LAZARD
Retirement Series
ANNUAL REPORT
December 31, 1999
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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 MANAGING PARTNER, DAVIDSON CAPITAL MANAGEMENT
CORPORATION
NORMAN EIG VICE CHAIRMAN AND MANAGING DIRECTOR, LAZARD FRERES
& CO. LLC
CARL FRISCHLING SENIOR PARTNER, KRAMER LEVIN NAFTALIS & FRANKEL 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
WILLIAM G. BUTTERLY, III VICE PRESIDENT AND SECRETARY
JAMES GIALLANZA TREASURER
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LAZARD RETIREMENT SERIES, INC.
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TABLE OF CONTENTS
Overview .................................................................... 2
Growth Charts ............................................................... 3
Performance Table ........................................................... 5
Portfolio of Investments
Lazard Retirement Equity Portfolio ........................................ 6
Lazard Retirement Small Cap Portfolio ..................................... 7
Lazard Retirement International Equity Portfolio .......................... 9
Lazard Retirement Emerging Markets Portfolio .............................. 11
Notes to Portfolios of Investments ........................................ 13
Statements of
Assets and Liabilities .................................................... 15
Operations ................................................................ 16
Changes in Net Assets ..................................................... 17
Financial Highlights ........................................................ 21
Notes to Financial Highlights ............................................... 23
Notes to Financial Statements ............................................... 24
Report of Independent Auditors .............................................. 28
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LAZARD RETIREMENT SERIES, INC.
OVERVIEW
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The extraordinary performance of global markets throughout 1999 may have masked
a less appealing feature of the "new economy". As technology continued to
impact the economy, a dual system emerged, in which technology and tech-related
companies enjoyed phenomenal performance, and more traditional companies with
higher earnings suffered paradoxically lower valuations. But while technology
stock outperformance may be the most conspicuous feature of today's economy, it
is hardly the most enduring. With the effects of technology only beginning to
penetrate the overall economy, the new economy's real impact will be the
long-term benefits of technological integration within the most traditional
companies. Through business-to-business e-commerce, the Internet has already
made some of the largest, most traditional U.S. companies radically more
efficient, thereby heightening productivity.
This transitional stage of the new economy--during which traditional companies
see their valuations fall as they implement the Internet and other
technological developments into their operations--has created a challenging
environment for many investors. As the economy's weighting shifted, we located
value in solid companies across a range of industries, including technology,
energy, healthcare, and industrial manufacturing. Our tech holdings had strong
absolute returns, but our lower weight in the group relative to the S&P 500
meant returns lagged the broader market, even as the portfolio outperformed its
value peers. A notable holding, Hewlett Packard, performed strongly as the
company took on new leadership, launched an I.P.O. of its medical businesses,
and refocused its core computer and printing operations. At the same time, our
investment in many well-managed, globally diversified, industrial companies
proved advantageous; in the aftermath of the turmoil in foreign markets late in
1998, many of these companies saw an upswing in profitability as business
conditions improved. As well, restructuring continued to be a central theme
during 1999. Procter & Gamble announced a stunning plan to reorganize its
far-flung consumer products and health care businesses into more efficient
global business units, and investors applauded the move even as they shunned
many other consumer company stocks.
International equities outperformed the S&P 500 for the first time since 1994,
with the MSCI EAFE Index advancing 27.0%. As a result of corporate reform and
economic recovery, Japanese equities rose over 60%, while European equities,
furthered by a wave of hostile bids and a growing equity culture, posted solid
gains.
The bond market was testy throughout the year, suffering amid rising interest
rates and negative returns. These conditions were spurred, in part, by rising
inflation expectations, which contributed to three Federal Reserve monetary
policy tightenings. At the same time, investor demand for fixed-income
securities remained lukewarm in an environment of relatively low interest rates
and high equity returns. In the near future, Federal Reserve monetary policy
moves will continue to dominate market activity, although absolute returns
should improve.
As traditional companies continue to absorb the latest technology into their
operations, it is logical that technology and tech-related companies will
profit. But the largest gains in financial productivity will be reaped by
traditional companies once the new technology is in place. The wisest strategy
for the new era is one that shuns neither tech nor tradition, but which finds
the relative value within each sector based on Lazard's thorough analyses of
individual companies and an understanding of the global market in which
companies now compete.
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 (those whose total market value is more than $1
billion) that the Investment Manager believes are undervalued based on their
earnings, cash flow or asset values.
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT EQUITY
PORTFOLIO AND THE STANDARD & POOR'S 500 STOCK INDEX
[LINE CHART OMITTED]
Lazard Retirement
Equity Portfolio S&P 500
-------------------------- --------------
3/18/98 10000 10000
3-98 10230 10154.4
4-98 10309.8 10256.5
5-98 10250 10080.1
Jun-98 10409.9 10489.6
7-98 10199.6 10377.8
8-98 9029.72 8874.62
Sep-98 9299.71 9443.39
10-98 10219.5 10211.5
11-98 10599.6 10830.7
Dec-98 11088.7 11455
1-99 11319.3 11934.3
2-99 10978.6 11563.8
Mar-99 11390.3 12026.9
4-99 12022.5 12492.9
5-99 11962.4 12198.7
Jun-99 12403.4 12875.7
7-99 12121.9 12474
8-99 11820 12411.6
Sep-99 11197.1 12072.2
10-99 11720.3 12836.1
11-99 11780.6 13097
Dec-99 11993.8 13868.5
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 in the range of the Russell 2000 Index that the
Investment Manager believes are undervalued based on their earnings, cash flow
or asset values.
[LINE CHART OMITTED]
COMPARISON OF $10,000 INVESTMENT IN LAZARD RETIREMENT
SMALL CAP PORTFOLIO AND THE RUSSELL 2000 INDEX
Lazard Retirement
Small Cap Portfolio Russell 2000
-------------------------- --------------
11/4/97 10000 10000
Nov-97 9720 9762.77
Dec-97 9855.83 9933.62
Jan-98 9855.83 9776.87
Feb-98 10567 10499.8
Mar-98 10957.6 10932.8
Apr-98 10957.6 10993.2
May-98 10446.8 10401.2
Jun-98 10186.7 10423
Jul-98 9475.62 9579.25
Aug-98 8285.48 7719.15
Sep-98 8505.88 8323.25
Oct-98 8936.27 8662.67
Nov-98 9376.83 9116.51
Dec-98 9539.05 9680.64
Jan-99 9348.27 9809.39
Feb-99 8847.2 9014.83
Mar-99 8817.12 9155.46
Apr-99 9758.79 9975.79
May-99 10239.9 10121.4
Jun-99 10690.6 10579.1
Jul-99 10600.8 10289.3
Aug-99 10209.6 9908.46
Sep-99 9899.22 9910.44
Oct-99 9508.69 9950.77
Nov-99 9608.92 10544.6
Dec-99 10027.9 11738.3
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 (those whose total market
value is more than $1 billion) that the Investment Manager believes are
undervalued based on their earnings, cash flow or asset values.
COMPARISON OF $10,000 INVESTMENT IN
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO AND
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST INDEX
[LINE CHART OMITTED]
Lazard Retirment
International Equity Portfolio MSCI EAFE
------------------------------ ---------
9/1/98 10,000.00 10,000.00
Sep-98 9,620.00 9,693.00
Oct-98 10,310.14 10,703.01
Nov-98 10,930.19 11,251.00
Dec-98 11,230.11 11,695.87
Jan-99 11,209.90 11,660.78
Feb-99 10,909.48 11,383.26
Mar-99 11,269.49 11,857.94
Apr-99 11,780.00 12,338.66
May-99 11,350.03 11,703.59
Jun-99 11,819.92 12,159.87
Jul-99 12,160.33 12,521.02
Aug-99 12,410.23 12,566.72
Sep-99 12,370.02 12,693.40
Oct-99 12,639.68 13,168.78
Nov-99 12,800.21 13,626.33
Dec-99 13,634.78 14,849.97
$ 13,635 $ 14,850
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 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
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS (FREE) INDEX
[LINE CHART OMITTED]
Lazard Retirement MSCI Emerging
Emerging Markets Portfolio Markets (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
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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<TABLE>
<CAPTION>
AVERAGE ANNUAL CUMULATIVE TOTAL
TOTAL RETURNS FOR PERIODS RETURNS FOR PERIODS
ENDED DECEMBER 31, 1999 ENDED DECEMBER 31, 1999
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ONE SINCE ONE SINCE
YEAR INCEPTION* YEAR INCEPTION*
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Lazard Retirement Equity Portfolio 8.16% 10.68% 8.16% 19.94%
Standard & Poor's 500 Stock Index** 21.04% 20.09% 21.04% 38.68%
Lazard Retirement Small Cap Portfolio 5.13% 0.13% 5.13% 0.28%
Russell 2000 Index** 21.26% 7.68% 21.26% 17.38%
Lazard Retirement International Equity Portfolio 21.41% 26.16% 21.41% 36.35%
MSCI EAFE Index** 26.96% 34.52% 26.96% 48.50%
Lazard Retirement Emerging Markets Portfolio 52.09% 5.31% 52.09% 11.82%
MSCI Emerging Markets (Free) Index** 66.41% 7.46% 66.41% 16.80%
</TABLE>
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 index is for the comparable period.
