strategies

The Bantam Value Portfolio seeks long-term capital appreciation. The Portfolio
invests primarily in equity securities, principally common stocks, of small U.S.
companies with market capitalizations under $500 million that the Investment
Manager believes are undervalued based on their earnings, cash flow or asset
values.

The Portfolio generally invests at least 65% of its total assets in equity
securities of small U.S. companies that have one or more of the characteristics
listed in the description of the Lazard Retirement Small Cap Portfolio on page
17. Assets not invested in equity securities of small U.S. companies may be
invested in equity or debt securities of large U.S. and non-U.S. companies.

The Portfolio may engage, to a limited extent, in various investment techniques,
such as options and futures transactions and lending portfolio securities.

Risk Factors

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
larger companies). Small companies carry additional risks because their earnings
tend to be less predictable, their share prices more volatile and their
securities less liquid than larger, more established companies. Some of the
Portfolio's investments will rise and fall based on investor perception only.
Investments in value stocks are subject to the risk that they may never reach
what the portfolio manager believes is their full value. They also may decline
in price, even though in theory they are already undervalued. And, while
investments in value stocks may limit downside risk over time, the Portfolio
may, as a trade-off, produce smaller gains than riskier stock funds.

19
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20
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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT GLOBAL EQUITY PORTFOLIO
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Ticker Symbol: N/A

Investment Objective and Strategies

The Global Equity Portfolio seeks long-term capital appreciation. The Portfolio
invests primarily in equity securities, principally common stocks, of relatively
large companies (those whose total market value is more than $1 billion), both
U.S. and non-U.S., that the Investment Manager believes are undervalued based on
their earnings, cash flow or asset values.

The Portfolio generally invests at least 65% of its total assets in equity
securities, including American and Global Depositary Receipts, of companies
located in at least four different countries, including the United States. The
allocation of the Portfolio's assets among geographic regions 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
at least 25% of the Portfolio's total assets in securities of U.S. companies.

The Portfolio may invest up to 20% of its total assets in investment grade
fixed-income securities. 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 Portfolio's performance will be influenced by political, social and economic
factors affecting companies around the world. These risks include changes in
currency exchange rates, a lack of adequate company information, political
instability, and differing auditing and legal standards. To the extent the
Portfolio invests in companies in emerging market countries, these countries
generally have economic structures that are less diverse and mature and
political systems that are less stable, than those of developed countries.

21
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22
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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
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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.

Risk Factors

23
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24
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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT INTERNATIONAL SMALL CAP PORTFOLIO
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Ticker Symbol: N/A

Investment Objective and Strategies

The International Small Cap Portfolio seeks long-term capital appreciation. The
Portfolio invests primarily in equity securities, principally common stocks, of
relatively small non-U.S. companies in the range of the Morgan Stanley Capital
International Europe, Australasia and Far East Small Cap Index (the "MSCI EAFE
Small Cap Index") that the Investment Manager believes are undervalued based on
their earnings, cash flow or asset values. The MSCI EAFE Small Cap Index is an
unmanaged index of securities listed on foreign stock exchanges.

The Portfolio generally invests at least 65% of its total assets in equity
securities, including American and Global Depositary Receipts, of small non-U.S.
companies that have one or more of the characteristics listed in the description
of the Lazard Retirement Small Cap Portfolio on page 17. The Portfolio generally
invests at least 65% 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 regions 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 Continental Europe, the United Kingdom,
the Pacific Basin, Latin America and Canada.

The Portfolio may invest up to 20% of its total assets in equity securities of
large companies or investment grade debt securities. 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

25
<PAGE>

Small companies carry additional risks because their earnings tend to be less
predictable, their share prices more volatile and their securities less liquid
than larger, more established companies. Some of the Portfolio's investments
will rise and fall based on investor perception only. Investments in value
stocks are subject to the risk that they may never reach what the portfolio
manager believes is their full value. They also may decline in price, even
though in theory they are already undervalued. And, while investments in value
stocks may limit downside risk over time, the Portfolio may, as a trade-off,
produce smaller gains than riskier stock funds.

26
<PAGE>

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.

27
<PAGE>

28
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT INTERNATIONAL FIXED-INCOME PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The International Fixed-Income Portfolio seeks high total return from a
combination of current income and capital appreciation. The Portfolio invests
primarily in non-U.S.

fixed-income securities of varying maturities.

The Portfolio generally invests at least 65% of its total assets in fixed-income
securities of companies within, or governments, their agencies or
instrumentalities of, at least three different non-U.S. countries. The Portfolio
may invest in any region of the world, including emerging market countries.
However, the Investment Manager currently intends to invest the Portfolio's
assets primarily in companies within, or governments of, Continental Europe, the
United Kingdom, Canada and the Pacific Basin. The Portfolio also may invest in
American or Global Depositary Receipts issued in relation to a pool of
fixed-income securities in which the Portfolio could invest directly.

The Portfolio generally invests at least 85% of its total assets in investment
grade fixed-income securities or the unrated equivalent as determined by the
Investment Manager. The Portfolio may invest up to 15% of its total assets in
fixed-income securities rated, at the time of purchase, below investment grade
("junk bonds") and as low as the lowest rating assigned by S&P and Moody's or
the unrated equivalent as determined by the Investment Manager.

The Investment Manager anticipates that, under normal market conditions, the
Portfolio's effective duration will range between two and eight years. Duration
is a measure of how sensitive the securities held by the Portfolio may be to
changes in interest rates.

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

While bonds are designed to produce a stable stream of income, their prices move
inversely with changes in interest rates. The value of your investment in the
Portfolio will go up and down, which means that you could lose money.

The Portfolio is subject to credit risk, or the risk that an issuer of bonds
held by the Portfolio fails to make timely interest or principal payments,
potentially reducing the Portfolio's income or share price.

29
<PAGE>

The Portfolio's investments in lower-rated, higher-yielding bonds are subject to
greater credit risk than its higher-rated investments. Lower-rated bonds tend to
be more volatile, less liquid and are considered speculative.

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 bond
market and may result in the Portfolio not achieving its investment objective.

30
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT STRATEGIC YIELD PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The Strategic Yield Portfolio seeks total return from a combination of capital
appreciation and current income. The Portfolio invests primarily in a wide
variety of U.S. and non-U.S. fixed-income securities, including those of
emerging markets and non-traditional sectors, many of which are rated, at the
time of purchase, below investment grade ("junk" bonds).

The Portfolio generally invests at least 65% of its total assets in fixed-income
securities, such as bonds, debentures, notes, convertible securities, structured
notes, and mortgage-related and asset-backed securities, of U.S and non-U.S
issuers. At least 95% of these fixed-income securities will be rated, at the
time of purchase, at least CCC by S&P or Caa by Moody's, or the unrated
equivalent as determined by the Investment Manager. The remaining 5% may be
rated, at the time of purchase, as low as the lowest rating assigned by S&P and
Moody's. Consequently, the Portfolio may invest all of its assets in
fixed-income securities rated below investment grade.

The Portfolio may invest without limitation in U.S. dollar denominated
fixed-income securities of foreign issuers. The Portfolio also may invest in
American or Global Depositary Receipts issued in relation to a pool of
fixed-income securities in which the Portfolio could invest directly.

When, in the Investment Managers judgment, business or financial conditions
warrant, the Portfolio may assume a temporary defensive position and invest
without limit in investment grade fixed-income securities or 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.

Risk Factors

31
<PAGE>

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 bond
market and may result in the Portfolio not achieving its investment objective.

32
<PAGE>

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.

<TABLE>
<CAPTION>
Effective Annual Rate of
Investment Management Investment Management
Name of Portfolio Fee Payable Fee Paid After Waiver
- ----------------- -------------------- ---------------------
<S> <C> <C>
Equity Portfolio .75% 0%
Small Cap Portfolio .75% 0%
Bantam Value Portfolio .75% N/A
Global Equity Portfolio .75% N/A
International Equity Portfolio .75% 0%
International Small Cap Portfolio .75% N/A
Emerging Markets Portfolio 1.00% 0%
International Fixed-Income Portfolio .75% N/A
Strategic Yield Portfolio .75% N/A
</TABLE>

The Bantam Value, Global Equity, International Small Cap, International
Fixed-Income and Strategic Yield Portfolios had not commenced operations.

33
<PAGE>

Principal Portfolio Managers

All of the Portfolios are managed on a team basis. The names of the principal
persons who are prima rily responsible for the day-to-day management of the
assets of each of the Portfolios are as follows:

Equity Portfolio--Herbert W. Gullquist and Michael S. Rome (each since
inception)

Small Cap Portfolio--Herbert W. Gullquist and Eileen Alexanderson (each since
inception)

Bantam Value Portfolio--Herbert W. Gullquist and Eileen Alexanderson

Global Equity Portfolio--Herbert W. Gullquist, John R. Reinsberg and Michael S.
Rome

International Equity Portfolio--Herbert W. Gullquist and John R. Reinsberg (each
since inception)

International Small Cap Portfolio--Herbert W. Gullquist and John R. Reinsberg

Emerging Markets Portfolio--Herbert W. Gullquist and John R. Reinsberg (each
since inception)

International Fixed-Income Portfolio--Thomas F. Dunn and Ira O. Handler

Strategic Yield Portfolio--Thomas F. Dunn and Ira O. Handler

Biographical Information of Principal Portfolio Managers

Eileen Alexanderson. Ms. Alexanderson has been a Managing Director of the
Investment Manager since January, 1997. Prior thereto, Ms. Alexanderson was a
Senior Vice President of the Investment Manager. She joined the Investment
Manager in 1979.

Thomas F. Dunn. Mr. Dunn is a Managing Director of the Investment Manager and
joined the Investment Manager in January, 1995. Prior thereto, he was a Senior
Vice President of Goldman Sachs Asset Management.

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.

Ira O. Handler. Mr. Handler has been a Managing Director of the Investment
Manager since January 1998 (a Senior Vice President from January 1994 to January
1998). He joined the Investment Manager in May, 1992.

John R. Reinsberg. Mr. Reinsberg is a Managing Director of the Investment
Manager. He joined the Investment Manager in January, 1992.

Michael S. Rome. Mr. Rome is a Managing Director of the Investment Manager. He
joined the Investment Manager in March, 1991.

34
<PAGE>

Administrator

State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as each Portfolio's administrator.

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.

35
<PAGE>

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
cal culated 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.

36
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

Equity Portfolios -- Declare and pay dividends from net investment income
annually but may declare and pay dividends twice annually.

Fixed-Income Portfolios -- Declare dividends from net investment income each
business day and pay dividends monthly.

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.

37
<PAGE>

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 EQUITY PORTFOLIO

Selected data for a share of capital stock outstanding throughout the period:

Period from
3/19/98* to
12/31/98
---------

Net asset value, beginning of period ........................... $ 10.00
---------

Income (loss) from investment operations:
Net investment income (loss) ................................. 0.02
Net realized and unrealized gain (loss) ...................... 1.06
---------
Total from investment operations ............................... 1.08
---------

Less distributions from and in excess of:
Net investment income ........................................ (0.02)
Net realized gains ........................................... (0.01)
---------
Total distributions .......................................... (0.03)
---------
Net asset value, end of period ................................. $ 11.05
=========

Total Return (a) ............................................... 10.9%
Ratios and Supplemental Data:
Net asset value, end of period (000s) .......................... $ 2,513
Ratios to average net assets:
Net expenses (b) ............................................. 1.50%
Gross expenses (b) ........................................... 21.32%
Net investment income (b) .................................... 0.53%
Portfolio turnover rate ........................................ 40%

See Notes to Financial Highlights.

38
<PAGE>

FINANCIAL HIGHLIGHTS (continued)

LAZARD RETIREMENT SMALL CAP 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 ............... $ 9.84 $ 10.00
--------- ---------

Income (loss) from investment operations:
Net investment income (loss) ..................... -- 0.02
Net realized and unrealized gain (loss) .......... (0.32) (0.16)
--------- ---------
Total from investment operations ................... (0.32) (0.14)
--------- ---------

Less distributions from and in excess of:
Net investment income ............................ -- (0.02)
Net realized gains ............................... -- --
--------- ---------
Total distributions .............................. -- (0.02)
--------- ---------
Net asset value, end of period ..................... $ 9.52 $ 9.84
========= =========

Total Return (a) ................................... (3.2)% (1.4)%
Ratios and Supplemental Data:
Net asset value, end of period (000s) .............. $ 1,704 $ 591
Ratios to average net assets:
Net expenses (b) ................................. 1.50% 1.50%
Gross expenses (b) ............................... 16.20% 52.55%
Net investment income (b) ........................ (0.18)% 0.71%
Portfolio turnover rate ............................ 61% 0%

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.

39
<PAGE>

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.

40
<PAGE>

PERFORMANCE INFORMATION OF PUBLICLY OFFERED SERIES OF THE LAZARD FUNDS,
INC.--THIS IS NOT THE PORTFOLIOS' PEFORMANCE
- --------------------------------------------------------------------------------

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. Moreover, the
Retirement Equity Portfolio is a non-diversified fund, while Lazard Equity
Portfolio is a diversified fund. See "Risk/Return Summary--Lazard Retirement
Equity Portfolio."

41
<PAGE>

The total return and average annual total return for the Institutional Shares of
the corresponding Lazard public funds and securities indices for the indicated
periods ended December 31, 1998, as calculated pursuant to SEC guidelines, were:

<TABLE>
<CAPTION>
Total Return
Name of Public Fund and Index Period Ended December 31, 1998
- ----------------------------- ------------------------------------------------
One Three Five Ten Since
Year Years Years Years Inception*
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 17.31% 76.01% 152.59% 373.80% 403.93%
Standard & Poor's 500 Index** 28.57% 110.83% 193.89% 479.58% 486.34%

Lazard Small Cap Portfolio (12.62%) 38.68% 71.95% -- 191.73%
Russell 2000 Index** (2.55%) 38.91% 75.17% -- 154.05%

Lazard Bantam Value Portfolio (13.82%) -- -- -- 53.85%
Russell 2000 Index** (2.55%) -- -- -- 34.86%

Lazard Global Equity Portfolio 17.10% -- -- -- 56.27%
MSCI World Index** 24.34% -- -- -- 62.36%

Lazard International Equity Portfolio 16.04% 50.09% 70.21% -- 114.93%
MSCI EAFE Index** 20.00% 29.52% 55.24% -- 81.20%

Lazard International Small Cap Portfolio 7.55% 24.72% 21.33% -- 31.80%
MSCI EAFE Small Cap Index** 5.44% (20.65%) (15.79%) -- (8.60%)
Salomon EMI Index Ex-U.S.** 12.15% 8.99% 24.42% -- 32.43%

Lazard Emerging Markets Portfolio (23.49%) (14.72%) -- -- (20.86%)
MSCI Emerging Markets Free Index** (25.34%) (30.01%) -- -- (33.60%)
IFC Investable Total Return Index** (22.02%) (27.28%) -- -- (33.87%)

Lazard International Fixed-Income Portfolio+ 13.20% 12.79% 40.26% -- 72.06%
Salomon World Gov't Bond Index Ex-U.S.** 17.79% 17.40% 48.74% -- 93.04%

Lazard Strategic Yield Portfolio++ 0.75% 20.68% 33.84% -- 67.42%
One Month LIBOR USD Fixed Index** 5.54% 17.57% 30.30% -- 41.24%

<CAPTION>
Average Annual Total Return
Name of Public Fund and Index Period Ended December 31, 1998 Total Annual
- ----------------------------- ---------------------------------------------- Operating
One Three Five Ten Since Expenses
Year Years Years Years Inception* 12/31/98
---------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 17.31% 20.74% 20.36% 16.83% 14.98% 0.85%
Standard & Poor's 500 Index** 28.57% 28.23% 24.06% 19.21% 16.50% --

Lazard Small Cap Portfolio (12.62%) 11.52% 11.45% -- 16.11% 0.81%
Russell 2000 Index** (2.55%) 11.58% 11.86% -- 13.89% --

Lazard Bantam Value Portfolio (13.82%) -- -- -- 16.39% 1.05%***
Russell 2000 Index** (2.55%) -- -- -- 11.16% --

Lazard Global Equity Portfolio 17.10% -- -- -- 16.09% 1.05%***
MSCI World Index** 24.34% -- -- -- 17.57% --

Lazard International Equity Portfolio 16.04% 14.49% 11.22% -- 11.26% 0.90%
MSCI EAFE Index** 20.00% 9.00% 9.19% -- 8.65% --

Lazard International Small Cap Portfolio 7.55% 7.64% 3.94% -- 5.58% 1.04%
MSCI EAFE Small Cap Index** 5.44% (7.42%) (3.38%) -- (1.75%) --
Salomon EMI Index Ex-U.S.** 12.15% 2.91% 4.47% -- 5.68% --

Lazard Emerging Markets Portfolio (23.49%) (5.17%) -- -- (5.10%) 1.28%***
MSCI Emerging Markets Free Index** (25.34%) (11.22%) -- -- (8.70%) --
IFC Investable Total Return Index** (22.02%) (10.07%) -- -- (8.85%) --

Lazard International Fixed-Income Portfolio+ 13.20% 4.09% 7.00% -- 7.86% 1.09%***
Salomon World Gov't Bond Index Ex-U.S.** 17.79% 5.49% 8.26% -- 9.61% --

Lazard Strategic Yield Portfolio++ 0.75% 6.47% 6.00% -- 7.36% 0.90%
One Month LIBOR USD Fixed Index** 5.54% 5.55% 5.44% -- 4.88% --
</TABLE>

* Inception dates for Institutional Shares are: Lazard Equity
Portfolio--June 1, 1987; Lazard Small Cap Portfolio--October 30, 1991;
Lazard Bantam Value Portfolio--March 1, 1996; Lazard Global Equity
Portfolio--January 4, 1996; Lazard International Equity Portfolio--October
29, 1991; Lazard International Small Cap Portfolio--December 1, 1993;
Lazard Emerging Markets Portfolio--July 15, 1994; Lazard International
Fixed-Income Portfolio--November 8, 1991 and Lazard Strategic Yield
Portfolio--October 1, 1991.

** The performance data of the indices have been prepared from sources and
data that the Investment Manager believes to be reliable, but no
representation is made as to their accuracy. These indices are unmanaged
and have no fees or costs. The S&P 500 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) World Index is an arithmetic,
market value-weighted average return net of dividends taxation, which is
derived from equities of EAFE Index countries plus equities from Canada
and the United States. The Morgan Stanley Capital International, Europe,
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 EAFE Small Cap
Index is an arithmetic, market-value weighted average of the performance
of securities listed on the stock exchanges of EAFE Index countries. The
Salomon Extended Market Index (EMI) Ex-US represents the bottom 20% based
on market capitalization of the universe of institutionally available
global securities of non-U.S. companies with a market capitalization
greater than $100 million. The 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. The Salomon World Government Bond Index
Ex-US is a market capitalization-weighted index of institutionally traded
fixed rate non-U.S. dollar government bonds, fully hedged into U.S.
dollars. The London Interbank Offered Rate-US dollar Fixed Index is an
average derived from sixteen quotations provided by banks determined by
the British Bankers Association. Effective January 1, 1998, Lazard
International Small Cap Portfolio changed its comparative index to the
MSCI EAFE Small Cap Index from the Salomon EMI Index Ex-US. Also on
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 these indices
provide a more accurate comparison given each 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.

+ Effective January 1, 1993, Lazard International Fixed-Income Portfolio,
formerly Lazard Global Fixed-Income Portfolio, was renamed to reflect
changes in certain non-fundamental investment policies of the public fund.
The performance of the public fund is now measured by the index "excluding
U.S." Performance of the index "Since Inception" shown above is a blended
return of the index "including U.S." and the index "excluding U.S." for
the applicable periods.

++ Effective May 1, 1993, Lazard Strategic Yield Portfolio, formerly Lazard
High-Yield Portfolio, was renamed to reflect changes in certain
non-fundamental investment policies of the public fund.

42
<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.

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

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

<PAGE>
LAZARD RETIREMENT SERIES

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

Prospectus

May 1, 1999

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

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

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

30 Rockefeller Plaza
New York, New York 10112
(800) 823-6300

<PAGE>

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

Risk/Return Summary

Carefully review this important section, which summarizes each Portfolio's
investments, risks and past performance.

5 Lazard Retirement Equity Portfolio

6 Lazard Retirement Small Cap Portfolio

8 Lazard Retirement International Equity Portfolio

9 Lazard Retirement Emerging Markets Portfolio

Investment Objectives, Strategies and Risks

Review this section for information on investment strategies and their risks.

11 Lazard Retirement Equity Portfolio

12 Lazard Retirement Small Cap Portfolio

14 Lazard Retirement International Equity Portfolio

16 Lazard Retirement Emerging Markets Portfolio

Fund Management

Review this section for details on the people and organizations who oversee the
Portfolios.

18 Investment Manager

18 Principal Portfolio Managers

19 Administrator

19 Distributor

19 Custodian

Account Policies

Review this section for details on how shares are valued, how to purchase and
sell shares, related charges and payments of dividends and distributions.

20 Buying Shares

20 Distribution and Service (12b-1) Fees

20 Selling Shares

21 Dividends, Distributions and Taxes

2
<PAGE>

22 Financial Highlights

Review this section for recent financial information.

25 Performance Information of Publicly Offered
Funds--not the Portfolios

Where to read about the performance of similarly managed funds.

Back Cover

Where to learn more about the Portfolios.

Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard
Freres"), serves as each Portfolio's investment manager.

3
<PAGE>

The Portfolios

The Fund consists of nine separate Portfolios, only four of which, Retirement
Equity Portfolio, Retirement Small Cap Portfolio, 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
<PAGE>

RISK/RETURN SUMMARY

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

Lazard Retirement
Equity Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

Principal Investment Risks

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
<PAGE>

Lazard Retirement
Small Cap Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

In choosing stocks for the Portfolio, the Investment Manager looks for smaller,
well managed U.S. companies that have the potential to grow.

Principal Investment Risks

6
<PAGE>

Performance Bar Chart and Table

[THE FOLLOWING INFORMATION WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]

Year-by-Year Total Returns as of 12/31

1998

(3.22)%
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Best quarter: 12/31/98 12.15%
Worst quarter: 9/30/98 (16.50)%
- --------------------------------------------------------------------------------

Average Annual Total Returns
(for the periods ending December 31, 1998)

7
<PAGE>

Lazard Retirement
International Equity Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

Principal Investment Risks

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.

8
<PAGE>

Lazard Retirement
Emerging Markets Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

Principal Investment Risks

9
<PAGE>

Performance Bar Chart and Table

[THE FOLLOWING INFORMATION WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]

Year-by-Year Total Returns as of 12/31

1998

(22.85)%
- --------------------------------------------------------------------------------

Average Annual Total Returns
(for the periods ending December 31, 1998)

Inception Date Past Year Since Inception
- --------------------------------------------------------------------------------
Portfolio 11/4/97 (22.85)% (23.31)%
- --------------------------------------------------------------------------------
MSCI Emerging Markets
(Free) Index (25.34)% (26.32)%
- --------------------------------------------------------------------------------
IFC Investable Total
Return Index (22.02)% (21.69)%
- --------------------------------------------------------------------------------

10
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The Portfolio may engage, to a limited extent, in various investment techniques,
such as options and futures transactions, and lending portfolio securities.

Risk Factors

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
smaller companies). 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.

