<PAGE> 1
THE LAZARD FUNDS, INC.
---------------------------
SEMI-ANNUAL REPORT
June 30, 1995
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza, New York, New York 10020
(800) 823-6300
<PAGE> 2
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The Lazard Funds, Inc.
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<TABLE>
<CAPTION>
BOARD OF DIRECTORS
- ---------------------------------
<S> <C>
JOHN J. BURKE(1) Retired Vice Chairman, Montana Power Company
NORMAN EIG(2) Managing Director, Lazard Freres & Co. LLC
HERBERT W. GULLQUIST(2) Managing Director, Lazard Freres & Co. LLC
LESTER Z. LIEBERMAN(1) Private Investor
RICHARD REISS(1) Managing Partner, Cumberland Associates
JOHN RUTLEDGE(1) President, Rutledge and Company
</TABLE>
<TABLE>
<CAPTION>
OFFICERS
- ---------------------------------
<S> <C>
NORMAN EIG Chairman of the Board
HERBERT W. GULLQUIST President
WILLIAM G. BUTTERLY, III Vice President and Secretary
GUS COUTSOUROS Treasurer
</TABLE>
Member of (1) Audit Committee (2) Executive Committee
<PAGE> 3
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The Lazard Funds, Inc.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<S> <C>
Overview........................................................................ 2
Lazard Equity Portfolio
Portfolio of Investments................................................... 7
Lazard International Equity Portfolio
Portfolio of Investments................................................... 9
Lazard International Fixed-Income Portfolio
Portfolio of Investments................................................... 11
Lazard Bond Portfolio
Portfolio of Investments................................................... 14
Lazard Strategic Yield Portfolio
Portfolio of Investments................................................... 15
Lazard Small Cap Portfolio
Portfolio of Investments................................................... 18
Lazard International Small Cap Portfolio
Portfolio of Investments................................................... 20
Lazard Special Equity Portfolio
Portfolio of Investments................................................... 22
Lazard Emerging Markets Portfolio
Portfolio of Investments................................................... 24
Statements of Assets and Liabilities............................................ 26
Statements of Operations........................................................ 27
Statements of Changes in Net Assets............................................. 28
Financial Highlights............................................................ 30
Notes to Financial Statements................................................... 32
Performance Table............................................................... 35
</TABLE>
1
<PAGE> 4
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The Lazard Funds, Inc.
OVERVIEW
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During the second quarter of 1995, major financial markets moved higher with the
exception of the Japanese stock market. European equity markets responded
positively to the German Bundesbank's lowering of interest rates and bond
markets around the world produced positive returns as interest rates declined by
50 to 100 basis points. In the U.S., both equity and bond markets turned in a
strong performance as inflation remained subdued and corporate profits continued
to improve. This environment--"the sweet spot of the economy"--was all the more
remarkable in that just six months ago the prevailing concern was that an overly
strong economy with near full capacity utilization and high employment would
produce inflationary pressures. But, instead, interest rates are down worldwide,
currencies have been relatively stable and there is now evidence of a global
slowdown.
Strongly divergent equity performance was again experienced by the world's two
largest markets--Japan and the U.S. For the second quarter, the S&P 500 was up
9.5%, while the Nikkei 225 was down 10.1% (in local currency). For the first six
months of 1995, the S&P 500 was up 20.2% while the Nikkei 225 was down 26.5%, a
swing of 46%! This is particularly significant in that these two markets
represent 60% of the world's stock market capitalization. Small capitalization
stocks around the world also joined the advance this past quarter as valuation
anomalies between small and large cap companies were recognized by investors and
small cap companies began to catch up with their larger brethren.
In the U.S., stocks were catapulted higher by stronger than expected corporate
earnings produced against a backdrop of continued subdued inflation. Despite the
rise in U.S. equity prices so far this year, multiples of earnings and cash
flows have expanded only modestly. In the first half of 1995, corporate profits
are estimated to have grown over 13% versus the first half of 1994, with unit
demand growth and profit margins widening as productivity gains have continued
to enhance earnings.
Cost rationalization programs, while in more advanced stages at companies which
were "early adopters," are still being implemented across a broad range of
industries and have become a global phenomenon. The maturation of this process
is yielding important strategic results. Companies which now operate at more
efficient levels are experiencing dramatic improvements in cash flows. Corporate
debt has been paid down or refinanced at lower rates and stock buyback activity
has accelerated. Cash is being re-deployed to strengthen market position through
strategic acquisitions and alliances rather than through capacity expansion. The
end result is often a broadening of industrial capacity, particularly across
national boundaries, as well as greater economies of scale. These developments
are creating enormous opportunity.
The performance of the Japanese equity market and economy were also prominent
investment topics during the quarter. Following a period of renewed optimism in
1994, a series of negative events occurred in the first six months of 1995--the
Kobe earthquake, the threat of escalating trade battles, the subway nerve gas
attack, a falling stock market, and a looming banking crisis. Evidence mounted
of the government's inability to manage the current environment. Japan is now
beginning to feel the pressures of persistent competitive disadvantages as its
productivity has dropped due to high labor costs, a strong yen, and the lack of
a meaningful fiscal policy. Financial institutions in Japan are struggling with
the hangover from the buying binge of the '80s built on asset-backed lending
with inflated assumptions of value. Japanese banks have yet to fully reflect the
extent of bad loans on their books; estimates of the scope of the reductions in
values range from 40 to 100 trillion yen, which would, at the high end,
represent 15% of Japan's GDP.
2
<PAGE> 5
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A general policy paralysis has become the order of the day in Japan as the
government has repeatedly failed to implement effective responses to the
deflationary spiral and "price destruction" which are now being experienced
across all asset classes. The resulting uncertainty has, at least in part, been
reflected in the stock market, which is now down over 60% from its high of five
years ago. With this backdrop, we continue to monitor Japanese companies and
events to search for signs that corporate managements are willing to respond to
a changing global environment.
Stock valuations, particularly those of European companies, are extremely
attractive, more so than in recent years. Stock prices have shown little
progress outside the U.S. for the last three quarters and, as a result,
valuation gaps have emerged and created compelling investment opportunities. In
an environment where company managements are increasingly shareholder-oriented
and corporate governance issues ever more important, we continue to find better
values.
3
<PAGE> 6
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THE LAZARD FUNDS, INC.
- --------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
The Lazard Equity Portfolio seeks capital appreciation through investing
primarily in common stocks of companies with relatively large capitalizations
that appear to the Investment Manager to be inexpensively priced relative to the
productivity of their equity and/or assets. Current income is incidental.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD EQUITY PORTFOLIO AND
THE UNMANAGED STANDARD & POOR'S 500 STOCK INDEX
<TABLE>
<CAPTION>
LAZARD EQUITY
PORTFOLIO S&P 500
- -----------------------------------
<S> <C> <C>
6/1/87 50000.00 50000.00
Jun-87 51550.00 52515.00
Jul-87 54230.60 55172.26
Aug-87 55586.37 57224.67
Sep-87 53863.19 55971.45
Oct-87 44544.86 43954.38
Nov-87 42273.07 40336.93
Dec-87 44133.08 43398.51
- -----------------------------------
Jan-88 45986.67 45290.68
Feb-88 47872.13 47319.70
Mar-88 47489.15 45876.45
Apr-88 48343.95 46449.91
May-88 48053.89 46747.19
Jun-88 50120.21 48906.91
Jul-88 49468.65 48789.53
Aug-88 48429.80 47062.38
Sep-88 50657.57 49076.65
Oct-88 52886.51 50494.97
Nov-88 51881.66 49697.15
Dec-88 53126.82 50581.75
- -----------------------------------
Jan-89 56473.81 54329.86
Feb-89 56247.92 52922.72
Mar-89 56979.14 54187.57
Apr-89 59600.18 57059.51
May-89 62341.79 59227.77
Jun-89 61406.66 58925.71
Jul-89 65827.94 64293.85
Aug-89 67144.50 65463.99
Sep-89 66808.78 65215.23
Oct-89 64604.09 63760.93
Nov-89 65120.92 64997.89
Dec-89 65641.89 66570.84
- -----------------------------------
Jan-90 61637.74 62190.48
Feb-90 62870.49 62911.89
Mar-90 64442.25 64623.09
Apr-90 62122.33 63078.60
May-90 66595.14 69058.45
Jun-90 66328.76 68644.10
Jul-90 66262.43 68479.36
Aug-90 60298.81 62240.89
Sep-90 57102.97 59259.55
Oct-90 57217.18 59058.07
Nov-90 60993.51 62790.54
Dec-90 62579.35 64542.39
- -----------------------------------
Jan-91 65082.52 67349.99
Feb-91 69898.63 72165.51
Mar-91 70667.51 73911.92
Apr-91 70526.18 74089.30
May-91 72783.01 77282.55
Jun-91 69434.99 73743.01
Jul-91 72698.44 77179.44
Aug-91 75751.77 79008.59
Sep-91 74691.25 77689.15
Oct-91 75587.54 78730.18
Nov-91 71581.40 75557.35
Dec-91 79741.68 84201.11
- -----------------------------------
Jan-92 80618.84 82634.97
Feb-92 82714.93 83709.23
Mar-92 80233.48 82076.90
Apr-92 79832.32 84489.96
May-92 79672.65 84903.96
Jun-92 76485.75 83638.89
Jul-92 78703.83 87059.72
Aug-92 76500.13 85275.00
Sep-92 77647.63 86281.24
Oct-92 78967.64 86574.60
Nov-92 82758.08 89526.79
Dec-92 83916.70 90627.97
- -----------------------------------
Jan-93 85511.11 91389.25
Feb-93 86537.25 92632.14
Mar-93 90258.35 94586.68
Apr-93 88453.18 92297.68
May-93 90752.96 94762.03
Jun-93 91297.48 95036.84
Jul-93 91480.08 94656.69
Aug-93 94864.84 98244.18
Sep-93 94769.98 97487.70
Oct-93 98655.54 99505.70
Nov-93 97866.30 98560.39
Dec-93 99627.89 99752.97
- -----------------------------------
Jan-94 104609.29 103144.57
Feb-94 103249.37 100349.36
Mar-94 98706.40 95974.12
Apr-94 100384.40 97202.59
May-94 101589.02 98796.72
Jun-94 99252.47 96376.20
Jul-94 102726.31 99537.33
Aug-94 107348.99 103618.37
Sep-94 105631.41 101090.08
Oct-94 107110.25 103617.33
Nov-94 103254.28 99845.66
Dec-94 103873.80 101323.37
- -----------------------------------
Jan-95 105639.66 103947.65
Feb-95 110287.80 108001.61
Mar-95 113375.86 111187.66
Apr-95 116550.38 114456.57
May-95 121445.50 119034.84
Jun-95 125210.31 121796.44
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</TABLE>
LAZARD INTERNATIONAL EQUITY PORTFOLIO
The Lazard International Equity Portfolio seeks capital appreciation through
investing primarily in the equity securities of non-United States companies.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL EQUITY PORTFOLIO
AND
THE MORGAN STANLEY CAPITAL INTERNATIONAL UNMANAGED EUROPE AUSTRALIA FAR EAST
INDEX
<TABLE>
<CAPTION>
LAZARD
INTERNATIONAL
EQUITY PORTFOLIO EAFE
- -----------------------------------------
<S> <C> <C>
10/31/91 50000.00 50000.00
Nov-91 49950.00 47665.00
Dec-91 51598.35 50129.28
- -----------------------------------------
Jan-92 52320.73 49061.53
Feb-92 52896.25 47300.22
Mar-92 51626.74 44178.40
Apr-92 52710.91 44386.04
May-92 55188.32 47359.91
Jun-92 54139.74 45115.05
Jul-92 51053.78 43960.10
Aug-92 50441.13 46716.40
Sep-92 48171.28 45791.42
Oct-92 47304.20 43387.37
Nov-92 47114.98 43795.21
Dec-92 48198.62 44022.94
- -----------------------------------------
Jan-93 47813.04 44014.14
Feb-93 48864.92 45343.37
Mar-93 50233.14 49297.31
Apr-93 51338.27 53975.62
May-93 52775.74 55114.51
Jun-93 52142.43 54254.72
Jul-93 53706.70 56153.64
Aug-93 57681.00 59180.32
Sep-93 56008.25 57848.76
Oct-93 58976.69 59630.50
Nov-93 57856.13 54418.80
Dec-93 63121.04 58347.83
- -----------------------------------------
Jan-94 69117.54 63278.22
Feb-94 66974.89 63101.05
Mar-94 64228.92 60381.39
Apr-94 66669.62 62941.56
May-94 66269.61 62582.79
Jun-94 64811.67 63465.21
Jul-94 68052.26 64080.82
Aug-94 71114.61 65599.54
Sep-94 67629.99 63533.15
Oct-94 68847.33 65648.81
Nov-94 64716.49 62491.10
Dec-94 63292.73 62884.79
- -----------------------------------------
Jan-95 60254.68 60470.02
Feb-95 60676.46 60300.70
Mar-95 61465.26 64057.44
Apr-95 64108.26 66466.00
May-95 64685.24 65675.05
Jun-95 65784.89 64519.17
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</TABLE>
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
The Lazard International Fixed-Income Portfolio seeks high total return from a
combination of current income and capital appreciation, consistent with what the
Investment Manager considers to be prudent investment risk, through investing
primarily in foreign fixed-income securities of varying maturities.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO AND
THE UNMANAGED SALOMON WORLD GOVERNMENT BOND EXCLUDING U.S. INDEX
<TABLE>
<CAPTION>
LAZARD SALOMON WORLD
INTERNATIONAL GOVERNMENT BOND
FIXED-INCOME EXCLUDING
PORTFOLIO U.S. INDEX
- -------------------------------------------
<S> <C> <C>
10/31/91 50000.0 50000.0
Nov-91 50200.0 50780.0
Dec-91 52007.2 53420.6
- -------------------------------------------
Jan-92 50499.0 52469.7
Feb-92 50549.5 52175.8
Mar-92 49841.8 51622.8
Apr-92 50140.8 51994.5
May-92 51544.8 53590.7
Jun-92 52524.1 55091.2
Jul-92 53312.0 56374.9
Aug-92 54858.1 57953.4
Sep-92 54803.2 58532.9
Oct-92 53597.5 56940.8
Nov-92 52740.0 56035.4
Dec-92 53109.1 56371.6
- -------------------------------------------
Jan-93 53958.9 57143.9
Feb-93 54984.1 58281.1
Mar-93 55973.8 59726.5
Apr-93 57821.0 61518.3
May-93 58803.9 62637.9
Jun-93 58215.9 61466.6
Jul-93 58390.5 61509.6
Aug-93 60317.4 63699.3
Sep-93 61222.2 64775.9
Oct-93 61161.0 64477.9
Nov-93 60732.8 64181.3
Dec-93 61400.9 64893.7
- -------------------------------------------
Jan-94 61830.7 65172.7
Feb-94 61707.0 65355.2
Mar-94 62139.0 66152.6
Apr-94 62014.7 66582.6
May-94 61642.6 65690.4
Jun-94 63183.7 67280.1
Jul-94 63120.5 67453.0
Aug-94 62615.5 67063.7
Sep-94 63867.8 68391.6
Oct-94 65464.5 70156.1
Nov-94 64286.2 68746.0
Dec-94 63964.7 68780.3
- -------------------------------------------
Jan-95 64924.2 70279.8
Feb-95 66936.9 72268.7
Mar-95 72425.7 78707.8
Apr-95 74453.6 80392.2
May-95 76240.5 82144.7
Jun-95 76697.9 82555.4
- -------------------------------------------
</TABLE>
4
<PAGE> 7
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THE LAZARD FUNDS, INC.
- --------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO
The Lazard Bond Portfolio seeks to build and preserve capital through investing
in a range of bonds including obligations issued or guaranteed by the U.S.
Government and its agencies or instrumentalities, mortgage-backed securities,
asset-backed securities, municipal securities and corporate fixed-income
securities.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD BOND PORTFOLIO AND
THE UNMANAGED LEHMAN GOVERNMENT/CORPORATE BOND INDEX
<TABLE>
<CAPTION>
LEHMAN
GOVERNMENT/
LAZARD CORPORATE
BOND PORTFOLIO BOND INDEX
- ------------------------------------------
<S> <C> <C>
10/31/91 50000.0 50000.0
Nov-91 50500.0 50575.0
Dec-91 51964.5 51809.0
- ------------------------------------------
Jan-92 51392.9 51337.6
Feb-92 51547.1 51537.8
Mar-92 51237.8 51336.8
Apr-92 51647.7 51788.6
May-92 52370.8 52591.3
Jun-92 53051.6 53369.6
Jul-92 54112.6 54431.7
Aug-92 54599.6 54976.0
Sep-92 55200.2 55723.7
Oct-92 54482.6 54999.3
Nov-92 54264.7 54790.3
Dec-92 54970.1 55524.5
- ------------------------------------------
Jan-93 55959.6 56607.2
Feb-93 56854.9 57501.6
Mar-93 56968.7 57731.6
Apr-93 57367.4 58193.4
May-93 57080.6 58164.3
Jun-93 58165.1 59484.7
Jul-93 58572.3 59865.4
Aug-93 59568.0 61242.3
Sep-93 59508.4 61456.6
Oct-93 59687.0 61708.6
Nov-93 59507.9 61011.3
Dec-93 59626.9 61279.7
- ------------------------------------------
Jan-94 60581.0 62198.9
Feb-94 59551.1 60843.0
Mar-94 58181.4 59352.3
Apr-94 57425.0 58859.7
May-94 57137.9 58753.8
Jun-94 57080.8 58618.6
Jul-94 58108.2 59791.0
Aug-94 58166.3 59814.9
Sep-94 56886.7 58911.7
Oct-94 56943.6 58846.9
Nov-94 56772.7 58741.0
Dec-94 57056.6 59128.7
- ------------------------------------------
Jan-95 57969.5 60264.0
Feb-95 59128.9 61662.1
Mar-95 59483.7 62075.2
Apr-95 60257.0 62944.3
May-95 62667.2 65581.6
Jun-95 63105.9 66106.3
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</TABLE>
LAZARD STRATEGIC YIELD PORTFOLIO
The Lazard Strategic Yield Portfolio seeks to obtain a total return on its
assets by placing approximately equal emphasis on capital appreciation and
current income through investing principally in high-yielding fixed-income
securities. The Strategic Yield Portfolio may invest up to 50% of its total
assets in non dollar denominated fixed-income securities of foreign issuers.
