<PAGE> 1
THE LAZARD FUNDS, INC.
--------------------------------
Annual Report
December 31, 1995
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza, New York, New York 10020
(800) 823-6300
<PAGE> 2
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BOARD OF DIRECTORS
- ------------------
JOHN J. BURKE(1) Retired Vice Chairman, Montana Power Company
KENNETH S. DAVIDSON(1) Private Investor
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
OFFICERS
- --------
NORMAN EIG Chairman of the Board
HERBERT W. GULLQUIST President
WILLIAM G. BUTTERLY, III Vice President and Secretary
GUS COUTSOUROS Treasurer
Member of (1) Audit Committee (2) Executive Committee
</TABLE>
<PAGE> 3
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Overview........................................................................ 2
Growth Charts................................................................... 3
Performance Table............................................................... 6
Portfolio of Investments
Lazard Equity Portfolio.................................................... 7
Lazard International Equity Portfolio...................................... 8
Lazard International Fixed-Income Portfolio................................ 10
Lazard Bond Portfolio...................................................... 12
Lazard Strategic Yield Portfolio........................................... 14
Lazard Small Cap Portfolio................................................. 17
Lazard International Small Cap Portfolio................................... 19
Lazard Special Equity Portfolio............................................ 20
Lazard Emerging Markets Portfolio.......................................... 21
Statements of
Assets and Liabilities..................................................... 24
Operations................................................................. 26
Changes in Net Assets...................................................... 28
Financial Highlights............................................................ 30
Notes to Financial Statements................................................... 32
Report of Independent Auditors.................................................. 36
</TABLE>
1
<PAGE> 4
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
OVERVIEW
- --------------------------------------------------------------------------------
DEAR SHAREHOLDERS,
1995 was a very impressive year for investors. Equity and fixed income returns
were strong as interest rates fell and capital structures changed, and corporate
activity increased.
Most major equity markets around the world had positive returns, with the U.S.
market clearly leading the way. The S&P 500 rose by 37.6%, reversing a
disappointing 1994. The surprise was the magnitude of these gains that were
powered by the unexpected strength of corporate profits. Operating earnings
increased an estimated 18% to 20% in 1995 and profit margins expanded to 30-year
highs due to the continued pace of cost-cutting and financial re-engineering by
U.S. companies.
Interest rates worldwide fell as inflation continued to decelerate. In the U.S.,
the Federal Reserve Bank successfully orchestrated a "soft landing," resulting
in moderating economic activity and low inflation. This fueled a rise in the
U.S. bond market that was paralleled by most major bond markets around the
world. The yield on the U.S. Treasury 30-year bond declined by 200 basis points
and again touched under 6%. For the year, the Lehman Aggregate Bond Index
returned 18.5% and the Salomon Brothers World Government Bond Index Ex-U.S. was
up 19.6%.
The "old capital structure" is breaking down. European monetary union (EMU) and
the prospect of a "converging Europe" have become increasingly effective as a
disciplinary force. Governments around the world, both local and federal, are
downsizing as state-owned monopolies are being dismantled and privatized. In the
business world, performance incentives and entrepreneurship are replacing
seniority and lifetime employment as the competition for global capital
accelerates.
Global corporate finance activity increased in 1995. Worldwide, companies
consolidated, repurchased shares and "de-merged" through asset sales and
spin-offs at an unprecedented pace. Growing corporate cash flows are allowing
companies to re-invest and shrink their capital base further enhancing
shareholder value. The Fund's holdings in defense and aerospace, media,
telecommunications, paper and bank stocks all benefited from this trend.
In Japan, government and business leaders finally began to actively address
their problems. Stimulative fiscal and monetary programs, along with an
initiative to restructure the banking system have all been introduced. Japanese
company managements are also beginning to rationalize costs using Western style
tactics: performance-oriented compensation, outsourcing to low-cost sites, asset
sales and share repurchases.
Looking ahead, the challenge is to find companies that can productively
re-deploy assets. This is most likely found in industries undergoing significant
consolidation including insurance, electric utility/power generation, defense,
and banks.
Many companies are embracing the concept of "shareholder value" by making their
businesses better and being responsive to the real owners of their capital.
Corporate governance and investor relations are beginning to unveil much of the
value that has been hidden away in companies for years.
THE LAZARD FUNDS, INC.
2
<PAGE> 5
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
GROWTH CHARTS
- --------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
The Lazard Equity Portfolio seeks capital appreciation through investing
primarily in equity securities of companies with relatively large
capitalizations that appear to the Investment Manager to be inexpensively priced
relative to the return on total capital or equity.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD EQUITY PORTFOLIO AND
THE STANDARD & POOR'S 500 STOCK INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LAZARD EQUITY
(FISCAL YEAR COVERED) PORTFOLIO S&P 500
<S> <C> <C>
MAY-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
JUL-95 129968.30 125840.09
AUG-95 131917.83 126154.69
SEP-95 136534.95 131478.41
OCT-95 135579.21 131005.09
NOV-95 141815.85 136756.21
DEC-95 143092.19 139395.61
</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. The
companies selected are those that the Investment Manager believes are
inexpensively priced relative to the return on total capital or equity.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL EQUITY PORTFOLIO
AND
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST INDEX
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL
MEASUREMENT PERIOD EQUITY
(FISCAL YEAR COVERED) 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
JUL-95 69929.33 68538.71
AUG-95 68670.61 65934.24
SEP-95 70181.36 67219.96
OCT-95 69058.46 65472.24
NOV-95 69749.04 67292.37
DEC-95 71632.27 70004.25
</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 SALOMON WORLD GOVERNMENT BOND NON-U.S.
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL
MEASUREMENT PERIOD FIXED-INCOME
(FISCAL YEAR COVERED) PORTFOLIO SWGBI NON-U.S.
<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 67455.0
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 70279.1
FEB-95 66936.9 72270.8
MAR-95 72425.7 78711.6
APR-95 74453.6 80395.2
MAY-95 76240.5 82150.2
JUN-95 76697.9 82559.3
JUL-95 76697.94 82996.86
AUG-95 72632.95 78249.44
SEP-95 74594.04 80557.80
OCT-95 75116.20 80815.59
NOV-95 75642.01 81518.68
DEC-95 76322.79 82227.90
</TABLE>
3
<PAGE> 6
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
- --------------------------------------------------------------------------------
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 LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LAZARD BOND
(FISCAL YEAR COVERED) PORTFOLIO LEHMAN G/C
<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 58065.4
JUN-93 58165.1 58977.0
JUL-93 58572.3 59118.6
AUG-93 59568.0 60058.6
SEP-93 59508.4 60310.8
OCT-93 59687.0 60473.7
NOV-93 59507.9 60135.0
DEC-93 59626.9 60411.6
JAN-94 60581.0 61082.2
FEB-94 59551.1 61760.2
MAR-94 58181.4 60846.1
APR-94 57425.0 59842.2
MAY-94 57137.9 59435.3
JUN-94 57080.8 59476.9
JUL-94 58108.2 59482.8
AUG-94 58166.3 59667.2
SEP-94 56886.7 59118.3
OCT-94 56943.6 59112.4
NOV-94 56772.7 58846.4
DEC-94 57056.6 59052.3
JAN-95 57969.5 60050.3
FEB-95 59128.9 61293.3
MAR-95 59483.7 61642.7
APR-95 60257.0 62400.9
MAY-95 62667.2 64285.4
JUN-95 63105.9 64716.1
JUL-95 62727.3 64722.6
AUG-95 63354.5 65311.6
SEP-95 64051.4 65781.8
OCT-95 64948.2 66512.0
NOV-95 65662.6 67383.3
DEC-95 66187.9 68090.8
</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 LIBOR USD FIX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LAZARD STRATEGIC
(FISCAL YEAR COVERED) YIELD PORTFOLIO 30 DAY LIBOR
<S> <C> <C>
10/1/91 50000.0 50000.0
OCT-91 51800.0 50210.0
NOV-91 52473.4 50420.9
DEC-91 51056.6 50597.4
JAN-92 50648.2 50769.4
FEB-92 51458.5 50947.1
MAR-92 52076.0 51125.4
APR-92 52076.0 51289.0
MAY-92 52648.9 51458.2
JUN-92 53175.4 51622.9
JUL-92 54185.7 51767.5
AUG-92 54781.7 51917.6
SEP-92 55384.3 52052.6
OCT-92 53002.8 52193.1
NOV-92 53002.8 52375.8
DEC-92 54115.9 52517.2
JAN-93 55522.9 52653.7
FEB-93 56577.8 52790.6
MAR-93 57483.1 52927.9
APR-93 57540.5 53065.5
MAY-93 58058.4 53208.8
JUN-93 59626.0 53347.1
JUL-93 60401.1 53485.8
AUG-93 60884.3 53624.9
SEP-93 60823.4 53764.3
OCT-93 61735.8 53904.1
NOV-93 61921.0 54060.4
DEC-93 62478.3 54206.4
JAN-94 63727.9 54347.3
FEB-94 62771.9 54504.9
MAR-94 61516.5 54668.5
APR-94 60655.3 54848.9
MAY-94 60655.3 55046.3
JUN-94 60230.7 55250.0
JUL-94 60893.2 55454.4
AUG-94 61745.7 55676.2
SEP-94 61375.3 55904.5
OCT-94 61252.5 56133.7
NOV-94 61497.5 56408.8
DEC-94 61005.5 56685.2
JAN-95 60944.5 56962.9
FEB-95 61249.3 57247.7
MAR-95 61555.5 57534.0
APR-95 62971.3 57815.9
MAY-95 64671.5 58099.2
JUN-95 65059.5 58389.7
JUL-95 65580.0 58670.0
AUG-95 66301.4 58951.6
SEP-95 66898.1 59234.5
OCT-95 67366.4 59504.7
NOV-95 68242.1 59788.5
DEC-95 69265.8 60076.7
</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 RUSSELL 2000 STOCK INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LAZARD SMALL CAP
(FISCAL YEAR COVERED) PORTFOLIO RUSSELL 2000
<S> <C> <C>
10/31/91 50000.00 50000.00
NOV-91 48600.00 47685.00
DEC-91 52245.00 51528.41
JAN-92 56581.34 55702.21
FEB-92 59127.50 57328.72
MAR-92 59127.50 55391.01
APR-92 57708.44 53452.32
MAY-92 57766.14 54163.24
JUN-92 54762.30 51601.32
JUL-92 56240.89 53397.04
AUG-92 54609.90 51891.25
SEP-92 54992.17 53089.93
OCT-92 57631.79 54778.19
NOV-92 62703.39 58968.72
DEC-92 65086.12 61020.84
JAN-93 67103.79 63083.34
FEB-93 67707.72 61626.12
MAR-93 70957.70 63622.80
APR-93 69325.67 61879.54
MAY-93 72514.65 64614.61
JUN-93 74472.54 65015.22
JUL-93 75068.33 65912.43
AUG-93 79497.36 68759.85
SEP-93 81007.81 70698.88
OCT-93 81736.88 72515.84
NOV-93 80674.30 70130.07
DEC-93 84627.34 72528.52
JAN-94 87758.55 74805.91
FEB-94 87846.31 74536.61
MAR-94 83717.53 70601.08
APR-94 83633.81 71017.62
MAY-94 83884.72 70222.23
JUN-94 82961.98 67834.67
JUL-94 84704.18 68947.16
AUG-94 89617.03 72787.52
SEP-94 89617.03 72547.32
OCT-94 88183.16 72264.38
NOV-94 83774.00 69344.90
DEC-94 86538.54 71210.28
JAN-95 86192.39 70313.03
FEB-95 89898.66 73238.05
MAR-95 92056.23 74497.75
APR-95 93989.41 76151.60
MAY-95 96809.09 77461.40
JUN-95 101165.50 81481.65
7/1/95 105819.11 86174.99
AUG-95 106348.21 87958.82
SEP-95 106454.55 89533.28
OCT-95 100386.64 85531.14
NOV-95 104602.88 89123.45
DEC-95 105335.10 91476.31
</TABLE>
4
<PAGE> 7
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
- --------------------------------------------------------------------------------
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 return on total capital or
equity. 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 EMI EX-U.S. INDEX
<TABLE>
<CAPTION>
LAZARD INTERNA-
MEASUREMENT PERIOD TIONAL SMALL CAP
(FISCAL YEAR COVERED) PORTFOLIO EMI EX-U.S.
<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
JUL-95 53649.0 56992.4
AUG-95 53166.2 60315.1
SEP-95 54708.0 58789.1
OCT-95 52574.4 59247.7
NOV-95 52416.7 59875.7
DEC-95 52731.2 62168.9
</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 RUSSELL 2000 STOCK INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LAZARD SPECIAL
(FISCAL YEAR COVERED) 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
JUL-95 143505.5 137553.7
AUG-95 146949.7 140401.1
SEP-95 149594.7 142914.3
OCT-95 147051.6 136526.0
NOV-95 148816.3 142260.1
DEC-95 150453.2 146015.8
</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
THE
INTERNATIONAL FINANCE CORP. INVESTABLE TOTAL RETURN INDEX
<TABLE>
<CAPTION>
LAZARD EMERGING
MEASUREMENT PERIOD MARKETS
(FISCAL YEAR COVERED) PORTFOLIO IFC INVESTABLE
<S> <C> <C>
7/1/94 50000.00 50000.00
JUL-94 51050.00 50000.00
AUG-94 56512.35 56450.00
SEP-94 58320.75 57844.32
OCT-94 57912.50 55947.02
NOV-94 56638.42 53821.03
DEC-94 49332.07 48116.00
JAN-95 43214.89 41673.27
FEB-95 42134.52 41135.69
MAR-95 42050.25 41053.42
APR-95 43311.76 42765.34
MAY-95 45867.15 44360.49
JUN-95 45775.42 44622.22
JUL-95 47514.88 46018.89
AUG-95 46897.19 44822.40
SEP-95 47366.16 44463.82
OCT-95 45282.05 42774.20
NOV-95 44693.38 42560.33
DEC-95 46481.12 44007.38
</TABLE>
Past performance is not indicative, nor a guarantee, of future results.
5
<PAGE> 8
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
PERIOD ENDED DECEMBER 31, AVERAGE ANNUAL RETURNS
1995 PERIOD ENDED DECEMBER 31, 1995
----------------------------- ------------------------------------
ONE FIVE SINCE ONE FIVE SINCE
YEAR YEAR INCEPTION* YEAR YEAR INCEPTION*
----------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 37.7% 128.5% 186.3% 37.7% 18.0% 13.0%
Standard & Poor's 500 Index 37.6% 115.5% 178.2% 37.6% 16.6% 12.6%
Lazard International Equity Portfolio 13.1% -- 43.2% 13.1% -- 9.0%
EAFE 11.2% -- 39.8% 11.2% -- 8.4%
Lazard International Fixed-Income Portfolio+ 19.4% -- 52.6% 19.4% -- 10.7%
Salomon World Government Bond Index Ex-US+ 19.6% -- 69.8% 19.6% -- 13.5%
Lazard Bond Portfolio:++ 16.2% -- 32.7% 16.2% -- 7.0%
Lehman Intermediate Gov't/Corp Index:++ 15.3% -- 36.6% 15.3% -- 7.8%
Lazard Strategic Yield Portfolio:+++ 13.6% -- 38.7% 13.6% -- 8.0%
LIBOR USD Fix:+++ 6.1% -- 20.6% 6.1% -- 4.5%
Lazard Small Cap Portfolio 21.5% -- 110.4% 21.5% -- 19.5%
Russell 2000 28.5% -- 83.0% 28.5% -- 15.6%
Lazard International Small Cap Portfolio 1.9% -- 5.8% 1.9% -- 2.7%
Salomon EMI Ex-US 5.2% -- 21.5% 5.2% -- 9.8%
Lazard Special Equity Portfolio 16.3% 99.3% 203.1% 16.3% 14.8% 11.8%
Russell 2000 28.5% 159.4% 190.6% 28.5% 21.0% 11.3%
Lazard Emerging Markets Portfolio (5.9%) -- (7.2%) (5.9%) -- (5.0%)
IFC Investable Total Return Index (8.5%) -- (9.1%) (8.5%) -- (6.3%)
</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 "Intermediate" index rather
than the "Bond" index. Performance of the index shown "One Year", and "Since
Inception" above now includes only the "Intermediate" index.
+++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 "LIBOR USD Fix" index
rather than the "Merrill" or "Lehman" indices. Performance of the index shown
"One Year", & "Since Inception" above now includes only the "LIBOR USD Fix"
index.
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 (EAFE) is comprised of international equities that are
compiled by Morgan Stanley Capital International. The Salomon World Government
Bond Index Ex-US is an index compiled by Salomon Brothers. The Lehman
Intermediate Government/Corporate Index is an index calculated by Lehman
Brothers. The London Interbank Offered Rates--U.S. dollar Fix rates--is an
average derived from sixteen quotations provided by banks determined by the
British Bankers Association. The Russell 2000 Index is an index of common stocks
and is a registered trademark of the Frank Russell Company. The Salomon Extended
Market Index (EMI) Ex-US is an index compiled by Salomon Brothers. 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.