11
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The Portfolio generally invests at least 65% of its total assets in equity
securities of small U.S. companies. These securities generally have one or more
of the following characteristics:

o are undervalued relative to their earnings, cash flow or asset
values;

o have an attractive price/value relationship with expectations that
some catalyst will cause the perception of value to change within
two years;

o are out of favor due to circumstances which are unlikely to harm the
company's franchise or earnings power;

o have low projected P/E or price-to-cash flow multiples;

o have the potential to become a larger factor in the company's
business;

o have significant debt but have high levels of free cash flow; and

o have a relatively short corporate history with the expectation that
the business may grow.

Risk Factors

12
<PAGE>

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
larger companies). Small companies carry additional risks because their earnings
tend to be less predictable, their share prices more volatile and their
securities less liquid than larger, more established companies. Some of the
Portfolio's investments will rise and fall based on investor perception only.
Investments in value stocks are subject to the risk that they may never reach
what the portfolio manager believes is their full value. They also may decline
in price, even though in theory they are already undervalued. And, while
investments in value stocks may limit downside risk over time, the Portfolio
may, as a trade-off, produce smaller gains than riskier stock funds.

13
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

Risk Factors

14
<PAGE>

15
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

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.

16
<PAGE>

17
<PAGE>

FUND MANAGEMENT

Investment Manager

Effective Annual Rate of
Investment Management Investment Management
Name of Portfolio Fee Payable Fee Paid After Waiver
- --------------- -------------------- ---------------------

Equity Portfolio .75% 0%
Small Cap Portfolio .75% 0%
International Equity Portfolio .75% 0%
Emerging Markets Portfolio 1.00% 0%

Principal Portfolio Managers

Equity Portfolio--Herbert W. Gullquist and Michael S. Rome (each since
inception)

Small Cap Portfolio--Herbert W. Gullquist and Eileen Alexanderson (each since
inception)

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)

18
<PAGE>

John R. Reinsberg. Mr. Reinsberg is a Managing Director of the Investment
Manager. He joined the Investment Manager in January, 1992.

Michael S. Rome. Mr. Rome is a Managing Director of the Investment Manager. He
joined the Investment Manager in March, 1991.

Administrator

State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as each Portfolio's administrator.

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

19
<PAGE>

ACCOUNT POLICIES

Buying 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.

Distribution and Service (12b-1) Fees

Selling Shares

20
<PAGE>

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.

Participating Insurance Companies should consult their tax advisers about
federal, state and local tax consequences.

21
<PAGE>

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 EQUITY PORTFOLIO

Selected data for a share of capital stock outstanding throughout the period:

Period from
3/19/98* to
12/31/98
----------

Less distributions from and in excess of:
Net investment income ................................... (0.02)
Net realized gains ...................................... (0.01)
-------
Total distributions ..................................... (0.03)
-------
Net asset value, end of period ............................ $ 11.05
=======

Total Return (a) .......................................... 10.9%
Ratios and Supplemental Data:
Net asset value, end of period (000s) ..................... $ 2,513
Ratios to average net assets:
Net expenses (b) ........................................ 1.50%
Gross expenses (b) ...................................... 21.32%
Net investment income (b) ............................... 0.53%
Portfolio turnover rate ................................... 40%

See Notes to Financial Highlights.

22
<PAGE>

FINANCIAL HIGHLIGHTS (continued)

LAZARD RETIREMENT SMALL CAP 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.............. $ 9.84 $10.00
------- ------
Income (loss) from investment operations:
Net investment income (loss).................... -- 0.02
Net realized and unrealized gain (loss)......... 0.32) (0.16)
------- ------
Total from investment operations.................. (0.32) (0.14)
------- ------

Less distributions from and in excess of:
Net investment income........................... -- (0.02)
Net realized gains.............................. -- --
------- ------
Total distributions............................. -- (0.02)
------- ------
Net asset value, end of period $ 9.52 $ 9.84
======= ======

Total Return (a).................................. (3.2)% (1.4)%
Ratios and Supplemental Data:
Net asset value, end of period (000s)............. $1,704 $ 591
Ratios to average net assets:
Net expenses (b)................................ 1.50% 1.50%
Gross expenses (b).............................. 16.20% 52.55%
Net investment income (b)....................... (0.18)% 0.71%
Portfolio turnover rate........................... 61% 0%

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.

23
<PAGE>

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.

(b) Annualized for periods of less than one year.

24
<PAGE>

PERFORMANCE INFORMATION OF PUBLICLY OFFERED SERIES OF THE LAZARD FUNDS,
INC.--THIS IS NOT THE PORTFOLIOS' PERFORMANCE
- --------------------------------------------------------------------------------

Name of Public Fund Total Return Average Annual Total Return
and Index Period Ended December 31, 1998 Period Ended December 31, 1998 Total Annual
---------------------------------------------- ------------------------------------------- Operating
One Three Five Ten Since One Three Five Ten Since Expenses
Year Years Years Years Inception* Year Years Years Years Inception* 12/31/98
---------------------------------------------- ------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 17.31% 76.01% 152.59% 373.80% 403.93% 17.31% 20.74% 20.36% 16.83% 14.98% 0.85%
Standard & Poor's 500
Index** 28.57% 110.83% 193.89% 479.58% 486.34% 28.57% 28.23% 24.06% 19.21% 16.50% --

Lazard Small Cap
Portfolio (12.62%) 38.68% 71.95% -- 191.73% (12.62%) 11.52% 11.45% -- 16.11% 0.81%
Russell 2000 Index** (2.55%) 38.91% 75.17% -- 154.05% (2.55%) 11.58% 11.86% -- 13.89% --

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>

- ----------

* Inception dates for Institutional Shares are: Lazard Equity
Portfolio--June 1, 1987; Lazard Small Cap Portfolio--October 30, 1991;
Lazard International Equity Portfolio--October 29, 1991 and Lazard
Emerging Markets Portfolio--July 15, 1994.

*** 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.

25
<PAGE>

For more information about the Portfolios, the following documents are available
free upon request:

Annual/Semiannual Reports (Reports):

Statement of Additional Information (SAI):

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

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

<PAGE>

LAZARD RETIREMENT SERIES
- --------------------------------------------------------------------------------

Prospectus

May 1, 1999

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

Lazard Retirement Equity Portfolio
Lazard Retirement Small Cap Portfolio

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

30 Rockefeller Plaza
New York, New York 10112
(800) 823-6300

<PAGE>

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

Risk/Return Summary

Carefully review this important section, which summarizes each Portfolio's
investments, risks and past performance.

5 Lazard Retirement Equity Portfolio

6 Lazard Retirement Small Cap Portfolio

Investment Objectives, Strategies and Risks

Review this section for information on investment strategies and their risks.

8 Lazard Retirement Equity Portfolio

9 Lazard Retirement Small Cap Portfolio

Fund Management

Review this section for details on the people and organizations who oversee the
Portfolios.

11 Investment Manager

11 Principal Portfolio Managers

12 Administrator

12 Distributor

12 Custodian

Account Policies

Review this section for details on how shares are valued, how to purchase and
sell shares, related charges and payments of dividends and distributions.

13 Buying Shares

13 Distribution and Service (12b-1) Fees

13 Selling Shares

14 Dividends, Distributions and Taxes

2
<PAGE>

15 Financial Highlights

Review this section for recent financial information.

17 Performance Information of Publicly Offered
Funds--not the Portfolios

Where to read about the performance of similarly managed funds.

Back Cover

Where to learn more about the Portfolios.

Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard
Freres"), serves as each Portfolio's investment manager.

3
<PAGE>

The Portfolios

The Fund consists of nine separate Portfolios, only two of which, the Retirement
Equity Portfolio and the Retirement Small Cap 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).

4
<PAGE>

RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------

Lazard Retirement
Equity Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

Principal Investment Risks

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
<PAGE>

Lazard Retirement
Small Cap Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

In choosing stocks for the Portfolio, the Investment Manager looks for smaller,
well managed U.S. companies that have the potential to grow.

Principal Investment Risks

6
<PAGE>

Performance Bar Chart and Table

[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]

Year-by-Year Total Returns as of 12/31

1998

(3.22%)
- --------------------------------------------------------------------------------

Average Annual Total Returns
(for the periods ending December 31, 1998)

7
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The Portfolio may engage, to a limited extent, in various investment techniques,
such as options and futures transactions, and lending portfolio securities.

Risk Factors

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
smaller companies). 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
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The Portfolio generally invests at least 65% of its total assets in equity
securities of small U.S. companies. These securities generally have one or more
of the following characteristics:

o are undervalued relative to their earnings, cash flow or asset
values;

o have an attractive price/value relationship with expectations
that some catalyst will cause the perception of value to
change within two years;

o are out of favor due to circumstances which are unlikely to
harm the company's franchise or earnings power;

o have low projected P/E or price-to-cash flow multiples;

o have the potential to become a larger factor in the company's
business;

o have significant debt but have high levels of free cash flow;
and

o have a relatively short corporate history with the expectation
that the business may grow.

Risk Factors

9
<PAGE>

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
larger companies). Small companies carry additional risks because their earnings
tend to be less predictable, their share prices more volatile and their
securities less liquid than larger, more established companies. Some of the
Portfolio's investments will rise and fall based on investor perception only.
Investments in value stocks are subject to the risk that they may never reach
what the portfolio manager believes is their full value. They also may decline
in price, even though in theory they are already undervalued. And, while
investments in value stocks may limit downside risk over time, the Portfolio
may, as a trade-off, produce smaller gains than riskier stock funds.

10
<PAGE>

FUND MANAGEMENT

Investment Manager

Effective Annual Rate of
Investment Management Investment Management
Name of Portfolio Fee Payable Fee Paid After Waiver
- --------------- -------------------- ---------------------

Equity Portfolio .75% 0%
Small Cap Portfolio .75% 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:

Equity Portfolio--Herbert W. Gullquist and Michael S. Rome (each since
inception)

Small Cap Portfolio--Herbert W. Gullquist and Eileen Alexanderson (each since
inception)

Biographical Information of Principal Portfolio Managers

Michael S. Rome. Mr. Rome is a Managing Director of the Investment Manager. He
joined the Investment Manager in March, 1991.

11
<PAGE>

Administrator

State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as each Portfolio's administrator.

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

12
<PAGE>

ACCOUNT POLICIES

Buying 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.

Distribution and Service (12b-1) Fees

Selling Shares

13
<PAGE>

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.

Participating Insurance Companies should consult their tax advisers about
federal, state and local tax consequences.

14
<PAGE>

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 EQUITY PORTFOLIO

Selected data for a share of capital stock outstanding throughout the period:

Period from
3/19/98* to
12/31/98
----------

Net asset value, beginning of period ...................... $ 10.00
-------
Income (loss) from investment operations:
Net investment income (loss) ............................ 0.02
Net realized and unrealized gain (loss) ................. 1.06
-------
Total from investment operations .......................... 1.08
-------
Less distributions from and in excess of:
Net investment income ................................... (0.02)
Net realized gains ...................................... (0.01)
-------
Total distributions ..................................... (0.03)
-------
Net asset value, end of period ............................ $ 11.05
=======
Total Return (a) .......................................... 10.9%
Ratios and Supplemental Data:
Net asset value, end of period (000s) ..................... $2,513
Ratios to average net assets:
Net expenses (b) ........................................ 1.50%
Gross expenses (b) ...................................... 21.32%
Net investment income (b) ............................... 0.53%
Portfolio turnover rate ................................... 40%

See Notes to Financial Highlights.

15
<PAGE>

FINANCIAL HIGHLIGHTS (continued)

LAZARD RETIREMENT small cap 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 ............ $ 9.84 $ 10.00
--------- ---------
Income (loss) from investment operations:
Net investment income (loss) .................. -- 0.02
Net realized and unrealized gain (loss) ....... (0.32) (0.16)
--------- ---------
Total from investment operations ................ (0.32) (0.14)
--------- ---------
Less distributions from and in excess of:
Net investment income ......................... -- (0.02)
Net realized gains ............................ -- --
--------- ---------
Total distributions ........................... -- (0.02)
--------- ---------
Net asset value, end of period .................. $ 9.52 $ 9.84
========= =========
Total Return (a) ................................ (3.2)% (1.4)%
Ratios and Supplemental Data:
Net asset value, end of period (000s) ........... $ 1,704 $ 591
Ratios to average net assets:
Net expenses (b) .............................. 1.50% 1.50%
Gross expenses (b) ............................ 16.20% 52.55%
Net investment income (b) ..................... (0.18)% 0.71%
Portfolio turnover rate ......................... 61% 0%

Notes to Financial Highlights:

* Commencement of operations.

(b) Annualized for periods of less than one year.

16
<PAGE>

PERFORMANCE INFORMATION OF PUBLICLY OFFERED SERIES OF THE LAZARD FUNDS, INC. --
THIS IS NOT THE PORTFOLIOS' PERFORMANCE
- --------------------------------------------------------------------------------

Lazard Small Cap Portfolio (12.62%) 38.68% 71.95% -- 191.73%
Russell 2000 Index** (2.55%) 38.91% 75.17% -- 154.05%

<CAPTION>
Average Annual Total Return
Name of Public Fund and Index Period Ended December 31, 1998 Total Annual
- ----------------------------- ------------------------------------------ Operating
One Three Five Ten Since Expenses
Year Years Years Years Inception* 12/31/98
------------------------------------------ --------
<S> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 17.31% 20.74% 20.36% 16.83% 14.98% 0.85%
Standard & Poor's 500 Index** 28.57% 28.23% 24.06% 19.21% 16.50% --

Lazard Small Cap Portfolio (12.62%) 11.52% 11.45% -- 16.11% 0.81%
Russell 2000 Index** (2.55%) 11.58% 11.86% -- 13.89% --
</TABLE>

- ----------
* Inception dates for Institutional Shares are: Lazard Equity
Portfolio--June 1, 1987 and Lazard Small Cap Portfolio--October 30, 1991.

17
<PAGE>

For more information about the Portfolios, the following documents are available
free upon request:

Annual/Semiannual Reports (Reports):

Statement of Additional Information (SAI):

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

<PAGE>
LAZARD RETIREMENT SERIES

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

Prospectus

May 1, 1999

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

Lazard Retirement Equity Portfolio
Lazard Retirement International Equity Portfolio

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

30 Rockefeller Plaza
New York, New York 10112
(800) 823-6300

<PAGE>

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

Risk/Return Summary

Carefully review this important section, which summarizes each Portfolio's
investments, risks and past performance.

5 Lazard Retirement Equity Portfolio

6 Lazard Retirement International Equity Portfolio

Investment Objectives, Strategies and Risks

Review this section for information on investment strategies and their risks.

7 Lazard Retirement Equity Portfolio

8 Lazard Retirement International Equity Portfolio

Fund Management

Review this section for details on the people and organizations who oversee the
Portfolios.

10 Investment Manager

10 Principal Portfolio Managers

11 Administrator

11 Distributor

11 Custodian

Account Policies

Review this section for details on how shares are valued, how to purchase and
sell shares, related charges and payments of dividends and distributions.

12 Buying Shares

12 Distribution and Service (12b-1) Fees

12 Selling Shares

13 Dividends, Distributions and Taxes

2
<PAGE>

14 Financial Highlights

Review this section for recent financial information.

16 Performance Information of Publicly Offered Funds--not the
Portfolios

Where to read about the performance of similarly managed funds.

Back Cover

Where to learn more about the Portfolios.

Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard
Freres"), serves as each Portfolio's investment manager.

3
<PAGE>

The Portfolios

The Fund consists of nine separate Portfolios, only two of which, the Retirement
Equity Portfolio and the Retirement International Equity 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).

4
<PAGE>

RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------

Lazard Retirement
Equity Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

Principal Investment Risks

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
<PAGE>

Lazard Retirement
International Equity Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

Principal Investment Risks

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.

6
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The Portfolio may engage, to a limited extent, in various investment techniques,
such as options and futures transactions, and lending portfolio securities.

Risk Factors

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
smaller companies). 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.

7
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

Risk Factors

8
<PAGE>

9
<PAGE>

FUND MANAGEMENT

Investment Manager

Principal Portfolio Managers

Equity Portfolio--Herbert W. Gullquist and Michael S. Rome (each since
inception)

International Equity Portfolio--Herbert W. Gullquist and John R. Reinsberg (each
since inception)

Biographical Information of Principal Portfolio Managers

John R. Reinsberg. Mr. Reinsberg is a Managing Director of the Investment
Manager. He joined the Investment Manager in January, 1992.

Michael S. Rome. Mr. Rome is a Managing Director of the Investment Manager. He
joined the Investment Manager in March, 1991.

10
<PAGE>

Administrator

State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as each Portfolio's administrator.

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

11
<PAGE>

ACCOUNT POLICIES

Buying 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.

Distribution and Service (12b-1) Fees

Selling Shares

12
<PAGE>

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.

Participating Insurance Companies should consult their tax advisers about
federal, state and local tax consequences.

13
<PAGE>

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 EQUITY PORTFOLIO

Selected data for a share of capital stock outstanding throughout the period:

Period from
3/19/98* to
12/31/98
----------

Net asset value, beginning of period ............................ $ 10.00
---------
Income (loss) from investment operations:
Net investment income (loss) .................................. 0.02
Net realized and unrealized gain (loss) ....................... 1.06
---------
Total from investment operations ................................ 1.08
---------
Less distributions from and in excess of:
Net investment income ......................................... (0.02)
Net realized gains ............................................ (0.01)
---------
Total distributions ........................................... (0.03)
---------
Net asset value, end of period .................................. $ 11.05
=========

Total Return (a) ................................................ 10.9%
Ratios and Supplemental Data:
Net asset value, end of period (000s) ........................... $ 2,513
Ratios to average net assets:
Net expenses (b) .............................................. 1.50%
Gross expenses (b) ............................................ 21.32%
Net investment income (b) ..................................... 0.53%
Portfolio turnover rate ......................................... 40%

See Notes to Financial Highlights.

14
<PAGE>

FINANCIAL HIGHLIGHTS (continued)

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%

Notes to Financial Highlights:

* Commencement of operations.

(b) Annualized for periods of less than one year.

15
<PAGE>

<TABLE>
<CAPTION>
Total Return
Name of Public Fund and Index Period Ended December 31, 1998
- ----------------------------- -----------------------------------------------
One Three Five Ten Since
Year Years Years Years Inception*
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 17.31% 76.01% 152.59% 373.80% 403.93%
Standard & Poor's 500 Index** 28.57% 110.83% 193.89% 479.58% 486.34%

Lazard International Equity Portfolio 16.04% 50.09% 70.21% -- 114.93%
MSCI EAFE Index** 20.00% 29.52% 55.24% -- 81.20%

<CAPTION>
Average Annual Total Return
Name of Public Fund and Index Period Ended December 31, 1998 Total Annual
- ----------------------------- --------------------------------------------- Operating
One Three Five Ten Since Expenses
Year Years Years Years Inception* 12/31/98
--------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 17.31% 20.74% 20.36% 16.83% 14.98% 0.85%
Standard & Poor's 500 Index** 28.57% 28.23% 24.06% 19.21% 16.50% --

Lazard International Equity Portfolio 16.04% 14.49% 11.22% -- 11.26% 0.90%
MSCI EAFE Index** 20.00% 9.00% 9.19% -- 8.65% --
</TABLE>

- ----------
* Inception dates for Institutional Shares are: Lazard Equity
Portfolio--June 1, 1987 and Lazard International Equity Portfolio--October
29, 1991.
** The performance data of the indices have been prepared from sources and
data that the Investment Manager believes to be reliable, but no
representation is made as to their accuracy. These indices are unmanaged
and have no fees or costs. The S&P 500 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 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.

16
<PAGE>

For more information about the Portfolios, the following documents are available
free upon request:

Annual/Semiannual Reports (Reports):

Statement of Additional Information (SAI):

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

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

<PAGE>

LAZARD RETIREMENT SERIES

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

Prospectus

May 1, 1999

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

Lazard Retirement Small Cap Portfolio
Lazard Retirement Emerging Markets Portfolio

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

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.

<PAGE>

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

Risk/Return Summary

Carefully review this important section, which summarizes each Portfolio's
investments, risks and past performance.

5 Lazard Retirement Small Cap Portfolio

7 Lazard Retirement Emerging Markets Portfolio

Investment Objectives, Strategies and Risks

Review this section for information on investment strategies and their risks.

9 Lazard Retirement Small Cap Portfolio

11 Lazard Retirement Emerging Markets Portfolio

Fund Management

Review this section for details on the people and organizations who oversee the
Portfolios.

13 Investment Manager

13 Principal Portfolio Managers

14 Administrator

14 Distributor

14 Custodian

Account Policies

Review this section for details on how shares are valued, how to purchase and
sell shares, related charges and payments of dividends and distributions.

14 Buying Shares

15 Distribution and Service (12b-1) Fees

15 Selling Shares

15 Dividends, Distributions and Taxes

2
<PAGE>

15 Financial Highlights

Review this section for recent financial information.

17 Performance Information of Publicly Offered Funds--not
the Portfolios

Where to read about the performance of similarly managed funds.

Back Cover

Where to learn more about the Portfolios.

Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard
Freres"), serves as each Portfolio's investment manager.

3
<PAGE>

The Portfolios

The Fund consists of nine separate Portfolios, only two of which, Retirement
Small Cap 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).

4
<PAGE>

RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------

Lazard Retirement Small Cap Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

In choosing stocks for the Portfolio, the Investment Manager looks for smaller,
well managed U.S. companies that have the potential to grow.

Principal Investment Risks

5
<PAGE>

Performance Bar Chart and Table

[The Following Table was Depicted as a Bar Chart in the Printed Material.]

Year-by-Year Total Returns as of 12/31

1998
(3.22)%
- --------------------------------------------------------------------------------
Best quarter: 12/31/98 12.15%
Worst quarter: 9/30/98 (16.50)%
- --------------------------------------------------------------------------------

Average Annual Total Returns
(for the periods ending December 31, 1998)

6
<PAGE>

Lazard Retirement Emerging Markets Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

Principal Investment Risks

7
<PAGE>

Performance Bar Chart and Table

[The Following Table was Depicted as a Bar Chart in the Printed Material.]

Year-by-Year Total Returns as of 12/31

1998
(22.85)%
- --------------------------------------------------------------------------------
Best quarter: 12/31/98 11.78%
Worst quarter: 9/30/98 (22.58)%
- --------------------------------------------------------------------------------

Average Annual Total Returns
(for the periods ending December 31, 1998)

8
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The Portfolio generally invests at least 65% of its total assets in equity
securities of small U.S. companies. These securities generally have one or more
of the following characteristics:

o are undervalued relative to their earnings, cash flow or asset
values;

o have an attractive price/value relationship with expectations
that some catalyst will cause the perception of value to
change within two years;

o are out of favor due to circumstances which are unlikely to
harm the company's franchise or earnings power;

o have low projected P/E or price-to-cash flow multiples;

o have the potential to become a larger factor in the company's
business;

o have significant debt but have high levels of free cash flow;
and

o have a relatively short corporate history with the expectation
that the business may grow.

Risk Factors

9
<PAGE>

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
larger companies). Small companies carry additional risks because their earnings
tend to be less predictable, their share prices more volatile and their
securities less liquid than larger, more established companies. Some of the
Portfolio's investments will rise and fall based on investor perception only.
Investments in value stocks are subject to the risk that they may never reach
what the portfolio manager believes is their full value. They also may decline
in price, even though in theory they are already undervalued. And, while
investments in value stocks may limit downside risk over time, the Portfolio
may, as a trade-off, produce smaller gains than riskier stock funds.