Many of the high-yielding securities in which the Lazard Strategic Yield
Portfolio invests are rated in the lower rating categories (i.e., below
investment grade) by the nationally recognized securities rating services. These
securities, which are often referred to as "junk bonds," are subject to greater
risk of loss of principal and interest than higher-rated securities and are
considered to be predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD STRATEGIC YIELD PORTFOLIO AND
THE UNMANAGED LEHMAN AGGREGATE BOND INDEX
<TABLE>
<CAPTION>
LAZARD LEHMAN
STRATEGIC AGGREGATE
YIELD PORTFOLIO BOND INDEX
- -----------------------------------------
<S> <C> <C>
10/1/91 50000.0 50000.0
Oct-91 51800.0 51485.0
Nov-91 52473.4 52082.2
Dec-91 51056.6 52686.4
- -----------------------------------------
Jan-92 50648.2 54525.1
Feb-92 51458.5 55877.4
Mar-92 52076.0 56654.1
Apr-92 52076.0 57067.6
May-92 52648.9 57980.7
Jun-92 53175.4 58699.7
Jul-92 54185.7 59885.4
Aug-92 54781.7 60681.9
Sep-92 55384.3 61373.7
Oct-92 53002.8 60594.2
Nov-92 53002.8 61454.6
Dec-92 54115.9 62247.4
- -----------------------------------------
Jan-93 55522.9 63778.7
Feb-93 56577.8 64984.1
Mar-93 57483.1 66108.3
Apr-93 57540.5 66584.3
May-93 58058.4 66670.9
Jun-93 59626.0 67877.6
Jul-93 60401.1 68264.5
Aug-93 60884.3 69459.2
Sep-93 60823.4 69646.7
Oct-93 61735.8 69904.4
Nov-93 61921.0 69310.2
Dec-93 62478.3 69684.5
- -----------------------------------------
Jan-94 63727.9 70625.2
Feb-94 62771.9 69396.3
Mar-94 61516.5 67682.2
Apr-94 60655.3 67140.8
May-94 60655.3 67134.1
Jun-94 60230.7 66986.4
Jul-94 60893.2 68319.4
Aug-94 61745.7 68401.4
Sep-94 61375.3 67395.9
Oct-94 61252.5 67335.2
Nov-94 61497.5 67187.1
Dec-94 61005.5 67650.7
- -----------------------------------------
Jan-95 60944.5 68990.2
Feb-95 61249.3 70632.1
Mar-95 61555.5 71063.0
Apr-95 62971.3 72057.9
May-95 64671.5 74846.5
Jun-95 65059.5 75392.9
- -----------------------------------------
</TABLE>
LAZARD SMALL CAP PORTFOLIO
The Lazard Small Cap Portfolio seeks capital appreciation through investing
primarily in equity securities of companies with market capitalizations under $1
billion that are believed by the Investment Manager to be inexpensively priced
relative to the productivity of their equity or assets employed.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD SMALL CAP PORTFOLIO AND
THE UNMANAGED RUSSELL 2000 STOCK INDEX
<TABLE>
<CAPTION>
LAZARD SMALL
CAP PORTFOLIO RUSSELL 2000
- ------------------------------------------
<S> <C> <C>
10/31/91 50000.0 50000.0
Nov-91 48600.0 47685.0
Dec-91 52245.0 51528.4
- ------------------------------------------
Jan-92 56581.3 55702.2
Feb-92 59127.5 57328.7
Mar-92 59127.5 55391.0
Apr-92 57708.4 53452.3
May-92 57766.1 54163.2
Jun-92 54762.3 51601.3
Jul-92 56240.9 53397.0
Aug-92 54609.9 51891.2
Sep-92 54992.2 53089.9
Oct-92 57631.8 54778.2
Nov-92 62703.4 58968.7
Dec-92 65086.1 61020.8
- ------------------------------------------
Jan-93 67103.8 63083.3
Feb-93 67707.7 61626.1
Mar-93 70957.7 63622.8
Apr-93 69325.7 61879.5
May-93 72514.6 64614.6
Jun-93 74472.5 65015.2
Jul-93 75068.3 65912.4
Aug-93 79497.4 68759.8
Sep-93 81007.8 70698.9
Oct-93 81736.9 72515.8
Nov-93 80674.3 70130.1
Dec-93 84627.3 72528.5
- ------------------------------------------
Jan-94 87758.5 74805.9
Feb-94 87846.3 74536.6
Mar-94 83717.5 70601.1
Apr-94 83633.8 71017.6
May-94 83884.7 70222.2
Jun-94 82962.0 67834.7
Jul-94 84704.2 68947.2
Aug-94 89617.0 72787.5
Sep-94 89617.0 72547.3
Oct-94 88183.2 72264.4
Nov-94 83774.0 69344.9
Dec-94 86538.5 71210.3
- ------------------------------------------
Jan-95 86192.4 70313.0
Feb-95 89898.7 73238.1
Mar-95 92056.2 74497.7
Apr-95 93989.4 76151.6
May-95 96809.1 77461.4
Jun-95 101165.5 81481.7
- ------------------------------------------
</TABLE>
5
<PAGE> 8
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
The Lazard International Small Cap Portfolio seeks capital appreciation through
investing primarily in equity securities of non-United States companies with
market capitalizations under $1 billion that are believed by the investment
manager to be inexpensively priced relative to the productivity of their equity
or assets. The Lazard International Small Cap Portfolio operates similarly to
the Lazard Small Cap Portfolio, except that this Portfolio will invest primarily
in the equity securities of non-United States issuers and, therefore, investment
determinations include, among other items, the effect of currency fluctuations
and the political and economic factors of other jurisdictions.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
AND
THE SALOMON BROTHERS WORLD EMI EX-US INDEX
<TABLE>
<CAPTION>
LAZARD SALOMON
INTERNATIONAL BROTHERS
SMALL CAP WORLD EMI
PORTFOLIO EX-US INDEX
- -----------------------------------------
<S> <C> <C>
12/1/94 50000.0 50000.0
Dec-93 54350.0 53550.0
Jan-94 60382.9 58899.6
Feb-94 59356.3 59311.9
Mar-94 55735.6 58339.2
Apr-94 55122.5 60089.4
May-94 54846.9 59230.1
Jun-94 53475.7 60474.0
Jul-94 54491.8 61163.4
Aug-94 56671.4 61811.7
Sep-94 54914.6 60043.9
Oct-94 55353.9 61130.7
Nov-94 52973.7 57316.1
Dec-94 51808.3 58084.2
- -----------------------------------------
Jan-95 50254.0 56196.4
Feb-95 49952.5 55376.0
Mar-95 48803.6 57729.4
Apr-95 49877.3 59461.3
May-95 51224.0 58420.7
Jun-95 51685.0 57702.2
- -----------------------------------------
</TABLE>
LAZARD SPECIAL EQUITY PORTFOLIO
The Lazard Special Equity Portfolio seeks capital appreciation through investing
primarily in equity securities of companies that are believed by the Investment
Manager to be undervalued in the marketplace in relation to factors such as the
respective companies' assets, earnings, earnings power or growth potential.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD SPECIAL EQUITY PORTFOLIO AND
THE UNMANAGED RUSSELL 2000 STOCK INDEX
<TABLE>
<CAPTION>
LAZARD
SPECIAL
EQUITY
PORTFOLIO RUSSELL 2000
- -----------------------------------------
<S> <C> <C>
1/16/86 50000.0 50000.0
Jan-86 49600.0 50790.0
Feb-86 52526.4 54436.7
Mar-86 55520.4 57049.7
Apr-86 56075.6 57848.4
May-86 58262.6 59815.2
Jun-86 60010.4 59755.4
Jul-86 57550.0 54168.3
Aug-86 58470.8 55890.8
Sep-86 56365.9 52442.4
Oct-86 58789.6 54524.3
Nov-86 59318.7 54338.9
Dec-86 58191.6 52768.5
- -----------------------------------------
Jan-87 63428.9 58873.9
Feb-87 68249.5 63825.2
Mar-87 69000.2 65542.1
Apr-87 67206.2 63647.9
May-87 67071.8 63444.2
Jun-87 68614.5 65074.7
Jul-87 71221.8 67105.1
Aug-87 73572.1 69091.4
Sep-87 73057.1 67833.9
Oct-87 55450.4 47056.4
Nov-87 54008.6 44538.9
Dec-87 56979.1 48124.3
- -----------------------------------------
Jan-88 58574.5 50222.5
Feb-88 62381.9 54747.5
Mar-88 65750.5 57309.7
Apr-88 68051.8 58610.6
May-88 67507.4 57034.0
Jun-88 71422.8 61100.5
Jul-88 71137.1 60520.1
Aug-88 69500.9 58976.8
Sep-88 71099.5 60539.7
Oct-88 72521.5 59867.7
Nov-88 71288.6 57886.1
Dec-88 72999.5 60161.0
- -----------------------------------------
Jan-89 75627.5 62850.2
Feb-89 76308.1 63309.0
Mar-89 78368.5 64803.1
Apr-89 79779.1 67628.5
May-89 82252.3 70543.3
Jun-89 83157.0 68927.9
Jul-89 84321.2 71588.5
Aug-89 86513.6 73335.2
Sep-89 87292.2 73569.9
Oct-89 84237.0 69214.6
Nov-89 83647.3 69678.3
Dec-89 84734.7 69943.1
- -----------------------------------------
Jan-90 80074.3 63837.1
Feb-90 81836.0 65816.0
Mar-90 83963.7 68396.0
Apr-90 83124.0 66159.4
May-90 85700.9 70843.5
Jun-90 85358.1 71027.7
Jul-90 84248.4 67916.7
Aug-90 75318.1 58829.5
Sep-90 71853.5 53599.5
Oct-90 69338.6 50324.6
Nov-90 72736.2 54164.4
Dec-90 75791.1 56293.0
- -----------------------------------------
Jan-91 80262.8 61365.0
Feb-91 85961.4 68250.2
Mar-91 89056.1 73034.5
Apr-91 90570.0 72844.6
May-91 92200.3 76312.0
Jun-91 90540.7 71901.2
Jul-91 95882.6 74417.7
Aug-91 95786.7 77163.7
Sep-91 98756.1 77757.9
Oct-91 99941.1 79810.7
Nov-91 99441.4 76115.5
Dec-91 104612.4 82250.4
- -----------------------------------------
Jan-92 107123.1 88912.7
Feb-92 111193.8 91508.9
Mar-92 113306.4 88415.9
Apr-92 112739.9 85321.3
May-92 112627.2 86456.1
Jun-92 109361.0 82366.7
Jul-92 110345.2 85233.1
Aug-92 108579.7 82829.5
Sep-92 109774.1 84742.9
Oct-92 109883.9 87437.7
Nov-92 117465.8 94126.7
Dec-92 120872.4 97402.3
- -----------------------------------------
Jan-93 123048.1 100694.5
Feb-93 122063.7 98368.5
Mar-93 124382.9 101555.6
Apr-93 121895.2 98773.0
May-93 124455.0 103138.8
Jun-93 125699.6 103778.2
Jul-93 127082.3 105210.4
Aug-93 127717.7 109755.4
Sep-93 129505.7 112850.5
Oct-93 131836.8 115750.8
Nov-93 130254.8 111942.6
Dec-93 133120.4 115771.0
- ----------------------------------------
Jan-94 133120.4 119406.2
Feb-94 133919.1 118976.4
Mar-94 134187.0 112694.4
Apr-94 133381.8 113359.3
May-94 131647.9 112089.7
Jun-94 130068.1 108278.7
Jul-94 132019.1 110054.4
Aug-94 134659.5 116184.5
Sep-94 132639.6 115801.0
Oct-94 133170.2 115349.4
Nov-94 130906.3 110689.3
Dec-94 129466.3 113666.9
- ----------------------------------------
Jan-95 129466.3 112234.6
Feb-95 133220.8 116903.6
Mar-95 134419.8 118914.4
Apr-95 137377.1 121554.3
May-95 138476.1 123645.0
Jun-95 141245.6 130062.2
- -----------------------------------------
</TABLE>
LAZARD EMERGING MARKETS PORTFOLIO
The Lazard Emerging Markets Portfolio seeks capital appreciation through
investing primarily in equity securities of non-United States issuers who are
located, or doing significant business, in emerging market countries. Emerging
market countries include countries where political and economic trends have
produced recently, or are producing, a more stable economy, or countries that
have developed recently, or are developing, financial markets and investment
liquidity. The Lazard Emerging Markets Portfolio seeks securities of issuers
whose potential is significantly enhanced by their relationship to the emerging
markets country and are believed to be inexpensively priced relative to the
productivity of their equity or assets.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD EMERGING MARKETS PORTFOLIO AND
INTERNATIONAL FINANCE CORP. INVESTABLE INDEX
<TABLE>
<CAPTION>
LAZARD
EMERGING INTERNATIONAL
MARKETS FINANCE CORP.
PORTFOLIO INVESTABLE INDEX
- --------------------------------------------
<S> <C> <C>
7/1/94 50000.00 50000.00
Jul-94 51050.00 51680.00
Aug-94 56512.35 58346.72
Sep-94 58320.75 59787.88
Oct-94 57912.50 57826.84
Nov-94 56638.42 55629.42
Dec-94 49332.07 49732.70
- --------------------------------------------
Jan-95 43214.89 43073.49
Feb-95 42134.52 42517.85
Mar-95 42050.25 42432.81
Apr-95 43311.76 44202.26
May-95 45867.15 45851.00
Jun-95 45775.42 46121.52
- --------------------------------------------
</TABLE>
6
<PAGE> 9
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--93.6%
AEROSPACE & DEFENSE--3.3%
Lockheed Martin Corp. 32,000 $ 2,020,000
McDonnell Douglas Corp. 29,800 2,287,150
------------
4,307,150
------------
AUTOMOTIVE--1.7%
Fiat SPA (a),(b) 145,500 1,600,500
Navistar International Corp. (a) 44,600 674,575
------------
2,275,075
------------
BANKS--5.5%
Chemical Banking Corp. 61,000 2,882,250
First Interstate Bancorp 32,400 2,600,100
Mellon Bank Corp. 44,300 1,843,988
------------
7,326,338
------------
BROADCASTING--3.4%
Capital Cities ABC Inc. 20,000 2,160,000
CBS Inc. 35,700 2,391,900
------------
4,551,900
------------
CHEMICALS & PLASTICS--6.7%
E I du Pont de Nemours & Co. 48,300 3,320,625
FMC Corp (a) 11,800 793,550
Hercules Inc. 57,900 2,822,625
W R Grace & Co. 32,400 1,988,550
------------
8,925,350
------------
COMMUNICATIONS--5.0%
TeleDanmark Class B (b) 53,300 1,492,400
Airtouch Communications (a) 65,800 1,875,300
U.S. West Inc. 79,400 3,305,025
------------
6,672,725
------------
COMMUNICATION SERVICES--3.8%
AT&T Corp. 57,500 3,054,687
TeleCommunications Inc. (New) Class A (a) 84,900 1,989,844
------------
5,044,531
------------
COMPUTERS & BUSINESS EQUIPMENT--1.4%
Digital Equipment Corp. (a) 45,000 1,833,750
------------
CONGLOMERATES--2.1%
ITT Corp. 23,200 2,726,000
------------
DRUGS & HEALTH CARE--7.7%
Astra AB (b) 56,100 1,725,075
American Home Products Corp. 25,900 2,004,013
Bausch & Lomb Inc. 42,100 1,747,150
Columbia/HCA Healthcare Corp. 60,225 2,604,731
Schering Plough Corp. 47,700 2,104,762
------------
10,185,731
------------
ENERGY--7.6%
Amoco Corp. 31,500 2,098,688
Kerr Mcgee Corp. 19,200 1,029,600
Mobil Corp. 31,000 2,976,000
Noble Affiliates Inc. 43,500 1,109,250
Royal Dutch Petroleum Co. (b) 23,500 2,864,062
------------
10,077,600
------------
ENTERTAINMENT--0.8%
Carnival Cruise Lines, Inc. 47,800 1,117,325
------------
FINANCIAL SERVICES--6.1%
Chase Manhattan Corp. 40,000 $ 1,880,000
Dean Witter Discover & Co. 38,342 1,802,074
Integra Financial Corp. 23,100 1,123,237
Travelers Inc. 74,000 3,237,500
------------
8,042,811
------------
FOOD & BEVERAGE--2.8%
CPC International Inc. 30,700 1,895,725
PepsiCo Inc. 40,700 1,856,938
------------
3,752,663
------------
INDUSTRIAL & MACHINERY--3.1%
Allied Signal Inc. 63,000 2,803,500
Sundstrand Corp. 22,400 1,338,400
------------
4,141,900
------------
METALS--0.9%
USX U.S. Steel Group 33,700 1,158,438
------------
OFFICE EQUIPMENT--1.5%
Xerox Corp. 17,300 2,028,425
------------
PAPER PRODUCTS--6.6%
Champion International Corp. 42,700 2,225,737
Georgia Pacific Corp. 21,700 1,882,475
Scott Paper Co. 64,000 3,168,000
Willamette Industries Inc. 26,000 1,443,000
------------
8,719,212
------------
PUBLISHING--1.2%
American Greetings Corp. 52,500 1,542,188
------------
RETAILING--8.3%
Gap Inc. 68,300 2,381,962
K Mart Corp. 79,200 1,158,300
Nike Inc. 25,000 2,100,000
Sears Roebuck & Co. 56,200 3,364,975
Toys R Us Inc. (a) 67,700 1,980,225
------------
10,985,462
------------
TECHNOLOGY--8.0%
Intel Corp. 58,600 3,710,112
International Business Machines 26,700 2,563,200
Novell Inc. (a) 96,500 1,923,969
Sun Microsystems Inc. (a) 49,700 2,410,450
------------
10,607,731
------------
TOBACCO--3.0%
Philip Morris Cos. Inc. 54,200 4,031,125
------------
TOYS & AMUSEMENTS--1.3%
Mattel Inc. 67,500 1,755,000
------------
UTILITIES--1.8%
National Power PLC (a),(b) 80,800 999,900
Southern Electric PLC (b) 71,000 1,446,625
------------
2,446,525
------------
TOTAL COMMON STOCKS
(Identified cost $104,325,406) 124,254,955
------------
</TABLE>
7
<PAGE> 10
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS--0.7%
TOBACCO--0.7%
RJR Nabisco Holdings Class C (conv.) 164,100 $ 1,005,113
------------
TOTAL PREFERRED STOCKS
(Identified cost $1,016,950) 1,005,113
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
SHORT TERM INVESTMENTS--6.3%
FEDERAL AGENCIES--5.2%
Federal National Mortgage Association
Discount Notes, 5.89%, 7/5/95 $1,690,000 1,688,894
Federal National Mortgage Association
Discount Notes, 5.90%, 7/7/95 5,215,000 5,209,872
------------
6,898,766
------------
U.S. GOVERNMENT OBLIGATIONS--1.1%
United States Treasury Bills, 5.16%,
7/6/95 880,000 879,369
United States Treasury Bills, 5.18%,
8/3/95 510,000 507,576
------------
1,386,945
------------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $8,285,711) 8,285,711
------------
TOTAL INVESTMENTS
(Identified cost $113,628,067)(c) 100.6% 133,545,779
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS (0.6) (768,304)
---- ----------
NET ASSETS 100.0% $132,777,475
---- ----------
---- ----------
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) The aggregate cost for federal income tax purposes is $113,628,067;
aggregate gross unrealized appreciation is $20,842,743 and the aggregate
gross unrealized depreciation is $925,031, resulting in net unrealized
appreciation of $19,917,712.
The accompanying notes are an integral part of these
financial statements.
