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About Lazard Global Total Return & Income Fund

 

LGI Conference Call August 25, 2004 Click here to play audio
Meet The Investment Team
10 FAQ's - LGI
 
Today, investment opportunities transcend national boundaries and traditional assumptions. The challenge is to identify the winners in the global competitive fray, while also backing the newcomers who will be tomorrow’s top performers.

Investment Objective

  • Objective is total return, consisting of capital appreciation and current income.
  • Invests in a portfolio of approximately 35 to 45 equities with a market cap of $5
    billion or greater, which are domiciled in those countries that comprise the MSCI
    World Index.
  • Seeks enhanced income by investing in emerging market debt instruments,
    including emerging market forward currency contracts.

There is no guarantee that the Fund will achieve its investment objective.

Why Global Investing?

  • Today, the world’s non-U.S. countries provide 48.5% of the world’s stock market capitalization and 67.5% of the world’s GDP. *
  • For a portfolio invested mostly in U.S. assets, investing in low-correlation assets (such as non-U.S. stocks, ADRs, and emerging market currency and debt instruments) may dampen volatility and broaden the portfolio’s opportunities, which may lead to enhanced performance.

Potential Tax Advantages

The Fund invests in global companies that may generate cash flow and pay dividends. Provisions of the 2003 tax bill have provided opportunities for investors by:

  • Lowering the tax rate on long-term capital gains to 15% (from 20%); and
  • Significantly lowering the U.S. tax rate on qualified dividend income (now 15%,
    versus the former rate of 38.6%)**

Offers Potential for Higher Income from Leverage

The Fund intends to use financial leverage, of up to about 33% of total assets, by investing primarily in forward currency contracts, as well as through borrowing used for the purpose of investing in other emerging market currency or debt instruments.***

 

Meet the Investment Team

 

 

Portfolio Management Team

James Donald is responsible for overall management of the Fund's portfolio, while the portfolio management teams will manage global equity investments and currency investments, respectively.

James is a Portfolio Manager/Analyst on the Emerging Markets Equity team and Head of the Emerging Markets Group. He began working in the investment field in 1985. Prior to joining Lazard in 1996, James was a Portfolio Manager with Mercury Asset Management. He has a BA (Hons) in history from the University of Western Ontario.



 

Global Equity Team

  Andrew Lacey and Michael Powers are the portfolio managers responsible for investing the portion of the Fund's assets allocated to Global Equity investments.
Andrew Lacey is Deputy Chairman of Lazard Asset Management responsible for oversight of the firm's U.S. and global strategies. He is also a Portfolio Manager/Analyst on various U.S. and global equity portfolio teams. Andrew began working in the investment field in 1995 when he joined Lazard as a member of Lazard's Global Research Platform. He has an MBA from Columbia University and a BA (Hons) from the College of Social Studies, Wesleyan University. Andrew is currently on the Board of Trustees of the Link Community School.
Michael Powers is a Portfolio Manager/Analyst on the Global Equity and International Equity portfolio teams. He began working in the investment field in 1990 when he joined Lazard. Michael has an MBA from Long Island University and a BA from Brown University.
  Emerging Market Currency and Debt Team
  Ardra Belitz and Ganesh Ramachandranare the portfolio managers responsible for investing the Fund's assets allocated to emerging market, currency and debt investments.

Ardra Belitz is a Director of Lazard Asset Management LLC and a Portfolio Manager/Analyst specializing in emerging markets currency and debt. She has been a member of the Emerging Income management team since 1998. Ardra began working in the investment industry in 1994. Prior to joining Lazard in 1996, she worked at Bankers Trust Company. Ardra has her BA in Economics from Brandeis University, from which she graduated Phi Beta Kappa.
Ganesh Ramachandran Ganesh Ramachandran is a Director of Lazard Asset Management LLC and a Portfolio Manager/Analyst specializing in emerging markets currency and debt. Ganesh has been a member of the Emerging Income management team since early 2001. He began working in the investment field in 1997 when he joined the Firm. Ganesh has his MBA from the University of Rochester, Simon School of Business and a BS in Chemical Engineering from the Indian Institute of Technology at Madras.

 


Ten Frequently Asked Questions - LGI

 

  What is Lazard Global Total Return & Income Fund?
  What is the investment objective of the Fund?
  What is the Fund’s ticker?
  What experience does Lazard have in managing these types of investments?
  What is the composition of the Lazard Global Total Return and Income Fund?
 

What are some of the risks associated with leverage?

  Will the Fund offer dividend reinvestment?
  Isn’t investing in emerging market currencies risky?
  How are shares of Lazard Global Total Return and Income Fund bought and sold?
  What are the tax implications of an investment in the Fund?
   
   

1. What is Lazard Global Total Return & Income Fund?

A. Lazard Global Total Return & Income Fund is a closed-end investment company that:

  • Seeks total return, consisting of capital appreciation and income
  • Focuses primarily on global equity securities that are financially productive
  • Has the potential to enhance income by investing in emerging market forward currency contracts and other emerging market debt instruments
  • Includes the potential for enhanced yield with the use of leverage.

2. What is the investment objective of the Fund?

A. The Fund’s objective is total return, consisting of capital appreciation and current income. The Fund seeks to achieve its objectives by investing in a portfolio of approximately 35 to 45 equity securities with a market cap of $5 billion or greater at the time of purchase, which are domiciled in those countries that comprise the MSCI World IndexSM.