10
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

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.

11
<PAGE>

12
<PAGE>

FUND MANAGEMENT

Investment Manager

Effective Annual Rate of
Investment Management Investment Management
Name of Portfolio Fee Payable Fee Paid After Waiver
- ----------------- --------------------- ------------------------

Small Cap 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:

Small Cap Portfolio--Herbert W. Gullquist and Eileen Alexanderson (each since
inception)

Emerging Markets Portfolio--Herbert W. Gullquist and John R. Reinsberg (each
since inception)

Biographical Information of Principal Portfolio Managers

John R. Reinsberg. Mr. Reinsberg is a Managing Director of the Investment
Manager. He joined the Investment Manager in January, 1992.

13
<PAGE>

Administrator

State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as each Portfolio's administrator.

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

ACCOUNT POLICIES

Buying 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.

14
<PAGE>

Distribution and Service (12b-1) Fees

Selling Shares

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.

Participating Insurance Companies should consult their tax advisers about
federal, state and local tax consequences.

15
<PAGE>

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 small cap 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 ....... $ 9.84 $ 10.00
--------- ---------
Income (loss) from investment operations:
Net investment income (loss) ............. -- 0.02
Net realized and unrealized gain (loss) .. (0.32) (0.16)
--------- ---------
Total from investment operations ........... (0.32) (0.14)
--------- ---------
Less distributions from and in excess of:
Net investment income .................... -- (0.02)
Net realized gains ....................... -- --
--------- ---------
Total distributions ...................... -- (0.02)
--------- ---------
Net asset value, end of period ............. $ 9.52 $ 9.84
========= =========

Total Return (a) ........................... (3.2)% (1.4)%
Ratios and Supplemental Data:
Net asset value, end of period (000s) ...... $ 1,704 $ 591
Ratios to average net assets:
Net expenses (b) ......................... 1.50% 1.50%
Gross expenses (b) ....................... 16.20% 52.55%
Net investment income (b) ................ (0.18)% 0.71%
Portfolio turnover rate .................... 61% 0%

See Notes to Financial Highlights.

16
<PAGE>

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.

(b) Annualized for periods of less than one year.

17
<PAGE>

<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 Small Cap Portfolio .......... (12.62%) 38.68% 71.95% 191.73% (12.62%) 11.52% 11.45% 16.11% 0.81%
Russell 2000 Index** ................ (2.55%) 38.91% 75.17% 154.05% (2.55%) 11.58% 11.86% 13.89% --

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>

* Inception dates for Institutional Shares are: Lazard Small Cap
Portfolio--October 30, 1991 and Lazard Emerging Markets Portfolio--July
15, 1994.

** The performance data of the indices have been prepared from sources and
data that the Investment Manager believes to be reliable, but no
representation is made as to their accuracy. These indices are unmanaged
and have no fees or costs. The Russell 2000 Index is composed of 2,000
common stocks of U.S. companies. 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):

Statement of Additional Information (SAI):

Lazard Retirement Series, Inc.
30 Rockefeller Plaza
New York, New York 10112
Telephone: 1-800-823-6300
http://www.lazardfunds.com
----------------------------------------------------------------

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

<PAGE>

LAZARD RETIREMENT SERIES

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

Prospectus

May 1, 1999

------------------------------------------
Lazard Retirement Small Cap Portfolio
------------------------------------------

30 Rockefeller Plaza
New York, New York 10112
(800) 823-6300

<PAGE>

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

5 Risk/Return Summary

Carefully review this important section, which summarizes the Portfolio's
investments, risks and past performance.

7 Investment Objectives, Strategies and Risks

Review this section for information on investment strategies and their risks.

Fund Management

Review this section for details on the people and organizations who oversee
the Portfolio:

9 Investment Manager

9 Principal Portfolio Managers

9 Administrator

10 Distributor

10 Custodian

Account Policies

Review this section for details on how shares are valued, how to purchase and
sell shares, related charges and payments of dividends and distributions.

10 Buying Shares

11 Distribution and Service (12b-1) Fees

11 Selling Shares

11 Dividends, Distributions and Taxes

2
<PAGE>

12 Financial Highlights

Review this section for recent financial information.

13 Performance Information of Publicly Offered
Fund -- not the Portfolio

Where to read about the performance of a similarly managed fund.

Back Cover

Where to learn more about the Portfolio.

Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard Freres")
serves as the Portfolio's investment manager.

3
<PAGE>

The Portfolios

The Fund consists of nine separate Portfolios, only one of which, Retirement
Small Cap Portfolio, is 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 Portfolio 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 Portfolio's performance may sometimes be
higher or lower than that of other types of funds (such as those emphasizing
growth stocks).

4
<PAGE>

RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------

Lazard Retirement
Small Cap Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

In choosing stocks for the Portfolio, the Investment Manager looks for smaller,
well managed U.S. companies that have the potential to grow.

Principal Investment Risks

5
<PAGE>

Performance Bar Chart and Table

[THE FOLLOWING TABLE WAS DEPICTED AS A BAR CHART IN THE PRINTED MATERIAL.]

Year-by-Year Total Returns as of 12/31

1998

(3.22)%
- --------------------------------------------------------------------------------

Average Annual Total Returns
(for the periods ending December 31, 1998)

6
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

The Portfolio generally invests at least 65% of its total assets in equity
securities of small U.S. companies. These securities generally have one or more
of the following characteristics:

o are undervalued relative to their earnings, cash flow or asset
values;

o have an attractive price/value relationship with expectations that
some catalyst will cause the perception of value to change within
two years;

o are out of favor due to circumstances which are unlikely to harm the
company's franchise or earnings power;

o have low projected P/E or price-to-cash flow multiples;

o have the potential to become a larger factor in the company's
business;

o have significant debt but have high levels of free cash flow; and

o have a relatively short corporate history with the expectation that
the business may grow.

Risk Factors

7
<PAGE>

Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the Portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
larger companies). Small companies carry additional risks because their earnings
tend to be less predictable, their share prices more volatile and their
securities less liquid than larger, more established companies. Some of the
Portfolio's investments will rise and fall based on investor perception only.
Investments in value stocks are subject to the risk that they may never reach
what the portfolio manager believes is their full value. They also may decline
in price, even though in theory they are already undervalued. And, while
investments in value stocks may limit downside risk over time, the Portfolio
may, as a trade-off, produce smaller gains than riskier stock funds.

8
<PAGE>

FUND MANAGEMENT

Investment Manager

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 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 the Portfolio.

Effective Annual Rate of
Investment Management Investment Management
Name of Portfolio Fee Payable Fee Paid After Waiver
- ----------------- --------------------- ------------------------

Small Cap Portfolio .75% 0%

Principal Portfolio Managers

The Portfolio is 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 the
Portfolio are as follows:

Small Cap Portfolio--Herbert W. Gullquist and Eileen Alexanderson (each since
inception)

Biographical Information of Principal Portfolio Managers

Administrator

State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as the Portfolio's administrator.

9
<PAGE>

Distributor

Lazard Freres acts as distributor for the Portfolio.

Custodian

State Street acts as custodian of the Portfolio's investments. State Street may
enter into subcustodial arrangements on behalf of the Portfolio for the holding
of foreign securities.

Year 2000 Issues

The 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
Portfolio, the Investment Manager is working to avoid such problems and to
obtain assurances from service providers that they are taking similar steps.
While the Portfolio cannot predict at this time the degree of impact, it is
possible that foreign markets will be less prepared than U.S. ones.

ACCOUNT POLICIES

Buying 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.

The 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 the 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.

10
<PAGE>

Distribution and Service (12b-1) Fees

The Fund has adopted a plan under rule 12b-1 that allows the 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

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Portfolio will declare and pay dividends from net investment income annually
but may declare and pay dividends twice annually.

The 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 Portfolio unless instructed otherwise by
the relevant Participating Insurance Company.

Portfolio dividends and distributions are taxable to most investors. Since the
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.

11
<PAGE>

FINANCIAL HIGHLIGHTS

The table below describes the 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 the Portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. The information in the table has been independently
audited by Anchin, Block & Anchin LLP, whose report, along with the Portfolio's
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 table, would reduce the
investment returns that are shown.

LAZARD RETIREMENT SMALL CAP 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 ............... $ 9.84 $10.00
------ ------
Income (loss) from investment operations:
Net investment income (loss) ..................... -- 0.02
Net realized and unrealized gain (loss) .......... (0.32) (0.16)
------ ------
Total from investment operations ................... (0.32) (0.14)
------ ------
Less distributions from and in excess of:
Net investment income ............................ -- (0.02)
Net realized gains ............................... -- --
------ ------
Total distributions .............................. -- (0.02)
------ ------
Net asset value, end of period ..................... $ 9.52 $ 9.84
====== ======
Total Return (a) ................................... (3.2)% (1.4)%
Ratios and Supplemental Data:
Net asset value, end of period (000s) .............. $1,704 $ 591
Ratios to average net assets:
Net expenses (b) ................................. 1.50% 1.50%
Gross expenses (b) ............................... 16.20% 52.55%
Net investment income (b) ........................ (0.18)% 0.71%
Portfolio turnover rate ............................ 61% 0%

Notes to Financial Highlights:

* Commencement of operations.

(b) Annualized for periods of less than one year.

12
<PAGE>

PERFORMANCE INFORMATION OF A PUBLICLY OFFERED SERIES OF THE LAZARD FUNDS, INC.
- -- THIS IS NOT THE PORTFOLIO'S PERFORMANCE
- --------------------------------------------------------------------------------

Set forth below is total return and average annual total return information for
the Institutional Shares of a publicly offered series of The Lazard Funds, Inc.,
which has the same investment objective and follows substantially the same
investment policies and strategies as the Portfolio offered in this Prospectus,
and for an appropriate securities index. This is not performance data for the
Portfolio and investors should not consider this performance data as an
indication of the future performance of the Portfolio 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 fund, and not those to be paid by the Portfolio. 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 the 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 fund and securities index for the indicated
periods ended December 31, 1998, as calculated pursuant to SEC guidelines, were:

Name of Public Fund Total Return Average Annual Total Return
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 Small
Cap Portfolio (12.62%) 38.68% 71.95% 191.73% (12.62%) 11.52% 11.45% 16.11% 0.81%
Russell 2000 Index** (2.55%) 38.91% 75.17% 154.05% (2.55%) 11.58% 11.86% 13.89% --
</TABLE>

- ----------
* Inception date for Institutional Shares of Lazard Small Cap Portfolio is
October 30, 1991.

13
<PAGE>

For more information about the Portfolio, 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 the Portfolio's investments. In the annual report, you will find
a broad discussion of the market conditions and investment strategies that
significantly affected the Portfolio's performance during its last fiscal year.

Statement of Additional Information (SAI):

The SAI provides more detailed information about the Portfolio, including its
operations and investment policies. It is incorporated by reference and is
legally considered a part of this prospectus.

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

You can get free copies of Reports and the SAI, or request other information
and discuss your questions about the Portfolio by contacting the Fund at:

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

<PAGE>

LAZARD RETIREMENT SERIES

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

Prospectus

May 1, 1999

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

Lazard Retirement International Equity Portfolio

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

30 Rockefeller Plaza
New York, New York 10112
(800) 823-6300

<PAGE>

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

4 Risk/Return Summary

Carefully review this important section, which summarizes the Portfolio's
investments, risks and past performance.

5 Investment Objectives, Strategies and Risks

Review this section for information on investment strategies and their risks.

Fund Management

Review this section for details on the people and organizations who oversee the
Portfolio.

7 Investment Manager

7 Principal Portfolio Managers

8 Administrator

8 Distributor

8 Custodian

Account Policies

Review this section for details on how shares are valued, how to purchase and
sell shares, related charges and payments of dividends and distributions.

9 Buying Shares

9 Distribution and Service (12b-1) Fees

9 Selling Shares

10 Dividends, Distributions and Taxes

11 Financial Highlights

Review this section for recent financial information.

12 Performance Information of Publicly
Offered Fund--not the Portfolio

Where to read about the performance of a similarly managed fund.

Back Cover

Where to learn more about the Portfolio.

<PAGE>

Lazard Asset Management, a division of Lazard Freres & Co. LLC ("Lazard
Freres"), serves as the Portfolio's investment manager.

The Portfolios

The Fund consists of nine separate Portfolios, only one of which, the Retirement
International Equity Portfolio, is 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).

3
<PAGE>

RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------

Lazard Retirement
International Equity Portfolio

Investment Objective

The Portfolio seeks long-term capital appreciation.

Principal Investment Strategies

Principal Investment Risks

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.

4
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

Ticker Symbol: N/A

Investment Objective and Strategies

Risk Factors

5
<PAGE>

6
<PAGE>

FUND MANAGEMENT

Investment Manager

Effective Annual Rate of
Investment Management Investment Management
Name of Portfolio Fee Payable Fee Paid After Waiver
- --------------- -------------------- ---------------------

International Equity Portfolio .75% 0%

Principal Portfolio Managers

The Portfolio is managed on a team basis. The names of the principal persons who
are prima rily responsible for the day-to-day management of the assets of the
Portfolio are as follows:

International Equity Portfolio--Herbert W. Gullquist and John R. Reinsberg (each
since inception)

Biographical Information of Principal Portfolio Managers

John R. Reinsberg. Mr. Reinsberg is a Managing Director of the Investment
Manager. He joined the Investment Manager in January, 1992.

7
<PAGE>

Administrator

State Street Bank and Trust Company ("State Street"), located at 225 Franklin
Street, Boston, Massachusetts 02110, serves as the Portfolio's administrator.

Distributor

Lazard Freres acts as distributor for the Portfolio.

Custodian

State Street acts as custodian of the Portfolio's investments. State Street may
enter into subcustodial arrangements on behalf of the Portfolio for the holding
of foreign securities.

Year 2000 Issues

8
<PAGE>

ACCOUNT POLICIES

Buying 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.

Distribution and Service (12b-1) Fees

Selling Shares

9
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Portfolio will declare and pay dividends from net investment income annually
but may declare and pay dividends twice annually.

The 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 Portfolio unless instructed otherwise by
the relevant Participating Insurance Company.

Participating Insurance Companies should consult their tax advisers about
federal, state and local tax consequences.

10
<PAGE>

FINANCIAL HIGHLIGHTS

The table below describes the Portfolio's performance for the fiscal period
indicated. Certain information reflects financial results for a single Portfolio
share. "Total return" shows how much your investment in the Portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. The information in the table has been independently
audited by Anchin, Block & Anchin LLP, whose report, along with the Portfolio's
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 table, 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%

Notes to Financial Highlights:

* Commencement of operations.

(b) Annualized for periods of less than one year.

11
<PAGE>

PERFORMANCE INFORMATION OF A PUBLICLY OFFERED SERIES OF THE LAZARD FUNDS,
INC.--THIS IS NOT THE PORTFOLIO'S PERFORMANCE
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Total Return Average Annual Total Return
Name of Public Fund Period Ended December 31, 1998 Period Ended December 31, 1998
and Index ----------------------------------- ------------------------------------ Total Annual
- ------------------- One Three Five Since One Three Five Since Operating 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% --
</TABLE>

- ----------

* Inception date for Institutional Shares of Lazard International Equity
Portfolio is October 29, 1991.

** The performance data of the index have been prepared from sources and data
that the Investment Manager believes to be reliable, but no representation
is made as to their accuracy. The index is unmanaged and has 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.

12
<PAGE>

For more information about the Portfolio, the following documents are available
free upon request:

Annual/Semiannual Reports (Reports):

Statement of Additional Information (SAI):

The SAI provides more detailed information about the Portfolio, including its
operations and investment policies. It is incorporated by reference and is
legally considered a part of this prospectus.

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

You can get free copies of Reports and the SAI, or request other information
and discuss your questions about the Portfolio by contacting the Fund at:

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

<PAGE>

LAZARD RETIREMENT SERIES, INC.
30 Rockefeller Plaza
New York, New York 10112
(800) 823-6300

STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999

Lazard Retirement Series, Inc. (the "Fund") is a no-load,
open-end management investment company known as a mutual fund. This Statement of
Additional Information, which is not a prospectus, supplements and should be
read in conjunction with the current Prospectus of the Fund, dated May 1, 1999,
as it may be revised from time to time, relating to the following nine
portfolios (individually, a "Portfolio" and collectively, the "Portfolios"):

<TABLE>
<S> <C>
Lazard Retirement Equity Portfolio Lazard Retirement International Small Cap
Lazard Retirement Small Cap Portfolio Portfolio
Lazard Retirement Bantam Value Lazard Retirement Emerging Markets
Portfolio Portfolio
Lazard Retirement Global Equity Lazard Retirement International Fixed-
Portfolio Income Portfolio
Lazard Retirement International Equity Lazard Retirement Strategic Yield Portfolio
Portfolio
</TABLE>

SHARES OF THE PORTFOLIOS ARE OFFERED ONLY TO VARIABLE ANNUITY
AND VARIABLE LIFE INSURANCE SEPARATE ACCOUNTS ESTABLISHED BY INSURANCE COMPANIES
("PARTICIPATING INSURANCE COMPANIES") TO FUND VARIABLE ANNUITY CONTRACTS AND
VARIABLE LIFE INSURANCE POLICIES (COLLECTIVELY, "POLICIES") AND QUALIFIED
PENSION AND RETIREMENT PLANS AND ACCOUNTS PERMITTING ACCUMULATION OF ASSETS ON A
TAX-DEFERRED BASIS (COLLECTIVELY, "ELIGIBLE PLANS") OUTSIDE THE SEPARATE ACCOUNT
CONTEXT.

To obtain a copy of the Fund's Prospectus, please write or
call the Fund at the address and telephone number given above.

The Fund's most recent Annual Report and Semi-Annual Report to
Shareholders are separate documents supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and report of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information.

<PAGE>

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

Description of the Fund and Portfolios.........................................3
Investment Restrictions.......................................................24
Management....................................................................26
Determination of Net Asset Value..............................................30
Portfolio Transactions........................................................32
Buying and Selling Shares.....................................................34
Distribution and Servicing Plan...............................................35
Dividends and Distributions...................................................36
Taxation......................................................................37
Performance Information.......................................................40
Information About the Fund and Portfolios.....................................43
Counsel and Independent Auditors..............................................45
Appendix......................................................................46

<PAGE>

DESCRIPTION OF THE FUND AND PORTFOLIOS

The Fund is a Maryland corporation organized on February 13,
1997. Each Portfolio is a separate portfolio of the Fund, an open-end management
investment company, known as a mutual fund. Each Portfolio is a non-diversified
investment company, which means that the proportion of the Portfolio's assets
that may be invested in the securities of a single issuer is not limited by the
Investment Company Act of 1940, as amended (the "1940 Act").

Lazard Asset Management, a division of Lazard Freres & Co. LLC
("Lazard Freres"), serves as the investment manager (the "Investment Manager")
to each of the Portfolios.

Lazard Freres is the distributor of each Portfolio's shares.

CERTAIN PORTFOLIO SECURITIES

The following information supplements and should be read in
conjunction with the Fund's Prospectus.

DEPOSITORY RECEIPTS. (All Portfolios) Each Portfolio may
invest in the securities of foreign issuers in the form of American Depositary
Receipts ("ADRs") and Global Depositary Receipts ("GDRs"). These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. GDRs are receipts issued outside the United States,
typically by non-United States banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in the United States securities markets and GDRs in bearer form
are designed for use outside the United States.

These securities may be purchased through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depositary, whereas a depositary may
establish an unsponsored facility without participation by the issuer of the
deposited security. Holders of unsponsored depositary receipts generally bear
all the costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.

FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL
ENTITIES. (All Portfolios) Each Portfolio may invest in obligations issued or
guaranteed by one or more foreign governments or any of their political
subdivisions, agencies or instrumentalities that are determined by the
Investment Manager to be of comparable quality to the other obligations in which
the Portfolio may invest. Supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
and related government agencies. Examples

3
<PAGE>

include the International Bank for Reconstruction and Development (the World
Bank), the European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.

CONVERTIBLE SECURITIES. (All Portfolios) Convertible
securities may be converted at either a stated price or stated rate into
underlying shares of common stock. Convertible securities have characteristics
similar to both fixed-income and equity securities. Convertible securities
generally are subordinated to other similar but non-convertible securities of
the same issuer, although convertible bonds, as corporate debt obligations,
enjoy seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock, of the same issuer. Because of the
subordination feature, however, convertible securities typically have lower
ratings than similar non-convertible securities.

Although to a lesser extent than with fixed-income securities,
the market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the underlying
common stock. A unique feature of convertible securities is that as the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the market
price of the underlying common stock increases, the prices of the convertible
securities tend to rise as a reflection of the value of the underlying common
stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.

Convertible securities are investments that provide for a
stable stream of income with generally higher yields than common stocks. There
can be no assurance of current income because the issuers of the convertible
securities may default on their obligations. A convertible security, in addition
to providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance of
capital appreciation, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.

WARRANTS. (All Portfolios) A warrant is an instrument issued
by a corporation which gives the holder the right to subscribe to a specified
amount of the corporation's capital stock at a set price for a specified period
of time. A Portfolio may invest up to 5% of its total assets in warrants, except
that this limitation does not apply to warrants purchased by the Portfolio that
are sold in units with, or attached to, other securities.

PARTICIPATION INTERESTS. (All Portfolios) Each Portfolio may
purchase from financial institutions participation interests in securities in
which the Portfolio may invest. A participation interest gives the Portfolio an
undivided interest in the security in the proportion that the Portfolio's
participation interest bears to the total principal amount of the security.
These
4
<PAGE>

instruments may have fixed, floating or variable rates of interest with
remaining maturities of 13 months or less. If the participation interest is
unrated, or has been given a rating below that which is permissible for purchase
by the Portfolio, the participation interest will be collateralized by U.S.
Government securities, or, in the case of unrated participation interests, the
Investment Manager must have determined that the instrument is of comparable
quality to those instruments in which the Portfolio may invest.

Each Portfolio may invest in corporate obligations denominated
in U.S. or foreign currencies that are originated, negotiated and structured by
a syndicate of lenders ("Co-Lenders") consisting of commercial banks, thrift
institutions, insurance companies, financial companies or other financial
institutions one or more of which administers the security on behalf of the
syndicate (the "Agent Bank"). Co-Lenders may sell such securities to third
parties called "Participants." Each Portfolio may invest in such securities
either by participating as a Co-Lender at origination or by acquiring an
interest in the security from a Co-Lender or a Participant (collectively,
"participation interests"). Co-Lenders and Participants interposed between the
Portfolio and the corporate borrower (the "Borrower"), together with Agent
Banks, are referred to herein as "Intermediate Participants." Each Portfolio
also may purchase a participation interest in a portion of the rights of an
Intermediate Participant, which would not establish any direct relationship
between the Fund, on behalf of the Portfolio, and the Borrower. In such cases,
the Portfolio would be required to rely on the Intermediate Participant that
sold the participation interest not only for the enforcement of the Portfolio's
rights against the Borrower, but also for the receipt and processing of payments
due to the Portfolio under the security. Because it may be necessary to assert
through an Intermediate Participant such rights as may exist against the
Borrower, if the Borrower fails to pay principal and interest when due, the
Portfolio may be subject to delays, expenses and risks that are greater than
those that would be involved if the Portfolio were to enforce its rights
directly against the Borrower. Moreover, under the terms of a participation
interest, the Portfolio may be regarded as a creditor of the Intermediate
Participant (rather than of the Borrower), so that the Portfolio also may be
subject to the risk that the Intermediate Participant may become insolvent.
Similar risks may arise with respect to the Agent Bank if, for example, assets
held by the Agent Bank for the benefit of the Portfolio were determined by the
appropriate regulatory authority or court to be subject to the claims of the
Agent Bank's creditors. In such case, the Portfolio might incur certain costs
and delays in realizing payment in connection with the participation interest or
suffer a loss of principal and/or interest. Further, in the event of the
bankruptcy or insolvency of the Borrower, the obligation of the Borrower to
repay the loan may be subject to certain defenses that can be asserted by such
Borrower as a result of improper conduct by the Agent Bank or Intermediate
Participant.