8
<PAGE> 11
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS*--96.9%
AUSTRALIA--3.4%
News Corp. Ltd. (b) 983,000 $ 19,660,000
Westpac Bank Corp. 4,251,900 15,381,785
--------------
TOTAL AUSTRALIA 35,041,785
--------------
CANADA--1.2%
Inco Ltd. 435,800 12,311,350
--------------
DENMARK--1.4%
Unidanmark Class A 294,900 14,470,605
--------------
FINLAND--2.0%
Kymmene Corp. 665,300 20,717,607
--------------
FRANCE--9.9%
Accor 84,500 11,252,035
Alcatel Alsthom (Cie Gen El) 140,000 12,605,281
Banque Nationale de Paris 191,722 9,247,614
Generale des Eaux 216,292 24,075,543
Michelin Class B (a) 226,800 10,046,651
Roussel Uclaf 1,000 156,041
Roussel Uclaf 144A (b) 224,400 17,503,200
Total SA-B 308,081 18,543,411
--------------
TOTAL FRANCE 103,429,776
--------------
GERMANY--9.1%
Hoechst AG 97,600 21,088,206
Mannesmann AG 32,100 9,807,108
Mannesmann AG (b) 48,505 14,502,995
Siemens AG 44,400 22,041,073
Veba AG 70,328 27,639,937
--------------
TOTAL GERMANY 95,079,319
--------------
HONG KONG--2.2%
HSBC Holdings Ltd. 1,400,600 17,964,996
Peregrine Investment 3,718,000 5,285,482
--------------
TOTAL HONG KONG 23,250,478
--------------
INDONESIA--0.3%
Hanjaya Mandala Sampoerna 404,000 3,174,674
--------------
ITALY--1.7%
Fiat SPA (a) 8,068,400 17,554,472
--------------
JAPAN--15.5%
Dai Nippon Printing 543,000 8,649,047
DDI Corp. 3,871 31,057,519
Hitachi 2,215,000 22,083,358
Mazda Motor Corp. (a) 2,612,000 9,183,836
Mitsubishi Heavy Ind. 2,526,000 17,166,846
Omron Corp. 908,000 17,355,436
Promise Co. 203,600 8,503,852
Rohm Co., Ltd. 466,000 24,082,119
Sekisui Chemical 500,000 5,899,357
Sony Corp. 375,000 18,007,787
--------------
TOTAL JAPAN 161,989,157
--------------
MALAYSIA--0.4%
Aokam Perdana Berhad 1,567,000 3,888,577
--------------
MEXICO--1.1%
Grupo Industrial Alfa SA 966,500 11,737,176
--------------
NETHERLANDS--10.2%
Akzo NV 168,100 $ 20,091,720
Heineken NV 193,100 29,223,588
Internationale-Nederlanden Group NV 411,420 22,754,885
Nedlloyd Group NV 436,300 14,867,144
Royal Dutch Petroleum Co. (b) 164,200 20,011,875
--------------
TOTAL NETHERLANDS 106,949,212
--------------
NEW ZEALAND--2.5%
Fletcher Challenge 6,106,600 17,146,490
Lion Nathan Ltd. 4,593,900 9,090,750
--------------
TOTAL NEW ZEALAND 26,237,240
--------------
NORWAY--1.1%
Aker AS Class A 401,700 5,378,601
Aker AS Class B 465,100 5,850,077
--------------
TOTAL NORWAY 11,228,678
--------------
SOUTH KOREA--1.0%
Samsung Electronics Ltd. Global
Deposit Receipt Republic 144A
Non-Voting (a),(b) 87,234 4,536,168
Samsung Electronics Ltd. Global
Deposit Shares 144A (a),(b) 25,000 1,318,750
Samsung Electronics Ltd. Global
Depositary Receipt 144A (a),(b) 1,850 169,506
Samsung Electronics Ltd. Global
Depositary Shares 144A (a),(b) 78,100 4,061,200
Samsung Electronics Ltd. Sponsored
Global Deposit 144A (b) 9,349 865,951
--------------
TOTAL SOUTH KOREA 10,951,575
--------------
SPAIN--0.5%
Banco Santander SA 130,100 5,128,813
--------------
SWEDEN--5.3%
Asea AB 264,500 22,480,918
Astra AB 698,500 21,038,288
Volvo AB 633,900 12,074,535
--------------
TOTAL SWEDEN 55,593,741
--------------
SWITZERLAND--10.8%
Baloise Holdings 6,410 14,612,462
Ciba Geigy AG 31,910 23,388,658
Nestle SA 30,185 31,430,148
Schweizerische Rueckversicherungs 30,000 23,108,989
SGS Holding 11,691 20,305,688
--------------
TOTAL SWITZERLAND 112,845,945
--------------
UNITED KINGDOM--17.3%
Barclays Bank PLC 1,375,300 14,776,764
British Aerospace Ord. 2,966,195 26,562,236
British Aerospace PLC New (a) 117,216 1,323,737
Cadbury Schweppes 3,164,889 23,106,157
Lloyds Abbey Life PLC 1,911,300 11,886,724
Midlands Electric 1,783,000 17,866,868
Mirror Group PLC 3,596,600 7,608,522
National Power Ord. 1,127,500 7,989,522
National Power P/P Ord. 2,020,800 5,560,655
Rank Organisation 2,905,200 18,345,227
Royal Bank of Scotland 3,398,700 23,110,295
Thorn EMI 1,067,100 22,099,001
--------------
TOTAL UNITED KINGDOM 180,235,708
--------------
TOTAL COMMON STOCKS
(Identified cost $932,864,093) 1,011,815,888
--------------
</TABLE>
9
<PAGE> 12
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
WARRANTS--0.0%
Baloise Holdings 3,745 $ 35,775
--------------
TOTAL WARRANTS
(Identified cost $0) 35,775
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
SHORT TERM INVESTMENTS--6.0%
COMMERCIAL PAPER--0.1%
Ford Motor Credit Corp., 6.05%, 7/3/95 $ 1,295,000 1,294,565
--------------
FEDERAL AGENCIES--5.8%
Federal National Mortgage Association
Discount Notes, 5.88%, 7/5/95 29,295,000 29,275,862
Federal National Mortgage Association
Discount Notes, 5.90%, 7/7/95 31,245,000 31,214,275
--------------
60,490,137
--------------
U.S. GOVERNMENT OBLIGATIONS--0.1%
United States Treasury Bills,
5.20%, 8/3/95 925,000 920,591
--------------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $62,705,293) 62,705,293
--------------
TOTAL INVESTMENTS
(Identified cost $995,569,386)(c) 102.9% 1,074,556,956
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS (2.9) (29,895,734)
----------- --------------
NET ASSETS 100.0% $1,044,661,222
======= ==============
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) The aggregate cost for federal income tax purposes is $995,569,386;
aggregate gross unrealized appreciation is $100,232,709 and the aggregate
gross unrealized depreciation is $21,245,139, resulting in net unrealized
appreciation of $78,987,570.
* Percentages of common stocks are presented in the portfolio by country.
Percentages by industry are as follows:
Aerospace & Defense 2.7%, Automotive 4.7%, Banks 9.8%, Chemicals & Plastics
4.5%, Domestic Oil 1.1%, Drugs & Health Care 5.9%, Electrical Equipment 7.2%,
Electronics 5.0%, Energy 1.9%, Entertainment 1.8%, Financial Services 2.3%,
Food & Beverage 9.4%, Forest Products 0.4%, Industrial & Machinery 2.1%,
Insurance 2.5%, International Oil 1.8%, Machinery 4.0%, Mining 1.2%,
Miscellaneous 3.0%, Paper Products 3.6%, Publishing 2.6%, Retailing 2.1%,
Services 3.8%, Steel 1.1%, Telephone 3.0%, Transportation & Freight Services
1.4%, Utilities 8.0%.
Forward Foreign Currency Contracts open at June 30, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ------------------ ---------------- -------- -----------
<S> <C> <C> <C>
DEM 29,026,049 $ 20,118,000 9/11/95 ($ 931,110)
FRF 155,019,249 $ 30,177,000 9/11/95 (1,715,876)
DFL 32,476,286 $ 20,118,000 9/11/95 (916,137)
SEK 224,593,228 $ 30,177,000 9/11/95 (517,820)
FRF 21,010 $ 4,325 7/31/95 (6)
ITL 2,496,829,136 $ 1,504,516 7/31/95 (21,430)
$ 648,622 GBP 406,074 7/07/95 (2,727)
$ 1,256,693 PTS 151,670,275 7/06/95 (4,513)
IDR 431,461,416 $ 193,480 7/06/95 (261)
$ 1,918,960 PTS 231,733,550 7/05/95 (5,782)
$ 2,012,970 GBP 1,251,494 7/05/95 (22,364)
$ 6,347,570 JPY 536,814,029 7/05/95 (13,855)
$ 3,663,716 DFL 5,665,204 7/05/95 (7,566)
$ 2,018,528 PTS 243,474,797 7/03/95 (8,416)
$ 854,202 GBP 531,716 7/03/95 (8,463)
$ 2,310,048 HKD 17,871,685 7/03/95 (388)
$ 3,646,960 JPY 307,621,092 7/03/95 (17,427)
IDR 2,849,556,052 $ 1,277,828 7/03/95 (1,721)
DFL 2,561,765 $1,637,434 7/03/95 (15,851)
-----------
($4,211,713)
===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
10
<PAGE> 13
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENCY DENOMINATED BONDS* --95.2%
AUSTRALIAN DOLLAR--0.9%
GOVERNMENT OBLIGATIONS
Commonwealth of Australia,
6.25%, 3/15/99 AUD 250,000 $ 165,853
Commonwealth of Australia,
9.50%, 8/15/03 345,000 250,842
-----------
TOTAL AUSTRALIAN DOLLAR 416,695
-----------
AUSTRIAN SCHILLING--0.9%
GOVERNMENT OBLIGATION
Republic of Austria,
5.625%, 12/14/00 ATS 4,000,000 396,715
-----------
BRITISH POUND--5.9%
GOVERNMENT OBLIGATIONS
United Kingdom Treasury,
7.25%, 3/30/98 GBP 350,000 547,831
United Kingdom Treasury,
8.00%, 6/10/03 425,000 658,676
United Kingdom Treasury,
8.50%, 12/7/05 250,000 398,764
United Kingdom Treasury,
8.50%, 7/16/07 200,000 318,415
United Kingdom Treasury,
12.50%, 11/21/05 150,000 293,761
CORPORATE BOND
Tokyo Electric Power,
11.00%, 6/5/01 250,000 436,665
-----------
TOTAL BRITISH POUND 2,654,112
-----------
CANADIAN DOLLAR--3.1%
GOVERNMENT OBLIGATIONS
Government of Canada,
9.00%, 12/1/04 CAD 600,000 466,611
Government of Canada Real Return,
4.25%, 12/1/21 800,000 587,713
CORPORATE BOND
Quebec Housing,
8.95%, 5/13/13 419,000 311,008
-----------
TOTAL CANADIAN DOLLAR 1,365,332
-----------
CZECH KORUNA--3.9%
CORPORATE BONDS
CEZ,
14.375%, 1/27/01 CZK 10,000,000 410,058
Czech Trade Bank,
11.125%, 8/26/97 5,000,000 191,973
Skoda Finance,
11.625%, 2/9/98 30,000,000 1,165,764
-----------
TOTAL CZECH KORUNA 1,767,795
-----------
DANISH KRONE--5.0%
GOVERNMENT OBLIGATION
Kingdom of Denmark,
8.00%, 5/15/03 DKR 1,000,000 $ 179,946
CORPORATE BONDS
Kreditforeningen,
10.20%, 4/15/04 (a) 5,000,000 948,060
Nykredit,
6.00%, 10/1/26 8,000,000 1,108,046
-----------
TOTAL DANISH KRONE 2,236,052
-----------
DUTCH GUILDER--4.9%
GOVERNMENT OBLIGATIONS
Government of Netherlands,
6.75%, 2/15/99 DFL 1,590,000 1,051,278
Government of Netherlands,
8.75%, 1/15/07 300,000 216,360
Government of Netherlands,
9.00%, 5/15/00 1,300,000 933,785
-----------
TOTAL DUTCH GUILDER 2,201,423
-----------
FINNISH MARKKA--3.2%
GOVERNMENT OBLIGATION
Republic of Finland,
8.50%, 4/25/05 FIM 6,600,000 1,417,429
-----------
FRENCH FRANC--3.2%
GOVERNMENT OBLIGATIONS
Government of France,
7.00%, 11/12/99 FRF 2,500,000 513,367
Government of France,
8.50%, 10/25/19 4,350,000 928,947
-----------
TOTAL FRENCH FRANC 1,442,314
-----------
GERMAN MARK--9.9%
GOVERNMENT OBLIGATIONS
Federal Republic of Germany,
6.00%, 6/20/16 DEM 800,000 485,819
Federal Republic of Germany,
8.00%, 1/21/02 700,000 537,313
Federal Republic of Germany,
8.25%, 9/20/01 500,000 388,676
CORPORATE BONDS
International Bank Reconstruction
and Development,
7.125%, 4/12/05 3,300,000 2,370,302
State of Hessen,
6.00%, 11/29/13 1,000,000 664,907
-----------
TOTAL GERMAN MARK 4,447,017
-----------
</TABLE>
11
<PAGE> 14
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
IRISH POUND--2.6%
GOVERNMENT OBLIGATION
Republic of Ireland,
6.25%, 4/1/99 IEP 770,000 $ 1,168,863
-----------
ITALIAN LIRA--7.3%
GOVERNMENT OBLIGATIONS
Republic of Italy,
8.50%, 8/1/99 ITL 5,100,000,000 2,761,558
Republic of Italy,
12.00%, 5/1/97 400,000,000 245,146
Republic of Italy,
12.00%, 1/1/02 400,000,000 243,435
-----------
TOTAL ITALIAN LIRA 3,250,139
-----------
JAPANESE YEN--32.1%
GOVERNMENT OBLIGATIONS
Credit Local De France,
6.00%, 10/31/01 JPY 80,000,000 1,130,317
Government of Japan,
3.40%, 3/22/04 165,000,000 2,023,686
Government of Japan,
5.50%, 3/20/02 60,000,000 832,729
Government of Japan,
6.40%, 3/20/00 255,000,000 3,594,160
Republic of Austria,
4.50%, 9/28/05 80,000,000 1,071,323
Republic of Austria,
6.25%, 10/16/03 15,000,000 221,226
Republic of Italy,
3.50%, 6/20/01 230,000,000 2,813,772
CORPORATE BOND
Export Import Bank,
4.375%, 10/1/03 205,000,000 2,702,938
-----------
TOTAL JAPANESE YEN 14,390,151
-----------
NEW ZEALAND DOLLAR--1.2%
GOVERNMENT OBLIGATION
Government of New Zealand,
10.00%, 7/15/97 NZD 800,000 552,758
-----------
NORWEGIAN KRONE--2.3%
CORPORATE BOND
Sparebanken Norway,
10.25%, 6/23/03 (a) NOK 6,000,000 1,025,887
-----------
SPANISH PESETA--3.0%
GOVERNMENT OBLIGATION
Government of Spain,
12.25%, 3/25/00 PTS 160,000,000 1,355,030
-----------
SWEDISH KRONA--0.9%
GOVERNMENT OBLIGATION
Kingdom of Sweden,
10.25%, 5/5/00 SEK 3,000,000 $ 407,645
-----------
UNITED STATES DOLLAR--4.9%
FOREIGN GOVERNMENT OBLIGATION--1.5%
Argentina Bote II,
6.0625%, 9/1/97 (b) USD 1,340,000 663,300
-----------
YANKEE BONDS--3.4%
Astra International,
9.75%, 4/29/01 100,000 101,500
Banpais,
8.25%, 8/18/95 800,000 792,000
Den Norske Credit,
6.3125%, 11/29/49 (a) 700,000 541,205
Hong Kong & Shanghai Bank,
6.75%, 8/29/49 (a) 100,000 80,220
-----------
1,514,925
-----------
TOTAL UNITED STATES DOLLAR 2,178,225
-----------
TOTAL CURRENCY DENOMINATED BONDS *
(Identified cost $39,799,094) 42,673,582
-----------
SHORT TERM INVESTMENTS--4.2%
U.S. GOVERNMENT OBLIGATIONS--4.2%
United States Treasury Bills,
5.16%, 7/6/95 275,000 274,803
United States Treasury Bills,
5.21%, 8/3/95 1,595,000 1,587,376
-----------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $1,862,179) 1,862,179
-----------
TOTAL INVESTMENTS
(Identified cost $41,661,273) (c) 99.4% 44,535,761
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES 0.6 266,700
---- ---------
NET ASSETS 100.0% $44,802,461
===== ===========
</TABLE>
12
<PAGE> 15
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
(a) Variable rate security. Interest shown is the current rate.
(b) Coupon set quarterly to 3 month LIBOR. Current rate shown.
(c) The aggregate cost for federal income tax purposes $41,661,273; aggregate
gross unrealized appreciation is $3,108,072 and the aggregate gross
unrealized depreciation is $233,584, resulting in net unrealized
appreciation of $2,874,488.
* Percentages of holdings are presented in the portfolio by currency
denomination. Percentages by country are as follows:
Argentina 1.5%, Austria 3.8%, Australia 0.9%, Canada 3.1%, Czech Republic
3.9%, Denmark 5.0%, Finland 3.2%, France 5.7%, Germany 9.9%, Honk Kong 0.2%,
Indonesia 0.2%, Ireland 2.6%, Italy 13.5%, Japan 21.4%, Netherlands 4.9%, New
Zealand 1.2%, Norway 3.5%, Spain 3.0%, Sweden 0.9%, United Kingdom 5.0%,
United States 1.8%.
Forward Foreign Currency Contracts open at June 30, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- -------------- --------------- -------- --------
<S> <C> <C> <C>
AUD 163,728 $ 117,000 9/12/95 $ 989
$ 478,000 CAD 655,458 9/12/95 (1,614)
$ 845,000 DEM 1,206,153 9/12/95 29,708
$ 543,000 DKR 3,055,733 9/12/95 21,954
$ 895,000 FRF 4,603,701 9/12/95 52,121
$ 83,000 JPY 7,119,740 9/12/95 1,826
NOK 6,483,516 $ 1,014,000 9/12/95 (39,314)
$ 146,000 SEK 1093,978 9/12/95 3,499
$ 360,058 JPY 30,338,458 7/10/95 (2,103)
$ 290,674 DFL 450,400 7/05/95 0
$ 692,163 DEM 968,267 7/03/95 8,008
DEM 1,071,760 $ 771,364 7/03/95 (3,645)
--------
$ 71,429
========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
13
<PAGE> 16
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES--8.1%
American Financial Home Equity Loan,
8.00%, 7/25/06 $ 85,319 $ 86,865
Bridgestone Firestone,
6.25%, 12/1/99 183,333 183,562
D.R. Structure Finance Corp., 9.35%,
8/15/19 600,000 615,000
Fical Home Equity Loan Trust, 8.90%,
11/15/97 3,503 3,524
G E Capital Mortgage Services Inc.,
7.20%, 9/15/11 58,864 59,158
Green Tree Financial Corp., 6.60%,
6/15/19 387,522 388,975
Green Tree Financial Corp., 7.25%,
1/15/20 600,000 608,625
Olympic Automobile Receivable, 6.85%,
6/15/01 680,215 686,911
Security Pacific Home Equity Loan,
7.85%, 5/15/98 46,239 46,933
-----------
TOTAL ASSET-BACKED SECURITIES
(Identified Cost $2,628,730) 2,679,553
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--2.8%
DLJ Mortgage Acceptance Corp., 6.50%,
4/25/24 425,000 422,742
Prudential Home Mortgage Securities
Co., 7.50%, 8/25/24 500,000 505,000
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Identified Cost $908,992) 927,742
-----------
CORPORATE BONDS--4.8%
CREDIT & FINANCE--2.2%
General Motors Acceptance Corp.,
5.625%, 2/1/99 750,000 725,250
-----------
FINANCIAL SERVICES--0.8%
Salomon Inc., 8.55%, 2/17/97 265,000 272,081
-----------
STEEL--1.5%
USX Marathon Group, 8.50%, 3/1/23 500,000 501,935
-----------
UTILITIES--0.3%
Texas New Mexico Power Co., 9.25%,
9/15/00 80,000 83,200
-----------
TOTAL CORPORATE BONDS
(Identified Cost $1,556,086) 1,582,466
-----------
MUNICIPAL BONDS--1.7%
Brazos River Authority Texas Revenue,
5.80%, 8/1/15 300,000 287,973
Clark County Nevada Passenger Facility,
5.75%, 7/1/23 300,000 277,686
-----------
TOTAL MUNICIPAL BONDS
(Identified Cost $566,010) 565,659
-----------
MORTGAGE PASS-THROUGH SECURITIES--2.8%
Federal National Mortgage Association,
6.00%, 12/1/00 $ 944,340 $ 928,404
-----------
TOTAL MORTGAGE PASS-THROUGH SECURITIES
(Identified Cost $907,377) 928,404
-----------
U.S. GOVERNMENT OBLIGATIONS--75.8%
United States Treasury Bonds, 8.875%,
2/15/19 4,765,000 5,957,012
United States Treasury Notes, 4.625%,
2/15/96 105,000 104,294
United States Treasury Notes, 6.875%,
10/31/96 2,063,000 2,090,397
United States Treasury Notes, 5.125%,
4/30/98 2,400,000 2,352,384
United States Treasury Notes, 7.50%,
11/15/01 4,050,000 4,347,432
United States Treasury Notes, 5.875%,
2/15/04 4,115,000 4,014,059
United States Treasury Notes, 5.125%,
12/31/98 5,355,000 5,215,288
United States Treasury Notes, 7.75%,
12/31/99 935,000 998,262
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified Cost $24,182,130) 25,079,128
-----------
FEDERAL AGENCIES--1.6%
Federal Home Loan Mortgage Corporation,
4.875%, 6/23/98 550,000 532,383
-----------
TOTAL FEDERAL AGENCIES
(Identified Cost $518,572) 532,383
-----------
SHORT TERM INVESTMENTS--0.4%
U.S. GOVERNMENT OBLIGATIONS--0.4%
United States Treasury Bills, 5.19%,
8/3/95 125,000 124,406
-----------
TOTAL SHORT TERM INVESTMENTS
(Identified Cost $124,406) 124,406
-----------
TOTAL INVESTMENTS
(Identified cost $31,392,303)(a) 98.0% 32,419,741
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES 2.0 657,062
-------- -----------
NET ASSETS 100.0% $33,076,803
======== ===========
</TABLE>
(a) The aggregate cost for federal income tax purposes is $31,392,303;
aggregate gross unrealized appreciation is $1,034,045 and the
aggregate gross unrealized depreciation is $6,607, resulting in net
unrealized appreciation of $1,027,438.