6
<PAGE> 9
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO
COMMON STOCKS--95.0%
AEROSPACE & DEFENSE--3.2%
Lockheed Martin Corp. ................... 32,000 $ 2,528,000
McDonnell Douglas Corp. ................. 29,800 2,741,600
-------------
5,269,600
-------------
AIRLINE--0.9%
AMR Corp. (a)............................ 20,000 1,485,000
-------------
AUTOMOTIVE--3.1%
Chrysler Corp. .......................... 32,200 1,783,075
General Motors Corp. .................... 31,600 1,670,850
Varity Corp. (a)......................... 42,000 1,559,250
-------------
5,013,175
-------------
BANKS--5.2%
BankAmerica Corp. ....................... 31,000 2,007,250
Chase Manhattan Corp. ................... 27,000 1,636,875
Chemical Banking Corp. .................. 39,500 2,320,625
UJB Financial Corp. ..................... 69,400 2,481,050
-------------
8,445,800
-------------
BEVERAGES--1.3%
Cadbury Schweppes PLC (b)................ 64,400 2,141,300
-------------
BROADCASTING--2.9%
U S West, Inc. (a)....................... 132,100 2,509,900
Viacom, Inc. Class B (a)................. 45,900 2,174,513
-------------
4,684,413
-------------
CHEMICALS & PLASTICS--6.5%
E I du Pont de Nemours & Co. ............ 66,100 4,618,737
FMC Corp. (New) (a)...................... 20,000 1,352,500
Hercules, Inc. .......................... 49,200 2,773,650
W R Grace & Co. ......................... 32,400 1,915,650
-------------
10,660,537
-------------
COMMUNICATION SERVICES--8.2%
Airtouch Communications (a).............. 44,500 1,257,125
AT&T Corp. .............................. 78,900 5,108,775
NYNEX Corp. ............................. 63,900 3,450,600
TeleCommunications, Inc. (New) Liberty
Media Group Series A (a)............... 21,225 570,422
TeleCommunications, Inc. (New) TCI Group
Series A (a)........................... 155,900 3,098,512
-------------
13,485,434
-------------
COMPUTERS & BUSINESS EQUIPMENT--3.0%
Digital Equipment Corp. (a).............. 45,000 2,885,625
Gateway 2000, Inc. (a)................... 80,400 1,969,800
-------------
4,855,425
-------------
DRUGS & HEALTH CARE--5.9%
American Home Products Corp. ............ 25,900 2,512,300
Astra AB (b)............................. 56,100 2,222,962
Columbia/HCA Healthcare Corp. ........... 60,225 3,056,419
Pharmacia & Upjohn, Inc. ................ 47,500 1,840,625
-------------
9,632,306
-------------
ENERGY--8.8%
Amoco Corp. ............................. 31,500 2,264,062
Kerr-McGee Corp. ........................ 40,000 2,540,000
Mobil Corp. ............................. 38,100 4,267,200
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
Noble Affiliates, Inc. .................. 64,900 $ 1,938,888
Royal Dutch Petroleum Co. (b)............ 23,500 3,316,437
-------------
14,326,587
-------------
ENTERTAINMENT--2.4%
Carnival Corp. Class A................... 81,800 1,993,875
ITT Corp. (New) (a)...................... 36,200 1,918,600
-------------
3,912,475
-------------
FINANCIAL SERVICES--2.8%
Travelers Group, Inc. ................... 74,000 4,652,750
-------------
FOOD PROCESSING--1.6%
Archer Daniels Midland Co. .............. 146,900 2,644,200
-------------
INDUSTRIAL & MACHINERY--3.3%
Allied Signal, Inc. ..................... 63,000 2,992,500
ITT Industries, Inc. (a)................. 36,200 868,800
Sundstrand Corp. ........................ 22,400 1,576,400
-------------
5,437,700
-------------
INSURANCE--4.8%
Allstate Corp. .......................... 52,099 2,142,571
Cigna Corp. ............................. 22,900 2,364,425
Exel Ltd. ............................... 27,500 1,677,500
ITT Hartford Group, Inc. (a)............. 36,200 1,751,175
-------------
7,935,671
-------------
LEISURE TIME--1.5%
Brunswick Corp. ......................... 100,300 2,407,200
-------------
OFFICE EQUIPMENT--1.4%
Xerox Corp. ............................. 17,300 2,370,100
-------------
PAPER PRODUCTS--5.3%
Champion International Corp. ............ 59,900 2,515,800
James River Corp. of Virginia............ 76,800 1,852,800
Kimberly-Clark Corp. .................... 52,806 4,369,697
-------------
8,738,297
-------------
RETAIL--6.9%
Gap, Inc. ............................... 49,700 2,087,400
Nordstrom, Inc. ......................... 52,400 2,122,200
Sears Roebuck & Co. ..................... 80,700 3,147,300
Toys "R" Us, Inc. (a).................... 67,700 1,472,475
Woolworth Corp. ......................... 195,700 2,544,100
-------------
11,373,475
-------------
SAVINGS & LOAN--1.0%
Great Western Financial Corp. ........... 64,600 1,647,300
-------------
TECHNOLOGY--7.6%
Advanced Micro Devices, Inc. ............ 89,300 1,473,450
General Instrument Corp. (a)............. 93,200 2,178,550
Intel Corp. ............................. 34,000 1,929,500
International Business Machines.......... 48,200 4,422,350
SGS-Thomson Microelectronics NV (a)...... 58,900 2,370,725
-------------
12,374,575
-------------
TOBACCO--4.6%
Philip Morris Companies, Inc. ........... 54,200 4,905,100
UST, Inc. ............................... 78,100 2,606,588
-------------
7,511,688
-------------
TRANSPORTATION--1.4%
Kansas City Southern Industries, Inc. ... 50,400 2,305,800
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 10
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO (CONTINUED)
UTILITIES--1.4%
National Power PLC (b)................... 142,500 $ 1,353,750
Southern Electric PLC (b)................ 35,500 1,007,313
-------------
2,361,063
-------------
TOTAL COMMON STOCKS
(Identified cost $130,480,451)............. 155,671,871
-------------
PREFERRED STOCKS--1.3%
(Identified cost $2,175,536)
FINANCIAL SERVICES--1.3%
Time Warner Financing Trust.............. 68,500 2,140,625
-------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
SHORT TERM INVESTMENT--3.5%
REPURCHASE AGREEMENT--3.5%
(Identified cost $5,694,000)
State Street Bank and Trust Co., 5.70%,
1/2/96 (collateralized by U.S. Treasury
Bills, due 12/12/96; total par value
$6,100,000; valued at $5,810,823)...... $ 5,694,000 5,694,000
-------------
<CAPTION>
DESCRIPTION VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Identified cost $138,349,987) (c)......... 99.8% $ 163,506,496
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES................................ 0.2 280,492
---- ----------
NET ASSETS.................................. 100.0% $ 163,786,988
===== =============
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) The aggregate cost for federal income tax purposes is $138,349,987;
aggregate gross unrealized appreciation is $31,359,389 and the aggregate
gross unrealized depreciation is $6,202,880, resulting in net unrealized
appreciation of $25,156,509.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
------------
<S> <C> <C>
LAZARD INTERNATIONAL EQUITY PORTFOLIO
COMMON STOCKS--92.7%
AUSTRALIA--1.9%
Westpac Bank Corp. ................... 5,488,300 24,312,671
--------------
DENMARK--1.1%
Unidanmark Class A.................... 294,900 14,605,583
--------------
FINLAND--1.6%
Kymmene Corp. ........................ 797,000 21,073,022
--------------
FRANCE--11.7%
Accor................................. 97,629 12,639,736
Alcatel Alsthom (Cie Gen El).......... 421,900 36,374,552
Banque Nationale de Paris............. 446,722 20,151,295
Cie De St Gobain...................... 193,600 21,111,374
Generale des Eaux..................... 216,692 21,633,800
Roussel Uclaf......................... 1,000 169,491
Roussel Uclaf 144A (b)................ 224,400 18,905,700
Total SA-B............................ 308,081 20,792,479
--------------
TOTAL FRANCE.......................... 151,778,427
--------------
GERMANY--8.0%
Hoechst AG............................ 107,250 29,083,479
Mannesmann AG......................... 25,520 8,124,771
Mannesmann AG (b)..................... 52,205 16,601,190
Siemens AG............................ 45,800 25,063,088
Veba AG............................... 580,880 24,660,573
--------------
TOTAL GERMANY......................... 103,533,101
--------------
<CAPTION>
NUMBER
OF SHARES
------------
<S> <C> <C>
HONG KONG--2.1%
HSBC Holdings Ltd. ................... 1,418,444 $ 21,462,392
Peregrine Investment.................. 4,806,000 6,215,325
--------------
TOTAL HONG KONG....................... 27,677,717
--------------
ITALY--1.4%
Fiat SPA.............................. 9,620,500 17,567,540
--------------
JAPAN--26.4%
Dai Nippon Printing................... 615,000 10,423,729
DDI Corp. ............................ 3,122 24,189,830
Hitachi............................... 1,927,000 19,409,976
Matsushita Electric Industrial Co. ... 1,486,000 24,178,983
Mazda Motor Corp. (a)................. 4,151,000 17,649,288
Mitsubishi Heavy Ind. ................ 4,131,000 32,927,971
Nintendo Co. ......................... 262,700 19,972,833
Omron Corp. .......................... 911,000 20,999,322
Orix Corp. ........................... 500,000 20,581,114
Promise Co. .......................... 203,600 9,800,407
Ricoh Company, Ltd. .................. 1,150,000 12,585,956
Rohm Company, Ltd. ................... 467,000 26,369,104
Sekisui Chemical...................... 1,661,000 24,452,494
Sony Corp. ........................... 411,000 24,640,097
Sumitomo Trust & Banking.............. 1,981,000 28,012,203
Toyota Motor Corp. ................... 1,269,000 26,916,320
--------------
TOTAL JAPAN........................... 343,109,627
--------------
NETHERLANDS--7.4%
Heineken NV........................... 156,400 27,747,916
ING Groep NV.......................... 427,220 28,539,904
Koninklijke Nedlloyd Groep NV......... 483,200 10,960,603
Royal Dutch Petroleum Co. (b)......... 202,600 28,591,925
--------------
TOTAL NETHERLANDS..................... 95,840,348
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 11
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL EQUITY PORTFOLIO (CONTINUED)
NEW ZEALAND--1.9%
Fletcher Challenge.................... 5,504,000 $ 12,702,092
Lion Nathan Ltd. ..................... 5,031,100 12,005,436
--------------
TOTAL NEW ZEALAND..................... 24,707,528
--------------
NORWAY--0.8%
Aker AS Class A....................... 401,700 5,327,166
Aker AS Class B....................... 467,600 5,684,343
--------------
TOTAL NORWAY.......................... 11,011,509
--------------
SPAIN--2.3%
Banco Santander SA.................... 225,100 11,301,393
ENDESA................................ 323,500 18,321,888
--------------
TOTAL SPAIN........................... 29,623,281
--------------
SWEDEN--3.9%
Astra AB Series B..................... 601,900 23,841,394
Electrolux AB Series B................ 324,300 13,309,600
Volvo AB Series B..................... 691,900 14,172,086
--------------
TOTAL SWEDEN.......................... 51,323,080
--------------
SWITZERLAND--7.1%
Baloise Holdings...................... 6,428 13,374,252
Ciba Geigy AG......................... 32,820 28,879,324
Nestle SA............................. 23,630 26,139,471
SGS Holding........................... 11,706 23,239,480
--------------
TOTAL SWITZERLAND..................... 91,632,527
--------------
UNITED KINGDOM--15.1%
Allied Domecq PLC..................... 1,425,500 11,600,590
British Aerospace Ord. PLC............ 2,114,187 26,129,779
Cadbury Schweppes PLC................. 3,493,230 28,834,474
Lloyds Abbey Life PLC................. 1,917,400 13,400,062
Midlands Electric PLC................. 1,441,300 17,011,772
Mirror Group PLC...................... 4,500,900 12,302,507
National Grid Group PLC (a)........... 1,166,011 3,603,606
National Power Ord. PLC............... 1,292,600 9,023,508
National Power P/P Ord. PLC........... 2,020,800 4,833,098
Rank Organisation PLC................. 3,441,200 24,904,476
Sears PLC............................. 11,817,700 19,087,448
Thorn EMI PLC......................... 1,107,100 26,074,191
--------------
TOTAL UNITED KINGDOM.................. 196,805,511
--------------
TOTAL COMMON STOCKS
(Identified cost $1,080,502,927) 1,204,601,472
--------------
PREFERRED STOCKS--2.1%
(Identified cost $24,881,403)
AUSTRALIA--2.1%
News Corporation, Ltd. (b)............ 1,409,000 27,123,250
--------------
WARRANTS--0.0%
(Identified cost $0)
UNITED KINGDOM--0.0%
British Aerospace PLC (a)............. 117,216 569,787
--------------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENT--5.4%
REPURCHASE AGREEMENT--5.4%
(Identified cost $70,037,000)
State Street Bank and Trust Co.,
5.70%, 1/2/96 (collateralized by
U.S. Treasury Bills, due 12/12/96;
total par value $74,995,000; valued
at $71,439,787)..................... $ 70,037,000 $ 70,037,000
--------------
TOTAL INVESTMENTS
(Identified cost $1,175,421,330) (c).... 100.2% 1,302,331,509
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS.................................. (0.2) (2,782,062)
---- ------------
NET ASSETS............................... 100.0% $1,299,549,447
===== ==============
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) The aggregate cost for federal income tax purposes is $1,175,447,648;
aggregate gross unrealized appreciation is $154,092,979 and the aggregate
gross unrealized depreciation is $27,209,118, resulting in net unrealized
appreciation of $126,883,861.
* Percentages of common and preferred stocks are presented in the portfolio by
country.
Percentages by industry are as follows:
Aerospace & Defense 2.0%, Automotive 5.9%, Banks 8.7%, Chemicals & Plastics
4.1%, Computer & Business Equipment 1.0%, Construction Materials 1.6%,
Domestic Oil 0.8%, Drugs & Health Care 5.5%, Electrical Equipment 11.0%,
Electronics 5.5%, Energy 2.2% , Entertainment 1.9%, Financial Services 4.2%,
Food & Beverage 8.7%, Insurance 2.1%, International Oil 1.6%, Machinery
3.2%, Miscellaneous 0.9%, Mortgage Backed Securities 1.3%, Paper Products
2.6%, Publishing 3.0%, Retailing 3.5%, Services 3.5%, Telephone 1.9%,
Transportation & Freight Services 0.8%, Utilities 7.3%.
