LAZARD
RETIREMENT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 2000
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LAZARD RETIREMENT SERIES, INC.
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BOARD OF DIRECTORS
------------------
JOHN J. BURKE RETIRED; FORMER VICE CHAIRMAN AND DIRECTOR,
MONTANA POWER COMPANY
KENNETH S. DAVIDSON PRESIDENT, DAVIDSON CAPITAL MANAGEMENT CORPORATION
NORMAN EIG VICE CHAIRMAN AND MANAGING DIRECTOR,
LAZARD FRERES & CO. LLC
CARL FRISCHLING SENIOR PARTNER, KRAMER, LEVIN, NAFTALIS & FRANKEL LLP
HERBERT W. GULLQUIST VICE CHAIRMAN AND MANAGING DIRECTOR,
LAZARD FRERES & CO. LLC;
CHIEF INVESTMENT OFFICER, LAZARD ASSET MANAGEMENT
WILLIAM KATZ PRESIDENT AND CHIEF OPERATING OFFICER, BBDO WORLDWIDE
NETWORK
LESTER Z. LIEBERMAN PRIVATE INVESTOR
RICHARD REISS, JR. MANAGING PARTNER, GEORGICA ADVISERS LLC
JOHN RUTLEDGE PRESIDENT, RUTLEDGE AND COMPANY
OFFICERS
--------
NORMAN EIG CHAIRMAN OF THE BOARD
HERBERT W. GULLQUIST PRESIDENT
DAVID M. GOLDENBERG VICE PRESIDENT AND SECRETARY
GERALD B. MAZZARI TREASURER
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LAZARD RETIREMENT SERIES, INC.
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TABLE OF CONTENTS PAGE
Overview ................................................. 2
Growth Charts ............................................ 3
Performance Table ........................................ 5
Portfolios of Investments
Lazard Retirement Equity Portfolio ..................... 6
Lazard Retirement Small Cap Portfolio .................. 7
Lazard Retirement International Equity Portfolio ....... 9
Lazard Retirement Emerging Markets Portfolio ........... 11
Notes to Portfolios of Investments ..................... 13
Statements of
Assets and Liabilities ................................. 15
Operations ............................................. 16
Changes in Net Assets .................................. 17
Financial Highlights ..................................... 21
Notes to Financial Highlights ............................ 23
Notes to Financial Statements ............................ 24
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LAZARD RETIREMENT SERIES, INC.
OVERVIEW
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LAZARD RETIREMENT SERIES, INC.
After a difficult start, equity markets around the world staged a rally late in
the first quarter, only to experience a fundamental turnaround during the early
part of the second quarter. While growth stocks led the initial rally in late
February, the market underwent a sharp rotation back to value at the end of
March. That rotation lasted through May, fueled by tighter monetary policy and
concerns over global growth. Thus, investors began to focus on fundamentals
after an extended period dominated by momentum strategies. While the S&P 500
fell nearly 3% by the end of the second quarter, the tech-laden NASDAQ Composite
bore the brunt of the sell-off, falling over 13% and suffering its first
quarterly decline since 1998. The volatile period was marked by dramatic
reversals, including a sharp rebound in global tech and telecom shares in June.
However, market sentiment has fundamentally changed; even amid the tech rally in
June, some of the most established Internet companies experienced weakness. For
example, Amazon fell nearly 20% in a single day after an analyst noted that the
company is still unable to generate cash flow from its operations even as its
sales grow strongly. Thus, investors have begun to question where money-losing
dot-coms will obtain financing, an issue that was far from their minds amid the
euphoria of late 1999 and early 2000.
During this very turbulent period, companies reporting earnings that were even
modestly disappointing experienced dramatic weakness. Even established,
blue-chip companies with solid franchises were dealt with harshly if they did
not meet Wall Street's expectations. Still, while the market volatility dented
the prospects of many Internet start-up hopefuls, established companies
continued to adapt their business to leverage technology to drive financial
productivity to new levels. Meanwhile, a host of companies around the globe also
formed web-enabled business-to-business ("B2B") exchanges, and other companies
reshaped themselves via M&A and disposals. Even as telecommunication stock
prices fell, companies moved to focus operations and highlight the hidden asset
values, amid the continuing trend to carve out wireless operations.
During the first quarter, the rotation into more established and profitable
technology stocks benefited U.S. investors. There were also strong gains in U.S.
healthcare holdings that had lagged in 1999, although consumer staples holdings
continued to lag. By the end of June, those same investors benefited from a
relatively high weight in healthcare as these stocks rebounded from recent
weakness. The high weight in consumer staples also helped as a wave of industry
consolidation sparked investor interest. After languishing during 1999, these
sectors have been the primary beneficiaries of the rotation out of technology as
investors seek companies that both possess consistent earnings growth and trade
at more reasonable valuations. While a low weight in technology helped returns
overall, stock selection in the sector was equally important as investors began
to differentiate between providers of enabling technology and companies with a
less clear ability to add value.
In the bond market, the U.S. Treasury yield curve inversion that began in late
January and continued through March dominated the first quarter of 2000. The
yield curve inverted on the expectation of continued short-term interest rate
hikes combined with the announcement of less frequent U.S. Treasury auctions and
an aggressive buy-back plan. After reports of continued strong economic growth,
the Federal Reserve increased rates as expected by 25 basis points in February
and again by 25 basis points in March. After a rocky ride during April and May,
the U.S. bond market enjoyed a strong month in June. Interest rates fell
significantly as investors reacted positively to the Federal Reserve's decision
to leave interest rates unchanged at the June meeting. More moderate economic
numbers also painted a brighter outlook with less inflationary pressure.
The return to more fundamental issues of investing is a healthy one, both for
relative value investors and for the economy as a whole. It also presents many
new opportunities. As the equity market's focus on fundamentals persists, Lazard
continues to seek--as it always has--relative value investments among
competitive, traditional companies in conjunction with opportunistic investments
in currently weakened technology, media and telecom companies that can prove
real financial productivity.
2
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LAZARD RETIREMENT SERIES, INC.
GROWTH CHARTS
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LAZARD RETIREMENT EQUITY PORTFOLIO
Lazard Retirement Equity Portfolio seeks long-term capital appreciation. The
Portfolio invests primarily in equity securities, principally common stocks, of
relatively large U.S. companies with market capitalizations in the range of the
S&P 500 Index that the Investment Manager believes are undervalued based on
their earnings, cash flow or asset values.
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT EQUITY PORTFOLIO,
STANDARD & POOR'S 500 INDEX, STANDARD & POOR'S BARRA VALUE INDEX AND RUSSELL
1000 VALUE INDEX
[Figures below represents line chart in its printed piece]
Lazard Retirement Russell 1000
Equity Portfolio S&P 500 S&P Barra Value Value
---------------- ------- --------------- -----
3/18/98 10000 10000 10000 10000
10230 10154.4 10105.2 10105.3
10309.8 10256.5 10224.9 10172.9
10250 10080.1 10081 10022
Jun-98 10409.9 10489.6 10157.5 10150.5
10199.6 10377.9 9937.11 9971.33
9029.72 8874.62 8339.22 8487.4
Sep-98 9299.71 9443.39 8845.91 8974.58
10219.5 10211.5 9538.81 9669.75
10599.6 10830.7 10035.7 10120.3
Dec-98 11088.7 11455 10388.1 10464.8
11319.3 11934.3 10598 10548.4
10978.6 11563.8 10369.8 10399.5
Mar-99 11390.3 12026.9 10684.1 10614.7
12022.5 12492.9 11605.2 11606.1
11962.4 12198.7 11400.1 11478.6
Jun-99 12403.4 12875.7 11838 11811.8
12121.9 12474 11474 11465.9
11820 12411.6 11183.7 11040.4
Sep-99 11197.1 12072.2 10746.1 10654.6
11720.4 12836.1 11352.7 11267.8
11780.6 13097 11286.2 11179.7
Dec-99 11993.8 13868.5 11710.2 11233.7
11494.4 13171.7 11337.6 10867.3
10651.9 12922.4 10629.2 10059.8
Mar-00 11858.2 14186.2 11737.3 11287.2
11858.2 13758.5 11658.8 11155.9
12045.5 13476.2 11695.1 11273.4
Jun-00 11931.1 13808.4 11233.2 10758.2
LAZARD RETIREMENT SMALL CAP PORTFOLIO
Lazard Retirement Small Cap Portfolio seeks long-term capital appreciation. The
Portfolio invests primarily in equity securities, principally common stocks, of
relatively small U.S. companies with market capitalizations in the range of the
Russell 2000 Index that the Investment Manager believes are undervalued based on
their earnings, cash flow or asset values.