The accompanying notes are an integral part of these
financial statements.
14
<PAGE> 17
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD STRATEGIC YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENCY DENOMINATED BONDS*--79.0%
AUSTRALIAN DOLLAR--2.6%
GOVERNMENT OBLIGATION
Commonwealth of Australia,
7.00%, 4/15/00 AUD 2,800,000 $ 1,867,125
-----------
BRITISH POUND--0.9%
GOVERNMENT OBLIGATION
United Kingdom Treasury,
2.50%, 7/17/24 GBP 350,000 643,689
-----------
CANADIAN DOLLAR--5.0%
GOVERNMENT OBLIGATIONS
Canada Trust (conv.),
7.00%, 7/1/09 CAD 2,000,000 1,310,521
Government of Canada
Real Return,
4.25%, 12/1/21 2,850,000 2,093,728
Quebec Housing,
8.95%, 5/13/13 394,000 292,452
-----------
TOTAL CANADIAN DOLLAR 3,696,701
-----------
CZECH KORUNA--4.6%
CORPORATE BONDS
Czech Electric Co.,
14.375%, 1/27/01 CZK 20,370,000 841,198
Czech Trade Bank,
11.125%, 8/26/97 20,000,000 767,892
Skoda Finance,
11.625%, 2/9/98 45,000,000 1,748,646
-----------
TOTAL CZECH KORUNA 3,357,736
-----------
DANISH KRONE--4.4%
CORPORATE BONDS
Kreditforeningen,
10.20%, 4/15/04 (a) DKR 9,000,000 1,706,509
Nykredit,
6.00%, 10/1/26 11,000,000 1,523,562
-----------
TOTAL DANISH KRONE 3,230,071
-----------
INDONESIAN RUPIAH--1.1%
CORPORATE BONDS
Astra International,
0.00%, 11/22/95 IDR 1,000,000,000 420,805
Bakrie & Brothers,
0.00%, 12/21/95 1,000,000,000 412,663
-----------
TOTAL INDONESIAN RUPIAH 833,468
-----------
IRISH POUND--2.7%
GOVERNMENT OBLIGATION
Republic of Ireland, 6.25%,
4/1/99 IEP 1,305,000 1,980,994
-----------
ITALIAN LIRA--1.0%
GOVERNMENT OBLIGATION
Republic of Italy,
8.50%, 8/1/99 ITL 1,400,000,000 758,075
-----------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -------------------------------------------------------------------------
<S> <C> <C> <C>
NEW ZEALAND DOLLAR--1.3%
GOVERNMENT OBLIGATION
Government of New Zealand,
10.00%, 7/15/97 NZD 1,400,000 $ 967,327
-----------
NORWEGIAN KRONE--2.3%
CORPORATE BOND
Sparebanken Norway,
10.25%, 6/23/03 NOK 10,000,000 1,709,811
-----------
SPANISH PESETA--1.6%
GOVERNMENT OBLIGATION
Government of Spain,
12.25%, 3/25/00 PTS 140,000,000 1,185,651
-----------
SOUTH AFRICAN RAND--0.6%
GOVERNMENT OBLIGATION
Republic of South Africa,
12.00%, 2/28/05 ZAR 1,960,000 419,321
-----------
SWITZERLAND FRANC--0.5%
CORPORATE BOND
CPC International Inc.,
5.75%, 3/27/45 CHF 500,000 371,255
-----------
THAILAND BAHT--0.6%
BILL OF EXCHANGE
Krung Thai Thana BE,
0.00%, 9/21/95 THB 10,000,000 396,193
-----------
TURKISH LIRE--0.6%
GOVERNMENT OBLIGATION
Turkey Treasury Bill,
0.00%, 8/29/95 TRL 22,000,000,000 449,454
-----------
UNITED STATES DOLLAR--49.2%
CORPORATE BONDS--23.0%
Air & Water Technologies
Corp.,
8.00%, 5/15/15 USD 300,000 237,000
Astra International,
9.75%, 4/29/01 1,540,000 1,563,100
Banco De Comercio Exterior,
8.625%, 6/2/00 650,000 654,875
Banpais SA,
8.25%, 8/18/95 900,000 879,537
Burns Philp (conv.),
5.50%, 4/30/04 745,000 646,287
Citibank Ecuador Note,
0.00%, 9/11/95 500,000 500,000
Citibank N A Rupee Note,
12.937%, 7/3/95 433,125 433,125
Columbia Gas Systems Inc.,
10.25%, 8/1/11 (e) 700,000 1,050,000
Compania Sub Americana,
7.375%, 12/8/03 260,000 241,800
Dairy Farm International
Holdings Ltd. (Conv.),
6.50%, 5/10/49 250,000 188,125
</TABLE>
15
<PAGE> 18
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD STRATEGIC YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Den Norske Credit,
6.3125%, 11/29/49 (a) $ 800,000 $ 618,520
Eletson Holdings Inc.,
9.25%, 11/15/03 700,000 675,500
Export-Import Bank of Japan,
8.00%, 6/4/00 496,375 502,332
Flagstar Corp.,
10.75%, 9/15/01 1,050,000 987,000
Fort Howard Corp.,
8.25%, 2/1/02 785,000 745,750
Hong Kong & Shanghai Bank,
6.75%, 8/29/49 1,200,000 962,640
Kansallis Osake Pankki,
8.4375%, 9/22/43 (a) 1,000,000 1,021,500
Noble Drilling Corp.,
9.25%, 10/1/03 820,000 834,350
NorthWest Airlines Inc.,
8.625%, 8/1/96 720,000 723,600
Pathmark Stores Inc.,
9.625%, 5/1/03 550,000 536,250
Rowan Cos. Inc.,
11.875%, 12/1/01 820,000 877,400
Sequa Corp.,
9.625%, 10/15/99 1,055,000 1,065,550
Sparbankernas Bank,
8.125%, 10/20/49 (a) 900,000 910,350
-----------
TOTAL CORPORATE BONDS 16,854,591
-----------
FEDERAL AGENCIES--0.7%
Government National Mortgage
Association,
6.00%, 7/1/25 500,000 500,200
-----------
U.S. GOVERNMENT OBLIGATIONS--4.3%
United States Treasury Notes,
4.625%, 2/15/96 385,000 382,413
United States Treasury Notes,
5.125%, 4/30/98 1,040,000 1,019,366
United States Treasury Notes,
5.125%, 12/31/98 1,820,000 1,772,516
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS 3,174,295
-----------
FOREIGN GOVERNMENT OBLIGATIONS--9.9%
Argentina Bote II,
6.0625%, 9/1/97 (c) 2,100,000 1,039,500
Argentina Bote X,
6.3125%, 4/1/00 (c) 600,000 376,800
Argentina Pensioner Bocon,
0.00%, 4/1/01 (d) 1,100,000 830,500
Banco Central de
Costa Rica,
6.9375%, 5/21/05 (a) 305,660 220,075
Federal Republic of Brazil,
6.6875%, 1/1/01 (a) 873,000 701,674
Republic of Brazil,
7.25%, 4/15/24 (a) 1,550,000 883,500
Republic of Brazil
Federative,
7.25%, 4/15/06 (a) 800,000 477,000
Republic of Poland,
3.25%, 10/27/14 (a) $ 1,500,000 $ 892,500
Republic of Poland,
7.125%, 10/27/24 (a) 1,000,000 766,250
Republic of South Africa,
9.625%, 12/15/99 500,000 519,375
Republic of South Africa,
9.625%, 12/15/99 550,000 571,313
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS 7,278,487
-----------
YANKEE BONDS--4.1%
Bridas Corp.,
12.50%, 11/15/99 800,000 722,000
Compania Sub Americana 144A,
7.375%, 12/8/03 750,000 697,500
Essar Gujarat Ltd. 144A,
9.40%, 7/15/99 (a) 1,600,000 1,584,000
-----------
TOTAL YANKEE BONDS 3,003,500
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--5.9%
Federal Home Loan
Mortgage Corp.,
5.963%, 2/1/24 (a) 1,810,075 1,833,832
Federal National Mortgage
Association,
7.329%, 11/1/27 (a) 1,780,444 1,816,231
Prudential Home Mortgage
Securities Co.,
6.00%, 10/25/00 750,000 731,250
-----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS 4,381,313
-----------
MUNICIPAL BONDS--1.3%
Brazos River Authority
Texas Revenue,
5.80%, 8/1/15 500,000 479,955
Clark County Nevada Passenger
Facility,
5.75%, 7/1/23 500,000 462,810
-----------
TOTAL MUNICIPAL BONDS 942,765
-----------
TOTAL UNITED STATES DOLLAR 36,135,151
-----------
TOTAL CURRENCY DENOMINATED BONDS*
(Identified cost $56,629,853) 58,002,022
-----------
STRUCTURED NOTES--3.6%
Goldman
Malaysian/Philippines,
8.75%, 9/21/95 860,000 859,570
JP Morgan Polish Note,
0.00%, 7/26/95 660,000 657,623
Morgan Stanley
Group Inc.,
14.25%, 6/26/96 (a) 500,000 500,000
BT Hungarian,
0.00%, 12/1/95 (b) 741,445 652,027
-----------
TOTAL STRUCTURED NOTES
(Identified cost $2,634,509) 2,669,220
-----------
</TABLE>
16
<PAGE> 19
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD STRATEGIC YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS--17.4%
FEDERAL AGENCIES--15.4%
Federal Home Loan
Mortgage Corp.,
5.89%, 7/5/95 $ 3,720,000 $ 3,717,565
Federal National Mortgage
Association Discount Notes,
5.90%, 7/7/95 7,610,000 7,602,517
-----------
11,320,082
-----------
U.S. GOVERNMENT OBLIGATIONS--2.0%
United States Treasury Bills,
5.12%, 8/3/95 1,080,000 1,074,931
United States Treasury Bills,
5.16%, 7/6/95 390,000 389,721
-----------
1,464,652
-----------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $12,784,734) 12,784,734
-----------
TOTAL INVESTMENTS
(Identified cost
$72,049,096)(f) 100.0% 73,455,976
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS 0.0 (21,612)
----- -----------
NET ASSETS 100.0% $73,434,364
===== ===========
(a) Variable rate security. Interest shown is the current rate.
(b) Interest is linked to the Hungarian Forint Index.
(c) Coupon set quarterly to 3 month LIBOR. Current rate shown.
(d) Zero coupon until 5/1/97, then coupon set monthly to 30 day LIBOR.
(e) Bond in default.
(f) The aggregate cost for federal income tax purposes is $72,049,096;
aggregate gross unrealized appreciation is $1,849,236 and the
aggregate gross unrealized depreciation is $442,356, resulting in
net unrealized appreciation of $1,406,880.
* Percentages of holdings are presented in the portfolio by currency
denomination. Percentages by country are as follows:
Argentina 3.1%, Australia 2.5%, Brazil 2.8%, Canada 5.0%, Chile
0.3%, Costa Rica 0.3%, Czech Republic 4.6%, Denmark 4.4%, Greece
0.9%, Hong Kong 1.6%, India 2.2%, Indonesia 3.3%, Ireland 2.7%,
Italy 1.0%, Japan 0.7%, Netherlands 0.9%, New Zealand 1.3%, Norway
3.2%, Poland 3.6%, South Africa 0.6%, Spain 2.9%, Switzerland 0.5%,
Thailand 0.5%, Turkey 0.6%, United Kingdom 0.9%, United States
32.2%.
Percentages by industry are as follows:
Aerospace & Defense 1.5%, Banking 10.4%, Communication Services
0.6%, Consumer Goods 2.7%, Credit & Finance 6.3%, Environmental
Services 0.3%, Food & Beverages 3.0%, Paper Products 1.0%, Petroleum
Services 2.3%, Supermarkets 0.7%, Transportation & Freight Services
1.9%, Utilities 1.1%, Bill of Exchange 0.5%, Collateralized Mortgage
Obligation 6.0%, U.S. Government Obligations 4.3%, Foreign
Government Obligations 28.3%, Municipal Bonds 1.3%, Structured Notes
3.6%, Yankee Bonds 4.1%, Other 2.7%.
</TABLE>
Forward Foreign Currency Contracts open at June 30, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ------------------ -------------- -------- ---------
<S> <C> <C> <C>
AUD 2,260,006 $ 1,615,000 9/12/95 $ 13,646
CAD 4,667,735 $ 3,404,000 9/12/95 11,492
CHF 417,296 $ 352,000 9/12/95 (12,527)
DEM 3,140,720 $ 2,208,260 9/12/95 (69,407)
DKR 17,737,880 $ 3,152,000 9/12/95 (127,436)
PTS 142,350,480 $ 1,117,000 9/12/95 (49,454)
GBP 384,566 $ 603,000 9/12/95 (7,713)
IEP 1,229,575 $ 1,964,000 9/12/95 (45,940)
ITL 1,309,420,800 $ 762,000 9/12/95 (30,249)
JPY 3,979,800 $ 47,520 9/12/95 104
NOK 20,077,160 $ 3,140,000 9/12/95 (121,741)
XEU 346,725 $ 457,000 9/12/95 (4,303)
$ 1,951,516 AUD 2,714,208 7/03/95 (22,441)
AUD 2,738,886 $ 1,969,259 7/03/95 22,645
---------
($443,324)
=========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
17
<PAGE> 20
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--90.1%
AUTO PARTS--3.6%
A.O. Smith Class B 53,800 $ 1,264,300
Carlisle Cos. Inc. 133,000 5,087,250
Durakon Industries Inc. (a) 250,000 3,812,500
Lear Seating Corp. (a) 224,800 5,142,300
Standard Motor Products Inc. 215,000 4,353,750
------------
19,660,100
------------
BROADCASTING--2.8%
Evergreen Media (a) 252,000 6,552,000
Katz Media Group Inc. (a) 230,000 3,651,250
Renaissance Communications Corp. (a) 155,500 5,209,250
------------
15,412,500
------------
BUILDING & CONSTRUCTION--1.5%
Centex Construction Products Inc. (a) 288,400 3,713,150
Redman Industries (a) 200,000 4,350,000
------------
8,063,150
------------
BUSINESS SERVICES AND SUPPLIES--1.3%
Ideon Group Inc. 700,000 6,912,500
------------
CHEMICALS & PLASTICS--2.5%
Fuller H B Co. 202,400 7,488,800
Mississippi Chemical Corp. 319,000 6,360,062
------------
13,848,862
------------
COMMUNICATIONS--5.4%
ACS Enterprises Inc. (a) 200,000 3,650,000
Associated Group Inc. Class A (a) 56,650 977,213
Associated Group Inc. Class B (a) 256,650 4,748,025
Cablevision Systems Corp. (a) 84,600 5,393,250
Cellular Communications Puerto Rico (a) 195,058 5,973,651
International Cabletel Inc. (a) 200,000 6,500,000
Preferred Entertainment Inc. (a) 140,000 2,292,500
------------
29,534,639
------------
CONSUMER GOODS--1.0%
American Recreation Holdings Inc. (a) 142,500 1,140,000
Triarc Cos. Inc. (a) 289,300 4,520,313
------------
5,660,313
------------
COSMETICS & TOILETRIES--1.1%
Maybelline Inc. 296,100 6,070,050
------------
DRUGS & HEALTH CARE--1.0%
Beverly Enterprises, Inc. (a) 460,400 5,697,450
------------
ELECTRICAL EQUIPMENT--1.3%
Belden Inc. 252,900 6,828,300
------------
ENERGY--3.5%
Enterra Corp. (a) 326,200 6,850,200
Helmerich & Payne Inc. 241,500 7,124,250
Vintage Petroleum Inc. 275,000 5,156,250
------------
19,130,700
------------
FINANCIAL SERVICES--7.3%
Albank Financial Corp. 169,000 4,415,125
Baybanks Inc. 79,200 6,276,600
Cullen Frost Bankers Inc. 136,000 5,508,000
Eaton Vance Corp. 100,500 3,241,125
PMI Group Inc. 201,800 8,753,075
Rollins Truck Leasing Corp. 548,700 5,898,525
Signet Banking Corp. 274,600 6,006,875
------------
40,099,325
------------
HOUSEHOLD APPLIANCES & HOME FURNISHINGS--1.7%
Ethan Allen Interiors Inc. (a) 188,000 $ 3,337,000
Miller (Herman) Inc. 245,500 6,076,125
------------
9,413,125
------------
INDUSTRIAL & MACHINERY--4.1%
Harnischfeger Industries Inc. 157,500 5,453,438
Mark IV Industries Inc. 431,729 9,282,173
Roper Industries 13,000 455,000
Trinova Corp. 211,400 7,399,000
------------
22,589,611
------------
INSURANCE--3.5%
Alexander & Alexander Services 199,800 4,770,225
American Bankers Insurance Group Inc. 208,600 6,623,050
Gryphon Holdings Inc. (a) 150,000 2,437,500
Western National Corp. 434,700 5,379,412
------------
19,210,187
------------
MACHINERY--3.6%
Briggs & Stratton Corp. 257,300 8,876,850
Manitowoc Inc. 119,600 3,453,450
Measurex Corp. 248,700 7,554,262
------------
19,884,562
------------
MANUFACTURING--6.3%
Alltrista Corp. (a) 311,400 5,994,450
Crane Co. 235,400 8,533,250
Pentair Inc. 139,500 6,068,250
Varlen Corp. 282,700 6,643,450
Wabash National Corp. 236,550 7,362,619
------------
34,602,019
------------
MINING--1.6%
The Pittston Co. 356,400 8,553,600
------------
PAPER PRODUCTS--1.3%
Bowater Inc. 155,000 6,955,625
------------
PUBLISHING--2.8%
Banta Corp. 234,700 7,803,775
Houghton Mifflin Co. 144,000 7,596,000
------------
15,399,775
------------
REAL ESTATE--4.3%
Avalon Properties Inc. 148,600 2,953,425
Bay Apartment Community Inc. 175,000 3,412,500
Crescent Real Estate Equities 193,900 6,180,562
Felcor Suite Hotels Inc. 240,000 6,120,000
GL Reality Corp. 75,000 759,375
Liberty Property 196,500 3,856,313
------------
23,282,175
------------
RESTAURANTS, LODGING & ENTERTAINMENT--0.9%
Sbarro, Inc. 219,900 5,112,675
------------
</TABLE>
18
<PAGE> 21
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
RETAILING--12.1%
Alexanders Inc. (a) 80,000 $ 4,440,000
Carson Pirie Scott & Co. Illinois (a) 431,200 7,060,900
Fingerhut Cos. Inc. 534,100 8,345,312
Fred Meyer Inc. (a) 206,700 5,606,738
Home Shopping Network Inc. (a) 148,900 1,265,650
Intelligent Electronics Inc. 493,600 6,725,300
Jones Apparel Group Inc. (a) 297,600 8,890,800
Penn Traffic Co. (a) 150,000 5,306,250
Revco Inc. (a) 274,562 6,589,488
Sothebys Holdings Inc. 579,200 7,891,600
The Good Guys Inc. (a) 350,000 3,850,000
------------
65,972,038
------------
SERVICES--2.3%
Gtech Holdings Corp. (a) 434,800 12,717,900
------------
STEEL--3.0%
Allegheny Ludlum Corp. 345,000 6,813,750
Huntco Inc. 114,800 1,865,500
Lukens Inc. 233,800 7,540,050
------------
16,219,300
------------
TECHNOLOGY--8.3%
Exar Corp. (a) 171,300 5,053,350
Integrated Device Technology (a) 169,400 7,834,750
Oak Industries Inc. (a) 197,400 5,083,050
Tektronix Inc. 115,600 5,693,300
Verbex Voice Systems Inc. (a),(b) 180,501 180,501
VLSI Technology Inc. (a) 373,700 11,257,711
Wang Laboratories Inc. (a) 643,100 10,530,763
------------
45,633,425
------------
TEXTILES, SHOES AND APPAREL--1.2%
Authentic Fitness Corp. (a) 300,000 5,025,000
Westpoint Stevens Inc. (a) 90,300 1,614,113
------------
6,639,113
------------
TIRES & RUBBER--0.8%
TBC Corp. (a) 428,800 4,609,600
------------
TOTAL COMMON STOCKS
(Identified cost $418,945,104) 493,712,619
------------
PREFERRED STOCKS--0.2%
TECHNOLOGY
Verbex Voice Systems Inc. Series F
(conv.) (a),(b) 687,285 1,000,000
------------
TOTAL PREFERRED STOCKS
(Identified cost $1,500,000) 1,000,000
------------
WARRANTS--0.0%
DRUGS & HEALTH CARE--0.0%
Pharma Patch PLC Class A 75,000 $ 2,344
Pharma Patch PLC Class B 37,500 1,172
------------
TOTAL WARRANTS
(Identified cost $0) 3,516
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
CONVERTIBLE BONDS--0.5%
COMMUNICATIONS--0.3%
International Cabletel Inc.
