Form 497K LAZARD FUNDS INC
Lazard Funds Summary Prospectus April 29, 2016
Before you invest, you may want to review the Portfolios Prospectus, which contains more information about the Portfolio and its risks. The Portfolios Prospectus and Statement of Additional Information (SAI), both dated April 29, 2016 (as revised or supplemented), are incorporated by reference into this Summary Prospectus. You can find the Portfolios Prospectus, SAI and other information about the Portfolio online at www.LazardNet.com/lam/us/lazardfunds.shtml. You can also get this information at no cost by calling (800) 823-6300 or by sending an e-mail request to [email protected].
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Institutional |
Open |
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Lazard Enhanced Opportunities Portfolio |
LEOIX |
LEOOX |
Investment Objective
The Portfolio seeks current income and long-term capital appreciation.
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio, a series of The Lazard Funds, Inc. (the Fund).
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Institutional |
Open |
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Shareholder Fees (fees paid directly from your investment) |
1.00% |
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1.00% |
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Annual Portfolio Operating Expenses (expenses that you pay each year as a |
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Management Fees |
1.40% |
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1.40% |
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Distribution and Service (12b-1) Fees |
None |
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.25% |
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Other Expenses |
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Dividend Expenses on Securities Sold Short1 |
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Borrowing Expenses on Securities Sold Short2 |
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Remainder of Other Expenses |
12.05% |
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24.81% |
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Total Other Expenses |
12.05% |
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24.81% |
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Total Annual Portfolio Operating Expenses |
13.45% |
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26.46% |
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Fee Waiver and Expense Reimbursement3 |
11.75% |
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24.51% |
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Total Annual Portfolio Operating Expenses After Fee Waiver and Expense Reimbursement |
1.70% |
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1.95% |
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1 |
When there is a cash dividend declared on a security the Portfolio has borrowed to sell short, the Portfolio pays the lender an amount equal to the dividend and this payment is recorded as an expense. |
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2 |
Net borrowing expenses on securities sold short, in which the Portfolio may receive income or be charged a fee on the borrowed securities. |
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3 |
Reflects a contractual agreement by Lazard Asset Management LLC (the Investment Manager) to waive its fee and, if necessary, reimburse the Portfolio until May 1, 2017 to the extent Total Annual Portfolio Operating Expenses exceed 1.70% and 1.95% of the average daily net assets of the Portfolios Institutional Shares and Open Shares, respectively, exclusive of taxes, brokerage, interest on borrowings, dividend and interest expenses on securities sold short, fees and expenses of Acquired Funds and extraordinary expenses, and excluding shareholder redemption fees or other transaction fees. This agreement can only be amended by agreement of the Fund, upon approval by the Funds Board of Directors, and the Investment Manager to lower the net amount shown and will terminate automatically in the event of termination of the Investment Management Agreement between the Investment Manager and the Fund, on behalf of the Portfolio. |
Example
This Example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then hold or redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return each year and that the Portfolios operating expenses remain the same, giving effect to the fee waiver and expense reimbursement arrangement in year one only. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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1 Year |
3 Years |
5 Years |
10 Years |
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Institutional Shares |
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$ |
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173 |
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$ |
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2,722 |
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$ |
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4,858 |
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$ |
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8,806 |
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Open Shares |
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$ |
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198 |
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$ |
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4,544 |
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$ |
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7,225 |
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$ |
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10,251 |
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Portfolio Turnover
The Portfolio pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Portfolio shares are held in a taxable account. These costs, which are not reflected in annual portfolio operating expenses or in the Example, affect the Portfolios performance. For the last fiscal year, the Portfolios portfolio turnover rate was 639% of the average value of its portfolio.
Principal Investment Strategies
The Portfolio seeks to achieve its investment objective over a full market cycle through a hedged strategy investing primarily in convertible fixed income and preferred securities (including those rated below investment grade (junk)). The strategy utilizes a relative value approach, focusing on convertible securities that are considered to have low volatility. It is expected that the Portfolio will invest primarily in small and mid cap companies. The Portfolio also will utilize selective strategy level and position level hedges, primarily through short selling and derivatives, seeking to minimize macro risk (equity and credit) and interest rate risk. The Portfolio may invest in convertible debt and preferred securities of any maturity and any quality. Convertible securities held in the Portfolio generally are expected to have maturities between three and seven years at the time of investment, or between five and seven years if invested at issuance. Preferred securities generally are of perpetual maturities, callable at various points determined by the issuer. The Portfolio management team utilizes bottom up fundamental credit, equity and quantitative analysis in conjunction with top down macroeconomic analysis to identify individual securities believed to offer compelling value versus comparable risk return.