Portfolio returns are net of fees and assume reinvestment of dividends and
distributions, if any. Certain expenses of a Portfolio may have been waived
and/or reimbursed by the Investment Manager and/or the Administrator; without
such waiver/reimbursement of expenses, the Portfolio's total return would
have been lower.
Past performance is not indicative, nor a guarantee, of future results; the
investment return and principal value of each Portfolio of Lazard Retirement
Series, Inc. will fluctuate, so that an investor's shares in a Portfolio,
when redeemed, may be worth more or less than their original cost. Within the
longer periods illustrated there may have been short-term fluctuations,
counter to the overall trend of investment results, and no single period of
any length may be taken as typical of what may be expected in future periods.
** The performance data of the indices have been prepared from sources and data
that the Investment Manager believes to be reliable, but no representation is
made as to their accuracy. These indices are unmanaged and have no fees or
costs. The S&P 500 Stock Index is a market capitalization-weighted index of
500 common stocks, designed to measure performance of the broad domestic
economy through changes in the aggregate market value of 500 stocks
representing all major industries. The Russell 2000 Index is composed of
2,000 common stocks of U.S. companies. The Morgan Stanley Capital
International (MSCI) Europe, Australasia and Far East Index (EAFE Index) is a
broadly diversified international index composed of the equity securities of
approximately 1,000 companies located outside the United States. The MSCI
Emerging Markets (Free) Index is comprised of emerging market securities in
countries open to non-local investors.
This performance data is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective
prospectus.
5
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
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DESCRIPTION SHARES VALUE
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LAZARD RETIREMENT EQUITY PORTFOLIO
COMMON STOCKS--99.0%
AEROSPACE & DEFENSE--2.7%
United Technologies Corp. ............................. 1,160 $ 75,400
----------
BANKING & FINANCIAL SERVICES--16.4%
Bank of America Corp. ................................. 953 47,829
Bank of New York Company, Inc. ........................ 1,890 75,600
Chase Manhattan Corp. ................................. 1,120 87,010
Citigroup, Inc. ....................................... 1,395 77,509
Federal National Mortgage
Association ......................................... 900 56,194
FleetBoston Financial Corp. ........................... 1,580 55,004
The Hartford Financial Services
Group, Inc. ......................................... 1,390 65,851
----------
464,997
----------
BREWERY--1.9%
Heineken NV ADR ....................................... 1,117 54,210
----------
CHEMICALS & PLASTICS--3.3%
Du Pont (E.I.) De Nemours & Co. ....................... 1,425 93,872
----------
COMPUTERS & BUSINESS EQUIPMENT--12.2%
Compaq Computer Corp. ................................. 2,100 56,831
Hewlett-Packard Co. ................................... 1,000 113,937
International Business Machines Corp. ................. 990 106,920
NCR Corp. (a) ......................................... 1,820 68,933
----------
346,621
----------
DIVERSIFIED--2.8%
Minnesota Mining &
Manufacturing Co. ................................... 800 78,300
----------
DRUGS & HEALTH CARE--12.2%
Amgen, Inc. (a) ....................................... 1,320 79,283
Aventis SA ADR ........................................ 948 53,917
Johnson & Johnson ..................................... 960 89,400
Merck & Company, Inc. ................................. 1,180 79,134
Pharmacia & Upjohn, Inc. .............................. 1,000 45,000
----------
346,734
----------
FOOD & BEVERAGES--5.7%
Cadbury Schweppes PLC ADR ............................. 1,650 39,909
Diageo PLC ADR ........................................ 1,000 32,000
PepsiCo, Inc. ......................................... 2,560 90,240
----------
162,149
----------
HOTELS & RESTAURANTS--3.4%
McDonald's Corp. ...................................... 2,370 95,540
----------
HOUSEHOLD PRODUCTS--2.9%
Procter & Gamble Co. .................................. 750 82,172
----------
INSURANCE--3.7%
Aetna, Inc. ........................................... 1,050 58,603
Allstate Corp. ........................................ 1,920 46,080
----------
104,683
----------
MANUFACTURING--3.6%
General Electric Co. .................................. 665 102,909
----------
MULTIMEDIA--2.5%
Gannett Company, Inc. ................................. 855 69,736
----------
OIL & GAS--5.6%
BP Amoco PLC ADR ...................................... 900 53,381
Chevron Corp. ......................................... 600 51,975
Royal Dutch Petroleum Co. NY Shares ................... 900 54,394
----------
159,750
----------
PAPER PRODUCTS--2.4%
Kimberly-Clark Corp. .................................. 1,040 67,860
----------
RETAIL--2.7%
Federated Department Stores, Inc. (a) ................. 1,500 75,844
----------
SERVICES--2.4%
First Data Corp. ...................................... 1,400 69,037
----------
TELECOMMUNICATIONS--12.6%
Alcatel SA ADR ........................................ 1,600 72,000
AT&T Corp. ............................................ 1,990 100,993
Bell Atlantic Corp. ................................... 1,670 102,809
SBC Communications, Inc. .............................. 1,684 82,095
----------
357,897
----------
TOTAL COMMON STOCKS
(Identified cost $2,456,344) .......................... 2,807,711
----------
TOTAL INVESTMENTS
(Identified cost $2,456,344) (b) ...................... 99.0% $2,807,711
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ...................................... 1.0 27,554
-------- ----------
NET ASSETS ............................................. 100.0% $2,835,265
======== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
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DESCRIPTION SHARES VALUE
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LAZARD RETIREMENT SMALL CAP PORTFOLIO
COMMON STOCKS--89.6%
AEROSPACE & DEFENSE--1.3%
AAR Corp. ............................................. 2,000 $ 35,875
----------
AUTO PARTS--1.8%
Pennzoil-Quaker State Co. ............................. 3,300 33,619
Tower Automotive, Inc. (a) ............................ 900 13,894
----------
47,513
----------
BANKING & FINANCIAL SERVICES--7.8%
Astoria Financial Corp. ............................... 800 24,350
Enhance Financial Services
Group, Inc. ......................................... 1,900 30,875
Hudson United Bancorp ................................. 1,545 39,494
Independence Community Bank Corp. ..................... 3,000 37,500
Southwest Bancorporation of Texas,
Inc. (a) ............................................ 2,200 43,588
Staten Island Bancorp, Inc. ........................... 1,900 34,200
----------
210,007
----------
BUILDING & CONSTRUCTION--0.3%
Granite Construction, Inc. ............................ 500 9,219
----------
BUSINESS SERVICES AND SUPPLIES--8.8%
ACNielsen Corp. (a) ................................... 1,600 39,400
Acxiom Corp. (a) ...................................... 700 16,800
American Management Systems,
Inc. (a) ............................................ 1,100 34,513
CDI Corp. (a) ......................................... 1,000 24,125
Gartner Group, Inc., Class A .......................... 900 13,725
Interim Services, Inc. (a) ............................ 1,300 32,175
The Standard Register Co. ............................. 1,400 27,125
United Stationers, Inc. (a) ........................... 1,800 51,412
----------
239,275
----------
CHEMICALS & PLASTICS--1.0%
H.B. Fuller Co. ....................................... 500 27,969
----------
COMMERCIAL SERVICES--0.4%
InaCom Corp. (a) ...................................... 1,500 10,969
----------
COMPUTERS & BUSINESS EQUIPMENT--8.4%
Bell & Howell Co. (a) ................................. 1,300 41,356
Electronics for Imaging, Inc. (a) ..................... 300 17,438
Mentor Graphics Corp. (a) ............................. 4,000 52,750
Quantum Corporation-Hard Disk
Drive (a) ........................................... 5,600 38,850
Storage Technology Corp. (a) .......................... 1,500 27,656
Tektronix, Inc. ....................................... 1,300 50,537
----------
228,587
----------
CONTAINERS--1.3%
American National Can Group, Inc. ..................... 2,800 36,400
----------
DRUGS & HEALTH CARE--2.5%
AmeriSource Health Corp., Class A (a) ................. 2,800 42,525
West Pharmaceutical Services, Inc. .................... 800 24,750
----------
67,275
----------
ELECTRICAL EQUIPMENT--1.4%
Anixter International, Inc. (a) ....................... 1,900 39,188
----------
ELECTRONICS--2.0%
KEMET Corp. (a) ....................................... 300 13,519
Sensormatic Electronics Corp. (a) ..................... 2,400 41,850
----------
55,369
----------
FOOD & BEVERAGES--5.8%
American Italian Pasta Co., Class A (a) ............... 1,200 36,900
Flowers Industries, Inc. .............................. 1,800 28,688
