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THE LAZARD FUNDS, INC.
----------------------
SEMI-ANNUAL REPORT
June 30, 1996
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza, New York, New York 10020
(800) 823-6300
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The Lazard Funds, Inc.
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<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
CARL FRISCHLING Partner, Kramer, Levin, Naftalis, Nessen, Kamin
& Frankel
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>
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The Lazard Funds, Inc.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Overview........................................................................ 2
Growth Charts................................................................... 3
Performance Table............................................................... 7
Portfolio of Investments
Lazard Equity Portfolio.................................................... 8
Lazard International Equity Portfolio...................................... 9
Lazard International Fixed-Income Portfolio................................ 10
Lazard Bond Portfolio...................................................... 14
Lazard Strategic Yield Portfolio........................................... 16
Lazard Small Cap Portfolio................................................. 20
Lazard International Small Cap Portfolio................................... 23
Lazard Emerging Markets Portfolio.......................................... 24
Lazard Global Equity Portfolio............................................. 27
Lazard Bantam Value Portfolio.............................................. 28
Statements of
Assets and Liabilities..................................................... 30
Operations................................................................. 32
Changes in Net Assets...................................................... 34
Financial Highlights............................................................ 36
Notes to Financial Statements................................................... 38
</TABLE>
1
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The Lazard Funds, Inc.
OVERVIEW
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DEAR SHAREHOLDERS,
The capital markets of the world during the second quarter were once again
resilient to the concerns of higher growth, inflation and bond yields. Most
equity and bond markets posted positive returns, with the more volatile asset
classes rising to the top: emerging debt and equity markets, global small
company stocks, and high-yield bonds. In Japan, the Nikkei 225 Index surged to
its highest level in five years, as signs of an economic recovery are
complementing management initiatives and improving valuations.
In the U.S., businesses continue to respond to the pressures of a global
marketplace and are in the advanced stages of cutting costs, re-engineering
industrial capacity, and increasing emphasis on core strategies. International
companies have begun to adopt these U.S. style management techniques. Share
buybacks, where legal, are being pursued. Mergers, regional and cross-border,
and de-mergers are becoming more common as companies seek ways to compete more
efficiently. Financial reporting practices are becoming more streamlined,
resulting from a convergence of global accounting standards. Management
compensation is being linked to performance, and greater care is being taken to
select board members that represent a broader range of constituents.
Governments around the world are also responding to the demands of a global
marketplace. Where share buybacks are still illegal, legislation is being
entertained to legalize such activities. Spanish and Italian governments
introduced new measures to reduce their expenditures and deficits to meet the
Maastricht criteria for inclusion in the first stage of European Monetary Union.
Latin and Eastern European countries are following orthodox methods of
macroeconomic stabilization that are being rewarded by their capital markets.
As markets continue to positively reflect these catalysts for change, the
challenge will be to find undervalued investments in this post-restructuring
environment. Global companies that have emerged at the top of their industries
(i.e. General Electric, Heineken) are positioned to widen the gap between
themselves and their competition, which should continue to improve returns on
shareholder capital. In addition, there are still companies that are only
beginning to embrace the concepts of re-engineering, de-leveraging and
value-added management. These catalysts for change are necessary for companies
to compete in today's global economy and will provide ongoing opportunities for
value investors.
THE LAZARD FUNDS, INC.
2
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The Lazard Funds, Inc.
GROWTH CHARTS
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LAZARD EQUITY PORTFOLIO
The Lazard Equity Portfolio seeks capital appreciation through investing
primarily in common stocks of companies with relatively large capitalization's
that appear to the Investment Manager to be inexpensively priced relative to the
productivity of their equity and/or assets. Current income is incidental.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD EQUITY PORTFOLIO AND
THE STANDARD & POOR'S 500 STOCK INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) LEP S&P 500
<S> <C> <C>
MAY-87 50,000.00 50,000.00
JUN-87 51,550.00 52,515.00
JUL-87 54,230.60 55,172.26
AUG-87 55,586.37 57,224.67
SEP-87 53,863.19 55,971.45
OCT-87 44,544.86 43,954.38
NOV-87 42,273.07 40,336.93
DEC-87 44,133.08 43,398.51
JAN-88 45,986.67 45,290.68
FEB-88 47,872.13 47,319.70
MAR-88 47,489.15 45,876.45
APR-88 48,343.95 46,449.91
MAY-88 48,053.89 46,747.19
JUN-88 50,120.21 48,906.91
JUL-88 49,468.65 48,789.53
AUG-88 48,429.80 47,062.38
SEP-88 50,657.57 49,076.65
OCT-88 52,886.51 50,494.97
NOV-88 51,881.66 49,697.15
DEC-88 53,126.82 50,581.75
JAN-89 56,473.81 54,329.86
FEB-89 56,247.92 52,922.72
MAR-89 56,979.14 54,187.57
APR-89 59,600.18 57,059.51
MAY-89 62,341.79 59,227.77
JUN-89 61,406.66 58,925.71
JUL-89 65,827.94 64,293.85
AUG-89 67,144.50 65,463.99
SEP-89 66,808.78 65,215.23
OCT-89 64,604.09 63,760.93
NOV-89 65,120.92 64,997.89
DEC-89 65,641.89 66,570.84
JAN-90 61,637.74 62,190.48
FEB-90 62,870.49 62,911.89
MAR-90 64,442.25 64,623.09
APR-90 62,122.33 63,078.60
MAY-90 66,595.14 69,058.45
JUN-90 66,328.76 68,644.10
JUL-90 66,262.43 68,479.36
AUG-90 60,298.81 62,240.89
SEP-90 57,102.97 59,259.55
OCT-90 57,217.18 59,058.07
NOV-90 60,993.51 62,790.54
DEC-90 62,579.35 64,542.39
JAN-91 65,082.52 67,349.99
FEB-91 69,898.63 72,165.51
MAR-91 70,667.51 73,911.92
APR-91 70,526.18 74,089.30
MAY-91 72,783.01 77,282.55
JUN-91 69,434.99 73,743.01
JUL-91 72,698.44 77,179.44
AUG-91 75,751.77 79,008.59
SEP-91 74,691.25 77,689.15
OCT-91 75,587.54 78,730.18
NOV-91 71,581.40 75,557.35
DEC-91 79,741.68 84,201.11
JAN-92 80,618.84 82,634.97
FEB-92 82,714.93 83,709.23
MAR-92 80,233.48 82,076.90
APR-92 79,832.32 84,489.96
MAY-92 79,672.65 84,903.96
JUN-92 76,485.75 83,638.89
JUL-92 78,703.83 87,059.72
AUG-92 76,500.13 85,275.00
SEP-92 77,647.63 86,281.24
OCT-92 78,967.64 86,574.60
NOV-92 82,758.08 89,526.79
DEC-92 83,916.70 90,627.97
JAN-93 85,511.11 91,389.25
FEB-93 86,537.25 92,632.14
MAR-93 90,258.35 94,586.68
APR-93 88,453.18 92,297.68
MAY-93 90,752.96 94,762.03
JUN-93 91,297.48 95,036.84
JUL-93 91,480.08 94,656.69
AUG-93 94,864.84 98,244.18
SEP-93 94,769.98 97,487.70
OCT-93 98,655.54 99,505.70
NOV-93 97,866.30 98,560.39