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT
SMALL CAP PORTFOLIO, RUSSELL 2000 INDEX AND RUSSELL 2000 VALUE INDEX
[Figures below represents line chart in its printed piece]
Lazard Retirement Russell 2000
Small Cap Portfolio Russell 2000 Value
11/4/97 10000 10000 10000
Nov-97 9720 9762.77 10071.4
Dec-97 9855.83 9933.62 10412.9
Jan-98 9855.83 9776.87 10224.5
Feb-98 10567 10499.8 10842.6
Mar-98 10957.6 10932.8 11282.3
Apr-98 10957.6 10993.2 11338.1
May-98 10446.8 10401.1 10936.7
Jun-98 10186.6 10423 10874.9
Jul-98 9475.62 9579.25 10023.1
Aug-98 8285.48 7719.15 8453.36
Sep-98 8505.88 8323.25 8930.72
Oct-98 8936.27 8662.67 9195.87
Nov-98 9376.83 9116.51 9444.81
Dec-98 9539.05 9680.64 9741
Jan-99 9348.27 9809.39 9519.87
Feb-99 8847.2 9014.83 8869.95
Mar-99 8817.12 9155.46 8796.78
Apr-99 9758.79 9975.79 9599.83
May-99 10239.9 10121.4 9894.93
Jun-99 10690.6 10579.1 10253.2
Jul-99 10600.8 10289.3 10009.9
Aug-99 10209.6 9908.46 9644.06
Sep-99 9899.22 9910.44 9451.27
Oct-99 9508.69 9950.77 9262.15
Nov-99 9608.92 10544.6 9310.13
Dec-99 10027.9 11738.3 9596.14
Jan-00 9864.41 11549.3 9345.2
Feb-00 10047.9 13456.5 9916.38
Mar-00 10977.5 12569.8 9962.88
Apr-00 10885.5 11813.6 10021.9
May-00 10742.9 11125.1 9868.93
Jun-00 11008.3 12094.9 10157.3
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
3
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LAZARD RETIREMENT SERIES, INC.
GROWTH CHARTS (CONTINUED)
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LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
Lazard Retirement International Equity Portfolio seeks long-term capital
appreciation. The Portfolio invests primarily in equity securities, principally
common stocks, of relatively large non-U.S. companies with market
capitalizations in the range of the Morgan Stanley Capital International (MSCI)
Europe, Australasia and Far East (EAFE) Index that the Investment Manager
believes are undervalued based on their earnings, cash flow or asset values.
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT INTERNATIONAL EQUITY
PORTFOLIO AND MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE,
AUSTRALASIA AND FAR EAST INDEX
[Figures below represents line chart in its printed piece]
Lazard Retirement
International
Equity
Portfolio MSCI EAFE
9/1/98 10000 10000
Sep-98 9620 9693
10310.1 10703
10930.2 11251
Dec-98 11230.1 11695.9
11209.9 11660.8
10909.5 11383.3
Mar-99 11269.5 11857.9
11780 12338.7
11350 11703.6
Jun-99 11819.9 12159.9
12160.3 12521
12410.2 12566.7
Sep-99 12370 12693.4
12639.7 13168.8
12800.2 13626.3
Dec-99 13634.8 14850
12654.2 13906.4
12755.4 14280.8
Mar-00 13270.7 14834.9
12775.7 14054.2
12654.4 13711
Jun-00 13118.8 14247.2
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
Lazard Retirement Emerging Markets Portfolio seeks long-term capital
appreciation. The Portfolio invests primarily in equity securities, principally
common stocks, of non-U.S. companies whose principal activities are located in
emerging market countries that the Investment Manager believes are undervalued
based on their earnings, cash flow or asset values.
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT EMERGING MARKETS
PORTFOLIO AND MORGAN STANLEY CAPITAL INTERNATIONAL
EMERGING MARKETS (FREE) INDEX
[Figures below represents line chart in its printed piece]
Lazard Retirement MSCI Emerging
Emerging Markets Markets
Portfolio (Free)
11/4/97 10000 10000
Nov-97 9360 9180
Dec-97 9529.38 9401.22
Jan-98 9027.31 8663.88
Feb-98 9880.83 9568.18
Mar-98 10403 9983.4
Apr-98 10362.8 9874.65
May-98 9107.64 8521.42
Jun-98 8494.69 7627.56
Jul-98 8755.48 7869.4
Aug-98 6104.32 5594.04
Sep-98 6576.19 5948.9
Oct-98 7098.33 6575.33
Nov-98 7630.71 7122.19
Dec-98 7351.66 7018.97
Jan-99 6855.42 6905.97
Feb-99 6885.58 6972.95
Mar-99 7857.83 7891.99
Apr-99 8718.42 8868.07
May-99 8486.07 8816.49
Jun-99 9488.61 9817.09
Jul-99 9154.61 9550.06
Aug-99 8991.66 9636.95
Sep-99 8657.17 9310.81
Oct-99 8809.02 9509.07
Nov-99 9681.11 10361.7
Dec-99 11181.7 11679.7
Jan-00 10907.7 11749.3
Feb-00 11100.8 11904.4
Mar-00 11120.8 11962.3
Apr-00 10064.9 10828.3
May-00 9556.59 10380.7
Jun-00 10338.5 10746.3
PAST PERFORMANCE IS NOT INDICATIVE, NOR A GUARANTEE, OF FUTURE RESULTS.
4
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LAZARD RETIREMENT SERIES, INC.
PERFORMANCE TABLE
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<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR CUMULATIVE TOTAL RETURNS FOR
PERIODS ENDED JUNE 30, 2000 PERIODS ENDED JUNE 30, 2000
--------------------------------- ----------------------------
ONE SINCE ONE SINCE
YEAR INCEPTION* YEAR INCEPTION*
--------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Lazard Retirement Equity Portfolio (3.80)% 8.03% (3.80)% 19.31%
Standard & Poor's 500 Index** 7.24% 15.17% 7.24% 38.08%
Standard & Poor's Barra Value Index** (5.11)% 5.22% (5.11)% 12.33%
Russell 1000 Value Index** (8.92)% 3.25% (8.92)% 7.58%
Lazard Retirement Small Cap Portfolio 2.97% 3.68% 2.97% 10.08%
Russell 2000 Index** 14.32% 7.39% 14.32% 20.95%
Russell 2000 Value Index** (0.94)% 0.57% (0.94)% 1.57%
Lazard Retirement International Equity Portfolio 10.99% 15.99% 10.99% 31.19%
MSCI EAFE Index** 17.16% 21.30% 17.16% 42.47%
Lazard Retirement Emerging Markets Portfolio 8.96% 1.26% 8.96% 3.39%
MSCI Emerging Markets (Free) Index** 9.47% 2.75% 9.47% 7.46%
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NOTES TO PERFORMANCE TABLE
* Performance is measured from March 18, 1998 for Lazard Retirement Equity
Portfolio, from November 4, 1997 for Lazard Retirement Small Cap Portfolio
and Lazard Retirement Emerging Markets Portfolio, and from September 1, 1998
for Lazard Retirement International Equity Portfolio.
The performance for the relevant indices are for the comparable period.
Portfolio returns are net of fees and assume reinvestment of dividends and
distributions, if any. Certain expenses of a Portfolio may have been waived
and/or reimbursed by the Investment Manager and/or the Administrator; without
such waiver/reimbursement of expenses, the Portfolio's total return would
have been lower.
Past performance is not indicative, nor a guarantee, of future results; the
investment return and principal value of each Portfolio of Lazard Retirement
Series, Inc. (the "Fund") will fluctuate, so that an investor's shares in a
Portfolio, when redeemed, may be worth more or less than their original cost.
Within the longer periods illustrated there may have been short-term
fluctuations, counter to the overall trend of investment results, and no
single period of any length may be taken as typical of what may be expected
in future periods.
** The performance data of the indices have been prepared from sources and data
that the Investment Manager believes to be reliable, but no representation is
made as to their accuracy. These indices are unmanaged and have no fees or
costs. The S&P 500 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 S&P Barra Value Index is a capitalization-weighted
index of all the stocks in the S&P 500 Index that have low price-to-book
ratios. The Russell 1000 Value Index measures the performance of those
Russell 1000 companies with lower price-to-book ratios and lower forecasted
growth values. The Russell 2000 Index is composed of the 2,000 smallest U.S.
companies included in the Russell 3000 Index. The Russell 2000 Value Index
measures the performance of those Russell 2000 companies with lower
price-to-book ratios and lower forecasted growth value. The Morgan Stanley
Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index is
a broadly diversified international index composed of equity securities of
approximately 1,000 companies located outside the United States. The MSCI
Emerging Markets (Free) Index is comprised of emerging market securities in
countries open to non-local investors.
This performance data is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective
prospectus.