Forward Foreign Currency Contracts open at December 31, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- --------------- ---------------- -------- --------------
<S> <C> <C> <C>
$ 3,971,727 GPB 2,555,480 1/5/96 $ (2,974)
NZD 230,101 $149,750 1/4/96 (682)
$ 7,327,986 JPY 750,385,723 1/4/96 (60,327)
$ 856,911 ESP 103,986,191 1/3/96 353
$ 1,861,380 ESP 226,995,238 1/2/96 9,974
--------
$(53,656)
========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 12
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO
CURRENCY DENOMINATED BONDS*--93.2%
AUSTRALIAN DOLLAR--1.0%
CORPORATE BOND
Bayerische Vereinsbank, 10.00%,
12/16/99........................ AUD 210,000 $ 166,403
GOVERNMENT OBLIGATION
Commonwealth of Australia, 9.50%,
8/15/03......................... 345,000 277,126
-----------
TOTAL AUSTRALIAN DOLLAR........... 443,529
-----------
AUSTRIAN SCHILLING--0.9%
GOVERNMENT OBLIGATION
Republic of Austria, 5.625%,
12/14/00........................ ATS 4,000,000 404,227
-----------
BELGIAN FRANC--1.4%
GOVERNMENT OBLIGATION
Belgium Kingdom, 6.50%,
3/31/05......................... BEL 19,000,000 637,078
-----------
BRAZILIAN REAL--0.4%
CORPORATE BOND
Chase Brazil Note, 27.152%, 3/1/96
(a)............................. BRL 198,729 195,410
-----------
BRITISH POUND--6.2%
CORPORATE BONDS
Barclays Bank PLC, 12.75%,
11/26/97........................ GBP 310,000 531,993
Bayerische Landesbank
Girozentrale, 8.50%, 2/26/03.... 275,000 446,517
Tokyo Electric Power, 11.00%,
6/5/01.......................... 100,000 179,667
West LB Finance Curacao NV, 8.50%,
6/2/03.......................... 820,000 1,319,717
GOVERNMENT OBLIGATION
United Kingdom Treasury, 8.50%,
7/16/07......................... 200,000 333,903
-----------
TOTAL BRITISH POUND............... 2,811,797
-----------
CANADIAN DOLLAR--3.1%
CORPORATE BOND
Quebec Housing, 8.95%,
5/13/13......................... CAD 419,000 332,985
GOVERNMENT OBLIGATIONS
Government of Canada, 7.50%,
12/1/03......................... 800,000 603,752
Government of Canada, 9.00%,
12/1/04......................... 600,000 494,983
-----------
TOTAL CANADIAN DOLLAR............. 1,431,720
-----------
CZECH KORUNA--3.8%
CORPORATE BONDS
CEZ AS, 14.375%, 1/27/01.......... CZK 10,000,000 401,260
Czech Trade Bank, 11.125%,
8/26/97......................... 5,000,000 188,630
Skofin, 11.625%, 2/9/98........... 30,000,000 1,137,966
-----------
TOTAL CZECH KORUNA................ 1,727,856
-----------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
DANISH KRONE--5.3%
CORPORATE BONDS
Kreditforen Denmark, 10.20%,
4/15/04 (a)..................... DKK 5,000,000 $ 992,346
Nykredit, 6.00%, 10/1/26.......... 8,285,520 1,240,776
GOVERNMENT OBLIGATION
Kingdom of Denmark, 8.00%,
5/15/03......................... 1,000,000 191,463
-----------
TOTAL DANISH KRONE................ 2,424,585
-----------
DUTCH GUILDER--4.9%
GOVERNMENT OBLIGATIONS
Government of Netherlands, 6.75%,
2/15/99......................... NLG 1,590,000 1,053,262
Government of Netherlands, 8.75%,
1/15/07......................... 300,000 224,154
Government of Netherlands, 9.00%,
5/15/00......................... 1,300,000 936,742
-----------
TOTAL DUTCH GUILDER............... 2,214,158
-----------
FRENCH FRANC--6.4%
GOVERNMENT OBLIGATIONS
Government of France, 6.75%,
10/25/03........................ FRF 2,300,000 477,425
Government of France, 7.50%,
4/25/05......................... 4,700,000 1,017,070
Government of France, 7.75%,
4/12/00......................... 2,000,000 437,819
Government of France, 8.50%,
10/25/19........................ 2,850,000 657,356
United Mexican States, 6.63%,
12/31/19........................ 3,000,000 340,770
-----------
TOTAL FRENCH FRANC................ 2,930,440
-----------
GERMAN MARK--11.0%
CORPORATE BONDS
Autobahn Tank & Rast, 6.00%,
10/16/00........................ DEM 610,000 435,739
Baden Wurttemberg, 6.75%,
6/22/05......................... 1,574,000 1,133,894
Bank Nederlandse Gem, 6.50%,
11/4/08......................... 800,000 550,603
International Bank Reconstruction
& Development, 7.125%,
4/12/05......................... 1,700,000 1,259,150
Land Hessen, 6.00%,
11/29/13........................ 1,000,000 690,136
GOVERNMENT OBLIGATION
Federal Republic of Germany,
8.25%, 9/20/01.................. 1,210,000 962,517
-----------
TOTAL GERMAN MARK................. 5,032,039
-----------
GREEK DRACHMA--0.2%
GOVERNMENT OBLIGATION
Greek Treasury Bill, 0.00%,
7/17/96......................... GRD 25,000,000 97,748
-----------
HUNGARIAN FORINTS--0.2%
GOVERNMENT OBLIGATION
Hungarian Treasury Bill, 0.00%,
10/11/96........................ HUF 15,200,000 89,745
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 13
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
IRISH POUND--2.7%
GOVERNMENT OBLIGATION
Republic of Ireland, 6.25%,
4/1/99.......................... IEP 770,000 $ 1,222,310
-----------
ITALIAN LIRA--8.9%
GOVERNMENT OBLIGATIONS
Republic of Italy, 8.50%,
8/1/99.......................... ITL 5,885,000,000 3,517,011
Republic of Italy, 12.00%,
5/1/97.......................... 400,000,000 256,907
Republic of Italy, 12.00%,
1/1/02.......................... 400,000,000 268,216
-----------
TOTAL ITALIAN LIRA................ 4,042,134
-----------
JAPANESE YEN--26.0%
CORPORATE BOND
Export-Import Bank of Japan,
4.375%, 10/1/03................. JPY 205,000,000 2,181,537
GOVERNMENT OBLIGATIONS
Credit Local De France, 6.00%,
10/31/01........................ 80,000,000 923,002
Government of Japan, 5.50%,
9/20/02......................... 475,000,000 5,391,768
Republic of Austria, 4.50%,
9/28/05......................... 80,000,000 863,923
Republic of Austria, 6.25%,
10/16/03........................ 15,000,000 179,600
Republic of Italy, 3.50%,
6/20/01......................... 230,000,000 2,337,591
-----------
TOTAL JAPANESE YEN................ 11,877,421
-----------
NORWEGIAN KRONE--2.2%
CORPORATE BOND
Sparebanken Norway, 10.25%,
6/23/03 (a)..................... NOK 6,000,000 1,022,560
-----------
PORTUGUESE ESCUDO--0.2%
GOVERNMENT OBLIGATION
Republic of Portugal, 11.875%,
2/23/00......................... PTE 13,000,000 93,525
-----------
SOUTH AFRICAN RAND--0.2%
GOVERNMENT OBLIGATION
Republic of South Africa, 11.50%,
5/30/00......................... ZAR 405,500 102,085
-----------
SPANISH PESETA--3.2%
GOVERNMENT OBLIGATION
Kingdom of Spain, 12.25%,
3/25/00......................... ESP 160,000,000 1,448,178
-----------
SWEDISH KRONA--1.1%
GOVERNMENT OBLIGATION
Kingdom of Sweden, 10.25%,
5/5/00.......................... SEK 3,000,000 484,969
-----------
THAILAND BAHT--0.3%
CORPORATE BOND
Industrial Group Finance of
Thailand, 11.25%, 5/14/96....... THB 3,000,000 119,177
-----------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES DOLLAR--3.6%
CONVERTIBLE BOND
Zenith Electric, 6.25%, 4/1/11.... USD $ 225,000 $ 159,750
CORPORATE BOND
Reliance Industries Ltd. 144A,
8.125%, 9/27/05................. 250,000 251,250
GOVERNMENT OBLIGATION
Argentina Bono 1998 Boax0,
8.9922%, 4/4/98 (b)............. 500,000 494,500
YANKEE BONDS
Astra International, 9.75%,
4/29/01......................... 100,000 106,000
Den Norske Credit, 6.125%,
11/29/49 (a).................... 700,000 552,545
Hong Kong & Shanghai Bank, 6.25%,
8/29/49 (a)..................... 100,000 79,850
-----------
TOTAL UNITED STATES DOLLAR........ 1,643,895
-----------
TOTAL CURRENCY DENOMINATED BONDS*
(Identified cost $40,755,329)....... 42,496,586
-----------
STRUCTURED NOTES--1.1%
ING Polish Note, 0.00%,
2/21/96......................... 224,047 216,766
United Mexican States 144A, 0.00%,
11/27/96 (c).................... 300,000 305,250
-----------
TOTAL STRUCTURED NOTES
(Identified cost $500,017).......... 522,016
-----------
SHORT TERM INVESTMENT--8.5%
REPURCHASE AGREEMENT--8.5%
(Identified cost $3,866,000)
State Street Bank and Trust Co.,
5.70%, 1/2/96 (collateralized by
U.S. Treasury Bills, due
12/12/96; total par value
$4,140,000; valued at
$3,943,739)..................... 3,866,000 3,866,000
-----------
TOTAL INVESTMENTS
(Identified cost $45,121,346) (d)... 102.8% 46,884,602
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS........................ (2.8) (1,260,299)
---- ---------
NET ASSETS........................... 100.0% $45,624,303
===== ===========
</TABLE>
(a) Variable rate security. Interest shown is the current rate.
(b) Coupon set quarterly to 3 month LIBOR. Current rate shown.
(c) Value set monthly based on CETES/LIBOR rates.
(d) The aggregate cost for federal income tax purposes is $45,125,136; aggregate
gross unrealized appreciation is $1,948,773 and the aggregate gross
unrealized depreciation is $189,307, resulting in net unrealized
appreciation of $1,759,466.
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 14
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
* Percentages of holdings are presented in the portfolio by currency
denomination.
Percentages by country are as follows:
Argentina 1.1%, Australia 1.0%, Austria 0.9%, Belgium 1.4%, Brazil 0.4%,
Canada 3.1%, Czech Republic 3.8%, Denmark 5.3%, France 6.4%, Germany 11.0%,
Greece 0.2%, Hong Kong 0.2%, Hungary 0.2%, Ireland 2.7%, Italy 8.9%, Japan
26.1%, Mexico 0.7%, Netherlands 4.9%, Norway 3.5%, Poland 0.5%, Portugal
0.2%, South Africa 0.2%, Spain 3.2%, Sweden 1.3%, Thailand 0.3%, United
Kingdom 6.2%, United States 0.6%.
Forward Foreign Currency Contracts open at December 31, 1995:
<TABLE>
<CAPTION>
In Unrealized
Contracts Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ------------------------------------- ---- ------------- -------------
<S> <C> <C> <C> <C> <C>
AUD 162,499 $121,000 3/12/96 $ 642
$ 486,000 CAD 660,814 3/12/96 (2,132)
$ 229,503 DEM 328,025 3/12/96 5
DEM 153,082 $106,526 3/12/96 (580)
$ 986,922 DKK 5,454,127 3/12/96 (2,887)
DKK 3,050,518 $549,000 3/12/96 (1,376)
$ 1,398,000 FRF 6,906,120 3/12/96 13,991
$ 451,000 JPY 45,330,010 3/12/96 (7,382)
JPY 27,531,450 $275,000 3/12/96 5,566
NOK 6,557,669 $1,038,000 3/12/96 1,839
$ 171,000 SEK 1,123,453 3/12/96 (2,760)
XEU 48,513 $62,240 3/12/96 134
$ 3,548,592 ITL 5,684,489,869 1/19/96 30,780
DKK 5,452,746 $983,948 1/2/96 1,914
-------
$ 37,754
============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO
ASSET-BACKED SECURITIES--17.7%
American Financial Home Equity Loan,
Series 1991-1, Class A, 8.00%,
7/25/06................................. $ 72,756 $ 74,484
AT & T Universal Card Master Trust, Series
1995-2, Class A, 5.95%,
10/17/02................................ 810,000 817,087
Banc One Credit Card Master Trust, Series
1995-B, Class A, 6.30%,
10/15/02................................ 400,000 409,500
Bridgestone Firestone, Series 1992-A,
Class A, 6.25%, 12/1/99................. 83,333 83,437
Chase Manhattan Grantor Trust, Series
1995-A, Class A, 5.90%,
11/15/01................................ 389,662 391,002
Chase Manhattan Grantor Trust, Series
1995-B, Class A, 6.00%, 9/17/01......... 641,571 644,578
Discover Card Master Trust I, Series
1995-2, Class A, 6.55%, 2/18/03......... 750,000 774,135
Fical Home Equity Loan Trust, Series
1990-1, Class A, 8.90%,
11/15/97................................ 1,057 1,056
First Chicago Master Trust II, Series
1992-E, Class A, 6.25%, 8/15/99......... 400,000 404,248
Ford Credit Grantor Trust, Series 1994-B,
Class A, 7.30%, 10/15/99................ 347,198 353,815
Ford Credit Grantor Trust, Series 1995-A,
Class A, 5.90%, 5/15/00................. 461,522 463,253
G E Home Equity Loan, Inc., Series 1991-1,
Class A, 7.20%, 9/15/11................. 49,714 50,195
Green Tree Financial Corp., Series 1994-3,
Class A, 6.60%, 6/15/19................. 299,343 301,307
Green Tree Financial Corp., Series 1994-6,
Class A2, 7.25%, 11/15/19............... 600,000 609,558
MBNA Master Credit Card Trust, Series
1995-D, Class A, 6.05%,
11/15/02................................ 773,000 784,595
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
Olympic Automobile Receivable Trust,
Series 1994-B, Class A2, 6.85%,
6/15/01................................. $ 273,922 $ 278,673
Premier Auto Trust, Series 1994-1, Class
A3, 5.90%, 7/6/99....................... 252,000 252,709
Premier Auto Trust, Series 1995-4, Class
A2, 4.75%, 2/2/00....................... 746,072 740,476
Security Pacific Home Equity Loan, Series
1991-1, Class A, 7.85%, 5/15/98......... 32,530 32,835
Standard Credit Card Master Trust I,
Series 1995-3, Class A, 7.85%, 2/7/02... 660,000 708,464
------------
TOTAL ASSET-BACKED SECURITIES
(Identified Cost $8,080,503)................ 8,175,407
------------
CORPORATE BONDS--12.7%
AUTOMOTIVE--1.6%
General Motors Acceptance Corp., 5.625%,
2/1/99.................................. 750,000 746,445
------------
AUTO PARTS--0.7%
Walbro Corp. 144A, 9.875%, 7/15/05........ 335,000 334,163
------------
BROADCASTING--2.7%
Act III Broadcasting Inc., 10.25%,
12/15/05................................ 170,000 174,250
Comcast Corp., 9.50%, 1/15/08............. 184,000 195,040
Comcast Corp., 9.125%, 10/15/06........... 367,000 382,598
Paxson Communications Corp. 144A, 11.625%,
10/1/02................................. 160,000 162,400
SCI Television Inc., 11.00%, 6/30/05...... 294,000 310,905
------------
1,225,193
------------
CHEMICALS & PLASTICS--0.6%
Arcadian Partners LP, Series B, 10.75%,
5/1/05.................................. 263,000 290,615
------------
ELECTRONICS--0.8%
Alpine Group Inc. 144A, 12.25%,
7/15/03................................. 368,000 360,640
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 15
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
FINANCIAL SERVICES--1.7%
Avco Financial Services Inc., 6.35%,
9/15/00................................. $ 128,000 $ 130,479
Bank of Boston Corp., 6.625%, 2/1/04...... 104,000 105,618
Citicorp, 8.00%, 2/1/03................... 126,000 139,258
Norwest Corporation Medium Term Note,
6.125%, 10/15/00........................ 149,000 151,235
Salomon Inc., 8.55%, 2/17/97.............. 265,000 271,919
------------
798,509
------------
FOREST PRODUCTS--0.5%
Williamhouse Regency Delaware Inc. 144A,
13.00%, 11/15/05........................ 238,000 249,900
------------
MANUFACTURING--1.0%
Silgan Corp., 11.75%, 6/15/02............. 434,000 465,465
------------
PAPER PRODUCTS--0.4%
Crown Paper Co., 11.00%, 9/1/05........... 215,000 188,125
------------
RESTAURANTS, LODGING & ENTERTAINMENT--0.7%
Flagstar Corp., 10.75%, 9/15/01........... 335,000 306,525
------------
RETAIL GROCERY--0.2%
Pueblo Xtra International, 9.50%,
8/1/03.................................. 73,000 69,715
------------
RETAIL--0.9%
D.R. Structured Finance Corp., Series
1994-K2, Class A2, 9.35%,
8/15/19................................. 600,000 396,000
------------
RETAIL TRADE--0.7%
Mothers Work Inc. 144A, 12.625%,
8/1/05.................................. 328,000 323,080
------------
UTILITIES--0.2%
Texas New Mexico Power Co., 9.25%,
9/15/00................................. 80,000 82,800
------------
TOTAL CORPORATE BONDS
(Identified cost $5,980,173)................ 5,837,175
------------
FEDERAL AGENCIES--5.2%
Federal Home Loan Mortgage Corp., 8.50%,
1/1/99.................................. 362,000 377,272
Federal Home Loan Mortgage Corp., 7.00%,
1/1/99.................................. 367,000 369,408
Federal Home Loan Mortgage Corp., 7.00%,
9/1/25.................................. 619,485 625,098
Federal Home Loan Mortgage Corp., 7.00%,
8/1/25.................................. 1,012,108 1,021,277
------------
TOTAL FEDERAL AGENCIES
(Identified cost $2,342,473)................ 2,393,055
------------
MUNICIPAL BOND--0.9%
(Identified cost $379,772)
Allegheny County Pennsylvania Hospital
Development, 5.375%, 12/1/25............ 400,000 393,256
------------
MORTGAGE PASS-THROUGH SECURITIES--13.4%
Federal National Mortgage Association,
9.00%, 1/1/99........................... 55,000 57,956
Federal National Mortgage Association,
9.00%, 10/1/25.......................... 173,675 182,901
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
Federal National Mortgage Association,
7.50%, 1/1/99........................... $ 303,000 $ 310,480
Federal National Mortgage Association,
9.00%, 7/1/25........................... 310,369 326,856
Federal National Mortgage Association,
8.00%, 10/1/25.......................... 391,577 405,525
Federal National Mortgage Association,
8.00%, 1/1/99........................... 414,000 429,008
Federal National Mortgage Association,
7.50%, 10/1/25.......................... 489,712 501,798
Federal National Mortgage Association,
7.50%, 9/1/25........................... 852,458 873,496
Federal National Mortgage Association,
8.00%, 9/1/25........................... 1,444,880 1,496,346
Government National Mortgage Association,
9.00%, 9/15/25.......................... 127,130 134,678
Government National Mortgage Association,
6.00%, 1/20/99.......................... 275,000 277,922
Government National Mortgage Association,
6.00%, 10/20/25 (a)..................... 1,154,060 1,165,600
------------
TOTAL MORTGAGE PASS-THROUGH SECURITIES
(Identified cost $6,068,445)................ 6,162,566
------------
U.S. GOVERNMENT OBLIGATIONS--43.2%
United States Treasury Bond Strip, 0.00%,
11/15/21................................ 1,270,000 258,788
United States Treasury Notes, 7.50%,
11/15/01................................ 491,000 540,792
United States Treasury Notes, 8.875%,
2/15/99................................. 720,000 793,800
United States Treasury Notes, 5.75%,
10/31/00................................ 1,115,000 1,131,023
United States Treasury Notes, 7.375%,
11/15/97................................ 1,580,000 1,639,740
United States Treasury Notes, 7.875%,
11/15/04................................ 3,044,000 3,523,430
United States Treasury Notes, 7.75%,
12/31/99................................ 3,436,000 3,728,610
United States Treasury Notes, 5.125%,
4/30/98................................. 6,500,000 6,486,805
United States Treasury Strips, 0.00%,
8/15/02................................. 1,000,000 699,840
United States Treasury Strips, 0.00%,
5/15/05................................. 1,898,000 1,116,992
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified cost $19,686,260)............... 19,919,820
------------
SHORT TERM INVESTMENTS--5.4%
REPURCHASE AGREEMENT--3.9%
State Street Bank and Trust Co., 5.70%,
1/2/96 (collateralized by U.S. Treasury
Bills, due 12/12/96; total par value
$1,935,000; valued at $1,843,269)....... 1,806,000 1,806,000
------------
FEDERAL AGENCIES--0.7%
Federal National Mortgage Association
Discount Notes, 5.45%, 1/16/96.......... 130,000 129,705
Federal National Mortgage Association
Discount Notes, 5.45%, 1/3/96........... 185,000 184,944
------------
314,649
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 16
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
U.S. GOVERNMENT OBLIGATION--0.8%
United States Treasury Bills, 4.65%,
1/11/96................................. $ 385,000 $ 384,503
------------
TOTAL SHORT TERM INVESTMENTS
(Identified cost $2,505,151)................ 2,505,152
------------
TOTAL INVESTMENTS
(Identified cost $45,042,777) (b)........... 98.5% 45,386,431
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES................................. 1.5 $ 696,972
---- ---------
NET ASSETS................................... 100.0% $ 46,083,403
===== ==========
</TABLE>
(a) Variable rate security. Interest shown is the current rate.