Ralcorp Holdings, Inc. (a) ............................ 2,600 51,837
Whitman Corp. ......................................... 2,900 38,969
----------
156,394
----------
GAS EXPLORATION--1.4%
Barrett Resources Corp. (a) ........................... 1,250 36,797
----------
HOMEBUILDERS--0.8%
Toll Brothers, Inc. (a) ............................... 1,100 20,488
----------
HOTELS & RESTAURANTS--0.8%
Prime Hospitality Corp. (a) ........................... 2,400 21,150
----------
HOUSEHOLD APPLIANCES &
HOME FURNISHINGS--4.4%
Bassett Furniture Industries, Inc. .................... 1,100 17,600
Ethan Allen Interiors, Inc. ........................... 900 28,856
Furniture Brands International, Inc. (a) .............. 1,300 28,600
Harman International Industries, Inc. ................. 800 44,900
----------
119,956
----------
INDUSTRIAL & MACHINERY--3.6%
Applied Power, Inc., Class A .......................... 700 25,725
JLG Industries, Inc. .................................. 2,800 44,625
Regal-Beloit Corp. .................................... 1,300 26,812
----------
97,162
----------
INSURANCE--6.0%
Arthur J. Gallagher & Co. ............................. 700 45,325
Everest Reinsurance Holdings, Inc. .................... 1,900 42,394
E. W. Blanch Holdings, Inc. ........................... 400 24,500
Radian Group, Inc. .................................... 479 22,872
Renaissance Re Holdings Ltd. .......................... 700 28,612
----------
163,703
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
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LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SMALL CAP PORTFOLIO (CONTINUED)
LEISURE TIME--1.0%
Vail Resorts, Inc. (a) ................................ 1,500 $ 26,906
----------
MEDICAL PRODUCTS--3.8%
Invacare Corp. ........................................ 1,700 34,106
Varian Medical Systems, Inc. (a) ...................... 2,300 68,569
----------
102,675
----------
MEDICAL SUPPLIES--1.7%
DENTSPLY International, Inc. .......................... 1,900 44,888
----------
MULTIMEDIA--2.1%
The Ackerley Group, Inc. .............................. 3,100 56,187
----------
OIL & GAS--2.3%
Devon Energy Corp. .................................... 900 29,588
Helmerich & Payne, Inc. ............................... 1,450 31,628
----------
61,216
----------
PAPER PRODUCTS--0.9%
Chesapeake Corp. ...................................... 800 24,400
----------
PHOTOGRAPHY--1.2%
Polaroid Corp. ........................................ 1,700 31,981
----------
PRINTING--1.1%
Bowne & Company, Inc. ................................. 2,300 31,050
----------
PUBLISHING--5.0%
Banta Corp. ........................................... 1,200 27,075
Houghton Mifflin Co. .................................. 1,000 42,187
Pulitzer, Inc. ........................................ 1,000 40,312
R. H. Donnelley Corp. (a) ............................. 1,300 24,538
----------
134,112
----------
REAL ESTATE--1.0%
FelCor Lodging Trust, Inc. ............................ 1,600 28,000
----------
RETAIL--5.8%
Borders Group, Inc. (a) ............................... 3,200 51,400
CompUSA, Inc. (a) ..................................... 2,600 13,325
Great Atlantic & Pacific Tea Company,
Inc ................................................. 1,400 39,025
Pier 1 Imports, Inc. .................................. 2,500 15,937
The Men's Wearhouse, Inc. (a) ......................... 600 17,625
The Wet Seal, Inc. Class A (a) ........................ 1,600 19,600
----------
156,912
----------
TELECOMMUNICATIONS EQUIPMENT--1.4%
Allen Telecom, Inc. (a) ............................... 3,200 37,000
----------
TRANSPORTATION--1.4%
CNF Transportation, Inc. .............................. 1,100 37,950
----------
UTILITIES--1.1%
Avista Corp. .......................................... 1,900 29,331
----------
TOTAL COMMON STOCKS
(Identified cost $2,373,521) .......................... 2,425,904
----------
PRINCIPAL
AMOUNT
(000)
---------
REPURCHASE AGREEMENT--6.8%
State Street Bank and Trust Company,
3.00%, 01/03/00, (Dated 12/31/99,
collateralized by $160,000 United
States Treasury Note, 11.875%,
11/15/03, with a value of $191,200)
(Identified cost $185,000) .......................... $ 185 185,000
----------
TOTAL INVESTMENTS
(Identified cost $2,558,521) (b) ...................... 96.4% $2,610,904
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ...................................... 3.6 97,835
-------- ----------
NET ASSETS ............................................. 100.0% $2,708,739
======== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
COMMON STOCKS--89.4%
AUSTRALIA--1.7%
Broken Hill Proprietary Company, Ltd. ................. 8,330 $ 109,378
----------
DENMARK--1.5%
Tele Danmark A/S ...................................... 1,290 95,848
----------
FINLAND--1.3%
MeritaNordbanken OYJ .................................. 2,900 17,090
UPM-Kymmene OYJ ....................................... 1,650 66,485
----------
TOTAL FINLAND ......................................... 83,575
----------
FRANCE--12.5%
Alcatel ............................................... 650 149,289
Aventis SA ............................................ 1,940 112,761
Axa ................................................... 600 83,650
Banque Nationale de Paris ............................. 1,025 94,580
Compagnie de Saint Gobain ............................. 350 65,825
Compagnie Generale des
Etablissements Michelin, Class B .................... 735 28,876
Suez Lyonnaise des Eaux SA ............................ 350 56,094
Total Fina SA, Class B ................................ 843 112,519
Vivendi ............................................... 970 87,600
----------
TOTAL FRANCE .......................................... 791,194
----------
GERMANY--9.7%
Allianz AG ............................................ 233 78,276
Aventis SA (a) ........................................ 581 33,734
Celanese AG (a) ....................................... 7 128
DaimlerChrysler AG .................................... 925 71,935
Deutsche Lufthansa AG ................................. 3,020 70,275
Deutsche Telekom AG ................................... 580 41,307
Metro AG .............................................. 1,293 69,554
Siemens AG ............................................ 1,005 127,864
Thyssen Krupp AG (a) .................................. 1,850 56,374
Veba AG ............................................... 1,225 59,541
----------
TOTAL GERMANY ......................................... 608,988
----------
HONG KONG--1.5%
HSBC Holdings PLC ADR ................................. 1,300 92,787
----------
ITALY--2.3%
ENI SpA (a) ........................................... 10,150 55,826
San Paolo-IMI-SpA ..................................... 3,850 52,318
Telecom Italia SpA .................................... 5,610 34,190
----------
TOTAL ITALY ........................................... 142,334
----------
JAPAN--23.5%
Asahi Breweries, Ltd. ................................. 5,000 54,713
Canon, Inc. ADR ....................................... 2,910 118,037
Fuji Bank, Ltd. ....................................... 6,000 58,315
Industrial Bank of Japan, Ltd. ........................ 7,000 67,486
Japan Tobacco, Inc. ................................... 6 45,923
Kao Corp. ADR ......................................... 270 76,894
Nintendo Company, Ltd. ADR ............................ 2,600 53,439
Nippon Telegraph & Telephone
Corp. ADR ........................................... 1,005 86,556
Nissan Motor Company, Ltd. (a) ........................ 15,000 59,019
NTT Mobile Communications
Network, Inc. ....................................... 5 192,326
Orix Corp. ............................................ 700 157,717
Promise Company, Ltd. ................................. 700 35,627
Sankyo Company, Ltd. .................................. 2,000 41,108
Sony Corp. ADR ........................................ 805 229,224
Sumitomo Trust & Banking
Company, Ltd. ....................................... 12,000 81,041
TDK Corp. ADR ......................................... 930 125,841
----------
TOTAL JAPAN ........................................... 1,483,266
----------
NETHERLANDS--3.8%
Heineken NV ........................................... 1,395 68,042
ING Groep NV .......................................... 1,480 89,363
Philips Electronics NV ................................ 590 80,236
----------
TOTAL NETHERLANDS ..................................... 237,641
----------
PORTUGAL--1.0%
Portugal Telecom SA ................................... 5,600 61,432
----------
SINGAPORE--2.2%
Oversea-Chinese Banking
Corporation, Ltd. ................................... 8,050 73,951
United Overseas Bank, Ltd. ADR ........................ 3,812 67,271
----------
TOTAL SINGAPORE ....................................... 141,222
----------
SPAIN--4.2%
Endesa SA ............................................. 3,995 79,320
Telefonica SA ......................................... 7,362 183,920
----------
TOTAL SPAIN ........................................... 263,240
----------
SWEDEN--2.7%
Electrolux AB, Series B ............................... 3,005 75,575
Nordbanken Holding AB ................................. 3,870 22,741