5
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000 (UNAUDITED)
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DESCRIPTION SHARES VALUE
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LAZARD RETIREMENT EQUITY PORTFOLIO
COMMON STOCKS--92.4%
AEROSPACE & DEFENSE--3.0%
United Technologies Corp. .................. 1,035 $ 60,936
---------
BANKING & FINANCIAL SERVICES--14.6%
Bank of America Corp. ...................... 713 30,659
Bank of New York Company, Inc. ............. 890 41,385
Chase Manhattan Corp. ...................... 1,240 57,117
Citigroup, Inc. ............................ 940 56,635
Federal National Mortgage Association ...... 665 34,705
FleetBoston Financial Corp. ................ 1,035 35,190
The Hartford Financial Services
Group, Inc. ............................... 740 41,394
---------
297,085
---------
BREWERY--2.2%
Heineken NV ADR ............................ 742 45,344
---------
CHEMICALS & PLASTICS--2.1%
Du Pont (E.I.) De Nemours & Co. ............ 985 43,094
---------
COMPUTER SOFTWARE--2.4%
Microsoft Corp. (a) ........................ 600 48,000
---------
COMPUTERS & BUSINESS EQUIPMENT--9.4%
Compaq Computer Corp. ...................... 1,550 39,622
Hewlett-Packard Co. ........................ 480 59,940
International Business Machines Corp. ...... 505 55,329
Xerox Corp. ................................ 1,760 36,520
---------
191,411
---------
DIVERSIFIED--3.0%
Minnesota Mining &
Manufacturing Co. ......................... 735 60,637
---------
DRUGS & HEALTH CARE--12.5%
Aventis SA ADR ............................. 633 45,932
Johnson & Johnson .......................... 560 57,050
Merck & Company, Inc. ...................... 860 65,898
Pharmacia Corp. ............................ 770 39,799
Schering-Plough Corp. ...................... 920 46,460
---------
255,139
---------
FOOD & BEVERAGES--5.5%
Diageo PLC ADR ............................. 1,375 48,898
PepsiCo, Inc. .............................. 1,430 63,546
---------
112,444
---------
HOTELS & RESTAURANTS--3.0%
McDonald's Corp ............................ 1,845 60,770
---------
HOUSEHOLD PRODUCTS--2.1%
Procter & Gamble Co. ....................... 765 43,796
---------
INSURANCE--3.4%
Aetna, Inc. ................................ 550 35,303
Allstate Corp. ............................. 1,500 33,375
---------
68,678
---------
MANUFACTURING--3.1%
General Electric Co. ....................... 1,210 64,130
---------
MULTIMEDIA--1.9%
Gannett Company, Inc. ...................... 660 39,476
---------
OIL & GAS--5.7%
BP Amoco PLC ADR ........................... 700 39,594
Chevron Corp. .............................. 435 36,894
Royal Dutch Petroleum Co. NY Shares ........ 630 38,784
---------
115,272
---------
PAPER PRODUCTS--2.3%
Kimberly-Clark Corp. ....................... 820 47,047
---------
RETAIL--2.1%
Federated Department Stores, Inc. (a) ...... 1,290 43,538
---------
SERVICES--1.8%
First Data Corp. ........................... 735 36,474
---------
TELECOMMUNICATIONS--12.3%
Alcatel SA ADR ............................. 645 42,892
AT&T Corp. ................................. 2,360 74,635
Bell Atlantic Corp. ........................ 720 36,585
Lucent Technologies, Inc. .................. 680 40,290
SBC Communications, Inc. ................... 1,284 55,533
---------
249,935
---------
TOTAL COMMON STOCKS
(Identified cost $1,901,563) ............... 1,883,206
---------
PRINCIPAL
AMOUNT
(000)
----------
REPURCHASE AGREEMENT--8.4%
State Street Bank and Trust Company,
6.40%, 07/03/00, (Dated 06/30/00,
collateralized by $145,000 United States
Treasury Bond, 10.75%, 08/15/05, with
a value of $178,531)
(Identified cost $171,000) ................ $171 171,000
---------
TOTAL INVESTMENTS
(Identified cost $2,072,563) (b) ........... 100.8% $2,054,206
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS .............................. (0.8) (15,679)
----- ----------
NET ASSETS .................................. 100.0% $2,038,527
===== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
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LAZARD RETIREMENT SMALL CAP PORTFOLIO
COMMON STOCKS--91.5%
AEROSPACE & DEFENSE--0.6%
AAR Corp. ................................. 2,600 $ 31,200
--------
AUTO PARTS--1.7%
Pennzoil-Quaker State Co. ................. 7,500 90,469
--------
BANKING & FINANCIAL SERVICES--5.4%
Heller Financial, Inc. .................... 3,100 63,550
Independence Community Bank Corp. ......... 3,000 39,750
Southwest Bancorporation of
Texas, Inc. (a) .......................... 3,900 80,925
Staten Island Bancorp, Inc. ............... 5,400 95,175
--------
279,400
--------
BUILDING & CONSTRUCTION--0.7%
Dycom Industries, Inc. (a) ................ 800 36,800
--------
BUSINESS SERVICES & SUPPLIES--15.0%
ACNielsen Corp. (a) ....................... 3,600 79,200
Acxiom Corp. (a) .......................... 2,300 62,675
Affiliated Computer Services, Inc.,
Class A (a) .............................. 900 29,756
American Management Systems, Inc. (a) ..... 2,400 78,788
CDI Corp. (a) ............................. 4,100 83,537
Gartner Group, Inc., Class A .............. 7,500 90,000
Interim Services, Inc. (a) ................ 4,400 78,100
MAXIMUS, Inc. (a) ......................... 3,600 79,650
National Data Corp. ....................... 2,500 57,500
The Profit Recovery Group
International, Inc. (a) .................. 2,800 46,550
United Stationers, Inc. (a) ............... 2,800 90,650
--------
776,406
--------
CHEMICALS & PLASTICS--1.7%
Minerals Technologies, Inc. ............... 1,900 87,400
--------
COMMUNICATION SERVICES--1.5%
Brightpoint, Inc. (a) ..................... 9,300 80,503
--------
COMPUTER SERVICES--0.6%
Dendrite International, Inc. (a) .......... 1,000 33,313
--------
COMPUTER SOFTWARE--1.1%
Transaction Systems Architects, Inc.,
Class A (a) .............................. 3,300 56,513
--------
COMPUTERS & BUSINESS EQUIPMENT--9.0%
Bell & Howell Co. (a) ..................... 3,200 77,600
Electronics for Imaging, Inc. (a) ......... 3,300 83,531
Mentor Graphics Corp. (a) ................. 4,900 97,387
Micron Electronics, Inc. (a) .............. 3,000 37,500
Quantum Corporation-
Hard Disk Drive (a) ...................... 5,100 56,419
RadiSys Corp. (a) ......................... 2,000 113,500
--------
465,937
--------
CONSTRUCTION MATERIALS--0.9%
Martin Marietta Materials, Inc. ........... 1,200 48,525
--------
CONTAINERS--1.1%
Packaging Corp. of America (a) ............ 5,500 55,688
--------
DRUGS & HEALTH CARE--2.7%
AmeriSource Health Corp., Class A (a) ..... 2,700 83,700
Apria Healthcare Group, Inc. (a) .......... 1,100 13,475
Enzon, Inc. (a) ........................... 1,000 42,500
--------
139,675
--------
ELECTRONICS--2.9%
General Semiconductor, Inc. (a) ........... 4,700 69,325
Sensormatic Electronics Corp. (a) ......... 5,200 82,225
--------
151,550
--------
FOOD & BEVERAGES--2.7%
Flowers Industries, Inc. .................. 2,800 55,825
Whitman Corp. ............................. 7,000 86,625
--------
142,450
--------
GAS EXPLORATION--0.6%
Barrett Resources Corp. (a) ............... 1,050 31,959
--------
HOUSEHOLD APPLIANCES &
HOME FURNISHINGS--4.8%
Ethan Allen Interiors, Inc. ............... 4,000 96,000
Furniture Brands
International, Inc. (a) .................. 4,100 62,012
Harman International
Industries, Inc. ......................... 1,500 91,500
--------
249,512
--------
INDUSTRIAL & MACHINERY--2.6%
JLG Industries, Inc. ...................... 2,300 27,313
Regal-Beloit Corp. ........................ 1,100 17,669
Snap-on, Inc. ............................. 3,300 87,862
--------
132,844
--------
INSURANCE--5.9%
Arthur J. Gallagher & Co. ................. 1,800 75,600
Everest Re Group, Ltd. .................... 2,900 95,337
Radian Group, Inc. ........................ 979 50,663
Renaissance Re Holdings Ltd. .............. 1,900 82,769
--------
304,369
--------
MEDICAL PRODUCTS--4.4%
Invacare Corp. ............................ 3,800 99,750
STERIS Corp. (a) .......................... 10,400 92,300
Varian Medical Systems, Inc. (a) .......... 900 35,212
--------
227,262
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
--------------------------------------------------------------------------------
LAZARD RETIREMENT SMALL CAP PORTFOLIO (CONTINUED)
MEDICAL SERVICES--0.3%
MedQuist, Inc. (a) .............. 407 $ 13,838
