UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08071
LAZARD RETIREMENT SERIES, INC.
(Exact name of Registrant as specified in charter)
30 Rockefeller Plaza
New York, New York 10112
(Address of principal executive offices) (Zip code)
Nathan A. Paul, Esq.
30 Rockefeller Plaza
New York, New York 10112
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 632-6000
Date of fiscal year end: 12/31
Date of reporting period: 06/30/03
Item 1. Report to Shareholders
Lazard
Retirement Series
Semi-Annual
Report
JUNE 30, 2003
[LOGO] LAZARD
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LAZARD RETIREMENT SERIES, INC.
TABLE OF CONTENTS PAGE
Investment Overviews ..................................................... 2
Performance Overviews .................................................... 5
Portfolios of Investments
Lazard Retirement Equity Portfolio ................................... 9
Lazard Retirement Small Cap Portfolio ................................ 11
Lazard Retirement International Equity Portfolio ..................... 14
Lazard Retirement Emerging Markets Portfolio ......................... 16
Notes to Portfolios of Investments ....................................... 18
Statements of
Assets and Liabilities ............................................... 20
Operations ........................................................... 21
Changes in Net Assets ................................................ 22
Financial Highlights ..................................................... 24
Notes to Financial Statements ............................................ 26
Board of Directors and Officers Information .............................. 29
SHARES OF THE PORTFOLIOS ARE OFFERED ONLY TO SEPARATE ACCOUNTS ESTABLISHED BY
INSURANCE COMPANIES TO FUND VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE
INSURANCE POLICIES. PORTFOLIO SHARES MAY ALSO BE OFFERED TO CERTAIN QUALIFIED
PENSION AND RETIREMENT PLANS AND ACCOUNTS PERMITTING ACCUMULATION OF ASSETS ON A
TAX-DEFERRED BASIS.
THE VIEWS OF THE FUND'S MANAGEMENT AND THE PORTFOLIO HOLDINGS DESCRIBED IN THIS
REPORT ARE AS OF JUNE 30, 2003; THESE VIEWS AND PORTFOLIO HOLDINGS MAY HAVE
CHANGED SUBSEQUENT TO THIS DATE. INFORMATION PROVIDED IN THIS REPORT SHOULD NOT
BE CONSIDERED A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.
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LAZARD RETIREMENT SERIES, INC.
INVESTMENT OVERVIEWS
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A MESSAGE FROM LAZARD
We are pleased to bring you the following semi-annual report of the Fund for the
six-month period ended June 30, 2003.
Crosscurrents affected the global economy during the first half of 2003. The
capital markets moved lockstep in anticipation of stronger economic growth
beginning with the third quarter of 2003. This flow of investment capital, from
Treasuries to credit and, ultimately, to the equity markets occurred against a
backdrop of considerable uncertainty. Government bond yields fell, worldwide, as
deflation fears set in at the beginning of the year. In March, however, global
equity markets rose steadily as the uncertainty of a possible war in Iraq and
the SARS (Severe Acute Respiratory Syndrome) crisis subsided. Other signs of
optimism began to appear in the U.S. and in Europe, as the Federal Reserve cut
interest rates, the U.S. government reduced taxes and Germany promised income
tax reductions, providing support to the global economy while increasing
investor confidence in a late 2003 recovery. Stocks did well abroad, with many
countries outpacing gains in the United States. The euro continued to appreciate
against the U.S. dollar, enhancing the returns of U.S. dollar-based investors.
While the weakness in the euro following its early 1999 creation depressed
returns on non-U.S. investments, the rebound in the euro that began in early
2002 has augmented returns for the U.S. dollar-based investors. These positive
results, however, were tempered by the fact that much of the economic data
across the globe had not materially changed for the better. For example,
economic growth estimates for the U.S. and much of Europe remain flat throughout
the remaining two quarters of the year.
In this environment, long-term investors are understandably questioning the
direction of the capital markets, particularly whether the global market rally
that took place in the second quarter was the beginning of a full market
recovery. Evidence for this has yet to materialize. We need to see much stronger
earnings growth over the next few quarters and better valuations across the
board. Regardless of market trends, Lazard will remain focused on seeking
financially productive and inexpensively valued companies. We feel that the
current environment will likely result in unique buying opportunities for the
disciplined investor. In our view, building a portfolio of various asset and
investment classes and maintaining a long-term focus is the best path for
investors to take in reaching their investment goals.
As bottom-up stock pickers, we remain focused on stock selection and
fundamentals of the companies we follow, seeking to identify and take advantage
of pricing anomalies and discovering hidden opportunities to uncover value.
The following INVESTMENT OVERVIEWS are intended to provide you with mid-year
reviews about the current market environment and insights on the Portfolios and
their recent performance.
EQUITY MARKETS OVERVIEW
During the first six months of 2003, as U.S. and global stocks climbed, the S&P
500(R) Index returned 11.8% and stocks outside the U.S., measured by the
Morgan Stanley Capital International (MSCI(R)) World(R) Index, registered an
11.1% return.
The year began with a sharp, but short-lived, rally that quickly faded in the
face of a deteriorating economic outlook, uncertainty about the prospect of a
U.S.-led war against Iraq and the fear of SARS spreading from China to the rest
of the world. By early March, stocks had approached the lows of October 2002. It
was only in mid-March, when investors' fears subsided, that stocks began to
rebound sharply. The equity markets continued on an upward swing through May and
June, posting their best quarterly performance since the fourth quarter of 1999,
the lead up to the 2000 market peak.
The second quarter's rally was broad based, with all sectors seeing double-digit
gains. However, the more volatile, less profitable companies that had been
hardest hit by previous market weakness achieved the strongest gains within each
sector. Regionally, returns were fairly consistent, with Europe and Asia
generating mid-teens percentage gains in local currency terms; the gain in
European markets was, however, enhanced by the continued strength of the euro,
which continued to rise against the dollar during the first six months of the
year. Emerging markets were the true stars of the period, as markets in
Venezuela, Turkey, Russia and Indonesia all posted strong gains. Returns in
Asian
2
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LAZARD RETIREMENT SERIES, INC.
INVESTMENT OVERVIEWS (CONTINUED)
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markets varied from modest increases in Malaysia, Pakistan and Taiwan to
impressive returns in South Korea and Indonesia.
Global returns have been strengthening in reaction to attractive valuations, a
weaker dollar, and stimulative economic policy. While the more speculative
stocks that had been hardest hit during the extended market decline have
dominated the early stages of this rally, we expect the rally to broaden to
include more financially productive, relative value stocks. Hence, our belief
remains that investors should strongly maintain an allocation to different asset
classes and non-correlated investments in order to manage risk and achieve
consistency in returns.
At Lazard, we believe that bottom-up, value-driven investing leads to portfolios
that outperform in the long-term. In the second half of 2003, we will, as
always, focus on high-quality companies that we believe are capable of
generating strong returns for investors in a variety of economic environments.
LAZARD RETIREMENT EQUITY PORTFOLIO
For the six months ended June 30, 2003, Lazard Retirement Equity Portfolio
posted a total return of 9.30%, as compared with the 11.77% return of the S&P
500 Index.
In the first quarter, the Portfolio benefited from strong stock selection in
telecommunications, as our holdings (including Comcast and Verizon) defended
well despite the group's sharp decline. The Portfolio's relatively low weight in
the health care sector detracted from returns, as did stock performance in the
group. Eli Lilly, for example, lagged the group due to concerns over their
anti-psychotic drug ZYPREXA.
The second quarter, conversely, saw the Portfolio benefit from its underweight
position in health care, as well as from stock selection in consumer
discretionary. Target rallied strongly on expectations the economic rebound will
support consumer spending. The Portfolio was hurt in this quarter by stock
selection in technology and the utilities sector. In both cases, however, all of
our holdings contributed positively, but returns were hurt by not owning some of
the sectors' biggest movers. As sentiment improved, investors embraced risk and
sought out the most volatile and highly leveraged stocks.
LAZARD RETIREMENT SMALL CAP PORTFOLIO
Lazard Retirement Small Cap Portfolio posted a total return of 11.75%, as
compared with the 17.88% return of the Russell 2000(R) Index for the six
months ended June 30, 2003.
Stock selection in the technology sector helped performance during the first
quarter. Shares of Microsemi Corp. (which designs and manufactures
semiconductors) performed strongly, due to improved pricing and volumes in its
military/aero/satellite division. On the other hand, stock selection in finance
and in consumer staples detracted from performance. Shares of Investment
Technology Group were weak, as the company reported disappointing results in
January due to weak trading volume. Robert Mondavi holdings declined after the
company lowered full-year forecasts due to sluggish sales, which have suffered
because of cheaper imports and price cuts by competitors.
The Portfolio was helped by stock selection in the utilities sector in the
second quarter, where DQE's stock rose after the company announced significant
progress in resolving its dispute with the IRS. Stock selection in the consumer
discretionary and financials sectors hurt the Portfolio, however, as both
sectors saw the strongest rallies in lower-quality stocks. In the financial
sector, shares of W Holding declined after the company announced that
first-quarter earnings were reduced due to investment losses.
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
Lazard Retirement International Equity Portfolio posted a total return of 8.01%,
as compared with the 9.47% return of the MSCI Europe, Australasia and Far East
(EAFE(R)) Index for the six months ended June 30, 2003.
In the first quarter of 2003, the Portfolio benefited from strong stock
selection in the financial sector, particularly in Irish bank holdings (Allied
Irish and Bank of Ireland), which posted strong returns from their core
businesses and had little exposure to volatile capital markets. Strong stock
selection in the materials sector was driven by gains in CRH, the Irish building
materials company. Conversely, European energy stocks, such as Eni and Total,
underperformed during the quarter, on investor fears of a potential oil price
drop in the wake of the Iraq war.
3
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LAZARD RETIREMENT SERIES, INC.
INVESTMENT OVERVIEWS (CONCLUDED)
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The second quarter saw the energy stocks, especially Total, rebound, as the Iraq
situation abated; stock selection in consumer discretionary also helped, as
Nissan's shares rose to a 13-year high. Takeda Chemical lagged the gains of some
of its pharmaceutical peers due to concerns over the company's new-drug
pipeline. While all of the Portfolio's financial holdings contributed
positively, returns were hurt by not owning some of the sector's big movers.
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
Lazard Retirement Emerging Markets Portfolio posted a total return of 12.68%, as
compared with the 16.13% return of the MSCI Emerging Markets Free(R) (EMF)
Index for the six months ended June 30, 2003.
Emerging markets equities fell overall during the first quarter of 2003, with
Asian markets dropping most, Eastern European markets falling moderately, and
Latin American markets posting a very marginal rise. Investor concerns about
declining world economic growth, the conflict in Iraq, and the emergence of SARS
in Asia all acted to make the period highly volatile and unpredictable. By
country, the first quarter included few bright spots, with defaulted Argentina,
ironically, performing better than any other nation. By sector, health care,
utilities and energy outperformed the index over the quarter. Significant
underperformers in the Portfolio included telecom services, information
technology, and financials. We purchased some shares in Telkom South Africa, and
added to positions in Satyam and Wimm-Bill-Dann. We disposed of the Portfolio's
holding in Panamerican Beverages after Coca Cola Femsa bid for the entire
company.
Emerging markets equities recovered dramatically during the second quarter of
2003, helped by the rapid end to the war and the falling impact of SARS. Markets
in Asia and Latin America performed similarly to the index, while Eastern
European shares demonstrated even better performance. Particularly noteworthy
performance was experienced in Venezuela (where the equity market rose by almost
90%), Turkey, Russia and Indonesia (where share prices finished more than 40%
higher). Although all sectors posted positive performance, information
technology and telecommunications, two sectors that lagged considerably over the
past three years, managed to keep pace or actually better the index's return.