(b) The aggregate cost for federal income tax purposes is $45,042,777; aggregate
gross unrealized appreciation is $574,652 and the aggregate gross unrealized
depreciation is $230,998, resulting in net unrealized appreciation of
$343,654.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO
CURRENCY DENOMINATED BONDS*--89.3%
ARGENTINA PESO--1.2%
GOVERNMENT OBLIGATION
Bocon Pre 1 Pesos 2197, 0.00%,
4/1/01......................... ARP 1,100,000 $ 956,809
-----------
AUSTRALIAN DOLLAR--2.9%
GOVERNMENT OBLIGATIONS
Commonwealth of Australia, 8.75%,
1/15/01........................ AUD 1,218,000 941,130
Commonwealth of Australia,
13.00%, 7/15/00................ 1,469,000 1,310,930
-----------
TOTAL AUSTRALIAN DOLLAR.......... 2,252,060
-----------
BRAZILIAN REAL--1.2%
CORPORATE BOND
Chase Brazil Note, 27.152%,
3/1/96 (a)..................... BRL 973,037 956,787
-----------
BRITISH POUND--0.8%
GOVERNMENT OBLIGATIONS
United Kingdom Treasury, 2.50%,
7/17/24........................ GBP 350,000 657,201
-----------
CANADIAN DOLLAR--4.9%
CONVERTIBLE BOND
Canada Trustco, 7.00%, 7/1/09.... CAD 2,000,000 1,340,169
GOVERNMENT OBLIGATIONS
Canada Government, 7.50%,
12/1/03........................ CAD 2,930,000 2,211,243
Quebec Housing, 8.95%, 5/13/13... 394,000 313,117
-----------
TOTAL CANADIAN DOLLAR............ 3,864,529
-----------
CZECH KORUNA--3.9%
CORPORATE BONDS
CEZ AS, 14.375%, 1/27/01......... CZK 20,370,000 817,366
Czech Trade Bank, 11.125%,
8/26/97........................ 20,000,000 754,519
Skofin, 11.625%, 2/9/98.......... 40,000,000 1,517,288
-----------
TOTAL CZECH KORUNA............... 3,089,173
-----------
DANISH KRONE--3.6%
CORPORATE BONDS
Kreditforen Denmark, 10.20%,
4/15/04........................ DKK 9,000,000 1,786,223
Nykredit, 6.00%, 10/1/26......... 7,089,480 1,061,666
-----------
TOTAL DANISH KRONE............... 2,847,889
-----------
GERMAN MARK--1.0%
CORPORATE BOND
Autobahn Tank & Rast, 6.00%,
10/16/00....................... DEM 1,050,000 750,042
-----------
GREEK DRACHMA--0.6%
GOVERNMENT OBLIGATION
Greek Treasury Bill, 0.00%,
7/17/96........................ GRD 130,000,000 508,288
-----------
HUNGARIAN FORINTS--0.6%
GOVERNMENT OBLIGATION
Hungarian Treasury Bill, 0.00%,
10/11/96....................... HUF 75,900,000 448,134
-----------
INDONESIAN RUPIAH--1.1%
CORPORATE BONDS
Bakrie & Brothers, 0.00%,
4/15/96........................ IDR 1,000,000,000 413,345
Indah Kiat, 0.00%, 3/21/96....... 1,000,000,000 422,086
-----------
TOTAL INDONESIAN RUPIAH.......... 835,431
-----------
IRISH POUND--3.0%
GOVERNMENT OBLIGATION
Republic of Ireland, 6.25%,
4/1/99......................... IEP 1,505,000 2,389,061
-----------
ITALIAN LIRA--2.0%
GOVERNMENT OBLIGATION
Republic of Italy, 8.50%,
8/1/99......................... ITL 2,575,000,000 1,538,879
-----------
MEXICAN PESO--0.2%
CORPORATE BOND
Ajustobonos, 0.00%, 2/15/96...... MXP 555,000 163,398
-----------
NEW ZEALAND DOLLAR--0.9%
GOVERNMENT OBLIGATION
Government of New Zealand,
10.00%, 7/15/97................ NZD 1,065,000 715,375
-----------
NORWEGIAN KRONE--2.2%
CORPORATE BOND
Sparebanken Norway, 10.25%,
6/23/03 (a).................... NOK 10,000,000 1,704,267
-----------
PORTUGUESE ESCUDO--0.6%
GOVERNMENT OBLIGATION
Republic of Portugal, 11.875%,
2/23/00........................ PTE 61,500,000 442,447
-----------
SOUTH AFRICAN RAND--0.7%
GOVERNMENT OBLIGATION
Republic of South Africa, 11.50%,
5/30/00........................ ZAR 2,032,200 511,608
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 17
- ------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
<S> <C> <C> <C>
SPANISH PESETA--1.6%
GOVERNMENT OBLIGATION
Kingdom of Spain, 12.25%,
3/25/00........................ ESP 140,000,000 $ 1,267,156
-----------
THAILAND BAHT--1.6%
CORPORATE BONDS
Industrial Group Finance of
Thailand, 11.25%, 5/14/96...... THB 3,000,000 119,177
Krung Thai Than BE, 0.00%,
1/12/96........................ 10,000,000 395,671
Phatra Thanakit BE, 0.00%,
6/20/96 (a).................... 20,000,000 755,592
-----------
TOTAL THAILAND BAHT.............. 1,270,440
-----------
UNITED STATES DOLLAR--54.7%
CONVERTIBLE BONDS
Burns Philp, 5.50%, 4/30/04...... USD $ 800,000 692,000
Dairy Farm International Holdings
Ltd., 0.00%, 5/10/49........... 250,000 197,500
Zenith Electric, 6.25%, 4/1/11... 535,000 379,850
CORPORATE BONDS
Act III Broadcasting Inc.,
10.25%, 12/15/05............... 400,000 410,000
Alpine Group Inc. 144A, 12.25%,
7/15/03........................ 718,000 703,640
Arcadian Partners Series B,
10.75%, 5/1/05................. 798,000 881,790
Astra International, 9.75%,
4/29/01........................ 1,540,000 1,632,400
Ce Casecnan Water & Energy Inc.
Series B 144A, 11.95%,
11/15/10....................... 750,000 757,500
Comcast Corp., 9.125%,
10/15/06....................... 320,000 333,600
Comcast Corp., 9.50%,
1/15/08........................ 479,000 507,740
Crown Paper Co., 11.00%,
9/1/05......................... 390,000 341,250
Den Norske Credit, 6.125%,
11/29/49 (a)................... 800,000 631,480
Eletson Holdings Inc., 9.25%,
11/15/03....................... 700,000 693,000
Export-Import Bank of Japan,
8.00%, 6/4/00.................. 444,125 448,886
Flagstar Corp., 10.75%,
9/15/01........................ 800,000 732,000
Forenings Banken 144A, 7.234%,
11/29/49 (a)................... 750,000 745,500
Fort Howard Corp., 8.25%,
2/1/02......................... 785,000 765,375
Fundy Cable Ltd., 11.00%,
11/15/05....................... 535,000 556,400
Hong Kong & Shanghai Bank, 6.25%,
8/29/49 (a).................... 1,200,000 958,200
Lennar Central Partners Ltd.
Participating Class D 144A,
9.89%, 9/15/04................. 370,000 370,000
Mothers Work Inc. 144A, 12.625%,
8/1/05......................... 739,000 727,915
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Noble Drilling Corp., 9.25%,
10/1/03........................ $ 820,000 $ 861,000
NorthWest Airlines Inc., 8.625%,
8/1/96......................... 420,000 421,050
Paxson Communications Corp. 144A,
11.625%, 10/1/02............... 425,000 432,969
Pueblo Xtra International, 9.50%,
8/1/03......................... 96,000 91,680
Reliance Industries, Ltd. 144A,
8.125%, 9/27/05................ 1,500,000 1,507,500
Rowan Companies, Inc., 11.875%,
12/1/01........................ 820,000 889,700
Silgan Corp., 11.75%, 6/15/02.... 767,000 822,607
Sparbankernas Bank, 7.719%,
10/20/49 (a)................... 900,000 914,985
Walbro Corp. 144A, 9.875%,
7/15/05........................ 850,000 847,875
Williamhouse Regency Delaware
Inc. 144A, 13.00%,
11/15/05....................... 575,000 603,750
FEDERAL AGENCIES
Federal Home Loan Mortgage Corp.,
6.946%, 2/1/24 (a)............. 1,646,326 1,681,825
Federal Home Loan Mortgage Corp.,
8.00%, 5/1/25.................. 2,116,850 2,193,585
Federal National Mortgage
Association, 7.503%, 11/1/27
(a)............................ 1,635,385 1,667,582
Government National Mortgage
Association, 6.00%, 10/20/25
(a)............................ 1,756,821 1,774,389
Government National Mortgage
Association, 6.00%, 11/20/25
(a)............................ 2,176,013 2,198,453
FOREIGN GOVERNMENT OBLIGATIONS
Argentina Bono 1998 Boax 0,
8.992%, 4/4/98 (b)............. 350,000 346,150
Argentina Bote X, 5.688%, 4/1/00
(b)............................ 600,000 358,800
Argentina Pensioner Bocon, 0.00%,
4/1/01 (c)..................... 200,000 194,750
Banco Central de Costa Rica
Series A, 6.727%,
5/21/05 (a).................... 240,032 196,827
Federal Republic of Brazil,
6.6875%, 1/1/01 (a)............ 855,000 734,231
Government of Poland, 6.875%,
10/27/24 (a)................... 2,200,000 1,661,000
Kingdom of Jordan, 4.00%,
12/23/23....................... 1,750,000 848,750
Republic of Brazil Federative,
6.8125%, 4/15/06 (a)........... 1,900,000 1,301,500
Republic of South Africa, 9.625%,
12/15/99....................... 750,000 811,875
MUNICIPAL BOND
Allegheny County Pennsylvania
Hospital Development, 5.375%,
12/1/25........................ 810,000 796,343
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 18
- -------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS
United States Treasury Notes,
5.625%, 8/31/97................ $ 1,435,000 $ 1,444,198
United States Treasury Notes,
6.875%, 10/31/96............... 100,000 101,281
YANKEE BOND
Bridas Corp., 12.50%, 11/15/99... 800,000 794,000
COLLATERALIZED MORTGAGE OBLIGATIONS
Asset Securitization Corp. Series
1995-MD4, Class ACS2, 2.433%,
8/13/29 (a).................... 3,880,000 759,631
Federal Home Loan Mortgage PC
Guaranteed, Series 1490, Class
E, 6.50%, 4/15/08.............. 3,575,000 750,750
Federal Home Loan Mortgage PC
Guaranteed, Series 1694, Class
V, 6.50%, 12/15/21............. 4,750,000 699,141
Federal Home Loan Mortgage PC,
Series 1587, Class HA, 6.50%,
10/15/08....................... 5,518,488 735,511
-----------
TOTAL UNITED STATES DOLLAR....... 42,909,714
-----------
TOTAL CURRENCY DENOMINATED BONDS*
(Identified cost $68,865,827)...... 70,078,688
-----------
STRUCTURED NOTES--4.5%
ING Polish Note, 0.00%, 2/21/96.. 335,665 324,756
J P Morgan Polish Note, 0.00%,
1/24/96........................ 724,280 701,031
Morgan Stanley Group Inc.,
14.25%, 6/26/96 (a)............ 500,000 419,500
YPF Sociedad Anonima, 7.50%,
10/26/02....................... 736,325 743,688
United Mexican States 144A,
0.00%, 11/27/96 (d)............ 1,300,000 1,322,750
-----------
TOTAL STRUCTURED NOTES
(Identified cost $3,517,303)....... 3,511,725
-----------
SHORT TERM INVESTMENT--4.5%
REPURCHASE AGREEMENT--4.5%
(Identified cost $3,520,000)
State Street Bank and Trust Co.,
5.70%, 1/2/96 (collateralized
by U.S. Treasury Bills, due
12/12/96; total par value
$3,770,000; valued at
$3,591,279).................... 3,520,000 3,520,000
-----------
TOTAL INVESTMENTS
(Identified cost $75,903,130)
(e).............................. 98.3% 77,110,413
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES........................ 1.7 1,363,511
---- ---------
NET ASSETS.......................... 100.0% $78,473,924
===== ==========
</TABLE>
(a) Variable rate security. Interest shown is the current rate.
(b) Coupon set quarterly to 3 month LIBOR. Current rate shown.
(c) Zero coupon until 5/1/97, then coupon set monthly to 30 day LIBOR.
(d) Value set monthly based on CETES/LIBOR rates.
(e) The aggregate cost for federal income tax purposes is $76,140,116; aggregate
gross unrealized appreciation is $1,517,650 and the aggregate gross
unrealized depreciation is $547,353, resulting in net unrealized
appreciation of $970,297.
* Percentages of holdings are presented in the portfolio by currency
denomination.
Percentages by country are as follows:
Argentina 3.3%, Australia 2.9%, Brazil 3.8%, Canada 4.9%, Costa Rica 0.3%,
Czech Republic 3.9%, Denmark 3.6%, Germany 1.0%, Greece 0.6%, Hong Kong 1.2%,
Hungary 0.6%, Indonesia 1.1%, Ireland 3.0%, Italy 2.0%, Japan 0.6%, Jordan
1.1%, Mexico 1.9%, New Zealand 0.9%, Norway 5.1%, Philippines 1.0%, Poland
3.4%, Portugal 0.6%, South Africa 1.7%, Spain 1.6%, Sweden 2.1%, Thailand
1.6%, United Kingdom 0.8%, United States 39.2%.
Percentages by industry are as follows:
Auto Parts 3.2%, Banking 6.6%, Broadcasting 1.1%, Building & Building
Materials 1.0%, Cable Systems 1.1%, Chemicals & Chemical Manufacturing 3.0%,
Electronics 1.4%, Food & Beverages 0.3%, Holdings Company 0.9%, Oil & Gas
Equipment 2.2%, Packaging 1.0%, Paper Manufacturing & Products 2.7%,
Restaurants 0.9%, Retail 1.0%, Shipbuilding 0.9%, Telecommunications 0.7%,
Transportation & Freight Services 0.5%, Utilities 2.0%, Collateralized
Mortgage Obligation 3.8%, U.S. Government Obligations 16.9%, Foreign
Government Obligations 37.8%, Municipal Bonds 1.0%, Structured Notes 2.8%,
Yankee Bonds 1.0%.
Forward Foreign Currency Contracts open at December 31, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ------------------- ------------------- -------- --------------
<S> <C> <C> <C>
$ 2,319,053 JPY 222,420,361 9/3/96 $(92,983)
JPY 222,420,361 $2,364,916 9/3/96 138,846
$ 755,892 THB 19,033,360 4/5/96 (300)
AUD 2,897,236 $2,155,000 3/12/96 9,100
CAD 4,790,223 $3,523,000 3/12/96 15,455
$ 282,658 DEM 403,700 3/12/96 (203)
DEM 6,008,452 $4,199,968 3/12/96 (3,940)
$ 1,113,480 DKK 6,153,537 3/12/96 (3,257)
DKK 21,775,923 $3,919,000 3/12/96 (9,819)
ESP 147,262,500 $1,190,000 3/12/96 (15,194)
GBP 447,225 $685,000 3/12/96 (8,321)
IEP 1,455,175 $2,313,000 3/12/96 (17,341)
ITL 2,461,074,000 $1,522,000 3/12/96 (13,064)
$ 95,000 JPY 9,567,450 3/12/96 (1,369)
JPY 32,520,300 $325,000 3/12/96 6,743
NOK 10,417,722 $1,649,000 3/12/96 2,922
$ 56,983 XEU 44,624 3/12/96 144
XEU 669,831 $860,792 3/12/96 3,285
$ 1,552,698 ITL 2,487,266,171 1/19/96 13,468
$ 247,918 ZAR 911,967 1/4/96 2,244
DKK 6,152,360 $1,110,194 1/2/96 2,159
--------
$ 28,575
========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 19
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO
COMMON STOCKS--91.4%
AUTO PARTS--5.3%
A.O. Smith Class B...................... 300,000 $ 6,225,000
Carlisle Companies, Inc. ............... 133,000 5,369,875
Durakon Industries, Inc. (a)............ 430,000 5,375,000
Lear Seating Corp. (a).................. 224,800 6,519,200
Masland Corp. .......................... 528,000 7,392,000
Standard Motor Products, Inc. Class A... 215,000 3,225,000
-------------
34,106,075
-------------
BANKS--4.7%
Albank Financial Corp. ................. 169,000 5,070,000
Baybanks, Inc. ......................... 59,600 5,855,700
Cullen Frost Bankers, Inc. ............. 136,000 6,800,000
Hibernia Corp. Class A.................. 580,000 6,235,000
Signet Banking Corp. ................... 274,600 6,521,750
-------------
30,482,450
-------------
BROADCASTING--2.2%
Cablevision Systems Corp. Class A (a)... 84,600 4,589,550
Evergreen Media Corp. Class A (a)....... 100,000 3,200,000
Katz Media Group, Inc. (a).............. 348,200 6,137,025
-------------
13,926,575
-------------
BUILDING & CONSTRUCTION--1.7%
Centex Construction Products, Inc.