-----------
MEDICAL SUPPLIES--1.8%
DENTSPLY International, Inc. .... 3,100 95,519
-----------
MULTIMEDIA--1.9%
The Ackerley Group, Inc. ........ 8,500 99,875
-----------
OIL & GAS--1.7%
Devon Energy Corp. .............. 700 39,331
Helmerich & Payne, Inc. ......... 1,250 46,719
-----------
86,050
-----------
PHOTOGRAPHY--1.5%
Polaroid Corp. .................. 4,400 79,475
-----------
PRINTING--2.4%
Valassis Communications, Inc. (a) 3,300 125,812
-----------
PUBLISHING--5.8%
Banta Corp. ..................... 4,300 81,431
Houghton Mifflin Co. ............ 2,400 112,050
R. H. Donnelley Corp. (a) ....... 5,500 106,563
-----------
300,044
-----------
REAL ESTATE--0.6%
FelCor Lodging Trust, Inc. ...... 1,600 29,600
-----------
RETAIL--5.4%
Borders Group, Inc. (a) ......... 5,700 88,706
Pier 1 Imports, Inc. ............ 8,000 78,000
Whole Foods Market, Inc. (a) .... 2,700 111,544
-----------
278,250
-----------
TELECOMMUNICATIONS EQUIPMENT--2.9%
Allen Telecom, Inc. (a) ......... 5,900 104,356
ANTEC Corp. (a) ................. 1,100 45,719
-----------
150,075
-----------
TRANSPORTATION--1.3%
CNF Transportation, Inc. ........ 3,000 68,250
-----------
TOTAL COMMON STOCKS
(Identified cost $4,493,776) .... 4,748,563
-----------
REPURCHASE AGREEMENT--7.2%
State Street Bank and Trust
Company, 6.40%, 07/03/00, (Dated
06/30/00, collateralized by
$390,000 United States Treasury
Note, 5.50%, 02/15/08, with a
value of $380,738) (Identified
cost $373,000) ................. $373 $ 373,000
-----------
TOTAL INVESTMENTS
(Identified cost $4,866,776) (b). 98.7% $5,121,563
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES .......... 1.3 69,267
----- ----------
NET ASSETS ....................... 100.0% $5,190,830
===== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
--------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
COMMON STOCKS--97.3%
AUSTRALIA--1.7%
Broken Hill Proprietary Company, Ltd. 24,180 $ 285,602
---------
DENMARK--1.3%
Tele Danmark A/S .................... 3,120 209,977
---------
FINLAND--0.8%
UPM-Kymmene OYJ ..................... 5,600 139,005
---------
FRANCE--13.9%
Alcatel ............................. 6,850 449,277
Aventis SA .......................... 4,961 362,088
Axa ................................. 1,350 212,660
Banque Nationale de Paris ........... 1,965 189,099
Compagnie de Saint Gobain ........... 1,060 143,297
Lagardere SCA ....................... 1,200 91,651
Suez Lyonnaise des Eaux SA .......... 1,190 208,473
Total Fina SA, Class B .............. 2,503 383,772
Vivendi ............................. 2,580 227,716
---------
TOTAL FRANCE ........................ 2,268,033
---------
GERMANY--8.2%
Allianz AG .......................... 798 286,685
Bayerische Hypo-und Vereinsbank AG .. 5,000 322,975
Deutsche Lufthansa AG ............... 8,640 199,699
Deutsche Telekom AG ................. 1,240 70,793
E.On AG ............................. 3,505 168,984
Siemens AG .......................... 1,415 213,442
Thyssen Krupp AG .................... 5,050 82,202
---------
TOTAL GERMANY ...................... 1,344,780
---------
HONG KONG--1.3%
HSBC Holdings PLC ................... 19,200 219,484
---------
ITALY--2.8%
Alleanza Assicurazioni .............. 5,830 77,644
ENI SpA ............................. 29,350 169,524
San Paolo-IMI SpA ................... 11,450 203,213
---------
TOTAL ITALY ......................... 450,381
---------
JAPAN--23.8%
ACOM Company, Ltd. .................. 800 67,254
Canon, Inc. ADR ..................... 6,000 302,250
Fuji Bank, Ltd. ..................... 20,000 151,925
Fujitsu, Ltd. ....................... 8,000 276,707
Industrial Bank of Japan, Ltd. ...... 22,000 166,703
Kao Corp. ADR ....................... 760 232,738
Nippon Paper Industries
Company, Ltd. ...................... 13,000 88,704
Nippon Telegraph & Telephone
Corp. ADR .......................... 4,195 286,833
Nissan Motor Company, Ltd. (a) ...... 84,000 494,793
NTT DoCoMo, Inc. .................... 7 189,341
Orix Corp. .......................... 1,700 250,742
Sankyo Company, Ltd. ................ 6,000 135,432
Sony Corp. ADR ...................... 3,378 318,588
Sumitomo Electric Industries, Ltd. .. 8,000 137,072
Sumitomo Trust & Banking
Company, Ltd. ...................... 31,000 220,583
TDK Corp. ADR ....................... 2,700 386,775
The Sakura Bank, Ltd. ............... 27,000 186,523
---------
TOTAL JAPAN ......................... 3,892,963
---------
NETHERLANDS--6.8%
Akzo Nobel NV ....................... 4,500 191,179
Getronics NV ........................ 9,200 141,849
Heineken NV ......................... 4,005 243,753
ING Groep NV ........................ 4,320 292,001
Koninklijke (Royal) Philips
Electronics NV ..................... 5,000 235,811
---------
TOTAL NETHERLANDS ................... 1,104,593
---------
PORTUGAL--1.6%
Portugal Telecom SA ................. 23,900 268,332
---------
SINGAPORE--2.9%
Oversea-Chinese Banking
Corporation, Ltd. .................. 31,050 213,952
United Overseas Bank, Ltd. ADR ...... 19,742 258,054
---------
TOTAL SINGAPORE ..................... 472,006
---------
SPAIN--3.0%
Endesa SA ........................... 12,495 242,039
Telefonica SA (a) ................... 11,262 241,916
---------
TOTAL SPAIN ......................... 483,955
---------
SWEDEN--2.8%
Electrolux AB, Series B ............. 8,415 130,232
Investor AB, Series B ............... 13,000 177,608
Svenska Handelsbanken AB,
Series A ........................... 10,940 158,766
---------
TOTAL SWEDEN ........................ 466,606
---------
SWITZERLAND--4.9%
ABB Ltd. ............................ 2,035 243,569
Roche Holding AG .................... 19 184,957
Roche Holding AG ADR ................ 1,364 133,206
Zurich Allied AG .................... 480 237,161
---------
TOTAL SWITZERLAND ................... 798,893
---------
UNITED KINGDOM--21.5%
AstraZeneca Group PLC ............... 4,942 230,688
BP Amoco PLC ........................ 30,970 297,097
British Aerospace PLC ............... 31,500 196,370
British Energy PLC .................. 14,686 39,887
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
--------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
(CONTINUED)
British Telecommunications PLC . 14,680 $ 189,693
Cadbury Schweppes PLC .......... 29,640 194,642
Diageo PLC ..................... 24,675 221,401
GKN PLC ........................ 8,665 110,526
Great Universal Stores PLC ..... 27,885 179,319
Halifax Group PLC .............. 17,210 165,096
Imperial Chemical Industries PLC 31,250 248,007
Invensys PLC ................... 59,440 223,048
National Grid Group PLC ........ 18,900 148,993
Prudential PLC ................. 9,490 138,998
Reed International PLC ......... 24,735 215,203
SmithKline Beecham PLC ......... 22,720 297,366
Tesco PLC ...................... 70,470 219,121
Vodafone AirTouch PLC .......... 48,500 195,939
-----------
TOTAL UNITED KINGDOM ........... 3,511,394
-----------
TOTAL COMMON STOCKS
(Identified cost $15,800,232) .. 15,916,004
-----------
REPURCHASE AGREEMENT--7.3%
State Street Bank and Trust
Company, 6.40%, 07/03/00,
(Dated 06/30/00, collateralized
by $1,160,000 United States
Treasury Bond, 7.625%, 02/15/07,
with a value of $1,210,750)
(Identified cost $1,184,000) .. $1,184 $ 1,184,000
-----------
TOTAL INVESTMENTS
(Identified cost $16,984,232) (b) 104.6% $17,100,004
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS (4.6) (745,600)
----- -----------
NET ASSETS 100.0% $16,354,404
===== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
--------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
COMMON STOCKS--86.2%
BRAZIL--5.6%
Companhia Cervejaria Brahma ADR ..... 7,300 $124,100
Companhia Energetica de Minas
Gerais ADR ......................... 2,497 43,200
Embratel Participacoes SA ADR ....... 2,600 61,425
Souza Cruz SA ....................... 7,000 41,880
Telesp Celular Participacoes SA ADR . 800 35,900
--------
TOTAL BRAZIL ........................ 306,505
--------
CHILE--1.6%
AFP Provida SA ADR .................. 4,200 88,725
--------
GREECE--1.4%
Hellenic Telecommunications
Organization SA .................... 833 20,410
Hellenic Telecommunications
Organization SA ADR ................ 4,600 56,063
--------
TOTAL GREECE ........................ 76,473
--------
HONG KONG--5.2%
China Telecom (Hong Kong), Ltd.