DEC-93 99,627.89 99,752.97
JAN-94 104,609.29 103,144.57
FEB-94 103,249.37 100,349.36
MAR-94 98,706.40 95,974.12
APR-94 100,384.40 97,202.59
MAY-94 101,589.02 98,796.72
JUN-94 99,252.47 96,376.20
JUL-94 102,726.31 99,537.33
AUG-94 107,348.99 103,618.37
SEP-94 105,631.41 101,090.08
OCT-94 107,110.25 103,617.33
NOV-94 103,254.28 99,845.66
DEC-94 103,873.80 101,323.37
JAN-95 105,639.66 103,947.65
FEB-95 110,287.80 108,001.61
MAR-95 113,375.86 111,187.66
APR-95 116,550.38 114,456.57
MAY-95 121,445.50 119,034.84
JUN-95 125,210.31 121,796.44
JUL-95 129,968.30 125,840.09
AUG-95 131,917.83 126,154.69
SEP-95 136,534.95 131,478.41
OCT-95 135,579.21 131,005.09
NOV-95 141,815.85 136,756.21
DEC-95 143,092.19 139,395.61
JAN-96 147,957.33 144,135.06
FEB-96 152,100.13 145,475.52
MAR-96 153,316.93 146,872.08
APR-96 156,536.59 149,031.10
MAY-96 158,415.03 152,876.10
JUN-96 156,830.88 153,457.03
</TABLE>
LAZARD INTERNATIONAL EQUITY PORTFOLIO
The Lazard International Equity Portfolio seeks capital appreciation through
investing primarily in the equity securities of non-United States companies.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL EQUITY PORTFOLIO
AND THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST
INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) LIEP EAFE
<S> <C> <C>
10/31/91 $ 50,000.00 $ 50,000.00
NOV-91 $ 49,950.00 $ 47,665.00
DEC-91 $ 51,598.35 $ 50,129.28
JAN-92 $ 52,320.73 $ 49,061.53
FEB-92 $ 52,896.25 $ 47,300.22
MAR-92 $ 51,626.74 $ 44,178.40
APR-92 $ 52,710.91 $ 44,386.04
MAY-92 $ 55,188.32 $ 47,359.91
JUN-92 $ 54,139.74 $ 45,115.05
JUL-92 $ 51,053.78 $ 43,960.10
AUG-92 $ 50,441.13 $ 46,716.40
SEP-92 $ 48,171.28 $ 45,791.42
OCT-92 $ 47,304.20 $ 43,387.37
NOV-92 $ 47,114.98 $ 43,795.21
DEC-92 $ 48,198.62 $ 44,022.94
JAN-93 $ 47,813.04 $ 44,014.14
FEB-93 $ 48,864.92 $ 45,343.37
MAR-93 $ 50,233.14 $ 49,297.31
APR-93 $ 51,338.27 $ 53,975.62
MAY-93 $ 52,775.74 $ 55,114.51
JUN-93 $ 52,142.43 $ 54,254.72
JUL-93 $ 53,706.70 $ 56,153.64
AUG-93 $ 57,681.00 $ 59,180.32
SEP-93 $ 56,008.25 $ 57,848.76
OCT-93 $ 58,976.69 $ 59,630.50
NOV-93 $ 57,856.13 $ 54,418.80
DEC-93 $ 63,121.04 $ 58,347.83
JAN-94 $ 69,117.54 $ 63,278.22
FEB-94 $ 66,974.89 $ 63,101.05
MAR-94 $ 64,228.92 $ 60,381.39
APR-94 $ 66,669.62 $ 62,941.56
MAY-94 $ 66,269.61 $ 62,582.79
JUN-94 $ 64,811.67 $ 63,465.21
JUL-94 $ 68,052.26 $ 64,080.82
AUG-94 $ 71,114.61 $ 65,599.54
SEP-94 $ 67,629.99 $ 63,533.15
OCT-94 $ 68,847.33 $ 65,648.81
NOV-94 $ 64,716.49 $ 62,491.10
DEC-94 $ 63,292.73 $ 62,884.79
JAN-95 $ 60,254.68 $ 60,470.02
FEB-95 $ 60,676.46 $ 60,300.70
MAR-95 $ 61,465.26 $ 64,057.44
APR-95 $ 64,108.26 $ 66,466.00
MAY-95 $ 64,685.24 $ 65,675.05
JUN-95 $ 65,784.89 $ 64,519.17
JUL-95 $ 69,929.33 $ 68,538.71
AUG-95 $ 68,670.61 $ 65,934.24
SEP-95 $ 70,181.36 $ 67,219.96
OCT-95 $ 69,058.46 $ 65,472.24
NOV-95 $ 69,749.04 $ 67,292.37
DEC-95 $ 71,632.27 $ 70,004.25
JAN-96 $ 72,062.06 $ 70,291.27
FEB-96 $ 73,070.93 $ 70,530.26
MAR-96 $ 74,824.63 $ 72,025.50
APR-96 $ 76,695.25 $ 74,121.44
MAY-96 $ 76,158.38 $ 72,757.61
JUN-96 $ 77,605.39 $ 73,165.05
</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 INDEX EX-US
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) LIFIR SWGBI NON-US
<S> <C> <C>
10/31/91 50,000.00 50,000.00
NOV-91 50,200.00 50,780.00
DEC-91 52,007.20 53,420.60
JAN-92 50,499.00 52,469.70
FEB-92 50,549.50 52,175.80
MAR-92 49,841.80 51,622.80
APR-92 50,140.80 51,994.50
MAY-92 51,544.80 53,590.70
JUN-92 52,524.10 55,091.20
JUL-92 53,312.00 56,374.90
AUG-92 54,858.10 57,953.40
SEP-92 54,803.20 58,532.90
OCT-92 53,597.50 56,940.80
NOV-92 52,740.00 56,035.40
DEC-92 53,109.10 56,371.60
JAN-93 53,958.90 57,143.90
FEB-93 54,984.10 58,281.10
MAR-93 55,973.80 59,726.50
APR-93 57,821.00 61,518.30
MAY-93 58,803.90 62,637.90
JUN-93 58,215.90 61,466.60
JUL-93 58,390.50 61,509.60
AUG-93 60,317.40 63,699.30
SEP-93 61,222.20 64,775.90
OCT-93 61,161.00 64,477.90
NOV-93 60,732.80 64,181.30
DEC-93 61,400.90 64,893.70
JAN-94 61,830.70 65,172.70
FEB-94 61,707.00 65,355.20
MAR-94 62,139.00 66,152.60
APR-94 62,014.70 66,582.60
MAY-94 61,642.60 65,690.40
JUN-94 63,183.70 67,280.10
JUL-94 63,120.50 67,455.00
AUG-94 62,615.50 67,063.70
SEP-94 63,867.80 68,391.60
OCT-94 65,464.50 70,156.10
NOV-94 64,286.20 68,746.00
DEC-94 63,964.70 68,780.30
JAN-95 64,924.20 70,279.10
FEB-95 66,936.90 72,270.80
MAR-95 72,425.70 78,711.60
APR-95 74,453.60 80,395.20
MAY-95 76,240.50 82,150.20
JUN-95 76,697.90 82,559.30
JUL-95 76,697.90 82,996.10
AUG-95 72,632.90 78,250.40
SEP-95 74,594.00 80,554.80
OCT-95 75,116.20 80,796.50
NOV-95 75,642.00 81,523.70
DEC-95 76,322.80 82,257.40
JAN-96 74,949.00 80,447.70
FEB-96 75,098.90 80,689.10
MAR-96 75,098.90 80,931.10
APR-96 75,174.00 80,769.30
MAY-96 75,474.70 80,850.00
JUN-96 75,927.50 81,335.10
</TABLE>
3
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The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
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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, 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
(FISCAL YEAR COVERED) LBP LEHMAN INT. G/C
<S> <C> <C>
10/31/91 50,000.0 50,000.0
NOV-91 50,500.0 50,575.0
DEC-91 51,964.5 51,809.0
JAN-92 51,392.9 51,337.6
FEB-92 51,547.1 51,537.8
MAR-92 51,237.8 51,336.8
APR-92 51,647.7 51,788.6
MAY-92 52,370.8 52,591.3
JUN-92 53,051.6 53,369.6
JUL-92 54,112.6 54,431.7
AUG-92 54,599.6 54,976.0
SEP-92 55,200.2 55,723.7
OCT-92 54,482.6 54,999.3
NOV-92 54,264.7 54,790.3
DEC-92 54,970.1 55,524.5
JAN-93 55,959.6 56,607.2
FEB-93 56,854.9 57,501.6
MAR-93 56,968.7 57,731.6
APR-93 57,367.4 58,193.4
MAY-93 57,080.6 58,065.4
JUN-93 58,165.1 58,977.0
JUL-93 58,572.3 59,118.6
AUG-93 59,568.0 60,058.6
SEP-93 59,508.4 60,310.8
OCT-93 59,687.0 60,473.7
NOV-93 59,507.9 60,135.0
DEC-93 59,626.9 60,411.6
JAN-94 60,581.0 61,082.2
FEB-94 59,551.1 61,760.2
MAR-94 58,181.4 60,846.1
APR-94 57,425.0 59,842.2
MAY-94 57,137.9 59,435.3
JUN-94 57,080.8 59,476.9
JUL-94 58,108.2 59,482.8
AUG-94 58,166.3 59,667.2
SEP-94 56,886.7 59,118.3
OCT-94 56,943.6 59,112.4
NOV-94 56,772.7 58,846.4
DEC-94 57,056.6 59,052.3
JAN-95 57,969.5 60,050.3
FEB-95 59,128.9 61,293.3
MAR-95 59,483.7 61,642.7
APR-95 60,257.0 62,400.9
MAY-95 62,667.2 64,285.4
JUN-95 63,105.9 64,716.1
JUL-95 62,727.3 64,722.6
AUG-95 63,354.5 65,311.6
SEP-95 64,051.4 65,781.8
OCT-95 64,948.2 66,512.0
NOV-95 65,662.6 67,383.3
DEC-95 66,187.9 68,090.8
JAN-96 66,783.6 68,676.4
FEB-96 66,049.0 67,872.9
MAR-96 65,916.9 67,526.8
APR-96 65,785.0 67,290.4
MAY-96 65,719.3 67,236.6
JUN-96 66,310.7 67,949.3
</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 foreign, fixed-income securities. 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
ONE MONTH LIBOR
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) LSYP 30 DAY LIBOR
<S> <C> <C>
10/1/91 50,000.00 50,000.00
OCT-91 51,800.00 50,210.00
NOV-91 52,473.40 50,420.90
DEC-91 51,056.60 50,597.40
JAN-92 50,648.20 50,769.40
FEB-92 51,458.50 50,947.10
MAR-92 52,076.00 51,125.40
APR-92 52,076.00 51,289.00
MAY-92 52,648.90 51,458.20
JUN-92 53,175.40 51,622.90
JUL-92 54,185.70 51,767.50
AUG-92 54,781.70 51,917.60
SEP-92 55,384.30 52,052.60
OCT-92 53,002.80 52,193.10
NOV-92 53,002.80 52,375.80
DEC-92 54,115.90 52,517.20
JAN-93 55,522.90 52,653.70
FEB-93 56,577.80 52,790.60
MAR-93 57,483.10 52,927.90
APR-93 57,540.50 53,065.50
MAY-93 58,058.40 53,208.80
JUN-93 59,626.00 53,347.10
JUL-93 60,401.10 53,485.80
AUG-93 60,884.30 53,624.90
SEP-93 60,823.40 53,764.30
OCT-93 61,735.80 53,904.10
NOV-93 61,921.00 54,060.40
DEC-93 62,478.30 54,206.40
JAN-94 63,727.90 54,347.30
FEB-94 62,771.90 54,504.90
MAR-94 61,516.50 54,668.50
APR-94 60,655.30 54,848.90
MAY-94 60,655.30 55,046.30