VARIABLE AND FLOATING RATE SECURITIES. (All Portfolios)
Variable and floating rate securities provide for a periodic adjustment in the
interest rate paid on the obligations. The terms of such obligations must
provide that interest rates are adjusted periodically based upon an interest
rate adjustment index as provided in the respective obligations. The adjustment
intervals may be regular, and range from daily up to annually, or may be event
based, such as based on a change in the prime rate.

5
<PAGE>

Each Portfolio may invest in floating rate debt instruments
("floaters"). The interest rate on a floater is a variable rate which is tied to
another interest rate, such as a money-market index or Treasury bill rate. The
interest rate on a floater resets periodically, typically every six months.
Because of the interest rate reset feature, floaters provide the Portfolio with
a certain degree of protection against rises in interest rates, although the
Portfolio will participate in any declines in interest rates as well.

Each Portfolio also may invest in inverse floating rate debt
instruments ("inverse floaters"). The interest rate on an inverse floater resets
in the opposite direction from the market rate of interest to which the inverse
floater is indexed. An inverse floating rate security may exhibit greater price
volatility than a fixed rate obligation of similar credit quality.

MUNICIPAL OBLIGATIONS. (Strategic Yield Portfolio) In
circumstances where the Investment Manager determines that investment in
municipal obligations would facilitate the Portfolio's ability to accomplish its
investment objective, the Portfolio may invest its assets in such obligations,
including municipal obligations issued at a discount. Dividends on shares
attributable to interest on municipal obligations held by the Portfolio will not
be exempt from federal income taxes. Municipal obligations are susceptible to
risks arising from the financial condition of the states, public bodies or
municipalities issuing the securities. To the extent that state or local
governmental entities are unable to meet their financial obligations, the income
derived by the Portfolio from municipal obligations could be impaired.

Municipal obligations are debt obligations issued by states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or multistate
agencies or authorities. Municipal obligations bear fixed, floating or variable
rates of interest. Certain municipal obligations are subject to redemption at a
date earlier than their stated maturity pursuant to call options, which may be
separated from the related municipal obligations and purchased and sold
separately. The Portfolio also may acquire call options on specific municipal
obligations. The Portfolio generally would purchase these call options to
protect the Portfolio from the issuer of the related municipal obligation
redeeming, or other holder of the call option from calling away, the municipal
obligation before maturity.

Municipal obligations generally include debt obligations
issued to obtain funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities. Municipal
obligations are classified as general obligation bonds, revenue bonds and notes.
General obligation bonds are secured by the issuer's pledge of its faith, credit
and taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Industrial
development bonds, in most cases, are revenue bonds and generally do not carry
the pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal obligations include municipal

6
<PAGE>

lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities.

While, in general, municipal obligations are tax exempt
securities having relatively low yields as compared to taxable, non-municipal
obligations of similar quality, certain municipal obligations are taxable
obligations, offering yields comparable to, and in some cases greater than, the
yields available on other permissible Portfolio investments. Dividends received
by shareholders on Portfolio shares which are attributable to interest income
received by the Portfolio from municipal obligations generally will be subject
to federal income tax. The Portfolio will invest in municipal obligations, the
ratings of which correspond with the ratings of other permissible Portfolio
investments. The Portfolio currently intends to invest no more than 25% of its
assets in municipal obligations. However, this percentage may be varied from
time to time without shareholder approval.

ZERO COUPON AND STRIPPED U.S. TREASURY SECURITIES. (Strategic
Yield Portfolio) The Portfolio may invest in zero coupon U.S. Treasury
securities, which are Treasury notes and Bonds that have been stripped of their
unmatured interest coupons, the coupons themselves and receipts or certificates
representing interests in such stripped debt obligations and coupons. Zero
coupon securities also are issued by corporations and financial institutions
which constitute a proportionate ownership of the issuer's pool of underlying
U.S. Treasury securities. A zero coupon security pays no interest to its holder
during its life and is sold at a discount to its face value at maturity. The
market prices of zero coupon securities generally are more volatile than the
market prices of securities that pay interest periodically and are likely to
respond to a greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.

MORTGAGE-RELATED SECURITIES. (International Fixed-Income
Portfolio and Strategic Yield Portfolio) Mortgage-related securities are
secured, directly or indirectly, by pools of mortgages, and may include complex
instruments such as collateralized mortgage obligations and stripped
mortgage-backed securities. These securities also may include mortgage
pass-through securities, interests in REMICs or other kinds of mortgage-backed
securities. The mortgage-related securities which may be purchased include those
with fixed, floating and variable interest rates, those with interest rates that
change based on multiples of changes in interest rates and those with interest
rates that change inversely to changes in interest rates.

RESIDENTIAL MORTGAGE-RELATED SECURITIES--Each of these Portfolios may invest in
mortgage-related securities representing participation interests in pools of
one- to four-family residential mortgage loans issued by governmental agencies
or instrumentalities, such as the GNMA, FNMA and FHLMC, or by private entities.
Residential mortgage-related securities issued by private entities are
structured to provide protection to the senior class investors against potential
losses on the underlying mortgage loans. This protection is generally provided
by having the holders of the subordinated class of securities ("Subordinated
Securities") take the first loss if there are defaults on the underlying
commercial mortgage loans. Other protection, which may benefit all of the
classes or particular classes, may include issuer guarantees, reserve funds,
additional Subordinated Securities, cross-collateralization and
over-collateralization.

7
<PAGE>

COMMERCIAL MORTGAGE-RELATED SECURITIES--Each of these Portfolios may invest in
commercial mortgage-related securities, which generally are multi-class debt or
pass-through certificates secured by mortgage loans on commercial properties.
Similar to residential mortgage-related securities, commercial mortgage-related
securities have been issued using a variety of structures, including multi-class
structures featuring senior and subordinated classes.

SUBORDINATED SECURITIES--Each of these Portfolios may invest in Subordinated
Securities issued or sponsored by commercial banks, savings and loan
institutions, mortgage bankers, private mortgage insurance companies and other
non-governmental issuers. Subordinated Securities have no governmental
guarantee, and are subordinated in some manner as to the payment of principal
and/or interest to the holders of more senior mortgage-related securities
arising out of the same pool of mortgages. The holders of Subordinated
Securities typically are compensated with a higher stated yield than are the
holders of more senior mortgage-related securities. On the other hand,
Subordinated Securities typically subject the holder to greater risk than senior
mortgage-related securities and tend to be rated in a lower rating category, and
frequently a substantially lower rating category, than the senior
mortgage-related securities issued in respect of the same pool of mortgage.
Subordinated Securities generally are likely to be more sensitive to changes in
prepayment and interest rates and the market for such securities may be less
liquid than is the case for traditional fixed-income securities and senior
mortgage-related securities.

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTI-CLASS PASS-THROUGH
SECURITIES--Collateralized mortgage obligations or "CMOs" are multiclass bonds
backed by pools of mortgage pass-through certificates or mortgage loans. CMOs
may be collateralized by (a) pass-through certificates issued or guaranteed by
GNMA, FNMA or FHLMC, (b) unsecuritized mortgage loans insured by the Federal
Housing Administration or guaranteed by the Department of Veterans' Affairs, (c)
unsecuritized conventional mortgages, (d) other mortgage-related securities or
(e) any combination thereof. CMOs may be issued by agencies or instrumentalities
of the U.S. Government, or by private originators of, or investors in, mortgage
loans, including depository institutions, mortgage banks, investment banks and
special purpose subsidiaries of the foregoing. The issuer of CMOs or multi-class
pass-through securities may elect to be treated as a REMIC. The International
Fixed-Income Portfolio may invest, to a limited extent, in residual interests in
REMICs. See "Taxation."

Each class of CMOs, often referred to as a "tranche," is
issued at a specific coupon rate and has a stated maturity or final distribution
date; these characteristics will vary from one tranche to another. Principal
prepayments on collateral underlying a CMO may cause it to be retired
substantially earlier than the stated maturities or final distribution dates.
The principal and interest on the underlying mortgages may be allocated among
the several classes of a series of a CMO in many ways. One or more tranches of a
CMO may have coupon rates which reset periodically at a specified increment over
an index, such as the London Interbank Offered Rate ("LIBOR") (or sometimes more
than one index). These floating rate CMOs typically are issued with lifetime
caps on the coupon rate thereon. Each of these Portfolios also may invest in
inverse floating rate CMOs. Inverse floating rate CMOs constitute a tranche of a
CMO with a coupon rate that moves in the reverse direction to an applicable
index such as the LIBOR.

8
<PAGE>

Accordingly, the coupon rate thereon will increase as interest rates decrease.
Inverse floating rate CMOs are typically more volatile than fixed or floating
rate tranches of CMOs.

Many inverse floating rate CMOs have coupons that move
inversely to a multiple of the applicable indexes. The coupon varying inversely
to a multiple of an applicable index creates a leverage factor. The markets for
inverse floating rate CMOs with highly leveraged characteristics may at times be
very thin. The Portfolio's ability to dispose of its positions in such
securities will depend on the degree of liquidity in the markets for such
securities. It is impossible to predict the amount of trading interest that may
exist in such securities, and therefore the future degree of liquidity. It
should be noted that inverse floaters based on multiples of a stated index are
designed to be highly sensitive to changes in interest rates and can subject the
holders thereof to extreme reductions of yield and loss of principal.

STRIPPED MORTGAGE-BACKED SECURITIES--Each of these Portfolios also may invest in
stripped mortgage-backed securities. Stripped mortgage-backed securities are
created by segregating the cash flows from underlying mortgage loans or mortgage
securities to create two or more new securities, each with a specified
percentage of the underlying security's principal or interest payments. Mortgage
securities may be partially stripped so that each investor class received some
interest and some principal. When securities are completely stripped, however,
all of the interest is distributed to holders of one type of security, known as
an interest-only security, or IO, and all of the principal is distributed to
holders of another type of security known as a principal-only security, or PO.
Strips can be created in a pass-through structure or as tranches of a CMO. The
yields to maturity on IOs and POs are very sensitive to the rate of principal
payments (including prepayments) on the related underlying mortgage assets. If
the underlying mortgage assets experience greater than anticipated prepayments
of principal, the Portfolio may not fully recoup its initial investment in IOs.
Conversely, if the underlying mortgage assets experience less than anticipated
prepayments of principal, the yield on POs could be materially and adversely
affected.

GOVERNMENT-AGENCY SECURITIES--Mortgage-related securities issued by the
Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA is a wholly-owned
U.S. Government corporation within the Department of Housing and Urban
Development.

GOVERNMENT-RELATED SECURITIES--Mortgage-related securities
issued by the Federal National Mortgage Association ("FNMA") include FNMA
Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
which are solely the obligations of FNMA and are not backed by or entitled to
the full faith and credit of the United States Government. FNMA is a
government-sponsored organization owned entirely by private stockholders.

Mortgage-related securities issued by the Federal Home Loan
Mortgage Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of
the United States

9
<PAGE>

Government created pursuant to an Act of Congress, which is owned entirely by
Federal Home Loan Banks.

PRIVATE ENTITY SECURITIES--These mortgage-related securities
are issued by commercial banks, savings and loan institutions, mortgage bankers,
private mortgage insurance companies and other non-governmental issuers. Timely
payment of principal and interest on mortgage-related securities backed by pools
created by non-governmental issuers often is supported partially by various
forms of insurance or guarantees, including individual loan, title, pool and
hazard insurance. The insurance and guarantees are issued by government
entities, private insurers and the mortgage poolers. There can be no assurance
that the private insurers or mortgage poolers can meet their obligations under
the policies, so that if the issuers default on their obligations the holders of
the security could sustain a loss. No insurance or guarantee covers the
Portfolio or the price of the Portfolio's shares. Mortgage-related securities
issued by non-governmental issuers generally offer a higher rate of interest
than government-agency and government-related securities because there are no
direct or indirect government guarantees of payment.

CMO RESIDUALS--CMO Residuals are derivative mortgage securities issued by
agencies or instrumentalities of the U.S. Government or by private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing.

The cash flow generated by the Mortgage Assets underlying
series of CMOs is applied first to make required payments of principal of and
interest on the CMOs and second to pay the related administrative expenses of
the issuer. The residual in a CMO structure generally represents the interest in
any excess cash flow remaining after making the foregoing payments. Each payment
of such excess cash flow to a holder of the related CMO Residual represents
dividend or interest income and/or a return of capital. The amount of residual
cash flow resulting from a CMO will depend on, among other things, the
characteristics of the Mortgage Assets, the coupon rate of each class of CMOs,
prevailing interest rates, the amount of administrative expenses and the
prepayment experience on the Mortgage Assets. In particular, the yield to
maturity on CMO Residuals is extremely sensitive to prepayments on the related
underlying Mortgage Assets in the same manner as an IO class of SMBS. See
"Stripped Mortgage-Backed Securities" above. In addition, if a series of a CMO
includes a class that bears interest at an adjustable rate, the yield to
maturity on the related CMO residual will also be extremely sensitive to the
level of the index upon which interest rate adjustments are based. As described
above with respect to SMBS, in certain circumstances, the Portfolio may fail to
fully recoup its initial investment in a CMO Residual.

CMO Residuals are generally purchased and sold by
institutional investors through several investment banking firms acting as
brokers or dealers. CMO Residuals may not have the liquidity of other more
established securities trading in other markets. Transactions in CMO Residuals
are generally completed only after careful review of the characteristics of the
securities in question. In addition, CMO Residuals may or, pursuant to an
exemption therefrom, may not have been registered under the Securities Act. CMO
Residuals, whether or not registered under the Securities Act, may be subject to
certain restrictions of transferability.

10
<PAGE>

Ownership of certain CMO Residuals imposes liability for certain of the expenses
of the related CMO issuer on the purchaser. The Investment Manager will not
purchase any CMO Residual that imposes such liability on the Portfolio.

OTHER MORTGAGE-RELATED SECURITIES--Other mortgage-related securities include
securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property. Other mortgage-related securities may be equity or debt
securities issued by agencies or instrumentalities of the U.S. Government or by
private originators of, or investors in, mortgage loans, including savings and
loan associations, homebuilders, mortgage banks, commercial banks, investment
banks, partnerships, trusts and special purpose entities of the foregoing.

REAL ESTATE INVESTMENT TRUSTS. (Bantam Value Portfolio, Equity
Portfolio, Global Equity Portfolio and Small Cap Portfolio) Each of these
Portfolios may invest in Real Estate Investment Trusts ("REITs"). A REIT is a
corporation, or a business trust that would otherwise be taxed as a corporation,
which meets the definitional requirements of the Internal Revenue Code of 1986,
as amended (the "Code"). The Code permits a qualifying REIT to deduct dividends
paid, thereby effectively eliminating corporate level Federal income tax and
making the REIT a pass-through vehicle for Federal income tax purposes. To meet
the definitional requirements of the Code, a REIT must, among other things,
invest substantially all of its assets in interests in real estate (including
mortgages and other REITs) or cash and government securities, derive most of its
income from rents from real property or interest on loans secured by mortgages
on real property, and distribute to shareholders annually a substantial portion
of its otherwise taxable income.

REITs are characterized as equity REITs, mortgage REITs and
hybrid REITs. Equity REITs, which may include operating or finance companies,
own real estate directly and the value of, and income earned by, the REITs
depends upon the income of the underlying properties and the rental income they
earn. Equity REITs also can realize capital gains (or losses) by selling
properties that have appreciated (or depreciated) in value. Mortgage REITs can
make construction, development or long-term mortgage loans and are sensitive to
the credit quality of the borrower. Mortgage REITs derive their income from
interest payments on such loans. Hybrid REITs combine the characteristics of
both equity and mortgage REITs, generally by holding both ownership interests
and mortgage interests in real estate. The value of securities issued by REITs
are affected by tax and regulatory requirements and by perceptions of management
skill. They also are subject to heavy cash flow dependency, defaults by
borrowers or tenants, self-liquidation and the possibility of failing to qualify
for tax-free status under the Code or to maintain exemption from the 1940 Act.

ASSET-BACKED SECURITIES. (International Fixed-Income Portfolio
and Strategic Yield Portfolio) Each of these Portfolios may invest in
asset-backed securities, including interests in pools of receivables, such as
motor vehicle installment purchase obligations, credit card receivables, home
equity loans, home improvement loans and manufactured housing loans. These
securities may be in the form of pass-through instruments or asset-backed bonds.
The securities, all of which are issued by non-governmental entities and carry
no direct or indirect

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government guarantee, are structurally similar to the collateralized mortgage
obligations and mortgage pass-through securities described above. As with
mortgage-backed securities, asset-backed securities are often backed by a pool
of assets representing the obligations of a number of different parties and use
similar credit enhancement techniques.

Asset-backed securities present certain risks that are not
presented by mortgage-related securities. Primarily, these securities may
provide the Portfolio with a less effective security interest in the related
collateral than do mortgage-related securities. Therefore, there is the
possibility that recoveries on the underlying collateral may not, in some cases,
be available to support payments on these securities. Credit card receivables
are generally unsecured and the debtors are entitled to the protection of a
number of state and federal consumer credit laws, many of which give such
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the balance due. Most organizations that issue asset-backed securities
relating to motor vehicle installment purchase obligations perfect their
interests in their respective obligations only by filing a financing statement
and by having the servicer of the obligations, which is usually the originator,
take custody thereof. In such circumstances, if the servicer were to sell the
same obligations to another party, in violation of its duty not to so do, there
is a risk that such party could acquire an interest in the obligations superior
to that of the holders of the securities. Also, although most such obligations
grant a security interest in the motor vehicle being financed, in most states
the security interest in a motor vehicle must be noted on the certificate of
title to perfect such security interest against competing claims of other
parties. Due to the large number of vehicles involved, however, the certificate
of title to each vehicle financed, pursuant to the obligations underlying the
securities, usually is not amended to reflect the assignment of the seller's
security interest for the benefit of the holders of the securities. Therefore,
there is the possibility that recoveries on repossessed collateral may not, in
some cases, be available to support payments on those securities. In addition,
various state and federal laws give the motor vehicle owner the right to assert
against the holder of the owner's obligation certain defenses such owner would
have against the seller of the motor vehicle. The assertion of such defenses
could reduce payments on the related securities.

INVESTMENT COMPANIES. (All Portfolios) Each Portfolio may invest, to the extent
permitted under the 1940 Act, in securities issued by investment companies which
principally invest in securities of the type in which the Portfolio invests.
Investments in the securities of investment companies may involve duplication of
advisory fees and certain other expenses.

ILLIQUID SECURITIES. (All Portfolios) Each Portfolio may
invest up to 15% of the value of its net assets in securities as to which a
liquid trading market does not exist, provided such investments are consistent
with the Portfolio's investment objective. Such securities may include
securities that are not readily marketable, such as certain securities that are
subject to legal or contractual restrictions on resale, repurchase agreements
providing for settlement in more than seven days after notice, certain
mortgage-related securities, and certain privately negotiated, non-exchange
traded options and securities used to cover such options. As to these
securities, the Portfolio is subject to a risk that should the Portfolio desire
to sell them when a ready buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's net assets could be
adversely affected.

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MONEY MARKET INSTRUMENTS. (All Portfolios) When the Investment Manager
determines that adverse market conditions exist, a Portfolio may adopt a
temporary defensive position and invest some or all of its assets in money
market instruments, including U.S. Government securities, repurchase agreements,
bank obligations and commercial paper. Each Portfolio also may purchase money
market instruments when it has cash reserves or in anticipation of taking a
market position.

INVESTMENT TECHNIQUES

The following information supplements and should be read in
conjunction with the Fund's Prospectus.

BORROWING MONEY. (All Portfolios) Each Portfolio is permitted
to borrow to the extent permitted under the 1940 Act, which permits an
investment company to borrow in an amount up to 33-1/3% of the value of its
total assets. Each Portfolio currently intends to borrow money only from banks
for temporary or emergency (not leveraging) purposes in an amount up to 15% of
the value of its total assets (including the amount borrowed) valued at the
lesser of cost or market, less liabilities (including the amount borrowed) at
the time the borrowing is made. While borrowings exceed 5% of a Portfolio's
total assets, the Portfolio will not make any additional investments.

LENDING PORTFOLIO SECURITIES. (All Portfolios) Each Portfolio
may lend securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. The
Portfolio continues to be entitled to payments in amounts equal to the interest,
dividends or other distributions payable on the loaned securities which affords
the Portfolio an opportunity to earn interest on the amount of the loan and on
the loaned securities' collateral. Loans of portfolio securities may not exceed
33-1/3% of the value of the Portfolio's total assets, and the Portfolio will
receive collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to al
least 100% of the current market value of the loaned securities. Such loans are
terminable by the Portfolio at any time upon specified notice. The Portfolio
might experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Portfolio. In
connection with its securities lending transactions, a Portfolio may return to
the borrower or a third party which is unaffiliated with the Portfolio, and
which is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.

DERIVATIVES. (All Portfolios) Each Portfolio may invest in, or
enter into, derivatives to the extent described in the Prospectus, for a variety
of reasons, including to hedge certain market risks, to provide a substitute for
purchasing or selling particular securities or to increase potential income
gain. Derivatives may provide a cheaper, quicker or more specifically focused
way for the Portfolio to invest than "traditional" securities would.

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<PAGE>

Derivatives can be volatile and involve various types and
degrees of risk, depending upon the characteristics of the particular derivative
and the portfolio as a whole. Derivatives permit a Portfolio to increase or
decrease the level of risk, or change the character of the risk, to which its
portfolio is exposed in much the same way as the Portfolio can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.

Derivatives may entail investment exposures that are greater
than their cost would suggest, meaning that a small investment in derivatives
could have a large potential impact on a Portfolio's performance.

If a Portfolio invests in derivatives at inopportune times or
judges market conditions incorrectly, such investments may lower the Portfolio's
return or result in a loss. A Portfolio also could experience losses if its
derivatives were poorly correlated with its other investments, or if the
Portfolio were unable to liquidate its position because of an illiquid secondary
market. The market for many derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and unpredictable changes
in the prices for derivatives.

Although neither the Fund nor any Portfolio will be a
commodity pool, certain derivatives subject the Portfolios to the rules of the
Commodity Futures Trading Commission which limit the extent to which a Portfolio
can invest in such derivatives. A Portfolio may invest in futures contracts and
options with respect thereto for hedging purposes without limit. However, no
Portfolio may invest in such contracts and options for other purposes if the sum
of the amount of initial margin deposits and premiums paid for unexpired options
with respect to such contracts, other than for bona fide hedging purposes,
exceeds 5% of the liquidation value of the Portfolio's assets, after taking into
account unrealized profits and unrealized losses on such contracts and options;
provided, however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.