Svenska Handelsbanken AB, Series A .................... 4,180 52,563
Volvo AB, Series B .................................... 835 21,589
----------
TOTAL SWEDEN .......................................... 172,468
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
(CONTINUED)
SWITZERLAND--3.5%
ABB Ltd. (a) .......................................... 730 $ 89,284
Roche Holding AG ADR .................................. 634 74,857
Zurich Allied AG ...................................... 96 54,744
----------
TOTAL SWITZERLAND ..................................... 218,885
----------
UNITED KINGDOM--18.0%
Allied Zurich PLC ..................................... 3,355 39,561
AstraZeneca Group PLC ................................. 1,902 79,019
BP Amoco PLC .......................................... 8,340 84,187
British Aerospace PLC ................................. 11,600 76,261
British American Tobacco PLC .......................... 7,180 40,592
British Energy PLC .................................... 5,886 33,823
Cadbury Schweppes PLC ................................. 6,690 40,308
Diageo PLC ............................................ 6,875 54,860
GKN PLC ............................................... 1,805 29,564
Granada Group PLC ..................................... 8,670 87,529
Great Universal Stores PLC ............................ 6,495 37,769
Halifax Group PLC ..................................... 5,510 60,166
Imperial Chemical Industries PLC ...................... 5,950 62,856
Invensys PLC .......................................... 10,190 53,875
National Westminster Bank PLC ......................... 2,655 57,039
Prudential PLC ........................................ 3,320 64,783
Reed International PLC ................................ 8,535 64,108
Royal & Sun Alliance Insurance
Group PLC ........................................... 7,668 57,472
SmithKline Beecham PLC ................................ 3,020 38,294
Tesco PLC ............................................. 9,270 28,151
Unilever PLC .......................................... 6,104 44,862
----------
TOTAL UNITED KINGDOM .................................. 1,135,079
----------
TOTAL COMMON STOCKS
(Identified cost $5,190,714) .......................... 5,637,337
----------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT--15.1%
State Street Bank and Trust Company,
3.00%, 01/03/00, (Dated 12/31/99,
collateralized by $965,000 United
States Treasury Note, 6.250%,
05/31/00, with a value of $972,238)
(Identified cost $953,000) .......................... $ 953 $ 953,000
----------
TOTAL INVESTMENTS
(Identified cost $6,143,714) (b) ...................... 104.5% $6,590,337
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ........................................ (4.5) (282,609)
-------- ----------
NET ASSETS ............................................. 100.0% $6,307,728
======== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
COMMON STOCKS--76.2%
ARGENTINA--1.1%
Quilmes Industrial Quinsasa SA ADR .................... 4,300 $ 51,331
----------
BRAZIL--4.9%
Companhia Cervejaria Brahma ADR ....................... 5,300 74,200
Companhia Energetica de Minas
Gerais ADR .......................................... 1,797 40,579
Embratel Participacoes SA ADR ......................... 1,900 51,775
Souza Cruz SA ......................................... 7,500 55,466
----------
TOTAL BRAZIL .......................................... 222,020
----------
CHILE--2.6%
AFP Provida SA ADR .................................... 3,100 66,650
Quinenco SA ADR ....................................... 3,860 42,942
Santa Isabel SA ADR ................................... 850 8,288
----------
TOTAL CHILE ........................................... 117,880
----------
CROATIA--0.1%
Pliva d.d. GDR (c) .................................... 400 5,324
----------
GREECE--1.2%
Hellenic Telecommunications
Organization SA ADR ................................. 3,000 35,812
Hellenic Telecommunications
Organization SA ..................................... 833 19,726
----------
TOTAL GREECE .......................................... 55,538
----------
HONG KONG--3.9%
China Telecom (Hong Kong), Ltd.
ADR (a) ............................................. 620 79,709
Guangshen Railway, Ltd. ADR ........................... 2,500 13,906
Jiangsu Expressway Company, Ltd. ...................... 86,000 14,050
Shenzhen Expressway Co. ............................... 84,000 13,292
Yue Yuen Industrial Holdings .......................... 24,000 57,117
----------
TOTAL HONG KONG ....................................... 178,074
----------
HUNGARY--2.0%
Magyar Olaj-es Gazipari RT ............................ 2,000 41,574
Magyar Tavkozlesi RT. ADR ............................. 1,340 48,240
----------
TOTAL HUNGARY ......................................... 89,814
----------
INDIA--6.4%
Hindalco Industries, Ltd. GDR ......................... 3,700 86,025
Larsen & Toubro, Ltd. GDR (c) ......................... 2,200 72,600
Mahanagar Telephone Nigam, Ltd.
GDR (c) ............................................. 6,200 70,370
State Bank of India GDR (c) ........................... 5,200 61,880
----------
TOTAL INDIA ........................................... 290,875
----------
INDONESIA--1.9%
Gulf Indonesia Resources, Ltd. (a) .................... 2,300 18,687
PT Hanjaya Mandala Sampoerna
Tbk (a) ............................................. 14,500 36,886
PT Indah Kiat Pulp & Paper Corp. (a) .................. 78,000 30,698
----------
TOTAL INDONESIA ....................................... 86,271
----------
ISRAEL--4.1%
Bank Hapoalim ......................................... 13,600 42,359
ECI Telecom, Ltd. ADR ................................. 2,100 66,412
Partner Communications Company,
Ltd., ADR (a) ....................................... 2,100 54,338
Supersol, Ltd. ADR .................................... 1,520 25,840
----------
TOTAL ISRAEL .......................................... 188,949
----------
MALAYSIA--0.8%
Jaya Tiasa Holdings Berhad ............................ 21,000 38,408
----------
MEXICO--16.9%
Carso Global Telecom (a) .............................. 8,800 82,660
Cemex SA de CV, ADR Warrants
12/13/02 (a) ........................................ 187 771
Cemex SA de CV ADR (a) ................................ 3,002 83,681
Fomento Economico Mexicano SA
de CV ADR ........................................... 1,600 71,200
Grupo Financiero Banamex Accival
SA de CV (a) ........................................ 30,500 122,322
Grupo Financiero Banorte SA de
CV (a) .............................................. 18,000 27,166
Grupo Industrial Maseca SA de
CV ADR .............................................. 5,800 42,050
Grupo Iusacell SA de CV ADR (a) ....................... 3,100 46,306
Grupo Televisa SA (a) ................................. 1,640 111,930
Kimberly-Clark de Mexico SA de CV ..................... 6,800 26,554
Panamerican Beverages, Inc., Class A .................. 1,745 35,882
Pepsi-Gemex SA de CV GDR (a) .......................... 4,800 30,900
Telefonos de Mexico SA ADR ............................ 370 41,625
Tubos de Acero de Mexico SA ADR ....................... 3,700 50,181
----------
TOTAL MEXICO .......................................... 773,228
----------
PERU--1.1%
Credicorp, Ltd. ....................................... 1,600 19,200
Telefonica del Peru SAA ADR ........................... 2,420 32,368
----------
TOTAL PERU ............................................ 51,568
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
(CONTINUED)
PHILIPPINES--3.1%
Benpres Holdings Corp. (a) ............................ 321,000 $ 48,588
Manila Electric Co. ................................... 8,700 24,826
Philippine Long Distance Telephone
Co. ADR ............................................. 2,570 66,499
----------
TOTAL PHILIPPINES ..................................... 139,913
----------
POLAND--0.9%
Bank Handlowy W. Warszawie
GDR (c) ............................................. 2,600 39,000
----------
SOUTH AFRICA--8.3%
ABSA Group, Ltd. ...................................... 9,800 43,945
Impala Platinum Holdings, Ltd. ........................ 1,600 64,728
Liberty Life Association of Africa, Ltd. .............. 2,100 24,224
Naspers, Ltd. ......................................... 4,400 41,462
Old Mutual PLC (a) .................................... 14,200 38,764
Sanlam, Ltd. .......................................... 32,100 44,851
Sasol, Ltd. ........................................... 5,000 42,161
South African Breweries PLC (U.K.) .................... 2,500 25,239
South African Breweries PLC ........................... 5,100 51,870
----------
TOTAL SOUTH AFRICA .................................... 377,244
----------
SOUTH KOREA--14.3%
Hanvit Bank GDR (a), (c) .............................. 3,900 24,960
Hyundai Electronics Industries Co. (a) ................ 400 8,490
Kookmin Bank .......................................... 3,390 53,141
Korea Electric Power Corp. ............................ 2,200 68,199
Korea Telecom Corp., ADR .............................. 700 52,325
Pohang Iron & Steel Company, Ltd. ..................... 200 23,338
Pohang Iron & Steel Company, Ltd.