7.25%, 4/15/05 $ 1,400,000 1,491,000
------------
RESTAURANTS, LODGING & ENTERTAINMENT--0.2%
Interactive Light Holdings Inc.
8.00%, 1/25/99 (b) 1,000,000 1,000,000
------------
TECHNOLOGY--0.0%
Verbex Voice Systems Inc.
10.00%, 12/31/95 100,000 100,000
------------
TOTAL CONVERTIBLE BONDS
(Identified cost $2,500,000) 2,591,000
------------
SHORT TERM INVESTMENTS--10.3%
Federal Agencies--10.3%
Federal Home Loan Mortgage Corp., 5.89%,
7/5/95 10,910,000 10,902,860
Federal National Mortgage Association
Discount Notes, 5.90%, 7/5/95 26,005,000 25,987,965
Federal National Mortgage Association
Discount Notes, 5.90%, 7/7/95 19,330,000 19,310,992
------------
56,201,817
------------
U.S. GOVERNMENT OBLIGATIONS--0.0%
United States Treasury Bills,
5.20%, 8/3/95 190,000 189,094
------------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $56,390,911) 56,390,911
------------
TOTAL INVESTMENTS
(Identified cost $479,336,015)(c) 101.1% 553,698,046
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS (1.1) (6,075,828)
---- ------------
NET ASSETS 100.0% $547,622,218
===== ============
</TABLE>
(a) Non-income producing security.
(b) Private placement (see note 6).
(c) The aggregate cost for federal income tax purposes is $479,336,015;
aggregate gross unrealized appreciation is $85,930,113 and the aggregate
gross unrealized depreciation is $11,568,082, resulting in net unrealized
appreciation of $74,362,031.
The accompanying notes are an integral part of these
financial statements.
19
<PAGE> 22
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--86.0%
AUSTRIA--5.1%
Bau Holdings AG 39,900 $ 1,925,359
BWT AG 11,100 1,344,764
Vae Eisenbahnsyst 17,400 1,750,719
------------
TOTAL AUSTRIA 5,020,842
------------
AUSTRALIA--3.5%
Bilbury Ltd. (a),(c) 472,100 --
Goodman Fielder Ltd. 1,981,900 1,648,062
Pacific Mutual Ltd. 991,200 1,232,836
Shomega Ltd. 592,300 526,208
------------
TOTAL AUSTRALIA 3,407,106
------------
BRAZIL--2.2%
Capco Automotive Products Corp. 275,200 2,132,800
------------
FINLAND--2.8%
Valmet 123,000 2,779,092
------------
FRANCE--5.5%
Europe 1 Communication 6,000 1,426,010
Imetal 17,600 2,067,899
Unibail SA 19,400 1,895,492
------------
TOTAL FRANCE 5,389,401
------------
GERMANY--5.9%
Cewe Color Holding AG 2,600 883,650
Dorries Scharmann 13,800 1,177,526
Sander (Jil) AG 2,700 1,884,084
Schwarz Pharma AG 45,000 1,887,338
------------
TOTAL GERMANY 5,832,598
------------
HONG KONG--3.0%
Acme Landis Holdings 4,690,000 406,097
ASM Pacific Technology 1,129,000 897,329
Manhattan Card Co. 4,026,000 1,638,954
------------
TOTAL HONG KONG 2,942,380
------------
IRELAND--4.9%
Fitzwilton PLC 1,181,232 898,974
Irish Life PLC 560,600 1,880,900
Unidare PLC 378,200 2,042,651
------------
TOTAL IRELAND 4,822,525
------------
ISRAEL--1.5%
ECI Telecom Ltd. 105,400 1,442,662
------------
ITALY--1.9%
Arnoldo Mondadori Edit 296,800 1,897,343
------------
JAPAN--4.2%
Cowboy Company Ltd. 48,000 1,019,409
FCC Company Ltd. 75,000 2,106,071
Towa Pharm Company Ltd. 19,000 1,042,416
------------
TOTAL JAPAN 4,167,896
------------
LUXEMBORG--1.6%
Arbed SA 10,700 $ 1,561,028
------------
NETHERLANDS--2.0%
Van Ommeren 62,400 1,924,956
------------
NEW ZEALAND--4.6%
Lion Nathan Ltd. 1,312,200 2,596,679
Warehouse Group 480,600 1,895,668
------------
TOTAL NEW ZEALAND 4,492,347
------------
NORWAY--5.4%
Aker AS Class B 124,777 1,569,458
Trans Ocean Drilling 143,100 1,974,114
Unitor AS 99,300 1,724,434
------------
TOTAL NORWAY 5,268,006
------------
PAKISTAN--0.0%
Lever Brothers 540 11,679
Packages 750 3,147
------------
TOTAL PAKISTAN 14,826
------------
PORTUGAL--2.0%
Corticeira Amorim SA 129,100 1,941,353
------------
PUERTO RICO--0.8%
Cellular Communications Puerto Rico (a) 25,300 774,812
------------
SINGAPORE--0.9%
Amtek Engineering 636,000 928,401
------------
SOUTH AFRICA--0.1%
Safmarine & Rennies 29,050 84,283
------------
SOUTH KOREA--1.4%
Keumkang 14,900 1,364,178
------------
SPAIN--5.9%
Asturiana De Zinc 127,000 1,211,022
Corporation Finance Reunida 713,800 2,587,065
Vallehermoso SA 120,000 2,055,727
------------
TOTAL SPAIN 5,853,814
------------
SWEDEN--5.5%
Arjo AB 133,400 1,174,183
Hoganas AG 113,800 2,222,442
IRO 120,802 1,221,128
Linjebuss 77,000 836,600
------------
TOTAL SWEDEN 5,454,353
------------
SWITZERLAND--7.3%
Bil GT Gruppe AG 5,000 2,809,379
Danzas Holding 9,800 1,676,596
Swisslog 8,690 2,663,977
------------
TOTAL SWITZERLAND 7,149,952
------------
</TABLE>
20
<PAGE> 23
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM--8.0%
Bell Cablemedia PLC (a),(b) 124,300 $ 2,361,700
Greycoat PLC 832,175 1,919,284
Scholl PLC 676,900 1,981,066
Seeboard PLC 263,200 1,628,516
------------
TOTAL UNITED KINGDOM 7,890,566
------------
TOTAL COMMON STOCKS
(Identified cost $86,775,029) 84,537,520
------------
PREFERRED STOCKS--4.4%
Germany--2.4%
Mobel Walther Preferred AG 4,687 2,372,478
------------
UNITED KINGDOM--2.0%
Signet Group PLC (a),(b) 38 1,976,000
------------
TOTAL PREFERRED STOCKS
(Identified cost $3,826,338) 4,348,478
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
CONVERTIBLE BOND--1.8%
United States--1.8%
International Cabletel Inc.,
7.25%, 4/15/05 $ 1,700,000 1,810,500
------------
TOTAL CONVERTIBLE BOND
(Identified cost $1,700,000) 1,810,500
------------
SHORT TERM INVESTMENTS--13.9%
U.S. Government Obligations--13.9%
United States Treasury Bills,
5.20%, 8/3/95 13,440,000 13,375,971
United States Treasury Bills,
5.34%, 7/6/95 295,000 294,781
------------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $13,670,752) 13,670,752
------------
TOTAL INVESTMENTS
(Identified cost $105,972,119) (d) 106.1% 104,367,250
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS (6.1) (6,015,747)
---- ------------
NET ASSETS 100.0% $ 98,351,503
===== ============
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) Bankrupt security--valued at zero.
(d) The aggregate cost for federal income tax purposes is $105,972,119;
aggregate gross unrealized appreciation is $5,943,336 and the aggregate
gross unrealized depreciation is $7,548,205, resulting in net unrealized
depreciation of $1,604,869.
* Percentages of common and preferred stocks are presented in the portfolio by
currency denomination. Percentages by industry are as follows:
Automotive 2.2%, Auto Parts 2.1%, Broadcasting 1.4%, Building & Housing
0.4%, Communication Services 1.3%, Conglomerates 0.1%, Construction
Materials 5.1%, Cosmetics & Toiletries 2.0%, Electrical Equipment 2.1%,
Energy 2.0%, Engineering & Construction 2.0%, Financial Services 5.8%,
Food & Beverage 2.6%, Food Processing 1.7%, Healthcare 1.2%, Industrial &
Machinery 5.3%, Insurance 1.9%, Leisure Time 0.9%, Metals 2.8%, Metal
Fabricate/Hardware 0.9%, Miscellaneous 13.4%, Paper Products 4.8%,
Pharmaceuticals 1.1%, Real Estate 10.4%, Steel 2.3%, Shipping Services
1.7%, Technology 0.9%, Telecommunication Equipment 1.5%, Telephone 2.4%,
Textiles, Shoes and Apparel 1.9%, Transportation 0.8%, Transportation &
Freight Services 3.7%, Utilities 1.7%.
Forward Foreign Currency Contracts open at June 30, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- --------------- --------------- -------- ---------
<S> <C> <C> <C>
BEL 89,647,740 $ 3,042,000 9/13/95 ($118,487)
PTS 219,831,600 $ 1,740,000 9/13/95 (61,159)
FRF 18,080,335 $ 3,521,000 9/13/95 (198,594)
SEK 62,586,328 $ 8,428,000 9/13/95 (124,002)
$ 1,787,012 ATS 17,353,096 7/10/95 (5,379)
$ 887,101 IEP 539,468 7/05/95 (4,175)
$ 309,379 PTE 45,113,600 7/05/95 (1,015)
$ 119,324 ATS 1,162,277 7/03/95 6
$ 18,396 IEP 11,238 7/03/95 (4)
$ 1,785,029 JPY 150,715,343 7/03/95 (6,781)
$ 443,596 PTE 64,569,846 7/03/95 (2,244)
$ 52,107 SEK 378,503 7/03/95 (51)
---------
($521,885)
=========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
21
<PAGE> 24
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD SPECIAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--91.6%
AEROSPACE & DEFENSE--3.2%
Tech Sym Corp. (a) 72,000 $ 1,971,000
-----------
BUILDING & HOUSING--4.7%
Puerto Rican Cement Co., Inc. 95,000 2,897,500
-----------
BUSINESS SERVICES AND SUPPLIES--2.3%
Ennis Business Forms Inc. 115,000 1,423,125
-----------
CHEMICALS & PLASTICS--5.9%
Aceto Corp. 132,000 1,881,000
MacDermid Inc. 38,400 1,708,800
-----------
3,589,800
-----------
ELECTRONICS--1.9%
Isco Inc. 5,900 63,425
Keithley Instruments Inc. 50,000 1,100,000
-----------
1,163,425
-----------
FOOD & BEVERAGE--3.0%
Farmer Brothers Co. 15,000 1,830,000
-----------
HOUSEHOLD APPLIANCES & HOME FURNISHINGS--16.0%
Allen Organ Co. Class B 92,800 3,990,400
Boston Acoustics Inc. 60,000 1,110,000
Mikasa Inc. (a) 3,300 49,089
National Presto Industries Inc. 78,500 3,561,938
Pulaski Furniture Corp. 17,000 297,500
Virco Manufacturing Co. 90,000 787,500
-----------
9,796,427
-----------
INDUSTRIAL & MACHINERY--8.8%
Amtrol Inc. 10,000 180,000
Mestek Inc. (a) 900 11,362
Paul Mueller Co. 15,000 442,500
Penn Engineering & Manufacturing Corp. 25,000 1,887,500
Robbins and Myers Inc. 57,600 1,526,400
Tecumseh Products Co. 30,000 1,305,000
-----------
5,352,762
-----------
MISCELLANEOUS--4.3%
Deflecta Shield Corp. (a) 19,300 159,225
Mathews International Corp. 8,500 155,125
Tranzonic Companies Class A 80,000 1,210,000
Tranzonic Companies Class B 40,000 560,000
Versa Technologies Inc. 40,000 550,000
-----------
2,634,350
-----------
MULTI-INDUSTRY--3.6%
American Filtrona Corp. 25,000 725,000
Eastern Co. 20,000 275,000
Latshaw Enterprises Inc. (a),(b) 38,400 307,200
Raven Industries Inc. 15,000 292,500
Wynns International Inc. 24,400 567,300
-----------
2,167,000
-----------
RESTAURANTS, LODGING & ENTERTAINMENT--3.6%
Bowl America Inc. Class A 80,000 630,000
International Dairy Queen Class A (a) 80,000 1,540,000
-----------
2,170,000
-----------
RETAILING--10.6%
Arden Group Inc. Class A (a) 30,000 $ 1,335,000
Blair Corp. 76,900 2,643,437
Claire's Stores Inc. 35,000 634,375
Crown Books Corp. (a) 2,000 22,500
Dress Barn, (The) (a) 59,400 564,300
Haverty Furniture Cos. Inc. 10,500 102,375
Strawbridge & Clothier Class A 25,200 504,000
Value City Department Stores Inc. (a) 90,000 686,250
-----------
6,492,237
-----------
SERVICES--11.9%
AFA Protective Systems Inc. (a),(b) 15,100 1,525,100
Barra Inc. (a) 35,000 323,750
Ecology and Environment Inc. 115,395 923,160
Greiner Engineering Inc. 35,000 402,500
Grey Advertising Inc. 4,000 736,000
Hilb, Rogal & Hamilton Co. 60,000 750,000
Isomedix Inc. (a) 23,500 317,250
Value Line Inc. 78,000 2,320,500
-----------
7,298,260
-----------
TEXTILES, SHOES AND APPAREL--11.8%
Cone Mills Corp. (a) 45,000 579,374
Fab Industries Inc. 65,000 1,982,500
Garan Inc. 111,000 1,859,250
Superior Surgical Manufacturing Co. Inc. 115,000 1,207,500
Thomaston Mills Inc. Class A 100,000 1,250,000
Weyco Group Inc. 10,000 350,000
-----------
7,228,624
-----------
TOTAL COMMON STOCKS
(Identified cost $48,649,589) 56,014,510
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
SHORT TERM INVESTMENTS--9.6%
FEDERAL AGENCIES--7.6%
Federal National Mortgage Association
Discount Notes, 5.90%, 7/7/95 $4,635,000 4,630,442
-----------
U.S. GOVERNMENT OBLIGATIONS--2.0%
United States Treasury Bills,
5.16%, 7/6/95 235,000 234,831
United States Treasury Bills,
5.23%, 8/3/95 1,030,000 1,025,061
-----------
1,259,892
-----------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $5,890,334) 5,890,334
-----------
</TABLE>
22
<PAGE> 25
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD SPECIAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Identified cost $54,539,923)(c) 101.2% $61,904,844
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS (1.2) (748,345)
---- -----------
NET ASSETS 100.0% $61,156,499
===== ===========
</TABLE>
(a) Non-income producing security.
(b) Affiliated issuer under the Investment Company Act of 1940 inasmuch as the
Portfolio owns more than 5% of the voting securities of the Company.
(c) The aggregate cost for federal income tax purposes is $54,539,923; aggregate
gross unrealized appreciation is $11,016,154 and the aggregate gross
unrealized depreciation is $3,651,233, resulting in net unrealized
appreciation of $7,364,921.
The accompanying notes are an integral part of these
financial statements.
