Mutual Funds

Lazard World Dividend & Income Fund

The Lazard World Dividend & Income Fund is a closed-end management company that seeks total return through a combination of dividends, income, and capital appreciation. The Fund will pursue this objective through a world equity strategy and a short-term emerging markets and debt strategy.

  • The Fund will invest substantially all of its net assets in between 60 to 90 world equity securities that are financially productive and high dividend yielding.
  • It seeks to enhance income through exposure to short-term, emerging market forward currency contracts and other emerging markets debt instruments (limited to 33.3% or less of the Fund’s total leveraged assets), which will provide exposure to emerging market currencies.
  • These two strategies are complementary, with historically low correlation to one another, which may reduce volatility.

There can be no assurance that the Fund will meet its investment objective.

Potential for Portfolio Diversification

For portfolios primarily invested in US assets, diversification by investing in historically low correlation assets (such as non-US stocks and emerging market currency and debt instruments) may reduce volatility and overall risk, which may, in turn, enhance return.

  • Lazard World Dividend & Income Fund’s world equity strategy will be broadly diversified, consisting of US and international equity securities in both developed and emerging markets. Securities also span industry sectors and the capitalization spectrum, investing in small-, medium-, and large-cap securities.
  • The Fund’s emerging market currency and debt strategy will also be broadly diversified across countries and regions, offering the potential for portfolio diversification-- with the possibility of credit and duration protection and limited interest-rate sensitivity.

Why Dividends Matter

While the Fund’s equity investments are not chosen for yield alone, they will generally include the highest dividend-yielding stocks on Lazard’s equity platform, as well as a selection of stocks that may potentially have significant dividend growth. This is important because:

  • Typically, dividends are real earnings, not hoped-for earnings based on the potential, future growth of a stock. They also offer the potential for stable income.
  • The 2003 tax bill significantly lowered the US, tax rate on qualified dividend income of US taxpayers.

There is no assurance as to what portion of the Fund’s income, if any, will consist of qualified dividend income.

Unique Leveraging Strategy

The Fund’s unique leveraging strategy allows greater flexibility, risk management, and economic efficiency. To enhance the income potential for investors, the Fund intends to employ financial leverage, initially up to approximately 33 1/3% of total assets, by investing in forward currency contracts and/or borrowings. Leveraged assets will be used for investing in emerging market currency or debt instruments.

It should be noted though, that the Lazard World Dividend & 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 World Dividend & 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.

Using leverage is a speculative investment technique and involves certain risks.

Anticipated Asset Allocation and Emerging Income Leverage

Investing Around the World

Today, the world’s non-US countries provide 56.2% of the world’s stock market capitalization and 78.8% of the world’s GDP, a broad universe of investment opportunities to optimize a US portfolio.* For a portfolio of primarily US assets, investments in other low- or uncorrelated assets (such as non-US stocks and emerging market currency and debt instruments) may dampen volatility and broaden this type of portfolio’s opportunities, which may enhance performance.

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 world equity investments and currency investments, respectively.

James Donald, CFA
Managing Director, Portfolio Manager/Analyst
James Donald is a Portfolio Manager/Analyst on the Emerging Markets Equity team and Head of the Emerging Markets Group. James also represents emerging markets as a member of various global and international equity teams. 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.

World Equity Investments

Andrew Lacey, Patrick Ryan, and Kyle Waldhauer are the portfolio managers responsible for investing the portion of the Fund's assets allocated to World Equity investments.

Andrew Lacey
Deputy Chairman, US and Global Strategies
Andrew Lacey is Deputy Chairman of Lazard Asset Management responsible for oversight of the firm's US and global strategies. He is also a Portfolio Manager/Analyst on various US and global equity teams. Andrew began working in the investment field upon joining the Firm in 1995 as a Research Analyst covering the technology sector. From 1989 to 1994, Andrew was a teacher at the Pingry School and Buckingham Browne & Nichols. 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 and Montclair Art Museum.
Patrick Ryan, CFA
Managing Director, Portfolio Manager/Analyst
Patrick Ryan is a Managing Director and Portfolio Manager/Analyst on the Global Equity Income and Global Equity Select teams. He began working in the investment industry in 1989. Prior to joining Lazard in February 1994, Pat was an equity analyst with Hutson Management. Pat has a BS in Industrial Engineering from Columbia University School of Engineering and Applied Science.
Kyle A. Waldhauer
Senior Vice President, Portfolio Manager/Analyst
Kyle Waldhauer is a Senior Vice President and Portfolio Manager/Analyst on the Global Equity Income and Global Equity Select teams. He began working in the investment field in 1994. Prior to joining Lazard in 1998, Kyle was a financial representative at Fidelity Investments. He has a BS in Economics and Finance from Southern New Hampshire University.

Emerging Market Currency and Debt Team

Ardra Belitz and Ganesh Ramachandran are the portfolio managers responsible for investing the Fund's assets allocated to emerging market, currency and debt investments.

Ardra Belitz
Managing Director, Portfolio Manager/Analyst
Ardra Belitz is a Managing 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, CFA
Managing Director, Portfolio Manager/Analyst
Ganesh Ramachandran is a Managing Director and 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.