ADR (a) ............................ 1,200 213,375
Yue Yuen Industrial Holdings ........ 33,000 72,811
--------
TOTAL HONG KONG ..................... 286,186
--------
HUNGARY--1.2%
Magyar Tavkozlesi RT. ADR ........... 1,880 64,742
--------
INDIA--8.9%
Bharat Heavy Electricals, Ltd. ...... 3,400 10,162
Hindalco Industries, Ltd. GDR (c) ... 5,500 105,875
Infosys Technologies, Ltd. .......... 290 54,031
Larsen & Toubro, Ltd. ............... 400 4,340
Larsen & Toubro, Ltd. GDR (c) ....... 2,600 28,210
Mahanagar Telephone Nigam, Ltd. ..... 13,000 62,467
Reliance Industries, Ltd. ........... 13,200 100,781
Satyam Computer Services, Ltd. ...... 480 32,060
State Bank of India ................. 18,200 92,264
--------
TOTAL INDIA ......................... 490,190
--------
INDONESIA--0.9%
PT Hanjaya Mandala Sampoerna Tbk .... 19,000 27,569
PT Indah Kiat Pulp & Paper Corp. (a) 105,000 21,294
--------
TOTAL INDONESIA ..................... 48,863
--------
ISRAEL--2.0%
Bank Hapoalim ....................... 18,200 52,777
Check Point Software
Technologies, Ltd. (a) ............. 140 29,645
Partner Communications
Company, Ltd. ADR (a) .............. 2,740 26,030
--------
TOTAL ISRAEL ........................ 108,452
--------
MALAYSIA--0.3%
Jaya Tiasa Holdings Berhad .......... 15,000 17,132
--------
MEXICO--16.8%
Carso Global Telecom (a) ............ 47,000 134,136
Cemex SA de CV ADR .................. 2,602 60,822
Fomento Economico Mexicano
SA de CV ADR ....................... 2,110 90,862
Grupo Financiero Banamex
Accival SA de CV (a) ............... 30,000 126,143
Grupo Financiero Banorte
SA de CV (a) ....................... 24,000 33,151
Grupo Iusacell SA de CV, Series V (a) 6,300 98,437
Grupo Televisa SA (a) ............... 2,300 158,556
Kimberly-Clark de Mexico SA de CV ... 9,400 26,732
Pepsi-Gemex SA de CV GDR (a) ........ 1,500 6,656
Telefonos de Mexico SA ADR .......... 1,020 58,267
Tubos de Acero de Mexico SA ADR ..... 5,000 69,375
Wal-Mart de Mexico SA de CV,
Series C (a) ....................... 24,000 55,332
--------
TOTAL MEXICO ........................ 918,469
--------
PERU--0.3%
Credicorp, Ltd. ..................... 2,100 18,900
--------
PHILIPPINES--2.2%
Benpres Holdings Corp. (a) .......... 428,000 41,068
Manila Electric Co. ................. 12,000 17,619
Philippine Long Distance
Telephone Co. ADR .................. 3,500 62,125
--------
TOTAL PHILIPPINES ................... 120,812
--------
POLAND--0.1%
Bank Handlowy W. Warszawie
GDR (c) ............................ 322 4,943
--------
RUSSIA--3.9%
Mobile Telesystems, ADR (a) ......... 4,400 94,600
OAO Lukoil Holding ADR .............. 2,300 117,576
--------
TOTAL RUSSIA ........................ 212,176
--------
SOUTH AFRICA--6.8%
ABSA Group, Ltd. .................... 13,100 49,620
Impala Platinum Holdings, Ltd. ...... 2,000 74,340
Old Mutual PLC ...................... 25,400 55,824
Sanlam, Ltd. ........................ 47,500 56,076
Sasol, Ltd. ......................... 9,100 61,024
South African Breweries PLC ......... 5,100 38,034
South African Breweries PLC (U.K.) .. 5,000 36,522
--------
TOTAL SOUTH AFRICA .................. 371,440
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
--------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
(CONTINUED)
SOUTH KOREA--17.0%
Hanvit Bank GDR (a), (c) ................... 5,500 $ 27,225
Hyundai Electronics Industries Co. (a) ..... 3,200 63,138
Kookmin Bank ............................... 4,640 59,091
Korea Electric Power Corp. ................. 3,100 96,195
Korea Telecom Corp., ADR ................... 1,680 81,270
LG Chemical, Ltd. .......................... 1,300 25,999
Pohang Iron & Steel Company, Ltd. .......... 200 17,308
Pohang Iron & Steel
Company, Ltd. ADR ......................... 2,260 54,240
Samsung Electronics Co. GDR (c) ............ 1,386 270,963
Samsung Fire & Marine Insurance ............ 742 20,629
SK Telecom Company, Ltd. ADR ............... 5,845 212,246
-----------
TOTAL SOUTH KOREA .......................... 928,304
-----------
TAIWAN--8.5%
ASE Test, Ltd. (a) ......................... 2,360 69,473
Asustek Computer, Inc. GDR (c) ............. 5,304 48,266
China Steel Corp. GDR ...................... 3,800 50,540
Compal Electronics, Inc. GDR ............... 3,405 40,865
Far Eastern Textile, Ltd. .................. 14,000 17,406
GigaMedia, Ltd. (a) ........................ 400 4,850
Siliconware Precision
Industries Co. ADR (a) .................... 4,200 38,850
Taiwan Semiconductor
Manufacturing Company, Ltd. (a) ........... 24,000 114,044
United Microelectronics Corp. (a) .......... 23,000 64,003
Via Technologies, Inc. (a) ................. 1,000 15,460
-----------
TOTAL TAIWAN ............................... 463,757
-----------
TURKEY--2.9%
Erciyas Biracilik ve Malt Sanayii
AS (a) .................................... 1,062,000 49,641
Turkiye Garanti Bankasi
AS ADR (a), (c) ........................... 2,700 32,130
Yapi ve Kredi Bankasi AS ................... 7,133,170 79,332
-----------
TOTAL TURKEY ............................... 161,103
----------
VENEZUELA--0.6%
Compania Anonima Nacional
Telefonos de Venezuela ADR ................ 1,200 32,625
-----------
TOTAL COMMON STOCKS
(Identified cost $4,580,410) ............... 4,719,797
-----------
PREFERRED STOCKS--6.2%
BRAZIL--6.1%
Banco Itau SA .............................. 1,104,300 97,051
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar ADR ................... 1,710 54,934
Companhia Paranaense de
Energia-Copel ADR ......................... 8,100 75,431
Tele Norte Leste Participacoes
SA ADR .................................... 4,645 109,737
-----------
TOTAL BRAZIL ............................... 337,153
-----------
COLOMBIA--0.1%
Banco Ganadero SA ADR ...................... 850 3,347
-----------
TOTAL PREFERRED STOCKS
(Identified cost $273,973) ................. 340,500
-----------
PRINCIPAL
AMOUNT
(000)
-----------
REPURCHASE AGREEMENT--9.2%
State Street Bank and Trust Company,
6.40%, 07/03/00, (Dated 06/30/00,
collateralized by $420,000 United
States Treasury Bond, 10.75%, 08/15/05,
with a value of $517,125)
(Identified cost $504,000) ................ $504 504,000
-----------
TOTAL INVESTMENTS
(Identified cost $5,358,383) (b) ........... 101.6% $5,564,297
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS .............................. (1.6) (89,566)
----- ----------
NET ASSETS .................................. 100.0% $5,474,731
===== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) For federal income tax purposes, the aggregate cost, aggregate gross
unrealized appreciation, aggregate gross unrealized depreciation and the net
unrealized appreciation (depreciation) is as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE NET
GROSS GROSS UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO COST APPRECIATION DEPRECIATION (DEPRECIATION)
--------- -------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Retirement Equity $ 2,072,563 $ 94,740 $113,097 $ (18,357)
Retirement Small Cap 4,866,776 539,454 284,667 254,787
Retirement International Equity 16,984,232 977,339 861,567 115,772
Retirement Emerging Markets 5,358,383 675,290 469,376 205,914
</TABLE>
(c)Pursuant to Rule 144A of the Securities Act of 1933, these securities may
only be resold in transactions exempt from registration, normally to
qualified institutional buyers. At June 30, 2000, these securities amounted
to $517,612, or 9.45% of net assets of Retirement Emerging Markets Portfolio.
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
PORTFOLIO HOLDINGS BY INDUSTRY, FOR THOSE PORTFOLIOS PREVIOUSLY PRESENTED BY
COUNTRY:
LAZARD LAZARD
RETIREMENT RETIREMENT
INTERNATIONAL EMERGING
EQUITY MARKETS
PORTFOLIO PORTFOLIO
------- -------
INDUSTRY
Aerospace & Defense 1.2% --%
Apparel & Textiles -- 0.3
Automotive 3.7 --
Banking & Financial Services 21.1 14.0
Brewery 1.5 4.5
Broadcasting -- 3.0
Chemicals & Plastics 2.7 --
Commercial Services 2.3 --
Computer Software -- 2.1
Computers & Business Equipment -- 1.6
Conglomerates -- 1.3
Construction & Materials 0.9 1.4
Cosmetics & Toiletries 1.4 --
Diversified 0.6 --
Drugs & Health Care 8.2 --
Electrical Equipment 7.6 --
Electronics 1.4 8.3
Food & Beverages 2.5 1.8
Forest Products 1.4 --
Household Products 0.8 --
Insurance 5.8 2.4
Manufacturing 5.7 0.2
Metals -- 3.3
Oil & Gas 5.3 3.3
Paper Products -- 0.9
Petrochemicals -- 2.3
Petroleum Equipment & Services 1.8 --
Publishing 1.3 --
Repurchase Agreement 7.3 9.2
Retail 2.4 3.3
Semiconductor Manufacturers -- 3.4
Steel -- 3.5
Telecommunications 12.9 22.7
Telephone -- 3.3
Tobacco -- 1.3
Transportation-Air 1.2 --
Utilities 3.6 4.2
----- -----
Total Investments 104.6% 101.6%
===== =====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD LAZARD RETIREMENT RETIREMENT
RETIREMENT RETIREMENT INTERNATIONAL EMERGING
EQUITY SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost $2,072,563,
$4,866,776, $16,984,232, and $5,358,383, respectively) $ 2,054,206 $5,121,563 $ 17,100,004 $ 5,564,297
Cash ................................................... 218 35,972 217 706
Foreign currency (cost $0, $0, $4,571, and $216,
respectively) ......................................... -- -- 4,559 217
Receivables for:
Investments sold ..................................... -- 50,400 4,434 9,577
Dividends and interest ............................... 2,501 894 23,121 8,847
Capital stock sold ................................... -- 12,984 80,125 5,428
Due from Manager ....................................... 4,417 4,298 1,547 4,530
Deferred organizational costs .......................... 8,366 7,664 10,630 7,664
----------- ---------- ------------ -----------
Total assets ........................................... 2,069,708 5,233,775 17,224,637 5,601,266
----------- ---------- ------------ -----------
LIABILITIES
Payables for:
Investments purchased .................................. -- 4,466 810,644 94,600
Capital stock repurchased .............................. 4,363 12,819 220 16
Accrued directors' fees payable ........................ 25 26 33 28
Accrued distribution fees payable ...................... 413 942 2,887 964
Other accrued expenses and payables .................... 26,380 24,692 56,449 30,927
----------- ---------- ------------ -----------
Total liabilities ...................................... 31,181 42,945 870,233 126,535
----------- ---------- ------------ -----------
Net assets ............................................. 2,038,527 5,190,830 16,354,404 5,474,731
=========== ========== ============ ===========
NET ASSETS
Paid in capital ........................................ 1,795,080 4,786,081 15,994,720 5,130,663
Undistributed (distribution in excess of)
investment income--net ............................... 6,339 3,112 75,363 7,338
Unrealized appreciation (depreciation) on:
Investments--net ....................................... (18,357) 254,787 115,772 205,914
Foreign currency--net .................................. -- -- (2,293) (39)
Accumulated realized gain (loss)--net .................. 255,465 146,850 170,842 130,855
----------- ---------- ------------ -----------
Net assets ............................................. $ 2,038,527 $5,190,830 $ 16,354,404 $ 5,474,731
=========== ========== ============ ===========
Shares of capital stock outstanding* ................... 177,762 481,331 1,259,610 537,877
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 11.47 $ 10.78 $ 12.98 $ 10.18
</TABLE>
* $0.001 par value, 500,000,000 shares authorized for the Portfolios in total.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD LAZARD RETIREMENT RETIREMENT
RETIREMENT RETIREMENT INTERNATIONAL EMERGING