23
<PAGE> 26
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD EMERGING MARKETS PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS*--86.7%
ARGENTINA--5.4%
Capex SA (a) 56,000 $ 434,087
Juan Minetti 120,000 372,074
Metrogas Class B (b) 50,000 431,250
-------------
TOTAL ARGENTINA 1,237,411
-------------
BRAZIL--6.9%
Capco Automotive Products Corp. (a) 60,100 465,775
Ceval Alimentos SA 24,000,000 273,764
Dixie Lalekla SA (a) 467,000 360,207
Makro Atacadista SA (a),(b) 20,000 295,000
Melpaper SA (a) 830,500 180,445
-------------
TOTAL BRAZIL 1,575,191
-------------
CHILE--3.8%
AFP Provida SA (b) 17,000 456,875
Compania De Telefonos Chile S (b) 5,000 406,875
-------------
TOTAL CHILE 863,750
-------------
CHINA--1.8%
Ek Chor China Motorcycle Co. 26,000 419,250
-------------
COLOMBIA--4.0%
Banco De Bogota 35,000 206,525
Banco Industrial Colombiano 82,000 325,674
Gran Cadena De Almacenes Class B (a),(b) 18,000 373,500
-------------
TOTAL COLOMBIA 905,699
-------------
CZECH REPUBLIC--1.3%
Central European Media Entertainment
Light Class A (a) 20,000 297,500
-------------
GREECE--1.7%
Ergo Bank 4,000 184,057
Titan Cement Co. 5,500 208,821
-------------
TOTAL GREECE 392,878
-------------
HONG KONG--3.4%
Harbin Power Equipment (a) 1,248,000 399,183
Peregrine Investment 470,000 376,000
-------------
TOTAL HONG KONG 775,183
-------------
HUNGARY--4.1%
Danubius Hotel 51,600 503,599
Egis Gyogyszergyar 20,000 434,305
-------------
TOTAL HUNGARY 937,904
-------------
INDIA--5.4%
Ashok Leyland Ltd. (a),(b) 38,600 521,100
India Fund Inc. 30,000 307,500
Larsen & Toubro Ltd. (a),(b) 20,200 402,788
-------------
TOTAL INDIA 1,231,388
-------------
INDONESIA--5.0%
Bank Bali 145,000 367,872
Kawasan Industries Sababeka 298,000 588,774
PT Indonesian Satellite (b) 5,000 191,250
-------------
TOTAL INDONESIA 1,147,896
-------------
KOREA--8.0%
Korea Mobile Telecom 636 $ 602,659
Pohang Iron & Steel 4,380 434,447
Samsung Electronics Ltd. Sponsored
Global Deposit 144A (a),(b) 99 9,170
Samsung Electronics Ltd. Global
Depositary Receipt 144A (a),(b) 19 1,741
Samsung Electronics Ltd. 144A (a),(b) 6,700 348,400
Samsung Electronics Ltd. Global Deposit
Receipt Republic 144A Non-Voting
(a),(b) 1,325 68,900
Shinhan Bank 17,100 351,810
-------------
TOTAL KOREA 1,817,127
-------------
MALAYSIA--4.9%
Aokam Perdana Berhad 185,000 459,085
Genting Berhad 33,000 326,210
Kian Joo Can Factory Berhad 85,000 332,958
-------------
TOTAL MALAYSIA 1,118,253
-------------
MEXICO--5.4%
Fomento Economico 201,200 470,003
Grupo Fernandez Editores Series B (a) 670,000 252,992
Pan American Beverage Class A (b) 17,000 510,000
-------------
TOTAL MEXICO 1,232,995
-------------
PAKISTAN--2.1%
Hub Power Ltd. (a),(b) 33,000 478,500
-------------
PERU--1.2%
Backus & Johnston 116,339 275,093
-------------
PHILIPPINES--4.0%
Alaska Milk Corp. (a) 1,580,000 340,251
Bacnotan Consolidated Industries 400,000 371,000
Pilipino Telephone 247,500 195,741
-------------
TOTAL PHILIPPINES 906,992
-------------
POLAND--1.4%
Jelfa 22,000 320,461
-------------
PORTUGAL--4.3%
Corticeira Amorim SA 16,800 252,632
Modelo SGPS, SA 10,600 375,021
Portugal Telecom SA (b) 18,000 339,750
-------------
TOTAL PORTUGAL 967,403
-------------
RUSSIA--1.4%
First NIS Regional Fund (a),(b) 88,000 316,800
-------------
SOUTH AFRICA--8.1%
Iscor 195,000 221,475
Malbak 60,000 379,507
Murray & Roberts 50,500 291,642
Nedcor Ltd. (b) 11,000 539,000
Safmarine & Rennies 146,000 423,590
-------------
TOTAL SOUTH AFRICA 1,855,214
-------------
SRI LANKA--0.8%
Blue Diamond Jewel (a) 379,708 179,125
-------------
THAILAND--2.3%
Hua Thai Manufacturing PLC 16,800 44,918
Hua Thai Manufacturing PLC (alien
market) 32,600 71,975
Swedish Motors 40,000 160,421
Thai Airways 111,000 247,316
-------------
TOTAL THAILAND 524,630
-------------
</TABLE>
24
<PAGE> 27
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
LAZARD EMERGING MARKETS PORTFOLIO
PORTFOLIO OF INVESTMENTS--JUNE 30, 1995 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCKS
(Identified cost $20,701,927) $ 19,776,643
-------------
PREFERRED STOCK--1.3%
BRAZIL--1.3%
Banco Bradesco SA 34,000,000 288,104
-------------
TOTAL PREFERRED STOCK
(Identified cost $249,964) 288,104
-------------
RIGHTS--0.0%
BRAZIL--0.0%
Banco Bradesco Preferred SA 613,972 714
-------------
TOTAL RIGHTS
(Identified cost $0) 714
-------------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
BOND--2.8%
ARGENTINA--2.8%
Argentina Pensioner Bocon,
0.00%, 4/1/01 (c) $ 840,000 634,200
-------------
TOTAL BOND
(Identified cost $646,115) 634,200
-------------
SHORT TERM INVESTMENTS--8.8%
FEDERAL AGENCIES--6.3%
Federal National Mortgage Association
Discount Notes, 5.89%, 7/5/95 1,440,000 1,439,058
-------------
TOTAL FEDERAL AGENCIES
(Identified cost $1,439,058) 1,439,058
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--2.5%
United States Treasury Bills,
5.21%, 8/3/95 $ 290,000 $ 288,614
United States Treasury Bills,
5.34%, 7/6/95 285,000 284,789
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified cost $573,403) 573,403
-------------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $2,012,461) 2,012,461
-------------
TOTAL INVESTMENTS
(Identified cost $23,610,467)(d) 99.6% 22,712,122
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES 0.4 85,485
----- -------------
NET ASSETS 100.0% $ 22,797,607
===== =============
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) Zero coupon until 5/1/97, then coupon set monthly to 30 day LIBOR.
(d) The aggregate cost for federal income tax purposes is $23,610,467; aggregate
gross unrealized appreciation is $1,363,350 and the aggregate gross
unrealized depreciation is $2,261,695, resulting in net unrealized
depreciation of $898,345.
* Percentages of common and preferred stocks are presented in the portfolio by
currency denomination. Percentages by industry are as follows:
Apparel & Textiles 0.5%, Automotive 0.7%, Auto Parts 2.0%, Banks 4.4%,
Broadcasting 1.3%, Building & Housing 2.7%, Chemicals & Plastics 1.6%,
Communications 9.5%, Construction Materials 3.3%, Consumer Goods 0.8%,
Domestic Oil 1.9%, Drugs & Health Care 3.3%, Electrical Equipment 1.7%,
Electronics 1.9%, Engineering & Construction 1.3%, Financial Services 15.4%,
Food & Beverage 8.2%, Forest Products 3.9%, Holding Company--Diversified
1.7%, Investment Companies 1.4%, Leisure Time 1.8%, Manufacturing 1.5%,
Publishing 1.1%, Restaurants, Lodging & Entertainment 3.6%, Retailing 1.6%,
Steel 2.9%, Transportation 1.1%, Transportation & Freight Services 1.9%,
Utilities 2.1%, Wholesale Trade 2.9%.
Forward Foreign Currency Contracts open at June 30, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C>
GRD 2,800,079 $ 12,409 7/07/95 (40)
IDR 213,594,761 $ 95,782 7/06/95 (129)
$ 22,653 PHP 576,075 7/03/95 $ (97)
-----
$(266)
=====
</TABLE>
The accompanying notes are an integral part of these
financial statements.
25
<PAGE> 28
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL STRATEGIC LAZARD SMALL
EQUITY EQUITY FIXED-INCOME LAZARD BOND YIELD CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value* $133,545,779 $1,074,556,956 $44,535,761 $32,419,741 $ 73,455,976 $553,698,046
Cash 42,822 3,943,906 5,470 161,499 3,702 9,359
Net foreign currency
contracts (note 2) -- -- 71,429 -- -- --
Receivables for:
Investments sold -- 3,377,303 1,575,009 517,093 5,238,892 2,727,475
Dividends and interest 182,795 5,302,627 1,045,810 417,416 1,176,679 366,575
Capital stock sold 198,269 6,874,236 6,000 237,050 47,200 595,442
Deferred organizational
expenses (note 2) -- 18,073 18,504 18,576 17,029 18,109
Other -- 23,779 1,225 -- -- --
------------ -------------- ----------- ------------ ------------ ------------
Total assets 133,969,665 1,094,096,880 47,259,208 33,771,375 79,939,478 557,415,006
------------ -------------- ----------- ------------ ------------ ------------
LIABILITIES
Payables for:
Investments purchased 787,591 31,768,536 2,166,100 568,029 5,830,932 4,894,032
Capital stock repurchased 252,969 12,044,303 98,500 22,500 40,000 4,462,303
Dividends declared -- -- 26,548 21,098 56,486 --
Investment management
fees payable (note 3) 94,819 636,464 104,103 38,305 88,082 328,986
Net foreign currency
contracts (note 2) -- 4,211,713 -- -- 443,324 --
Due to Manager -- -- -- -- -- --
Accrued expenses and
other payables 56,811 774,642 61,496 44,640 46,290 107,467
------------ -------------- ----------- ------------ ------------ ------------
Total liabilities 1,192,190 49,435,658 2,456,747 694,572 6,505,114 9,792,788
------------ -------------- ----------- ------------ ------------ ------------
Net assets, at value 132,777,475 1,044,661,222 44,802,461 33,076,803 73,434,364 547,622,218
============== =============== ============ ============== ============ ==============
NET ASSETS
Paid in capital 108,347,700 991,623,823 39,002,833 33,185,172 77,555,498 438,728,177
Accumulated
undistributed
(distributions in
excess of) investment
income--net 436,470 12,199,586 1,314 -- (13,904) 2,882,870
Unrealized appreciation
(depreciation) on:
Investments--net 19,917,712 78,987,570 2,874,488 1,027,438 1,406,880 74,362,031
Foreign exchange
transactions--net -- (4,118,669) 102,394 -- (436,345) --
Accumulated
undistributed realized
gain (loss)--net 4,075,593 (34,031,088) 2,821,432 (1,135,807) (5,077,765) 31,649,140
------------ -------------- ----------- ------------ ------------ ------------
NET ASSETS, AT VALUE $132,777,475 $1,044,661,222 $44,802,461 $33,076,803 $ 73,434,364 $547,622,218
------------ -------------- ----------- ------------ ------------ ------------
Shares of capital stock
outstanding** 8,044,272 89,558,309 3,776,829 3,338,369 7,920,557 32,665,573
------------ -------------- ----------- ------------ ------------ ------------
NET ASSET VALUE PER
SHARE $ 16.51 $ 11.66 $ 11.86 $ 9.91 $ 9.27 $ 16.76
========== ============ ========= ========== ========= ==========
<CAPTION>
LAZARD LAZARD LAZARD
INTERNATIONAL SPECIAL EMERGING
SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments, at value* $104,367,250 $ 61,904,844 $ 22,712,122
Cash 1,816,479 7,887 223,853
Net foreign currency
contracts (note 2) -- -- --
Receivables for:
Investments sold -- -- 95,911
Dividends and interest 252,624 78,294 18,396
Capital stock sold 75,850 25,160 35,550
Deferred organizational
expenses (note 2) 12,062 -- 17,204
Other -- 23,086 --
------------ ------------ ------------
Total assets 106,524,265 62,039,271 23,103,036
------------ ------------ ------------
LIABILITIES
Payables for:
Investments purchased 7,465,604 123,469 218,297
Capital stock repurchas 36,000 531,000 12,920
Dividends declared -- -- --
Investment management
fees payable (note 3) 51,214 206,154 28,655
Net foreign currency
contracts (note 2) 521,885 -- 266
Due to Manager -- -- 20,680
Accrued expenses and
other payables 98,059 22,149 24,611
------------ ------------ ------------
Total liabilities 8,172,762 882,772 305,429
------------ ------------ ------------
Net assets, at value 98,351,503 61,156,499 22,797,607
============== ============ ============
NET ASSETS
Paid in capital 104,686,021 49,122,816 25,498,381
Accumulated
undistributed
(distributions in
excess of) investment
income--net 845,830 400,899 146,361
Unrealized appreciation
(depreciation) on:
Investments--net (1,604,869) 7,364,921 (898,345)
Foreign exchange
transactions--net (514,044) -- (1,625)
Accumulated
undistributed realized
gain (loss)--net (5,061,435) 4,267,863 (1,947,165)
------------ ------------ ------------
NET ASSETS, AT VALUE $ 98,351,503 $ 61,156,499 $ 22,797,607
------------ ------------ ------------
Shares of capital stock
outstanding** 9,495,663 4,713,261 2,492,955
------------ ------------ ------------
NET ASSET VALUE PER
SHARE $ 10.36 $ 12.98 $ 9.14
========== ========= =========
</TABLE>
* For identified cost, see accompanying portfolios of investments
** $0.001 par value, 1,000,000,000 shares authorized
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 29
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL LAZARD STRATEGIC LAZARD
EQUITY EQUITY FIXED-INCOME BOND YIELD SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest* $ 225,874 $ 2,284,131 $1,548,376 $1,001,783 $ 3,330,411 $ 1,134,829
Dividends* 1,095,942 14,235,120 -- -- -- 2,861,490
----------- ------------ ---------- ---------- ----------- -----------
Total investment income 1,321,816 16,519,251 1,548,376 1,001,783 3,330,411 3,996,319
----------- ------------ ---------- ---------- ----------- -----------
EXPENSES:
Management fee (note 3) 414,397 3,487,680 149,912 69,892 240,798 1,780,275
Custodian fees 32,502 598,922 47,334 24,039 44,661 56,568
Professional services 15,893 58,609 14,148 11,434 13,885 31,928
Registration fees 19,225 92,975 8,190 8,810 9,904 31,733
Shareholder services 13,436 23,079 8,848 9,162 9,493 14,337
Directors' fees and expenses 5,896 5,895 5,413 5,895 5,895 5,895
Shareholders reports 1,392 3,667 946 793 1,359 3,002
Organizational expenses (note 2) -- 6,697 6,697 6,697 6,697 6,697
Other 8,476 44,106 8,459 6,911 6,542 31,061
----------- ------------ ---------- ---------- ----------- -----------
Total expenses before
reimbursement from Manager 511,217 4,321,630 249,947 143,633 339,234 1,961,496
Less: Management fees waived
(note 3) -- -- (40,070) (31,587) -- --
----------- ------------ ---------- ---------- ----------- -----------
Expenses--net 511,217 4,321,630 209,877 112,046 339,234 1,961,496
----------- ------------ ---------- ---------- ----------- -----------
INVESTMENT INCOME--NET 810,599 12,197,621 1,338,499 889,737 2,991,177 2,034,823
----------- ------------ ---------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NET
Realized gain (loss) on:
Investments--net* 4,456,555 (9,908,859) 2,530,675 21,668 (1,473,316) 31,850,228
Foreign exchange
transactions--net -- (10,360,663) 340,969 -- (547,382) --
Net change in unrealized
appreciation (depreciation)
on:
Investments--net 15,600,142 54,465,021 3,011,173 1,946,211 3,592,377 42,530,710
Foreign exchange
transactions--net -- (2,460,667) 97,583 -- (338,949) --
----------- ------------ ---------- ---------- ----------- -----------
Realized and unrealized gain
(loss) on investments--net 20,056,697 31,734,832 5,980,400 1,967,879 1,232,730 74,380,938
----------- ------------ ---------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $20,867,296 $ 43,932,453 $7,318,899 $2,857,616 $ 4,223,907 $76,415,761
============ ============== =========== =========== ============ ============
*Net of foreign withholding
taxes of: $ 26,475 $ 2,432,696 $ 23,468 $ -- $ 1,749 $ --
============ ============== =========== =========== ============ ============
<CAPTION>
LAZARD LAZARD LAZARD
INTERNATIONAL SPECIAL EMERGING
SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest* $ 238,612 $ 147,515 $ 117,719
Dividends* 1,096,547 760,402 145,584
----------- ---------- -----------
Total investment income 1,335,159 907,917 263,303
----------- ---------- -----------
EXPENSES:
Management fee (note 3) 321,191 453,303 89,956
Custodian fees 97,673 28,953 47,989
Professional services 14,498 13,335 9,913
Registration fees 17,257 7,373 10,692
Shareholder services 13,897 9,326 10,486
Directors' fees and expenses 5,895 5,895 5,895
Shareholders reports 2,110 3,370 658
Organizational expenses (note 2) 1,750 -- 1,606
Other 16,635 7,556 1,048
----------- ---------- -----------
Total expenses before
reimbursement from Manager 490,906 529,111 178,243
Less: Management fees waived
(note 3) -- (23,011) (61,301)
----------- ---------- -----------
Expenses--net 490,906 506,100 116,942
----------- ---------- -----------
INVESTMENT INCOME--NET 844,253 401,817 146,361
----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOS
Realized gain (loss) on:
Investments--net* (32,469) 2,717,157 (1,757,281)
Foreign exchange
transactions--net (1,517,128) -- (20,528)
Net change in unrealized
appreciation (depreciation)
on:
Investments--net 1,050,173 2,179,142 635,055
Foreign exchange
transactions--net (253,267) -- (2,707)
----------- ---------- -----------
Realized and unrealized gain
(loss) on investments--net (752,691) 4,896,299 (1,145,461)
----------- ---------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 91,562 $5,298,116 $ (999,100)
============ =========== ============
*Net of foreign withholding
taxes of: $ 139,389 $ 8,075 $ 20,952
============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE> 30
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LAZARD
LAZARD LAZARD INTERNATIONAL
EQUITY INTERNATIONAL EQUITY FIXED-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------ ------------------------------- -----------
SIX MONTHS YEAR ENDED SIX MONTHS SIX MONTHS
ENDED DECEMBER ENDED YEAR ENDED ENDED
JUNE 30, 31, JUNE 30, DECEMBER 31, JUNE 30,
------------------------------ ------------------------------- -----------
1995 1994 1995 1994 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net $ 810,599 $ 775,588 $ 12,197,621 $ 5,752,469 $ 1,338,499
Realized gain (loss) on
investments and foreign
exchange transactions 4,456,555 3,165,434 (20,269,522) 50,645,245 2,871,644
Unrealized appreciation
(depreciation)--net 15,600,142 (1,765,260) 52,004,354 (68,363,473) 3,108,756
------------ ----------- -------------- ------------- -----------
Net increase (decrease) in net
assets resulting from
operations 20,867,296 2,175,762 43,932,453 (11,965,759) 7,318,899
------------ ----------- -------------- ------------- -----------
Distributions to shareholders
from:
Investment income--net (361,558) (819,467) -- (5,752,469) (1,338,499)
Realized gains--net -- (3,479,186) -- (74,500,587) --
Offset to investment income--
net -- -- -- 5,752,469 --
------------ ----------- -------------- ------------- -----------
(361,558) (4,298,653) -- (74,500,587) (1,338,499)
------------ ----------- -------------- ------------- -----------
Capital stock transactions:
Net proceeds from sales 32,817,437 44,216,711 232,731,422 348,583,561 9,982,181
Net proceeds from
reinvestment of
distributions 349,602 4,207,450 -- 72,041,335 1,269,134
Cost of shares redeemed (10,000,520) (4,318,758) (63,879,635) (105,923,266) (8,232,008)
------------ ----------- -------------- ------------- -----------
Net increase (decrease) in net
assets from capital stock
transactions 23,166,519 44,105,403 168,851,787 314,701,630 3,019,307
------------ ----------- -------------- ------------- -----------
Total increase (decrease) in
net assets 43,672,257 41,982,512 212,784,240 228,235,284 8,999,707
Net assets at beginning of
period 89,105,218 47,122,706 831,876,982 603,641,698 35,802,754
------------ ----------- -------------- ------------- -----------
Net assets at end of period* $132,777,475 $89,105,218 $1,044,661,222 $ 831,876,982 $44,802,461
============== ============ =============== =============== ============