JUN-94 60,230.70 55,250.00
JUL-94 60,893.20 55,454.40
AUG-94 61,745.70 55,676.20
SEP-94 61,375.30 55,904.50
OCT-94 61,252.50 56,133.70
NOV-94 61,497.50 56,408.80
DEC-94 61,005.50 56,685.20
JAN-95 60,944.50 56,962.90
FEB-95 61,249.30 57,247.70
MAR-95 61,555.50 57,534.00
APR-95 62,971.30 57,815.90
MAY-95 64,671.50 58,099.20
JUN-95 65,059.50 58,389.70
JUL-95 65,580.00 58,670.00
AUG-95 66,301.40 58,951.60
SEP-95 66,898.10 59,234.50
OCT-95 67,366.40 59,504.70
NOV-95 68,242.10 59,788.50
DEC-95 69,265.80 60,076.70
JAN-96 70,651.10 60,341.00
FEB-96 70,368.50 60,612.50
MAR-96 70,861.10 60,879.20
APR-96 71,498.80 61,147.10
MAY-96 72,213.80 61,416.20
JUN-96 73,008.20 61,686.40
</TABLE>
4
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The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
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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
(FISCAL YEAR COVERED) LSCP RUSSELL 2000
<S> <C> <C>
10/31/91 $50,000.00 $50,000.00
NOV-91 $48,600.00 $47,685.00
DEC-91 $52,245.00 $51,528.41
JAN-92 $56,581.34 $55,702.21
FEB-92 $59,127.50 $57,328.72
MAR-92 $59,127.50 $55,391.01
APR-92 $57,708.44 $53,452.32
MAY-92 $57,766.14 $54,163.24
JUN-92 $54,762.30 $51,601.32
JUL-92 $56,240.89 $53,397.04
AUG-92 $54,609.90 $51,891.25
SEP-92 $54,992.17 $53,089.93
OCT-92 $57,631.79 $54,778.19
NOV-92 $62,703.39 $58,968.72
DEC-92 $65,086.12 $61,020.84
JAN-93 $67,103.79 $63,083.34
FEB-93 $67,707.72 $61,626.12
MAR-93 $70,957.70 $63,622.80
APR-93 $69,325.67 $61,879.54
MAY-93 $72,514.65 $64,614.61
JUN-93 $74,472.54 $65,015.22
JUL-93 $75,068.33 $65,912.43
AUG-93 $79,497.36 $68,759.85
SEP-93 $81,007.81 $70,698.88
OCT-93 $81,736.88 $72,515.84
NOV-93 $80,674.30 $70,130.07
DEC-93 $84,627.34 $72,528.52
JAN-94 $87,758.55 $74,805.91
FEB-94 $87,846.31 $74,536.61
MAR-94 $83,717.53 $70,601.08
APR-94 $83,633.81 $71,017.62
MAY-94 $83,884.72 $70,222.23
JUN-94 $82,961.98 $67,834.67
JUL-94 $84,704.18 $68,947.16
AUG-94 $89,617.03 $72,787.52
SEP-94 $89,617.03 $72,547.32
OCT-94 $88,183.16 $72,264.38
NOV-94 $83,774.00 $69,344.90
DEC-94 $86,538.54 $71,210.28
JAN-95 $86,192.39 $70,313.03
FEB-95 $89,898.66 $73,238.05
MAR-95 $92,056.23 $74,497.75
APR-95 $93,989.41 $76,151.60
MAY-95 $96,809.09 $77,461.40
JUN-95 $101,165.50 $81,481.65
7/1/95 $105,819.11 $86,174.99
AUG-95 $106,348.21 $87,958.82
SEP-95 $106,454.55 $89,533.28
OCT-95 $100,386.64 $85,531.14
NOV-95 $104,602.88 $89,123.45
DEC-95 $105,335.10 $91,476.31
JAN-96 $106,283.12 $91,375.68
FEB-96 $110,215.60 $94,226.61
MAR-96 $112,199.48 $96,148.83
APR-96 $116,575.26 $101,292.79
MAY-96 $120,422.24 $105,283.73
JUN-96 $116,929.99 $100,956.57
</TABLE>
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
The Lazard International Small Cap Portfolio seeks capital appreciation through
investing primarily in equity securities of non-United States companies with
market capitalizations under $1 billion that are believed by the investment
manager to be inexpensively priced relative to the productivity of their equity
or assets. The Lazard International Small Cap Portfolio operates similarly to
the Lazard Small Cap Portfolio, except that this Portfolio will invest primarily
in the equity securities of non-United States issuers and, therefore, investment
determinations include, among other items, the effect of currency fluctuations
and the political and economic factors of other jurisdictions.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
AND THE SALOMON EMI EX-US INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) LISCP EMI EX-US INDEX
<S> <C> <C>
12/1/94 50,000.00 50,000.00
DEC-94 54,350.00 53,550.00
JAN-94 60,382.90 58,899.60
FEB-94 59,356.30 59,311.90
MAR-94 55,735.60 58,339.20
APR-94 55,122.50 60,089.40
MAY-94 54,846.90 59,230.10
JUN-94 53,475.70 60,474.00
JUL-94 54,491.80 61,163.40
AUG-94 56,671.40 61,811.70
SEP-94 54,914.60 60,043.90
OCT-94 55,353.90 61,130.70
NOV-94 52,973.70 57,316.10
DEC-94 51,808.30 58,084.20
JAN-95 50,254.00 56,196.40
FEB-95 49,952.50 55,376.00
MAR-95 48,803.60 57,729.40
APR-95 49,877.30 59,461.30
MAY-95 51,224.00 58,420.70
JUN-95 51,685.00 57,702.20
JUL-95 53,649.00 56,992.40
AUG-95 53,166.20 60,315.10
SEP-95 54,708.00 58,789.10
OCT-95 52,574.40 59,247.70
NOV-95 52,416.70 59,875.70
DEC-95 52,731.20 62,168.90
JAN-96 53,574.90 63,275.50
FEB-96 54,003.50 64,262.60
MAR-96 54,705.50 65,740.70
APR-96 56,893.70 69,198.60
MAY-96 57,292.00 68,638.10
JUN-96 57,463.90 68,645.00
</TABLE>
5
<PAGE> 8
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
GROWTH CHARTS (CONTINUED)
- --------------------------------------------------------------------------------
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 included countries where political and economic trends have
produced recently, or are producing, a more stable economy, or countries that
have developed recently, or are developing, financial markets and investment
liquidity. The Lazard Emerging Markets Portfolio seeks securities of issuers
whose potential is significantly enhanced by their relationship to the emerging
markets country and are believed to be inexpensively priced relative to the
productivity of their equity or assets.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD EMERGING MARKETS PORTFOLIO AND
INTERNATIONAL FINANCE CORP. INVESTABLE TOTAL RETURN INDEX
<TABLE>
<CAPTION>
LAZARD EMERGING
MARKET PORTFOLIO IFCI
<S> <C> <C>
7/1/94 50000 50000
51050 51680
AUG-94 56512.35 58346.72
58320.75 59787.88
OCT-94 57912.5 57826.84
56638.42 55629.42
DEC-94 49332.07 49732.7
43214.89 43063.54
FEB-95 42134.52 42512.33
42050.25 42418.8
APR-95 43311.76 44213.12
45867.15 45853.42
JUN-95 45775.42 46123.96
47514.88 47567.63
AUG-95 46897.19 46326.11
47366.16 45950.87
OCT-95 45282.05 44218.52
44693.38 43997.43
DEC-95 46481.12 45510.94
50896.83 49424.88
FEB-96 51304 48337.53
51304 49014.26
APR-96 54587.46 50974.83
56443.43 50521.15
JUN-96 55935.44 51086.99
</TABLE>
LAZARD GLOBAL EQUITY PORTFOLIO
The Lazard Global Equity Portfolio seeks capital appreciation through investing
primarily in equity securities of companies with relatively large market
capitalizations that are located anywhere in the world which the investment
manager believes to be inexpensively priced relative to the return on total
capital or equity. In addition to security specific factors, investment
determinations include, among other items, analysis of U.S. and non-U.S.
markets.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD GLOBAL EQUITY PORTFOLIO AND
MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LAZARD GLOBAL
(FISCAL YEAR COVERED) EQUITY PORTFOLIO MCSI WORLD
<S> <C> <C>
1/3/96 50000.00 50000.00
JAN-96 50050.00 50895.00
FEB-96 50850.80 51195.28
MAR-96 51562.71 52034.88
APR-96 52181.46 53247.30
MAY-96 52338.01 53284.57
JUN-96 52704.37 53545.66
</TABLE>
LAZARD BANTAM VALUE PORTFOLIO
The Lazard Bantam Value Portfolio seeks capital appreciation through investing
primarily in equity securities of companies with market capitalizations under
$500 million that are believed by the investment manager to be inexpensively
priced relative to the return on total capital or equity and which are likely to
increase market capitalization as a result of growth or are likely to be the
subject of acquisitions or other events.
COMPARISON OF $50,000 INVESTMENT IN THE LAZARD BANTAM VALUE PORTFOLIO AND
THE RUSSELL 2000 STOCK INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) LBVP RUSSELL 2000
<S> <C> <C>
3/4/96 $50,000.00 $50,000.00
MAR-96 $53,150.00 $50,800.00
APR-96 $57,242.55 $53,517.80
MAY-96 $59,417.77 $55,626.40
JUN-96 $58,883.01 $53,340.16
</TABLE>
Past performance is not indicative, nor a guarantee, of future results.