Frequently Asked Questions

What is Lazard World Dividend & Income Fund?

Lazard World Dividend & Income Fund Inc. is a closed-end investment company that:

  • Seeks total return through a combination of dividends, income, and capital appreciation
  • Primarily focuses on financially productive, high dividend-yielding, world equity securities
  • Seeks to enhance income through exposure to short-term, emerging market forward currency contracts and other emerging market debt instruments
  • The two strategies are complementary, with historically low correlation to one another, which may result in reduced volatility

What is the investment objective of the Fund?

The Fund’s investment objective is total return through a combination of dividend, income, and capital appreciation. The Fund will pursue its objective through a world equity strategy while seeking to enhance income through an emerging income strategy. The Fund will invest substantially all of its net assets in between 60 to 90 world equities. Leveraged assets will be invested in a short-term emerging currency and debt strategy (limited to 33.3% or less of the fund’s total leveraged assets), which provides exposure to emerging market currencies.

World Equity: The Fund will generally invest in between 60 to 90 of the highest dividend yielding world equities selected from current holdings already managed in Lazard accounts (with inceptions as far back as 1985). The portfolio is primarily driven by bottom-up stock selection and fundamental sector research. Companies are not chosen for yield alone.

Emerging Income: The leveraged portion of the Fund will be invested in a diversified, short-duration (typical duration below one year) emerging market currency and debt strategy that has been managed at Lazard since 1995. It has an investment universe of over 40 emerging countries from which to choose local currency-based debt obligations.

Dividends can be an important component of a stock’s total return. In addition, investing in emerging market forward currency contracts and debt instruments, for which borrowers are generally required to pay higher interest rates, typically results in higher yields.

What is the Fund’s ticker?

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

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

Lazard has managed portfolios, worldwide, for more than 30 years. The Fund offers access to world markets through a selection of 60 to 90 of Lazard’s highest dividend yielding securities, which will be chosen from across more than 30 of its U.S. and International portfolios spanning regions, capitalization ranges, and industry sectors (with inceptions going back as far as 1985) and through a portfolio of emerging market currency and debt instruments that further broaden the opportunity set (a strategy that has been managed at Lazard since 1995).

What is the composition of the Lazard World Dividend & Income Fund?

The Fund allocation is expected to be as follows: World Equity Investments (66 2/3%—100%) and Emerging Market Currency and Debt (up to 33 1/3%).

What are some of the risks associated with leverage?

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 World Dividend & 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 World Dividend & 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.

Will the Fund offer dividend reinvestment?

Yes, dividends and capital gains distributions will be reinvested automatically in the Fund unless the investor chooses to receive distributions in cash.

If a client does not elect to participate, he or she will receive all distributions in cash paid by check mailed directly to him or her by EquiServe, in its function as dividend paying agent.

Isn’t investing in emerging market currencies risky?

It is true these investments may increase the risks of investing in the Fund. However, Lazard's emerging market currency and debt strategy has been based on data and active management, over the past 10 years, which shows that it is possible to earn high risk-adjusted returns by purchasing emerging market forward currency contracts and debt instruments while diversifying currency devaluation risk both within each region and across regions, defined as Latin America, Central and Eastern Europe, Africa, the Middle East, Africa, and Asia.

The key is that historically, correlations between emerging market forward currency contracts and debt instruments are very low; hence the diversification benefits on a portfolio level are significant. The strategy is predicated on two assumptions: first, that correlations between currency movements are low enough to make diversification efficient; and second that the returns are high enough to compensate for the risks. Historical data have supported both assumptions.

An investor should consult the prospectus for a complete discussion of the associated risks.

How are shares of Lazard World Dividend & Income Fund bought and sold?

Shares of the Lazard World Dividend and Income Fund will be listed and traded on the New York Stock Exchange with the ticker symbol “LOR.”

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

The 2003 tax bill extended the 15% maximum individual net long-term capital gains tax rate to dividends from the U.S. and from certain foreign corporations that are eligible for benefits under prescribed tax treaties with the United States-- versus what used to be a maximum 38.6% tax rate. This means that the after-tax income you get from dividend yields may now be as valuable as your after-tax dollars from long-term capital gains. ²

Foreign stocks are still subject to foreign dividend withholding tax. You and the Fund must meet certain holding-period and other requirements for distributions to be eligible for corporate dividends received deduction or for preferential individual tax rates that apply to qualified dividend income, as the case may be.

For more information, contact your advisor.

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

* Sources: FactSet, as of 12/31/2004. Includes companies with a market capitalization of $100 million USD. The U.S. Central Intelligence Agency’s, The World Factbook 2005 (year-end 2004 GDP estimate).

2 Source: Financial Analysts Journal, “Dividends and the Frozen Orange Juice Syndrome”
There is no assurance as to what portion of the Fund’s income, if any, will consist of qualified dividend income.

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 “LOR”). An investment in shares of the Fund involves risks, including the risk of loss of the amount you may invest. Interested investors should contact their broker or financial advisor for additional information.

LOR Closed-End Fund Disclosures