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
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
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
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
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
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
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.