(a)................................... 288,400 4,145,750
Redman Industries, Inc. (New) (a)....... 200,000 6,750,000
-------------
10,895,750
-------------
CHEMICALS & PLASTICS--3.6%
Crompton & Knowles Corp. ............... 563,700 7,469,025
Fuller H B Co. ......................... 237,400 8,249,650
Mississippi Chemical Corp. ............. 319,000 7,416,750
-------------
23,135,425
-------------
COMMUNICATIONS--3.0%
Associated Group, Inc. Class A (a)...... 56,650 1,069,269
Associated Group, Inc. Class B (a)...... 256,650 4,876,350
Cellular Communications of Puerto Rico,
Inc. (a).............................. 230,058 6,384,109
International CableTel, Inc. (a)........ 296,000 7,252,000
-------------
19,581,728
-------------
COMPUTERS & BUSINESS EQUIPMENT--1.7%
Wang Labs, Inc. (a)..................... 643,100 10,691,538
-------------
COMPUTER SOFTWARE--0.9%
Ameridata Technologies, Inc. (a)........ 610,000 5,871,250
-------------
COSMETICS & TOILETRIES--2.9%
Alberto Culver Co. Class A.............. 276,900 8,445,450
Maybelline, Inc. ....................... 291,800 10,577,750
-------------
19,023,200
-------------
DRUGS & HEALTH CARE--1.7%
FHP International Corp. (a)............. 132,500 3,776,250
Perrigo Co. (a)......................... 618,000 7,338,750
-------------
11,115,000
-------------
ELECTRICAL EQUIPMENT--2.4%
Belden, Inc. ........................... 252,900 6,512,175
UCAR International, Inc. (a)............ 275,000 9,281,250
-------------
15,793,425
-------------
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS--4.1%
Amphenol Corp. Class A (a).............. 416,800 $ 10,107,400
Lexmark International Group, Inc. Class
A (a)................................. 413,600 7,548,200
Oak Industries, Inc. (a)................ 455,900 8,548,125
-------------
26,203,725
-------------
ENERGY--0.2%
California Energy Company, Inc. (a)..... 81,700 1,593,150
-------------
FINANCIAL SERVICES--1.2%
Rollins Truck Leasing Corp. ............ 685,800 7,629,525
-------------
HOUSEHOLD APPLIANCES & HOME
FURNISHINGS--3.9%
Ethan Allen Interiors, Inc. (a)......... 298,000 6,071,750
Heilig Meyers Co. ...................... 277,900 5,106,413
Miller (Herman), Inc. .................. 276,700 8,301,000
Sunbeam Corp. Delaware (New)............ 364,100 5,552,525
-------------
25,031,688
-------------
INDUSTRIAL & MACHINERY--2.3%
Mark IV Industries, Inc. ............... 431,729 8,526,648
Trinova Corp. .......................... 211,400 6,051,325
-------------
14,577,973
-------------
INSURANCE--6.4%
Alexander & Alexander Services, Inc. ... 167,900 3,190,100
American Bankers Insurance Group,
Inc. ................................. 208,600 8,135,400
Gryphon Holdings, Inc. (a).............. 150,000 2,887,500
NAC Re Corp. ........................... 240,000 8,640,000
Prudential Reinsurance Holdings,
Inc. ................................. 310,900 7,267,287
Reliance Group Holdings, Inc. .......... 276,100 2,381,363
Western National Corp. ................. 550,000 8,868,750
-------------
41,370,400
-------------
LEISURE TIME--2.1%
Players International, Inc. (a)......... 570,000 6,091,875
Polaris Industries, Inc. ............... 260,000 7,637,500
-------------
13,729,375
-------------
MACHINERY--4.5%
Briggs & Stratton Corp. ................ 289,300 12,548,387
Manitowoc, Inc. ........................ 313,000 9,585,625
Measurex Corp. ......................... 248,700 7,025,775
-------------
29,159,787
-------------
MANUFACTURING--4.0%
Alltrista Corp. (a)..................... 311,400 5,605,200
Crane Co. .............................. 271,400 10,007,875
Pentair, Inc. .......................... 139,500 6,940,125
Varlen Corp. ........................... 157,700 3,390,550
-------------
25,943,750
-------------
MEDICAL SUPPLIES--1.5%
Dentsply International, Inc. ........... 240,000 9,600,000
-------------
OIL & GAS--3.4%
Diamond Shamrock, Inc. ................. 200,000 5,175,000
Helmerich & Payne, Inc. ................ 306,500 9,118,375
Vintage Petroleum, Inc. ................ 332,000 7,470,000
-------------
21,763,375
-------------
PAPER PRODUCTS--0.9%
Bowater, Inc. .......................... 155,000 5,502,500
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 20
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
PUBLISHING--2.4%
Banta Corp. ............................ 211,100 $ 9,288,400
Houghton Mifflin Co. ................... 144,000 6,192,000
-------------
15,480,400
-------------
REAL ESTATE--4.8%
Avalon Properties, Inc. ................ 238,600 5,129,900
Bay Apartment Communities, Inc. ........ 175,000 4,243,750
Crescent Real Estate Equities, Inc. .... 193,900 6,616,837
FelCor Suite Hotels, Inc. .............. 330,000 9,157,500
Liberty Property Trust.................. 271,500 5,633,625
-------------
30,781,612
-------------
RESTAURANTS, LODGING & ENTERTAINMENT--2.2%
IHOP Corp. (New) (a).................... 297,500 7,735,000
Sbarro, Inc. ........................... 301,300 6,477,950
-------------
14,212,950
-------------
RETAIL--8.4%
Alexander's, Inc. (a)................... 80,000 5,560,000
Carson Pirie Scott & Co. (a)............ 431,200 8,570,100
Fred Meyer, Inc. (a).................... 119,300 2,684,250
Good Guys, Inc. (a)..................... 175,800 1,582,200
Home Shopping Network, Inc. (a)......... 648,900 5,840,100
Intelligent Electronics, Inc. .......... 855,600 5,133,600
Jones Apparel Group, Inc. (a)........... 232,600 9,158,625
Revco D.S., Inc. (a).................... 217,062 6,132,001
Sothebys Holdings, Inc. ................ 693,200 9,878,100
-------------
54,538,976
-------------
SERVICES--3.0%
Gtech Holdings Corp. (a)................ 321,700 8,364,200
The Pittston Services Group............. 356,400 11,182,050
-------------
19,546,250
-------------
STEEL--2.0%
Huntco, Inc. Class A.................... 301,300 4,632,488
Lukens, Inc. ........................... 298,800 8,590,500
-------------
13,222,988
-------------
TECHNOLOGY--0.0%
Verbex Voice Systems, Inc. (a),(b)...... 180,501 180,501
-------------
TELECOMMUNICATION--0.5%
CAI Wireless Systems, Inc. (a).......... 330,000 3,176,250
-------------
TELECOMMUNICATION EQUIPMENT--1.3%
Scientific Atlanta, Inc. ............... 575,000 8,625,000
-------------
TEXTILES, SHOES & APPAREL--2.2%
Authentic Fitness Corp. ................ 275,000 5,706,250
Warnaco Group, Inc. Class A............. 265,000 6,625,000
Westpoint Stevens, Inc. Class A (a)..... 90,300 1,811,644
-------------
14,142,894
-------------
TOTAL COMMON STOCKS
(Identified cost $511,858,156)............ 590,635,485
-------------
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS--0.1%
(Identified cost $1,500,000)
TECHNOLOGY--0.1%
Verbex Voice Systems, Inc. Series F
(conv.) (a),(b)....................... 687,285 $ 500,343
-------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
CONVERTIBLE BONDS--0.3%
COMMUNICATIONS--0.2%
International CableTel, Inc. 144A,
7.25%, 4/15/05........................ $ 1,400,000 1,498,000
-------------
RESTAURANTS, LODGING & ENTERTAINMENT--0.1%
Interactive Light Holdings, Inc., 8.00%,
1/25/99 (b)........................... 1,000,000 500,000
-------------
TECHNOLOGY--0.0%
Verbex Voice Systems, Inc., 10.00%,
12/31/95 (b).......................... 100,000 100,000
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $2,500,000).............. 2,098,000
-------------
SHORT TERM INVESTMENT--7.4%
REPURCHASE AGREEMENT--7.4%
(Identified cost $47,748,000)
State Street Bank and Trust Co., 5.70%,
1/2/96 (collateralized by U.S.
Treasury Notes, 5.75%, due 9/30/97;
total par value $47,615,000; valued at
$48,704,574).......................... 47,748,000 47,748,000
-------------
TOTAL INVESTMENTS
(Identified cost $563,606,156) (c)........ 99.2% 640,981,828
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES............................... 0.8 5,389,176
---- ----------
NET ASSETS................................. 100.0% $ 646,371,004
===== =============
</TABLE>
(a) Non-income producing security.
(b) Private placement (see note 6).
(c) The aggregate cost for federal income tax purposes is $563,606,156;
aggregate gross unrealized appreciation is $96,906,783 and the aggregate
gross unrealized depreciation is $19,531,111, resulting in net unrealized
appreciation of $77,375,672.
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 21
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP
PORTFOLIO
COMMON STOCKS--87.9%
ARGENTINA--2.0%
Capex SA 144A (c)....................... 158,200 $ 2,293,900
-------------
AUSTRALIA--1.2%
Bibury Ltd. (a),(d)..................... 472,100 0
Pacific Mutual Ltd. .................... 991,200 1,436,628
-------------
TOTAL AUSTRALIA......................... 1,436,628
-------------
AUSTRIA--1.3%
Vae Eisenbahnsyst....................... 17,400 1,467,480
-------------
BRAZIL--1.7%
Capco Automotive Products Corp. ........ 275,200 1,960,800
-------------
DENMARK--2.4%
Spar Nord Holding....................... 39,100 1,323,872
Sparekassen Bikube...................... 45,200 1,497,848
-------------
TOTAL DENMARK........................... 2,821,720
-------------
FINLAND--2.6%
Finnair................................. 296,700 2,217,030
Sampo Insurance Company Ltd. ........... 14,500 776,774
-------------
TOTAL FINLAND........................... 2,993,804
-------------
FRANCE--3.9%
Club Mediterranee....................... 4,622 369,043
Imetal.................................. 17,600 2,102,512
Unibail SA.............................. 19,400 2,004,574
-------------
TOTAL FRANCE............................ 4,476,129
-------------
GERMANY--9.0%
Cewe Color Holding AG................... 6,100 2,019,868
Doerries Scharmann AG................... 76,994 279,100
Hornbach Holding AG..................... 30,300 2,640,293
Moebel Walther AG....................... 101,770 3,369,867
WMF Wuerttembergische Metallwarenfabrik
AG.................................... 9,600 2,074,590
-------------
TOTAL GERMANY........................... 10,383,718
-------------
HONG KONG--3.5%
Manhattan Card Co. ..................... 4,026,000 1,718,177
Peregrine Investment.................... 1,800,000 2,327,837
-------------
TOTAL HONG KONG......................... 4,046,014
-------------
IRELAND--3.4%
Fitzwilton PLC.......................... 2,861,700 2,199,193
Unidare PLC............................. 378,200 1,695,421
-------------
TOTAL IRELAND........................... 3,894,614
-------------
ISRAEL--2.1%
ECI Telecom Ltd. ....................... 105,400 2,404,437
-------------
ITALY--2.7%
Arnoldo Mondadori Editore............... 350,800 3,039,438
Unipol.................................. 21,000 134,546
-------------
TOTAL ITALY............................. 3,173,984
-------------
JAPAN--7.2%
Cowboy Company Ltd. .................... 149,000 2,525,424
FCC Company Ltd. ....................... 80,000 2,820,339
Towa Pharmaceutical Company Ltd. ....... 80,000 2,944,310
-------------
TOTAL JAPAN............................. 8,290,073
-------------
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
NEW ZEALAND--4.8%
Fisher & Paykel......................... 719,416 $ 2,187,032
Warehouse Group......................... 437,100 1,160,189
Wrightson Ltd. ......................... 2,925,200 2,218,379
-------------
TOTAL NEW ZEALAND....................... 5,565,600
-------------
NORWAY--5.0%
Aker AS Class B......................... 186,800 2,270,820
Fokus Bank (a).......................... 649,000 3,504,176
-------------
TOTAL NORWAY............................ 5,774,996
-------------
PAKISTAN--0.0%
Lever Brothers.......................... 540 11,126
Packages................................ 750 2,214
-------------
TOTAL PAKISTAN.......................... 13,340
-------------
PHILIPPINES--1.9%
Philippine Commercial International
Bank (a).............................. 243,000 2,241,937
-------------
PORTUGAL--2.0%
Corticeira Amorim SA.................... 197,100 2,271,572
-------------
SPAIN--5.1%
Corporation Financiera Reunida SA....... 1,070,400 3,706,249
Vallehermoso SA......................... 120,000 2,230,833
-------------
TOTAL SPAIN............................. 5,937,082
-------------
SWEDEN--6.0%
Getinge Industrier AB................... 44,466 2,025,839
IRO AB (a).............................. 204,100 2,305,451
TV 4 AB Series A........................ 149,200 2,584,153
-------------
TOTAL SWEDEN............................ 6,915,443
-------------
SWITZERLAND--6.9%
Bil GT Gruppe AG........................ 5,000 2,947,551
Logitech International PLC.............. 25,100 2,589,423
Swisslog Holding AG..................... 8,690 2,410,750
-------------
TOTAL SWITZERLAND....................... 7,947,724
-------------
TAIWAN--1.6%
Yageo Corp. (a), (c).................... 213,100 1,917,900
-------------
UNITED KINGDOM--11.6%
Amec PLC................................ 35,247 51,455
Bell Cablemedia PLC (a),(b)............. 75,400 1,206,400
Greycoat PLC............................ 832,175 1,796,433
London Clubs International PLC.......... 342,800 2,246,647
McBride PLC (a)......................... 660,000 1,978,258
Scholl PLC.............................. 1,028,400 3,066,513
Takare PLC.............................. 1,087,400 3,039,789
-------------
TOTAL UNITED KINGDOM.................... 13,385,495
-------------
TOTAL COMMON STOCKS
(Identified cost $103,585,858)............ 101,614,390
-------------
PREFERRED STOCKS--4.7%
AUSTRIA--1.3%
Bau Holdings AG......................... 39,900 1,500,432
-------------
GERMANY--1.7%
Sander (Jil) AG......................... 2,700 1,976,298
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 22
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO (CONTINUED)
UNITED KINGDOM--1.7%
Signet Group PLC (a),(b)................ 38 $ 1,900,000
-------------
TOTAL PREFERRED STOCKS
(Identified cost $5,664,250).............. 5,376,730
-------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
CONVERTIBLE BONDS--3.0%
PHILIPPINES--1.4%
Bacnotan Consolidated Industries,
5.50%, 6/21/04........................ $ 2,000,000 1,700,000
-------------
UNITED STATES--1.6%
International CableTel Inc. 144A,
7.25%, 4/15/05........................ 1,700,000 1,819,000
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $3,700,000).............. 3,519,000
-------------
SHORT TERM INVESTMENT--6.7%
REPURCHASE AGREEMENT--6.7%
(Identified cost $7,711,000)
State Street Bank and Trust Co., 5.70%,
1/2/96 (collateralized by U.S.
Treasury Bills, due 12/12/96; total
par value $8,260,000; valued at
$7,868,426)........................... 7,711,000 7,711,000
-------------
TOTAL INVESTMENTS
(Identified cost $120,661,108) (e)........ 102.3% 118,221,120
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS.............................. (2.3) (2,686,681)
---- ----------
NET ASSETS................................. 100.0% $ 115,534,439
===== =============
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) Global Depository Receipts.
(d) Company currently in bankruptcy.
(e) The aggregate cost for federal income tax purposes is $120,735,712;
aggregate gross unrealized appreciation is $6,708,912 and the aggregate
gross unrealized depreciation is $9,223,504, resulting in net unrealized
depreciation of $2,514,592.
* Percentages of common stocks, preferred stocks, and convertible bonds are
presented in the portfolio by currency denomination.
Percentages by industry are as follows:
Agriculture 1.9%, Automotive 1.7%, Auto Parts 2.4%, Broadcasting 2.2%,
Computers 2.2%, Construction Materials 5.3%, Cosmetics & Toiletries 4.4%,
Electrical Equipment 1.5%, Electronics 1.9%, Engineering & Construction 1.3%,
Entertainment 1.9%, Financial Services 14.8%, Food & Beverages 2.2%, Health
Care 2.6%, Household Products 1.8%, Industrial & Machinery 2.3%, Insurance
0.8%, Leisure Time 1.8%, Lodging 0.3%, Manufacturing 3.3%, Miscellaneous
5.1%, Mortgage Backed Securities 5.7%, Paper Products 2.0%, Pharmaceuticals
2.6%, Publishing 2.6%, Real Estate 5.2%, Retailing 2.6%, Retail Trade 2.9%,
Telecommunication 1.6%, Telecommunication Equipment 2.1%, Telephone 1.0%,
Textiles, Shoes, and Apparel 1.7%, Transportation & Freight Services 1.9%,
Venture Capital 2.0%.