When required by the Commission, a Portfolio will segregate
aside permissible liquid assets to cover its obligations relating to its
transactions in derivatives. To maintain this required cover, the Portfolio may
have to sell portfolio securities at disadvantageous prices or times since it
may not be possible to liquidate a derivative position at a reasonable price.

Derivatives may be purchased on established exchanges or
through privately negotiated transactions referred to as over-the-counter
derivatives. Exchange-traded derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such derivatives. This
guarantee usually is supported by a daily payment system (i.e., variation margin
requirements) operated by the clearing agency in order to reduce overall credit
risk. As a result, unless the clearing agency defaults, there is relatively
little counterparty credit risk associated with derivatives purchased on an
exchange. By contrast, no clearing agency guarantees over-the-counter
derivatives. Therefore, each party to an over-the-counter derivative bears the
risk that the counterparty will default. Accordingly, the Investment Manager
will consider the creditworthiness of counterparties to over-the-counter
derivatives in the same manner as it would

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<PAGE>

review the credit quality of a security to be purchased by the Portfolio.
Over-the-counter derivatives are less liquid than exchange-traded derivatives
since the other party to the transaction may be the only investor with
sufficient understanding of the derivative to be interested in bidding for it.

FUTURES TRANSACTIONS--IN GENERAL. (All Portfolios) Each Portfolio may enter into
futures contracts in U.S. domestic markets, such as the Chicago Board of Trade
and the International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London International
Financial Futures Exchange, the Deutsche Termine Borse and the Sydney Futures
Exchange Limited. Foreign markets may offer advantages such as trading
opportunities or arbitrage possibilities not available in the United States.
Foreign markets, however, may have greater risk potential than domestic markets.
For example, some foreign exchanges are principal markets so that no common
clearing facility exists and an investor may look only to the broker for
performance of the contract. In addition, any profits a Portfolio might realize
in trading could be eliminated by adverse changes in the exchange rate, or the
Portfolio could incur losses as a result of those changes. Transactions on
foreign exchanges may include both commodities which are traded on domestic
exchanges and those which are not. Unlike trading on domestic commodity
exchanges, trading on foreign commodity exchanges is not regulated by the
Commodity Futures Trading Commission.

Engaging in these transactions involves risk of loss to the
Portfolio which could adversely affect the value of the Portfolio's net assets.
Although each of these Portfolios intends to purchase or sell futures contracts
only if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting the Portfolio
to substantial losses.

Successful use of futures by a Portfolio also is subject to
the Investment Manager's ability to predict correctly movements in the direction
of the relevant market, and, to the extent the transaction is entered into for
hedging purposes, to ascertain the appropriate correlation between the
transaction being hedged and the price movements of the futures contract. For
example, if a Portfolio uses futures to hedge against the possibility of a
decline in the market value of securities held in its portfolio and the prices
of such securities instead increase, the Portfolio will lose part or all of the
benefit of the increased value of securities which it has hedged because it will
have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Portfolio has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. The Portfolio may have
to sell such securities at a time when it may be disadvantageous to do so.

Pursuant to regulations and/or published positions of the
Commission, a Portfolio may be required to segregate permissible liquid assets
in connection with its commodities

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<PAGE>

transactions in an amount generally equal to the value of the underlying
commodity. The segregation of such assets will have the effect of limiting the
Portfolio's ability otherwise to invest those assets.

SPECIFIC FUTURES TRANSACTIONS. Each Portfolio, except the International
Fixed-Income Portfolio, may purchase and sell stock index futures contracts. A
stock index future obligates the Portfolio to pay or receive an amount of cash
equal to a fixed dollar amount specified in the futures contract multiplied by
the difference between the settlement price of the contract on the contract's
last trading day and the value of the index based on the stock prices of the
securities that comprise it at the opening of trading in such securities on the
next business day.

The International Fixed-Income Portfolio, Emerging Markets
Portfolio, Global Equity Portfolio, International Small Cap Portfolio and
Strategic Yield Portfolio may purchase and sell interest rate futures contracts.
An interest rate future obligates the Portfolio to purchase or sell an amount of
a specific debt security at a future date at a specific price.

Each Portfolio, except the Bantam Value Portfolio, Equity
Portfolio and Small Cap Portfolio, may purchase and sell currency futures. A
currency future obligates the Portfolio to purchase or sell an amount of a
specific currency at a future date at a specific price.

OPTIONS--IN GENERAL. (All Portfolios) Each Portfolio may invest up to 5% of its
assets, represented by the premium paid, in the purchase of call and put
options. A Portfolio may write (i.e., sell) covered call and put option
contracts to the extent of 20% of the value of its net assets at the time such
option contracts are written. A call option gives the purchaser of the option
the right to buy, and obligates the writer to sell, the underlying security or
securities at the exercise price at any time during the option period, or at a
specific date. Conversely, a put option gives the purchaser of the option the
right to sell, and obligates the writer to buy, the underlying security or
securities at the exercise price at any time during the option period, or at a
specified date.

A covered call option written by a Portfolio is a call option
with respect to which the Portfolio owns the underlying security or otherwise
covers the transaction by segregating cash or other securities. A put option
written by a Portfolio is covered when, among other things, cash or liquid
securities having a value equal to or greater than the exercise price of the
option are placed in a segregated account with the Fund's custodian to fulfill
the obligation undertaken. The principal reason for writing covered call and put
options is to realize, through the receipt of premiums, a greater return than
would be realized on the underlying securities alone. A Portfolio receives a
premium from writing covered call or put options which it retains whether or not
the option is exercised.

There is no assurance that sufficient trading interest to
create a liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may cease to
exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow, or other unforeseen events, at times
have rendered certain of the
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<PAGE>

clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, a Portfolio is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.

SPECIFIC OPTIONS TRANSACTIONS. Each Portfolio, except the International
Fixed-Income Portfolio, may purchase and sell call and put options in respect of
specific securities (or groups or "baskets" of specific securities) or indices
listed on national securities exchanges or traded in the over-the-counter
market. An option on an index is similar to an option in respect of specific
securities, except that settlement does not occur by delivery of the securities
comprising the index. Instead, the option holder receives an amount of cash if
the closing level of the index upon which the option is based is greater than,
in the case of a call, or less than, in the case of a put, the exercise price of
the option. Thus, the effectiveness of purchasing or writing index options will
depend upon price movements in the level of the index rather than the price of a
particular security.

Each Portfolio, except the Bantam Value Portfolio, Equity
Portfolio and Small Cap Portfolio, may purchase and sell call and put options on
foreign currency. These options convey the right to buy or sell the underlying
currency at a price which is expected to be lower or higher than the spot price
of the currency at the time the option is exercised or expires.

Each Portfolio may purchase cash-settled options on interest
rate swaps, interest rate swaps denominated in foreign currency (except in the
case of the Equity Portfolio) and (except in the case of the International
Fixed-Income Portfolio) equity index swaps in pursuit of its investment
objective. Interest rate swaps involve the exchange by a Portfolio with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating-rate payments for fixed-rate payments) denominated in
U.S. dollars or foreign currency. Equity index swaps involve the exchange by the
Portfolio with another party of cash flows based upon the performance of an
index or a portion of an index of securities which usually includes dividends. A
cash-settled option on a swap gives the purchaser the right, but not the
obligation, in return for the premium paid, to receive an amount of cash equal
to the value of the underlying swap as of the exercise date. These options
typically are purchased in privately negotiated transactions from financial
institutions, including securities brokerage firms.

Successful use by a Portfolio of options will be subject to
the Investment Manager's ability to predict correctly movements in the prices of
individual stocks, the stock market generally, foreign currencies or interest
rates. To the extent the Investment Manager's predictions are incorrect, the
Portfolio may incur losses.

FUTURE DEVELOPMENTS. The Portfolios may take advantage of
opportunities in the area of options and futures contracts and options on
futures contracts and any other derivatives which are not presently contemplated
for use by the Portfolio or which are not currently available

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<PAGE>

but which may be developed, to the extent such opportunities are both consistent
with the Portfolio's investment objective and legally permissible for the
Portfolio. Before entering into such transactions or making any such investment,
the Portfolio will provide appropriate disclosure in the Prospectus or Statement
of Additional Information.

FORWARD COMMITMENTS. (All Portfolios) A Portfolio may purchase
or sell securities on a forward commitment, when-issued or delayed delivery
basis, which means delivery and payment take place a number of days after the
date of the commitment to purchase or sell the securities at a predetermined
price and/or yield. Typically, no interest accrues to the purchaser until the
security is delivered. When purchasing a security on a forward commitment basis,
the Portfolio assumes the rights and risks of ownership of the security,
including the risk or price and yield fluctuations, and takes such fluctuations
into account when determining its net asset value. Because the Portfolio is not
required to pay for these securities until the delivery date, these risks are in
addition to the risks associated with the Portfolio's other investments. If the
Portfolio is fully or almost fully invested when forward commitment purchases
are outstanding, such purchases may result in a form of leverage. The Portfolio
intends to engage in forward commitments to increase its portfolio's financial
exposure to the types of securities in which it invests. Leveraging the
portfolio in this manner will increase the Portfolio's exposure to changes in
interest rates and will increase the volatility of its returns. The Portfolio
will set aside in a segregated account permissible liquid assets at least equal
at all times to the amount of the Portfolio's purchase commitments. At no time
will the Portfolio have more than 33-1/3% of its assets committed to purchase
securities on a forward commitment basis.

Securities purchased on a forward commitment or when-issued
basis are subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest rates
rise) based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates. Securities
purchased on a forward commitment or when-issued basis may expose a Portfolio to
risks because they may experience such fluctuations prior to their actual
delivery. Purchasing securities on a forward commitment or when-issued basis can
involve the additional risk that the yield available in the market when the
delivery takes place actually may be higher than that obtained in the
transaction itself. Purchasing securities on a forward commitment or when-issued
basis when the Portfolio is fully or almost fully invested may result in greater
potential fluctuation in the value of the Portfolio's net assets and its net
asset value per share.

SWAP AGREEMENTS. (All Portfolios) To the extent consistent
with the Portfolio's investment objective and management policies as set forth
herein, each Portfolio may enter into equity, interest rate, index, total return
and currency rate swap agreements. These transactions are entered into in an
attempt to obtain a particular return when it is considered desirable to do so,
possibly at a lower cost to the Portfolio than if the Portfolio had invested
directly in the asset that yielded the desired return. Swap agreements are
two-party contracts entered into primarily by institutional investors for
periods ranging from a few weeks to more than a year. In a standard swap
transaction, two parties agree to exchange the returns (or differentials in
rates of return) earned or realized on particular predetermined investments or
instruments, which may be adjusted for an interest factor. The gross returns to
be exchanged or "swapped" between the

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<PAGE>

parties are generally calculated with respect to a "notional amount," i.e., the
return on or increase in value of a particular dollar amount invested at a
particular interest rate, in a particular foreign currency, or in a "basket" of
securities representing a particular index. Forms of swap agreements include
interest rate caps, under which, in return for a premium, one party agrees to
make payments to the other to the extent interest rates exceed a specified rate
or "cap"; interest rate floors, under which, in return for a premium, one party
agrees to make payments to the other to the extent interest rates fall below a
specified level or "floor"; and interest rate collars, under which a party sells
a cap and purchases a floor or vice versa in an attempt to protect itself
against interest rate movements exceeding given minimum or maximum levels.

Most swap agreements entered into by a Portfolio would
calculate the obligations of the parties to the agreement on a "net basis."
Consequently, the Portfolio's current obligations (or rights) under a swap
agreement generally will be equal only to the net amount to be paid or received
under the agreement based on the relative values of the positions held by each
party to the agreement (the "net amount"). The risk of loss with respect to
swaps is limited to the net amount of payments that the Portfolio is
contractually obligated to make. If the other party to a swap defaults, the
Portfolio's risk of loss consists of the net amount of payments that the
Portfolio contractually is entitled to receive.

FOREIGN CURRENCY TRANSACTIONS. (All Portfolios, except the
Bantam Value Portfolio, Equity Portfolio and Small Cap Portfolio) Foreign
currency transactions may be entered into for a variety of purposes, including:
to fix in U.S. dollars, between trade and settlement date, the value of a
security the Portfolio has agreed to buy or sell; to hedge the U.S. dollar value
of securities the Portfolio already owns, particularly if it expects a decrease
in the value of the currency in which the foreign security is denominated; or to
gain exposure to the foreign currency in an attempt to realize gains.

Foreign currency transactions may involve, for example, the
Portfolio's purchase of foreign currencies for U.S. dollars or the maintenance
of short positions in foreign currencies, which would involve the Portfolio
agreeing to exchange an amount of a currency it did not currently own for
another currency at a future date in anticipation of a decline in the value of
the currency sold relative to the currency the Portfolio contracted to receive
in the exchange. The Portfolio's success in these transactions will depend
principally on the Investment Manager's ability to predict accurately the future
exchange rates between foreign currencies and the U.S. dollar.

INVESTMENT CONSIDERATIONS AND RISKS

EQUITY SECURITIES. (All Portfolios, except the International
Fixed-Income Portfolio and Strategic Yield Portfolio) Equity securities
fluctuate in value, often based on factors unrelated to the value of the issuer
of the securities, and such fluctuations can be pronounced. Changes in the value
of a Portfolio's investments will result in changes in the value of its shares
and thus the Portfolio's total return to investors.

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<PAGE>

The securities of the smaller companies in which the Small
Cap, International Small Cap, Emerging Markets and Bantam Value Portfolios may
invest may be subject to more abrupt or erratic market movements than larger,
more established companies, because securities of smaller companies typically
are traded in lower volume and the issuers typically are more subject to changes
in earnings and prospects. Smaller capitalization companies often have limited
product lines, markets or financial resources. They may be dependent on
management for one or a few key persons, and can be more susceptible to losses
and the risk of bankruptcy. In addition, securities of the small capitalization
sector may be thinly traded (and therefore have to be sold at a discount from
current market prices or sold in small lots over an extended period of time),
may be followed by fewer investment research analysts and may be subject to
wider price swings, and thus may create a greater chance of loss than by
investing in securities of larger capitalization companies.

FIXED-INCOME SECURITIES. (All Portfolios) Even though
interest-bearing securities are investments which promise a stable stream of
income, the prices of such securities generally are inversely affected by
changes in interest rates and, therefore, are subject to the risk of market
price fluctuations. Certain portfolio securities, such as those with interest
rates that fluctuate directly or indirectly based on multiples of a stated
index, are designed to be highly sensitive to changes in interest rates and can
subject the holders thereof to extreme reductions of yield and possibly loss of
principal.

The values of fixed-income securities also may be affected by
changes in the credit rating or financial condition of the issuer. Certain
portfolio securities, such as those rated below investment grade by Standard &
Poor's Ratings Group ("S&P") and Moody's Investors Service, Inc. ("Moody's" and
together with S&P, the "Rating Agencies"), may be subject to such risk with
respect to the issuing entity and to greater market fluctuations than certain
lower yielding, higher rated fixed-income securities. Once the rating of a
portfolio security has been changed, the Portfolio will consider all
circumstances deemed relevant in determining whether to continue to hold the
security.

Federal income tax law requires the holder of a zero coupon
security or of certain pay-in-kind bonds to accrue income with respect to these
securities prior to the receipt of cash payments. A Portfolio investing in such
securities may be required to distribute such income accrued with respect to
these securities and may have to dispose of portfolio securities under
disadvantageous circumstances in order to generate cash to satisfy these
distribution requirements.

MORTGAGE-RELATED SECURITIES. (International Fixed-Income
Portfolio and Strategic Yield Portfolio) As with other interest-bearing
securities, the prices of certain mortgage-related securities are inversely
affected by changes in interest rates. However, although the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true, since during periods of declining interest rates the
mortgages underlying the security are more likely to be prepaid. For this and
other reasons, a mortgage-related security's stated maturity may be shortened by
unscheduled prepayments on the underlying mortgages, and, therefore, it is
possible that the realized return of the security may differ materially from the

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<PAGE>

return originally expected by the Investment Manager. Moreover, with respect to
certain stripped mortgage-backed securities, if the underlying mortgage
securities experience greater than anticipated prepayments of principal, the
Portfolio may fail to fully recoup its initial investment even if the securities
are rated in the highest rating category by a nationally recognized statistical
rating organization. During periods of rapidly rising interest rates,
prepayments of mortgage-related securities may occur at slower than expected
rates. Slower prepayments effectively may lengthen a mortgage-related security's
expected maturity (but not past its stated maturity), which generally would
cause the value of such security to fluctuate more widely in response to changes
in interest rates. Were the prepayments on the Portfolio's mortgage-related
securities to decrease broadly, the Portfolio's effective duration, and thus
sensitivity to interest rate fluctuations, would increase. Commercial real
property loans, however, often contain provisions that substantially reduce the
likelihood that such securities will be prepaid. The provisions generally impose
significant prepayment penalties on loans and in some cases there may be
prohibitions on principal prepayments for several years following origination.

Certain mortgage-related securities are subject to credit
risks associated with the performance of the underlying mortgage properties.
Adverse changes in economic conditions and circumstances are more likely to have
an adverse impact on mortgage-related securities secured by loans on commercial
properties than on those secured by loans on residential properties. In
addition, as described above, these securities are subject to prepayment risk,
although commercial mortgages typically have shorter maturities than residential
mortgages and prepayment protection features. Some mortgage-related securities
have structures that make their reactions to interest rate changes and other
factors difficult to predict, making their values highly volatile.

In certain instances, the credit risk associated with
mortgage-related securities can be reduced by third party guarantees or other
forms of credit support. Improved credit risk does not reduce prepayment risk
which is unrelated to the rating assigned to the mortgage-related security.
Prepayment risk can lead to fluctuations in value of the mortgage-related
security which may be pronounced. If a mortgage-related security is purchased at
a premium, all or part of the premium may be lost if the market value of the
security declines whether resulting from changes in interest rates or
prepayments on the underlying mortgage collateral. Certain mortgage-related
securities that may be purchased by these Portfolios, such as inverse floating
rate collateralized mortgage obligations, have coupons that move inversely to a
multiple of a specific index which may result in increased price volatility.

FOREIGN SECURITIES. (All Portfolios) Foreign securities
markets generally are not as developed or efficient as those in the United
States. Securities of some foreign issuers are less liquid and more volatile
than securities of comparable U.S. issuers. Similarly, volume and liquidity in
most foreign securities markets are less than in the United States and, at
times, volatility of price can be greater than in the United States.

Because evidences of ownership of such securities usually are
held outside the United States, the Portfolios will be subject to additional
risks which include possible adverse political and economic developments,
seizure or nationalization of foreign deposits and adoption

21
<PAGE>

of governmental restrictions, which might adversely affect or restrict the
payment of principal and interest on the foreign securities to investors located
outside the country of the issuer, whether from currency blockage or otherwise.

With respect to the Emerging Markets, International
Fixed-Income and Strategic Yield Portfolios, emerging market countries have
economic structures that generally are less diverse and mature, and political
systems that are less stable, than those of developed countries. Emerging
markets may be more volatile than the markets of more mature economies; however,
such markets may provide higher rates of return to investors. Many emerging
market countries providing investment opportunities for these Portfolios have
experienced substantial, and in some periods extremely high, rates of inflation
for many years. Inflation and rapid fluctuations in inflation rates have had and
may continue to have adverse effects on the economies and securities markets of
certain of these countries.

Since foreign securities often are purchased with and payable
in currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations.

FOREIGN CURRENCY TRANSACTION. (All Portfolios, except the
Bantam Value Portfolio, Equity Portfolio and Small Cap Portfolio) Currency
exchange rates may fluctuate significantly over short periods of time. They
generally are determined by the forces of supply and demand in the foreign
exchange markets and the relative merits of investments in different countries,
actual or perceived changes in interest rates and other complex factors, as seen
from an international perspective. Currency exchange rates also can be affected
unpredictably by intervention of U.S. or foreign governments or central banks,
or the failure to intervene, or by currency controls or political developments
in the United States or abroad.

LOWER RATED SECURITIES. (International Fixed-Income Portfolio
and Strategic Yield Portfolio). Each of these Portfolios may invest in
securities rated below investment grade such as those rated Ba by Moody's or BB
by S&P, and as low as the lowest rating assigned by the Rating Agencies
(commonly known as junk bonds). They may be subject to certain risks and to
greater market fluctuations than lower yielding investment grade securities. See
"Appendix" for a general description of the Rating Agencies' ratings. Although
ratings may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market value risk of these securities. The
Portfolio will rely on the Investment Manager's judgment, analysis and
experience in evaluating the creditworthiness of an issuer.

You should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities and will fluctuate over time. These securities generally are
considered by the Rating Agencies to be, on balance, predominantly speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation and generally will involve more credit risk than
securities in the higher rating categories.

22
<PAGE>

Companies that issue certain of these securities often are
highly leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of such
issuers generally is greater than is the case with the higher rated securities.
For example, during an economic downturn or a sustained period of rising
interest rates, highly leveraged issuers of these securities may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations also may be affected adversely by
specific corporate developments, forecasts, or the unavailability of additional
financing. The risk of loss because of default by the issuer is significantly
greater for the holders of these securities because such securities generally
are unsecured and often are subordinated to other creditors of the issuer.

Because there is no established retail secondary market for
many of these securities, the Portfolio anticipates that such securities could
be sold only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it generally
is not as liquid as the secondary market for higher rated securities. The lack
of a liquid secondary market may have an adverse impact on market price and
yield and the Portfolio's ability to dispose of particular issues when necessary
to meet the Portfolio's liquidity needs or in response to a specific economic
event such as a deterioration in the creditworthiness of the issuer. The lack of
a liquid secondary market for certain securities also may make it more difficult
for the Portfolio to obtain accurate market quotations for purposes of valuing
its portfolio and calculating its net asset value. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may decrease
the values and liquidity of these securities. In such cases, judgment may play a
greater role in valuation because less reliable, objective data may be
available.

These securities may be particularly susceptible to economic
downturns. It is likely that an economic recession could disrupt severely the
market for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.

The Portfolio may acquire these securities during an initial
offering. Such securities may involve special risks because they are new issues.
The Portfolio has no arrangement with any persons concerning the acquisition of
such securities, and the Investment Manager will review carefully the credit and
other characteristics pertinent to such new issues.

The credit risk factors pertaining to lower rated securities
also apply to lower rated zero coupon securities and pay-in-kind bonds, in which
each of these Portfolios may invest. Pay-in-kind bonds pay interest through the
issuance of additional securities. Zero coupon securities and pay-in-kind bonds
carry an additional risk in that, unlike bonds which pay interest throughout the
period to maturity, the Portfolio will realize no cash until the cash payment
date unless a portion of such securities are sold and, if the issuer defaults,
the Portfolio may obtain no return at all on its investment.

23
<PAGE>

SIMULTANEOUS INVESTMENTS BY OTHER PORTFOLIOS OR FUNDS. (All
Portfolios) Investment decisions for each Portfolio are made independently from
those of the other portfolios and accounts managed by the Investment Manager.
If, however, such other portfolios or accounts desire to invest in, or dispose
of, the same securities as the Portfolio, available investments or opportunities
for sales will be allocated equitably to each. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by a
Portfolio or the price paid or received by a Portfolio.