The Portfolio participated in several public offerings of Asian companies over
the quarter, including Indonesia's largest bank (Bank Mandiri) and Daewoo
Shipbuilding, in South Korea. We sold the Portfolio's position in Quanta
Computer, and trimmed holdings in Compal Electronics and Yue Yuen, all due to
higher valuations. Holdings in KT Corp. and Telefonos de Mexico were increased
due to their defensive natures.
- ----------
NOTES TO INVESTMENT OVERVIEWS:
All returns are for the period ended June 30, 2003 and assume reinvestment of
all dividends and distributions, if any. Certain expenses of the Portfolios have
been waived or reimbursed by the Fund's Investment Manager or Administrator;
without such waiver/reimbursement of expenses, the Portfolios' returns would
have been lower. Performance information does not reflect the fees and charges
imposed by participating insurance companies at the separate account level, and
such charges will have the effect of reducing performance.
The performance data of the indices and other market data 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,
have no fees or costs and are not available for investment.
Past performance is not indicative, nor a guarantee, of future results.
4
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LAZARD RETIREMENT SERIES, INC.
PERFORMANCE OVERVIEWS
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LAZARD RETIREMENT EQUITY PORTFOLIO
COMPARISON OF CHANGES IN VALUE OF $10,000 INVESTMENT IN LAZARD RETIREMENT EQUITY
PORTFOLIO AND S&P 500(R) INDEX*
[Table below represents a chart in the printed document.]
Retirement Equity
Portfolio S&P 500 Index
----------------- -------------
3-18-98 10000 10000
10230 10154.4
10309.8 10256.5
10250 10080.1
Jun-98 10409.9 10489.6
10199.6 10377.8
9029.72 8874.62
9299.71 9443.39
10219.5 10211.5
10599.6 10830.7
Dec-98 11088.7 11455
11319.3 11934.3
10978.6 11563.8
11390.3 12026.9
12022.5 12492.9
11962.4 12198.7
Jun-99 12403.4 12875.7
12121.9 12474
11820 12411.6
11197.1 12072.2
11720.3 12836.1
11780.6 13097
Dec-99 11993.8 13868.5
11494.4 13171.7
10651.9 12922.4
11858.2 14186.2
11858.2 13758.5
12045.5 13476.2
Jun-00 11931.1 13808.4
11702 13592.5
12183 14435.5
12006.3 13673.6
12308 13615.8
11735.7 12542.9
Dec-00 11982.2 12604.2
12605.2 13051.5
12135.1 11861.5
11535.6 11110.1
12134.5 11973.5
12440.7 12053.7
Jun-01 12017.7 11760.3
11865.1 11644.5
11301.5 10915.6
10173.6 10034.2
10385.2 10225.8
10995.9 11010.1
Dec-01 11088.2 11107
10981.4 10944.9
11016.6 10733.6
11276.6 11137.2
10791.7 10462.3
10827.7 10385.4
Jun-02 10177.6 9645.54
9444.84 8893.19
9463.73 8951.88
8506 7979.26
9263.03 8681.44
9712.29 9192.77
Dec-02 9286.89 8652.24
9062.15 8425.55
8931.65 8299.17
9002.21 8379.34
9641.37 9070.04
10067 9548.04
Jun-03 10149 9670
Retirement Equity Portfolio .......... $10,149
S&P 500 Index ........................ 9,670
AVERAGE ANNUAL TOTAL RETURNS*
PERIODS ENDED JUNE 30, 2003
ONE FIVE SINCE
YEAR YEARS INCEPTION**
------ ------ -----------
Retirement Equity Portfolio ..................... (0.28)% (0.51)% 0.28%
S&P 500 Index ................................... 0.25 (1.61) (0.63)
- ----------
* All returns assume reinvestment of all dividends and distributions, if any.
Certain expenses of the Portfolio have been waived or reimbursed by the
Portfolio's Investment Manager or Administrator; without such
waiver/reimbursement of expenses, the Portfolio's returns would have been
lower. Performance information does not reflect the fees and charges imposed
by participating insurance companies at the separate account level, and such
charges will have the effect of reducing performance.
Past performance is not indicative, nor a guarantee, of future results; the
investment return and principal value of the Portfolio will fluctuate, so
that an investor's shares in the 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 index has been prepared from sources and data
that the Investment Manager believes to be reliable, but no representation is
made as to its accuracy. The index is unmanaged, has no fees or costs and is
not available for investment. The S&P 500 Index is a market
capitalization-weighted index of 500 common stocks, designed to measure
performance of the broad domestic economy through changes in the aggregate
market value of these stocks, which represent all major industries.
** The Portfolio's inception date was March 18, 1998.
5
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LAZARD RETIREMENT SERIES, INC.
PERFORMANCE OVERVIEWS (CONTINUED)
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LAZARD RETIREMENT SMALL CAP PORTFOLIO
COMPARISON OF CHANGES IN VALUE OF $10,000 INVESTMENT IN LAZARD RETIREMENT SMALL
CAP PORTFOLIO AND RUSSELL 2000(R) INDEX*
[Table below represents a chart in the printed document.]
Retirement
Small Cap Portfolio Russell 2000 Index
------------------- ------------------
11-4-97 10000 10000
9720 9762.77
Dec-97 9855.83 9933.62
9855.83 9776.87
10567 10499.8
10957.6 10932.8
10957.6 10993.2
10446.8 10401.2
Jun-98 10186.7 10423
9475.62 9579.25
8285.48 7719.15
8505.88 8323.25
8936.27 8662.67
9376.83 9116.51
Dec-98 9539.05 9680.64
9348.27 9809.39
8847.2 9014.83
8817.12 9155.46
9758.79 9975.79
10239.9 10121.4
Jun-99 10690.6 10579.1
10600.8 10289.3
10209.6 9908.46
9899.22 9910.44
9508.69 9950.77
9608.92 10544.6
Dec-99 10027.9 11738.3
9864.41 11549.3
10047.9 13456.5
10977.5 12569.8
10885.5 11813.6
10742.9 11125.1
Jun-00 11007.7 12094.8
11150.8 11705.7
11561.2 12598.9
11499.9 12228.6
11623 11682.7
11132.5 10483.3
Dec-00 12138.8 11383.9
12738.4 11976.5
12459.4 11190.7
11953.3 10643.3
12604.2 11475.9
13337.1 11758
Jun-01 13543.3 12174.1
13326.6 11514.9
13346.6 11143
11875.9 9643.05
12527.9 10207.2
13552.7 10997.2
Dec-01 14398.9 11675.7
14520.6 11554.3
14443.6 11238.3
15401.8 12142.3
15457.3 12252.2
14752.4 11708.2
Jun-02 14014.8 11127.5
11867.7 9447.21
12274.8 9422.65
11312.4 8745.92
11909.7 9026.66
12573.1 9831.84
Dec-02 11853.9 9284.21
11555.2 9027.03
11245.5 8754.42
11246.1 8867.35
12075.4 9707.53
13092.7 10748.7
Jun-03 13248 10935
Retirement Small Cap Portfolio ............ $13,248
Russell 2000 Index ........................ 10,935
AVERAGE ANNUAL TOTAL RETURNS*
PERIODS ENDED JUNE 30, 2003
ONE FIVE SINCE
YEAR YEARS INCEPTION**
------ ----- -----------
Retirement Small Cap Portfolio .................. (5.47)% 5.40% 5.10%
Russell 2000 Index .............................. (1.64) 0.96 1.59
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* All returns assume reinvestment of all dividends and distributions, if any.
Certain expenses of the Portfolio have been waived or reimbursed by the
Portfolio's Investment Manager or Administrator; without such
waiver/reimbursement of expenses, the Portfolio's returns would have been
lower. Performance information does not reflect the fees and charges imposed
by participating insurance companies at the separate account level, and such
charges will have the effect of reducing performance.
Past performance is not indicative, nor a guarantee, of future results; the
investment return and principal value of the Portfolio will fluctuate, so
that an investor's shares in the 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 index has been prepared from sources and data
that the Investment Manager believes to be reliable, but no representation is
made as to its accuracy. The index is unmanaged, has no fees or costs and is
not available for investment. The Russell 2000 Index is comprised of the
2,000 smallest U.S. companies included in the Russell 3000(R) Index (which
consists of the 3,000 largest U.S. companies by capitalization).
** The Portfolio's inception date was November 4, 1997.
6
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LAZARD RETIREMENT SERIES, INC.
PERFORMANCE OVERVIEWS (CONTINUED)
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LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
COMPARISON OF CHANGES IN VALUE OF $10,000 INVESTMENT IN LAZARD RETIREMENT
INTERNATIONAL EQUITY PORTFOLIO AND MORGAN STANLEY CAPITAL INTERNATIONAL
(MSCI(R)) EUROPE, AUSTRALASIA AND FAR EAST (EAFE(R)) INDEX*
[Table below represents a chart in the printed document.]
Retirement International
Equity Portfolio MSCI EAFE Index
------------------------ ---------------
9-1-98 10000 10000
9620 9693
10310.1 10703
10930.2 11251
Dec-98 11230.1 11695.9
11209.9 11660.8
10909.5 11383.3
11269.5 11857.9
11780 12338.7
11350 11703.6
Jun-99 11819.9 12159.9
12160.3 12521
12410.2 12566.7
12370 12693.4
12639.7 13168.8
12800.2 13626.3
Dec-99 13634.8 14850
12654.2 13906.4
12755.4 14280.8
13270.7 14834.9
12775.7 14054.2
12654.3 13711
Jun-00 13119.2 14247.2
12826.6 13649.9
12825.3 13768.4
12286.6 13098
12134.5 12788.5
11840.2 12308.7
Dec-00 12322.5 12746.2
12230.1 12739.7
11594.1 11784.6
10732.5 10999
11297 11763.4
11020.2 11348.2
Jun-01 10681.5 10884.1
10271.3 10686.1
10140.8 10415.7
8956.39 9360.73
9079.54 9600.36
9316.51 9954.61
Dec-01 9357.5 10013.3
8914.89 9481.64
9069.12 9547.54
9645.92 10063.6
9676.79 10130
9810.33 10258.1
Jun-02 9470.89 9849.87
8513.38 8877.69
8623.2 8857.54
7819.52 7906.24
8334.83 8330.8
8561.53 8709.02
Dec-02 8355.2 8416.4
7932.43 8065.43
7870.56 7879.93
7819.79 7725.48
8489.48 8482.19
8932.97 8996.04
Jun-03 9025 9214
Retirement International Equity Portfolio ...... $9,025
MSCI EAFE Index ................................ 9,214
AVERAGE ANNUAL TOTAL RETURNS*
PERIODS ENDED JUNE 30, 2003
ONE SINCE
YEAR INCEPTION**
------ -----------
Retirement International Equity Portfolio ................ (4.70)% (2.10)%
MSCI EAFE Index .......................................... (6.46) (1.68)
- ----------
* All returns assume reinvestment of all dividends and distributions, if any.
Certain expenses of the Portfolio have been waived or reimbursed by the
Portfolio's Investment Manager or Administrator; without such
waiver/reimbursement of expenses, the Portfolio's returns would have been
lower. Performance information does not reflect the fees and charges imposed
by participating insurance companies at the separate account level, and such
charges will have the effect of reducing performance.
Past performance is not indicative, nor a guarantee, of future results; the
investment return and principal value of the Portfolio will fluctuate, so
that an investor's shares in the 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 index has been prepared from sources and data
that the Investment Manager believes to be reliable, but no representation is
made as to its accuracy. The index is unmanaged, has no fees or costs and is
not available for investment. The MSCI EAFE Index is a broadly diversified
international index comprised of equity securities of approximately 1,000
companies located outside the United States.
** The Portfolio's inception date was September 1, 1998.
7
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LAZARD RETIREMENT SERIES, INC.