ADR ................................................. 1,000 35,000
Samsung Electronics Co. GDR (c) ....................... 1,496 181,390
SK Telecom Company, Ltd. ADR .......................... 5,361 205,734
----------
TOTAL SOUTH KOREA ..................................... 652,577
----------
TAIWAN--0.7%
China Steel Corp. GDR ................................. 2,100 30,660
----------
THAILAND--0.4%
Bangkok Expressway Public
Company, Ltd. (a) ................................... 42,000 20,072
----------
TURKEY--0.7%
Yapi ve Kredi Bankasi AS .............................. 1,021,000 31,530
----------
VENEZUELA--0.8%
Compania Anonima Nacional
Telefonos de Venezuela ADR .......................... 900 22,162
Mavesa SA ADR ......................................... 5,100 15,619
----------
TOTAL VENEZUELA ....................................... 37,781
----------
TOTAL COMMON STOCKS
(Identified cost $2,835,769) .......................... 3,478,057
----------
PREFERRED STOCKS--9.6%
BRAZIL--9.2%
Banco Itau SA ......................................... 1,041,000 89,319
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar ADR ............................. 2,580 83,366
Companhia Paranaense de
Energia-Copel ADR ................................... 6,100 56,806
Companhia Riograndense Telecom ........................ 92,100 28,550
Tele Norte Leste Participacoes SA ADR ................. 3,000 76,500
Tele Sudeste Celular Participacoes
SA ADR .............................................. 1,400 54,338
Telesp Participacoes SA ADR ........................... 1,327,315 31,227
----------
TOTAL BRAZIL .......................................... 420,106
----------
COLOMBIA--0.4%
Banco Ganadero SA ADR ................................. 2,550 20,081
----------
TOTAL PREFERRED STOCKS
(Identified cost $360,907) ............................ 440,187
----------
PRINCIPAL
AMOUNT
(000)
---------
REPURCHASE AGREEMENT--12.7%
State Street Bank and Trust Company,
3.00%, 01/03/00, (Dated 12/31/99,
collateralized by $590,000 United
States Treasury Note, 5.625%,
04/30/00, with a value of $595,163)
(Identified cost $580,000) .......................... $ 580 580,000
----------
TOTAL INVESTMENTS
(Identified cost $3,776,676) (b) ...................... 98.5% $4,498,244
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ...................................... 1.5 69,257
-------- ----------
NET ASSETS ............................................. 100.0% $4,567,501
======== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
(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 $2,461,434 $466,858 $120,581 $346,277
Retirement Small Cap 2,558,339 238,475 185,910 52,565
Retirement International Equity 6,207,087 541,190 157,940 383,250
Retirement Emerging Markets 3,783,688 867,772 153,216 714,556
</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 December 31, 1999, these securities
amounted to $455,524 or 10.0% of the 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)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
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% --%
Automotive ............................. 3.3 --
Banking & Financial Services ........... 18.0 14.0
Brewery ................................ 2.0 4.4
Broadcasting ........................... -- 2.5
Chemicals & Plastics ................... 1.0 --
Commercial Services .................... 1.4 --
Conglomerates .......................... -- 4.6
Construction & Materials ............... 1.0 2.7
Consumer Goods ......................... 0.7 --
Cosmetics & Toiletries ................. 1.2 --
Drugs & Health Care .................... 6.0 0.1
Electrical Equipment ................... 9.9 --
Electronics ............................ 1.3 4.2
Food & Beverages ....................... 2.0 4.5
Forest Products ........................ 1.1 --
Household Products ..................... 1.2 --
Industrial Construction ................ -- 1.0
Insurance .............................. 6.0 2.4
Leisure/Entertainment .................. 1.4 --
Manufacturing .......................... 5.2 --
Metals ................................. -- 3.3
Oil & Gas .............................. 4.0 2.2
Paper Products ......................... -- 1.3
Petroleum Equipment & Services ......... 1.7 --
Printing ............................... -- 0.9
Publishing ............................. 1.0 --
Railroad ............................... -- 0.3
Repurchase Agreement ................... 15.1 12.7
Retail ................................. 1.7 3.6
Steel .................................. -- 3.0
Telecommunications ..................... 11.0 19.6
Telecommunications Equipment ........... -- 1.5
Telephone .............................. -- 3.5
Tobacco ................................ 1.4 2.0
Toys & Amusement ....................... 0.9 --
Transportation-Air ..................... 1.1 --
Utilities .............................. 2.7 4.2
----- ----
Total Investments ...................... 104.5% 98.5%
===== ====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<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 $2,456,344,
$2,373,521, $5,190,714, and $3,196,676 respectively)............. $2,807,711 $ 2,425,904 $5,637,337 $ 3,918,244
Repurchase Agreements, at value .................................. -- 185,000 953,000 580,000
Cash ............................................................. 10,559 903 689 124
Foreign currency (cost $0, $0, $40,320, and $213,
respectively) ................................................... -- -- 40,516 213
Receivables for:
Dividends and interest .......................................... 4,159 1,563 2,066 7,621
Capital stock sold .............................................. -- 40,855 70,284 --
Due from Manager ................................................. 45,451 57,681 87,067 75,205
Deferred organizational costs .................................... 10,142 9,309 12,885 9,309
---------- ----------- ---------- ------------
Total assets ..................................................... 2,878,022 2,721,215 6,803,844 4,590,716
---------- ----------- ---------- ------------
LIABILITIES
Payables for:
Investments purchased ........................................... -- -- 466,481 --
Capital stock repurchased ....................................... 32,778 -- 818 139
Accrued directors' fees payable .................................. 3,665 3,665 3,665 3,665
Accrued distribution fees payable ................................ 555 482 900 786
Other accrued expenses and payables .............................. 5,759 8,329 24,252 18,625
---------- ----------- ---------- ------------
Total liabilities ................................................ 42,757 12,476 496,116 23,215
---------- ----------- ---------- ------------
Net assets ....................................................... 2,835,265 2,708,739 6,307,728 4,567,501
========== =========== ========== ============
NET ASSETS
Paid in capital .................................................. 2,513,865 2,695,341 5,845,483 3,826,750
Undistributed (distributions in excess of)
investment income-net ........................................... -- 374 (14,069) (3,500)
Unrealized appreciation (depreciation) on:
Investments-net ................................................. 351,367 52,383 446,623 721,568
Foreign currency-net ............................................ -- -- 728 32
Accumulated realized gain (loss)-net ............................. (29,967) (39,359) 28,963 22,651
---------- ----------- ---------- ------------
Net assets ....................................................... $2,835,265 $ 2,708,739 $6,307,728 $ 4,567,501
========== =========== ========== ============
Shares of capital stock outstanding* ............................. 245,950 275,707 467,494 414,824
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ......... $ 11.53 $ 9.82 $ 13.49 $ 11.01
</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 YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<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 ........................................ $ 191 $6,358 $ 7,122 $1,854
Dividends ....................................... 48,699 24,913 21,372 36,378
--------- --------- ---------- ---------------
Total investment income* ......................... 48,890 31,271 28,494 38,232
--------- --------- ---------- ---------------
EXPENSES:
Management fees ................................. 20,979 15,911 9,907 18,802
Administration fees ............................. 38,059 37,924 37,765 37,876
Distribution fees ............................... 6,993 5,304 3,302 4,701
Custodian fees .................................. 8,310 19,716 50,886 43,532
Professional services ........................... 32,867 30,378 27,365 29,265
Registration fees ............................... 53 423 1,399 1,037
Shareholders' services .......................... 12,713 13,160 12,362 13,006
Directors' fees and expenses .................... 12,285 12,285 12,285 12,285
Shareholders' reports ........................... 20,973 15,954 10,647 14,827
Amortization of organizational expenses ......... 3,562 3,300 4,522 3,300
Other ........................................... 778 832 531 1,778
--------- --------- ---------- ---------------
Total expenses before fees waived and expenses
reimbursed ...................................... 157,572 155,187 170,971 180,409
Management fees waived and expenses
reimbursed ...................................... (81,834) (88,996) (114,835) (109,411)
Administration fees waived ...................... (37,500) (37,500) (37,500) (37,500)
Expense reductions .............................. (1,114) (787) (1,339) (2,571)
--------- --------- ---------- ---------------
Expenses-net .................................... 37,124 27,904 17,297 30,927
--------- --------- ---------- ---------------
INVESTMENT INCOME--NET ........................... 11,766 3,367 11,197 7,305
--------- --------- ---------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY--NET