The Portfolio will generally have short positions through selling securities short and through investments in derivative instruments, principally swap agreements on individual securities, and may use short positions to seek to increase returns or to reduce risk. A short sale involves the sale of a security that the Portfolio does not own in the expectation of purchasing the same security (or a security exchangeable therefor) at a later date and at a lower price and profiting from the price decline. Similarly, when taking short positions with respect to securities through investments in derivative instruments, the Investment Manager is expecting the value of such securities to fall during the period of the Portfolios investment exposure.
Although the Portfolios investment focus is US companies, the Portfolio also may invest in non-US companies, including depositary receipts and shares. At certain times, based on the currently existing market environment, the Investment Manager may not believe it is able to find sufficient opportunities to invest in convertible fixed income and preferred securities and/or take short positions and may determine to tactically shift the Portfolio to invest substantially in money market instruments, such as short-term US Treasury securities and certificates of deposit.
The Portfolio may invest in exchange-traded open-end management investment companies (ETFs) and similar products, which generally pursue a passive index-based strategy.
In addition, the Portfolio may, but is not required to, enter into futures and forward currency contracts and equity, interest rate, credit default and currency swap agreements; and write put and call options on securities (including ETFs), indexes and currencies, for hedging purposes or to seek to increase returns.
It is expected that the Portfolio will buy and sell securities, and take short positions in securities, frequently in connection with implementing its investment strategy.
The Portfolio is classified as non-diversified under the Investment Company Act of 1940, as amended (the 1940 Act), which means that it may invest a relatively high percentage of its assets in a limited
2Summary Prospectus |
number of issuers, when compared to a diversified fund.
Principal Investment Risks
The value of your investment in the Portfolio will fluctuate, which means you could lose money.
Short Position Risk. Short positions may involve substantial risks. If a short position appreciates in value during the period of the Portfolios investment, there will be a loss to the Portfolio that could be substantial. Short positions involve more risk than long positions because the maximum sustainable loss on a security purchased is limited to the amount paid for the security plus the transaction costs. However, the Portfolios potential loss on a short position is unlimited because, theoretically, there is no limit to the potential price increase of a security.
Convertible Securities Risk. The market value of convertible securities may perform like that of non-convertible fixed income securities; that is, their prices move inversely with changes in interest rates (i.e., as interest rates go up, prices go down). In addition, convertible securities are subject to the risk that the issuer will not make interest or principal payments, or will not make payments on a timely basis. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security also is subject to the same types of market and issuer risks that apply to the underlying common stock.
Fixed Income and Debt Securities Risk. The market value of a debt security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The debt securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening.
Prices of bonds and other debt securities tend to move inversely with changes in interest rates. Interest rate risk is usually greater for fixed-income securities with longer maturities or durations. A rise in interest rates (or the expectation of a rise in interest rates) may result in periods of volatility, decreased liquidity and increased redemptions, and, as a result, the Portfolio may have to liquidate portfolio securities at disadvantageous prices. Risks associated with rising interest rates are heightened given that interest rates in the US and other countries are at or near historic lows.
The Portfolios investments in lower-rated, higher-yielding securities (junk bonds) are subject to greater credit risk than its higher rated investments. Credit risk is the risk that the issuer will not make interest or principal payments, or will not make payments on a timely basis. Non-investment grade securities tend to be more volatile, less liquid and are considered speculative. If there is a decline, or perceived decline, in the credit quality of a debt security (or any guarantor of payment on such security), the securitys value could fall, potentially lowering the Portfolios share price. The prices of non-investment grade securities, unlike investment grade debt securities, may fluctuate unpredictably and not necessarily inversely with changes in interest rates. The market for these securities may be less liquid and therefore these securities may be harder to value or sell at an acceptable price, especially during times of market volatility or decline.
Some fixed income securities may give the issuer the option to call, or redeem, the securities before their maturity. If securities held by the Portfolio are called during a time of declining interest rates (which is typically the case when issuers exercise options to call outstanding securities), the Portfolio may have to reinvest the proceeds in an investment offering a lower yield (and the Portfolio may not fully benefit from any increase in the value of its portfolio holdings as a result of declining interest rates).
Adjustable rate securities provide the Portfolio with a certain degree of protection against rises in interest rates, although such securities will participate in any declines in interest rates as well. Certain adjustable rate securities, such as those with interest rates that fluctuate directly or indirectly based on multiples of a stated index, are designed to be highly sensitive to changes in interest rates and can subject the holders thereof to extreme
Summary Prospectus3 |
reductions of yield and possibly loss of principal. Certain fixed income securities may be issued at a discount from their face value (such as zero coupon securities) or purchased at a price less than their stated face amount or at a price less than their issue price plus the portion of original issue discount previously accrued thereon, i.e., purchased at a market discount. The amount of original issue discount and/or market discount on certain obligations may be significant, and accretion of market discount together with original issue discount will cause the Portfolio to realize income prior to the receipt of cash payments with respect to these securities.