6
<PAGE> 9
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS AVERAGE ANNUAL RETURNS
PERIOD ENDED JUNE 30, 1996 PERIOD ENDED JUNE 30, 1996
-------------------------------------- -------------------------------------------------
ONE THREE FIVE SINCE ONE THREE FIVE SINCE
YTD YEAR YEAR YEAR INCEPTION* YEAR YEAR YEAR INCEPTION*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------- -------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lazard Equity Portfolio 9.7% 25.3% 71.7% 125.9% 214.1% 25.3% 19.7% 17.7% 13.5%
Standard & Poor's 500
Stock Index 10.1% 26.0% 61.1% 107.6% 206.4% 26.0% 17.2% 15.7% 13.1%
Lazard International
Equity Portfolio 8.4% 18.2% 48.7% -- 55.2% 18.2% 14.1% -- 9.9%
EAFE Index 4.5% 13.3% 34.7% -- 46.2% 13.3% 10.4% -- 8.5%
Lazard International
Fixed-Income Portfolio (0.5%) (0.9%) 30.6% -- 51.8% (0.9%) 9.3% -- 9.4%
Salomon World Government
Bond Index Ex-US (1.3%) (1.7%) 32.0% -- 62.3% (1.7%) 9.7% -- 11.0%
Lazard Bond Portfolio: (0.4%) 4.5% 13.8% -- 32.2% 4.5% 4.4% -- 6.2%
Lehman Intermediate
Gov't/Corp. Index: (0.2%) 5.0% 15.6% -- 36.3% 5.0% 5.0% -- 6.9%
Lazard Strategic Yield
Portfolio:: 5.5% 12.2% 22.8% -- 46.4% 12.2% 7.1% -- 8.4%
One Month LIBOR:: 2.7% 5.8% 16.0% -- 23.9% 5.8% 5.1% -- 4.6%
Lazard Small Cap Portfolio 11.1% 15.6% 56.5% -- 133.8% 15.6% 16.1% -- 20.0%
Russell 2000 Stock Index 10.4% 23.9% 55.3% -- 102.0% 23.9% 15.8% -- 16.3%
Lazard International Small
Cap Portfolio 9.1% 11.3% -- -- 15.3% 11.3% -- -- 5.7%
Salomon EMI Ex-US Index 10.5% 17.1% -- -- 34.3% 17.1% -- -- 12.2%
Lazard Emerging Markets
Portfolio 20.4% 22.2% -- -- 11.7% 22.2% -- -- 5.8%
IFC Investable Total
Return Index 12.1% 10.6% -- -- 2.0% 10.6% -- -- 1.0%
Lazard Global Equity
Portfolio 5.3% -- -- -- 5.3% -- -- -- --
MSCI World Index 6.5% -- -- -- 6.5% -- -- -- --
Lazard Bantam Value
Portfolio 17.7% -- -- -- 17.7% -- -- -- --
Russell 2000 Stock Index 7.1% -- -- -- 7.1% -- -- -- --
</TABLE>
* Performance is measured from June 1, 1987 for Lazard 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; from January 3, 1996 for the Lazard Global Equity
Portfolio and from March 1, 1996 for the Lazard Bantam Value 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 "YTD", "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 "One Month LIBOR" index rather than the
"Merrill" or "Lehman" indices. Performance of the index shown "YTD", One Year",
and "Since Inception" above now includes only the "One Month LIBOR" 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 Extended Market
Index (EMI) Ex-US is an index compiled by Salomon Brothers. The Salomon World
Government Bond Index Ex-US is an index compiled by Salomon Brothers. The Lehman
Intermediate Gov't/Corp. Index is an index calculated by Lehman Brothers. The
London Interbank Offered Rates--US 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 IFC Investable Total
Return Index is an index of emerging markets securities that represent 65% of
market capital compiled by the International Finance Corporation. The MSCI
(Morgan Stanley Capital International) World Index is an international index
calculated by Morgan Stanley.
This performance data is not authorized for distribution to prospective
investors in the fund unless preceded or accompanied by an effective prospectus.
7
<PAGE> 10
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO
COMMON STOCKS--94.4%
AEROSPACE & DEFENSE--3.3%
Lockheed Martin Corp. .................. 52,000 $ 4,368,000
McDonnell Douglas Corp. ................ 82,600 4,006,100
------------
8,374,100
------------
AGRICULTURAL MACHINERY--1.3%
Deere & Co. ............................ 83,100 3,324,000
------------
AIRLINE--1.5%
AMR Corp. (a)........................... 41,600 3,785,600
------------
AUTOMOTIVE--2.8%
Chrysler Corp. ......................... 63,900 3,961,800
General Motors Corp. ................... 57,600 3,016,800
------------
6,978,600
------------
BANKS--8.5%
Bank of New York Company, Inc. ......... 75,000 3,843,750
BankAmerica Corp. ...................... 34,500 2,613,375
Chase Manhattan Corp. (New)............. 77,012 5,438,972
NationsBank Corp. ...................... 44,900 3,709,863
Summit Bancorp.......................... 82,200 2,887,275
Wells Fargo & Co. ...................... 11,733 2,802,720
------------
21,295,955
------------
BEVERAGES--1.0%
Cadbury Schweppes PLC (b)............... 77,500 2,499,375
------------
BROADCASTING--1.6%
Viacom, Inc. Class B (a)................ 101,600 3,949,700
------------
CHEMICALS & PLASTICS--3.8%
Du Pont (E.I.) De Nemours & Co. ........ 56,000 4,431,000
Hercules, Inc. ......................... 41,900 2,314,975
W. R. Grace & Co. ...................... 37,100 2,629,462
------------
9,375,437
------------
COMMERCIAL SERVICES--1.1%
WMX Technologies, Inc. ................. 83,200 2,724,800
------------
COMMUNICATION SERVICES--5.3%
AT&T Corp. ............................. 92,700 5,747,400
Tele-Communications, Inc. (New) TCI
Group Series A (a).................... 254,200 4,607,375
U S West, Inc. (a)...................... 157,900 2,881,675
------------
13,236,450
------------
COMPUTERS & BUSINESS EQUIPMENT--2.0%
Digital Equipment Corp. (a)............. 109,400 4,923,000
------------
CONSUMER GOODS--1.5%
Dial Corp. ............................. 129,700 3,712,663
------------
DRUGS & HEALTH CARE--4.6%
Astra AB (b)............................ 74,200 3,246,250
Columbia/HCA Healthcare Corp. .......... 82,625 4,410,109
Pharmacia & Upjohn, Inc. ............... 87,500 3,882,813
------------
11,539,172
------------
ELECTRICAL EQUIPMENT--1.3%
Arrow Electronics, Inc. (a)............. 75,800 3,268,875
------------
ENERGY--7.0%
Amoco Corp. ............................ 31,500 2,279,812
Kerr-McGee Corp. ....................... 40,000 2,435,000
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
Mobil Corp. ............................ 56,000 $ 6,279,000
Noble Affiliates, Inc. ................. 64,900 2,449,975
Royal Dutch Petroleum Co. (b)........... 26,800 4,120,500
------------
17,564,287
------------
ENTERTAINMENT--3.5%
Brunswick Corp. ........................ 157,600 3,152,000
Carnival Corp. Class A.................. 94,600 2,731,575
ITT Corp. (New) (a)..................... 43,900 2,908,375
------------
8,791,950
------------
FINANCIAL SERVICES--1.6%
Travelers Group, Inc. .................. 86,100 3,928,313
------------
FOOD PROCESSING--3.0%
Archer Daniels Midland Co. ............. 206,900 3,956,962
IBP, Inc. .............................. 132,500 3,660,313
------------
7,617,275
------------
INDUSTRIAL & MACHINERY--0.7%
ITT Industries, Inc. ................... 73,200 1,839,150
------------
INSURANCE--7.2%
Aetna Life & Casualty Co. .............. 51,100 3,653,650
Allstate Corp. ......................... 66,499 3,034,017
Cigna Corp. ............................ 26,900 3,170,837
Exel Ltd. .............................. 49,400 3,482,700
ITT Hartford Group, Inc. ............... 86,800 4,622,100
------------
17,963,304
------------
MANUFACTURING--4.4%
Allied Signal, Inc. .................... 78,200 4,467,175
General Electric Co. ................... 75,200 6,504,800
------------
10,971,975
------------
MEDICAL SUPPLIES--1.5%
Baxter International, Inc. ............. 77,000 3,638,250
------------
OFFICE EQUIPMENT--1.3%
Xerox Corp. ............................ 62,400 3,338,400
------------
PAPER PRODUCTS--2.6%
Champion International Corp. ........... 71,700 2,993,475
Kimberly-Clark Corp. ................... 45,706 3,530,789
------------
6,524,264
------------
RETAIL--7.1%
Federated Department Stores, Inc. (a)... 104,200 3,555,825
Nordstrom, Inc. ........................ 52,400 2,331,800
Sears Roebuck & Co. .................... 89,200 4,337,350
Wal-Mart Stores, Inc. .................. 147,900 3,752,962
Woolworth Corp. ........................ 164,100 3,692,250
------------
17,670,187
------------
SAVINGS & LOAN--0.8%
Great Western Financial Corp. .......... 78,800 1,881,350
------------
TECHNOLOGY--7.2%
Advanced Micro Devices, Inc. (a)........ 130,700 1,780,788
General Instrument Corp. (a)............ 127,000 3,667,125
Intel Corp. ............................ 36,200 2,658,437
International Business Machines
Corp. ................................ 47,200 4,672,800
LSI Logic Corp. (a)..................... 134,400 3,494,400
SGS-Thomson Microelectronics NV (a)..... 50,000 1,793,750
------------
18,067,300
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 11
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD EQUITY PORTFOLIO (CONTINUED)
TOBACCO--4.4%