Realized gain (loss) on:
Investments--net ............................... 63,497 57,830 54,483 87,094
Foreign currency--net .......................... -- -- (1,251) (4,088)
Change in net unrealized appreciation
(depreciation) on:
Investments--net ............................... 133,198 30,863 399,570 1,046,285
Foreign currency--net .......................... -- -- 729 49
--------- --------- ---------- ---------------
Realized and unrealized gain (loss) on invest-
ments and foreign currency--net ................. 196,695 88,693 453,531 1,129,340
--------- --------- ---------- ---------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $ 208,461 $ 92,060 $ 464,728 $ 1,136,645
========= ========= ========== ===============
*Net of foreign withholding taxes of: ............ $ 1,340 $ -- $ 2,220 $ 3,077
========= ========= ========== ===============
</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
-----------------------------------
PERIOD ENDED
YEAR ENDED DECEMBER 31,
DECEMBER 31, 1999 1998**
------------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ................................................... $ 11,766 $ 3,231
Realized gain (loss) on investments and foreign currency--net ................... 63,497 (2,724)
Change in unrealized appreciation (depreciation)--net ........................... 133,198 218,169
---------- ----------
Net increase (decrease) in net assets resulting from operations .................. 208,461 218,676
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ..................................................... (11,766) (3,231)
From realized gains--net ........................................................ (68,216) --
In excess of investment income--net ............................................. (3,863) (2,008)
In excess of realized gains--net ................................................ (17,679) (3,082)
---------- ----------
Net decrease in net assets resulting from distributions .......................... (101,524) (8,321)
---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ......................................................... 951,097 2,442,944
Net proceeds from reinvestment of distributions ................................. 101,522 8,321
Cost of shares redeemed ......................................................... (837,312) (148,599)
---------- ----------
Net increase (decrease) in net assets from capital stock transactions ............ 215,307 2,302,666
---------- ----------
Total increase (decrease) in net assets .......................................... 322,244 2,513,021
Net assets at beginning of period ................................................ 2,513,021 --
---------- ----------
Net assets at end of period* ..................................................... $2,835,265 $2,513,021
========== ==========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ....................................... 227,507 --
---------- ----------
Shares sold ..................................................................... 81,270 242,014
Shares issued to shareholders from reinvestment of distributions ................ 8,995 776
Shares repurchased .............................................................. (71,822) (15,283)
---------- ----------
Net increase (decrease) ......................................................... 18,443 227,507
---------- ----------
Shares outstanding at end of period ............................................. 245,950 227,507
========== ==========
*Includes undistributed (distributions in excess of) investment income--net ..... $ -- $ --
========== ==========
</TABLE>
**Portfolio commenced operations on March 18, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT SMALL CAP PORTFOLIO
----------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ................................................... $ 3,367 $ (1,783)
Realized gain (loss) on investments and foreign currency--net ................... 57,830 (55,446)
Change in unrealized appreciation (depreciation)--net ........................... 30,863 30,724
------------ ----------
Net increase (decrease) in net assets resulting from operations .................. 92,060 (26,505)
------------ ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ..................................................... (3,367) (270)
From realized gains--net ........................................................ (42,556) --
In excess of investment income--net ............................................. (585) (247)
In excess of realized gains--net ................................................ -- --
------------ ----------
Net decrease in net assets resulting from distributions .......................... (46,508) (517)
------------ ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ......................................................... 1,969,581 1,618,594
Net proceeds from reinvestment of distributions ................................. 46,507 517
Cost of shares redeemed ......................................................... (1,057,288) (479,176)
------------ ----------
Net increase (decrease) in net assets from capital stock transactions ............ 958,800 1,139,935
------------ ----------
Total increase (decrease) in net assets .......................................... 1,004,352 1,112,913
Net assets at beginning of period ................................................ 1,704,387 591,474
------------ ----------
Net assets at end of period* ..................................................... $ 2,708,739 $1,704,387
============ ==========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ....................................... 179,072 60,099
------------ ----------
Shares sold ..................................................................... 201,446 172,507
Shares issued to shareholders from reinvestment of distributions ................ 4,958 56
Shares repurchased .............................................................. (109,769) (53,590)
------------ ----------
Net increase (decrease) ......................................................... 96,635 118,973
------------ ----------
Shares outstanding at end of period ............................................. 275,707 179,072
============ ==========
*Includes undistributed (distributions in excess of) investment income--net ..... $ 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)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT INTERNATIONAL EQUITY
PORTFOLIO
------------------------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998**
------------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ................................................... $ 11,197 $ (625)
Realized gain (loss) on investments and foreign currency--net ................... 53,232 (3,290)
Change in unrealized appreciation (depreciation)--net ........................... 400,299 47,052
---------- --------
Net increase (decrease) in net assets resulting from operations .................. 464,728 43,137
---------- --------
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 ......................................................... 5,417,457 469,985
Net proceeds from reinvestment of distributions ................................. 50,185 --
Cost of shares redeemed ......................................................... (87,052) (526)
---------- --------
Net increase (decrease) in net assets from capital stock transactions ............ 5,380,590 469,459
---------- --------
Total increase (decrease) in net assets .......................................... 5,795,132 512,596
Net assets at beginning of period ................................................ 512,596 --
---------- --------
Net assets at end of period* ..................................................... $6,307,728 $512,596
========== ========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ....................................... 45,638 --
---------- --------
Shares sold ..................................................................... 425,219 45,686
Shares issued to shareholders from reinvestment of distributions ................ 3,863 --
Shares repurchased .............................................................. (7,226) (48)
---------- --------
Net increase (decrease) ......................................................... 421,856 45,638
---------- --------
Shares outstanding at end of period ............................................. 467,494 45,638
========== ========
*Includes undistributed (distributions in excess of) investment income--net ..... $ (14,069) $ (1,825)
========== ========
**Portfolio commenced operations on September 1, 1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD RETIREMENT EMERGING MARKETS
PORTFOLIO
----------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ................................................... $ 7,305 $ 10,479
Realized gain (loss) on investments and foreign currency--net ................... 83,006 (66,175)
Change in unrealized appreciation (depreciation)--net ........................... 1,046,334 (249,436)
---------- ----------
Net increase (decrease) in net assets resulting from operations .................. 1,136,645 (305,132)
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ..................................................... (8,982) (10,051)
In excess of investment income--net ............................................. (432) --
---------- ----------
Net decrease in net assets resulting from distributions .......................... (9,414) (10,051)
---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ......................................................... 2,442,484 242,183
Net proceeds from reinvestment of distributions ................................. 9,413 10,051
Cost of shares redeemed ......................................................... (260,995) (116,698)
---------- ----------
Net increase (decrease) in net assets from capital stock transactions ............ 2,190,902 135,536