EQUITY SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Interest ................................................ $ 2,753 $ 11,836 $ 28,862 $ 14,022
Dividends ............................................... 18,253 16,392 130,175 36,343
--------- --------- --------- ---------
Total investment income* ................................ 21,006 28,228 159,037 50,365
--------- --------- --------- ---------
EXPENSES:
Management fees ......................................... 8,803 15,294 41,649 24,705
Administration fees ..................................... 19,046 19,158 19,861 19,193
Distribution fees ....................................... 2,935 5,098 13,967 6,176
Custodian fees .......................................... 6,174 13,288 62,086 27,426
Professional services ................................... 13,209 12,607 13,955 12,355
Registration fees ....................................... -- 565 2,708 355
Shareholders' services .................................. 6,468 6,526 6,622 6,527
Directors' fees and expenses ............................ 53 60 120 79
Shareholders' reports ................................... 7,135 5,681 8,672 6,219
Amortization of organizational expenses ................. 1,776 1,645 2,255 1,645
Other ................................................... 395 250 340 522
--------- --------- --------- ---------
Total expenses before fees waived and expenses reimbursed 65,994 80,172 172,235 105,202
Management fees waived and expenses reimbursed .......... (38,827) (42,041) (89,936) (52,851)
Administration fees waived .............................. (12,500) (12,500) (12,500) (12,500)
Expense reductions ...................................... -- (141) (194) (324)
--------- --------- --------- ---------
Expenses--net ........................................... 14,667 25,490 69,605 39,527
--------- --------- --------- ---------
INVESTMENT INCOME (LOSS)--NET ........................... 6,339 2,738 89,432 10,838
--------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY--NET
Realized gain (loss) on:
Investments--net ........................................ 285,432 186,209 134,962 114,067
Foreign currency--net ................................... -- -- 6,917 (5,863)
Change in net unrealized appreciation (depreciation) on:
Investments--net ........................................ (369,724) 202,404 (330,851) (515,654)
Foreign currency--net ................................... -- -- (3,021) (71)
--------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY--NET ............................. (84,292) 388,613 (191,993) (407,521)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ....................................... $ (77,953) $ 391,351 $(102,561) $(396,683)
========= ========= ========= =========
*Net of foreign withholding taxes of .................... $ 759 $ -- $ 21,885 $ 2,838
========= ========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT EQUITY PORTFOLIO
------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ............................................. $ 6,339 $ 11,766
Realized gain (loss) on investments and foreign currency--net ............. 285,432 63,497
Change in unrealized appreciation (depreciation)--net ..................... (369,724) 133,198
----------- -----------
Net increase (decrease) in net assets resulting from operations ........... (77,953) 208,461
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ............................................... -- (11,766)
From realized gains--net .................................................. -- (68,216)
In excess of investment income--net ....................................... -- (3,863)
In excess of realized gains--net .......................................... -- (17,679)
----------- -----------
Net decrease in net assets resulting from distributions ................... -- (101,524)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ................................................... 2,826,830 951,097
Net proceeds from reinvestment of distributions ........................... -- 101,522
Cost of shares redeemed ................................................... (3,545,615) (837,312)
----------- -----------
Net increase (decrease) in net assets from capital stock transactions ..... (718,785) 215,307
----------- -----------
Total increase (decrease) in net assets ................................... (796,738) 322,244
Net assets at beginning of period ......................................... 2,835,265 2,513,021
----------- -----------
Net assets at end of period* .............................................. $ 2,038,527 $ 2,835,265
=========== ===========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ................................. 245,950 227,507
----------- -----------
Shares sold ............................................................... 241,037 81,270
Shares issued to shareholders from reinvestment of distributions .......... -- 8,995
Shares repurchased ........................................................ (309,225) (71,822)
----------- -----------
Net increase (decrease) ................................................... (68,188) 18,443
----------- -----------
Shares outstanding at end of period ....................................... 177,762 245,950
=========== ===========
*Includes undistributed (distributions in excess of) investment income--net $ 6,339 $ --
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT SMALL CAP PORTFOLIO
----------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ............................................. $ 2,738 $ 3,367
Realized gain (loss) on investments and foreign currency--net ............. 186,209 57,830
Change in unrealized appreciation (depreciation)--net ..................... 202,404 30,863
----------- -----------
Net increase (decrease) in net assets resulting from operations ........... 391,351 92,060
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ............................................... -- (3,367)
From realized gains--net .................................................. -- (42,556)
In excess of investment income--net ....................................... -- (585)
----------- -----------
Net decrease in net assets resulting from distributions ................... -- (46,508)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ................................................... 4,265,551 1,969,581
Net proceeds from reinvestment of distributions ........................... -- 46,507
Cost of shares redeemed ................................................... (2,174,811) (1,057,288)
----------- -----------
Net increase (decrease) in net assets from capital stock transactions ..... 2,090,740 958,800
----------- -----------
Total increase (decrease) in net assets ................................... 2,482,091 1,004,352
Net assets at beginning of period ......................................... 2,708,739 1,704,387
----------- -----------
Net assets at end of period* .............................................. $ 5,190,830 $ 2,708,739
=========== ===========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ................................. 275,707 179,072
----------- -----------
Shares sold ............................................................... 410,125 201,446
Shares issued to shareholders from reinvestment of distributions .......... -- 4,958
Shares repurchased ........................................................ (204,501) (109,769)
----------- -----------
Net increase (decrease) ................................................... 205,624 96,635
----------- -----------
Shares outstanding at end of period ....................................... 481,331 275,707
=========== ===========
*Includes undistributed (distributions in excess of) investment income--net $ 3,112 $ 374
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
LAZARD RETIREMENT
INTERNATIONAL EQUITY PORTFOLIO
------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ................... $ 89,432 $ 11,197
Realized gain (loss) on investments and
foreign currency--net ......................... 141,879 53,232
Change in unrealized appreciation
(depreciation)--net ........................... (333,872) 400,299
----------- ----------
Net increase (decrease) in net assets
resulting from operations ..................... (102,561) 464,728
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ..................... -- (11,197)
From realized gains--net ........................ -- (24,823)
In excess of investment income--net ............. -- (14,166)
----------- ----------
Net decrease in net assets resulting
from distributions ............................ -- (50,186)
----------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ......................... 10,956,707 5,417,457
Net proceeds from reinvestment
of distributions .............................. -- 50,185
Cost of shares redeemed ......................... (807,470) (87,052)
----------- ----------
Net increase (decrease) in net assets from
capital stock transactions .................... 10,149,237 5,380,590
----------- ----------
Total increase (decrease) in net assets ........... 10,046,676 5,795,132
Net assets at beginning of period ................. 6,307,728 512,596
----------- ----------
Net assets at end of period* ...................... $16,354,404 $6,307,728
=========== ==========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ....... 467,494 45,638
----------- ----------
Shares sold ..................................... 856,390 425,219
Shares issued to shareholders from reinvestment
of distributions .............................. -- 3,863
Shares repurchased .............................. (64,274) (7,226)
----------- ----------
Net increase (decrease) ......................... 792,116 421,856
----------- ----------
Shares outstanding at end of period ............. 1,259,610 467,494
=========== ==========
*Includes undistributed (distributions in
excess of) investment income--net ............ $ 75,363 $ (14,069)
=========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
LAZARD RETIREMENT
EMERGING MARKETS PORTFOLIO
------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ................... $ 10,838 $ 7,305
Realized gain (loss) on investments and
foreign currency--net ......................... 108,204 83,006
Change in unrealized appreciation
(depreciation)--net ........................... (515,725) 1,046,334
---------- ----------
Net increase (decrease) in net assets
resulting from operations ..................... (396,683) 1,136,645
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ..................... -- (8,982)
In excess of investment income--net ............. -- (432)
---------- ----------
Net decrease in net assets resulting
from distributions .............................. -- (9,414)
---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ......................... 1,774,767 2,442,484
Net proceeds from reinvestment
of distributions .............................. -- 9,413
Cost of shares redeemed ......................... (470,854) (260,995)
---------- ----------
Net increase (decrease) in net assets
from capital stock transactions ................. 1,303,913 2,190,902
---------- ----------
Total increase (decrease) in net assets ........... 907,230 3,318,133
Net assets at beginning of period ................. 4,567,501 1,249,368
---------- ----------
Net assets at end of period* ...................... $5,474,731 $4,567,501
========== ==========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ....... 414,824 172,204
---------- ----------
Shares sold ..................................... 167,665 269,490
Shares issued to shareholders from
reinvestment of distributions ................. -- 911