Philip Morris Companies, Inc. .......... 75,100 $ 7,810,400
UST, Inc. .............................. 91,300 3,127,025
------------
10,937,425
------------
TRANSPORTATION--0.8%
Burlington Northern Santa Fe............ 24,800 2,005,700
------------
UTILITIES--1.7%
National Power PLC (b).................. 172,500 4,204,688
------------
TOTAL COMMON STOCKS
(Identified cost $202,005,588)............ 235,931,545
------------
PREFERRED STOCKS--1.2%
(Identified cost $2,626,127)
FINANCIAL SERVICES--1.2%
Time Warner Financing Trust............. 82,500 2,970,000
------------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
DISCOUNT NOTES--4.3%
(Identified cost $10,662,769)
Federal Home Loan Bank Discount Notes,
5.28%, 7/12/96........................ $10,680,000 $ 10,662,770
------------
TOTAL INVESTMENTS
(Identified cost $215,294,484) (c)........ 99.9% 249,564,315
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES............................... 0.1 334,378
---- ----------
NET ASSETS................................. 100.0% $249,898,693
---- ----------
---- ----------
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) The aggregate cost for federal income tax purposes is $215,294,484;
aggregate gross unrealized appreciation is $37,895,718 and aggregate gross
unrealized depreciation is $3,625,887, resulting in net unrealized
appreciation of $34,269,831.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL EQUITY PORTFOLIO
<CAPTION>
<S> <C> <C>
COMMON STOCKS* --92.9%
AUSTRALIA--2.3%
Coles Myer, Ltd. ..................... 2,164,500 $ 7,858,538
Westpac Bank Corp. ................... 6,221,600 27,526,608
--------------
TOTAL AUSTRALIA....................... 35,385,146
--------------
DENMARK--1.0%
Unidanmark Class A.................... 343,800 15,962,038
--------------
FINLAND--1.5%
Kymmene OY (a)........................ 1,120,300 23,244,846
--------------
FRANCE--13.4%
Accor SA.............................. 110,959 15,532,017
Alcatel Alsthom (Cie Gen El).......... 487,100 42,520,394
Banque Nationale de Paris............. 493,922 17,351,992
Cie de Saint Gobain................... 218,900 29,322,284
Generale des Eaux..................... 263,292 29,433,257
Rhone-Poulenc A (New)................. 16,690 439,023
Rhone-Poulenc SA...................... 1,064,300 27,933,840
Roussel Uclaf 144A (b)................ 131,300 15,493,400
Societe Nationale Elf Aquitaine....... 218,300 16,068,197
Total SA Class B...................... 232,281 17,241,793
--------------
TOTAL FRANCE.......................... 211,336,197
--------------
GERMANY--11.3%
Daimler-Benz AG (a)................... 57,730 30,924,752
Deutsche Bank AG (a).................. 503,300 23,832,687
Hoechst AG............................ 1,162,800 39,461,019
Mannesmann AG......................... 20,720 7,167,853
Mannesmann AG (b)..................... 64,205 21,893,905
Siemens AG............................ 533,700 28,536,540
Veba AG............................... 476,580 25,347,599
--------------
TOTAL GERMANY......................... 177,164,355
--------------
HONG KONG--2.0%
HSBC Holdings, Ltd. .................. 2,094,615 31,659,513
--------------
JAPAN--27.8%
Dai Nippon Printing................... 653,000 12,658,163
DDI Corp. ............................ 3,667 32,054,606
<CAPTION>
SHARES
-----------
<S> <C> <C>
Honda Motor Co. ...................... 1,072,000 $ 27,837,791
Matsushita Electric Industrial Co. ... 1,719,000 32,064,737
Mitsubishi Heavy Ind. ................ 3,910,000 34,071,504
Mitsui Marine & Fire.................. 990,000 7,884,515
Nintendo Co. ......................... 250,000 18,653,134
NKK Corp. (a)......................... 5,583,000 16,948,347
Omron Corp. .......................... 642,000 13,677,685
Orix Corp. ........................... 576,000 21,383,075
Promise Company, Ltd. ................ 218,600 10,793,581
Ricoh Company, Ltd. .................. 2,924,000 31,013,944
Rohm Company, Ltd. ................... 567,000 37,535,592
Sekisui Chemical Co. ................. 2,005,000 24,566,360
Sony Corp. ........................... 778,000 51,290,450
Sumitomo Trust & Banking.............. 2,250,000 30,859,964
Toyota Motor Corp. ................... 1,383,000 34,649,294
--------------
TOTAL JAPAN........................... 437,942,742
--------------
NETHERLANDS--6.0%
Heineken NV........................... 184,000 41,147,816
ING Groep NV (a)...................... 655,400 19,560,164
Royal Dutch Petroleum Co. (b)......... 222,100 34,147,875
--------------
TOTAL NETHERLANDS..................... 94,855,855
--------------
NEW ZEALAND--0.4%
Lion Nathan Ltd. ..................... 2,487,000 6,519,071
--------------
SPAIN--2.3%
ENDESA................................ 574,900 35,884,934
--------------
SWEDEN--3.0%
Astra AB Series B..................... 326,600 14,257,700
Electrolux AB Series B................ 287,300 14,473,279
Nackebro Fastighets AB (a)............ 85,520 1,059,295
Svenska Handelsbanken Series A........ 838,800 17,548,647
--------------
TOTAL SWEDEN.......................... 47,338,921
--------------
SWITZERLAND--6.2%
Baloise Holdings Ltd. ................ 8,073 17,564,038
Ciba Geigy AG......................... 25,160 30,690,289
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 12
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C>
LAZARD INTERNATIONAL EQUITY PORTFOLIO (CONTINUED)
Nestle SA............................. 26,410 $ 30,187,082
SGS Holding........................... 7,947 19,037,966
--------------
TOTAL SWITZERLAND..................... 97,479,375
--------------
UNITED KINGDOM--15.7%
Allied Domecq PLC..................... 3,039,200 21,381,544
British Aerospace Ord. PLC............ 2,237,887 33,938,448
Cadbury Schweppes PLC................. 4,092,912 32,354,282
General Electric Co. PLC.............. 2,767,900 14,894,818
Lloyds Abbey Life PLC................. 1,800,900 14,208,063
Mirror Group PLC...................... 3,323,600 10,504,001
National Power Ord. PLC............... 1,598,200 12,906,725
National Power P/P Ord. PLC (a)....... 1,699,200 10,133,449
Rank Organisation PLC................. 1,994,400 15,409,442
Redland PLC........................... 2,657,800 16,428,085
Sears PLC............................. 14,956,300 22,995,398
THORN EMI PLC......................... 553,300 15,415,751
Unilever PLC.......................... 1,377,700 27,387,110
--------------
TOTAL UNITED KINGDOM.................. 247,957,116
--------------
TOTAL COMMON STOCKS
(Identified cost $1,278,013,859)........ 1,462,730,109
--------------
PREFERRED STOCKS* --2.8%
AUSTRALIA--1.6%
News Corporation, Ltd. (b)............ 1,277,700 25,713,713
--------------
ITALY--1.2%
Fiat SPA.............................. 10,889,500 19,129,962
--------------
TOTAL PREFERRED STOCKS
(Identified cost $47,069,856)........... 44,843,675
--------------
RIGHTS--0.0%
(Identified cost $0)
GERMANY--0.0%
Daimler-Benz AG (a)................... 29,230 4,037
--------------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
DISCOUNT NOTES--3.3%
Federal Home Loan Bank Discount Notes,
5.24%, 7/1/96..................... $40,000,000 $ 40,000,000
5.28%, 7/12/96.................... 11,865,000 11,845,858
--------------
TOTAL DISCOUNT NOTES
(Identified cost $51,845,858)........... 51,845,858
--------------
TOTAL INVESTMENTS
(Identified cost $1,376,929,573) (c).... 99.0% 1,559,423,679
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES............................. 1.0 15,750,388
---- ------------
NET ASSETS............................... 100.0% $1,575,174,067
---- ------------
---- ------------
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) The aggregate cost for federal income tax purposes is $1,376,929,573;
aggregate gross unrealized appreciation is $203,694,297 and aggregate gross
unrealized depreciation is $21,200,191, resulting in net unrealized
appreciation of $182,494,106.
* Percentages of common and preferred stocks are presented in the portfolio by
country.
Percentages by industry are as follows:
Aerospace & Defense 2.2%, Automotive 7.1%, Banks 8.7%, Chemicals & Plastics
5.9%, Computer & Business Equipment 2.0%, Construction Materials 2.9%, Drugs
& Health Care 3.8%, Electrical Equipment 11.7%, Electronics 4.4%, Energy
2.2%, Entertainment 1.0%, Financial Services 3.8%, Food & Beverage 8.4%,
Forest Products & Paper 1.5%, Household Products 1.7%, Insurance 3.7%,
International Oil 1.1%, Machinery 4.0%, Petroleum Equipment & Services 1.0%,
Publishing 2.3%, Real Estate 0.1%, Retailing 2.9%, Services 3.0%, Steel 1.1%,
Telephone 2.0%, Utilities 7.2%.