INVESTMENT RESTRICTIONS

Each Portfolio's investment objective is a fundamental policy,
which cannot be changed without approval by the holders of a majority (as
defined in the 1940 Act) of the Portfolio's outstanding voting shares. In
addition, each Portfolio has adopted investment restrictions numbered 1 through
8 as fundamental policies. However, the amendment of these restrictions to add
an additional Portfolio, which amendment does not substantively affect the
restrictions with respect to an existing Portfolio, will not require approval as
described in the first sentence. Investment restrictions numbered 9 through 12
are not fundamental policies and may be changed, as to a Portfolio, by vote of a
majority of the Fund's Board members at any time. None of the Portfolios may:

1. Invest more than 25% of the value of its total assets in
the securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

2. Invest in commodities, except that a Portfolio may purchase
and sell options, forward contracts, futures contracts, including those relating
to indices, and options on futures contracts or indices.

3. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but a Portfolio may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate or real estate investment trusts.

4. Borrow money, except to the extent permitted under the 1940
Act (which currently limits borrowing to more than 33-1/3% of the value of the
Portfolio's total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.

5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, a Portfolio may
lend its portfolio securities in an amount not to exceed 33-1/3% of the value of
its total assets. Any loans of portfolio securities

24
<PAGE>

will be made according to guidelines established by the Securities and Exchange
Commission and the Fund's Board.

6. Act as an underwriter of securities of other issuers,
except to the extent a Portfolio may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of portfolio
securities.

7. Issue any senior security (as such term is defined in
Section 18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restrictions Nos. 2, 4, 10 and 11 may be deemed to give rise to a
senior security.

8. Purchase securities on margin, but a Portfolio may make
margin deposits in connection with transactions on options, forward contracts,
futures contracts, including those relating to indices, and options on futures
contracts or indices.

9. Invest in the securities of a company for the purpose of
exercising management or control, but the Portfolio will vote the securities it
owns as a shareholder in accordance with its views.

10. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.

11. Purchase, sell or write puts, calls or combinations
thereof, except as described in the Prospectus and Statement of Additional
Information.

12. Enter into repurchase agreements providing for settlement
in more than seven days after notice or purchase securities which are illiquid,
if, in the aggregate, more than 15% of the value of its net assets would be so
invested.

* * *

If a percentage restriction is adhered to at the time of
investment, a later change in percentage resulting from a change in values or
assets will not constitute a violation of such restriction.

In addition, each Portfolio has adopted the following policies
as non-fundamental policies. Each Portfolio intends (i) to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code and (ii) to comply in all material respects with insurance laws and
regulations that the Fund has been advised are applicable to investments of
separate accounts of Participating Insurance Companies. As non-fundamental
policies, these policies may be changed by vote of a majority of the Fund's
Board of Directors at any time.

25
<PAGE>

MANAGEMENT

The Fund's Board is responsible for the management and
supervision of each Portfolio. The Board approves all significant agreements
with those companies that furnish services to the Portfolios. These companies
are as follows:

<TABLE>
<S> <C>
Lazard Asset Management.................................. Investment Manager
Lazard Freres & Co. LLC.................................. Distributor
Boston Financial Data Services, Inc...................... Transfer Agent and
Dividend Disbursing Agent
State Street Bank and Trust Company...................... Custodian
</TABLE>

The Directors and officers of the Fund and their principal
occupations during the past five years are set forth below. Unless otherwise
specified, the address of each of the following persons is 30 Rockefeller Plaza,
New York, New York 10112.

<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- ------------------------------- --------------------------- --------------------------------------------------
<S> <C> <C>
Norman Eig* (58) Chairman of the Board Vice Chairman and Managing Director (formerly
General Partner), Lazard Freres.

Herbert W. Gullquist* (61) President, Director Vice Chairman and Managing Director (formerly
General Partner), Lazard Freres; Chief Investment
Officer of the Investment Manager.

John J. Burke (70) Director Retired; Former Vice Chairman, Director, Montana
50 Burning Tree Lane Power Company.
Butte, MT 59701

Kenneth S. Davidson (54) Director Managing Partner, Davidson Capital Management
Davidson Capital Management Corporation; Director, Blackthorn Fund N.V. and
Corporation Ottertail Valley Railroad.
635 Madison Avenue,
16th Floor
New York, NY 10022

Carl Frischling* (62) Director Senior Partner, Kramer, Levin, Naftalis & Frankel;
Kramer, Levin, Naftalis & Frankel from 1992 to 1994, Senior Partner, Reid & Priest.
919 Third Avenue
New York, NY 10022

Lester Z. Lieberman (68) Director Private Investor; Director of Dowel Associates;
1500 Mt. Kemble Avenue Chairman of the Board of Trustees of Newark Beth
Morristown, NJ 07960 Israel Medical Center and Irvington General
Hospital; Member of the New Jersey State
Investment Council; prior to 1994, Director of
United Jersey Bank, N.A. and Clarkson University.

Richard Reiss, Jr. (55) Director Managing Partner, Georgica Advisers LLC, an
Georgica Advisers LLC investment manager.
1114 Avenue of the Americas
New York, NY 10036
</TABLE>

26
<PAGE>

<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- ------------------------------- --------------------------- --------------------------------------------------
<S> <C> <C>
John Rutledge (50) Director President, Rutledge & Company, an economics and
Rutledge & Company investment advisory firm; Chairman, Claremont
One Greenwich Office Park Economics Institute.
51 Weaver Street
Greenwich, CT 06831

William Katz (45) Director President and Chief Operating Officer of BBDO, an
BBDO Worldwide Network advertising agency; from May 1994 to February
1285 Avenue of the Americas 1996, General Manager of BBDO; prior thereto,
New York, NY 10019 Executive Vice President and Senior Account
Director of BBDO.

William G. Butterly, III (38) Vice President, Secretary Senior Vice President, Legal Affairs of the
Investment Manager.

James Giallanza (33) Treasurer Certified Public Accountant; Vice President of the
Investment Manager; from August 1990 to July 1998,
Manager, Price Waterhouse LLP.
</TABLE>

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

The Fund has adopted a Distribution and Servicing Plan with
respect to shares of the Portfolios. So long as the Plan remains in effect, the
Directors who are not "interested persons" of the Fund, as defined in the 1940
Act, will be selected and nominated by the Directors who are not "interested
persons" of the Fund.

The Fund pays its Directors its allocable share of the
aggregate of a fixed fee of $20,000 per annum and a per meeting fee of $1,000
for the Fund and The Lazard Funds, Inc., and reimburses them for their expenses.
The aggregate amount of compensation paid to each Director by the Fund for the
year ended December 31, 1998, was as follows:

Total Compensation from
Aggregate Compensation the Fund and
Name of Director from the Fund The Lazard Funds, Inc.
- ---------------- ------------- ----------------------

John J. Burke $5,400 $24,000
Kenneth S. Davidson $5,400 $24,000
Norman Eig N/A N/A
Carl Frischling $5,400 $24,000
Herbert W. Gullquist N/A N/A
William Katz $5,400 $24,000
Lester Z. Lieberman $5,400 $24,000
Richard Reiss, Jr. $5,400 $24,000
John Rutledge $5,400 $24,000

The Fund does not compensate officers or Directors who are
employees or affiliated persons of the Investment Manager. As of April 6, 1999,
the Fund's officers and Directors, as a group, owned less than 1% of the shares
of each Portfolio.

27
<PAGE>

INVESTMENT MANAGER AND INVESTMENT MANAGEMENT AGREEMENT

Lazard Asset Management, 30 Rockefeller Plaza, New York, New
York 10112, has entered into an investment management agreement (the "Management
Agreement") with the Fund on behalf of each Portfolio. Pursuant to the
Management Agreement, Lazard Asset Management regularly provides each Portfolio
with investment research, advice and supervision and furnishes continuously an
investment program for each Portfolio consistent with its investment objectives
and policies, including the purchase, retention and disposition of securities.

Lazard Asset Management is a division of Lazard Freres, a New
York limited liability company, which is registered as an investment adviser
with the Commission and is a member of the New York, American and Midwest Stock
Exchanges. Lazard Freres provides its clients with a wide variety of investment
banking and related services, including investment management. It is a major
underwriter of corporate securities, conducts a broad range of trading and
brokerage activities in corporate and governmental bonds and stocks and acts as
a financial adviser to utilities. Lazard Asset Management provides investment
management services to client discretionary accounts with assets as of March 31,
1999 totaling approximately $64 billion. Its clients are both individuals and
institutions, some of whose accounts have investment policies similar to those
of several of the Portfolios. As of April 6, 1999, Lazard Asset Management held
voting and dispositive power with respect to a sufficient number of shares of
the Emerging Markets and International Equity Portfolios held by client accounts
as to be considered a controlling person of such Portfolio.

Under the terms of the Management Agreement, the Investment
Manager will pay the compensation of all personnel of the Fund, except the fees
of Directors of the Fund who are not employees or affiliated persons of the
Investment Manager. The Investment Manager will make available to the Portfolios
such of the Investment Manager's members, directors, officers and employees as
are reasonably necessary for the operations of each Portfolio, or as may be duly
elected officers or directors of the Fund. Under the Management Agreement, the
Investment Manager also pays each Portfolio's office rent and provides
investment advisory research and statistical facilities and all clerical
services relating to research, statistical and investment work. The Investment
Manager, including its employees who serve the Portfolios, may render investment
advice, management and other services to others.

As compensation for its services, each of the Portfolios has
agreed to pay the Investment Manager an investment management fee, accrued daily
and payable monthly, at the annual rates set forth below as a percentage of the
average daily value of the net assets of the relevant Portfolio:

28
<PAGE>

Investment Management
Name of Portfolio Fee Payable
----------------- -----------

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

For the fiscal periods ended December 31, 1997 and 1998, the
Investment Manager waived all of its management fees payable by the relevant
Portfolios.

The Management Agreement provides that each Portfolio pays all
of its expenses that are not specifically assumed by the Investment Manager.
Expenses attributable to each Portfolio will be charged against the assets of
that Portfolio. Other expenses of the Fund will be allocated among the
Portfolios in a manner which may, but need not, be proportionate in relation to
the net assets of each Portfolio. Expenses payable by each of the Portfolios
include, but are not limited to, clerical salaries, brokerage and other expenses
of executing portfolio transactions; legal, auditing or accounting expenses;
trade association dues; taxes or governmental fees; the fees and expenses of any
person providing administrative services to the Fund; the fees and expenses of
the custodian and transfer agent of the Fund; clerical expenses of issue,
redemption or repurchase of shares of the Portfolio; the expenses and fees for
registering and qualifying securities for sale; the fees of Directors of the
Fund who are not employees or affiliated persons of the Investment Manager or
its affiliates; travel expenses of all Directors, officers and employees;
insurance premiums; and the cost of preparing and distributing reports and
notices to shareholders. In addition, shares of each Portfolio are subject to an
annual distribution and servicing fee. See "Distribution and Servicing Plan."

As to each Portfolio, the Management Agreement is subject to
annual approval by (i) the Fund's Board or (ii) vote of a majority (as defined
in the 1940 Act) of the outstanding voting securities of such Portfolio,
provided that in either event the continuance also is approved by a majority of
the Directors who are not "interested persons" (as defined in the 1940 Act) of
the Fund or the Investment Manager, by vote cast in person at a meeting called
for the purpose of voting on such approval. The Management Agreement was
approved by the sole shareholder of each Portfolio on April 30, 1997. The
Management Agreement was last approved by the Fund's Board, including a majority
of the Directors who are not "interested persons" of any party to the Management
Agreement, at a meeting held on October 27, 1998. As to each Portfolio, the
Management Agreement is terminable without penalty, on 60 days' notice, by the
Fund's Board or by vote of the holders of a majority of the shares of such
Portfolio, or, upon not less than 90 days' notice, by the Investment Manager.
The Management Agreement will terminate automatically, as to the relevant
Portfolio, in the event of its assignment (as defined in the 1940 Act).

29
<PAGE>

ADMINISTRATOR AND CUSTODIAN

The Fund has engaged State Street Bank and Trust Company
("State Street"), 225 Franklin Street, Boston, Massachusetts 02110, to provide
certain administrative services to the Portfolios.

State Street also acts as the Fund's custodian. As the Fund's
custodian, State Street, among other things, maintains a custody account or
accounts in the name of each Portfolio; receives and delivers all assets for
each Portfolio upon purchase and upon sale or maturity; collects and receives
all income and other payments and distributions on account of the assets of each
Portfolio and disburses the Portfolio's assets in payment of its expenses. The
custodian does not determine the investment policies of any Portfolio or decide
which securities any Portfolio will buy or sell.

DISTRIBUTOR

Lazard Freres serves as the distributor of each Portfolio's
shares and conducts a continuous offering pursuant to a "best efforts"
arrangement. As the distributor, it accepts purchase and redemption orders for
Portfolio shares. In addition, the distribution agreement obligates Lazard
Freres to pay certain expenses in connection with the offering of Portfolio
shares. After the prospectus and periodic reports have been prepared, set in
type and mailed to shareholders, Lazard Freres also will pay for the printing
and distribution of copies thereof used in connection with the offering to
prospective investors.

DETERMINATION OF NET ASSET VALUE

Net asset value per share of each Portfolio is determined by
State Street for the Fund on each day the New York Stock Exchange is open for
trading. The New York Stock Exchange is ordinarily closed on the following
national holidays: New Year's Day, Martin Luther King Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Net asset value per share is determined by dividing the value of
the total assets of the Portfolio represented, less all liabilities, by the
total number of Portfolio shares outstanding.

The value of securities, other than options listed on national
securities exchanges and debt securities maturing in 60 days or less, is
determined as of the close of regular trading on the New York Stock Exchange.
Options on stock and stock indices traded on national securities exchanges are
valued as of the close of options trading on such exchanges (which is currently
4:10 p.m., New York time). Debt securities maturing in 60 days or less are
valued at amortized cost, except where to do so would not reflect accurately
their fair value, in which case such securities would be valued at their fair
value as determined under the supervision of the Board of Directors. Each
security for which the primary market is on a national securities exchange is

30
<PAGE>

valued at the last sale price on the principal exchange on which it is traded,
or, if no sales are reported on such exchange on that day, at the closing bid
price.

Any security held by a Portfolio for which the primary market
is the Nasdaq National Market System is valued at the last sale price as quoted
by such system or, in the absence of any sale on the valuation date, at the
closing bid price. Any other unlisted security for which current
over-the-counter market quotations or bids are readily available is valued at
its last quoted bid price or, if available, the mean of two such prices.

All other securities and other assets for which current market
quotations are not readily available are valued at fair value as determined in
good faith by the Fund's Board of Directors and in accordance with procedures
adopted by the Board of Directors. The portfolio securities of any of the
Portfolios also may be valued on the basis of prices provided by a pricing
service when such prices are believed by the Investment Manager to reflect the
fair market value of such securities.

The Bantam Value Portfolio, International Small Cap Portfolio
and Small Cap Portfolio invest primarily in equity securities of companies with
relatively small market capitalizations. Because of the difference between the
bid and asked prices of over-the-counter securities, there may be an immediate
reduction in the net asset value of the shares of the Bantam Value Portfolio,
International Small Cap Portfolio or Small Cap Portfolio after such Portfolio
has completed a purchase of securities that will be valued by the relevant
Portfolio at their bid price, since those securities usually will have been
purchased at or near the asked price.

Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets ordinarily is completed well before the
close of business on each business day in New York (i.e., a day on which the New
York Stock Exchange is open). In addition, European or Far Eastern securities
trading generally or in a particular country or countries may not take place on
all business days in New York. Furthermore, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days which are
not business days in New York and on which the net asset value of a Portfolio is
not calculated. Each Portfolio calculates net asset value per share, and
therefore effects sales, redemptions and repurchases of its shares, as of the
close of regular trading on the New York Stock Exchange once on each day on
which the New York Stock Exchange is open. Such calculation may not take place
contemporaneously with the determination of the prices of the majority of the
portfolio securities used in such calculation. If events materially affecting
the value of such securities occur between the time when their price is
determined and the time when the Portfolio's net asset value is calculated, such
securities will be valued at fair value as determined in good faith by the Board
of Directors.

31
<PAGE>

PORTFOLIO TRANSACTIONS

GENERAL

Subject to the supervision of the Board of Directors, the
Investment Manager is primarily responsible for the investment decisions and the
placing of portfolio transactions for each Portfolio. In selecting brokers or
dealers to execute portfolio transactions on behalf of a Portfolio, the
Investment Manager seeks the best overall terms available, taking into account
such factors as price, size of order, difficulty of execution and skill required
of the executing broker. While the Investment Manager will generally seek
reasonably competitive spreads or commissions, the Portfolios will not
necessarily be paying the lowest spread or commission available.

Purchases and sales of portfolio securities on a securities
exchange are effected by the Investment Manager through brokers who charge a
negotiated commission for their services based on the quality and quantity of
execution services provided by the broker in the light of generally prevailing
rates. Orders may be directed to any broker including, to the extent and in the
manner permitted by applicable law, Lazard Freres. In the over-the-counter
market, securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price that includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount.

To the extent consistent with applicable provisions of the
1940 Act and the rules adopted by the Commission thereunder, the Fund's Board
has determined that securities transactions for a Portfolio may be executed
through Lazard Freres if, in the judgment of the Investment Manager, the use of
Lazard Freres is likely to result in price and execution at least as favorable
as those of other qualified brokers or dealers, and if, in the transaction,
Lazard Freres charges the Portfolio a rate consistent with that charged to
comparable unaffiliated customers in similar transactions.

Purchase and sale orders for securities held by a Portfolio
may be combined with those for other Portfolios in the interest of the most
favorable net results for all. When the Investment Manager determines that a
particular security should be bought for or sold by more than one Portfolio, the
Investment Manager undertakes to allocate those transactions between the
participants equitably.

RESEARCH AND STATISTICAL INFORMATION

When it can be done consistently with the policy of obtaining
the best overall terms available, the Investment Manager may select brokers or
dealers who supply market quotations to the Fund's custodian for valuation
purposes, or who supply research, market and statistical information to the
Investment Manager. Although such research, market and statistical

32
<PAGE>

information may be useful to the Investment Manager, it is only supplementary to
the Investment Manager's own research efforts, since the information must still
be analyzed, weighed and reviewed by the Investment Manager's staff. Information
so received will be in addition to, and not in lieu of, the services required to
be performed by the Investment Manager under the Management Agreement with the
Fund on behalf of the Portfolios. Such information may be useful to the
Investment Manager in providing services to both the Portfolios and clients
other than the Portfolios, and, conversely, supplemental information obtained by
the placement of business of other clients may be useful to the Investment
Manager in carrying out its obligations to the Portfolios. The total dollar
amount of transactions pursuant to which brokerage was directed in consideration
of research services provided during the year ended December 31, 1998, was
$1,894,819,000, and the related commissions were $4,385,000. In addition, when
it can be done consistently with the above stated policy, the Investment Manager
may place orders with brokers and dealers (i) who refer persons to the
Investment Manager for the purpose of purchasing shares of the Portfolios or
(ii) who provide services to the Fund at no fee or for a reduced fee.

BROKERAGE COMMISSIONS

In connection with its portfolio securities transactions for
the fiscal periods ended December 31, 1997 and 1998, each Portfolio indicated
below paid brokerage commissions as follows:

<TABLE>
<CAPTION>
Period Ended December 31, 1997
- ------------------------------
Percentage of
Amount of Percentage of Total Brokerage
Brokerage Total Brokerage Transactions
Brokerage Commissions Paid Commissions Paid Effected Through
Name of Portfolio Commissions Paid to Lazard Freres to Lazard Freres Lazard Freres
----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Small Cap Portfolio $ 716 -0- 0.00% 0.00%
Emerging Markets Portfolio $4,048 -0- 0.00% 0.00%
</TABLE>

<TABLE>
<CAPTION>
Period Ended December 31, 1998
- ------------------------------
Percentage of
Amount of Percentage of Total Brokerage
Brokerage Total Brokerage Transactions
Brokerage Commissions Paid Commissions Paid Effected Through
Name of Portfolio Commissions Paid to Lazard Freres to Lazard Freres Lazard Freres
----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Equity Portfolio $2,498 $2,054 88.71% 80.55%
Small Cap Portfolio $2,875 $ 70 2.43% 2.73%
International Equity Portfolio $ 566 $ 2 0.37% 1.20%
Emerging Markets Portfolio $3,422 $ 125 3.80% 1.40%
</TABLE>

The Bantam Value, Global Equity, International Fixed-Income,
International Small Cap and Strategic Yield Portfolios had not commenced
operations.

<PAGE>

BUYING AND SELLING SHARES

GENERAL. INDIVIDUALS MAY NOT PURCHASE ORDERS DIRECTLY WITH THE
FUND. INDIVIDUALS SHOULD CONSULT A PARTICIPATING INSURANCE COMPANY, THE
ADMINISTRATOR OF AN ELIGIBLE PLAN OR A FINANCIAL INTERMEDIARY FOR INFORMATION ON
THE PURCHASE OF PORTFOLIO SHARES. THE FUND DOES NOT ISSUE SHARE CERTIFICATES.

Fund shares are sold on a continuous basis. Net asset value
ordinarily is determined as of 4:00 p.m. (New York Time) on each day during
which the New York Stock Exchange is open for trading. For purposes of
determining net asset value, options and futures contracts will be valued 15
minutes after the close of trading on the floor of the New York Stock Exchange.
Net asset value per share is computed by dividing the value of the net assets of
each Portfolio (i.e., the value of its assets less liabilities) by the total
number of shares outstanding. Equity securities typically are valued based on
market value, or where market quotations are not readily available, based on
fair value as determined in good faith by the Board. Debt securities having
remaining maturities of 60 days or less are valued on an amortized cost basis
unless the Board determines that such method does not represent fair value.
Other debt securities are valued using available market quotations or at fair
value which may be determined by one or more pricing services.

Portfolio shares may be redeemed at any time by the separate
accounts of the Participating Insurance Companies or by Eligible Plans.
INDIVIDUALS MAY NOT PLACE REDEMPTION ORDERS DIRECTLY WITH THE FUND. The value of
the shares redeemed may be more or less than their original cost, depending on
the Portfolio's then-current net asset value.

The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Commission.

REDEMPTION COMMITMENT. The Fund has committed to pay in cash
all redemption requests by any shareholder of record, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of a Portfolio's
net assets at the beginning of such period. Such commitment is irrevocable
without the prior approval of the Commission. In the case of requests for
redemption in excess of such amount, the Fund's Board reserves the rights to
make payments in whole or part in securities (which may include non-marketable
securities) or other assets of the Portfolio in case of an emergency or any time
a cash distribution would impair the liquidity of the Portfolio to the detriment
of the existing shareholders. In such event, the securities would be valued in
the same manner as the Portfolio's investments are valued. If the recipient sold
such securities, brokerage charges might be incurred.

SUSPENSION OF REDEMPTIONS. The right of redemption may be
suspended or the date of payment postponed (a) during any period when the New
York Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Portfolio ordinarily utilizes is
restricted, or when an emergency exists as determined by the

34
<PAGE>

Commission so that disposal of the Portfolio's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other periods
as the Commission by order may permit to protect the Portfolio's shareholders.