Shares repurchased .............................. (44,612) (27,781)
---------- ----------
Net increase (decrease) ......................... 123,053 242,620
---------- ----------
Shares outstanding at end of period ............. 537,877 414,824
========== ==========
*Includes undistributed (distributions in
excess of) investment income--net ............ $ 7,338 $ (3,500)
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
--------------------------------------------------------------------------------
LAZARD RETIREMENT EQUITY PORTFOLIO
FOR THE
SIX MONTHS PERIOD
ENDED YEAR ENDED 3/18/98* TO
6/30/00+ 12/31/99 12/31/98
------- -------- --------
Net asset value, beginning of period ........ $11.53 $11.05 $10.00
------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) .............. 0.04 0.06 0.02
Net realized and unrealized gain (loss) ... (0.10) 0.83 1.06
------ ------ ------
Total from investment operations .......... (0.06) 0.89 1.08
------ ------ ------
Less distributions from and in excess of:
Net investment income ..................... -- (0.06) (0.02)
Net realized gain ......................... -- (0.35) (0.01)
------ ------ ------
Total distributions ....................... -- (0.41) (0.03)
------ ------ ------
Net asset value, end of period .............. $11.47 $11.53 $11.05
====== ====== ======
TOTAL RETURN (A) ............................ (0.5)% 8.2% 10.9%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $2,039 $2,835 $2,513
Ratios to average net assets:
Net expenses (b) .......................... 1.25% 1.33% 1.50%
Gross expenses (b) ........................ 5.62% 5.63% 21.32%
Net investment income (b) ................. 0.54% 0.42% 0.53%
Portfolio turnover rate ..................... 83% 35% 40%
LAZARD RETIREMENT SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTH YEAR ENDED FOR THE PERIOD
ENDED ------------------- 11/4/97* TO
6/30/00+ 12/31/99 12/31/98 12/31/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 9.82 $ 9.52 $ 9.84 $10.00
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) .............. 0.01 0.02 -- 0.02
Net realized and unrealized gain (loss) ... 0.95 0.46 (0.32) (0.16)
------ ------ ------ ------
Total from investment operations .......... 0.96 0.48 (0.32) (0.14)
------ ------ ------ ------
Less distributions from and in excess of:
Net investment income ..................... -- (0.02) -- (0.02)
Net realized gain ......................... -- (0.16) -- --
------ ------ ------ ------
Total distributions ....................... -- (0.18) -- (0.02)
------ ------ ------ ------
Net asset value, end of period .............. $10.78 $ 9.82 $ 9.52 $ 9.84
====== ====== ====== ======
TOTAL RETURN (A) ............................ 9.8% 5.1% (3.2)% (1.4)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $5,191 $2,709 $1,704 $ 591
Ratios to average net assets:
Net expenses (b) .......................... 1.25% 1.32% 1.50% 1.50%
Gross expenses (b) ........................ 3.93% 7.31% 16.20% 52.55%
Net investment income (b) ................. 0.13% 0.16% (0.18)% 0.71%
Portfolio turnover rate ..................... 56% 73% 61% 0%
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS
SELECT DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
--------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS PERIOD
ENDED YEAR ENDED 9/1/98* TO
6/30/00+ 12/31/99 12/31/98
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period ........ $ 13.49 $ 11.23 $ 10.00
------- ------- -------
Income (loss) from investment operations:
Net investment income (loss) .............. 0.09 0.08 (0.04)
Net realized and unrealized gain (loss) ... (0.60) 2.32 1.27
------- ------- -------
Total from investment operations .......... (0.51) 2.40 1.23
------- ------- -------
Less distributions from and in excess of:
Net investment income ..................... -- (0.07) --
Net realized gain ......................... -- (0.07) --
------- ------- -------
Total distributions ....................... -- (0.14) --
------- ------- -------
Net asset value, end of period .............. $ 12.98 $ 13.49 $ 11.23
======= ======= =======
TOTAL RETURN (A) ............................ (3.8)% 21.4% 12.3%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $16,354 $ 6,308 $ 513
Ratios to average net assets:
Net expenses (b) .......................... 1.25% 1.31% 1.60%
Gross expenses (b) ........................ 3.10% 12.94% 48.67%
Net investment income (b) ................. 1.61% 0.85% (0.58)%
Portfolio turnover rate ..................... 21% 22% 7%
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
<CAPTION>
SIX MONTHS YEAR ENDED FOR THE PERIOD
ENDED -------------------- 11/4/97* TO
6/30/00+ 12/31/99 12/31/98 12/31/97
------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 11.01 $ 7.26 $ 9.49 $ 10.00
------- ------- ------- -------
Income (loss) from investment operations:
Net investment income (loss) .............. 0.02 0.02 0.06 0.04
Net realized and unrealized gain (loss) ... (0.85) 3.76 (2.23) (0.51)
------- ------- ------- -------
Total from investment operations .......... (0.83) 3.78 (2.17) (0.47)
------- ------- ------- -------
Less distributions from and in excess of:
Net investment income ..................... -- (0.03) (0.06) (0.04)
Net realized gain ......................... -- -- -- --
------- ------- ------- -------
Total distributions ....................... -- (0.03) (0.06) (0.04)
------- ------- ------- -------
Net asset value, end of period .............. $ 10.18 $ 11.01 $ 7.26 $ 9.49
======= ======= ======= =======
TOTAL RETURN(A) ............................. (7.5)% 52.1% (22.9)% (4.7)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $ 5,475 $ 4,568 $ 1,249 $ 1,429
Ratios to average net assets:
Net expenses (b) .......................... 1.60% 1.64% 1.80% 1.80%
Gross expenses (b) ........................ 4.26% 9.59% 14.37% 23.17%
Net investment income (b) ................. 0.44% 0.39% 0.83% 1.96%
Portfolio turnover rate ..................... 32% 45% 44% 0%
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
* Commencement of operations
+ Unaudited
(a) Total returns are historical and assume changes in share price, reinvestment
of all dividends and distributions, and no sales charge. Had certain
expenses not been waived and/or reimbursed by the Investment Manager and/or
the Administrator during the periods shown, total returns would have been
lower. Periods of less than one year are not annualized.
(b) Annualized for periods of less than one year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
23
<PAGE>
================================================================================
Lazard Retirement Series, Inc.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
1. ORGANIZATION
Lazard Retirement Series, Inc. (the "Fund") was incorporated in Maryland on
February 13, 1997 and is registered under the Investment Company Act of 1940
(the "Act"), as amended, as a no-load, open-end management investment company.
The Fund is comprised of eight portfolios (each referred to as a "Portfolio"),
which are offered only to qualified pension and retirement plans and variable
annuity and variable life insurance separate accounts established by insurance
companies to fund variable annuity contracts and variable life insurance
policies. Currently, only the following four portfolios, each of which is
"non-diversified", as defined in the Act, are being offered: Lazard Retirement
Equity Portfolio ("Equity Portfolio"), Lazard Retirement Small Cap Portfolio
("Small Cap Portfolio"), Lazard Retirement International Equity Portfolio
("International Equity Portfolio") and Lazard Retirement Emerging Markets
Portfolio ("Emerging Markets Portfolio"). Equity Portfolio commenced operations
on March 18, 1998; International Equity Portfolio commenced operations on
September 1, 1998; Small Cap Portfolio and Emerging Markets Portfolio each
commenced operations on November 4, 1997. Each of the other four Portfolios has
issued 1 share of capital stock at $10 per share, but had not commenced
operations at June 30, 2000.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
(a) VALUATION OF INVESTMENTS--Market values for equity securities listed on the
New York Stock Exchange ("NYSE"), other U.S. exchanges or NASDAQ are based on
the last quoted sales prices on the principal exchange on which the security is
traded as of the close of regular trading on the NYSE (normally 4:00 p.m.
Eastern Time) on each valuation date; securities not traded on the valuation
date are valued at the closing bid price. Any securities not listed, for which
current over-the-counter market quotations or bids are readily available, are
valued at the last quoted bid price or, if available, the mean of two such
prices. Securities listed on foreign exchanges are valued at the last quoted
sales price; securities not traded on the valuation date are valued at the
closing bid price.
Bonds and other fixed-income securities are valued on the basis of prices
provided by a pricing service, which are based primarily on institutional-size
trading in similar groups of securities, or by using brokers' quotations.
Mortgage-backed securities issued by certain government related organizations
are valued using pricing services or brokers' quotations based on a matrix
system which considers such factors as other security prices, yields and
maturities. Debt securities maturing in sixty days or less are valued at
amortized cost except where to do so would not accurately reflect their fair
value, in which case such securities are valued at fair value as determined in
good faith in accordance with procedures adopted by the Board of Directors.
Options on stocks and stock indices traded on national securities exchanges are
valued as of the close of options trading on such exchanges (which is currently
4:10 p.m. Eastern Time). Securities for which market quotations are not readily
available are valued at fair value as determined in good faith using methods
approved by the Board of Directors.
(b) PORTFOLIO SECURITY TRANSACTIONS AND INVESTMENT INCOME--Portfolio security
transactions are accounted for on trade date. Realized gains and losses on sales
of investments are recorded on a specific identification basis and dividend
income is recorded on the ex-dividend date. Non-cash dividends, in which
security shares are received, are included in dividend income and are valued at
the security's opening price per share on the ex-dividend date. Interest income
is accrued daily. The Portfolios amortize premiums and accrete discounts on
fixed-income securities using the effective yield method.
(c) REPURCHASE AGREEMENTS--In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value or market price of which is at least equal to the
principal amount, plus interest, of the repurchase transaction. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is marked-to-market on a daily basis to ensure the adequacy of the
collateral. In the event of default of the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, such as the default
or bankruptcy by the other party to the agreement, realization and/or retention
of the collateral or proceeds may be subject to delay due to legal proceedings
and the Portfolio may suffer a loss.
(d) FOREIGN CURRENCY TRANSLATION AND FORWARD FOREIGN CURRENCY CONTRACTS--The
accounting records of the Portfolios are maintained in U.S. dollars. Portfolio
securities and other assets and liabilities denominated in a foreign currency
are translated to U.S. dollars at the prevailing rate of exchange at period end.
Purchases and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the respective
dates of transactions.