Forward Foreign Currency Contracts open at June 30, 1996:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- -------------- ---------------- -------- --------------
<S> <C> <C> <C>
$ 2,891,510 FRF 14,833,085 7/31/96 $ (7,716)
$ 1,832,112 AUD 2,321,774 7/5/96 (7,535)
$ 1,311,679 AUD 1,660,564 7/3/96 (6,717)
SEK 2,933,963 $ 440,998 7/1/96 (2,192)
--------------
$(24,160)
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------------
<S> <C> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO
CURRENCY DENOMINATED BONDS*--96.8%
ARGENTINA PESO--0.4%
GOVERNMENT OBLIGATION
Republic of Argentina, 3.36%,
4/1/01 (a).................... ARP 200,000 $ 212,085
-----------
AUSTRALIAN DOLLAR--0.7%
CORPORATE BOND
Bayerische Vereinsbank, 10.00%,
12/16/99...................... AUD 210,000 170,805
GOVERNMENT OBLIGATION
Commonwealth of Australia,
9.00%, 9/15/04................ 297,000 $ 235,831
-----------
TOTAL AUSTRALIAN DOLLAR......... 406,636
-----------
AUSTRIAN SCHILLING--1.3%
GOVERNMENT OBLIGATION
Republic of Austria, 8.00%,
3/18/02....................... ATS 7,320,000 747,078
-----------
BRAZILIAN REAL--0.6%
CORPORATE BONDS
Chase Brazil Note, 17.638%,
9/16/96....................... BRL 168,034 167,933
Chase Brazil Note, 24.78%,
7/1/96 (a).................... 161,224 156,742
-----------
TOTAL BRAZILIAN REAL............ 324,675
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 13
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
BRITISH POUND--8.1%
CORPORATE BONDS
Barclays Bank PLC, 12.75%,
11/26/97...................... GBP 310,000 $ 520,257
Bayerische Landesbank
Girozentrale, 8.50%,
2/26/03....................... 275,000 436,694
Birmingham Midshires Building
Society, 9.125%, 1/5/06....... 500,000 778,615
Merrill Lynch & Company, 7.375%,
12/6/01....................... 775,000 1,170,504
West LB Finance Curacao NV,
8.50%, 6/2/03................. 820,000 1,299,342
The Woolwich Building Society,
11.625%, 12/18/01............. 250,000 445,285
-----------
TOTAL BRITISH POUND............. 4,650,697
-----------
CANADIAN DOLLAR--2.2%
CORPORATE BONDS
NHA Mortgage Backed, 7.00%,
5/1/06........................ CAD 298,595 211,879
Quebec Housing, 8.95%,
5/13/13....................... 415,000 318,836
GOVERNMENT OBLIGATION
Government of Canada, 4.25%,
12/1/21 (a)................... 1,010,000 729,703
-----------
TOTAL CANADIAN DOLLAR........... 1,260,418
-----------
COLOMBIAN PESO--0.2%
CORPORATE BOND
Cargil BA Colombia, 0.00%,
10/17/96...................... COP 130,000,000 110,770
-----------
CZECH KORUNA--1.2%
CORPORATE BOND
Skofin, 11.625%, 2/9/98......... CZK 20,000,000 721,114
-----------
DANISH KRONE--8.4%
CORPORATE BONDS
Kreditforen Denmark, 10.20%,
4/15/04 (a)................... DKK 5,000,000 948,195
Nykredit, 6.00%, 10/1/26........ 3,718,520 513,490
GOVERNMENT OBLIGATION
Kingdom of Denmark, 9.00%,
11/15/98...................... 18,350,000 3,397,812
-----------
TOTAL DANISH KRONE.............. 4,859,497
-----------
DUTCH GUILDER--1.9%
CONVERTIBLE BOND
Koninklijke Nedlloyd Groep NV,
4.25%, 3/15/01................ NLG 575,000 321,973
GOVERNMENT OBLIGATION
Government of Netherlands,
8.75%, 1/15/07................ 1,113,000 760,273
-----------
TOTAL DUTCH GUILDER............. 1,082,246
-----------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
FRENCH FRANC--7.1%
GOVERNMENT OBLIGATIONS
Government of France, 7.50%,
4/25/05....................... FRF 4,700,000 $ 979,639
Government of France, 8.50%,
11/25/02...................... 7,060,000 1,553,622
Government of France, 8.50%,
4/25/03....................... 4,300,000 943,666
Government of France, 8.50%,
10/25/19...................... 2,850,000 635,759
-----------
TOTAL FRENCH FRANC.............. 4,112,686
-----------
GERMAN MARK--9.1%
CORPORATE BONDS
Autobahn Tank & Rast, 6.00%,
10/16/00...................... DEM 610,000 407,603
Baden Wurttemberg, 6.75%,
6/22/05....................... 914,000 604,724
Bank Nederlandse Gemeenten,
6.50%, 11/4/08................ 2,000,000 1,269,319
International Bank
Reconstruction & Development,
7.125%, 4/12/05............... 1,700,000 1,158,302
Land Hessen, 6.00%, 11/29/13.... 1,000,000 648,019
GOVERNMENT OBLIGATION
Federal Republic of Germany,
6.00%, 2/16/06................ 1,885,000 1,190,135
-----------
TOTAL GERMAN MARK............... 5,278,102
-----------
GREEK DRACHMA--0.2%
GOVERNMENT OBLIGATIONS
Greek Treasury Bill, 0.00%,
7/17/96....................... GRD 25,000,000 103,335
Greek Treasury Bill, 0.00%,
1/31/97....................... 3,500,000 13,404
-----------
TOTAL GREEK DRACHMA............. 116,739
-----------
HUNGARIAN FORINT--0.3%
CORPORATE BOND
Unilever, 0.00%, 8/16/96........ HUF 10,000,000 64,686
GOVERNMENT OBLIGATION
Hungarian Treasury Bill, 0.00%,
10/11/96...................... 15,200,000 94,408
-----------
TOTAL HUNGARIAN FORINT.......... 159,094
-----------
INDONESIAN RUPIAH--0.3%
CORPORATE BOND
Bank Dagang Nasional Indonesia,
0.00%, 2/11/97................ IDR 500,000,000 195,610
-----------
IRISH POUND--1.8%
GOVERNMENT OBLIGATION
Republic of Ireland, 8.00%,
10/18/00...................... IEP 610,000 1,016,667
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 14
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
ITALIAN LIRA--8.1%
GOVERNMENT OBLIGATIONS
Republic of Italy, 11.50%,
3/1/03........................ ITL 1,965,000,000 $ 1,436,744
Republic of Italy, 12.00%,
1/17/99....................... 1,395,000,000 979,620
Republic of Italy, 12.00%,
9/1/01........................ 3,080,000,000 2,261,047
-----------
TOTAL ITALIAN LIRA.............. 4,677,411
-----------
JAPANESE YEN--25.9%
CORPORATE BONDS
Export-Import Bank of Japan,
4.375%, 10/1/03............... JPY 205,000,000 2,033,786
Isveimer, 4.15%, 3/23/99........ 177,000,000 1,671,356
Sumitomo Bank International,
0.75%, 5/31/01................ 45,000,000 444,384
GOVERNMENT OBLIGATIONS
Government of Japan, 4.50%,
6/20/03....................... 762,000,000 7,660,760
Republic of Austria, 4.50%,
9/28/05....................... 80,000,000 805,559
Republic of Austria, 6.25%,
10/16/03...................... 15,000,000 165,958
Republic of Italy, 3.50%,
6/20/01....................... 230,000,000 2,183,228
-----------
TOTAL JAPANESE YEN.............. 14,965,031
-----------
MEXICAN PESO--0.2%
GOVERNMENT OBLIGATION
Mexican Cetes, 0.00%,
7/18/96....................... MXN 900,000 116,951
-----------
NORWEGIAN KRONE--1.7%
CORPORATE BOND
Sparebanken Norway,
10.25%, 6/23/03 (a)............. NOK 6,000,000 982,324
-----------
POLISH ZLOTY--0.2%
GOVERNMENT OBLIGATION
Poland Treasury Bill, 0.00%,
8/14/96....................... PLZ 350,000 125,814
-----------
PORTUGUESE ESCUDO--0.2%
GOVERNMENT OBLIGATION
Republic of Portugal, 11.875%,
2/23/00....................... PTE 13,000,000 92,841
-----------
SOUTH AFRICAN RAND--0.3%
GOVERNMENT OBLIGATION
Republic of South Africa,
11.50%, 5/30/00............... ZAR 705,500 149,293
-----------
SPANISH PESETA--3.7%
GOVERNMENT OBLIGATION
Kingdom of Spain, 8.00%,
5/30/04....................... ESP 289,000,000 2,149,354
-----------
SWEDISH KRONA--1.4%
GOVERNMENT OBLIGATION
Kingdom of Sweden, 10.25%,
5/5/00........................ SEK 4,900,000 816,622
-----------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
THAILAND BAHT--0.4%
CORPORATE BONDS
Peregrine THB Note, 0.00%,
1/6/97........................ THB 3,000,000 $ 112,860
Thai Fuji Finance Local, 0.00%,
7/5/96........................ 3,000,000 118,060
-----------
TOTAL THAILAND BAHT............. 230,920
-----------
TURKISH LIRA--0.2%
GOVERNMENT OBLIGATION
Turkish Treasury Bill, 0.00%,
9/25/96....................... TRL 12,000,000,000 121,346
-----------
UNITED STATES DOLLAR--10.7%
COLLATERALIZED MORTGAGE OBLIGATION
Federal National Mortgage
Association, Series 23, Class
2, 10.00%, 9/1/17............. 678,141 219,972
CORPORATE BONDS
Americold Corp., 12.875%,
5/1/08........................ USD 105,000 107,100
Argosy Gaming Co. 144A, 13.25%,
6/1/04........................ 200,000 202,500
Asia Invest Interest Ltd.,
0.00%, 1/13/97................ 130,000 121,530
Big 5 Holdings Inc., 13.625%,
9/15/02....................... 130,000 121,550
Cablevision Systems Corp.,
10.50%, 5/15/16............... 200,000 193,500
Calpine Corp. 144A, 10.50%,
5/15/06....................... 210,000 210,525
Carrols Corp., 11.50%, 8/15/03.. 300,000 303,000
Cobb Theaters 144A, 10.625%,
3/1/03........................ 500,000 507,500
Commodore Media Inc., 7.50%,
5/1/03 (a).................... 400,000 414,000
County Seat Stores Inc., 12.00%,
10/1/02....................... 130,000 107,900
Courtyard By Marriott II Ltd.
144A, 10.75%, 2/1/08.......... 50,000 48,875
Dade International Inc. 144A,
11.125%, 5/1/06............... 290,000 300,150
Eagle Food Centers Inc., 8.625%,
4/15/00....................... 90,000 78,300
GI Holdings Inc. 144A, 10.00%,
2/15/06....................... 2,000 1,990
Hayes Wheels International Inc.,
11.00%, 7/15/06............... 183,000 185,516
Hills Stores Co. 144A, 12.50%,
7/1/03........................ 90,000 88,200
ICF Kaiser International Inc.,
13.00%, 12/31/03 (a).......... 90,000 85,950
KCS Energy Inc., 11.00%,
1/15/03....................... 100,000 105,500
Paribas LBP Participation,
0.00%, 11/28/96............... 108,288 100,860
Plains Resources Inc., 10.25%,
3/15/06....................... 95,000 93,813
Poindexter (J.B.) & Co., 12.50%,
5/15/04....................... 250,000 215,000
Reliance Industries Ltd. 144A,
9.375%, 6/24/26............... 250,000 252,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 15
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
Remington Product Co. 144A,
11.00%, 5/15/06............... 150,000 $ 149,250
Smith's Food & Drug Centers,
Inc., 11.25%, 5/15/07......... 200,000 201,500
Terex Corp. 144A, 13.75%,
5/15/02....................... 65,000 67,844
Unisys Corp. 144A, 12.00%,
4/15/03....................... 211,000 215,747
Univision Network Holding LP,
7.00%, 12/17/02............... 40,000 33,200
Waxman Industries Inc., 12.75%,
6/1/04........................ 95,000 63,650
FOREIGN GOVERNMENT OBLIGATIONS
Morocco Restructuring &
Consolidation Agreement,
6.438%, 1/1/09 (a)............ 250,000 180,625
Venezuela FLIRB, 6.50%, 3/31/07
(a)(b)........................ 750,000 546,562
YANKEE BONDS
Den Norske Credit, 5.75%,
11/29/49 (a).................. 700,000 574,875
Hong Kong & Shanghai Bank,
5.563%, 8/29/49 (a)........... 100,000 84,610
-----------
TOTAL UNITED STATES DOLLAR...... 6,183,594
-----------
TOTAL CURRENCY DENOMINATED BONDS*
(Identified cost $55,484,069)..... 55,865,615
-----------
<CAPTION>
SHARES
---------------
<S> <C> <C> <C>
PREFERRED STOCK--0.4%
(Identified cost $250,937)
Cablevision Systems Corp.,
144A.......................... 2,500 242,500
-----------
COMMERCIAL PAPER--0.8%
Ford Motor Credit Corp., 5.38%,
10/1/96....................... 105,000 103,556
General Motors Acceptance Corp.,
5.32%, 11/27/96............... 90,000 88,018
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
General Motors Acceptance Corp.,
5.34%, 7/12/96................ $ 120,000 $ 119,804
General Motors Acceptance Corp.,
5.37%, 7/19/96................ 65,000 64,826
General Motors Acceptance Corp.,
5.53%, 12/12/96............... 70,000 68,237
-----------
TOTAL COMMERCIAL PAPER
(Identified cost $444,441)........ 444,441
-----------
TOTAL INVESTMENTS
(Identified cost $56,179,447)
(c)............................. 98.0% 56,552,556
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES....................... 2.0 1,144,517
---- ---------
NET ASSETS......................... 100.0% $57,697,073
---- ---------
---- ---------
</TABLE>
(a) Variable rate security. Interest shown is the current rate.