---------- ----------
Total increase (decrease) in net assets .......................................... 3,318,133 (179,647)
Net assets at beginning of period ................................................ 1,249,368 1,429,015
---------- ----------
Net assets at end of period* ..................................................... $4,567,501 $1,249,368
========== ==========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ....................................... 172,204 150,628
---------- ----------
Shares sold ..................................................................... 269,490 32,741
Shares issued to shareholders from reinvestment of distributions ................ 911 1,440
Shares repurchased .............................................................. (27,781) (12,605)
---------- ----------
Net increase (decrease) ......................................................... 242,620 21,576
---------- ----------
Shares outstanding at end of period ............................................. 414,824 172,204
========== ==========
*Includes undistributed (distributions in excess of) investment income--net ..... $ (3,500) $ 654
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EQUITY PORTFOLIO
FOR THE PERIOD
YEAR ENDED 3/18/98* TO
12/31/1999 12/31/1998
---------- --------------
Net asset value, beginning of period ............. $ 11.05 $ 10.00
------- -------
Income (loss) from investment operations:
Net investment income (loss) .................... 0.06 0.02
Net realized and unrealized gain (loss) ......... 0.83 1.06
------- -------
Total from investment operations ................ 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 ................... $ 11.53 $ 11.05
======= =======
TOTAL RETURN (A) ................................. 8.2 % 10.9 %
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, end of period (in thousands) ......... $ 2,835 $ 2,513
Ratios to average net assets:
Net expenses (b) ................................ 1.33% 1.50%
Gross expenses (b) .............................. 5.63% 21.32%
Net investment income (b) ....................... 0.42% 0.53%
Portfolio turnover rate .......................... 35% 40%
LAZARD RETIREMENT SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
----------------------------- 11/4/97* TO
12/31/1999 12/31/1998 12/31/1997
------------ -------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period ............. $ 9.52 $ 9.84 $ 10.00
------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) .................... 0.02 -- 0.02
Net realized and unrealized gain (loss) ......... 0.46 (0.32) (0.16)
------- -------- --------
Total from investment operations ................ 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 ................... $ 9.82 $ 9.52 $ 9.84
======= ======== ========
TOTAL RETURN (A) ................................. 5.1% (3.2)% (1.4)%
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, end of period (in thousands) ......... $ 2,709 $ 1,704 $ 591
Ratios to average net assets:
Net expenses (b) ................................ 1.32% 1.50% 1.50%
Gross expenses (b) .............................. 7.31% 16.20% 52.55%
Net investment income (b) ....................... 0.16% (0.18)% 0.71%
Portfolio turnover rate .......................... 73% 61% 0%
SEE NOTES TO FINANCIAL HIGHLIGHTS.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
FOR THE PERIOD
YEAR ENDED 9/1/98* TO
12/31/1999 12/31/1998
---------- --------------
Net asset value, beginning of period ............. $ 11.23 $ 10.00
------- -------
Income (loss) from investment operations:
Net investment income (loss) .................... 0.08 (0.04)
Net realized and unrealized gain (loss) ......... 2.32 1.27
------- -------
Total from investment operations ................ 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 ................... $ 13.49 $ 11.23
======= =======
TOTAL RETURN (A) ................................. 21.4% 12.3%
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, end of period (in thousands) ......... $ 6,308 $ 513
Ratios to average net assets:
Net expenses (b) ................................ 1.31% 1.60%
Gross expenses (b) .............................. 12.94% 48.67%
Net investment income (b) ....................... 0.85% (0.58)%
Portfolio turnover rate .......................... 22% 7%
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
--------------------------- 11/4/97* TO
12/31/1999 12/31/1998 12/31/1997
------------ ------------ ---------------
<S> <C> <C> <C>
Net asset value, beginning of period ............. $ 7.26 $ 9.49 $ 10.00
------- ------- -------
Income (loss) from investment operations:
Net investment income (loss) .................... 0.02 0.06 0.04
Net realized and unrealized gain (loss) ......... 3.76 (2.23) (0.51)
------- ------- --------
Total from investment operations ................ 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 ................... $ 11.01 $ 7.26 $ 9.49
======= ======= ========
TOTAL RETURN (A) ................................. 52.1% (22.9)% (4.7)%
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, end of period (in thousands) ......... $ 4,568 $ 1,249 $ 1,429
Ratios to average net assets:
Net expenses (b) ................................ 1.64% 1.80% 1.80%
Gross expenses (b) .............................. 9.59% 14.37% 23.17%
Net investment income (b) ....................... 0.39% 0.83% 1.96%
Portfolio turnover rate .......................... 45% 44% 0%
SEE NOTES TO FINANCIAL HIGHLIGHTS.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
* Commencement of operations
(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
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION
Lazard Retirement Series, Inc. (the "Fund") was incorporated in Maryland on
February 13, 1997 and is registered under the Investment Company Act of 1940
(the "Act"), as amended, as a no-load, open-end management investment company.
The Fund is comprised of nine portfolios (each referred to as a "Portfolio"),
which are offered only to qualified pension and retirement plans and variable
annuity and variable life insurance separate accounts established by insurance
companies to fund variable annuity contracts and variable life insurance
policies. Currently, only the following four portfolios, each of which is
"non-diversified", as defined in the Act, are being offered: Lazard Retirement
Equity Portfolio ("Equity Portfolio"), Lazard Retirement Small Cap Portfolio
("Small Cap Portfolio"), Lazard Retirement International Equity Portfolio
("International Equity Portfolio") and Lazard Retirement Emerging Markets
Portfolio ("Emerging Markets Portfolio"). 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. The other five portfolios have issued
20,001 shares at $10 per share, but had not commenced operations at December
31, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
(A) VALUATION OF INVESTMENTS--Market values for equity securities listed on the
New York Stock Exchange ("NYSE"), other U.S. exchanges or NASDAQ are based on
the last quoted sales prices on the principal exchange on which the security is
traded as of the close of regular trading on the NYSE (normally 4:00 p.m.
Eastern Time) on each valuation date; securities not traded on the valuation
date are valued at the closing bid price. Any securities not listed, for which
current over-the-counter market quotations or bids are readily available, are
valued at the last quoted bid price or, if available, the mean of two such
prices. Securities listed on foreign exchanges are valued at the last quoted
sales price; securities not traded on the valuation date are valued at the
closing bid price.
Bonds and other fixed-income securities are valued on the basis of prices
provided by a pricing service which are based primarily on institutional size
trading in similar groups of securities, or using brokers' quotations.
Mortgage-backed securities issued by certain government-related organizations
are valued using pricing services or brokers' quotations based on a matrix
system which considers such factors as other security prices, yields and
maturities. Debt securities maturing in sixty days or less are valued at
amortized cost except where to do so would not accurately reflect their fair
value, in which case such securities are valued at fair value as determined in
good faith in accordance with procedures adopted by the Board of Directors.
Options on stocks and stock indices traded on national securities exchanges are
valued as of the close of options trading on such exchanges (which is currently
4:10 p.m. Eastern Time). Securities for which market quotations are not readily
available are valued at fair value as determined in good faith using methods
approved by the Board of Directors.
(B) PORTFOLIO SECURITY TRANSACTIONS AND INVESTMENT INCOME--Portfolio security
transactions are accounted for on trade date. Realized gains and losses on
sales of investments are recorded on a specific identification basis and
dividend income is recorded on the ex-dividend date. 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, including interest, of the repurchase transaction. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is marked-to-market on a daily basis to ensure the adequacy of
the collateral. In the event of default of the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to delay due to legal
proceedings and the Portfolio may suffer a loss.
(D) FOREIGN CURRENCY TRANSLATION AND FORWARD FOREIGN CURRENCY CONTRACTS--The
accounting records of the Portfolios are maintained in U.S. dollars. Portfolio
securities and other assets and liabilities denominated in foreign currencies
are translated into U.S. dollars at the prevailing rate of exchange at period
end. Purchases and sales of securities, income receipts and expense payments
are translated into U.S. dollars at the prevailing exchange rate on the
respective dates of transactions.