PERFORMANCE OVERVIEWS (CONCLUDED)
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
COMPARISON OF CHANGES IN VALUE OF $10,000 INVESTMENT IN LAZARD RETIREMENT
EMERGING MARKETS PORTFOLIO AND MSCI EMERGING MARKETS FREE(R) (EMF) INDEX*
[Table below represents a chart in the printed document.]
Retirement Emerging
Markets Portfolio MSCI EMF Index
------------------- --------------
11-4-97 10000 10000
9360 9180
Dec-97 9529.38 9401.22
9027.31 8663.88
9880.83 9568.18
10403 9983.4
10362.8 9874.65
9107.64 8521.42
Jun-98 8494.69 7627.56
8755.48 7869.4
6104.32 5594.04
6576.19 5948.9
7098.33 6575.33
7630.71 7122.19
Dec-98 7351.66 7018.97
6855.42 6905.97
6885.58 6972.95
7857.83 7891.99
8718.42 8868.07
8486.07 8816.49
Jun-99 9488.61 9817.09
9154.61 9550.06
8991.66 9636.95
8657.17 9310.81
8809.02 9509.07
9681.11 10361.7
Dec-99 11181.7 11679.7
10907.7 11749.3
11100.8 11904.4
11120.8 11962.3
10064.9 10828.3
9556.59 10380.7
Jun-00 10338.5 10746.3
9790.57 10193.6
9934.49 10243.9
9036.41 9349.44
8525.85 8671.57
7617 7913.38
Dec-00 8042.79 8104.44
9113.28 9220.42
8191.02 8498.45
7407.14 7663.74
7926.38 8042.42
8106.62 8138.42
Jun-01 8010.97 7971.36
7555.18 7467.64
7444.88 7393.71
6331.12 6249.31
6628.05 6637.39
7274.95 7330.34
Dec-01 7634.33 7912.37
7964.44 8180.6
8177.45 8314.76
8539.71 8815.56
8656.71 8872.86
8678.35 8731.42
Jun-02 8039.62 8076.22
7357.86 7461.62
7496.19 7576.75
6761.56 6758.99
7091.53 7197.85
7517.73 7693.35
Dec-02 7520.73 7437.93
7316.92 7405.21
7060.1 7205.27
6824.29 7001
7520.37 7624.79
8088.01 8172.02
Jun-03 8474 8638
Retirement Emerging Markets Portfolio ..... $8,474
MSCI EMF Index ............................ 8,638
AVERAGE ANNUAL TOTAL RETURNS*
PERIODS ENDED JUNE 30, 2003
ONE FIVE SINCE
YEAR YEARS INCEPTION**
----- ------ -----------
Retirement Emerging Markets Portfolio ............ 5.40% (0.05)% (2.89)%
MSCI EMF Index ................................... 6.96 2.52 (2.55)
- ----------
* All returns assume reinvestment of all dividends and distributions, if any.
Certain expenses of the Portfolio have been waived or reimbursed by the
Portfolio's Investment Manager or Administrator; without such
waiver/reimbursement of expenses, the Portfolio's returns would have been
lower. Performance information does not reflect the fees and charges imposed
by participating insurance companies at the separate account level, and such
charges will have the effect of reducing performance.
Past performance is not indicative, nor a guarantee, of future results; the
investment return and principal value of the Portfolio will fluctuate, so
that an investor's shares in the 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 index has been prepared from sources and data
that the Investment Manager believes to be reliable, but no representation is
made as to its accuracy. The index is unmanaged, has no fees or costs and is
not available for investment. The MSCI EMF Index is comprised of emerging
market securities in countries open to non-local investors.
** The Portfolio's inception date was November 4, 1997.
8
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS
JUNE 30, 2003 (UNAUDITED)
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EQUITY PORTFOLIO
COMMON STOCKS--95.9%
AEROSPACE & DEFENSE--3.4%
Lockheed Martin Corp. .................................... 1,100 $ 52,327
The Boeing Co. ........................................... 1,200 41,184
United Technologies Corp. ................................ 550 38,957
----------
132,468
----------
APPAREL & TEXTILES--1.1%
NIKE, Inc., Class B ...................................... 800 42,792
----------
BANKING & FINANCIAL SERVICES--19.7%
American Express Co. ..................................... 2,200 91,982
Bank of America Corp. .................................... 1,150 90,884
Bank One Corp. ........................................... 2,100 78,078
Citigroup, Inc. .......................................... 2,500 107,000
Freddie Mac .............................................. 450 22,847
Golden West Financial Corp. .............................. 750 60,007
HSBC Holdings PLC ADR .................................... 800 47,288
Lehman Brothers Holdings, Inc. ........................... 450 29,916
Merrill Lynch & Co., Inc. ................................ 700 32,676
Morgan Stanley ........................................... 400 17,100
National City Corp. ...................................... 800 26,168
Northern Trust Corp. ..................................... 1,500 62,685
SouthTrust Corp. ......................................... 1,500 40,800
Wells Fargo & Co. ........................................ 1,400 70,560
----------
777,991
----------
BREWERY--0.8%
Anheuser-Busch Cos., Inc. ................................ 600 30,630
----------
BUSINESS SERVICES & SUPPLIES--5.3%
Accenture, Ltd., Class A (a) ............................. 2,200 39,798
Automatic Data Processing, Inc. .......................... 800 27,088
Avery Dennison Corp. ..................................... 800 40,160
First Data Corp. ......................................... 1,100 45,584
Pitney Bowes, Inc. ....................................... 1,500 57,615
----------
210,245
----------
CABLE & BROADCASTING--1.5%
Comcast Corp., Class A (a) ............................... 2,100 60,543
----------
CHEMICALS--1.0%
Rohm & Haas Co. .......................................... 1,300 40,339
----------
COMPUTER SOFTWARE--3.7%
Microsoft Corp. .......................................... 3,800 97,318
Oracle Corp. (a) ......................................... 2,300 27,646
PeopleSoft, Inc. (a) ..................................... 1,100 19,349
----------
144,313
----------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
COMPUTERS & BUSINESS EQUIPMENT--3.7%
Cisco Systems, Inc. (a) .................................. 2,000 $ 33,380
Hewlett-Packard Co. ...................................... 1,850 39,405
International Business Machines Corp. .................... 900 74,250
----------
147,035
----------
COSMETICS & TOILETRIES--1.8%
Colgate-Palmolive Co. .................................... 1,200 69,540
----------
DIVERSIFIED--5.0%
3M Co. ................................................... 400 51,592
Emerson Electric Co. ..................................... 1,350 68,985
General Electric Co. ..................................... 2,650 76,002
----------
196,579
----------
DRUGS & HEALTH CARE--6.6%
Eli Lilly & Co. .......................................... 600 41,382
HCA, Inc. ................................................ 1,200 38,448
Pfizer, Inc. ............................................. 2,750 93,912
Schering-Plough Corp. .................................... 1,600 29,760
Wyeth .................................................... 1,200 54,660
----------
258,162
----------
FOOD & BEVERAGES--4.2%
H.J. Heinz Co. ........................................... 1,200 39,576
PepsiCo, Inc. ............................................ 950 42,275
The Coca-Cola Co. ........................................ 800 37,128
The Kroger Co. (a) ....................................... 2,900 48,372
----------
167,351
----------
HOUSEHOLD PRODUCTS &
HOME FURNISHINGS--1.2%
Newell Rubbermaid, Inc. .................................. 1,700 47,600
----------
INSURANCE--6.3%
American International Group, Inc. ....................... 650 35,867
Berkshire Hathaway, Inc., Class B (a) .................... 7 17,010
Jefferson-Pilot Corp. .................................... 1,100 45,606
Marsh & McLennan Cos., Inc. .............................. 1,000 51,070
MetLife, Inc. ............................................ 1,400 39,648
The Hartford Financial Services
Group, Inc. ............................................. 1,200 60,432
----------
249,633
----------
LEISURE & ENTERTAINMENT--1.0%
Mattel, Inc. ............................................. 2,100 39,732
----------
MEDICAL PRODUCTS & SERVICES--2.2%
Guidant Corp. ............................................ 900 39,951
Johnson & Johnson ........................................ 900 46,530
----------
86,481
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EQUITY PORTFOLIO (CONCLUDED)
METALS & MINING--1.2%
Alcoa, Inc. .............................................. 1,800 $ 45,900
----------
MULTIMEDIA--4.1%
The News Corp., Ltd. ADR ................................. 3,900 97,695
Viacom, Inc., Class B (a) ................................ 1,500 65,490
----------
163,185
----------
OIL & GAS--8.1%
Baker Hughes, Inc. ....................................... 1,200 40,284
Burlington Resources, Inc. ............................... 950 51,366
ChevronTexaco Corp. ...................................... 700 50,540
ConocoPhillips ........................................... 750 41,100
Exxon Mobil Corp. ........................................ 2,600 93,366
Praxair, Inc. ............................................ 700 42,070
----------
318,726
----------
RETAIL--3.5%
Target Corp. ............................................. 1,600 60,544
The Home Depot, Inc. ..................................... 1,500 49,680
Wal-Mart Stores, Inc. .................................... 500 26,835
----------
137,059
----------
SEMICONDUCTORS & COMPONENTS--2.2%
Intel Corp. .............................................. 2,200 45,725
Texas Instruments, Inc. .................................. 2,300 40,480
----------
86,205
----------
TELECOMMUNICATIONS--4.0%
BellSouth Corp. .......................................... 2,800 74,564
Verizon Communications, Inc. ............................. 2,100 82,845
----------
157,409
----------
UTILITIES--4.3%
Ameren Corp. ............................................. 900 39,690
Entergy Corp. ............................................ 900 47,502
KeySpan Corp. ............................................ 1,550 54,948
NiSource, Inc. ........................................... 1,400 26,600
----------
168,740
----------
TOTAL COMMON STOCKS
(Identified cost $3,616,269) 3,778,658
----------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT--5.7%
State Street Bank and Trust Co.,
0.96%, 07/01/03
(Dated 06/30/03, collateralized by
$185,000 United States Treasury
Bond, 12.75%, 11/15/10, with a
value of $235,875)
(Identified cost $226,000) .............................. $226 $ 226,000
----------
TOTAL INVESTMENTS
(Identified cost $3,842,269) (b) ......................... 101.6% $4,004,658
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ............................................. (1.6) (62,716)
----- ----------
NET ASSETS ................................................ 100.0% $3,941,942
===== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SMALL CAP PORTFOLIO
COMMON STOCKS--95.9%
AEROSPACE & DEFENSE--3.0%
DRS Technologies, Inc. (a) ............................... 21,100 $ 589,112
Moog, Inc., Class A (a) .................................. 9,500 330,125
The Titan Corp. (a) ...................................... 60,200 619,458
-----------
1,538,695
-----------
AGRICULTURE--1.7%
AGCO Corp. (a) ........................................... 21,900 374,052
Delta & Pine Land Co. .................................... 23,400 514,332
-----------
888,384
-----------
AUTOMOTIVE--0.3%
American Axle & Manufacturing
Holdings, Inc. (a) ...................................... 6,000 143,400
-----------
BANKING & FINANCIAL SERVICES--11.2%
Chittenden Corp. ......................................... 9,100 248,885
Community First Bankshares, Inc. ......................... 23,000 627,900
East West Bancorp, Inc. .................................. 11,700 422,838
Financial Federal Corp. (a) .............................. 17,200 419,680
First Community Bancorp .................................. 8,800 274,296
First Midwest Bancorp, Inc. .............................. 22,700 653,987
Hudson United Bancorp .................................... 18,300 624,945
IndyMac Bancorp, Inc. .................................... 24,700 627,874
Sterling Bancshares, Inc. ................................ 42,900 561,132
The South Financial Group, Inc. .......................... 10,300 240,299
United Bankshares, Inc. .................................. 21,400 613,110
W Holding Co., Inc. ...................................... 11,800 199,656
W.P. Stewart & Co., Ltd. ................................. 13,300 297,920
-----------
5,812,522
-----------
BUILDING & CONSTRUCTION--1.5%
Chicago Bridge & Iron Co. NV,
NY Shares ............................................... 22,800 517,104
Florida Rock Industries, Inc. ............................ 6,200 255,936
-----------
773,040
-----------
BUSINESS SERVICES & SUPPLIES--5.3%
ADVO, Inc. (a) ........................................... 8,500 377,400
FTI Consulting, Inc. (a) ................................. 17,200 429,484
Harland (John H.) Co. .................................... 6,100 159,576