Forward Foreign Currency Contracts open at December 31, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ---------------- --------------- -------- --------------
<S> <C> <C> <C>
BEL 93,045,843 $3,141,000 3/13/96 $(32,706)
DEM 7,821,860 $5,436,000 3/13/96 (36,959)
SEK 63,425,392 $9,599,000 3/13/96 101,636
$ 1,094,460 GBP 702,929 1/4/96 (2,786)
$ 117,722 NZD 180,278 1/4/96 138
$ 142,407 NZD 218,583 1/3/96 495
$ 264,919 SEK 1,754,164 1/3/96 (728)
$ 758,901 FIM 3,282,247 1/2/96 (4,257)
--------
$ 24,833
========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
-----------
<S> <C> <C>
LAZARD SPECIAL EQUITY PORTFOLIO
COMMON STOCKS--89.5%
AEROSPACE & DEFENSE--1.2%
Tech-Sym Corp. (a)........................ 17,500 $ 557,812
------------
AUTO & TRUCK--1.0%
Oshkosh Truck Corp. Class B............... 18,000 270,000
Republic Automotive Parts, Inc. (a)....... 15,000 191,250
------------
461,250
------------
BUILDING & HOUSING--5.0%
Puerto Rican Cement Co., Inc. ............ 65,000 2,153,125
Simpson Manufacturing Co. (a)............. 15,000 195,000
------------
2,348,125
------------
BUSINESS SERVICES & SUPPLIES--2.6%
Ennis Business Forms...................... 100,000 1,225,000
------------
CHEMICALS & PLASTICS--6.2%
Aceto Corp. .............................. 77,000 1,174,250
MacDermid, Inc. .......................... 30,000 1,755,000
------------
2,929,250
------------
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
FOOD & BEVERAGE--4.2%
Farmer Brothers Co. ...................... 15,000 $ 1,980,000
------------
HOUSEHOLD APPLIANCES & HOME
FURNISHINGS--14.2%
Allen Organ Co. Class B................... 60,000 2,445,000
Boston Acoustics, Inc. ................... 40,000 920,000
Chromcraft Revington, Inc. (a)............ 9,000 239,625
Mikasa, Inc. (a).......................... 22,000 297,000
National Presto Industries, Inc. ......... 47,100 1,872,225
Virco Manufacturing Co. .................. 99,000 903,375
------------
6,677,225
------------
INDUSTRIAL & MACHINERY--9.7%
Amtrol, Inc. ............................. 25,000 381,250
Paul Mueller Co. ......................... 15,000 476,250
Penn Engineering & Manufacturing Corp. ... 20,000 1,940,000
Robbins & Myers, Inc. .................... 40,000 1,140,000
Tecumseh Products Co. Class A............. 12,000 621,000
------------
4,558,500
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 23
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
DESCRIPTION SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
<CAPTION>
LAZARD SPECIAL EQUITY PORTFOLIO (CONTINUED)
<S> <C> <C>
MISCELLANEOUS--6.8%
Brenco, Inc. ............................. 15,300 $ 156,825
Matthews International Corp. ............. 8,500 159,375
Mine Safety Appliances Co. ............... 800 38,200
NCH Corp. ................................ 16,400 947,100
Tranzonic Companies Class A............... 80,000 1,100,000
Tranzonic Companies Class B............... 40,000 555,000
Versa Technologies, Inc. ................. 16,400 250,100
------------
3,206,600
------------
MULTI-INDUSTRY--4.2%
American Filtrona Corp. .................. 15,000 502,500
Core Industries, Inc. .................... 12,300 158,363
Kysor Industrial Corp. Delaware........... 6,200 150,350
Latshaw Enterprises, Inc. (a),(b)......... 38,400 259,200
RPC Energy Services, Inc. (a)............. 18,500 168,812
Wynns International, Inc. ................ 24,400 722,850
------------
1,962,075
------------
RESTAURANTS, LODGING & ENTERTAINMENT--2.7%
Bowl America, Inc. Class A................ 80,000 610,000
International Dairy Queen, Inc.
Class A (a)............................. 30,000 682,500
------------
1,292,500
------------
RETAIL--11.0%
Arden Group, Inc. Class A (a)............. 25,000 1,425,000
Blair Corp. .............................. 58,000 1,834,250
Dress Barn, Inc. (a)...................... 100,000 962,500
Haverty Furniture Company, Inc. .......... 11,800 160,775
Value City Department Stores, Inc. (a).... 115,000 776,250
------------
5,158,775
------------
SERVICES--11.6%
AFA Protective Systems, Inc. (b).......... 15,100 1,661,000
Grey Advertising, Inc. ................... 4,000 784,000
Hilb, Rogal & Hamilton Co. ............... 100,000 1,337,500
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Isomedix, Inc. (a)........................ 28,400 $ 408,250
Value Line, Inc. ......................... 35,000 1,286,250
------------
5,477,000
------------
TEXTILES, SHOES & APPAREL--9.1%
Fab Industries, Inc. ..................... 50,000 1,593,750
Garan, Inc. .............................. 80,000 1,350,000
Superior Surgical Manufacturing Company,
Inc. ................................... 100,000 950,000
Weyco Group, Inc. ........................ 10,000 375,000
------------
4,268,750
------------
TOTAL COMMON STOCKS
(Identified cost $34,483,841)............... 42,102,862
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
SHORT TERM INVESTMENT--11.1%
FEDERAL AGENCY--11.1%
(Identified cost $5,209,190)
Federal Home Loan Mortgage Corp., 5.60%,
1/2/96.................................. $ 5,210,000 5,209,190
------------
TOTAL INVESTMENTS
(Identified cost $39,693,031) (c)........... 100.6% $ 47,312,052
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS...................................... (0.6) (291,849)
---- ---------
NET ASSETS................................... 100.0% $ 47,020,203
===== ============
</TABLE>
(a) Non-income producing security.
(b) Affiliated issuer under the Investment Company Act of 1940 in as much as the
Portfolio owns more than 5% of the voting securities of the Company.
(c) The aggregate cost for federal income tax purposes is $39,693,031; aggregate
gross unrealized appreciation is $9,365,862 and the aggregate gross
unrealized depreciation is $1,746,841, resulting in net unrealized
appreciation of $7,619,021.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
LAZARD EMERGING MARKETS PORTFOLIO
COMMON STOCKS--79.9%
ARGENTINA--7.4%
Capex SA.................................. 140,000 $ 1,021,796
Juan Minetti.............................. 144,000 475,105
Metrogas SA Class B (b)................... 57,000 555,750
YPF Sociedad Anonima Class D (b).......... 25,000 540,625
-----------
TOTAL ARGENTINA........................... 2,593,276
-----------
BRAZIL--2.8%
Capco Automotive Products Corp. (a)....... 60,100 428,212
Makro Atacadista SA (a),(c)............... 100,000 568,500
-----------
TOTAL BRAZIL.............................. 996,712
-----------
CHILE--4.2%
AFP Provida SA (b)........................ 17,000 469,625
Chilectra SA (b).......................... 8,000 398,000
Compania De Telefonos Chile (b)........... 7,300 604,987
-----------
TOTAL CHILE............................... 1,472,612
-----------
<CAPTION>
NUMBER
OF SHARES
----------
<S> <C> <C>
CHINA--1.6%
Ek Chor China Motorcycle Co. ............. 47,000 $ 546,375
-----------
COLOMBIA--1.7%
Banco De Bogota........................... 66,451 318,589
Banco Industrial Colombiano............... 82,000 290,507
-----------
TOTAL COLOMBIA............................ 609,096
-----------
CZECH REPUBLIC--1.5%
Komercni Banka AS 144A (a),(c)............ 30,000 546,000
-----------
GREECE--3.0%
Ergo Bank................................. 10,000 398,372
Papastratos Cigarette SA.................. 10,000 316,336
Titan Cement Co. SA (a)................... 8,000 335,737
-----------
TOTAL GREECE.............................. 1,050,445
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 24
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORTFOLIO (CONTINUED)
<S> <C> <C>
HONG KONG--5.2%
China Hong Kong Photo Products............ 1,100,000 $ 622,373
Harbin Power Equipment.................... 1,248,000 183,992
Peregrine Investment...................... 360,000 465,568
Yue Yuen Industrial Holding............... 2,100,000 556,741
-----------
TOTAL HONG KONG........................... 1,828,674
-----------
HUNGARY--3.0%
Danubius Hotel............................ 51,600 485,296
Egis Gyogyszergyar........................ 25,000 555,332
-----------
TOTAL HUNGARY............................. 1,040,628
-----------
INDIA--2.9%
Ashok Leyland Ltd. 144A (a), (c).......... 58,600 600,650
Hindalco Industries Ltd. 144A (a), (c).... 12,500 426,625
-----------
TOTAL INDIA............................... 1,027,275
-----------
INDONESIA--5.9%
Bank Bali................................. 125,750 247,485
Bimantara Citra (a)....................... 540,000 448,721
Citra Marga Nusaphala Persada............. 470,000 441,942
Kawasan Industries Jababeka............... 298,000 482,222
Trias Sentosa............................. 210,000 468,403
-----------
TOTAL INDONESIA........................... 2,088,773
-----------
ISRAEL--0.5%
Blue Square (a)........................... 24,000 161,433
-----------
KOREA--7.8%
Chosun Brewery............................ 7,610 301,251
Chosun Brewery Ord. (New) (a)............. 2,790 109,676
Korea Chemical............................ 3,760 389,401
Korea Mobile Telecom...................... 836 942,420
Pohang Iron & Steel (b)................... 9,600 210,000
Samsung Electronics Ltd. 144A (a), (c).... 6,800 397,800
Shinhan Bank.............................. 17,100 381,964
-----------
TOTA KOREA................................ 2,732,512
-----------
LUXEMBOURG--1.4%
First NIS Regional Fund (a)............... 88,000 484,000
-----------
MALAYSIA--2.9%
Genting Berhad............................ 33,000 275,466
Kian Joo Can Factory Berhad............... 125,000 516,793
Southern Bank Berhad...................... 125,000 238,217
-----------
TOTAL MALAYSIA............................ 1,030,476
-----------
MEXICO--6.7%
Cemex SA.................................. 204,000 671,627
Fomento Economico Series B................ 271,200 609,541
Grupo Fernandez Editores Series B (a)..... 1,070,000 298,185
Pan American Beverage Class A............. 11,000 352,000
Telefonos de Mexico SA (b)................ 13,000 414,375
-----------
TOTAL MEXICO.............................. 2,345,728
-----------
PAKISTAN--1.9%
Hub Power Ltd. 144A (a),(c)............... 38,000 655,500
-----------
PERU--1.3%
Backus & Johnston......................... 265,358 455,851
-----------
PHILIPPINES--3.4%
Alaska Milk Corp. (a)..................... 2,300,000 333,206
Benpress Holdings Corp. 144A (c).......... 64,600 323,000
<CAPTION>
NUMBER
DESCRIPTION OF SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
C & P Homes (a)........................... 300,100 $ 220,241
Philippine Commercial International
Bank (a)................................ 34,400 317,377
-----------
TOTAL PHILIPPINES......................... 1,193,824
-----------
POLAND--0.7%
Jelfa (a)................................. 22,000 253,417
-----------
PORTUGAL--3.5%
Corticeira Amorim SA...................... 31,800 366,494
Investec-Consultoria Internacional SA
(a)..................................... 27,000 541,172
Portugal Telecom SA (a),(b)............... 18,000 342,000
-----------
TOTAL PORTUGAL............................ 1,249,666
-----------
SOUTH AFRICA--5.0%
JD Group Ltd. ............................ 100,654 662,651
Kersaf Investments........................ 50,000 630,915
Malbak.................................... 69,391 480,623
-----------
TOTAL SOUTH AFRICA........................ 1,774,189
-----------
SRI LANKA--0.3%
Blue Diamond Jewel........................ 408,186 120,832
-----------
TAIWAN--2.1%
Siliconware Precision Industries Inc. 144A
(a),(c)................................. 16,700 275,550
Yageo Corp. (a),(c)....................... 52,600 473,400
-----------
TOTAL TAIWAN.............................. 748,950
-----------
VENEZUELA--1.1%
Venezolana De Ceme........................ 309,000 379,492
-----------
ZIMBABWE--2.1%
Bindura Nickel............................ 250,000 362,171
Delta Corp. .............................. 225,000 376,658
-----------
TOTAL ZIMBABWE............................ 738,829
-----------
TOTAL COMMON STOCKS
(Identified cost $28,827,960)............... 28,124,565
-----------
PREFERRED STOCKS--6.6%
BRAZIL--4.4%
Brahma Cia Cervejaria..................... 1,700,000 699,606
Cemig Cia Energetica de Minas Gerais...... 20,000,000 442,387
Dixie Toga SA (a)......................... 467,000 408,385
-----------
TOTAL BRAZIL.............................. 1,550,378
-----------
COLOMBIA--2.2%
Banco Industrial Colombiano SA (b)........ 35,000 573,125
Gran Cadena De Almacenes Class B 144A (a),
(b)..................................... 18,000 207,000
-----------
TOTAL COLOMBIA............................ 780,125
-----------
TOTAL PREFERRED STOCKS
(Identified cost $2,368,183)................ 2,330,503
-----------
WARRANTS--0.0%
(Identified cost $0)
INDONESIA--0.0%
Bank Bali (a)............................. 29,000 12,683
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 25
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- -------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORTFOLIO (CONTINUED)
<S> <C> <C>
CONVERTIBLE BONDS--3.7%
PHILIPPINES--1.3%
Bacnotan Consolidated Industries, 5.50%,
6/21/04................................. $ 550,000 $ 467,500
-----------
TAIWAN--1.0%
United Micro Electronics, 1.25%, 6/8/04... 285,000 357,675
-----------
UNITED STATES--1.4%
International Financial Holdings, Inc.
144A, 6.50%, 8/1/99..................... 370,000 492,100
-----------
TOTAL CONVERTIBLE BONDS
(Identified cost $1,527,925)................ 1,317,275
-----------
SHORT TERM INVESTMENT--13.8%
REPURCHASE AGREEMENT--13.8%
(Identified cost $4,852,000)
State Street Bank and Trust Co., 5.70%,
1/2/96 (collateralized by U.S. Treasury
Bills, due 12/12/96; total par value
$5,200,000; valued at $4,953,489)....... 4,852,000 4,852,000
-----------
TOTAL INVESTMENTS
(Identified cost $37,576,068) (d)........... 104.0% 36,637,026
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS...................................... (4.0) (1,420,768)
----- -----------
NET ASSETS................................... 100.0% $35,216,258
===== ===========
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) Global Depository Receipts.
(d) The aggregate cost for federal income tax purposes is $37,579,111; aggregate
gross unrealized appreciation is $2,072,339 and the aggregate gross
unrealized depreciation is $3,014,424, resulting in net unrealized
depreciation of $942,085.
* Percentages of common and preferred stocks and convertible bonds are
presented in the portfolio by currency denomination.
Percentage by industry are as follows:
Apparel & Textiles 1.6%, Auto Parts 1.2%, Banks 3.4%, Brewery 2.0%,
Chemicals 1.3 %, Chemicals & Plastics 1.1%, Commercial Services 1.3%,
Communications 8.3%, Construction Materials 7.7%, Consumer Goods 0.4%,
Domestic Oil 1.6%, Drugs & Health Care 2.3%, Electrical Equipment 0.5%,
Electronics 2.9%, Financial Services 10.2%, Food & Beverages 6.1%, Forest
Products 1.1%, Holding Company--Diversified 1.4%, Homebuilders 0.6%,
International Oil 1.5%, Leisure Time 3.3%, Manufacturing 1.5%, Metals 1.2%,
Miscellaneous 4.9%, Mortgage Backed Securities 6.2%, Publishing 2.3%,
Restaurants, Lodging & Entertainment 2.2%, Retailing 2.9%, Steel 0.6%,
Tobacco 0.9%, Utilities 4.3%, Wholesale Trade 3.4%.
Forward Foreign Currency Contracts open at December 31, 1995:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ----------- ----------- -------- --------------
<S> <C> <C> <C>
$ 141,295 PEN 326,108 1/2/96 $ (183)
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 26
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL
EQUITY EQUITY FIXED-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value*..................... $ 157,812,496 $1,232,294,509 $ 43,018,602
Investments in repurchase agreements, at cost and
value.................................................. 5,694,000 70,037,000 3,866,000
Cash..................................................... 438 1,017 262
Net foreign currency contracts (note 2).................. -- -- 37,754
Receivables for:
Investments sold....................................... -- 2,923,500 2,218,953
Dividends and interest................................. 288,199 2,212,207 1,366,951
Capital stock sold..................................... 374,224 13,482,088 122,511
Deferred organizational expenses (note 2)................ -- 11,265 11,696
Other.................................................... -- -- --
------------- -------------- ------------
Total assets............................................. 164,169,357 1,320,961,586 50,642,729
------------- -------------- ------------
LIABILITIES
Payables for:
Investments purchased.................................. -- 19,016,374 4,816,290
Capital stock repurchased.............................. 191,954 993,056 10,826
Dividends declared..................................... -- 16,445 37,253
Investment management fees payable (note 3).............. 118,750 798,137 101,798
Net foreign currency contracts (note 2).................. -- 53,656 --
Due to Manager........................................... -- -- --
Accrued directors fees payable........................... 2,778 2,778 2,778
Accrued expenses and other payables...................... 68,887 531,693 49,481
------------- -------------- ------------
Total liabilities........................................ 382,369 21,412,139 5,018,426
------------- -------------- ------------
Net assets, at value..................................... 163,786,988 1,299,549,447 45,624,303
============= ============== ============
NET ASSETS
Paid in capital.......................................... 131,965,086 1,169,741,962 43,666,321
Undistributed (distributions in excess of) investment
income--net............................................ -- 63,301 24,037
Unrealized appreciation (depreciation) on:
Investments--net....................................... 25,156,509 126,910,179 1,763,256
Foreign currency--net.................................. -- (35,747) 13,676
Accumulated realized gain (loss)--net.................... 6,665,393 2,869,752 157,013
------------- -------------- ------------
NET ASSETS, AT VALUE..................................... $ 163,786,988 $1,299,549,447 $ 45,624,303
============= ============== ============
Shares of capital stock outstanding**.................... 9,405,110 103,988,517 4,204,312
============= ============== ============
NET ASSET VALUE PER SHARE................................ $ 17.41 $ 12.50 $ 10.85
============= ============== ============
</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.