Shares issued and repurchased:
Shares outstanding at
beginning of period 6,482,310 3,391,490 74,103,632 48,980,591 3,499,078
------------ ----------- -------------- ------------- -----------
Shares sold 2,201,165 3,088,569 21,119,734 27,102,620 889,949
Shares issued to shareholders
from reinvestment of
distributions 22,924 304,879 -- 6,362,069 113,270
Shares repurchased (662,127) (302,628) (5,665,057) (8,341,648) (725,468)
------------ ----------- -------------- ------------- -----------
Net increase (decrease) 1,561,962 3,090,820 15,454,677 25,123,041 277,751
============== ============ =============== =============== ============
Shares outstanding at end
of period 8,044,272 6,482,310 89,558,309 74,103,632 3,776,829
============== ============ =============== =============== ============
*Includes undistributed (over
distributed) net investment
income of: $ 436,470 $ (12,571) $ 12,199,586 $ 1,965 $ 1,314
============== ============ =============== =============== ============
<CAPTION>
-----------------------------------------------------------------------------
LAZARD
INTERNATIONAL LAZARD
FIXED-INCOME BOND
PORTFOLIO PORTFOLIO
------------- ----------------------------
YEAR ENDED SIX MONTHS YEAR ENDED
DECEMBER ENDED DECEMBER
31, JUNE 30, 31,
------------ ----------------------------
1994 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations:
Investment income--net $ 1,206,922 $ 889,737 $ 1,235,348
Realized gain (loss) on
investments and foreign
exchange transactions 180,322 21,668 (1,151,722)
Unrealized appreciation
(depreciation)--net (512,114) 1,946,211 (965,163)
----------- ----------- -----------
Net increase (decrease) in net
assets resulting from
operations 875,130 2,857,616 (881,537)
----------- ----------- -----------
Distributions to shareholders
from:
Investment income--net (1,206,922) (889,737) (1,235,348)
Realized gains--net (287,561) -- (58,029)
Offset to investment income--
net -- -- --
----------- ----------- -----------
(1,494,483) (889,737) (1,293,377)
----------- ----------- -----------
Capital stock transactions:
Net proceeds from sales 25,803,649 10,189,491 18,506,638
Net proceeds from
reinvestment of
distributions 1,439,206 834,462 1,205,567
Cost of shares redeemed (4,276,403) (4,408,563) (6,605,325)
----------- ----------- -----------
Net increase (decrease) in net
assets from capital stock
transactions 22,966,452 6,615,390 13,106,880
----------- ----------- -----------
Total increase (decrease) in
net assets 22,347,099 8,583,269 10,931,966
Net assets at beginning of
period 13,455,655 24,493,534 13,561,568
----------- ----------- -----------
Net assets at end of period* $35,802,754 $33,076,803 $24,493,534
============ ============ ============
Shares issued and repurchased:
Shares outstanding at
beginning of period 1,279,788 2,650,557 1,319,047
----------- ----------- -----------
Shares sold 2,492,028 1,061,212 1,891,145
Shares issued to shareholders
from reinvestment of
distributions 138,395 86,809 125,665
Shares repurchased (411,133) (460,209) (685,300)
----------- ----------- -----------
Net increase (decrease) 2,219,290 687,812 1,331,510
============ ============ ============
Shares outstanding at end
of period 3,499,078 3,338,369 2,650,557
============ ============ ============
*Includes undistributed (over
distributed) net investment
income of: $ 1,314 $ -- $ --
============ ============ ============
</TABLE>
+ For the period July 15, 1994 (commencement of operations) through December 31,
1994
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
LAZARD
LAZARD LAZARD LAZARD SPECIAL
STRATEGIC YIELD SMALL CAP INTERNATIONAL SMALL CAP EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------- ------------------------------ ----------------------------- -----------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
----------------------------- ------------------------------ ----------------------------- -----------
1995 1994 1995 1994 1995 1994 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------- -----------
$ 2,991,177 $ 4,065,416 $ 2,034,823 $ 2,022,125 $ 844,253 $ 591,036 $ 401,817
(2,020,698) (3,078,071) 31,850,228 22,502,779 (1,549,597) (4,068,829) 2,717,157
3,253,428 (2,316,644) 42,530,710 (17,010,725) 796,906 (3,653,545) 2,179,142
----------- ------------ ------------ ------------ ----------- ------------ -----------
4,223,907 (1,329,299) 76,415,761 7,514,179 91,562 (7,131,338) 5,298,116
----------- ------------ ------------ ------------ ----------- ------------ -----------
(2,991,107) (4,065,416) -- (1,181,605) -- (591,036) --
-- (182,040) -- (31,911,994) -- -- --
-- -- -- -- -- 591,036 --
----------- ------------ ------------ ------------ ----------- ------------ -----------
(2,991,107) (4,247,456) -- (33,093,599) -- -- --
----------- ------------ ------------ ------------ ----------- ------------ -----------
12,852,433 47,082,168 60,092,795 96,349,172 21,438,737 87,421,230 1,586,537
2,866,501 4,028,879 -- 32,373,017 -- -- --
(5,845,701) (18,148,713) (18,558,961) (24,422,634) (6,611,002) (10,380,143) (7,225,759)
----------- ------------ ------------ ------------ ----------- ------------ -----------
9,873,233 32,962,334 41,533,834 104,299,555 14,827,735 77,041,087 (5,639,222)
----------- ------------ ------------ ------------ ----------- ------------ -----------
11,106,033 27,385,579 117,949,595 78,720,135 14,919,297 69,909,749 (341,106)
62,328,331 34,942,752 429,672,623 350,952,488 83,432,206 13,522,457 61,497,605
----------- ------------ ------------ ------------ ----------- ------------ -----------
$73,434,364 $ 62,328,331 $547,622,218 $429,672,623 $98,351,503 $ 83,432,206 $61,156,499
============ ============== ============== ============== ============ ============== ============
6,846,915 3,449,123 29,940,743 23,005,203 8,034,455 1,244,608 5,170,257
----------- ------------ ------------ ------------ ----------- ------------ -----------
1,404,185 4,889,580 3,885,377 6,292,755 2,115,568 7,756,773 127,972
315,914 425,219 -- 2,255,296 -- -- --
(646,457) (1,917,007) (1,160,547) (1,612,511) (654,360) (966,926) (584,968)
----------- ------------ ------------ ------------ ----------- ------------ -----------
1,073,642 3,397,792 2,724,830 6,935,540 1,461,208 6,789,847 (456,996)
============ ============== ============== ============== ============ ============== ============
7,920,557 6,846,915 32,665,573 29,940,743 9,495,663 8,034,455 4,713,261
============ ============== ============== ============== ============ ============== ============
$ (13,904) $ (13,973) $ 2,882,870 $ 848,046 $ 845,830 $ 1,577 $ 400,899
============ ============== ============== ============== ============ ============== ============
<CAPTION>
- ---------------------------------------------------
LAZARD LAZARD
SPECIAL EQUITY EMERGING MARKETS
PORTFOLIO PORTFOLIO
- --------------------- ----------------------------
PERIOD
SIX MONTHS ENDED
YEAR ENDED ENDED DECEMBER
DECEMBER 31, JUNE 30, 31,
----------------------------
1994 1995 1994+
- ---------------------------------------------------
<S> <C> <C> <C>
-----------
$ 764,923 $ 146,361 $ 18,035
10,854,080 (1,777,809) (187,391)
(13,546,230) 632,348 (1,532,318)
------------ ----------- -----------
(1,927,227) (999,100) (1,701,674)
------------ ----------- -----------
(760,649) -- (18,035)
(16,861,086) -- --
-- -- 18,035
------------ ----------- -----------
(17,621,735) -- --
------------ ----------- -----------
6,540,035 8,584,820 19,386,871
16,313,998 -- --
(59,936,521) (1,813,018) (660,292)
------------ ----------- -----------
(37,082,488) 6,771,802 18,726,579
------------ ----------- -----------
(56,631,450) 5,772,702 17,024,905
118,129,055 17,024,905 --
------------ ----------- -----------
$ 61,497,605 $22,797,607 $17,024,905
============== ============ ============
7,508,865 1,727,237 --
------------ ----------- -----------
429,986 971,123 1,786,246
1,278,144 -- --
(4,046,738) (205,405) (59,009)
------------ ----------- -----------
(2,338,608) 765,718 1,727,237
============== ============ ============
5,170,257 2,492,955 1,727,237
============== ============ ============
$ (918) $ 146,361 $ --
============== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE> 32
- --------------------------------------------------------------------------------
THE LAZARD FUNDS, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET
GAINS
(LOSSES)
NET ON
ASSET SECURITIES
VALUE, (BOTH TOTAL
BEGINNING REALIZED FROM
OF INVESTMENT AND INVESTMENT
PERIOD PERIOD INCOME-NET UNREALIZED)-NET OPERATIONS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LAZARD EQUITY PORTFOLIO
Six months ended 6/30/95 $13.75 $0.104 $2.704 $2.808
Year ended 12/31/94 13.89 0.141 0.441 0.582
Year ended 12/31/93 12.74 0.158 2.172 2.330
Year ended 12/31/92 12.34 0.123 0.518 0.641
Year ended 12/31/91 11.53 0.107 3.051 3.158
Year ended 12/31/90 12.34 0.191 (0.778) (0.587)
Year ended 12/31/89 10.32 0.204 2.231 2.435
Year ended 12/31/88 8.73 0.181 1.597 1.778
6/1/87* to 12/31/87 10.00 0.110 (1.280) (1.170)
- ---------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO
Six months ended 6/30/95 11.23 0.136 0.294 0.430
Year ended 12/31/94 12.32 0.078 (0.049) 0.029
Year ended 12/31/93 9.48 0.021 2.919 2.940
Year ended 12/31/92 10.30 0.097 (0.779) (0.682)
10/29/91* to 12/31/91 10.00 0.020 0.300 0.320
- ---------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO
Six months ended 6/30/95 10.23 0.370 1.630 2.000
Year ended 12/31/94 10.51 0.592 (0.161) 0.431
Year ended 12/31/93 9.79 0.571 0.912 1.483
Year ended 12/31/92 10.28 0.614 (0.403) 0.211
11/8/91* to 12/31/91 10.00 0.110 0.280 0.390
- ---------------------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO
Six months ended 6/30/95 9.24 0.304 0.670 0.974
Year ended 12/31/94 10.28 0.584 (1.010) (0.426)
Year ended 12/31/93 10.21 0.551 0.302 0.853
Year ended 12/31/92 10.25 0.577 (0.004) 0.573
11/12/91* to 12/31/91 10.00 0.140 0.250 0.390
- ---------------------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO
Six months ended 6/30/95 9.10 0.421 0.170 0.591
Year ended 12/31/94 10.13 0.762 (0.990) (0.228)
Year ended 12/31/93 9.50 0.644 0.738 1.382
Year ended 12/31/92 9.97 1.049 (0.450) 0.599
10/1/91* to 12/31/91 10.00 0.250 (0.030) 0.220
- ---------------------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO
Six months ended 6/30/95 14.35 0.060 2.350 2.410
Year ended 12/31/94 15.26 0.070 0.220 0.290
Year ended 12/31/93 12.98 0.019 3.830 3.849
Year ended 12/31/92 10.42 0.019 2.560 2.579
10/30/91* to 12/31/91 10.00 0.030 0.420 0.450
- ---------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
Six months ended 6/30/95 10.38 0.089 (0.109) (0.020)
Year ended 12/31/94 10.86 0.072 (0.548) (0.476)
12/1/93* to 12/31/93 10.00 0.004 0.859 0.863
- ---------------------------------------------------------------------------------------------
LAZARD SPECIAL EQUITY PORTFOLIO
Six months ended 6/30/95 11.89 0.085 1.005 1.090
Year ended 12/31/94 15.73 0.156 (0.557) (0.401)
Year ended 12/31/93 16.90 0.157 1.478 1.635
Year ended 12/31/92 15.14 0.161 2.181 2.342
Year ended 12/31/91 11.54 0.230 4.160 4.390
Year ended 12/31/90 13.72 0.714 (2.155) (1.441)
Year ended 12/31/89 13.13 0.260 1.874 2.134
Year ended 12/31/88 10.64 0.224 2.761 2.985
Year ended 12/31/87 11.66 0.112 (0.291) (0.179)
1/16/86* to 12/31/86 10.00 0.075 1.585 1.660
- ---------------------------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORTFOLIO
Six months ended 6/30/95 9.86 0.059 (0.779) (0.720)
7/15/94* to 12/31/94 10.00 0.010 (0.154) (0.144)
- ---------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
+ Annualized.
++ Not Annualized.
(a) The Portfolio received a special distribution from one of its portfolio
investments. Had the Fund not received this distribution, the ratio would
have been 2.20%.
(b) Includes $.032 per share of distributions from paid-in capital, none of
which is a return of capital for tax purposes.
(c) If the Investment Manager had not waived management fees and reimbursed
certain expenses the ratio of expenses to average net assets (and net
investment income per share) would have been 10.84%+ ($0.056) for the
International Equity Portfolio, 20.70%+ ($0.293) for the International
Fixed-Income Portfolio, 7.80%+ ($.0114) for the Bond Portfolio, 6.22%+
($0.075) for the Strategic Yield Portfolio, and 11.05%+ ($0.085) for the
Small Cap Portfolio.
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LESS:
- -------------------------------
DIVIDENDS
FROM NET RATIOS TO
AND IN ASSET AVERAGE NET
EXCESS DISTRIBUTIONS VALUE, ASSETS NET ASSETS,
OF FROM END ---------------- PORTFOLIO END OF
INVESTMENT CAPITAL OF TOTAL INVESTMENT TURNOVER PERIOD
INCOME-NET GAINS PERIOD RETURN EXPENSES INCOME-NET RATE (000'S)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.048) -- $16.51 20.4%++ 0.93% 1.47% 35.85% $ 132,777
(0.152) $(0.574) 13.75 4.2 1.05 1.15 66.52 89,105
(0.165) (1.015) 13.89 18.6 1.05(e) 1.31 63.92 47,123
(0.132) (0.109) 12.74 5.3 1.05(d) 1.19 174.45 24,646
(0.082) (2.266) 12.34 27.5 1.93 0.84 90.00 14,821
(0.223)(b) -- 11.53 (4.7) 1.77 1.62 70.00 14,397
(0.214) (0.201) 12.34 23.6 1.78 1.71 78.00 16,239
(0.188) -- 10.32 20.4 1.84 1.86 111.00 12,336
(0.100) -- 8.73 (11.7)++ 1.68+ 1.93+ 97.00 10,186
- ----------------------------------------------------------------------------------------------------
-- -- 11.66 3.8++ 0.93 2.62 40.45 1,044,661
-- (1.123) 11.23 0.2 0.94 0.75 106.15 831,877
(0.021) (0.079) 12.32 31.0 0.99 1.13 86.95 603,642
(0.138) -- 9.48 (6.6) 1.05(d) 2.13 60.37 176,005
(0.020) -- 10.30 3.2++ 1.05+,(c) 2.19+ 0.18 4,967
- ----------------------------------------------------------------------------------------------------
(0.370) -- 11.86 19.8++ 1.05(g) 6.70 83.07 44,802
(0.593) (0.116) 10.23 4.2 1.05(f) 5.68 65.90 35,803
(0.570) (0.193) 10.51 15.7 1.05(e) 5.50 115.84 13,546
(0.614) (0.087) 9.79 2.0 1.05(d) 6.08 256.20 8,183
(0.110) -- 10.28 3.9++ 1.05+,(c) 4.82+ 6.43 1,427
- ----------------------------------------------------------------------------------------------------
(0.304) -- 9.91 10.7++ 0.80(g) 6.37 59.32 33,077
(0.584) (0.029) 9.24 (4.2) 0.80(f) 6.11 120.51 24,494
(0.551) (0.232) 10.28 8.6 0.80(e) 5.22 174.63 13,562
(0.577) (0.036) 10.21 5.7 0.80(d) 5.59 131.38 8,532
(0.140) -- 10.25 3.9++ 0.80+,(c) 5.50+ 10.46 3,256
- ----------------------------------------------------------------------------------------------------
(0.421) -- 9.27 6.7++ 1.06 9.32 94.71 73,434
(0.761) (0.039) 9.10 (2.3) 1.05(f) 8.03 195.18 62,328
(0.633) (0.119) 10.13 15.6 1.05(e) 6.36 215.60 34,943
(1.049) (0.020) 9.50 6.0 1.05(d) 10.57 122.88 9,641
(0.250) -- 9.97 2.1++ 1.05+,(c) 9.52+ 11.26 4,256
- ----------------------------------------------------------------------------------------------------
-- -- 16.76 16.8++ 0.83 0.86 37.63 547,622
(0.042) (1.158) 14.35 2.0 0.85 0.51 70.11 429,673
(0.020) (1.549) 15.26 30.1 0.88 0.16 98.47 350,952
(0.019) -- 12.98 24.8 1.05(d) 0.29 106.91 168,171
(0.030) -- 10.42 4.5++ 1.05+,(c) 2.47+ 5.50 2,512
- ----------------------------------------------------------------------------------------------------
-- -- 10.36 (0.2)++ 1.15 1.97 70.83 98,352
-- -- 10.38 (4.5) 1.05(f) 0.95 112.92 83,432
(0.003) -- 10.86 8.7++ 1.05+,(e) 1.76+ 0.84 13,522
- ----------------------------------------------------------------------------------------------------
-- -- 12.98 9.2++ 1.67(g) 1.33 7.00 61,156
(0.155) (3.279) 11.89 (2.6) 1.71 0.87 11.29 61,498
(0.157) (2.648) 15.73 10.2 1.67 0.74 26.31 118,129
(0.160) (0.422) 16.90 15.5 1.70 1.04 10.93 150,488
(0.227) (0.563) 15.14 38.2 1.77 1.63 19.48 111,395
(0.739) -- 11.54 (10.5) 1.78 4.70(a) 27.18 76,972
(0.264) (1.280) 13.72 16.2 1.78 1.82 40.67 101,522
(0.245) (0.250) 13.13 28.0 1.96 1.87 64.90 74,695
(0.105) (0.736) 10.64 (1.9) 1.81 0.82 90.86 53,942
-- -- 11.66 16.6++ 2.23+ 0.71+ 73.12 51,403
- ----------------------------------------------------------------------------------------------------
-- -- 9.14 (7.3)++ 1.30(g) 1.63 58.16 22,798
-- -- 9.86 (1.4)++ 1.30+,(f) 0.31+ 30.68 17,025
- ----------------------------------------------------------------------------------------------------
</TABLE>
(d) If the Investment Manager had not waived management fees and reimbursed
certain expenses the ratio of expenses to average net assets (and net
investment income per share) would have been 1.53% ($0.050) for the Equity
Portfolio, 1.37% ($0.014) for the International Equity Portfolio, 2.80%
($0.176) for the International Fixed-Income Portfolio, 3.23% ($0.0251) for
the Bond Portfolio, 2.99% ($0.192) for the Strategic Yield Portfolio, and
1.14%+ ($0.006) for the Small Cap Portfolio.
(e) If the Investment Manager had not waived management fees and reimbursed
certain expenses the ratio of expenses to average net assets (and net
investment income per share) would have been 1.18% ($0.020) for the Equity
Portfolio, 2.87%+ ($0.010) for the International Small Cap Portfolio, 2.08%
($0.119) for the International Fixed-Income Portfolio, 1.76% ($0.101) for
the Bond Portfolio, and 1.63% ($0.058) for the Strategic Yield Portfolio.
(f) If the Investment Manager had not waived management fees and reimbursed
certain expenses the ratio of expenses to average net assets (and net
investment income per share) would have been 1.26% ($0.016) for the
International Small Cap Portfolio, 1.51% ($0.048) for the International
Fixed-Income Portfolio, 1.23% ($0.041) for the Bond Portfolio, 1.15%
($0.009) for the Strategic Yield Portfolio, and 2.31%+ ($0.034) for the
Emerging Markets Portfolio.
(g) If the Investment Manager had not waived certain expenses the ratio of
expenses to average net assets (and net investment income per share) would
have been 1.25% ($0.360) for the International Fixed-Income Portfolio, 1.03%
($0.295) for the Bond Portfolio, 1.75% ($0.080) for the Special Equity
Portfolio and 1.98% ($0.034) for the Emerging Markets Portfolio.
The accompanying notes are an integral part of these financial statements.
31
<PAGE> 34
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Lazard Funds, Inc. (the "Fund") was incorporated in Maryland on May 17,
1991 and is registered under the Investment Company Act of 1940 (the "Act"), as
amended, as an open-end management investment company. The Fund was originally
composed of five portfolios: Lazard International Equity Portfolio (the
"International Equity Portfolio"), Lazard International Fixed-Income Portfolio,
formerly Lazard Global Fixed-Income Portfolio (the "International Fixed-Income
Portfolio"), Lazard Bond Portfolio, formerly Lazard High Quality Bond Portfolio
(the "Bond Portfolio"), Lazard Strategic Yield Portfolio, formerly Lazard
High-Yield Portfolio, (the "Strategic Yield Portfolio") and Lazard Small Cap
Portfolio (the "Small Cap Portfolio").