(b) Front Loaded Interest Reduction Bond.
(c) The aggregate cost for federal income tax purposes is $56,179,447; aggregate
gross unrealized appreciation is $1,016,064 and aggregate gross unrealized
depreciation is $642,955, resulting in net unrealized appreciation of
$373,109.
* Percentages of holdings are presented in the portfolio by currency
denomination.
Percentages by country are as follows:
Argentina 0.4%, Australia 0.7%, Austria 1.3%, Brazil 0.6%, Canada 2.2%,
Colombia 0.2%, Czech Republic 1.2%, Denmark 8.4%, France 7.1%, Germany 9.1%,
Greece 0.2%, Hong Kong 0.1%, Hungary 0.3%, Indonesia 0.3%, Ireland 1.8%,
Italy 8.1%, Japan 25.9%, Mexico 0.2%, Morocco 0.3%, Netherlands 1.9%, Norway
2.7%, Poland 0.2%, Portugal 0.2%, South Africa 0.3%, Spain 3.7%, Sweden 1.4%,
Thailand 0.4%, Turkey 0.2%, United Kingdom 8.1%, United States 8.4%,
Venezuela 0.9%.
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 16
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-INCOME
PORTFOLIO (CONTINUED)
Forward Foreign Currency Contracts open at June 30, 1996:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ------------------- ------------------- --------- --------------
<S> <C> <C> <C>
$ 70,000 CNY 617,967 3/26/97 $ 2,364
$ 70,000 COP 82,048,400 12/12/96 1,968
$ 90,000 CLP 39,265,200 11/29/96 1,688
$ 261,000 ATS 2,803,140 9/12/96 2,012
ATS 2,926,129 $ 274,234 9/12/96 (318)
$ 365,007 AUD 464,053 9/12/96 (1,886)
$ 1,530,000 BEL 48,303,630 9/12/96 20,433
$ 788,000 CAD 1,073,492 9/12/96 (490)
$ 355,000 CHF 447,406 9/12/96 5,092
$ 1,348,417 DEM 2,058,538 9/12/96 11,617
DEM 15,835 $ 10,500 9/12/96 38
DKK 14,805,705 $ 2,512,564 9/12/96 (23,090)
$ 900,005 ESP 115,650,656 9/12/96 (19)
ESP 99,694,800 $ 765,000 9/12/96 (10,818)
$ 2,153,273 FRF 11,134,880 9/12/96 19,086
FRF 2,453,819 $ 478,094 9/12/96 (633)
$ 173,351 GBP 111,800 9/12/96 196
GBP 221,239 $ 340,000 9/12/96 (3,429)
IEP 666,632 $ 1,055,175 9/12/96 (9,733)
$ 1,295,321 ITL 2,025,622,500 9/12/96 18,952
ITL 1,124,939,075 $ 724,430 9/12/96 (5,458)
$ 2,735,777 JPY 294,750,935 9/12/96 (11,534)
JPY 363,596,632 $ 3,372,142 9/12/96 11,588
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ------------------- ------------------- --------- --------------
<S> <C> <C> <C>
$ 1,586,405 NLG 2,709,805 9/12/96 $ 11,043
NOK 6,610,968 $ 1,008,000 9/12/96 (12,148)
$ 370,444 SEK 2,491,438 9/12/96 5,717
XEU 93,958 $ 116,000 9/12/96 (1,332)
$ 65,000 CLP 26,751,471 7/22/96 (242)
$ 118,979 SKK 3,608,964 7/12/96 (2,437)
$ 22,000 CLP 9,136,380 7/11/96 189
$ 1,690,510 JPY 184,882,645 7/10/96 0
JPY 78,663,003 $ 719,270 7/10/96 0
$ 763,279 ATS 8,176,033 7/8/96 515
$ 957,301 FRF 4,927,929 7/8/96 769
$ 324,994 IEP 203,625 7/8/96 78
ATS 5,249,905 $ 490,108 7/8/96 (331)
FRF 2,474,110 $ 480,622 7/8/96 (386)
$ 2,010,223 JPY 219,023,800 7/5/96 (7,536)
$ 112,950 THB 2,865,648 7/5/96 (62)
JPY 317,734,415 $ 2,916,199 7/5/96 10,933
$ 2,177,264 ESP 278,842,242 7/3/96 1,106
ESP 394,492,898 $ 3,080,281 7/3/96 (1,564)
PLN 243,966 $ 89,998 7/3/96 209
--------------
$ 32,147
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO
ASSET-BACKED SECURITIES--13.4%
Advanta Home Equity Loan Trust, Series
1993-2, Class A2, 6.15%, 10/25/09... $ 562,197 $ 542,694
American Financial Home Equity Loan,
Series 1991-1, Class A, 8.00%,
7/25/06............................. 59,440 59,942
Banc One Credit Card Master Trust,
Series 1994-C, Class A, 7.80%,
12/15/00............................ 750,000 772,965
Chase Manhattan Credit Card Master
Trust, Series 1996-3, Class A,
7.04%, 2/15/04 (a).................. 1,700,000 1,719,652
Chase Manhattan Grantor Trust, Series
1995-B, Class A, 5.90%, 11/15/01.... 309,330 308,072
Chase Manhattan Grantor Trust, Series
1996-A, Class A, 5.20%, 2/15/02..... 557,551 548,663
EQCC Home Equity Loan Trust, Series
1994-2, Class A2, 7.35%, 6/15/14.... 125,000 125,547
First Chicago Master Trust II, Series
1992-E, Class A, 6.25%, 8/15/99..... 400,000 399,748
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
Ford Credit Grantor Trust, Series
1995-A, Class A, 5.90%, 5/15/00..... $ 352,338 $ 351,344
G E Home Equity Loan, Inc., Series
1991-1, Class A, 7.20%, 9/15/11..... 39,945 40,045
Green Tree Financial Corp., Series
1994-3, Class A, 6.60%, 6/15/19..... 206,455 207,035
Green Tree Financial Corp., Series
1994-6, Class A2, 7.25%, 1/15/20.... 523,760 526,704
Green Tree Financial Corp., Series
1996-1, Class A1, 5.50%, 3/15/27.... 403,092 396,791
Lehman FHA Title I Loan Trust, Series
1996-2, Class A2, 6.78%, 3/25/08.... 1,014,000 1,017,961
Money Store Home Equity Trust, Series
1996-B, Class A13, 6.90%, 4/15/10... 273,000 273,256
Olympic Automobile Receivable Trust,
Series 1994-B, Class A2, 6.85%,
6/15/01............................. 216,079 217,632
Premier Auto Trust, Series 1995-4,
Class A3, 5.90%, 7/6/99............. 252,000 251,604
Sears Credit Account Master Trust,
Series 1995-2, Class A, 8.10%,
6/15/04............................. 779,000 812,349
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 17
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
Security Pacific Home Equity Loan,
Series 1991-1, Class A, 7.85%,
5/15/98............................. $ 18,776 $ 18,926
-------------
TOTAL ASSET-BACKED SECURITIES
(Identified cost $8,592,939)............ 8,590,930
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS--1.3%
Asset Securitization Corp., Series
1996-D2, Class ACS2, 1.492%, 2/28/26
(a)................................. 2,125,000 213,496
Merrill Lynch Mortgage Investors Inc.