24
<PAGE> 27
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD LAZARD
LAZARD STRATEGIC LAZARD INTERNATIONAL SPECIAL EMERGING
BOND YIELD SMALL CAP SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 43,580,431 $ 73,590,413 $ 593,233,828 $ 110,510,120 $ 47,312,052 $ 31,785,026
1,806,000 3,520,000 47,748,000 7,711,000 -- 4,852,000
63 995 728 763,380 9,076 1,149
-- 28,575 -- 24,833 -- --
366,924 2,934,989 7,165,530 -- 221,037 40,889
553,239 1,845,795 749,739 390,583 53,462 54,388
2,315,034 1,100,000 1,498,625 48,088 5,151 1,136,426
11,768 10,221 11,301 10,283 -- 14,674
-- -- -- -- 23,086 --
------------ ------------ ------------- ------------- ------------ ------------
48,633,459 83,030,988 650,407,751 119,458,287 47,623,864 37,884,552
------------ ------------ ------------- ------------- ------------ ------------
2,253,838 4,305,501 3,117,733 3,704,869 409,404 2,132,621
140,279 31,271 348,671 36,706 -- 397,087
40,260 64,009 -- -- -- --
80,148 93,407 402,416 64,707 156,547 69,012
-- -- -- -- -- 183
-- -- -- -- -- 20,680
2,778 2,778 2,778 2,778 2,778 2,778
32,753 60,098 165,149 114,788 34,932 45,933
------------ ------------ ------------- ------------- ------------ ------------
2,550,056 4,557,064 4,036,747 3,923,848 603,661 2,668,294
------------ ------------ ------------- ------------- ------------ ------------
46,083,403 78,473,924 646,371,004 115,534,439 47,020,203 35,216,258
============ ============ ============= ============= ============ ============
45,330,824 80,585,414 569,127,212 119,225,351 37,141,252 37,977,655
40,199 62,968 -- (22,525) -- 3,727
343,654 1,207,283 77,375,672 (2,439,988) 7,619,021 (939,042)
-- 8,059 -- 27,094 -- (1,569)
368,726 (3,389,800) (131,880) (1,255,493) 2,259,930 (1,824,513)
------------ ------------ ------------- ------------- ------------ ------------
$ 46,083,403 $ 78,473,924 $ 646,371,004 $ 115,534,439 $ 47,020,203 $ 35,216,258
============ ============ ============= ============= ============ ============
4,560,693 8,245,403 40,536,196 10,986,319 3,842,845 3,812,846
============ ============ ============= ============= ============ ============
$ 10.10 $ 9.52 $ 15.95 $ 10.52 $ 12.24 $ 9.24
============ ============ ============= ============= ============ ============
</TABLE>
25
<PAGE> 28
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL
EQUITY EQUITY FIXED-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest*......................................................... $ 535,797 $ 4,165,491 $ 2,966,123
Dividends*........................................................ 2,571,107 24,929,197 --
------------ ------------- -------------
Total investment income............................................. 3,106,904 29,094,688 2,966,123
------------ ------------- -------------
EXPENSES:
Management fee (note 3)........................................... 982,130 7,895,766 314,329
Administration fees (note 3)...................................... 39,265 147,565 27,200
Custodian fees (note 3)........................................... 61,339 1,442,079 74,621
Professional services............................................. 23,741 139,202 38,965
Registration fees................................................. 40,646 163,159 23,517
Shareholder services.............................................. 28,098 56,217 15,195
Directors' fees and expenses...................................... 11,217 13,792 14,190
Shareholders' reports............................................. 6,706 12,175 2,337
Amortization of organizational expenses (note 2).................. -- 13,505 13,505
Other............................................................. 13,739 111,644 2,173
------------ ------------- -------------
Total expenses before fees waived and expenses reimbursed........... 1,206,881 9,995,104 526,032
Management fees waived and expenses reimbursed (note 3)........... -- -- (81,792)
Administration fees waived (note 3)............................... -- -- --
Fees paid indirectly (note 2)..................................... (820) (12,411) (1,547)
------------ ------------- -------------
Expenses--net....................................................... 1,206,061 9,982,693 442,693
------------ ------------- -------------
INVESTMENT INCOME--NET.............................................. 1,900,843 19,111,995 2,523,430
------------ ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NET
Realized gain (loss) on:
Investments--net*.............................................. 17,975,165 34,556,028 2,294,418
Foreign exchange transactions--net............................. -- (16,586,286) 423,923
Net unrealized appreciation (depreciation) during the period on:
Investments--net............................................... 20,838,939 102,387,630 1,899,941
Foreign currency--net.......................................... -- 1,622,255 8,865
------------ ------------- -------------
Realized and unrealized gain (loss) on investments--net........... 38,814,104 121,979,627 4,627,147
------------ ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..... $ 40,714,947 $ 141,091,622 $ 7,150,577
============ ============= ==========
*Net of foreign withholding taxes of:............................... $ 68,660 $ 3,114,151 $ 29,944
============ ============= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD LAZARD
LAZARD STRATEGIC LAZARD INTERNATIONAL SPECIAL EMERGING
BOND YIELD SMALL CAP SMALL CAP EQUITY MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,255,143 $ 6,380,257 $ 2,657,903 $ 543,364 $ 314,283 $ 218,910
-- -- 6,738,744 2,093,899 1,318,974 376,771
----------- ----------- ------------ ------------- ------------- -------------
2,255,143 6,380,257 9,396,647 2,637,263 1,633,257 595,681
----------- ----------- ------------ ------------- ------------- -------------
164,220 525,597 4,066,987 736,353 888,834 236,306
26,180 30,732 91,734 34,635 28,661 25,173
45,246 104,008 117,360 214,946 32,541 110,068
24,226 34,117 86,437 35,325 29,918 26,210
14,302 14,219 49,700 20,181 27,815 26,945
15,550 13,523 41,852 29,968 23,332 23,460
11,316 12,978 11,266 11,590 11,314 12,131
2,943 7,108 12,377 7,681 2,983 5,627
13,505 13,505 13,505 3,530 -- 4,136
2,664 8,664 56,085 14,044 29,194 2,781
----------- ----------- ------------ ------------- ------------- -------------
320,152 764,451 4,547,303 1,108,253 1,074,592 472,837
(34,072) -- -- -- (132,906) (142,805)
(21,875) -- -- -- -- (21,875)
(1,235) (5,026) (9,569) (614) (55) (959)
----------- ----------- ------------ ------------- ------------- -------------
262,970 759,425 4,537,734 1,107,639 941,631 307,198
----------- ----------- ------------ ------------- ------------- -------------
1,992,173 5,620,832 4,858,913 1,529,624 691,626 288,483
----------- ----------- ------------ ------------- ------------- -------------
1,538,947 613,040 48,772,968 2,832,676 5,875,256 (1,723,841)
-- (829,920) -- (3,047,215) -- (79,972)
1,262,427 3,392,780 45,544,351 215,054 2,433,242 594,358
-- 105,454 -- 287,871 -- (2,651)
----------- ----------- ------------ ------------- ------------- -------------
2,801,374 3,281,354 94,317,319 288,386 8,308,498 (1,212,106)
----------- ----------- ------------ ------------- ------------- -------------
$ 4,793,547 $ 8,902,186 $ 99,176,232 $ 1,818,010 $ 9,000,124 $ (923,623)
========== ========== ============ ========== ========== ============
$ -- $ 12,123 $ -- $ 270,513 $ 11,220 $ 36,665
========== ========== ============ ========== ========== ============
</TABLE>
27
<PAGE> 30
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL
EQUITY EQUITY FIXED-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- ------------------------------- -------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
---------------------------- ------------------------------- -------------
1995 1994 1995 1994 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net................... $ 1,900,843 $ 775,588 $ 19,111,995 $ 5,752,469 $ 2,523,430
Realized gain (loss) on investments and
foreign exchange transactions.......... 17,975,165 3,165,434 17,969,742 50,645,245 2,718,341
Unrealized appreciation (depreciation)--
net.................................... 20,838,939 (1,765,260) 104,009,885 (68,363,473) 1,908,806
------------- ------------ -------------- -------------- -------------
Net increase (decrease) in net assets
resulting from operations................ 40,714,947 2,175,762 141,091,622 (11,965,759) 7,150,577
------------- ------------ -------------- -------------- -------------
Distributions to shareholders:
From investment income--net.............. (1,412,326) (819,467) (6,515,474) (5,752,469) (2,523,430)
From realized gains--net................. (11,452,652) (3,479,186) (14,115,900) (74,500,587) (801,842)
(In excess of) offset to investment
income--net............................ -- -- -- 5,752,469 (1,799,275)
In excess of realized gains--net......... -- -- -- -- --
------------- ------------ -------------- -------------- -------------
(12,864,978) (4,298,653) (20,631,374) (74,500,587) (5,124,547)
------------- ------------ -------------- -------------- -------------
Capital stock transaction:
Net proceeds from sales.................. 55,622,979 44,216,711 497,338,051 348,583,561 13,752,209
Net proceeds from reinvestment of
distributions.......................... 12,294,787 4,207,450 19,395,497 72,041,335 4,630,486
Cost of shares redeemed.................. (21,085,965) (4,318,758) (169,521,331) (105,923,266) (10,587,176)
------------- ------------ -------------- -------------- -------------
Net increase (decrease) in net assets from
capital stock transactions............... 46,831,801 44,105,403 347,212,217 314,701,630 7,795,519
------------- ------------ -------------- -------------- -------------
Total increase (decrease) in net assets... 74,681,770 41,982,512 467,672,465 228,235,284 9,821,549
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*.............. $ 163,786,988 $ 89,105,218 $1,299,549,447 $ 831,876,982 $ 45,624,303
=============== ============= ================= ================ ===============
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.............................. 3,491,105 3,088,569 42,535,462 27,102,620 1,219,616
Shares issued to shareholders from
reinvestment of distributions.......... 710,986 304,879 1,554,544 6,362,069 418,379
Shares repurchased....................... (1,279,291) (302,628) (14,205,121) (8,341,648) (932,761)
------------- ------------ -------------- -------------- -------------
Net increase (decrease)................... 2,922,800 3,090,820 29,884,885 25,123,041 705,234
------------- ------------ -------------- -------------- -------------
Shares outstanding at end of period....... 9,405,110 6,482,310 103,988,517 74,103,632 4,204,312
=============== ============= ================= ================ ===============
* Includes undistributed (overdistributed)
net investment income of:................ $ -- $ (12,571) $ 63,301 $ 1,965 $ 24,037
=============== ============= ================= ================ ===============
<CAPTION>
LAZARD
INTERNATIONAL LAZARD
FIXED-INCOME BOND
PORTFOLIO PORTFOLIO
-------------- ---------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
-------------- ---------------------------
1994 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net................... $ 1,206,922 $ 1,992,173 $ 1,235,348
Realized gain (loss) on investments and
foreign exchange transactions.......... 180,322 1,538,947 (1,151,722)
Unrealized appreciation (depreciation)--
net.................................... (512,114) 1,262,427 (965,163)
------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations................ 875,130 4,793,547 (881,537)
------------ ------------ ------------
Distributions to shareholders:
From investment income--net.............. (1,206,922) (1,992,173) (1,235,348)
From realized gains--net................. (287,561) (16,046) (58,029)
(In excess of) offset to investment
income--net............................ -- -- --
In excess of realized gains--net......... -- -- --
------------ ------------ ------------
(1,494,483) (2,008,219) (1,293,377)
------------ ------------ ------------
Capital stock transaction:
Net proceeds from sales.................. 25,803,649 24,539,689 18,506,638
Net proceeds from reinvestment of
distributions.......................... 1,439,206 1,820,886 1,205,567
Cost of shares redeemed.................. (4,276,403) (7,556,034) (6,605,325)
------------ ------------ ------------
Net increase (decrease) in net assets from
capital stock transactions............... 22,966,452 18,804,541 13,106,880
------------ ------------ ------------
Total increase (decrease) in net assets... 22,347,099 21,589,869 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 $ 46,083,403 $ 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 2,500,066 1,891,145
Shares issued to shareholders from
reinvestment of distributions.......... 138,395 186,028 125,665
Shares repurchased....................... (411,133) (775,958) (685,300)
------------ ------------ ------------
Net increase (decrease)................... 2,219,290 1,910,136 1,331,510
------------ ------------ ------------
Shares outstanding at end of period....... 3,499,078 4,560,693 2,650,557
============= ============= =============
* Includes undistributed (overdistributed)
net investment income of:................ $ 1,314 $ 40,199 $ --
============= ============= =============
</TABLE>
+ For the period July 15, 1994 through December 31, 1994
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD
STRATEGIC LAZARD LAZARD
YIELD LAZARD INTERNATIONAL SPECIAL
PORTFOLIO SMALL CAP SMALL CAP EQUITY
- --------------------------------- PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------ ----------------------------- -------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
- --------------------------------- ------------------------------ ----------------------------- -------------
1995 1994 1995 1994 1995 1994 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 5,620,832 $ 4,065,416 $ 4,858,913 $ 2,022,125 $ 1,529,624 $ 591,036 $ 691,626
(216,880) (3,078,071) 48,772,968 22,502,779 (214,539) (4,068,829) 5,875,256
3,498,234 (2,316,644) 45,544,351 (17,010,725) 502,925 (3,653,545) 2,433,242
------------- ------------- -------------- ------------- ------------- ------------- -------------
8,902,186 (1,329,299) 99,176,232 7,514,179 1,818,010 (7,131,338) 9,000,124
------------- ------------- -------------- ------------- ------------- ------------- -------------
(5,620,832) (4,065,416) (4,858,913) (1,181,605) -- (591,036) (691,626)
-- (182,040) (48,772,968) (31,911,994) -- -- (5,248,285)
(88,052) -- -- -- -- 591,036 --
-- -- (778,930) -- (594,717) -- --
------------- ------------- -------------- ------------- ------------- ------------- -------------
(5,708,884) (4,247,456) (54,410,811) (33,093,599) (594,717) -- (5,939,911)
------------- ------------- -------------- ------------- ------------- ------------- -------------
22,589,307 47,082,168 239,938,336 96,349,172 45,713,631 87,421,230 2,211,152
5,445,026 4,028,879 54,147,470 32,373,017 584,483 -- 5,125,731
(15,082,042) (18,148,713) (122,152,846) (24,422,634) (15,419,174) (10,380,143) (24,874,498)
------------- ------------- -------------- ------------- ------------- ------------- -------------
12,952,291 32,962,334 171,932,960 104,299,555 30,878,940 77,041,087 (17,537,615)
------------- ------------- -------------- ------------- ------------- ------------- -------------
16,145,593 27,385,579 216,698,381 78,720,135 32,102,233 69,909,749 (14,477,402)
62,328,331 34,942,752 429,672,623 350,952,488 83,432,206 13,522,457 61,497,605
------------- ------------- -------------- ------------- ------------- ------------- -------------
$ 78,473,924 $ 62,328,331 $ 646,371,004 $ 429,672,623 $ 115,534,439 $ 83,432,206 $ 47,020,203
=============== =============== ================ =============== =============== =============== ===============
6,846,915 3,449,123 29,940,743 23,005,203 8,034,455 1,244,608 5,170,257
------------- ------------- -------------- ------------- ------------- ------------- -------------
2,439,621 4,889,580 14,336,125 6,292,755 4,381,937 7,756,773 175,167
590,779 425,219 3,421,484 2,255,296 56,201 -- 414,107
(1,631,912) (1,917,007) (7,162,156) (1,612,511) (1,486,274) (966,926) (1,916,686)
------------- ------------- -------------- ------------- ------------- ------------- -------------
1,398,488 3,397,792 10,595,453 6,935,540 2,951,864 6,789,847 (1,327,412)
------------- ------------- -------------- ------------- ------------- ------------- -------------
8,245,403 6,846,915 40,536,196 29,940,743 10,986,319 8,034,455 3,842,845
=============== =============== ================ =============== =============== =============== ===============
$ 62,968 $ (13,973) $ -- $ 848,046 $ (22,525) $ 1,577 $ --
=============== =============== ================ =============== =============== =============== ===============
<CAPTION>
LAZARD
LAZARD EMERGING
SPECIAL EQUITY MARKETS
PORTFOLIO PORTFOLIO
-------------- ---------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
-------------- --------------- ---------------
1994 1995 1994+
- ---------------------------------------------------------
<S> <C> <C> <C>
$ 764,923 $ 288,483 $ 18,035
10,854,080 (1,803,813) (187,391)
(13,546,230) 591,707 (1,532,318)
------------- --------------- ---------------
(1,927,227) (923,623) (1,701,674)
------------- --------------- ---------------