Herman Miller, Inc. ...................................... 28,800 582,048
PRG-Schultz International, Inc. (a) ...................... 47,700 281,430
ProQuest Co. (a) ......................................... 6,000 154,800
Tier Technologies, Inc., Class B (a) ..................... 20,600 159,650
Watson Wyatt & Co. Holdings (a) .......................... 25,800 598,044
-----------
2,742,432
-----------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
CHEMICALS--1.7%
Ferro Corp. .............................................. 12,300 $ 277,119
Spartech Corp. ........................................... 27,900 591,759
-----------
868,878
-----------
COMPUTER SOFTWARE--2.0%
Borland Software Corp. (a) ............................... 41,700 407,409
Mentor Graphics Corp. (a) ................................ 44,700 647,256
-----------
1,054,665
-----------
COMPUTERS & BUSINESS EQUIPMENT--4.4%
Advanced Digital Information Corp. (a) ................... 67,900 678,321
Extreme Networks, Inc. (a) ............................... 97,000 514,100
Maxtor Corp. (a) ......................................... 78,800 591,788
ScanSource, Inc. (a) ..................................... 19,100 510,925
-----------
2,295,134
-----------
CONSUMER PRODUCTS--1.7%
Fossil, Inc. (a) ......................................... 19,500 459,420
The Scotts Co., Class A (a) .............................. 9,000 445,500
-----------
904,920
-----------
DIVERSIFIED--4.0%
Black Hills Corp. ........................................ 7,600 233,320
Fisher Scientific International, Inc. (a) ................ 20,200 704,980
Olin Corp. ............................................... 23,600 403,560
The Liberty Corp. ........................................ 16,700 709,750
-----------
2,051,610
-----------
DRUGS & HEALTH CARE--7.0%
aaiPharma, Inc. (a) ...................................... 42,700 848,876
Andrx Corp. (a) .......................................... 26,900 535,310
Celgene Corp. (a) ........................................ 19,800 601,920
LifePoint Hospitals, Inc. (a) ............................ 22,300 466,962
Manor Care, Inc. (a) ..................................... 27,300 682,773
MIM Corp. (a) ............................................ 75,100 490,403
-----------
3,626,244
-----------
EDUCATION--1.6%
Learning Tree International, Inc. (a) .................... 25,600 400,128
Scholastic Corp. (a) ..................................... 14,600 434,788
-----------
834,916
-----------
ELECTRICAL EQUIPMENT--1.9%
Axcelis Technologies, Inc. (a) ........................... 37,700 230,724
Coherent, Inc. (a) ....................................... 30,900 739,437
-----------
970,161
-----------
ELECTRONICS--4.3%
Actel Corp. (a) .......................................... 26,600 545,300
Cree, Inc. (a) ........................................... 23,600 384,208
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SMALL CAP PORTFOLIO (CONTINUED)
Electro Scientific Industries, Inc. (a) .................. 9,000 $ 136,440
Microsemi Corp. (a) ...................................... 40,100 641,600
Zoran Corp. (a) .......................................... 26,000 499,460
-----------
2,207,008
-----------
ENVIRONMENTAL--0.8%
Waste Connections, Inc. (a) .............................. 12,000 420,600
-----------
FOOD & BEVERAGES--1.6%
AFC Enterprises, Inc. (a) ................................ 37,300 605,752
The Robert Mondavi Corp., Class A (a) .................... 9,500 240,445
-----------
846,197
-----------
FOREST & PAPER PRODUCTS--1.0%
Packaging Corp. of America (a) ........................... 28,400 523,412
-----------
INDUSTRIAL & MACHINERY--1.8%
Nordson Corp. ............................................ 15,600 372,060
Roper Industries, Inc. ................................... 14,500 539,400
-----------
911,460
-----------
INSURANCE--3.4%
HCC Insurance Holdings, Inc. ............................. 17,900 529,303
Max Re Capital, Ltd. ..................................... 20,200 302,394
Reinsurance Group of America, Inc. ....................... 8,400 269,640
RLI Corp. ................................................ 7,400 243,460
Triad Guaranty, Inc. (a) ................................. 10,700 406,065
-----------
1,750,862
-----------
LEISURE & ENTERTAINMENT--2.4%
Brunswick Corp. .......................................... 26,600 665,532
Extended Stay America, Inc. (a) .......................... 25,900 349,391
Sonic Corp. (a) .......................................... 10,100 256,843
-----------
1,271,766
-----------
MANUFACTURING--0.8%
Plexus Corp. (a) ......................................... 37,400 431,222
-----------
MEDICAL PRODUCTS & SERVICES--5.1%
Cambrex Corp. ............................................ 10,800 248,616
Covance, Inc. (a) ........................................ 24,600 445,260
INAMED Corp. (a) ......................................... 8,800 472,472
Invitrogen Corp. (a) ..................................... 9,600 368,352
Pediatrix Medical Group, Inc. (a) ........................ 8,200 292,330
Varian, Inc. (a) ......................................... 14,400 499,248
Viasys Healthcare, Inc. (a) .............................. 16,600 343,620
-----------
2,669,898
-----------
OIL & GAS--7.7%
Cal Dive International, Inc. (a) ......................... 28,600 623,480
Helmerich & Payne, Inc. .................................. 22,600 659,920
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
Key Energy Services, Inc. (a) ............................ 59,400 $ 636,768
Kinder Morgan Management, LLC (a) ........................ 18,431 690,425
Lone Star Technologies, Inc. (a) ......................... 14,100 298,638
Newfield Exploration Co. (a) ............................. 15,500 582,025
St. Mary Land & Exploration Co. .......................... 8,500 232,050
Western Gas Resources, Inc. .............................. 6,900 273,240
-----------
3,996,546
-----------
PRINTING & PUBLISHING--2.8%
Journal Register Co. (a) ................................. 32,568 589,155
Pulitzer, Inc. ........................................... 7,000 345,940
R. H. Donnelley Corp. (a) ................................ 14,700 536,109
-----------
1,471,204
-----------
REAL ESTATE--5.9%
Alexandria Real Estate Equities, Inc. .................... 10,600 477,000
Camden Property Trust .................................... 15,600 545,220
Capital Automotive REIT .................................. 400 11,196
CarrAmerica Realty Corp. ................................. 9,100 253,071
Catellus Development Corp. (a) ........................... 20,700 455,400
Healthcare Realty Trust, Inc. ............................ 14,800 431,420
Maguire Properties, Inc. (a) ............................. 20,300 390,775
The Mills Corp. .......................................... 15,200 509,960
-----------
3,074,042
-----------
RETAIL--4.6%
American Eagle Outfitters, Inc. (a) ...................... 38,500 706,090
AnnTaylor Stores Corp. (a) ............................... 10,500 303,975
BJ's Wholesale Club, Inc. (a) ............................ 19,200 289,152
Linens `n Things, Inc. (a) ............................... 26,700 630,387
Too, Inc. (a) ............................................ 21,700 439,425
-----------
2,369,029
-----------
TELECOMMUNICATIONS--0.6%
C-COR.net Corp. (a) ...................................... 59,900 293,510
-----------
TRANSPORTATION--3.2%
EGL, Inc. (a) ............................................ 23,100 351,120
Forward Air Corp. (a) .................................... 12,000 304,440
Swift Transportation Co., Inc. (a) ....................... 31,100 579,082
USF Corp. ................................................ 16,100 434,217
-----------
1,668,859
-----------
UTILITIES--2.6%
AGL Resources, Inc. ...................................... 15,400 391,776
DQE, Inc. ................................................ 20,100 302,907
Energen Corp. ............................................ 8,200 273,060
MDU Resources Group, Inc. ................................ 11,400 381,786
-----------
1,349,529
-----------
TOTAL COMMON STOCKS
(Identified cost $46,135,274) ............................ 49,760,145
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SMALL CAP PORTFOLIO (CONCLUDED)
REPURCHASE AGREEMENT--4.7%
State Street Bank and Trust Co.,
0.96%, 07/01/03
(Dated 06/30/03, collateralized by
$2,490,000 United States Treasury
Bill, 0.96%, 07/17/03, with a
value of $2,490,000)
(Identified cost $2,437,000) ........................... $2,437 $ 2,437,000
-----------
DESCRIPTION VALUE
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Identified cost $48,572,274) (b) ....................... 100.6% $52,197,145
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ............................................ (0.6) (336,037)
----- -----------
NET ASSETS ............................................... 100.0% $51,861,108
===== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
COMMON STOCKS--96.5%
AUSTRALIA--2.2%
BHP Billiton, Ltd. ....................................... 278,091 $ 1,611,375
-----------
BELGIUM--1.2%
Fortis ................................................... 49,800 864,680
-----------
DENMARK--1.1%
Novo Nordisk A/S, B Shares ............................... 24,400 854,175
-----------
FINLAND--2.6%
Nokia Oyj ................................................ 118,300 1,948,085
-----------
FRANCE--8.6%
BNP Paribas SA ........................................... 22,760 1,156,537
Carrefour SA ............................................. 14,100 691,063
Credit Agricole SA ....................................... 38,100 724,097
Lagardere SCA ............................................ 20,830 905,377
Schneider Electric SA .................................... 13,200 620,577
Total SA ................................................. 15,543 2,348,902
-----------
TOTAL FRANCE ............................................. 6,446,553
-----------
GERMANY--1.8%
Bayerische Motoren Werke AG .............................. 10,300 396,238
Deutsche Telekom AG (a) .................................. 25,100 383,065
Siemens AG ............................................... 12,200 598,502
-----------
TOTAL GERMANY ............................................ 1,377,805
-----------
HONG KONG--1.4%
CLP Holdings, Ltd. ....................................... 162,500 706,417
Hong Kong & China Gas Co., Ltd. .......................... 280,000 353,674
-----------
TOTAL HONG KONG .......................................... 1,060,091
-----------
IRELAND--3.9%
Allied Irish Banks PLC ................................... 49,436 743,117
Bank of Ireland .......................................... 106,000 1,284,199
CRH PLC .................................................. 56,647 887,940
-----------
TOTAL IRELAND ............................................ 2,915,256
-----------
ITALY--6.8%
Alleanza Assicurazioni SpA ............................... 76,180 724,345
Eni SpA .................................................. 83,575 1,263,969
Snam Rete Gas SpA ........................................ 193,900 761,514
Telecom Italia SpA ....................................... 259,700 2,350,024
-----------
TOTAL ITALY .............................................. 5,099,852
-----------
JAPAN--13.9%
ACOM Co., Ltd. ........................................... 19,300 697,581
Canon, Inc. ADR .......................................... 32,900 1,501,885
East Japan Railway Co. ................................... 174 773,816
Fanuc, Ltd. .............................................. 10,100 500,479
Honda Motor Co., Ltd. .................................... 8,800 333,458
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
Kao Corp. ................................................ 56,000 $ 1,042,349
Nissan Motor Co., Ltd. ................................... 211,000 2,017,306
NTT DoCoMo, Inc. ......................................... 716 1,550,364
Takeda Chemical Industries, Ltd. ......................... 38,200 1,409,336
Tokyo Gas Co., Ltd. ...................................... 193,000 554,528
-----------
TOTAL JAPAN .............................................. 10,381,102
-----------
NETHERLANDS--9.0%
ABN AMRO Holding NV ...................................... 64,300 1,229,417
Heineken NV .............................................. 28,111 997,491
Koninklijke (Royal) KPN NV (a) ........................... 138,700 982,733
Koninklijke (Royal) Philips
Electronics NV .......................................... 47,350 900,439
Royal Dutch Petroleum Co. ................................ 57,500 2,668,937
-----------
TOTAL NETHERLANDS ........................................ 6,779,017
-----------
NORWAY--0.5%
Statoil ASA .............................................. 44,600 379,987
-----------
SINGAPORE--1.7%
Oversea-Chinese Banking Corp., Ltd. ...................... 103,050 585,179
United Overseas Bank, Ltd.