The Fund seeks enhanced income by investing in emerging market debt instruments, including emerging market forward currency contracts.

3. What is the Fund’s ticker?

A. The Fund’s ticker symbol on the New York Stock Exchange is "LGI".

4. What experience does Lazard have in managing these types of investments?

A.Lazard Asset Management has been managing equities since 1971. The firm has been managing its Global Equity strategy since 1986 and its Global Equity Select strategy since 1994. The portfolio managers seek to invest substantially all of the Fund’s net assets using a global equity strategy while seeking exposure to emerging market forward currency contracts and debt instruments.

Global Equity Strategy - The Fund invests in a portfolio of approximately 35 to 45 equity securities of companies with a market capitalization of $5 billion or greater at the time of purchase that are domiciled in those countries that comprise the MSCI World IndexSM (Global Equity investments).

Emerging Income Strategy – The Fund invests in emerging market currencies (primarily by entering into forward currency contracts), or instruments whose value is derived from the performance of an underlying emerging market currency, but also may invest in debt obligations, including government, government agency, and corporate obligations and structured notes denominated in emerging market currencies (collectively, Currency investments).

5. What is the composition of the Lazard Global Total Return and Income Fund?

A. The Fund will invest substantially all its net assets using a global equity strategy, and will seek to obtain exposure to emerging market currencies and debt instruments using the emerging income strategy, but will limit such strategy to 33 1/3% or less of the Fund’s total assets (including currency investments and any borrowings).

*Forward currency contracts and borrowed funds generally will comprise 100% of leverage. The Fund has reserved the right to issue preferred stock in the future, but does not currently intend to do so.

6. What are some of the risks associated with leverage?

A. Using leverage is a speculative investment technique and involves certain risks. These include:

  • Higher volatility of net asset value and possibly more volatility in the market value of common stock of the Fund
  • The potential that the Fund’s return will fall if the interest rate on any borrowings rises, and income levels may fluctuate if the interest rate of borrowings varies
  • The management fee may be higher as a result of leverage, because it will be calculated on a basis that includes the leverage used.
  • It should be noted though, that the Lazard Global Total Return & Income Fund, does not seek to profit from utilizing a leveraged spread-play. That is to say, the Fund is not borrowing at the short-end of the yield curve in order to invest at the longer-end of the yield curve (and profit from the spread). On the contrary, the leveraged portion of the Lazard Global Total Return & Income Fund invests in very short duration instruments (typically, less than 12-months), and instead seeks to profit from accessing the high yields available in emerging market local currency debt.

7. Will the Fund offer dividend reinvestment?

A. All dividends, including any capital gain dividends, on common stock will automatically be reinvested under the Dividend Reinvestment Plan. A shareholder may elect to receive all distributions in cash paid by check mailed directly to him or her by EquiServe, in its function as dividend paying agent.

8. Isn’t investing in emerging market currencies risky?

A. It is true these investments may increase the risks of investing in the Fund. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and significant devaluation may occur subsequent to investments in these currencies by the Fund. Other risks include the dependence on the investment manager’s ability to predict movements in exchange rates and imperfect correlations between movements in exchange rates.

However, the key is that correlations between emerging market forward currency contracts and debt instruments is very low, so the diversification benefits on a portfolio level are significant. Furthermore, the average duration of the currency portfolio is typically less than 12-months. The currency portfolio's diversification and low duration help to significantly reduce the risk of this strategy. For a complete discussion of the associated risks, please consult the Fund's prospectus.

9. How are shares of Lazard Global Total Return and Income Fund bought and sold?

A. Shares of the Fund are traded on the New York Stock Exchange (LGI) and are bought and sold in much the same way one would buy corporate stocks – through broker-dealers and investment firms.

10. What are the tax implications of an investment in the Fund?

A. American Depository Receipts (ADRs) represent a significant portion of the Fund's net assets. The United States’ 2003 tax bill now provides ADRs with the same tax treatment as U.S. stocks (with respect to dividend payments).

This means that dividends paid by a non-U.S. company with an ADR in the U.S. market will be subject to the new, lower dividend tax rate of a maximum 15% (for qualifying dividend income). There is also the possibility that ordinary shares will be purchased for the Fund. Dividends paid on shares of certain foreign corporations will also be subject to the 15% tax. Keep in mind, however, that certain holding periods and other requirements must be met by a shareholder and by the Fund for distributing to be eligible for these preferential tax rates.

For more information, contact your advisor.


The Fund’s ticker symbol on the New York Stock Exchange is “LGI”. For more information please contact your advisor or call Lazard Asset Management at 800-823-6300.

 

LGI Closed-End Fund Disclosures

* Sources: FactSet, MSCI (1/31/04)

** ADRs and foreign stocks are still subject to foreign dividend withholding tax. Certain holding period and other requirements must be met by you and the Fund for distributions to be eligible for corporate dividends received deduction or for the preferential individual tax rates that apply to qualified dividend income, as the case may be.

*** Using leverage is a speculative investment technique and involves certain risk, including increasing the risk of loss and volatility in the market price of the Fund's common stock and in its NAV.

Past performance is no guarantee of future results. An investment in the Fund involves risk, including the risk of loss.

An investor may not purchase shares directly from the Fund. Shares are listed on the New York Stock Exchange (ticker symbol “LGI”). An investment in shares of the Fund involve risks, including the risk of loss of the amount you may invest. Interested investors should contact their broker or financial advisor for additional information.

 

 

 

 

 

 

 

 


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