(760,649) (136,100) (18,035)
(16,861,086) -- --
-- -- 18,035
-- -- --
------------- --------------- ---------------
(17,621,735) (136,100) --
------------- --------------- ---------------
6,540,035 28,211,253 19,386,871
16,313,998 113,328 --
(59,936,521) (9,073,505) (660,292)
------------- --------------- ---------------
(37,082,488) 19,251,076 18,726,579
------------- --------------- ---------------
(56,631,450) 18,191,353 17,024,905
118,129,055 17,024,905 --
------------- --------------- ---------------
$ 61,497,605 $35,216,258 $17,024,905
=============== ================== ==================
7,508,865 1,727,237 --
------------- --------------- ---------------
429,986 3,079,834 1,786,246
1,278,144 12,192 --
(4,046,738) (1,006,417) (59,009)
------------- --------------- ---------------
(2,338,608) 2,085,609 1,727,237
------------- --------------- ---------------
5,170,257 3,812,846 1,727,237
=============== ================== ==================
$ (918) $ 3,727 $ --
=============== ================== ==================
</TABLE>
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
------------------------------------------- LESS:
TOTAL ----------------------------
NET FROM DIVIDENDS DISTRIBU- NET
ASSET NET REALIZED INVEST- FROM AND TIONS ASSET
VALUE, AND UNREALIZED MENT IN EXCESS OF FROM VALUE,
BEGINNING INVESTMENT GAIN (LOSS) OPERA- INVESTMENT REALIZED END OF
PERIOD OF PERIOD INCOME-NET ON INVESTMENTS TIONS INCOME-NET GAINS PERIOD
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
Year ended
12/31/95................. $ 13.75 $ 0.226 $ 4.931 $ 5.157 $(0.175) $(1.322) $17.41
12/31/94................. 13.89 0.141 0.441 0.582 (0.152) (0.574) 13.75
12/31/93................. 12.74 0.158 2.172 2.330 (0.165) (1.015) 13.89
12/31/92................. 12.34 0.123 0.518 0.641 (0.132) (0.109) 12.74
12/31/91................. 11.53 0.107 3.051 3.158 (0.082) (2.266) 12.34
12/31/90................. 12.34 0.191 (0.778) (0.587 ) (0.223)(b) -- 11.53
12/31/89................. 10.32 0.204 2.231 2.435 (0.214) (0.201) 12.34
12/31/88................. 8.73 0.181 1.597 1.778 (0.188) -- 10.32
6/1/87* to 12/31/87...... 10.00 0.110 (1.280) (1.170 ) (0.100) -- 8.73
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO
Year ended
12/31/95................. 11.23 0.187 1.288 1.475 (0.091) (0.114) 12.50
12/31/94................. 12.32 0.078 (0.049) 0.029 -- (1.123) 11.23
12/31/93................. 9.48 0.021 2.919 2.940 (0.021) (0.079) 12.32
12/31/92................. 10.30 0.097 (0.779) (0.682 ) (0.138) -- 9.48
10/29/91* to 12/31/91.... 10.00 0.020 0.300 0.320 (0.020) -- 10.30
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
Year ended
12/31/95................. 10.23 0.701 1.250 1.951 (1.129) (0.202) 10.85
12/31/94................. 10.51 0.592 (0.161) 0.431 (0.593) (0.116) 10.23
12/31/93................. 9.79 0.571 0.912 1.483 (0.570) (0.193) 10.51
12/31/92................. 10.28 0.614 (0.403) 0.211 (0.614) (0.087) 9.79
11/8/91* to 12/31/91..... 10.00 0.110 0.280 0.390 (0.110) -- 10.28
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO
Year ended
12/31/95................. 9.24 0.595 0.863 1.458 (0.594) (0.004) 10.10
12/31/94................. 10.28 0.584 (1.010) (0.426 ) (0.584) (0.029) 9.24
12/31/93................. 10.21 0.551 0.302 0.853 (0.551) (0.232) 10.28
12/31/92................. 10.25 0.577 (0.004) 0.573 (0.577) (0.036) 10.21
11/12/91* to 12/31/91.... 10.00 0.140 0.250 0.390 (0.140) -- 10.25
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO
Year ended
12/31/95................. 9.10 0.748 0.430 1.178 (0.758) -- 9.52
12/31/94................. 10.13 0.762 (0.990) (0.228 ) (0.761) (0.039) 9.10
12/31/93................. 9.50 0.644 0.738 1.382 (0.633) (0.119) 10.13
12/31/92................. 9.97 1.049 (0.450) 0.599 (1.049) (0.020) 9.50
10/1/91* to 12/31/91..... 10.00 0.250 (0.030) 0.220 (0.250) -- 9.97
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO
Year ended
12/31/95................. 14.35 0.126 2.951 3.077 (0.154) (1.323) 15.95
12/31/94................. 15.26 0.070 0.220 0.290 (0.042) (1.158) 14.35
12/31/93................. 12.98 0.019 3.830 3.849 (0.020) (1.549) 15.26
12/31/92................. 10.42 0.019 2.560 2.579 (0.019) -- 12.98
10/30/91* to 12/31/91.... 10.00 0.030 0.420 0.450 (0.030) -- 10.42
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
Year ended
12/31/95................. 10.38 0.139 0.056 0.195 -- (0.055) 10.52
12/31/94................. 10.86 0.072 (0.548) (0.476 ) -- -- 10.38
12/1/93* to 12/31/93..... 10.00 0.004 0.859 0.863 (0.003) -- 10.86
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
-----------------
NET
INVEST- ASSETS,
MENT PORTFOLIO END OF
TOTAL INCOME- TURNOVER PERIOD
PERIOD RETURN++ EXPENSES NET RATE (000'S)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
Year ended
12/31/95................. 37.7 % 0.92%(h) 1.45% 80.72% $163,787
12/31/94................. 4.2 1.05 1.15 66.52 89,105
12/31/93................. 18.6 1.05(e) 1.31 63.92 47,123
12/31/92................. 5.3 1.05(d) 1.19 174.45 24,646
12/31/91................. 27.5 1.93 0.84 90.00 14,821
12/31/90................. (4.7 ) 1.77 1.62 70.00 14,397
12/31/89................. 23.6 1.78 1.71 78.00 16,239
12/31/88................. 20.4 1.84 1.86 111.00 12,336
6/1/87* to 12/31/87...... (11.7 ) 1.68+ 1.93+ 97.00 10,186
- ------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL EQUITY PORTFOLIO
Year ended
12/31/95................. 13.1 0.95(h) 1.82 62.54 1,299,549
12/31/94................. 0.2 0.94 0.75 106.15 831,877
12/31/93................. 31.0 0.99 1.13 86.95 603,642
12/31/92................. (6.6 ) 1.05(d) 2.13 60.37 176,005
10/29/91* to 12/31/91.... 3.2 1.05+,(c) 2.19+ 0.18 4,967
- ------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO
Year ended
12/31/95................. 19.4 1.05(g),(h) 5.99 189.97 45,624
12/31/94................. 4.2 1.05(f) 5.68 65.90 35,803
12/31/93................. 15.7 1.05(e) 5.50 115.84 13,546
12/31/92................. 2.0 1.05(d) 6.08 256.20 8,183
11/8/91* to 12/31/91..... 3.9 1.05+,(c) 4.82+ 6.43 1,427
- ------------------------------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO
Year ended
12/31/95................. 16.2 0.80(g),(h) 6.07 244.28 46,083
12/31/94................. (4.2 ) 0.80(f) 6.11 120.51 24,494
12/31/93................. 8.6 0.80(e) 5.22 174.63 13,562
12/31/92................. 5.7 0.80(d) 5.59 131.38 8,532
11/12/91* to 12/31/91.... 3.9 0.80+,(c) 5.50+ 10.46 3,256
- ------------------------------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTFOLIO
Year ended
12/31/95................. 13.6 1.09(h) 8.02 205.33 78,474
12/31/94................. (2.3 ) 1.05(f) 8.03 195.18 62,328
12/31/93................. 15.6 1.05(e) 6.36 215.60 34,943
12/31/92................. 6.0 1.05(d) 10.57 122.88 9,641
10/1/91* to 12/31/91..... 2.1 1.05+,(c) 9.52+ 11.26 4,256
- ------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO
Year ended
12/31/95................. 21.5 0.84(h) 0.90 69.68 646,371
12/31/94................. 2.0 0.85 0.51 70.11 429,673
12/31/93................. 30.1 0.88 0.16 98.47 350,952
12/31/92................. 24.8 1.05(d) 0.29 106.91 168,171
10/30/91* to 12/31/91.... 4.5 1.05+,(c) 2.47+ 5.50 2,512
- ------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
Year ended
12/31/95................. 1.9 1.13(h) 1.56 117.53 115,534
12/31/94................. (4.5 ) 1.05(f) 0.95 112.92 83,432
12/1/93* to 12/31/93..... 8.7 1.05+,(e) 1.76+ 0.84 13,522
- ------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 33
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------- LESS:
TOTAL ----------------------------
NET FROM DIVIDENDS DISTRIBU- NET
ASSET NET REALIZED INVEST- FROM AND TIONS ASSET
VALUE, AND UNREALIZED MENT IN EXCESS OF FROM VALUE,
BEGINNING INVESTMENT GAIN (LOSS) OPERA- INVESTMENT REALIZED END OF
PERIOD OF PERIOD INCOME-NET ON INVESTMENTS TIONS INCOME-NET GAINS PERIOD
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD SPECIAL EQUITY PORTFOLIO
Year ended
12/31/95................. $ 11.89 $ 0.195 $ 1.725 $ 1.920 $(0.188) $(1.382) $12.24
12/31/94................. 15.73 0.156 (0.557) (0.401 ) (0.155) (3.279) 11.89
12/31/93................. 16.90 0.157 1.478 1.635 (0.157) (2.648) 15.73
12/31/92................. 15.14 0.161 2.181 2.342 (0.160) (0.422) 16.90
12/31/91................. 11.54 0.230 4.160 4.390 (0.227) (0.563) 15.14
12/31/90................. 13.72 0.714 (2.155) (1.441 ) (0.739) -- 11.54
12/31/89................. 13.13 0.260 1.874 2.134 (0.264) (1.280) 13.72
12/31/88................. 10.64 0.224 2.761 2.985 (0.245) (0.250) 13.13
12/31/87................. 11.66 0.112 (0.291) (0.179 ) (0.105) (0.736) 10.64
1/16/86* to 12/31/86..... 10.00 0.075 1.585 1.660 -- -- 11.66
- ----------------------------------------------------------------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORTFOLIO
Year ended
12/31/95................. 9.86 0.080 (0.660) (0.580 ) (0.040) -- 9.24
7/15/94* to 12/31/94..... 10.00 0.010 (0.154) (0.144 ) -- -- 9.86
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
-------------------- NET
INVEST- ASSETS,
MENT PORTFOLIO END OF
TOTAL INCOME- TURNOVER PERIOD
PERIOD RETURN++ EXPENSES NET RATE (000'S)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
LAZARD SPECIAL EQUITY PORTFO
Year ended
12/31/95................. 16.3 % 1.59%(g),(h) 1.17% 15.35% $ 47,020
12/31/94................. (2.6 ) 1.71 0.87 11.29 61,498
12/31/93................. 10.2 1.67 0.74 26.31 118,129
12/31/92................. 15.5 1.70 1.04 10.93 150,488
12/31/91................. 38.2 1.77 1.63 19.48 111,395
12/31/90................. (10.5 ) 1.78 4.70(a) 27.18 76,972
12/31/89................. 16.2 1.78 1.82 40.67 101,522
12/31/88................. 28.0 1.96 1.87 64.90 74,695
12/31/87................. (1.9 ) 1.81 0.82 90.86 53,942
1/16/86* to 12/31/86..... 16.6 2.23+ 0.71+ 73.12 51,403
- ----------------------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORT
Year ended
12/31/95................. (5.9 ) 1.30(g),(h) 1.22 102.22 35,216
7/15/94* to 12/31/94..... (1.4 ) 1.30+,(f) 0.31+ 30.68 17,025
- ----------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
+ Annualized.
++ Total return represents aggregate total return for the periods indicated.
(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.
(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 and Administrator had not waived certain fees and
reimbursed certain expenses and the Portfolios had not paid fees indirectly
the ratio of expenses to average net assets (and net investment income per
share) would have been 1.25% ($0.678) for the International Fixed-Income
Portfolio, 0.97% ($0.578) for the Bond Portfolio, 1.81% ($0.157) for the
Special Equity Portfolio and 2.00% ($0.034) for the Emerging Markets
Portfolio.
(h) "Ratio of total expenses to average net assets" for the year ended December
31, 1995 includes fees paid indirectly. Excluding fees paid indirectly for
the year ended December 31, 1995, the expense ratios would have been 0.92%
for the Equity Portfolio, 0.95% for the International Equity Portfolio,
1.05% for the International Fixed-Income Portfolio, 0.80% for the Bond
Portfolio, 1.08% for the Strategic Yield Portfolio, 0.84% for the Small Cap
Portfolio, 1.13% for the International Small Cap Portfolio, 1.59% for the
Special Equity Portfolio, 1.30% for the Emerging Markets Portfolio.
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.
Effective December 30, 1995, Lazard Global Equity Portfolio, Lazard Bantam Value
Portfolio and Lazard Emerging World Funds Portfolio were added to the Fund. The
Lazard Global Equity Portfolio was first offered for sale on January 4, 1996.
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 or specific identification
basis. Dividend income is recorded on the ex-date.
32
<PAGE> 35
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 risk management 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.
(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
33
<PAGE> 36
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
(I) FEES PAID INDIRECTLY--Portfolios leaving excess cash in demand deposit
accounts may receive credits which are available to offset custody expenses. The
Statements of Operations report gross custody expense, and reflect the amount of
such credits as a reduction in total expenses.
(J) ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires the Fund to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expense
during the reporting period. Actual results could differ from those estimates.
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.
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 December 31, 1996 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 year ended December 31, 1995, the Manager did not impose part of its
management fee amounting to $81,792 for International Fixed-Income Portfolio,
$34,072 for Bond Portfolio, $104,245 for Special Equity Portfolio and $142,805
for Emerging Markets Portfolio. For the Special Equity Portfolio, the Manager
reimbursed $28,661 for Administrative Fees.
Effective June 1, 1995, the Fund has engaged State Street Bank and Trust Company
("State Street") 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 the
Bond and
34
<PAGE> 37
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Emerging Markets Portfolios for one year or until each Portfolio reaches net
assets of $50 million.
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 year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------- -------------
<S> <C> <C>
Equity Portfolio $ 136,115,551 $ 98,319,414
International Equity 958,136,052 617,956,968
International Fixed-
Income 82,002,248 77,059,477
Bond(1) 93,823,671 77,259,918
Strategic Yield(2) 142,277,826 127,543,921
Small Cap 433,744,267 348,508,399
International Small Cap 137,601,260 108,309,231
Special Equity 8,213,439 33,702,368
Emerging Markets 39,309,777 22,364,600
</TABLE>
(1) Includes purchases and sales of U.S. Government securities of $68,932,503
and $63,560,433, respectively.
(2) Includes purchases and sales of U.S. Government securities of $15,853,916
and $17,588,675, respectively.
For the period, the Small Cap Portfolio and Special Equity Portfolio paid
brokerage commissions of $3,324 and $13,658, respectively, to Lazard Freres &
Co. LLC for portfolio transactions executed on behalf of the Portfolios.
Included in the payable for investments purchased at December 31, 1995, for the
Special Equity Portfolio, is $285,255 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 $3,297,896 and $1,537,156 are
available to the extent provided by regulations to offset future realized
capital gains of the Strategic Yield Portfolio and Emerging Markets Portfolio,
respectively. These losses expire through 2003.
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, 1995,
International Equity Portfolio, Bond Portfolio, Strategic Yield Portfolio, Small
Cap Portfolio, International Small Cap Portfolio, and Emerging Markets Portfolio
will elect to defer net capital and currency losses of $4,705,302, $29,502,
$7,241, $1,687,171, $1,180,891, and $284,313, respectively. The Special Equity
Portfolio and the International Equity Portfolio redesignated $50,277, and
$2,679,708, respectively, of ordinary income dividends to long-term capital gain
distributions.
6. PRIVATE PLACEMENTS
At December 31, 1995, the Small Cap Portfolio held the following securities
which were private placements and represented 0.20% (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 $ 500,000
Verbex Voice Systems Inc.
Series F Preferred
(conv.) 7/12/93 500,343
Verbex Voice Systems Inc. 6/7/94 180,501
Verbex Voice Systems Inc.
10.00%, 12/31/95 3/17/95 100,000
----------
$1,280,844
==========
</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.
35
<PAGE> 38
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
The Lazard Funds, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of The Lazard Funds, Inc. (comprised of,
Lazard Equity Portfolio, Lazard International Equity Portfolio, Lazard
International Fixed-Income Portfolio, Lazard Bond Portfolio, Lazard Strategic
Yield Portfolio, Lazard Small Cap Portfolio, Lazard International Small Cap
Portfolio, Lazard Special Equity Portfolio, and Lazard Emerging Markets
Portfolio) as of December 31, 1995, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended and the financial highlights for each of the
periods presented, except as noted below. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the
periods through December 31, 1991 of Lazard Equity Portfolio and Lazard Special
Equity Portfolio were audited by other auditors whose reports dated February 5,
1992 and February 3, 1992, respectively, expressed unqualified opinions on those
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights audited
by us, as stated above, present fairly, in all material respects, the financial
position of each of the respective portfolios constituting the Lazard Funds,
Inc. as of December 31, 1995, the results of their operations for the year then
ended and changes in their net assets for each of the two years in the period
then ended and the financial highlights for the periods presented in conformity
with generally accepted accounting principles.
ANCHIN, BLOCK & ANCHIN LLP
New York, New York
January 27, 1996
36
<PAGE> 39
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
Anchin, Block & Anchin LLP
1375 Broadway
New York, New York 10019
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.