Effective January 1, 1992, the Lazard Equity Fund and the Lazard Special
Equity Fund, Inc. ("Old Funds") were reorganized as separate portfolios ("New
Funds") of the Fund, namely Lazard Equity Portfolio (the "Equity Portfolio"),
and Lazard Special Equity Portfolio (the "Special Equity Portfolio"),
respectively. The per share data included herein includes per share data for
both the Old Funds and New Funds.
Effective November 1, 1993, Lazard International Small Cap Portfolio (the
"International Small Cap Portfolio") and Lazard Emerging Markets Portfolio (the
"Emerging Markets Portfolio") were added to the Fund. The Lazard Emerging
Markets Portfolio was first offered for sale on July 15, 1994.
The Equity Portfolio and Special Equity Portfolio are operated as
"diversified" as defined in the Act. The remaining Portfolios are
"non-diversified."
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
(a) Valuation of Investments--The value of securities, other than options
listed on national securities exchanges and debt securities maturing in 60 days
or less, is determined as of the close of regular trading on the New York Stock
Exchange. Options on stocks and stock indices traded on national securities
exchanges are valued as of the close of options trading on such exchanges (which
is currently 4:10 p.m. New York time). Debt securities maturing in sixty days or
less are valued at amortized cost. Each security for which the primary market is
on a national securities exchange is valued at the last sale price in the
principal exchange on which it is traded, or, if no sales are reported on such
exchange on that day, at the closing bid price.
Any security held by any Portfolio except the Special Equity Portfolio for
which the primary market is the National Association of Securities Dealers
Automated Quotations National Market System is valued at the last sale price as
quoted by such System or, in the absence of any sale on the valuation date, at
the closing bid price. Any other unlisted security for which current
over-the-counter market quotations or bids are readily available is valued at
its last quoted bid price or, for each of these Portfolios except the Equity
Portfolio, if available, the mean of two such prices.
Any security held by the Special Equity Portfolio that is not listed on a
national securities exchange but that is quoted on the National Association of
Securities Dealers Automated Quotations System is valued at the last bid price
as quoted by such System. Any other security held by the Special Equity
Portfolio for which current over-the-counter market quotations or bids are
readily available is valued at its last quoted bid price or, if available, the
mean of two such prices.
All other securities and other assets for which current market quotations
are not readily available are valued at fair value as determined in good faith
by the Fund's Board of Directors and in accordance with procedures adopted by
the Board of Directors. The portfolio securities of any of the Portfolios may
also be valued on the basis of prices provided by a pricing service when such
prices are believed by the Investment Manager to reflect the fair market value
of such securities.
(b) Securities Transactions and Investment Income--Security transactions are
accounted for on the trade date. Realized gains and losses on sales of
investments are recorded on a first-in, first-out basis. Dividend income is
recorded on the ex-date. Interest income is accrued daily. The Portfolios
amortize premiums and accrue discounts on fixed income securities.
(c) Forward Foreign Currency Exchange Contracts--The International Equity
Portfolio, International Fixed-Income Portfolio, Strategic Yield Portfolio,
International Small Cap Portfolio and the Emerging Markets Portfolio (the
"eligible portfolios") may enter into forward foreign currency exchange
contracts ("forward contracts"). To the extent permitted by each eligible
portfolio's investment objectives, restrictions and policies, forward contracts
may be entered into for both risk management and investment purposes. Depending
on how such strategies are utilized, the risks associated with their use may
vary.
Certain risks may arise upon entering into these forward contracts from the
possible movement in foreign exchange rates and the potential inability of
counterparties to meet the terms of their agreements. Forward contracts are
presented at an amount representing the net increase or decrease in value from
the date that the forward contract was entered into, to the financial statement
date. Gains and losses on these forward contracts are included in realized or
unrealized foreign exchange transactions in the accompanying Statements of
Operations.
Risk management includes hedging strategies which serve to reduce an
eligible portfolio's exposure to foreign currency fluctuations. Such exposure
may exist during the period that a foreign denominated investment is held, or
during the period between the trade date and settlement date of an investment
which is purchased or sold.
Eligible portfolios can utilize forward contracts for investment purposes.
For example, forward contracts to purchase foreign currencies can increase an
eligible portfolio's exposure to a particular currency without acquiring a
security denominated in that currency. As of June 30, 1995, the International
Fixed-Income Portfolio had a fair
32
<PAGE> 35
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
value of $107,494 in such forward contracts outstanding, and had an average fair
value of $219,370 in such outstanding forward contracts for the six month period
ended June 30, 1995.
(d) Foreign Currency Translations--The books and records of the eligible
portfolios are maintained in U.S. dollars. Foreign exchange transactions are
translated into U.S. dollars on the following basis:
(i) the foreign currency market value of investment securities, contracts,
and other assets and liabilities stated in foreign currencies are translated at
the exchange rate at the end of the period; and
(ii) purchases and sales of investment securities, dividends, interest
income and expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.
The eligible portfolios do not isolate that portion of the results of
operations from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with net realized and unrealized gain or loss from
investments. Foreign exchange gain (loss) is treated as ordinary income for
federal income tax purposes to the extent constituting "Section 988
Transactions" pursuant to the Internal Revenue Code ("IRC"), including, currency
gains (losses) related to the sale of debt securities, forward foreign currency
exchange contracts, payments of liabilities, and collections of receivables.
(e) Federal Income Taxes--The Fund's policy is to qualify each Portfolio as
a regulated investment company under the IRC and to distribute all of its
taxable income, including any realized net capital gains to shareholders.
Therefore, no Federal income tax provision is required.
(f) Dividends and Distributions--The Fund intends to declare dividends from
net investment income on shares of the International Fixed-Income Portfolio, the
Bond Portfolio and the Strategic Yield Portfolio daily and pay such dividends
monthly. Dividends from net investment income on shares of the Equity Portfolio
will be declared and paid quarterly. Dividends from net investment income on
shares of the International Equity Portfolio, Small Cap Portfolio, International
Small Cap Portfolio, Emerging Markets Portfolio and the Special Equity Portfolio
will be declared and paid annually. During any particular year, net realized
gains from investment transactions in excess of available capital loss carry
forwards would be taxable to the Fund if not distributed. The Fund intends to
declare and distribute these amounts annually to shareholders; however, to avoid
taxation a second distribution may be required.
Income distributions and capital gains distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles. These differences which may result in
distribution reclassifications are primarily due to differing treatments of
foreign currency transactions. Permanent book and tax differences relating to
shareholder distributions will result in reclassifications and may affect the
allocation between investment income--net and realized gains--net.
(g) Organizational Expenses--Costs incurred by the Fund in connection with
its organization and initial registration of shares have been deferred and are
being amortized on a straight line basis over a five-year period from the date
of commencement of operations of each Portfolio. In the event that any of the
initial shares of any of the Portfolios during such period are redeemed, the
appropriate Portfolio will be reimbursed by such holder for any unamortized
organizational expenses in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.
(h) Allocation of Expenses--Expenses not directly chargeable to a specific
Portfolio are allocated primarily on the basis of relative net assets.
3. INVESTMENT MANAGEMENT AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an investment management agreement (the
"Management Agreement") with Lazard Freres Asset Management (the "Manager"), a
division of Lazard Freres & Co. LLC, on behalf of each Portfolio. Pursuant to
the Management Agreement, the Manager will regularly provide the Portfolios with
investment research, advice and supervision and furnish continuously an
investment program for each Portfolio consistent with its investment objectives
and policies, including the purchase, retention and disposition of securities.
Each of the Portfolios pays the Manager an investment management fee at the
annual rate set forth below as a percentage of the average daily value of the
net assets of the relevant Portfolio: Equity Portfolio, 0.75%; International
Equity Portfolio, 0.75%; International Fixed-Income Portfolio, 0.75%; Bond
Portfolio, 0.50%; Strategic Yield Portfolio, 0.75%; Small Cap Portfolio, 0.75%;
International Small Cap, 0.75%; Special Equity Portfolio, 1.50% and Emerging
Markets Portfolio, 1.00%. The investment management fees are accrued daily and
payable monthly with the exception of those paid by the Special Equity
Portfolio, which are payable quarterly.
Effective June 1, 1995, the Fund has engaged State Street Bank and Trust
Company to provide certain administrative services. Each Portfolio will bear the
cost of such expenses at the annual rate of $37,500 plus 0.02% of average assets
up to average assets of $1 billion and plus 0.01% of average assets over $1
billion. State Street has agreed to waive the $37,500 fee for one year or until
each Portfolio reaches net assets of $50 million, whichever comes first, for the
Bond and Emerging Markets Portfolios. Administration expenses for the Special
Equity Portfolio are paid for by the Manager.
Under certain state regulations, if the total expenses of any of the
Portfolios exceed certain limitations the Fund's Manager is required to
reimburse the Portfolio for such excess.
The Manager has agreed to maintain the annualized total operating expenses
of the International Fixed-Income Portfolio at a level not to exceed 1.05%;
Emerging Market Portfolio at a level not to exceed 1.30%; and Bond Portfolio at
a level not to exceed 0.80% of the average daily value of net assets of the
relevant portfolio until
33
<PAGE> 36
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
December 31, 1995 or such time as the respective Portfolio reaches total net
assets of $100 million. For the period commencing May 1, 1995, the Manager has
agreed to bear total operating expenses (exclusive of extraordinary expenses) of
the Special Equity Portfolio in excess of 1.50% of the average daily value of
the net assets until October 31, 1996, or such time as the total net assets of
the Portfolio equals or exceeds $90 million.
For the six months ended June 30, 1995, the Manager did not impose part of
its management fee amounting to $40,070 for International Fixed-Income
Portfolio, $31,587 for Bond Portfolio, $23,011 for Special Equity Portfolio and
$61,301 for Emerging Markets Portfolio.
The Fund has a distribution agreement with Lazard Freres & Co. LLC. As the
distributor, Lazard Freres & Co. LLC acts as distributor for shares of each of
the Portfolios and bears the cost of printing and mailing prospectuses to
potential investors and of any advertising expenses incurred in connection with
the distribution of shares.
Certain Directors of the Fund are Managing Directors of the Manager. The
Fund pays each director who is not an officer of the Manager or an interested
Director, $20,000 per year, plus $1,000 per meeting attended, and reimburses
them for travel and out of pocket expenses.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
Purchase and sales of portfolio securities, (excluding short-term
securities), for the six months ended June 30, 1995 were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL FIXED- STRATEGIC SMALL INTERNATIONAL
EQUITY EQUITY INCOME BOND YIELD CAP SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases $61,359,192 $564,469,728 $35,201,396 $22,697,588 $54,225,244 $177,969,052 $68,700,117
Sales 37,357,805 352,337,189 32,167,225 15,844,201 51,283,681 166,751,577 57,181,056
<CAPTION>
SPECIAL EMERGING
EQUITY MARKETS
PORTFOLIO PORTFOLIO
- ----------------------------------------
<S> <C> <C>
Purchases $ 3,922,585 $15,593,223
Sales 12,087,542 9,730,548
</TABLE>
(1) Includes purchases and sales of U.S. Government securities of $21,109,257
and $9,795,939, respectively.
(2) Includes purchases and sales of U.S. Government securities of $3,497,941 and
$3,538,794, respectively.
For the same period, the Small Cap Portfolio and Special Equity Portfolio
paid brokerage commissions of $786 and $6,200, respectively, to Lazard Freres &
Co. LLC for portfolio transactions executed on behalf of the Portfolios.
Included in the payable for investments purchased at June 30, 1995, for the
Special Equity Portfolio, is $3,765 for unsettled purchases with Lazard Freres &
Co. LLC.
5. FEDERAL INCOME TAXES
For Federal income tax purposes capital loss carryforwards (exclusive of
certain capital losses incurred after October 31) of $703,582; $2,330,411 and
$426,494 are available to the extent provided by regulations to offset future
realized capital gains of the Bond Portfolio, Strategic Yield Portfolio and
International Small Cap Portfolio, respectively. These losses expire in 2002.
Additionally, certain capital and currency losses incurred after October 31,
within the taxable year are deemed to arise on the first business day of the
Portfolio's next taxable year. During the year ended December 31, 1994, Equity
Portfolio, International Equity Portfolio, International Fixed-Income Portfolio,
Bond Portfolio, Strategic Yield Portfolio, International Small Cap Portfolio,
and Emerging Markets Portfolio will elect to defer net capital and currency
losses of $345,637, $14,298,894, $17,028, $394,012, $553,445, $1,920,587, and
$163,226, respectively.
6. PRIVATE PLACEMENTS
At June 30, 1995, the Small Cap Portfolio held the following securities
which were private placements and represented 0.42% (at value) of the net assets
of the Portfolio:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY DATE VALUE
- ------------------------------- ----------- -----------
<S> <C> <C>
Interactive Light Holdings Inc.
8.00%, 1/25/99 2/4/94 $1,000,000
Verbex Voice Systems Inc.
Series F Preferred (conv.) 7/12/93 1,000,000
Verbex Voice Systems Inc. 6/7/94 180,501
Verbex Voice Systems Inc.
10.00%, 12/31/95 3/17/95 100,000
----------
$2,280,501
==========
</TABLE>
Verbex Voice Systems Inc. and Interactive Light Holdings Inc. are valued as
determined in good faith by the Fund's Board of Directors and in accordance with
the procedures adopted by the Board of Directors. The Small Cap Portfolio will
bear any cost, including those involved in registration under the Securities Act
of 1933, in connection with the disposition of such securities.
34
<PAGE> 37
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS AVERAGE ANNUAL RETURNS
PERIOD ENDED JUNE 30, 1995 PERIOD ENDED JUNE 30, 1995
-------------------------- --------------------------
1/1/95- ONE FIVE SINCE ONE FIVE SINCE
6/30/95 YEAR YEAR INCEPTION* YEAR YEAR INCEPTION*
------ -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 20.4% 26.1% 88.5% 150.5% 26.1% 13.5% 12.0%
Standard & Poor's 500 Index 20.2% 26.1% 77.0% 143.0% 26.1% 12.1% 11.6%
Lazard International Equity Portfolio 3.8% 1.5% -- 31.4% 1.5% -- 7.7%
EAFE 2.6% 1.7% -- 29.1% 1.7% -- 7.2%
Lazard International Fixed-Income Portfolio+ 19.8% 21.3% -- 53.1% 21.3% -- 12.4%
Salomon World Government Bond Index Ex-US+ 20.0% 22.7% -- 70.4% 22.7% -- 15.8%
Lazard Bond Portfolio++ 10.7% 10.7% -- 26.4% 10.7% -- 6.7%
Lehman Gov't/Corp Bond Index++ 11.8% 12.8% -- 32.2% 12.8% -- 8.0%
Lazard Strategic Yield Portfolio+++ 6.7% 8.0% -- 30.3% 8.0% -- 7.3%
Lehman Aggregate Bond Index+++ 11.4% 12.6% -- 50.8% 12.6% -- 11.6%
Lazard Small Cap Portfolio 16.8% 21.8% -- 102.2% 21.8% -- 21.2%
Russell 2000 14.4% 20.1% -- 63.0% 20.1% -- 14.2%
Lazard International Small Cap Portfolio -0.2% -3.3% -- 3.6% -3.3% -- 2.3%
Salomon EMI Ex-US -0.7% -4.6% -- 14.7% -4.6% -- 9.1%
Lazard Special Equity Portfolio 9.2% 8.7% 65.9% 184.5% 8.7% 10.7% 11.6%
Russell 2000 14.4% 20.1% 83.1% 158.8% 20.1% 12.9% 10.6%
Lazard Emerging Markets Portfolio -7.3% -- -- -8.6% -- -- --
IFC Investable Total Return Index -7.3% -- -- -7.8% -- -- --
</TABLE>
* Performance is measured from June 1, 1987 for Lazard Equity Portfolio; from
January 16, 1986 for Lazard Special Equity Portfolio; from October 31, 1991 for
Lazard International Equity Portfolio, Lazard International Fixed-Income
Portfolio, Lazard Bond Portfolio and Lazard Small Cap Portfolio; from October 1,
1991 for Lazard Strategic Yield Portfolio; from December 1, 1993 for Lazard
International Small Cap Portfolio; from July 15, 1994 for the Lazard Emerging
Markets Portfolio. The performance for the relevant index is for the comparable
period. Portfolio returns are net of fees and assume reinvestment of dividends
and capital gain distributions, if any.
+ Effective January 1, 1993, the Portfolio, formerly Lazard Global Fixed-Income
Portfolio, has been renamed to reflect the Board of Directors approval of
changes in certain non-fundamental investment policies of the Portfolio. The
performance of the Portfolio is now measured by the index "excluding U.S."
Performance of the index "Since Inception" shown above is a blended return of
the index "including U.S." and the index "excluding U.S." for the applicable
periods.
++ Effective May 1, 1993, the Portfolio, formerly Lazard High Quality Bond
Portfolio, has been renamed to reflect the Board of Directors approval of
changes in certain non-fundamental investment policies of the Portfolio. The
performance of the Portfolio is now measured by the "Bond" index rather than the
"Intermediate" index. Performance of the index "Since Inception" shown above is
a blended return of the "Bond" index and the "Intermediate" index for the
applicable periods.
+++ Effective May 1, 1993, the Portfolio, formerly Lazard High-Yield Portfolio,
has been renamed to reflect the Board of Directors approval of changes in
certain non-fundamental investment policies of the Portfolio. The performance of
the index is now measured by the Lehman Aggregate Bond Index rather than the
Merrill Lynch High Yield Index. Performance of the index shown "Since Inception"
above is a blended return of the "Merrill" index and the "Lehman" index for the
applicable periods.
Past performance is not indicative, nor a guarantee, of future results; the
investment return and principal value of each portfolio of The Lazard Funds,
Inc. will fluctuate so that an investor's shares in a portfolio may be 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 indices 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 and have no fees or
costs. The S&P 500 Index is an index of common stocks and is a registered
trademark of Standard & Poor's Corporation. The Morgan Stanley-Europe, Australia
and Far East Index and the Europe, Australia and Far East Excluding Japan
indices are comprised of international equities that are compiled by Morgan
Stanley Capital International. The Salomon Extended Market Index (EMI) Ex-US and
The Salomon Extended Market Index (EMI) Ex-Japan are indices compiled by Salomon
Brothers. The Salomon World Government Bond Index is an index compiled by
Salomon Brothers. The Lehman Government/Corporate Bond Index is an index of
Government and Corporate bonds calculated by Lehman Brothers. The Lehman
Aggregate Bond Index is an index of bonds calculated by Lehman Brothers. The
Russell 2000 Index is an index of common stocks and is a registered trademark of
the Frank Russell Company. The IFC Investable Total Return Index is an index of
emerging markets securities that represent 65% of market capital compiled by the
International Finance Corporation.
This performance data is not authorized for distribution to prospective
investors in the fund unless preceded or accompanied by an effective prospectus.
35
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<PAGE> 40
THE LAZARD FUNDS, INC.
30 Rockefeller Plaza
New York, New York 10020
TELEPHONE
(800) 823-6300
INVESTMENT MANAGER
Lazard Freres Asset Management
30 Rockefeller Plaza
New York, New York 10020
Telephone: (212) 632-6400
DISTRIBUTOR
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Scudder Service Corporation
P.O. Box 2038
Boston, Massachusetts 02106
Telephone: (800) 854-8525
INDEPENDENT PUBLIC ACCOUNTANTS
Seymour Schneidman & Associates
Four Hundred Park Avenue
New York, New York 10022
LEGAL COUNSEL
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004
This report is for the information of the stockholders of The Lazard Funds,
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.
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