Sponsored ADR ........................................... 47,542 669,520
-----------
TOTAL SINGAPORE .......................................... 1,254,699
-----------
SPAIN--3.5%
Altadis SA ............................................... 48,300 1,237,985
Endesa SA ................................................ 80,795 1,352,746
-----------
TOTAL SPAIN .............................................. 2,590,731
-----------
SWEDEN--1.0%
Sandvik AB ............................................... 29,100 761,585
-----------
SWITZERLAND--7.4%
Compagnie Financiere Richemont
AG, A Shares ............................................ 58,100 939,345
Credit Suisse Group ...................................... 55,900 1,471,216
Novartis AG .............................................. 24,900 985,301
Roche Holding AG ......................................... 4,400 345,133
UBS AG ................................................... 32,500 1,807,888
-----------
TOTAL SWITZERLAND ........................................ 5,548,883
-----------
UNITED KINGDOM--29.9%
Barclays PLC ............................................. 277,800 2,062,851
Boots Group PLC .......................................... 157,500 1,685,441
BP PLC ................................................... 228,320 1,583,342
BT Group PLC ............................................. 38,784 130,399
Cadbury Schweppes PLC .................................... 118,340 699,097
Diageo PLC ............................................... 143,175 1,528,602
GlaxoSmithKline PLC ...................................... 134,600 2,716,406
HSBC Holdings PLC ........................................ 257,400 3,041,198
Imperial Tobacco Group PLC ............................... 82,080 1,466,861
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
(CONCLUDED)
Kingfisher PLC ......................................... 306,600 $ 1,402,706
Royal Bank of Scotland Group PLC ....................... 56,700 1,590,578
Tesco PLC .............................................. 222,270 804,162
Unilever PLC ........................................... 114,300 910,053
Vodafone Group PLC ..................................... 1,407,400 2,752,067
-----------
TOTAL UNITED KINGDOM ................................... 22,373,763
-----------
TOTAL COMMON STOCKS
(Identified cost $68,955,874) .......................... 72,247,639
-----------
PRINCIPAL
AMOUNT
DESCRIPTION (000) VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT--4.6%
State Street Bank and Trust Co.,
0.96%, 07/01/03
(Dated 06/30/03, collateralized by
$2,775,000 United States Treasury
Bond, 12.75%, 11/15/10, with a
value of $3,538,125)
(Identified cost $3,464,000) .......................... $3,464 $ 3,464,000
-----------
TOTAL INVESTMENTS
(Identified cost $72,419,874) (b) ...................... 101.1% $75,711,639
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ........................................... (1.1) (803,593)
----- -----------
NET ASSETS .............................................. 100.0% $74,908,046
===== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
COMMON STOCKS--88.0%
ARGENTINA--0.8%
Tenaris SA ADR ........................................... 3,244 $ 82,722
----------
BRAZIL--4.6%
Brasil Telecom Participacoes SA ADR ...................... 1,700 63,665
Companhia Vale do Rio Doce ADR ........................... 4,500 133,470
Empresa Brasileira de Aeronautica SA
ADR ..................................................... 7,000 133,700
Souza Cruz SA ............................................ 15,300 125,856
----------
TOTAL BRAZIL ............................................. 456,691
----------
CHILE--1.9%
Administradora de Fondos de
Pensiones Provida SA ADR ................................ 7,760 186,473
----------
CHINA--0.3%
Beijing Capital Land, Ltd., H Shares ..................... 42,700 7,939
Sinotrans, Ltd. .......................................... 57,000 16,081
----------
TOTAL CHINA .............................................. 24,020
----------
CROATIA--1.6%
Pliva d.d. GDR (c) ....................................... 11,600 160,559
----------
EGYPT--1.9%
Commercial International Bank ............................ 12,000 73,319
MobiNil .................................................. 12,178 108,594
----------
TOTAL EGYPT .............................................. 181,913
----------
HONG KONG--5.1%
China Mobile (Hong Kong), Ltd. ADR ....................... 12,320 145,006
CNOOC, Ltd. ADR .......................................... 7,200 213,840
Yue Yuen Industrial (Holdings), Ltd. ..................... 55,000 140,707
----------
TOTAL HONG KONG .......................................... 499,553
----------
HUNGARY--2.5%
EGIS Rt. ................................................. 1,270 43,271
Gedeon Richter Rt. ....................................... 2,850 201,030
----------
TOTAL HUNGARY ............................................ 244,301
----------
INDIA--7.8%
Hindalco Industries, Ltd. GDR (c) ........................ 5,600 90,328
Hindustan Lever, Ltd. .................................... 20,600 79,106
Punjab National Bank, Ltd. (a) ........................... 2,700 9,012
Reliance Industries, Ltd. ................................ 21,900 152,975
Satyam Computer Services, Ltd. ........................... 27,900 115,484
State Bank of India ...................................... 39,100 323,267
----------
TOTAL INDIA .............................................. 770,172
----------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
INDONESIA--4.3%
PT Bank Mandiri .......................................... 393,000 $ 32,476
PT Hanjaya Mandala Sampoerna Tbk ......................... 385,500 193,918
PT Telekomunikasi Indonesia Tbk
ADR ..................................................... 17,200 192,640
----------
TOTAL INDONESIA .......................................... 419,034
----------
ISRAEL--2.1%
Bank Hapoalim, Ltd. (a) .................................. 52,400 111,247
Koor Industries, Ltd. (a) ................................ 4,773 99,242
----------
TOTAL ISRAEL ............................................. 210,489
----------
MEXICO--9.4%
America Telecom SA de CV,
Series A1 Shares (a) .................................... 112,000 105,296
Carso Global Telecom,
Series A1 Shares (a) .................................... 39,400 50,195
Cemex SA de CV ADR ....................................... 3,842 85,638
Fomento Economico Mexicano
SA de CV ADR ............................................ 2,510 103,412
Grupo Financiero Banorte SA de CV,
Series O Shares ......................................... 51,600 146,028
Grupo Televisa SA ADR .................................... 3,100 106,950
Kimberly-Clark de Mexico SA de CV,
Series A Shares ......................................... 35,200 94,551
Telefonos de Mexico SA de CV,
Series L Shares ADR ..................................... 7,500 235,650
----------
TOTAL MEXICO ............................................. 927,720
----------
PERU--0.9%
Credicorp, Ltd. .......................................... 8,600 85,140
----------
PHILIPPINES--2.0%
Philippine Long Distance
Telephone Co. ADR (a) ................................... 9,000 96,930
San Miguel Corp., Class B ................................ 87,100 102,672
----------
TOTAL PHILIPPINES ........................................ 199,602
----------
RUSSIA--2.8%
LUKOIL ADR ............................................... 1,920 151,872
Wimm-Bill-Dann Foods OJSC ADR (a) ........................ 6,100 123,830
----------
TOTAL RUSSIA ............................................. 275,702
----------
SOUTH AFRICA--13.5%
ABSA Group, Ltd. ......................................... 40,400 189,035
Impala Platinum Holdings, Ltd. ........................... 1,950 115,806
Iscor, Ltd. .............................................. 86,832 184,995
Kumba Resources, Ltd. .................................... 49,400 197,995
Old Mutual PLC ........................................... 54,400 78,547
Sanlam, Ltd. ............................................. 129,900 121,079
Sappi, Ltd. .............................................. 7,800 93,787
Sasol, Ltd. .............................................. 11,400 126,827
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
PORTFOLIOS OF INVESTMENTS (CONCLUDED)
JUNE 30, 2003 (UNAUDITED)
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
(CONCLUDED)
Steinhoff International Holdings, Ltd. ................... 115,700 $ 101,680
Telkom South Africa, Ltd. ................................ 22,400 115,579
----------
TOTAL SOUTH AFRICA ....................................... 1,325,330
----------
SOUTH KOREA--16.1%
Daewoo Shipbuilding & Marine
Engineering Co., Ltd. ................................... 2,900 48,140
Hite Brewery Co., Ltd. ................................... 2,050 110,008
Kookmin Bank ............................................. 6,990 210,665
KT Corp. ADR ............................................. 12,590 248,149
LG Household & Health Care, Ltd. ......................... 2,500 64,567
POSCO ADR ................................................ 6,340 166,045
Samsung Electronics Co., Ltd.,
GDR (c) ................................................. 2,526 375,742
Samsung Fire & Marine
Insurance Co., Ltd. ..................................... 2,642 128,506
Samsung SDI Co., Ltd. .................................... 1,160 87,886
SK Telecom Co., Ltd. ADR ................................. 7,645 144,185
----------
TOTAL SOUTH KOREA ........................................ 1,583,893
----------
TAIWAN--5.6%
Advantech Co., Ltd. ...................................... 31,000 44,785
Ambit Microsystems Corp. ................................. 12,000 37,099
Chinatrust Financial Holding Co., Ltd. ................... 109,901 88,594
Compal Electronics, Inc. (a) ............................. 45,000 60,329
Compal Electronics, Inc. GDR ............................. 5,568 37,306
Fubon Financial Holding Co., Ltd. ........................ 173,000 138,460
United Microelectronics Corp. (a) ........................ 138,000 88,916
United Microelectronics Corp. ADR (a) .................... 15,858 59,468
----------
TOTAL TAIWAN ............................................. 554,957
----------
THAILAND--3.1%
Delta Electronics (Thailand) PCL ......................... 133,200 90,300
PTT PCL (c) .............................................. 78,900 120,114
Thai Union Frozen Products PCL ........................... 144,500 89,367
----------
TOTAL THAILAND ........................................... 299,781
----------
TURKEY--0.5%
Turkiye Garanti Bankasi AS
ADR (a), (c) ............................................ 38,313 51,887
----------
VENEZUELA--1.2%
Compania Anonima Nacional
Telefonos de Venezuela ADR .............................. 9,385 117,219
----------
TOTAL COMMON STOCKS
(Identified cost $8,109,682) ............................. 8,657,158
----------
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCKS--6.7%
BRAZIL--6.7%
Banco Itau Holding Financeira SA
ADR ................................................... 4,469 $ 148,914
Caemi Mineracao e Metalurgica SA (a) ................... 1,143,000 193,940
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar ADR ............................... 3,800 58,293
Companhia de Bebidas das Americas
ADR ................................................... 6,270 127,148
Companhia Paranaense de
Energia-Copel ADR (a) ................................. 26,900 80,700
Telemar Norte Leste SA ................................. 3,800,000 52,185
----------
TOTAL BRAZIL ........................................... 661,180
----------
TOTAL PREFERRED STOCKS
(Identified cost $704,056) ............................. 661,180
----------
PRINCIPAL
AMOUNT
(000)
---------
CORPORATE BOND--0.0%
INDIA--0.0%
Hindustan Lever, Ltd.,
9.00%, 01/01/05
(Identified cost $0) .................................. $ 21 27
----------
REPURCHASE AGREEMENT--5.4%
State Street Bank and Trust Co.,
0.94%, 07/01/03
(Dated 06/30/03, collateralized by
$545,000 United States Treasury
Bill, 0.96%, 07/17/03, with a
value of $545,000)
(Identified cost $534,000) ............................ 534 534,000
----------
TOTAL INVESTMENTS
(Identified cost $9,347,738) (b) ....................... 100.1% $9,852,365
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ........................................... (0.1) (12,911)
----- ----------
NET ASSETS .............................................. 100.0% $9,839,454
===== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS
JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) For federal income tax purposes, the aggregate cost, aggregate gross
unrealized appreciation, aggregate gross unrealized depreciation and the net
unrealized appreciation is as follows:
AGGREGATE AGGREGATE
GROSS GROSS NET
AGGREGATE UNREALIZED UNREALIZED UNREALIZED
PORTFOLIO COST APPRECIATION DEPRECIATION APPRECIATION
--------- ----------- ------------ ------------ ------------
Retirement Equity $ 3,842,269 $ 256,160 $ 93,771 $ 162,389
Retirement Small Cap 48,572,274 6,026,929 2,402,058 3,624,871
Retirement International Equity 72,419,874 5,379,044 2,087,279 3,291,765
Retirement Emerging Markets 9,347,738 1,120,152 615,525 504,627
(c) Pursuant to Rule 144A under the Securities Act of 1933, these securities may
only be traded among "qualified institutional buyers."