Preferred Securities Risk. There are various risks associated with investing in preferred securities. In addition, unlike common stock, participation in the growth of an issuer may be limited.
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Credit risk is the risk that a security held by the Portfolio will decline in price or the issuer of the security will fail to make dividend, interest or principal payments when due because the issuer experiences a decline in its financial status. |
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Interest rate risk is the risk that securities will decline in value because of changes in market interest rates. When market interest rates rise, the market value of such securities generally will fall. |
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Preferred securities may include provisions that permit the issuer, at its discretion, to defer or omit distributions for a stated period without any adverse consequences to the issuer. |
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Preferred securities are generally subordinated to bonds and other debt instruments in an issuers capital structure in terms of having priority to corporate income, claims to corporate assets and liquidation payments, and therefore will be subject to greater credit risk than more senior debt instruments. |
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During periods of declining interest rates, an issuer may be able to exercise an option to call, or redeem, its issue at par earlier than the scheduled maturity. If this occurs during a time of lower or declining interest rates, the Portfolio may have to reinvest the proceeds in lower yielding securities (and the Portfolio may not benefit from any increase in the value of its portfolio holdings as a result of declining interest rates). |
Swap Agreements and Other Derivatives Risk. Swap agreements and other derivatives transactions, including those entered into for hedging purposes, may increase volatility or reduce returns, perhaps substantially, particularly since most derivatives have a leverage component that provides investment exposure in excess of the amount invested. Over-the-counter swap agreements, forward currency contracts, over-the-counter options on securities (including options on ETFs), indexes and currencies and other over-the-counter derivatives transactions are subject to the risk of default by the counterparty and can be illiquid. These derivatives transactions, as well as the exchange-traded futures and options in which the Portfolio may invest, are subject to many of the risks of, and can be highly sensitive to changes in the value of, the related security, interest rate, index, commodity, currency or other reference asset. As such, a small investment could have a potentially large impact on the Portfolios performance. Derivatives transactions incur cost, either explicitly or implicitly, which reduce return. Successful use of derivatives is subject to the Investment Managers ability to predict correctly movements in the direction of the relevant reference asset or market. Use of derivatives transactions, even when entered into for hedging purposes, may cause the Portfolio to experience losses greater than if the Portfolio had not engaged in such transactions.
Counterparty Credit Risk. The Portfolios investment strategy is dependent on counterparties to its securities borrowing transactions in connection with short sales of securities and counterparties to derivatives transactions. Transactions with such counterparties are subject to the risk of default by a counterparty, which could result in a loss of Portfolio assets used as collateral or the loss of monies owed to the Portfolio by a counterparty.
Small and Mid Cap Companies Risk. Small and mid cap companies carry additional risks because their earnings tend to be less predictable, their share prices more volatile and their securities less liquid than larger, more established companies. The shares of small and mid cap companies tend to trade less frequently than those of larger companies, which can have an adverse effect on the pricing of these
4Summary Prospectus |
securities and on the ability to sell these securities when the Investment Manager deems it appropriate.
Leverage Risk. The use of leverage, which the Portfolios strategy entails, may magnify the Portfolios gains or losses.
Value Investing Risk. The Portfolio invests in securities believed by the Investment Manager to be undervalued, but that may not realize their perceived value for extended periods of time or may never realize their perceived value. The securities in which the Portfolio invests may respond differently to market and other developments than other types of securities.
Market Risk. Market risks, including political, regulatory, market and economic developments, and developments that impact specific economic sectors, industries or segments of the market, can affect the value of the Portfolios investments. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers, which could adversely affect the Portfolio.
Market Direction Risk. Since the Portfolio will typically hold both long and short positions, an investment in the Portfolio will involve market risks associated with different types of investment decisions than those made for a typical long only fund. The Portfolios results will suffer both when there is a general market advance and the Portfolio holds significant short positions, or when there is a general market decline and the Portfolio holds significant long positions. In recent years, the markets have shown considerable volatility from day to day and even in intra-day trading.
Issuer Risk. The value of a security may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuers goods or services, as well as the historical and prospective earnings of the issuer and the value of its assets or factors unrelated to the issuers value, such as investor perception.
Non-US Securities Risk. The Portfolios performance will be influenced by political, social and economic factors affecting the non-US countries and companies in which the Portfolio invests. Non-US securities carry special risks, such as less developed or less efficient trading markets, political instability, a lack of company information, differing auditing and legal standards, and, potentially, less liquidity.
Foreign Currency Risk. Investments denominated in currencies other than US dollars may experience a decline in value, in US dollar terms, due solely to fluctuations in currency exchange rates. The Investment Manager does not intend to actively hedge the Portfolios foreign currency exposure.