The Portfolios do not isolate the portion of operations resulting from changes
in foreign exchange rates on investments from the fluctuations arising from
changes in their market prices. Such fluctuations are included in net realized
and unrealized gain or loss from investments. Net realized exchange gains
(losses) from foreign currency
24
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
transactions represent net foreign exchange 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 exchange gains and losses arise from
changes in the value of assets and liabilities, other than investments in
securities, as a result of changes in exchange rates.
A forward foreign currency contract is an agreement between two parties to buy
or sell currency at a set price on a future date. International Equity
Portfolio and Emerging Markets Portfolio (the "Eligible Portfolios") may enter
into forward foreign currency contracts for risk management. Risk management
includes hedging strategies which serve to reduce an Eligible Portfolio's
exposure to foreign currency fluctuations. Such exposure may exist during the
period that a foreign denominated investment is held, or during the period
between the trade date and settlement date of an investment which is purchased
or sold. Upon entering into these contracts risks may arise from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of the foreign currency relative to the
U.S. dollar.
The U.S. dollar value of forward currency contracts is determined using forward
exchange rates provided by a quotation service. Daily fluctuations in the value
of such contracts are recorded as unrealized gains or losses. When the contract
is closed, the Portfolio records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the
time it was closed. Such gains and losses are disclosed in the realized or
unrealized gain (loss) on foreign currency in the accompanying Statements of
Operations.
(E) FEDERAL INCOME TAXES--The Fund's policy is to continue to have each
Portfolio qualify as a regulated investment company under the Internal Revenue
Code and to distribute all of its taxable income, including any realized net
capital gains to shareholders. Therefore, no federal income tax provision is
required.
Under current tax law, certain capital and net foreign currency losses realized
after October 31 within the taxable year may be deferred and treated as
occurring on the first day of the following tax year. For the tax period ended
December 31, 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.
As a result of these book/tax differences, the Portfolios made the following
reclassifications to the capital accounts for the year ended December 31, 1999:
INCREASE (DECREASE)
---------------------------------------------------
UNDISTRIBUTED
INVESTMENT ACCUMULATED
INCOME REALIZED GAIN
PORTFOLIO PAID IN CAPITAL (LOSS)-NET (LOSS)-NET
================== ----------------- -------------- --------------
Equity $ (2,155) $ 3,863 $(1,708)
Small Cap (1,631) 959 672
International
Equity (3,173) 1,922 1,251
Emerging Markets (1,851) (2,045) 3,896
(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.
25
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
(H) ALLOCATION OF EXPENSES--Expenses not directly chargeable to a specific
Portfolio are allocated primarily on the basis of relative net assets.
(I) EXPENSE REDUCTIONS--Portfolios leaving excess cash in demand deposit
accounts may receive credits which are available to offset custody expenses.
The Statements of Operations report gross custody expenses, and report the
amount of such credits separately as an expense reduction.
(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
ANNUAL OPERATING EXPENSES*
- ---------------------- ---------------------
Equity 1.25%
Small Cap 1.25
International Equity 1.25
Emerging Markets 1.60
* Effective May 1, 1999 annual operating expense limits were reduced as
follows: Equity Portfolio from 1.50% to 1.25%, Small Cap Portfolio from
1.50% to 1.25%, International Equity Portfolio from 1.60% to 1.25% and
Emerging Markets Portfolio from 1.80% to 1.60%.
For the year ended December 31, 1999, the Manager waived, in entirety, its
management fee, and, in addition, reimbursed expenses as follows:
REIMBURSED
PORTFOLIO WAIVED FEES EXPENSES
- --------- ----------- -----------
Equity $20,979 $60,855
Small Cap 15,911 73,085
International Equity 9,907 104,928
Emerging Markets 18,802 90,609
The Fund has entered into an administrative agreement with State Street Bank
and Trust Company ("State Street") to provide certain administrative services.
Each Portfolio will bear the cost of such expenses at the annual rate of
$37,500 plus 0.02% of average assets up to $1 billion and 0.01% of average
assets over $1 billion. State Street has agreed to waive the $37,500 fee for
the Equity Portfolio, Small Cap Portfolio, International Equity Portfolio and
Emerging Markets Portfolio until February 29, 2000 or until each Portfolio
reaches net assets of $50 million, whichever comes first.
The Fund has a distribution agreement with Lazard Freres & Co. LLC (the
"Distributor"). The Distributor acts as distributor for shares of each of the
Portfolios and bears the cost of printing and mailing prospectuses to potential
investors and of any advertising expenses incurred in connection with
distribution of shares.
The Distributor provides each Portfolio with distribution services pursuant to
a separate Distribution Plan (the "Plan") in accordance with Rule 12b-1 under
the Act. Under the Plan, the Distributor is entitled to distribution fees from
each Portfolio. The distribution fee is an asset-based fee to support
distribution efforts and/or servicing of accounts. Each Portfolio will pay a
monthly distribution fee at an annual rate of 0.25% of the average daily net
assets of each Portfolio for such services under the 12b-1 plan adopted by the
Fund. The distribution fee may be retained by the Distributor if a shareholder
invests directly through the Distributor. Usually the fees are paid to external
organizations, such as 401(k) alliance sponsors, 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 $20,000 per year, plus $1,000
per meeting attended for the Fund and The Lazard Funds, Inc., a related party,
and reimburses them for travel and out of pocket expenses.
Effective January 1, 2000, each Director who is not an employee or an
affiliated person of the Manager will be paid a quarterly fee of $7,500, plus
$2,500 per meeting
26
<PAGE>
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LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
attended for the Fund and The Lazard Funds, Inc. and will be reimbursed for
travel and other out of pocket expenses. In addition, the Chairman of the Audit
Committee for the Fund and The Lazard Funds, Inc. will also receive 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 year ended December 31, 1999 were as follows:
PORTFOLIO PURCHASES SALES
- ---------------------- ------------- ------------
Equity $1,112,394 $ 962,614
Small Cap 2,230,450 1,433,864
International Equity 5,025,917 302,350
Emerging Markets 2,495,884 779,721
For the year ended December 31, 1999, brokerage commissions were paid to Lazard
Freres & Co. LLC for portfolio transactions executed on behalf of the
Portfolios as follows:
COMMISSIONS
PORTFOLIO PAID
- ---------------------- ------------
Equity $1,822
Small Cap 213
International Equity 40
Emerging Markets 2
27
<PAGE>
================================================================================
LAZARD RETIREMENT SERIES, INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
Lazard Retirement Series, Inc.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Lazard Retirement Series, Inc.
[comprised of Lazard Retirement Equity Portfolio (commenced operations on March
18, 1998), Lazard Retirement Small Cap Portfolio, Lazard Retirement
International Equity Portfolio (commenced operations on September 1, 1998) and
Lazard Retirement Emerging Markets Portfolio] as of December 31, 1999 and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended or the
period from commencement of operations to December 31, 1999 and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights as stated
above, present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Lazard Retirement Series, Inc. as of
December 31, 1999, the results of their operations for the year then ended,
changes in their net assets for each of the two years in the period then ended
or the period from commencement of operations to December 31, 1999 and the
financial highlights for the periods presented in conformity with generally
accepted accounting principles.
ANCHIN, BLOCK & ANCHIN LLP
New York, New York
January 31, 2000
28
<PAGE>
LAZARD RETIREMENT SERIES, INC.
30 Rockefeller Plaza
New York, New York 10112
Telephone: (800) 887-4929
http://www.lazardfunds.com
INVESTMENT MANAGER
Lazard Asset Management
30 Rockefeller Plaza
New York, New York 10112
Telephone: (800) 887-4929
DISTRIBUTOR
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10112
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc.
P.O. Box 9363
Boston, Massachusetts 02205-9363
Telephone: (800) 986-3455
INDEPENDENT PUBLIC ACCOUNTANTS
Anchin, Block & Anchin LLP
1375 Broadway
New York, New York 10018
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.lazardfunds.com
This report is for the information of the stockholders of Lazard
Retirement Series, Inc. Its use in connection with any offering of the
Fund's shares is authorized only in the case of a concurrent or prior
delivery of the Fund's current prospectus.