SECURITY ABBREVIATIONS:
- -----------------------
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
REIT -- Real Estate Investment Trust
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS (CONCLUDED)
JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS BY INDUSTRY, FOR THOSE PORTFOLIOS PREVIOUSLY PRESENTED BY
COUNTRY:
LAZARD RETIREMENT LAZARD RETIREMENT
INTERNATIONAL EQUITY EMERGING MARKETS
PORTFOLIO PORTFOLIO
-------------------- -----------------
INDUSTRY
Aerospace & Defense .................. --% 1.4%
Apparel & Textiles ................... -- 1.4
Automotive ........................... 3.7 --
Banking & Financial Services ......... 23.8 18.2
Brewery .............................. 1.3 3.5
Broadcasting ......................... -- 1.1
Building & Construction .............. 1.2 0.9
Chemicals ............................ -- 1.6
Computers & Business Equipment ....... -- 3.0
Conglomerates ........................ -- 1.0
Cosmetics & Toiletries ............... 1.4 --
Diversified .......................... 3.2 --
Drugs & Health Care .................. 7.3 4.1
Electronics .......................... 4.9 7.1
Food & Beverages ..................... 3.0 3.2
Forest & Paper Products .............. -- 1.9
Household Products & Home Furnishings -- 2.5
Industrial & Machinery ............... 0.8 --
Insurance ............................ 1.0 3.3
Medical Products & Services .......... 1.2 --
Metals & Mining ...................... 2.2 7.4
Oil & Gas ............................ 11.0 7.1
Real Estate .......................... -- 0.1
Retail ............................... 7.4 0.6
Shipbuilding ......................... -- 0.5
Steel ................................ -- 3.6
Telecommunications ................... 13.5 17.0
Tobacco .............................. 3.6 3.2
Transportation ....................... 1.0 0.2
Utilities ............................ 5.0 0.8
------ ------
Subtotal ............................. 96.5 94.7
Repurchase Agreements ................ 4.6 5.4
------ ------
Total Investments .................... 101.1% 100.1%
====== ======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD LAZARD
LAZARD LAZARD RETIREMENT RETIREMENT
RETIREMENT RETIREMENT INTERNATIONAL EMERGING
EQUITY SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities, at value ..................... $ 4,004,658 $52,197,145 $75,711,639 $ 9,852,365
Cash .................................................... 311 954 251 369
Foreign currency ........................................ -- -- 192,301 23,435
Receivables for:
Investments sold ...................................... 12,725 510,654 342,062 --
Dividends and interest ................................ 2,800 45,795 236,455 25,402
Capital stock sold .................................... -- 15,522 255,756 7,665
Due from Investment Manager ............................. 4,177 -- -- 2,803
----------- ----------- ----------- -----------
Total assets ............................................ 4,024,671 52,770,070 76,738,464 9,912,039
----------- ----------- ----------- -----------
LIABILITIES
Payables for:
Investments purchased ................................. 54,679 785,165 1,754,903 32,575
Capital stock repurchased ............................. 3,367 53,146 1,496 4,267
Management fees payable ................................. -- 27,275 36,252 --
Accrued directors' fees payable ......................... 33 14 -- --
Accrued distribution fees payable ....................... 817 10,653 14,585 1,970
Other accrued expenses and payables ..................... 23,833 32,709 23,182 33,773
----------- ----------- ----------- -----------
Total liabilities ....................................... 82,729 908,962 1,830,418 72,585
----------- ----------- ----------- -----------
Net assets .............................................. $ 3,941,942 $51,861,108 $74,908,046 $ 9,839,454
=========== =========== =========== ===========
NET ASSETS
Paid in capital ......................................... $ 4,862,560 $55,142,785 $82,071,277 $10,878,549
Undistributed (distributions in excess of)
investment income--net ................................ 40,408 23,302 1,108,560 96,417
Unrealized appreciation (depreciation) on:
Investments--net ...................................... 162,389 3,624,871 3,291,765 504,627
Foreign currency--net ................................. -- -- (2,017) 60
Accumulated undistributed realized gain (loss)--net ..... (1,123,415) (6,929,850) (11,561,539) (1,640,199)
----------- ----------- ----------- -----------
Net assets .............................................. $ 3,941,942 $51,861,108 $74,908,046 $ 9,839,454
=========== =========== =========== ===========
Shares of capital stock outstanding* .................... 459,236 4,328,550 8,553,370 1,244,018
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 8.58 $ 11.98 $ 8.76 $ 7.91
Cost of investments in securities ....................... $ 3,842,269 $48,572,274 $72,419,874 $ 9,347,738
Cost of foreign currency ................................ $ -- $ -- $ 192,301 $ 23,394
* $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.
20
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
LAZARD LAZARD
LAZARD LAZARD RETIREMENT RETIREMENT
RETIREMENT RETIREMENT INTERNATIONAL EMERGING
EQUITY SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS)
INCOME:
Interest ............................................... $ 697 $ 11,142 $ 15,531 $ 2,333
Dividends .............................................. 34,944 258,611 1,172,847 155,222
-------- ---------- ---------- ----------
Total investment income* ................................. 35,641 269,753 1,188,378 157,555
-------- ---------- ---------- ----------
EXPENSES:
Management fees ........................................ 13,696 171,881 213,593 42,094
Administration fees .................................... 19,038 23,179 24,292 19,515
Distribution fees ...................................... 4,565 57,294 71,198 10,523
Custodian fees ......................................... 20,946 38,610 62,242 44,876
Professional services .................................. 13,276 23,766 20,709 13,845
Shareholders' services ................................. 6,833 6,986 7,447 6,729
Directors' fees and expenses ........................... 138 1,323 1,201 230
Shareholders' reports .................................. 583 5,232 4,433 886
Other .................................................. 381 977 933 423
-------- ---------- ---------- ----------
Total expenses before fees waived and expenses reimbursed 79,456 329,248 406,048 139,121
Management fees waived and expenses reimbursed ......... (47,157) (42,766) (50,049) (62,379)
Administration fees waived ............................. (9,375) -- -- (9,375)
Expense reductions ..................................... (97) (14) (10) (18)
-------- ---------- ---------- ----------
Expenses--net ............................................ 22,827 286,468 355,989 67,349
-------- ---------- ---------- ----------
INVESTMENT INCOME (LOSS)--NET ............................ 12,814 (16,715) 832,389 90,206
-------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY--NET
Realized gain (loss) on:
Investments--net ..................................... (149,676) (3,022,351) (1,603,766) 108,492
Foreign currency--net ................................ -- -- (111,016) (4,054)
Change in net unrealized appreciation (depreciation) on:
Investments--net ..................................... 432,285 8,383,549 6,056,172 890,603
Foreign currency--net ................................ -- -- (2,362) 1,220
-------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY--NET .................. 282,609 5,361,198 4,339,028 996,261
-------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ........................................ $295,423 $5,344,483 $5,171,417 $1,086,467
======== ========== ========== ==========
*Net of foreign withholding taxes of ..................... $ 153 $ 447 $ 142,421 $ 12,786
======== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS
LAZARD RETIREMENT LAZARD RETIREMENT
EQUITY PORTFOLIO SMALL CAP PORTFOLIO
------------------------------ -----------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2003 DECEMBER 31, JUNE 30, 2003 DECEMBER 31,
(UNAUDITED) 2002 (UNAUDITED) 2002
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ....................... $ 12,814 $ 25,946 $ (16,715) $ (90,478)
Realized gain (loss) on investments and
foreign currency--net ............................. (149,676) (688,195) (3,022,351) (3,549,265)
Change in unrealized appreciation (depreciation)--net 432,285 (201,392) 8,383,549 (8,808,736)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations ..................................... 295,423 (863,641) 5,344,483 (12,448,479)
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ......................... -- (3,177) -- --
From realized gains--net ............................ -- -- -- (229,881)
----------- ----------- ----------- -----------
Net decrease in net assets resulting from distributions -- (3,177) -- (229,881)
----------- ----------- ----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ............................. 934,445 2,513,776 8,977,072 46,617,304
Net proceeds from reinvestment of distributions ..... -- 3,177 -- 229,881
Cost of shares redeemed ............................. (1,038,261) (2,914,349) (9,913,039) (28,879,989)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets from
capital stock transactions .......................... (103,816) (397,396) (935,967) 17,967,196
----------- ----------- ----------- -----------
Total increase (decrease) in net assets ............... 191,607 (1,264,214) 4,408,516 5,288,836
Net assets at beginning of period ..................... 3,750,335 5,014,549 47,452,592 42,163,756
----------- ----------- ----------- -----------
Net assets at end of period* .......................... $ 3,941,942 $ 3,750,335 $51,861,108 $47,452,592
=========== =========== =========== ===========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period ........... 477,899 534,559 4,426,956 3,223,779
----------- ----------- ----------- -----------
Shares sold ......................................... 114,917 300,204 811,858 3,666,010
Shares issued to shareholders from reinvestment
of distributions .................................. -- 388 -- 20,470
Shares repurchased .................................. (133,580) (357,252) (910,264) (2,483,303)
----------- ----------- ----------- -----------
Net increase (decrease) ............................. (18,663) (56,660) (98,406) 1,203,177
----------- ----------- ----------- -----------
Shares outstanding at end of period ................. 459,236 477,899 4,328,550 4,426,956
=========== ============ =========== ===========
*Includes undistributed (distributions in excess of)
investment income--net .............................. $ 40,408 $ 27,594 $ 23,302 $ 40,017
=========== ============ =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
LAZARD RETIREMENT SERIES, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
LAZARD RETIREMENT LAZARD RETIREMENT
INTERNATIONAL EQUITY PORTFOLIO EMERGING MARKETS PORTFOLIO
------------------------------ -----------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2003 DECEMBER 31, JUNE 30, 2003 DECEMBER 31,
(UNAUDITED) 2002 (UNAUDITED) 2002
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss)--net ...................... $ 832,389 $ 397,193 $ 90,206 $ 72,165
Realized gain (loss) on investments and
foreign currency--net ............................ (1,714,782) (5,333,647) 104,438 (650,942)
Change in unrealized appreciation (depreciation)--net 6,053,810 292,792 891,823 81,128
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations .................................... 5,171,417 (4,643,662) 1,086,467 (497,649)
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From investment income--net ........................ -- (37,072) -- (54,276)
----------- ----------- ----------- -----------
Net decrease in net assets resulting from distributions -- (37,072) -- (54,276)
----------- ----------- ----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from sales ............................ 26,282,603 32,242,893 1,778,191 9,983,938
Net proceeds from reinvestment of distributions .... -- 37,072 -- 54,276
Cost of shares redeemed ............................ (5,459,005) (10,996,859) (990,513) (6,428,372)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets from
capital stock transactions ......................... 20,823,598 21,283,106 787,678 3,609,842