Non-Diversification Risk. The Portfolios net asset value (NAV) may be more vulnerable to changes in the market value of a single issuer or group of issuers and may be relatively more susceptible to adverse effects from any single corporate, industry, economic, market, political or regulatory occurrence than if the Portfolios investments consisted of securities issued by a larger number of issuers.
ETF Risk. Shares of ETFs may trade at prices that vary from their NAVs, sometimes significantly. The shares of ETFs may trade at prices at, below or above their most recent NAV. In addition, the performance of an ETF pursuing a passive index-based strategy may diverge from the performance of the index. The Portfolios investments in ETFs are subject to the risks of such ETFs investments, as well as to the general risks of investing in ETFs. Portfolio shares will bear not only the Portfolios management fees and operating expenses, but also their proportional share of the management fees and operating expenses of the ETFs in which the Portfolio invests. The Portfolio may be limited by the 1940 Act in the amount of its assets that may be invested in ETFs unless an ETF has received an exemptive order from the SEC on which the Portfolio may rely or an exemption is available.
Securities Selection Risk. Securities and other investments selected by the Investment Manager for the Portfolio may not perform to expectations. This could result in the Portfolios underperformance compared to other funds with similar investment objectives or strategies.
Summary Prospectus5 |
High Portfolio Turnover Risk. The Portfolios investment strategy may involve high portfolio turnover (such as 100% or more). A portfolio turnover rate of 100%, for example, is equivalent to the Portfolio buying and selling all of its securities once during the course of the year. A high portfolio turnover rate could result in high transaction costs and an increase in taxable capital gains distributions to the Portfolios shareholders, which will reduce returns to shareholders.
Performance Bar Chart and Table
Total Returns for Institutional Shares
As of 12/31
The accompanying bar chart and table provide some indication of the risks of investing in Lazard Enhanced Opportunities Portfolio by showing the Portfolios performance for the first complete calendar year of operation compared to that of a broad measure of market performance. The bar chart shows the performance of the Portfolios Institutional Shares. Updated performance information is available at www.LazardNet.com or by calling (800) 823-6300. The Portfolios past performance (before and after taxes) is not necessarily an indication of how the Portfolio will perform in the future.
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Average Annual Total Returns
(for the periods ended December 31, 2015)
After-tax returns are shown only for Institutional Shares. After-tax returns of the Portfolios other share classes will vary. After-tax returns are calculated using the historical highest individual marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investors tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
6Summary Prospectus |
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Inception |
1 Year |
Since |
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Institutional Shares: |
12/31/14 |
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Returns Before Taxes |
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-2.32% |
-2.32% |
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Returns After Taxes on Distributions |
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-6.09% |
-6.08% |
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Returns After Taxes on Distributions and Sale of Portfolio Shares |
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-1.27% |
-3.43% |
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Open Shares (Returns Before Taxes) |
12/31/14 |
-2.57% |
-2.57% |
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BofA Merrill Lynch U.S. Convertible ex Mandatory Index |
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-2.75% |
-2.75% |
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HFRX Global Hedge Fund Index |
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-3.64% |
-3.64% |
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Management
Investment Manager
Lazard Asset Management LLC
Portfolio Managers/Analysts
Sean Reynolds, a portfolio manager/analyst on the Investment Managers capital structure and convertibles-based teams, has been with the Portfolio since December 2014.
Frank Bianco, a portfolio manager/analyst on the Investment Managers capital structure and convertibles-based teams, has been with the Portfolio since December 2014.
Purchase and Sale of Portfolio Shares
The initial investment minimums are:
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Institutional Shares* |
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$ |
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100,000 |
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Open Shares* |
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$ |
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2,500 |
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Unless the investor is a client of a securities dealer or other institution which has made an aggregate minimum initial purchase for its clients of at least $100,000 for Institutional Shares or $2,500 for Open Shares.
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The subsequent investment minimum is $50.
Portfolio shares are redeemable through the Funds transfer agent, Boston Financial Data Services, Inc., on any business day by telephone, mail or overnight delivery. Clients of financial intermediaries may be subject to the intermediaries procedures.
Tax Information
All dividends and short-term capital gains distributions are generally taxable to you as ordinary income, and long-term capital gains are generally taxable as such, whether you receive the distribution in cash or reinvest it in additional shares.
Financial Intermediary Compensation
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Portfolio through a broker-dealer or other financial intermediary (such as a bank), the Portfolio and/or the Investment Manager and its affiliates may pay the intermediary for the sale of Portfolio shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Portfolio over another investment. Ask your salesperson or visit your financial intermediarys website for more information.
00084118
Lazard Asset Management LLC 30 Rockefeller Plaza New York, NY 10112 www.lazardnet.com
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