DISTRIBUTION AND SERVICING PLAN

Portfolio Shares are subject to a Distribution and Servicing
Plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the Distribution
and Servicing Plan, the Fund pays Lazard Freres for advertising, marketing and
distributing each Portfolio's shares and for the provision of certain services
to the holders of shares a fee at an annual rate of .25% of the Portfolio's
average daily net assets. Lazard Freres may make payments to Participating
Insurance Companies for providing these services to Policy owners or to certain
financial institutions, securities dealers and other industry professionals
(collectively, "Service Agents") for providing these services to Eligible Plan
participants. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the Fund
and providing reports and other information, and services related to the
maintenance of shareholder accounts. The fee payable for such services is
intended to be a "service fee" as defined in Conduct Rules of the NASD.
Depending on a Participating Insurance Company's corporate structure and
applicable state law, Lazard Freres may make payments to the Participating
Insurance Company's affiliated broker-dealer or other affiliated company rather
than the Participating Insurance Company itself. From time to time, Lazard
Freres may defer or waive receipt of fees under the Distribution and Servicing
Plan while retaining the ability to be paid by the Fund under the Distribution
and Servicing Plan thereafter. The fees payable to Lazard Freres under the
Distribution and Servicing Plan for advertising, marketing and distributing
shares and for payments to Participating Insurance Companies are payable without
regard to actual expenses incurred.

Rule 12b-1 (the "Rule") adopted by the Commission under the
1940 Act provides, among other things, that an investment company may bear
expenses of distributing its shares only pursuant to a plan adopted in
accordance with the Rule. The Fund's Board has adopted such a plan (the
"Distribution and Servicing Plan"), pursuant to which the Fund pays Lazard
Freres for advertising, marketing and distributing shares of the Portfolios and
for the provision of certain services to the holders of shares of the
Portfolios. Lazard Freres may make payments to Participating Insurance Companies
and Service Agents for providing these services to Policy owners and Eligible
Plan participants. The Fund's Board determined, in the exercise of its business
judgment, that the Fund's Distribution and Servicing Plan is reasonably likely
to benefit the Fund, Policy owners and Eligible Plan participants.

A quarterly report of the amounts expended under the
Distribution Servicing Plan, and the purposes for which such expenditures were
incurred, must be made to the Board for its review. In addition, the
Distribution and Servicing Plan provides that it may not be amended to increase
materially the costs which holders of shares of a Portfolio may bear for
distribution pursuant to the Distribution and Servicing Plan without such
shareholders' approval and that other material amendments of the Distribution
and Servicing Plan must be approved by the

35
<PAGE>

Board and by the Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund and have no direct or indirect financial interest in
the operation of the Distribution and Servicing Plan or in any agreements
entered into in connection with the Distribution and Servicing Plan, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Distribution and Servicing Plan is subject to annual approval by
such vote cast in person at a meeting called for the purpose of voting on the
Distribution and Servicing Plan. The Distribution and Servicing Plan was last so
approved October 27, 1998. As to each Portfolio, the Distribution and Servicing
Plan may be terminated at any time by vote of a majority of the Board members
who are not "interested persons" and have no direct or indirect financial
interest in the operation of the Distribution and Servicing Plan or in any
agreements entered into in connection with the Distribution and Servicing Plan
or by vote of the holders of a majority of such Portfolio's shares.

For the fiscal period ended December 31, 1998, each Portfolio
indicated below paid the Distributor the amount set forth below under the
Distribution and Servicing Plan:

Amount Paid to Distributor
Under Distribution and Servicing
Plan For Fiscal Period
Name of Portfolio Ended December 31, 1998
----------------- ---------------------------

Equity Portfolio $1,567
Small Cap Portfolio $2,503
International Equity Portfolio $ 271
Emerging Markets Portfolio $3,144

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to declare as a dividend on the outstanding
shares of each of the International Fixed-Income Portfolio and Strategic Yield
Portfolio substantially all of the Portfolio's net investment income at the
close of each business day to shareholders of record at 4:00 p.m. (New York
time). Net investment income for a Saturday, Sunday or holiday will be included
in the dividend declared on the previous business day. Dividends declared on the
shares of the International Fixed-Income Portfolio and Strategic Yield Portfolio
ordinarily will be paid on the last business day of each month. Shareholders who
redeem all their shares of any of these Portfolios prior to a dividend payment
date will receive, in addition to the redemption proceeds, any dividends that
are declared but unpaid. Shareholders of any of these Portfolios who redeem only
a portion of their shares will be entitled to all dividends that are declared by
unpaid on the redeemed shares on the next dividend payment date.

Dividends from net investment income on the Equity Portfolio,
International Equity Portfolio, Small Cap Portfolio, International Small Cap
Portfolio, Emerging Markets Portfolio, Global Equity Portfolio and Bantam Value
Portfolio generally will be declared and paid at least annually and may be
declared and paid twice annually.

36
<PAGE>

Investment income for a Portfolio includes, among other
things, interest income, accretion of market and original issue discount and
amortization of premium and, in the case of the Equity Portfolio, International
Equity Portfolio, Small Cap Portfolio, International Small Cap Portfolio,
Emerging Markets Portfolio, Global Equity Portfolio and Bantam Value Portfolio,
also would include dividends.

With respect to all of the Portfolios, net realized capital
gains, if any, will be distributed at least annually and may be declared and
paid twice annually. If a dividend check mailed to a shareholder who elected to
receive dividends and/or capital gain distributions in cash is returned as
undeliverable by the postal or other delivery service, such shareholder's
distribution option automatically will be converted to all dividends and other
distributions reinvested in additional shares. NO INTEREST WILL ACCRUE ON
AMOUNTS REPRESENTED BY UNCASHED DISTRIBUTION OR REDEMPTION CHECKS. Each
Portfolio forwards to the Fund's custodian the monies for dividends to be paid
in cash on the payment date.

TAXATION

Management believes that each of the Equity Portfolio,
International Equity Portfolio, Emerging Markets Portfolio and Small Cap
Portfolio has qualified for the fiscal year ended December 31, 1998 as a
"regulated investment company" under Subchapter M of the Code. It is intended
that each such Portfolio will continue to so qualify as a regulated investment
company, if such qualification is in the best interests of its shareholders.
Each Portfolio will be treated as a separate entity for tax purposes and thus
the provisions of the Code applicable to regulated investment companies
generally will be applied to each Portfolio separately, rather than to the Fund
as a whole. As a regulated investment company, a Portfolio will pay no Federal
income tax on net investment income and net realized securities gains to the
extent that such income and gains are distributed to shareholders in accordance
with applicable provisions of the Code. To qualify as a regulated investment
company, the Portfolio must distribute at least 90% of its net income
(consisting of net investment income and net short-term capital gain) to its
shareholders and meet certain asset diversification and other requirements. If
the Portfolio did not qualify as a regulated investment company, it would be
treated for tax purposes as an ordinary corporation subject to Federal income
tax. The term "regulated investment company" does not imply the supervision of
management of investment practices or policies by any government agency.

Any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of the shares below
the cost of the investment. Such a dividend or distribution would be a return of
investment in an economic sense, although taxable as stated in the Prospectus.
In addition, the Code provides that if a shareholder holds shares of a Portfolio
for six months or less and has received a capital gain distribution with respect
to such shares, any loss incurred on the sale of such shares will be treated as
long-term capital loss to the extent of the capital gain distribution received.

37
<PAGE>

Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gains and losses. However, all or a
portion of the gain or loss realized from the disposition of foreign currency,
non-U.S. dollar denominated debt instruments, and certain financial futures and
options, may be treated as ordinary income or loss under Section 988 of the
Code. In addition, all or a portion of the gain realized from the disposition of
certain market discount bonds will be treated as ordinary income under Section
1276 of the Code. Finally, all or a portion of the gain realized from engaging
in "conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and straddle transactions, transactions marketed or
sold to produce capital gains, or transactions described in Treasury regulations
to be issued in the future.

Under Section 1256 of the Code, gain or loss realized by a
Portfolio from certain financial futures and options transactions (other than
those taxed under Section 988 of the Code) will be treated as 60% long-term
capital gain or loss and 40% short-term capital gain or loss. Gain or loss will
arise upon the exercise or lapse of such futures and options as well as from
closing transactions. In addition, any such futures or options remaining
unexercised at the end of the Portfolio's taxable year will be treated as sold
for their then fair market value, resulting in additional gain or loss to the
Portfolio characterized in the manner described above.

Offsetting positions held by a Portfolio involving financial
futures and options may constitute "straddles." Straddles are defined to include
"offsetting positions" in actively traded personal property. The tax treatment
of straddles is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Sections 988 and
1256 of the Code. As such, all or a portion of any short- or long-term capital
gain from certain "straddle" transactions may be recharacterized as ordinary
income.

If a Portfolio were treated as entering into straddles by
reason of its future or options transactions, such straddles could be
characterized as "mixed straddles" if the futures or options transactions
comprising such straddles were governed by Section 1256 of the Code. The
Portfolio may make one or more elections with respect to "mixed straddles."
Depending upon which election is made, if any, the results to the Portfolio may
differ. If no election is made, to the extent the straddle rules apply to
positions established by the Portfolio, losses realized by the Portfolio will be
deferred to the extent of unrealized gain in any offsetting positions. Moreover,
as a result of the straddle and conversion transaction rules, short-term capital
loss on straddle positions may be recharacterized as long-term capital loss, and
long-term capital gain may be recharacterized as short-term capital gain or
ordinary income.

The Taxpayer Relief Act of 1997 included constructive sale
provisions that generally apply if a Portfolio either (1) holds an appreciated
financial position with respect to stock, certain debt obligations, or
partnership interests ("appreciated financial position") and then enters into a
short sale, futures or forward contract, or offsetting notional principal
contract (collectively, a "Contract") with respect to the same or substantially
identical property or (2) holds an appreciated financial position that is a
Contract and then acquires property that is the same as, or substantially
identical to, the underlying property. In each instance, with certain

38
<PAGE>

exceptions, the Portfolio generally will be taxed as if the appreciated
financial position were sold at its fair market value on the date the Portfolio
enters into the financial position or acquires the property, respectively.
Transactions that are identified hedging or straddle transactions under other
provisions of the Code can be subject to the constructive sale provisions.

Income received by a Portfolio from sources within foreign
countries may be subject to withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. It is impossible to determine the effective rate
of foreign tax in advance since the amount of each Portfolio's assets to be
invested in various countries is not known.

If a Portfolio invests in an entity that is classified as a
"passive foreign investment company" ("PFIC") for Federal income tax purposes,
the operation of certain provisions of the Code applying to PFICs could result
in the imposition of certain Federal income taxes on the Portfolio. In addition,
gain realized from the sale, other disposition or marking-to-market of PFIC
securities may be treated as ordinary income under Section 1291 or Section 1296
of the Code.

Investment by a Portfolio in securities issued at a discount
or providing for deferred interest or for payment of interest in the form of
additional obligations could, under special tax rules, affect the amount, timing
and character of distributions to shareholders by causing a Portfolio to
recognize income prior to the receipt of cash payments. For example, the
Portfolio could be required to recognize annually a portion of the discount (or
deemed discount) at which such securities were issued and to distribute an
amount equal to such income in order to maintain its qualification as a
regulated investment company. In such case, the Portfolio may have to dispose of
securities which it might otherwise have continued to hold in order to generate
cash to satisfy these distribution requirements.

Shareholders of the Fund will be variable annuity and variable
life insurance separate accounts established by insurance companies to fund
Policies. The Secretary of the Treasury may in the future issue additional
regulations or revenue rulings that will prescribe the circumstances in which a
Policy owner's control of the investments of a separate account may cause the
Policy owner, rather than the insurance company, to be treated as the owner of
assets of the separate account. Failure to comply with Section 817(h) of the
Code or any regulation thereunder, or with any regulations or revenue rulings on
Policy owner control, if promulgated, would cause earnings regarding a Policy
owner's interest in the separate account to be includable in the Policy owner's
gross income in the year earned.

The Fund will not report dividends paid to Eligible Plans to the Internal
Revenue Service ("IRS"). Generally, distributions from Eligible Plans, except
those representing returns of non-deductible contributions thereto, will be
taxable as ordinary income and, if made prior to the time the participant
reaches age 59-1/2, generally will be subject to an additional tax equal to 10%
of the taxable portion of the distribution. If the distribution from an Eligible
Plan (other than certain governmental or church plans) for any taxable year
following the year in which the participant reaches age 70-1/2 is less than the
"minimum required distribution" for that taxable

39
<PAGE>

year, an excise tax equal to 50% of the deficiency may be imposed by the IRS.
The administrator, trustee or custodian of such a Plan will be responsible for
reporting distributions from the Plan to the IRS. Participants in Eligible Plans
will receive a disclosure statement describing the consequences of a
distribution from the Plan from the administrator, trustee or custodian of the
Plan prior to receiving the distribution. Moreover, certain contributions to an
Eligible Plan in excess of the amounts permitted by law may be subject to an
excise tax. For more information concerning the Federal income tax consequences,
Policy owners should refer to the prospectus for their contracts or policies and
Eligible Plan participants should consult the Plan's administrator or trustee.

PERFORMANCE INFORMATION

Current yield is computed pursuant to a formula which operates
as follows: The amount of the relevant Portfolio's expenses accrued for the
30-day period (net of reimbursements) is subtracted from the amount of the
dividends and interest earned (computed in accordance with the regulatory
requirements) by such Portfolio during the period. That result is then divided
by the product of: (a) the average daily number of such Portfolio's shares
outstanding during the period that were entitled to receive dividends, and (b)
the net asset value per share on the last day of the period less any
undistributed earned income per share reasonably expected to be declared as a
dividend shortly thereafter. The quotient is then added to 1, and that sum is
raised to the 6th power, after which 1 is subtracted. The current yield is then
arrived at by multiplying the result by 2. A Portfolio's "actual distribution
rate" is computed in the same manner as yield, except that actual income
dividends declared per share during the period in question is substituted for
net investment income per share.

Average annual total return is calculated by determining the
ending redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial investment,
taking the "n"th root of the quotient (where "n" is the number of years in the
period) and subtracting 1 from the result.

The average annual total return for the indicated Portfolio
and periods ended December 31, 1998 (the date listed in the footnote is the
beginning of the period for the indicated Portfolio) was as follows:

40
<PAGE>

Average Annual Total Returns
For Periods Ended
December 31, 1998
----------------------------------
Since
Name Of Portfolio 1-Year Inception
- ----------------- ------ ---------

Equity N/A N/A(1)
International Equity N/A N/A(2)
Small Cap (3.22)% (3.99)%(3)
Emerging Markets (22.85)% (23.31)%(4)

- ------------------
(1) Commenced operations on March 19, 1998.
(2) Commenced operations on September 1, 1998.
(3) Commenced operations on November 4, 1997.
(4) Commenced operations on November 4, 1997.

Total return is calculated by subtracting the amount of the
relevant Portfolio's net asset value per share at the beginning of a stated
period from the net asset value per share at the end of the period (after giving
effect to the reinvestment of dividends and distributions during the period),
and dividing the result by the net asset value per share at the beginning of the
period.

The total return for the indicated Portfolio from inception
through December 31, 1998 (the date listed in the footnote is the date
operations commenced) was as follows:

Total Return Through
Name Of Portfolio December 31, 1998
----------------- -----------------

Equity 10.89%(1)
International Equity 12.30%(2)
Small Cap (4.61)%(3)
Emerging Markets (26.48)%(4)

- -------------------
(1) March 19, 1998.
(2) September 1, 1998.
(3) November 4, 1997.
(4) November 4, 1997.

41
<PAGE>

A Portfolio's yield, actual distribution rate and total return
are not fixed and will fluctuate in response to prevailing market conditions or
as a function of the type and quality of the securities held by such Portfolio,
its average portfolio maturity and its expenses. Yield, actual distribution rate
and total return information is useful in reviewing a Portfolio's performance
and such information may provide a basis for comparison with other investments
but such information may not provide a basis for comparison with certificates of
deposit, which pay a fixed rate of return, or money market funds, which seek a
stable net asset value. Investment return and principal value of an investment
in a Portfolio will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.

No performance data is provided for the Bantam Value, Global
Equity, International Fixed-Income, International Small Cap and Strategic Yield
Portfolios which had not commenced operations as of the date performance
information was calculated.

From time to time, the Fund may compare a Portfolio's
performance against one or more broad-based indices or data from Lipper
Analytical Services, Inc., Money Magazine, Morningstar, Inc. and other industry
publications. In addition, the Fund may compare a Portfolio's performance
against inflation with the performance of other instruments against inflation,
such as short-term Treasury Bills (which are direct obligations of the U.S.
Government) and FDIC-insured bank money market accounts.

42
<PAGE>

INFORMATION ABOUT THE FUND AND PORTFOLIOS

As of April 6, 1999, the following shareholders owned
beneficially or of record 5% or more of the indicated Portfolio's outstanding
shares:

Percentage of Total
Name and Address Shares Outstanding
- ---------------- ------------------
Equity Portfolio
Conseco Variable Insurance Co
Attn: Separate Accts C1B
11825 N. Pennsylvania Street
Carmel, IN 46032-4555 91.35%

Lazard Freres & Co. LLC
Attn: Michael R. August
30 Rockefeller Plaza, 57th floor
New York, NY 10112-0002 8.61%

Small Cap Portfolio

American National Insurance Co.
P.O. Box 58969
Houston, TX 77258 51.69%

Conseco Variable Insurance Co
Attn: Separate Accts C1B
11825 N. Pennsylvania Street
Carmel, IN 46032-4555 32.04%

Lazard Freres & Co. LLC
Attn: Michael R. August
30 Rockefeller Plaza, 57th floor
New York, NY 10112-0002 11.04%

Lazard Freres & Co. LLC
Attn: Michael R. August
30 Rockefeller Plaza, 57th floor
New York, NY 10112-0002 5.14%

43
<PAGE>

Emerging Markets Portfolio

Lazard Freres & Co. LLC
Attn: Michael R. August
30 Rockefeller Plaza, 57th floor
New York, NY 10112-0002 79.70%

American National Insurance Co.
P.O. Box 58969
Houston, TX 77258 20.30%

International Equity Portfolio

Allmerica Financial Life Insurance
and Annuity Company
440 Lincoln Street
Worcester, MA 01653-0002 60.77%

Lazard Freres & Co. LLC
Attn: Michael R. August
30 Rockefeller Plaza, 57th floor
New York, NY 10112-0002 39.20%

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

Generally, all shares have equal voting rights and will be
voted in the aggregate. As used in this Statement of Additional Information, the
vote of a majority of the outstanding voting securities means, with respect to
the Fund or a Portfolio, the vote of the lesser of (i) 67% of the shares
represented at a meeting if the holders of more than 50% of the outstanding
shares of the Fund or Portfolio, as the case may be, are present in person or by
proxy, or (ii) more than 50% of the outstanding shares of the Fund or Portfolio,
as the case may be. Shareholders are entitled to one vote for each full share
held, and fractional votes for fractional shares held.

Each share of a Portfolio is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Portfolio
as are declared in the discretion of the Fund's Board of Directors. In the event
of the liquidation of a Portfolio, shares of the Portfolio are entitled to
receive the assets of that Portfolio that are available for distribution.

Shareholders are not entitled to any preemptive rights. All
shares, when issued, will be fully paid and non-assessable by the Fund.

44
<PAGE>

COUNSEL AND INDEPENDENT AUDITORS

Legal matters in connection with the issuance of the shares of
the Fund offered hereby will be passed upon by Stroock & Stroock & Lavan LLP,
180 Maiden Lane, New York, New York 10038-4982.

Anchin, Block & Anchin LLP, 1375 Broadway, New York, New York
10018, has been selected as the independent auditors for the Fund.

45
<PAGE>

APPENDIX

Description of certain ratings.

S&P

BOND RATINGS

AAA

Bonds rated AAA have the highest rating assigned to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.

Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.

BBB

Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.

Bonds rated BB have less near-term vulnerability to default
than other speculative grade bonds. However, they face major ongoing
uncertainties or exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet timely interest and principal
payment.

Bonds rated B have a greater vulnerability to default but
presently have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair capacity
or willingness to pay interest and repay principal.

46
<PAGE>

CCC

Bonds rated CCC have a current identifiable vulnerability to
default, and are dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal. In
the event of adverse business, financial or economic conditions to meet timely
payments of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.

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

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

Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.

S&P's letter ratings may be modified by the additional of a
plus or a minus sign, which is used to show relative standing within the major
ratings categories, except in the AAA (Prime Grade) category.

COMMERCIAL PAPER RATINGS

An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.

A-1

This designation indicates the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted within a plus sign (+)
designation.

47
<PAGE>

A-2

Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.

Moody's

BOND RATINGS

Aaa

Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities of fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Baa

Bond which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments

48
<PAGE>

may be very moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.

Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa

Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.

Bonds which are rated Ca present obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies the numerical modifiers 1, 2 and 3 to show
relative standing within the major rating categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a rating for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end of a
rating category.

COMMERCIAL PAPER RATINGS

The rating Prime-1 (P-1) is the highest commercial paper
rating assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high rates
of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and well
established access to a range of financial markets and assured sources of
alternate liquidity.

Issuers (or related supporting institutions) rated Prime-2
(P-2) have a strong capacity for repayment of short-term promissory obligations.
This ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.

<PAGE>

LAZARD RETIREMENT SERIES, INC.

PART C. OTHER INFORMATION

Item 23. Exhibits

(a)(1) Articles of Incorporation1

(a)(2) Articles of Amendment1

(b) By-Laws, as amended1

(d) Investment Management Agreement1

(e) Distribution Agreement1

(g) Custody Agreement1

(h)(1) Administration Agreement1

(h)(2) Form of Fund Participation Agreement1

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

(j) Consent of Independent Auditors

(m) Distribution and Servicing Plan1

(n) Financial Data Schedules

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

Item 24. Persons Controlled by or under Common Control with Registrant.
None.

Item 25. Indemnification

Reference is made to Article EIGHTH of the Registrant's Articles of
Incorporation filed as Exhibit 1 and to Section 2-418 of the Maryland General
Corporation Law. The application of these provisions is limited by Article VIII
of the Registrant's By-Laws filed as Exhibit 2 and by the following undertaking
set forth in the rules promulgated by the Securities and Exchange Commission:

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnificaetion against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.

Reference also is made to the Investment Management Agreements and the
Distribution Agreement filed as Exhibits 5 and 6, respectively.

Item 26. Business and Other Connections of Investment Advisers.