----------- ----------- ----------- -----------
Total increase (decrease) in net assets .............. 25,995,015 16,602,372 1,874,145 3,057,917
Net assets at beginning of period .................... 48,913,031 32,310,659 7,965,309 4,907,392
----------- ----------- ----------- -----------
Net assets at end of period* ......................... $74,908,046 $48,913,031 $ 9,839,454 $ 7,965,309
=========== =========== =========== ===========
SHARES ISSUED AND REPURCHASED:
Shares outstanding at beginning of period .......... 6,029,034 3,552,781 1,134,215 683,959
----------- ----------- ----------- -----------
Shares sold ........................................ 3,198,306 3,754,965 254,680 1,302,294
Shares issued to shareholders from reinvestment
of distributions ................................. -- 4,361 -- 7,710
Shares repurchased ................................. (673,970) (1,283,073) (144,877) (859,748)
----------- ----------- ----------- -----------
Net increase (decrease) ............................ 2,524,336 2,476,253 109,803 450,256
----------- ----------- ----------- -----------
Shares outstanding at end of period ................ 8,553,370 6,029,034 1,244,018 1,134,215
=========== =========== =========== ===========
*Includes undistributed (distributions in excess of)
investment income--net ............................. $ 1,108,560 $ 276,171 $ 96,417 $ 6,211
=========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
23
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD RETIREMENT EQUITY PORTFOLIO
SIX MONTHS YEAR ENDED FOR THE PERIOD
ENDED ----------------------------------------------- 3/18/98* TO
6/30/03+ 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
-------- -------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 7.85 $ 9.38 $ 10.20 $ 11.53 $ 11.05 $ 10.00
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) .......... 0.03 0.06 0.06 0.07 0.06 0.02
Net realized and unrealized gain (loss) 0.70 (1.58) (0.82) (0.10) 0.83 1.06
-------- -------- -------- -------- -------- --------
Total from investment operations ...... 0.73 (1.52) (0.76) (0.03) 0.89 1.08
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income ................. -- (0.01) (0.06) (0.07) (0.06) (0.02)
Net realized gains .................... -- -- -- (1.23) (0.35) (0.01)
-------- -------- -------- -------- -------- --------
Total distributions ................... -- (0.01) (0.06) (1.30) (0.41) (0.03)
-------- -------- -------- -------- -------- --------
Net asset value, end of period .......... $ 8.58 $ 7.85 $ 9.38 $ 10.20 $ 11.53 $ 11.05
======== ======== ======== ======== ======== ========
TOTAL RETURN (a) ........................ 9.30% (16.25)% (7.47)% (0.09)% 8.16% 10.89%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 3,942 $ 3,750 $ 5,015 $ 3,232 $ 2,835 $ 2,513
Ratios to average net assets:
Net expenses (b) ...................... 1.25% 1.25% 1.25% 1.25% 1.33% 1.50%
Gross expenses (b) .................... 4.35% 3.74% 3.25% 5.07% 5.63% 21.32%
Net investment income (b) ............. 0.70% 0.58% 0.63% 0.74% 0.42% 0.53%
Portfolio turnover rate ................. 33% 94% 141% 133% 35% 40%
LAZARD RETIREMENT SMALL CAP PORTFOLIO
SIX MONTHS YEAR ENDED
ENDED ------------------------------------------------------------
6/30/03+ 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
-------- -------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 10.72 $ 13.08 $ 11.75 $ 9.82 $ 9.52 $ 9.84
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) .......... -- 0.01 0.01 0.03 0.02 --
Net realized and unrealized gain (loss) 1.26 (2.32) 2.15 2.03 0.46 (0.32)
-------- -------- -------- -------- -------- --------
Total from investment operations ...... 1.26 (2.31) 2.16 2.06 0.48 (0.32)
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income ................. -- -- (0.01) (0.03) (0.02) --
Net realized gains .................... -- (0.05) (0.82) (0.10) (0.16) --
-------- -------- -------- -------- -------- --------
Total distributions ................... -- (0.05) (0.83) (0.13) (0.18) --
-------- -------- -------- -------- -------- --------
Net asset value, end of period .......... $ 11.98 $ 10.72 $ 13.08 $ 11.75 $ 9.82 $ 9.52
======== ======== ======== ======== ======== ========
TOTAL RETURN (a) ........................ 11.75% (17.68)% 18.63% 21.05% 5.13% (3.22)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 51,861 $ 47,453 $ 42,164 $ 15,205 $ 2,709 $ 1,704
Ratios to average net assets:
Net expenses (b) ...................... 1.25% 1.25% 1.25% 1.25% 1.32% 1.50%
Gross expenses (b) .................... 1.44% 1.42% 1.67% 2.76% 7.31% 16.20%
Net investment income (loss) (b) ...... (0.07)% (0.17)% 0.09% 0.42% 0.16% (0.18)%
Portfolio turnover rate ................. 38% 108% 78% 67% 73% 61%
+ Unaudited.
* Commencement of operations.
(a) Total returns assume changes in share price and reinvestment of all
dividends and distributions. 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.
24
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
FINANCIAL HIGHLIGHTS (CONCLUDED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO
SIX MONTHS YEAR ENDED FOR THE PERIOD
ENDED ----------------------------------------------- 9/1/98* TO
6/30/03+ 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
-------- -------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 8.11 $ 9.09 $ 12.01 $ 13.49 $ 11.23 $ 10.00
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) .......... 0.08 0.05 0.01 0.10 0.08 (0.04)
Net realized and unrealized gain (loss) 0.57 (1.02) (2.90) (1.40) 2.32 1.27
-------- -------- -------- -------- -------- --------
Total from investment operations ...... 0.65 (0.97) (2.89) (1.30) 2.40 1.23
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income ................. -- (0.01) --(c) (0.08) (0.07) --
Net realized gains .................... -- -- (0.03) (0.10) (0.07) --
-------- -------- -------- -------- -------- --------
Total distributions ................... -- (0.01) (0.03) (0.18) (0.14) --
-------- -------- -------- -------- -------- --------
Net asset value, end of period .......... $ 8.76 $ 8.11 $ 9.09 $ 12.01 $ 13.49 $ 11.23
======== ======== ======== ======== ======== ========
TOTAL RETURN (a) ........................ 8.01% (10.71)% (24.06)% (9.62)% 21.41% 12.30%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 74,908 $ 48,913 $ 32,311 $ 20,937 $ 6,308 $ 513
Ratios to average net assets:
Net expenses (b) ...................... 1.25% 1.25% 1.25% 1.25% 1.31% 1.60%
Gross expenses (b) .................... 1.43% 1.65% 1.94% 2.32% 12.94% 48.67%
Net investment income (loss) (b) ...... 2.92% 0.98% 0.50% 0.72% 0.85% (0.58)%
Portfolio turnover rate ................. 17% 49% 58% 32% 22% 7%
LAZARD RETIREMENT EMERGING MARKETS PORTFOLIO
SIX MONTHS YEAR ENDED
ENDED ------------------------------------------------------------
6/30/03+ 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
-------- -------- -------- -------- -------- --------
Net asset value, beginning of period .... $ 7.02 $ 7.17 $ 7.59 $ 11.01 $ 7.26 $ 9.49
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) .......... 0.07 0.05 0.03 0.03 0.02 0.06
Net realized and unrealized gain (loss) 0.82 (0.16) (0.42) (3.12) 3.76 (2.23)
-------- -------- -------- -------- -------- --------
Total from investment operations ...... 0.89 (0.11) (0.39) (3.09) 3.78 (2.17)
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income ................. -- (0.04) (0.03) (0.01) (0.03) (0.06)
Net realized gains .................... -- -- -- (0.32) -- --
-------- -------- -------- -------- -------- --------
Total distributions ................... -- (0.04) (0.03) (0.33) (0.03) (0.06)
-------- -------- -------- -------- -------- --------
Net asset value, end of period .......... $ 7.91 $ 7.02 $ 7.17 $ 7.59 $ 11.01 $ 7.26
======== ======== ======== ======== ======== ========
TOTAL RETURN (a) ........................ 12.68% (1.50)% (5.07)% (28.07)% 52.09% (22.85)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 9,839 $ 7,965 $ 4,907 $ 4,789 $ 4,568 $ 1,249
Ratios to average net assets:
Net expenses (b) ...................... 1.60% 1.60% 1.60% 1.60% 1.64% 1.80%
Gross expenses (b) .................... 3.31% 3.92% 4.21% 4.15% 9.59% 14.37%
Net investment income (b) ............. 2.14% 0.95% 0.52% 0.42% 0.39% 0.83%
Portfolio turnover rate ................. 9% 53% 63% 54% 45% 44%
+ Unaudited.
* Commencement of operations.
(a) Total returns assume changes in share price and reinvestment of all
dividends and distributions. Periods of less than one year are not
annualized.
(b) Annualized for periods of less than one year.
(c) Amount is less than $0.01 per share.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
25
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Lazard Retirement Series, Inc. (the "Fund") was incorporated in Maryland on
February 13, 1997 and is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company. The Fund is
comprised of seven no-load portfolios (each referred to as a "Portfolio"), which
are offered only to separate accounts established by insurance companies to fund
variable annuity contracts and variable life insurance policies. The Fund may
also be offered to certain qualified pension and retirement plans and accounts
permitting accumulation of assets on a tax-deferred basis. Currently, only the
following four Portfolios, each of which is "diversified", as defined in the
Act, are 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"). Each of
the other three Portfolios had not commenced operations as of June 30, 2003.
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"), NASDAQ national market or other U.S. exchanges
or markets are based on the closing market price on the principal exchange or
market on which the security is traded, generally 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 reported sales price; securities not traded on the
valuation date are valued at the last quoted bid price.
Bonds and other fixed-income securities that are not exchange-traded are valued
on the basis of prices provided by pricing services which are based primarily on
institutional trading in similar groups of securities, or by using brokers'
quotations.
Securities for which current market quotations are not readily available are
valued at fair value as determined in good faith in accordance with procedures
approved by the Board of Directors.
(b) PORTFOLIO SECURITIES TRANSACTIONS AND INVESTMENT INCOME--Portfolio
securities transactions are accounted for on trade date. Realized gain (loss) on
sales of investments are recorded on a specific identification basis. Dividend
income is recorded on the ex-dividend date and interest income is accrued daily.
The Portfolios amortize premium and accrete discount 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 fair value of which at all times is required to be at least
equal to the principal amount, plus accrued interest, of the repurchase
transaction. If the seller defaults, and the fair value of the collateral
declines, realization of the collateral by a Portfolio may be delayed or
limited.
(d) FOREIGN CURRENCY TRANSLATION--The accounting records of the Portfolios are
maintained in U.S. dollars. Portfolio securities and other assets and
liabilities denominated in a foreign currency are translated daily into U.S.
dollars at the prevailing rates of exchange. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rates on the respective transaction dates.
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 (loss) on investments. Net realized gain (loss) on foreign
currency transactions represents net foreign currency gain (loss) from
disposition of foreign currencies, currency gain (loss) realized between the
trade and settlement dates on securities transactions, and the difference
between the amount of dividends, interest and foreign withholding taxes recorded
on a Portfolio's accounting records and the U.S. dollar equivalent amounts
actually received or paid. Net unrealized foreign currency gain (loss) arises
from changes in the value of assets and liabilities, other than investments in
securities, as a result of changes in exchange rates.
(e) FEDERAL INCOME TAXES--The Fund's policy is to continue to have each
Portfolio qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code and to distribute all its taxable income, including any
realized net capital gains, to shareholders. Therefore, no federal income tax
provision is required.