24
<PAGE>
================================================================================
Lazard Retirement Series, Inc.
Notes to Financial Statements (continued)
June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
The Portfolios do not isolate the portion of operations resulting from changes
in foreign exchange rates on investments from the fluctuations arising from
changes in their market prices. Such fluctuations are included in net realized
and unrealized gain or loss from investments. Net realized gains (losses) from
foreign currency transactions represent net foreign currency gains (losses) from
forward foreign currency contracts, disposition of foreign currencies, currency
gains or losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of net investment income
recorded on the Portfolio's accounting records and the U.S. dollar equivalent
amounts actually received or paid. Net unrealized foreign currency gains and
losses arise from changes in the value of assets and liabilities, other than
investments in securities, as a result of changes in exchange rates.
A forward foreign currency contract is an agreement between two parties to buy
or sell currency at a set price on a future date. International Equity Portfolio
and Emerging Markets Portfolio (the "Eligible Portfolios") may enter into
forward foreign currency contracts for risk management. Risk management includes
hedging strategies which serve to reduce an Eligible Portfolio's exposure to
foreign currency fluctuations. Such exposure may exist during the period that a
foreign denominated investment is held, or during the period between the trade
date and settlement date of an investment which has been purchased or sold. Upon
entering into these contracts risks may arise from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of the foreign currency relative to the U.S. dollar.
The U.S. dollar value of forward foreign currency contracts is determined using
forward exchange rates provided by a quotation service. Daily fluctuations in
the value of such contracts are recorded as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the time
it was closed. Such gains and losses are disclosed in the realized or unrealized
gain (loss) on foreign currency in the accompanying Statements of Operations.
(e) FEDERAL INCOME TAXES--The Fund's policy is to continue to have each
Portfolio qualify as a regulated investment company under the Internal Revenue
Code and to distribute all of its taxable income, including any realized net
capital gains, to shareholders. Therefore, no federal income tax provision is
required.
Under current tax law, certain capital and net foreign currency losses realized
after October 31 within the taxable year may be deferred and treated as
occurring on the first day of the following tax year. For the tax year ended
December 31, 1999, the following Portfolios have elected to defer net capital
and currency losses arising between November 1, 1999 and December 31, 1999, as
follows:
Portfolio Amount
--------- ------
Equity $25,229
Small Cap 38,687
International Equity 407
Emerging Markets 2,776
(f) DIVIDENDS AND DISTRIBUTIONS--The Fund intends to declare and to pay
dividends annually from net investment income on shares of Equity Portfolio,
Small Cap Portfolio, International Equity Portfolio and Emerging Markets
Portfolio. During any particular year, net realized gains from investment
transactions in excess of available capital loss carryforwards would be taxable
to the Portfolio if not distributed. The Portfolios intend to declare and
distribute these amounts annually to shareholders; however, to avoid taxation, a
second distribution may be required.
Income dividends and capital gains distributions are determined in accordance
with federal income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments of foreign currency
transactions. Book and tax differences relating to shareholder distributions
will result in reclassifications and may affect the allocation between
investment income-net, realized gains-net, and paid in capital.
(g) ORGANIZATIONAL EXPENSES--Costs incurred by the Fund in connection with its
organization have been deferred and are being amortized on a straight line basis
over a five-year period from the date of commencement of operations. In the
event that any of the initial shares of any of the Portfolios are redeemed
during such amortization period, the appropriate Portfolio will be reimbursed by
such holder for any unamortized organizational expenses in the same proportion
as the number of shares redeemed bears to the number of initial shares held at
the time of redemption.
(h) ALLOCATION OF EXPENSES--Expenses not directly chargeable to a specific
Portfolio are allocated primarily on the basis of relative net assets.
(i) EXPENSE REDUCTIONS--Portfolios leaving excess cash in demand deposit
accounts may receive credits which are available to offset custody expenses. The
Statements of
25
<PAGE>
================================================================================
Lazard Retirement Series, Inc.
Notes to Financial Statements (continued)
June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
Operations report gross custody expenses, and report the amount of such credits
separately as an expense reduction.
(j) ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires the Fund to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expense
during the reporting period. Actual results could differ from those estimates.
3. INVESTMENT MANAGEMENT, ADMINISTRATIVE AND DISTRIBUTION AGREEMENTS
The Fund has entered into investment management agreements (the "Management
Agreements") with Lazard Asset Management (the "Manager"), a division of Lazard
Freres & Co. LLC, on behalf of each Portfolio. Pursuant to the Management
Agreements, the Manager will regularly provide the Portfolios with investment
research, advice and supervision and furnish continuously an investment program
for each Portfolio consistent with its investment objectives and policies,
including the purchase, retention and disposition of securities. Each of the
Portfolios pays the Manager an investment management fee at the annual rate set
forth below as a percentage of the average daily net assets of the relevant
Portfolio:
Portfolio Annual Rate
--------- -----------
Equity 0.75%
Small Cap 0.75
International Equity 0.75
Emerging Markets 1.00
The investment management fees are accrued daily and payable monthly.
The Manager has voluntarily agreed to reduce its fees and, if necessary,
reimburse the following Portfolios if annualized operating expenses exceed the
following percentages of average daily net assets:
Annual
Portfolio Operating Expenses
--------- ------------------
Equity 1.25%
Small Cap 1.25
International Equity 1.25
Emerging Markets 1.60
For the period ended June 30, 2000, the Manager waived, in entirety, its
management fee and, in addition, reimbursed expenses as follows:
Reimbursed
Portfolio Waived Fees Expenses
--------- ----------- ----------
Equity $ 8,803 $30,024
Small Cap 15,294 26,747
International Equity 41,649 48,287
Emerging Markets 24,705 28,146
The Fund has entered into an administrative agreement with State Street Bank and
Trust Company ("State Street") to provide certain administrative services. Each
Portfolio bears the cost of such expenses at the annual rate of $37,500, and
0.02% of average daily net assets up to $1 billion plus 0.01% of average daily
net assets over $1 billion. State Street waived the $37,500 fee for the Equity
Portfolio, Small Cap Portfolio, International Equity Portfolio and Emerging
Markets Portfolio until February 29, 2000. From March 1, 2000, State Street has
agreed to waive $18,750 of the fee for the Equity Portfolio, Small Cap
Portfolio, International Equity Portfolio and Emerging Markets Portfolio until
February 28, 2001 or until each Portfolio reaches net assets of $50 million,
whichever comes first.
The Fund has a distribution agreement with Lazard Freres & Co. LLC (the
"Distributor"). The Distributor acts as distributor for shares of each of the
Portfolios and bears the cost of printing and mailing prospectuses to potential
investors and of any advertising expenses incurred in connection with
distribution of shares.
The Distributor provides each Portfolio with distribution services pursuant to a
separate Distribution Plan (the "Plan"), in accordance with Rule 12b-1 under the
Act. Under the Plan, the Distributor is entitled to distribution fees from each
Portfolio. The distribution fee is an asset-based fee to support distribution
efforts and/or servicing of accounts. For such services, each Portfolio will pay
a monthly distribution fee at an annual rate of 0.25% of the average daily net
assets. The distribution fees may be retained by the Distributor, in the case of
a shareholder who purchases shares directly through the Distributor, but usually
the fees are paid to external organizations, such as 401(k) alliance sponsors,
discount brokers and bank trust departments, who distribute the Fund to the
public.
Certain Directors of the Fund are Managing Directors of the Manager. The Fund
pays each Director who is not an employee or an affiliated person of the Manager
its allocated portion of a fixed fee of $30,000 per year, plus $2,500 per
meeting attended for the Fund and The Lazard Funds, Inc.,
26
<PAGE>
================================================================================
Lazard Retirement Series, Inc.
Notes to Financial Statements (continued)
June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
another multi-portfolio fund advised by the Manager, and reimburses them for
travel and other out of pocket expenses. In addition, the Chairman of the Audit
Committee for the Fund and The Lazard Funds, Inc. also receives an annual fee of
$5,000.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
Purchases and sales of portfolio securities (excluding short-term securities),
for the period ended June 30, 2000 were as follows:
Portfolio Purchases Sales
--------- --------- -----
Equity $ 1,945,166 $2,785,380
Small Cap 4,039,124 2,105,076
International Equity 12,686,913 2,212,357
Emerging Markets 2,983,916 1,440,276
For the period ended June 30, 2000, brokerage commissions were paid to Lazard
Freres & Co. LLC for portfolio transactions executed on behalf of the
Portfolios as follows:
Commissions
Portfolio Paid
--------- -----------
Equity $995
Small Cap 152
International Equity 276
Emerging Markets 41
27
<PAGE>
LAZARD RETIREMENT SERIES, INC.
30 Rockefeller Plaza
New York, New York 10112
Telephone: (800) 887-4929
http://www.lazardnet.com
INVESTMENT MANAGER
Lazard Asset Management
30 Rockefeller Plaza
New York, New York 10112
Telephone: (800) 887-4929
DISTRIBUTOR
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10112
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc.
P.O. Box 9363
Boston, Massachusetts 02205-9363
Telephone: (800) 986-3455
INDEPENDENT PUBLIC ACCOUNTANTS
Anchin, Block & Anchin LLP
1375 Broadway
New York, New York 10018
http://www.anchin.com
LEGAL COUNSEL
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
<PAGE>
LAZARD
Retirement Series
30 Rockefeller Plaza
New York, New York 10112
Telephone (800) 887-4929
http://www.lazardnet.com
This report is for the information of the shareholders of Lazard Retirement
Series, Inc. Its use in connection with any offering of the Fund's shares is
authorized only in the case of a concurrent or prior delivery of the Fund's
current prospectus.