The description of the Investment Manager under the Captions
"Fund Management - Investment Manager" in the Prospectus and
"Management" in the Statement of Additional Information consituting
Parts A and B, respectively, of this Registration Statement is
incorporated by reference herein. Following is a list of the General
Members of Lazard Freres & Co. LLC, together with thier other business
connections which are of substantial nature during the previous two
years:

Name and Address of Company with
Name of General Member which General Member is Connected Capacity
- ---------------------- --------------------------------- --------

Eileen D. Alexanderson None

William Araskog None

F. Harlan Batrus Mutual of America Capital
Management Corp. Director
666 Fifth Avenue
New York, New York 10103

Ryan Labs, Inc. Director
350 Albany Street
New York, New York 10280

A. J. Technologies Owner
New York, New York

Gerardo Braggiotti Lazard S.P.A. Managing Director
Via dell'Orso, 2
20121 Milano, Italia

Lazard Brothers & Co. Ltd. Managing Director
21 Moorfields
London EC2P 2HT
England

Centrale of Mediobanca Director
S.P.A. (prior to 12/97) Centrale,
Milan Italy Sec Generale

Patrick J. Callahan, Jr. Berry Metal Co. Director
Route 68
Harmony, Pennsylvania 16307

Michigan Wheel Corp. Director
1501 Buchanan Avenue
Southwest Grand Rapids, Michigan 49507

Rotation Dynamics Corp. Director
15 Salt Creek Lane
Suite 316
Hinsdale, Illinois 60521

Somerset Technologies, Inc. Director
(prior to 12/97)
P.O. Box 791
New Brunswick, New Jersey 08903

BT Capital Corp. Director
New York, New York

Michel David-Weill Lazard Freres & Co. LLC Chairman
30 Rockefeller Plaza
New York, New York 10020

Lazard Freres & Cie General Partner
121 Boulevard Haussmann
75382 Paris Cedex 08, France

Lazard Partners L.P. Chairman
30 Rockefeller Plaza
New York, New York 10020

Corporate Advisers, L.P. Member of
30 Rockefeller Plaza Investment
New York, New York 10020 Advisory Board

The Dannon Company, Inc. Director
22-11 38th Avenue
Long Island City, New York 11101

Eurafrance President and
12 Avenue Percier Chairman of
75008 Paris, France the Board

Exor Group Director
19 Avenue Montaigne
75008 Paris, France

Euralux Director
8 Rue Ste-Zithe
2763 Luxembourg

Group Danone Director
7 Rue de Teheran
75008 Paris, France

ITT Industries, Inc. Director
320 Park Avenue
New York, New York 10022

La France S.A. Director
7 & 9 Boulevard Haussmann
75009 Paris, France

Lazard Brothers & Co., Limited Deputy
21 Moorfields Chairman
London EC2P-2HT
England

Pearson plc Director
Millbank Tower
London SWI P4QZ

Publicis S.A. Director
133 Champs-Ezlysees
75008 Paris, France

S.A. de la Rue Imperiale de Lyo Director
49, Rue de la Republique
Lyon (Rhone) 69002
France

Compagnie De Credit Premanent
121, Boulevard Haussmann a Paris Seme rep. of LFC
France (Director)

Maison Lazard S.A. Director
Paris, France

Maison Lazard & Cie General
Paris, France Partner

Maison Lazard Development Chairman
Paris, France

Parteger Gerant
Paris, France (Partner)

Parteman Gerant
Paris, France (Partner)

Partemiel General
Paris, France Partner

Partena General
Paris, France Partner

IFI SpA Director
(prior to 9/98)
Torino, Italy

IFIL SpA Director
Torino, Italy

Fonds Partenaires - Gestion Investments Director
Paris, France

John V. Doyle None

Thomas F. Dunn None

Norman Eig Lazard Freres & Co. LLC Vice Chairman
30 Rockefeller Plaza
New York, New York 10020

The Lazard Funds, Inc. Director,
30 Rockefeller Plaza Chairman
New York, New York 10020

Lazard Retirement Series, Inc. Director,
30 Rockefeller Plaza Chairman
New York, New York 10020

Lazard Investment Funds Director
Limited
20/22 Lower Hatch Street
Dublin 2
Ireland

Lazard Pension Management, Inc. Director,
30 Rockefeller Plaza Chief Investment
New York, New York 10020 Officer &
Treasurer

Lazard Asset Management Director
Holdings Limited
21 Moorfields
London EC2P 2HT
England

Lazard Asset Management Director
Pacific Co.
Level 49, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Australia

Lazard Asset Management Director
Limited
21 Moorfields
London EC2P 2HT
England

Lazard Asset Management Member of the
(Deutschland) GmbH Supervisory
Ulmenstrasse 37-39 Board
60325 Frankfurt am Main
Federal Republic of Germany

Lazard Asset Management Managing
(Deutschland) Gesellschaft Director
fur Beteiligungen mbH
Ulmenstrasse 37-39
60325 Frankfurt am Main
Federal Republic of Germany

Lazard Asset Management (CI) Holdings Ltd. Director
Lazard House P.O. Box 108
2-6 Church Street St. Helier
Jersey, JE4 8QD Channel Islands

Richard P. Emerson None

Peter R. Ezersky Cakewalk LLC Board Member
New York, New York

Eli H. Fink Deloitte & Touche LLP Partner,
(Prior to 4/98) Vice Chairman
1633 Broadway
New York, New York 10019

Jonathan F. Foster None

Robert P. Freeman Lazard Freres Real Estate Investors, LLC President
30 Rockefeller Plaza
New York, New York 10020

The Fortress Group, Inc. Director
(prior to 9/98)
1650 Tyson Blvd. Suite 600
McLean, VA 22102

ARV Assisted Living, Inc. Director
245 Fischer Ave., Suite D-1
Costa Mesa, CA 92626

United Dominion Realty Trust Director
10 South Sixth Street
Richmond, Virginia 23219

Albert H. Garner None

James S. Gold Smart & Final Inc. Director
4700 South Boyle Avenue
Los Angeles, California 90058

The Hain Food Group Director
59 Charles Lindbergh Blvd.
Uniondale, NY 11553

Jeffrey A. Golman None

Steven J. Golub Lazard Freres & Co. LLC Chief
30 Rockefeller Plaza Financial
New York, New York 10020 Officer

Mineral Technologies Inc. Director
405 Lexington Avenue
New York, New York 10174-1901

Herbert W. Gullquist Lazard Freres & Co., LLC Vice Chairman
30 Rockefeller Plaza
New York, New York 10020

The Lazard Funds, Inc. Director,
30 Rockefeller Plaza President
New York, New York 10020

Lazard Retirement Series Director,
30 Rockefeller Plaza President
New York, New York 10020

Lazard Far East Investors Director
Limited
Lazard House, P.O. Box 108
2-6 Church Street, St. Helier
Jersey, JE4 8QD Channel Islands

Lazard Asset Management (Canada), Inc. Director,
30 Rockefeller Plaza President
New York, New York 10020

Lazard Pension Management, Inc. Director,
30 Rockefeller Plaza President
New York, New York 10020

Lazard Asset Management Director
Holdings Limited
21 Moorfields
London EC2P 2HT
England

Lazard Asset Management Director,
Pacific Co. Chairman
Level 49, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Australia

Lazard Asset Management Director
Limited
21 Moorfields
London EC2P 2HT
England

Lazard Asset Management Member of the
(Deutschland) GmbH Supervisory
Ulmenstrasse 37-39 Board
60325 Frankfurt am Main
Federal Republic of Germany

Lazard Asset Management Managing
(Deutschland) Gesellschaft Director
fur Beteiligungen mbH
Ulmenstrasse 37-39
60325 Frankfurt am Main
Federal Republic of Germany

The Egypt Trust Member of
11 Rue Aldringen the Advisory
Luxembourg 1-2960 Board

Lazard Asset Management Egypt Board
3, Shagaret El Dor Street, Member
Apt. 31
Zamalek, Cairo, Egypt

Thomas R. Haack None

Ira O. Handler None

Yasushi Hatakeyama None

Melvin L. Heineman Lazard Freres & Co., Ltd Director
21 Moorfields
London EC2P 2HT
England

Lazard Asset Management Pacific Co. Director
Level 49, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Australia

Lazard Pension Management, Inc. Director
30 Rockefeller Plaza & Vice
New York, New York 10020 President

Scott D. Hoffman None

Robert E. Hougie None

Kenneth M. Jacobs ARV Assisted Living, Inc. Director
245 Fischer Ave., Suite D-1
Costa Mesa, CA 92626

James L. Kempner None

Ivan-Jacques Kerno J.P. Morgan & Co. Inc. Managing
(prior to 4/98) Director
Paris, France

Larry A. Kohn None

Lee O. Kraus None

Sandra A. Lamb None

Michael S. Liss None

William R. Loomis, Jr. Englehard Corp. Director
Iselin, New Jersey

Minorco S.A. Director
(prior to 11/98)
Boite Postal 185
L-2011 Luxembourg

Minorco (U.S.A.) Inc. Director
(prior to 9/98)
30 Rockefeller Plaza
Suite 4212
New York, NY 10112

Terra Industries, Inc. Director
600 4th Street
Sioux City, Iowa 51101

Ripplewood Holdings LLC Director
New York, New York

J. Robert Lovejoy None

Matthew, J. Lustig None

Thomas E. Lynch None

Mark T. McMaster None

Anthony E. Meyer Lazard Freres Real Managing
Estate Investors, LLC Director
30 Rockefeller Plaza
New York, New York 10020

Atlas Industrial Corporation Director
Reno, Nevada

Dermody Properties Director
Reno, Nevada

Center Trust Inc. Director
Manahattan Beach CA

Prometheus Realty Investors LLC Director
New York, New York

Destination Europe, Ltd. Director
London United Kingdom

Damon Mezzacappa Lazard Freres & Co. LLC Vice Chairman
30 Rockefeller Plaza
New York, New York 10020

Corporate Advisors, L.P. Member of
30 Rockefeller Plaza Investment
New York, New York 10020 Advisory Board

Richard W. Moore Jr. None

Robert P. Morgenthau Lazard Asset Management Director,
(Canada), Inc. Vice
30 Rockefeller Plaza President
New York, New York 10020

Lazard Investment Funds Limited Director
20/22 Lower Hatch Street
Dublin 2
Ireland

Lazard Fund Manager (CI) Limited Director
Lazard House P.O. Box 108
2-6 Church Street St. Helier
Jersey, JE4 8QD Channel Islands

Lazard Global Bond Fund plc Director
20/22 Lower Hatch Street
Dublin 2
Ireland

Lazard Global Equity Fund plc Director
20/22 Lower Hatch Street
Dublin 2
Ireland

Lazard Global Liquidity Fund plc Director
20/22 Lower Hatch Street
Dublin 2
Ireland

Lazard Strategic Yield Fund plc Director
20/22 Lower Hatch Street
Dublin 2
Ireland

Global Funds Management plc Director
20/22 Lower Hatch Street
Dublin 2
Ireland

Lazard Asset Management (CI) Director
Holdings Ltd.
Lazard House P.O. Box 108
2-6 Church Street St. Helier
Jersey, JE4 8QD Channel Islands

Lazard Asset Management (CI) Ltd Director
Lazard House P.O. Box 108
2-6 Church Street St. Helier
Jersey, JE4 8QD Channel Islands

Lazard Investment Funds (CI) Ltd Director
Lazard House P.O. Box 108
2-6 Church Street St. Helier
Jersey, JE4 8QD Channel Islands

Lazard Funds Administration Services Director
(CI) Ltd.
Lazard House P.O. Box 108
2-6 Church Street St. Helier
Jersey, JE4 8QD Channel Islands

Lazard Fund Managers (CI) Ltd. Director
Guernsey

Lazard Global Bond Fund Director
20/22 Lower Hatch Street
Dublin 2
Ireland

Lazard Investment Funds Ltd. Director
Guernsey

Bitterroot Enterprises Director
Sunvalley, Idaho

Steven J. Niemczyk None

Hamish W. M. Norton None

James A. Paduano Donovan Data Systems, Inc. Director
666 Fifth Avenue
New York, New York 10019

Secure Products Inc. Director
47 Maple Street
Summit, NJ 07901

Adam P. Parten None

Louis Perlmutter None

Russell E. Planitzer Intersolv, Inc. Director
9420 Key West Ave.
Rockville, MD 20850

Steven L. Rattner Lazard Freres & Co. LLC Deputy Chief
30 Rockefeller Plaza Executive
New York, New York 10020

John R. Reinsberg Lazard Asset Management Executive
Pacific Co. Vice President,
Level 49, Governor Phillip Director
Tower
1 Farrer Place
Sydney NSW 2000
Australia

Lazard Asset Management Member of the
(Deutschland) GmbH Supervisory
Ulmenstrasse 37-39 Board
60325 Frankfurt am Main
Federal Republic of Germany

Louis G. Rice None

Luis E. Rinaldini None

Bruno M. Roger
AXA Supervisory
21 Rue de Chateaudun Board
75441 Paris France Member

CAP Gemini Sogeti Supervisory
6, Bid Jean Pain a Grenoble (38005) Board Member
France

Compagnie De Credit Board Member
121, Boulevard Haussmann a Paris Seme
France

Compagnie De Saint-Gobain Board Member
Les Miroirs
18 Avenue d'Alsace
Paris la Defense (92096)
France

Eurafrance Vice Chairman
12, Avenue Percier a Paris Seme & CEO
France

Financiere Et Industrielle Gaz Chairman &
Et Eaux CEO
3, Rue Jacques Bingen a Paris 17eme
France

Fonds Partenaires Gestion (F.P.G.) Board Member
121, Boulevard Haussmann a Paris Seme
France

Lazard Freres & Cie General
121 Boulevard Haussmann Partner
75382 Paris Cedex 08, France

LVMH-Moet Hennessy Louis Vuitton Director
30, Avenue Hoche a Paris 8eme without power
France of vote

Marine-Wendel Director
189, Rue Taitbout a Paris 9eme Permanent
France Representative

Pinault-Printemps-Redoute Supervisory
61, Rue Caumartin Board Member
75009 Paris

Sidel Director
66, Rue de Miromesnil Permanent
75008 Paris Representative

Societe Francoise Generale Director
Immobiliere (S.F.G.I.) Permanent
23, rue de I'Arcasde a Paris 8eme Representative
France

Sofina (Belgique) Board Member
Rue de Naples, 38-B-1050 Bruzelles

Thomson CSF Board Member
51 Esplanade du General de Gaulle
La Defense 10-92800 Puteaux
France

Michael S. Rome None

Steven H. Sands Isogen LLC Director

Skila, Inc. Director

Gary S. Shedlin None

Arthur P. Solomon Alexander Haagen Director

FAC Director

Berkshire Realty Trust Director
1 Beacon Street, Suite 1550
Boston, MA 02108

Cliveden Director
Hill House
1 Little New Street
London EC4A 3TR
England

David A. Tanner E.M. Warburg, Pincus Managing
& Co. LLC (prior to 12/97) Director
466 Lexington Avenue
New York, New York 10017

Golden Books Family Director
Entertainment Inc.
888 7th Ave.
New York, New York 10106

Renaissance Re Holdings Director
Ltd. (prior to 7/98)
Hamilton, Bermuda

Poserdon Resources Inc. Director
Stamford, CT

Charter Financial Inc. Director
New York, New York

Classic Sports, Inc. Director
(prior to 9/97)
New York, New York

Information Ventures LLC Director
(prior to 9/97)
Greenwich, CT

David L. Tashjian None

J. Mikesell Thomas None

Michael P. Triguboff Lazard Asset Management Pacific Co. Managing Director
Level 49, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Australia

Lazard Japan Asset Management K.K. Director
AIG Building 2nd Floor
1-3, Marunouchi 1-chome
Chiyoda-ku, Toyko 100-0005, Japan

Donald A. Wagner None

Ali E. Wambold The Albert Fisher Group plc Director
(prior to 1/99)
Fisher House
61 Thames Street
Windsor, Berkshire SO4 IQW
England

Lazard Freres & Co., Ltd. Director
21 Moorfields
London EC2P 2HT
England

Tomkins PLC Director
East Putney House
84 Upper Richmond Road
London SW15 2ST
England, UK

Corporate Advisors L.P. Member of
30 Rockefeller Plaza Investment
New York, NY 10020 Advisory
Board

Lazard S.P.A. Director
(prior to 12/98)
Via dell'Orso, 2
20121 Milano, Italia

Lazard & Co. GmbH Director
Ulmenstrasse 37-39
60325 Frankfurt am Main
Federal Republic of Germany

Michael A. Weinstock None

Antonio F. Weiss None

Alexander E. Zagoneos The Egypt Trust Director
11 Rue Aldringen
Luxembourg 1-2960

Flemings Continental European Director
Investment Trust, plc
25 Copthall Avenue
London EC2R 7DR

Gartmore Emerging Pacific Director
Investment Trust plc
Gartmore House
16-18 Monument Street
London EC3R 8AJ

The Greek Progress Fund Director
Ergobank
5, Evripidou
40-44, Praxit, Elous
105-61 Athens
Greece

Jupiter International Green Director
Investment Trust plc
Knightsbridge House
197 Knightsbridge
London SW7 1R8
England

Latin American Investment Trust plc Director
Exchange House
Primrose Street
London EC2A 2NY

New Zealand Investment Trust plc Director
23 Cathedral Yard
Exeter
Devon EX1 1HB

Taiwan Opportunities Fund Ltd. Director
c/o Martin-Currie
20 Castle Terrace
Edinburgh EHI 2ES
U.K.

The World Trust Fund Director
Kredietrust
11 rue Aldringen
Luxembourg 1-2960

Lazard Select Investment Trust Ltd. Director
Lazard House P.O. Box 108
2-6 Church Street
St. Helier
Jersey, JE4 8QD
Channel Islands

Ermitage Selz Fund Director
Forum Bourse
17 Rue Des Bains
Boite Pastale 44
L-2010 Luxembourg

Lazard Asset Management Egypt Director
3, Shagaret El Dor Street, Apt. 31
Zamalek, Cairo, Egypt

Taiwan American Fund Limited Director
c/o Martin-Currie
20 Castle Terrace
Edinburgh EHI 2ES
U.K.

Item 27. Principal Underwriters

(a) Lazard Freres & Co. LLC, through its division Lazard Asset Management,
currently serves as an investment adviser or subadviser to the
following investment companies: The Lazard Funds, Inc.;
American AAdvantage Funds International Equity Fund; ISG
International Equity Fund; Fortis Series Fund, Inc. Lazard
International Stock Series; EQ Advisors Trust Lazard Large Cap Value
Portfolio and Lazard Small Cap Value Portfolio; JNL Series Trust
Lazard/JNL Mid Cap Value Series and Lazard/JNL Small Cap Value Series;
The Managers Funds Managers International Equity Fund; Members Mutual
Funds Members International Stock Fund; Nationwide Investing
Foundation III Prestige Advisor Series Prestige International Fund;
Nationwide Separate Account Trust Nationwide Small Company Fund;
Pacific Select Fund Mid-Cap Value Portfolio; The Target Portfolio
Trust Target International Equity Portfolio and Target
Small Capitalization Value Portfolio; Prudential Diversified
Funds Prudential Diversified Moderate Growth Fund and Prudential
Diversified High Growth Fund; Style Select Series, Inc. Small-Cap
Value Portfolio; TIFF Investment Program, Inc. TIFF Emerging Markets
Fund; and Travelers Series Trust Lazard International Stock Portfolio.

(b) Eileen D. Alexanderson, William Araskog, F. Harlan Batrus, Gerardo
Braggiotti, Patrick J. Callahan, Jr., Michel David-Weill, John V.
Doyle, Thomas F. Dunn, Norman Eig, Richard P. Emerson, Peter R.
Ezersky, Eli H. Fink, Jonathan F. Foster, Robert P. Freeman, Albert H.
Garner, James S. Gold, Jeffrey A. Golman, Steven J. Golub, Herbert W.
Gullquist, Thomas R. Haack, Ira O. Handler, Yasushi Hatakeyama, Melvin
L. Heineman, Scott D. Hoffman, Robert E. Hougie, Kenneth M. Jacobs,
James L. Kempner, Ivan-Jacques Kerno, Larry A. Kohn, Lee O. Kraus,
Sandra A. Lamb, Michael S. Liss, William R. Loomis, Jr., J. Robert
Lovejoy, Matthew J. Lustig, Thomas E. Lynch, Mark T. McMaster, Anthony
E. Meyer, Damon Mezzacappa, Richard W. Moore, Jr., Robert P.
Morgenthau, Steven J. Niemczyk, Hamish W. M. Norton, James A. Paduano,
Adam P. Parten, Louis Perlmutter, Russell E. Planitzer, Steven L.
Rattner, John R. Reinsberg, Louis G. Rice, Luis E. Rinaldini, Bruno M.
Roger, Michael S. Rome, Steven H. Sands, Gary S. Shedlin, Arthur P.
Solomon, David A. Tanner, David L. Tashjian, J. Mikesell Thomas,
Michael P. Triguboff, Donald A. Wagner, Ali E. Wambold, Michael A.
Weinstock, Antonio F. Weiss and Alexander E. Zagoreos are the general
members of Lazard Freres & Co. LLC. Mr. David-Weill is the senior
member of Lazard Freres & Co. LLC. The address of all such members is
30 Rockefeller Plaza, New York, New York 10020.

Item 28. Location of Accounts and Records

The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder are maintained as follows: Journals, ledgers,
securities records and other original records are maintained primarily
at the offices of the Registrant's Custodian, State Street Bank & Trust
Company. All other records so required to be maintained are maintained
at the offices of Lazard Freres & Co. LLC, 30 Rockefeller Plaza, New
York, New York 10020.

Item 29. Management Services

Not Applicable

Item 30. Undertakings

None

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, and State of
New York, on the 21st day of April, 1999.

LAZARD RETIREMENT SERIES, INC.
(Registrant)

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

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

/S/Herbert W. Gullquist* President (Principal April 21, 1999
- ----------------------- Executive, Financial
Herbert W. Gullquist and Accounting Officer)
and Director

/S/Norman Eig* Director April 21, 1999
- --------------
Norman Eig

/s/ John J. Burke* Director April 21, 1999
- ------------------
John J. Burke

/s/ Lester Z. Lieberman* Director April 21, 1999
- ------------------------
Lester Z. Lieberman

/s/ Richard Reiss, Jr.* Director April 21, 1999
- -----------------------
Richard Reiss, Jr.

/s/ John Rutledge* Director April 21, 1999
- -----------------------
John Rutledge

/s/ Kenneth S. Davidson* Director April 21, 1999
- ------------------------
Kenneth S. Davidson

/s/ Carl Frischling* Director April 21, 1999
- ------------------------
Carl Frischling

/s/ William Katz* Director April 21, 1999
- ------------------------
William Katz

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

<PAGE>

EXHIBIT INDEX
-------------

Exhibit 23 (j) Consent of Independent Auditors
Exhibit 27 (n) Financial Data Schedule

Exhibit (J)
ABA
ESTABLISHED 1923

ANCHIN, BLOCK & ANCHIN LLP
Accountants and Consultants

1375 Broadway
New York, New York 10018
(212) 840-3456
FAX (212) 840-7066

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in the Statement of Additional Information
constituting part of Lazard Retirement Series, Inc. Post-Effective Amendment No.
3 to Registration Statement on Form N-1A of our report dated February 4, 1999,
relating to the financial statements and financial highlights of Lazard
Retirement Series, Inc. which are incorporated by reference in such Statement of
Additional Information. We also consent to the incorporation by reference of our
report in the Prospectus constituting part of such Post-Effective Amendment No.
3 and to the reference to us under the heading "Financial Highlights" in the
Prospectus.

We also consent to the reference to our firm under the caption "Counsel and
Independent Auditors" in the Statement of Additional Information.

ANCHIN, BLOCK & ANCHIN LLP

/s/ Anchin, Block & Anchin LLP
------------------------------

April 15, 1999
Ghr/as/R695/CIA

A member of [HLB LOGO] international
A worldwide organization of accounting firms and business advisors
e-mail: [email protected]
www.anchin.com

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