At December 31, 2002, the following Portfolios had available for federal income
tax purposes unused realized capital losses which can be used to offset future
realized capital gains as follows:
26
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
PORTFOLIO EXPIRING 2009 EXPIRING 2010
- --------- ------------- -------------
Equity $ 88,896 $ 761,551
Small Cap -- 3,603,539
International Equity 2,886,750 5,759,225
Emerging Markets 475,627 600,016
Under current tax law, certain capital and net foreign currency losses realized
after October 31 within the taxable year may be deferred and treated as
occurring on the first day of the following tax year. For the tax year ended
December 31, 2002, the following Portfolios elected to defer net capital and
currency losses arising between November 1, 2002 and December 31, 2002, as
follows:
PORTFOLIO AMOUNT
- --------- --------
Equity $ 30,237
Small Cap --
International Equity 643,349
Emerging Markets 115,476
(f) DIVIDENDS AND DISTRIBUTIONS--Each Portfolio intends to declare and to pay
dividends annually from net investment income. 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, at least 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 book/tax differences, which may result in
distribution reclassifications, are primarily due to differing treatments of
foreign currency transactions. Book/tax differences relating to shareholder
distributions may result in reclassifications among certain capital accounts.
(g) ALLOCATION OF EXPENSES--Expenses not directly chargeable to a specific
Portfolio are allocated among the Portfolios primarily on the basis of relative
net assets.
(h) 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.
(i) 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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
3. INVESTMENT MANAGEMENT, ADMINISTRATIVE AND DISTRIBUTION AGREEMENTS
The Fund has entered into an investment management agreement (the "Management
Agreement") with Lazard Asset Management LLC (the "Investment Manager"), a
subsidiary of Lazard Freres & Co. LLC ("Lazard"). Pursuant to the Management
Agreement, the Investment Manager regularly provides each Portfolio with
investment research, advice and supervision and furnishes continuously an
investment program for each Portfolio consistent with its investment objective
and policies, including the purchase, retention and disposition of securities.
Each Portfolio pays the Investment Manager a management fee, accrued daily and
payable monthly, at the annual rate set forth below as a percentage of its
average daily net assets:
PORTFOLIO ANNUAL RATE
- --------- -----------
Equity 0.75%
Small Cap 0.75
International Equity 0.75
Emerging Markets 1.00
The Investment Manager has voluntarily agreed to reduce its fees and, if
necessary, reimburse the following Portfolios if annualized operating expenses
exceed the following percentages of average daily net assets:
ANNUAL
PORTFOLIO OPERATING EXPENSES
- --------- ------------------
Equity 1.25%
Small Cap 1.25
International Equity 1.25
Emerging Markets 1.60
The Fund has entered into an administrative agreement with State Street Bank and
Trust Company ("State Street") to provide certain administrative services. Each
Portfolio bears the cost of such services at a fixed annual rate of $37,500,
plus 0.02% of average daily net assets up to $1 billion and 0.01% of average
daily net assets over $1 billion. State Street has agreed to waive one half of
the $37,500 fixed annual rate for each of the Equity and Emerging Markets
Portfolios until each Portfolio's net assets reach $25 million.
The Fund has a distribution agreement with Lazard pursuant to which Lazard acts
as distributor for shares of each Portfolio and bears the cost of printing and
mailing prospectuses to potential investors and of any advertising expenses
incurred in connection with the distribution of Portfolio shares.
27
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
Lazard provides each Portfolio with distribution services pursuant to a
Distribution and Servicing Plan (the "Plan") in accordance with Rule 12b-1 under
the Act. Under the Plan, each Portfolio pays a monthly fee to Lazard, at an
annual rate of 0.25% of the average daily net assets of the Portfolio, for
distribution and servicing of accounts. Lazard may make payments to
participating insurance companies, certain financial institutions, securities
dealers and other industry professionals, for providing these services.
Certain Directors of the Fund are Managing Directors of the Investment Manager.
The Fund pays each Director who is not an employee or an affiliated person of
the Investment Manager its allocated portion of a fixed fee of $30,000 per year,
plus $2,500 per meeting attended for the Fund and The Lazard Funds, Inc.,
another multi-series fund advised by the Investment Manager, and reimburses such
Directors for travel and other out of pocket expenses.
In addition, the Chairman of the Audit Committee for the Fund and The Lazard
Funds, Inc. also receives an annual fee of $5,000.
4. SECURITIES TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
Purchases and sales of portfolio securities (excluding short-term securities)
for the period ended June 30, 2003 were
as follows:
PORTFOLIO PURCHASES SALES
- --------- ----------- -----------
Equity $ 1,185,384 $ 1,485,377
Small Cap 16,897,463 17,711,816
International Equity 30,163,997 9,732,489
Emerging Markets 1,397,245 709,243
For the period ended June 30, 2003, no brokerage commissions were paid to Lazard
for portfolio transactions executed on behalf of the Portfolios.
28
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
BOARD OF DIRECTORS AND OFFICERS INFORMATION
(UNAUDITED)
- --------------------------------------------------------------------------------
NAME (AGE) POSITION(S) PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
ADDRESS WITH THE FUND* AND OTHER DIRECTORSHIPS HELD
- -----------------------------------------------------------------------------------------------------------------------
NON-INTERESTED DIRECTORS:
John J. Burke (74) Director Lawyer and Private Investor; Director, Pacific Steel &
50 Burning Tree Lane since April 1997 Recycling, a steel service and recycling company; Director,
Butte, MT 59701 Sletten Construction Company, a multi-state general
contractor; Trustee Emeritus, The University of Montana
Foundation.
Kenneth S. Davidson (58) Director President, Davidson Capital Management Corporation; Trustee,
Davidson Capital since April 1997 The Juilliard School; Chairman of the Board, Bridgehampton
Management Corporation Chamber Music Festival; Trustee, American Friends of the
500 Park Avenue National Gallery/London; Trustee, The Spence School.
Suite 510
New York, NY 10022
William Katz (48) Director President and Chief Executive Officer, BBDO New York, an
BBDO Worldwide since April 1997 advertising agency; Director, BBDO Worldwide.
1285 Avenue of the Americas
New York, NY 10019
Lester Z. Lieberman (72) Director Private Investor; Director, Dowel Associates, a real estate
25 Lindsley Drive since April 1997 developer; Chairman, Healthcare Foundation of NJ; Director,
Morristown, NJ 07960 Cives Steel Co.; Director, Northside Power Transmission Co.;
Advisory Trustee, New Jersey Medical School.
Richard Reiss, Jr. (59) Director Managing Partner, Georgica Advisors LLC, an investment
Georgica Advisors LLC since April 1997 manager; Director, Lazard Alternative Strategies Fund, LLC;
Carnegie Hall Tower Director, O'Charley's, Inc., a restaurant chain.
152 West 57th Street
46th Floor
New York, NY 10019
INTERESTED DIRECTORS**:
Norman Eig (62) Chairman of the Managing Director and Co-Chief Executive Officer of the
Lazard Asset Management LLC Board Investment Manager; Member of the Management Committee of
30 Rockefeller Plaza since April 1997 Lazard.
New York, NY 10112-6300
Herbert W. Gullquist (66) President and Director Managing Director, Co-Chief Executive Officer and Chief
Lazard Asset Management LLC since April 1997 Investment Officer of the Investment Manager.
30 Rockefeller Plaza
New York, NY 10112-6300
John Rutledge (54) Director Chairman, Rutledge Capital, LLC, an economics and investment
Rutledge Capital, LLC since April 1997 advisory firm; Director, Strategic Optical Holdings Corp.;
29 Horseshoe Road Director, Framed Picture Enterprise; Director, Crom
Cos Cob, CT 06807 Corporation, a water storage system manufacturer; Director,
Earle M. Jorgensen Co., a steel service center company;
Director, Amerindo Funds, Inc., a family of three investment
portfolios; Director, Vingage Corporation, a streaming video
company; Chairman of Advisory Board, Saugatuck Capital.
* Each Director serves an indefinite term, until his successor is elected, and
serves in such capacity for 15 Lazard portfolios.
** Mr. Eig and Mr. Gullquist are "interested persons" (as defined in the Act) of
the Fund ("Interested Directors") because of their positions with the
Investment Manager; Mr. Rutledge is an Interested Director because of a
family member's position with the Investment Manager.
The Fund's Statement of Additional Information contains further information
about the Directors and is available without charge by calling 800-887-4929.
29
- --------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
BOARD OF DIRECTORS AND OFFICERS INFORMATION (CONCLUDED)
(UNAUDITED)
- --------------------------------------------------------------------------------
NAME (AGE) POSITION(S)
ADDRESS WITH THE FUND* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
OFFICERS:
Nathan A. Paul (30) Vice President and Director and General Counsel of the Investment Manager; from
Lazard Asset Management LLC Secretary September 1997 to October 2000, an Associate at Schulte Roth &
30 Rockefeller Plaza since April 2002 Zabel LLP, a law firm.
New York, NY 10112-6300
Stephen St. Clair (44) Treasurer Fund Administration Manager of the Investment Manager.
Lazard Asset Management LLC since April 2003
30 Rockefeller Plaza
New York, NY 10112-6300
Brian D. Simon (40) Assistant Secretary Vice President of the Investment Manager; from July 1999 to
Lazard Asset Management LLC since November 2002 October 2002, Vice President, Law & Regulation at J. & W. Seligman
30 Rockefeller Plaza & Co.; from July 1997 to July 1999, an Associate at Schulte Roth &
New York, NY 10112-6300 Zabel LLP, a law firm.
* Each Officer serves an indefinite term, until his successor is elected, and
serves in such capacity for 15 Lazard portfolios.
30
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[This page intentionally left blank]
LAZARD RETIREMENT SERIES, INC.
30 Rockefeller Plaza
New York, New York 10112-6300
Telephone: 800-887-4929
http://www.LazardNet.com
INVESTMENT MANAGER
Lazard Asset Management LLC
30 Rockefeller Plaza New York,
New York 10112-6300
Telephone: 800-887-4929
DISTRIBUTOR
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10112-6300
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 8514
Boston, Massachusetts 02266-8514
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
http://www.stroock.com
This report is for the information of the shareholders of Lazard Retirement
Series, Inc. Its use in connection with any offering of the Fund's shares is
authorized only in the case of a concurrent or prior delivery of the Fund's
current Prospectus.
[LOGO]
[LOGO] LAZARD Lazard Retirement Series, Inc.
30 Rockefeller Plaza Tel 800-887-4929
New York, NY 10112-6300 www.LazardNet.com
RT03101
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Registrant's principal executive and principal financial officers have
concluded, based on their evaluation of the Registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report, that
the Registrant's disclosure controls and procedures are reasonably designed to
ensure that information required to be disclosed by the Registrant on Form N-CSR
is recorded, processed, summarized and reported within the required time periods
and that information required to be disclosed by the Registrant in the reports
that it files or submits on Form N-CSR is accumulated and communicated to the
Registrant's management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure.
(b) There were no changes to the Registrant's internal controls over financial
reporting that occurred during the Registrant's most recently ended fiscal
half-year that has materially affected, or is reasonably likely to materially
affect, the Registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive and principal financial officers as
required by Rule 30a-2(a) under the Investment Company Act of 1940.
(b) Certification of principal executive and principal financial officers as
required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LAZARD RETIREMENT SERIES, INC.
By: /s/ Norman Eig
---------------------------
Norman Eig
Chief Executive Officer
Date: August 22, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ Norman Eig
---------------------------
Norman Eig
Chief Executive Officer
Date: August 22, 2003
By: /s/ Stephen St. Clair
---------------------------
Stephen St. Clair
Chief Financial Officer
Date: August 22, 2003
EXHIBIT INDEX
(a)(2) Certifications of principal executive and principal
financial officers as required by Rule 30a-2(a) under the
Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial
officers as required by Rule 30a-2(b) under the Investment
Company Act of 1940. (EX-99.906CERT)