144A, Series 1996-C1, Class IO,
0.567%, 4/25/98 (a)................. 4,808,005 148,375
Federal National Mortgage Association,
Series 23, Class 2, 10.00%,
9/1/17.............................. 1,416,371 459,435
-------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Identified cost $825,915).............. 821,306
-------------
CORPORATE BONDS--17.2%
AEROSPACE & DEFENSE--1.1%
BE Aerospace, Inc. 144A, 9.875%,
2/1/06.............................. 125,000 122,813
Lockheed Martin Corporation, 7.45%,
6/15/04............................. 328,000 332,546
McDonnell Douglas Finance Corp.,
6.83%, 5/21/01...................... 287,000 281,346
-------------
736,705
-------------
AUTOMOTIVE--0.4%
General Motors Acceptance Corp.,
6.70%, 4/18/01...................... 282,000 279,338
-------------
AUTO PARTS--1.1%
Hayes Wheels International Inc.,
11.00%, 7/15/06..................... 610,000 618,387
Walbro Corp. 144A, 9.875%,
7/15/05............................. 100,000 98,000
-------------
716,387
-------------
BROADCASTING--1.8%
Cablevision Systems Corp., 10.50%,
5/15/16............................. 400,000 387,000
Comcast Corp., 9.50%, 1/15/08......... 184,000 177,560
Cox Communications Inc., 6.50%,
11/15/02............................ 265,000 256,069
Paxson Communications Corp. 144A,
11.625%, 10/1/02.................... 160,000 166,400
Sullivan Broadcasting, 10.25%,
12/15/05............................ 170,000 161,925
-------------
1,148,954
-------------
CHEMICALS & PLASTICS--0.2%
Harris Chemical North America Inc.,
10.75%, 10/15/03.................... 121,000 118,277
-------------
COMPUTERS--0.7%
Unisys Corp. 144A, 12.00%, 4/15/03.... 465,000 475,462
-------------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
DRUGS & HEALTH CARE--0.3%
Columbia/HCA Healthcare Corp., 7.15%,
3/30/04............................. $ 182,000 $ 182,015
-------------
ELECTRONICS--0.8%
Alpine Group Inc. 144A, 12.25%,
7/15/03............................. 368,000 370,760
Texas Instruments Inc., 6.125%,
2/1/06.............................. 164,000 151,003
-------------
521,763
-------------
ENTERTAINMENT--2.3%
AMF Group Inc. 144A, 10.875%,
3/15/06............................. 400,000 394,000
Argosy Gaming Co. 144A, 13.25%,
6/1/04.............................. 38,000 38,475
Cobb Theaters 144A, 10.625%,
3/1/03.............................. 415,000 421,225
Hollywood Casino Inc., 12.75%,
11/1/03............................. 315,000 315,000
Walt Disney Co. Series B, 6.75%,
3/30/06............................. 295,000 285,457
-------------
1,454,157
-------------
FINANCIAL SERVICES--2.9%
Avco Financial Services Inc., 6.35%,
9/15/00............................. 128,000 125,334
Bankamerica Corp., 7.20%, 9/15/02..... 105,000 105,575
Citicorp, 6.75%, 8/15/05.............. 107,000 102,654
Finova Capital Corp., 5.98%,
2/27/01............................. 125,000 120,529
Fleet Norstar Financial, 7.25%,
9/1/99.............................. 161,000 162,929
Household Finance Corp., 9.625%,
7/15/00............................. 149,000 162,607
Keycorp, 7.50%, 6/15/06............... 139,000 139,662
MBNA Corp., 6.50%, 9/15/00............ 196,000 192,362
Nationsbank Corp., 5.75%, 1/17/01..... 159,000 151,996
Norwest Corporation Medium Term Note,
6.125%, 10/15/00.................... 149,000 144,926
Salomon Inc., 8.55%, 2/17/97.......... 265,000 268,220
Sears Roebuck Acceptance Corp., 6.34%,
10/12/00............................ 169,000 165,909
-------------
1,842,703
-------------
MANUFACTURING--0.7%
Silgan Corp., 11.75%, 6/15/02......... 434,000 440,510
-------------
OIL & GAS--0.4%
Plains Resources Inc. 144A, 10.25%,
3/15/06............................. 145,000 143,188
Tenneco, Inc., 7.875%, 10/1/02........ 134,000 137,946
-------------
281,134
-------------
OTHER--0.1%
Remington Product Co., 144A, 11.00%,
5/15/06............................. 75,000 74,625
-------------
PAPER PRODUCTS--0.6%
Crown Paper Co., 11.00%, 9/1/05....... 105,000 100,013
Williamhouse Regency Delaware Inc.
144A, 13.00%, 11/15/05.............. 238,000 269,535
-------------
369,548
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 18
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD BOND PORTFOLIO (CONTINUED)
RESTAURANTS, LODGING &
ENTERTAINMENT--1.8%
Carrols Corp., 11.50%, 8/15/03........ $ 467,000 $ 471,670
Courtyard By Marriott II Ltd. 144A,
10.75%, 2/1/08...................... 525,000 513,188
ITT Corp., 6.25%, 11/15/00............ 169,000 164,033
-------------
1,148,891
-------------
RETAIL GROCERY--0.3%
Pueblo Xtra International, 9.50%,
8/1/03.............................. 73,000 65,700
Smith's Food & Drug Centers, Inc.,
11.25%, 5/15/07..................... 100,000 100,750
-------------
166,450
-------------
RETAIL--0.5%
Hills Stores Co. 144A, 12.50%,
7/1/03.............................. 96,000 94,080
Mothers Work Inc. 144A, 12.625%,
8/1/05.............................. 217,000 228,935
-------------
323,015
-------------
UTILITIES--1.2%
Calpine Corp. 144A, 10.50%,
5/15/06............................. 275,000 275,687
KCS Energy Inc. 144A, 11.00%,
1/15/03............................. 130,000 137,150
Texas New Mexico Power Co., 9.25%,
9/15/00............................. 80,000 81,935
Texas Utilities Electric Co., 7.375%,
8/1/01.............................. 247,000 250,203
-------------
744,975
-------------
TOTAL CORPORATE BONDS
(Identified Cost $11,080,439)........... 11,024,909
-------------
MORTGAGE PASS-THROUGH SECURITIES--37.0%
Federal Home Loan Mortgage Corp.,
7.00%, 3/1/11....................... 87,634 86,456
6.50%, 4/1/11....................... 90,863 87,938
7.00%, 4/1/26....................... 320,887 308,953
7.00%, 1/1/26....................... 984,887 948,258
7.00%, 9/1/25....................... 605,708 583,181
7.00%, 1/1/11....................... 719,733 711,111
6.50%, 2/1/11....................... 799,477 773,742
7.00%, 12/1/99...................... 870,000 858,307
6.50%, 12/1/99...................... 982,000 950,390
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
7.00%, 8/1/25....................... $ 988,002 $ 951,258
7.00%, 1/1/99....................... 3,334,000 3,210,009
Federal National Mortgage Association,
7.50%, 3/1/26....................... 177,623 175,235
7.50%, 12/1/25...................... 289,838 285,943
8.00%, 10/1/25...................... 351,333 353,968
7.50%, 10/1/25...................... 466,761 460,487
8.00%, 1/1/26....................... 591,463 595,899
7.50%, 9/1/25....................... 799,368 788,624
8.00%, 9/1/25....................... 1,298,564 1,308,303
7.50%, 12/1/99...................... 1,989,000 1,962,268
8.00%, 1/1/99....................... 2,609,000 2,628,568
Government National Mortgage
Association,
9.00%, 9/15/25...................... 121,751 127,420
8.50%, 12/15/99..................... 616,000 633,322
7.00%, 1/20/99...................... 1,150,000 1,165,273
6.50%, 1/15/99...................... 3,715,000 3,721,967
-------------
TOTAL MORTGAGE PASS-THROUGH SECURITIES
(Identified Cost $23,823,988)........... 23,676,880
-------------
U.S. GOVERNMENT OBLIGATIONS--27.9%
United States Treasury Notes,
8.875%, 11/15/98.................... 2,952,000 3,121,267
6.25%, 8/31/00...................... 3,005,000 2,983,875
7.375%, 11/15/97.................... 3,195,000 3,251,903
7.75%, 12/31/99..................... 7,700,000 8,022,399
United States Treasury Strips, 0.00%,
8/15/02............................. 700,000 471,170
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified Cost $17,855,654)........... 17,850,614
-------------
DISCOUNT NOTES--31.2%
(Identified Cost $19,977,717)
Federal Home Loan Bank Discount Notes,
5.28%, 7/12/96...................... 20,010,000 19,977,717
-------------
TOTAL INVESTMENTS
(Identified cost $82,156,652)(b)........ 128.0% 81,942,356
-------------
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS.................................. (28.0) (17,908,644)
---- ----------
NET ASSETS............................... 100.0% $ 64,033,712
---- ----------
---- ----------
</TABLE>
(a) Variable rate security. Interest shown is the current rate.
(b) The aggregate cost for federal income tax purposes is $82,156,652; aggregate
gross unrealized appreciation is $206,508 and aggregate gross unrealized
depreciation is $420,804, resulting in net unrealized depreciation of
$214,296.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
LAZARD STRATEGIC YIELD PORTFOLIO
<CAPTION>
<S> <C> <C> <C>
CURRENCY DENOMINATED BONDS*--86.2%
ARGENTINA PESO--1.4%
GOVERNMENT OBLIGATION
Republic of Argentina, 3.36%,
4/1/01 (a).................... ARP 1,500,000 $ 1,590,636
------------
AUSTRALIAN DOLLAR--2.0%
GOVERNMENT OBLIGATIONS
Commonwealth of Australia,
7.00%, 8/15/98................ AUD 1,791,000 $ 1,376,839
Commonwealth of Australia,
9.00%, 9/15/04................ 1,023,000 812,306
------------
TOTAL AUSTRALIAN DOLLAR......... 2,189,145
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 19
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C>
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
BRAZILIAN REAL--3.0%
CORPORATE BONDS
Chase Brazil Note, 17.638%,
9/16/96....................... BRL 1,244,539 $ 1,243,792
Chase Brazil Note, 24.782%,
7/1/96........................ 1,154,953 1,122,846
Metalurgica Gerdau SA, 144A,
11.125%, 5/24/04.............. 1,000,000 995,000
------------
TOTAL BRAZILIAN REAL............ 3,361,638
------------
BRITISH POUND--2.5%
CORPORATE BONDS
Birmingham Midshires Building
Society, 9.125%, 1/5/06....... GBP 350,000 545,030
Merrill Lynch & Co., 7.375%,
12/6/01....................... 1,025,000 1,548,086
GOVERNMENT OBLIGATION
United Kingdom Treasury, 1.00%,
7/17/24....................... 350,000 638,177
------------
TOTAL BRITISH POUND............. 2,731,293
------------
CANADIAN DOLLAR--3.5%
CORPORATE BONDS
NHA Mortgage Backed, 6.75%,
4/1/03........................ CAD 650,144 461,668
NHA Mortgage Backed, 7.00%,
5/1/06........................ 1,148,731 815,125
GOVERNMENT OBLIGATIONS
Canada Government, 4.25%,
12/1/21 (a)................... 3,245,000 2,344,443
Quebec Housing, 8.95%,
5/13/13....................... 390,000 299,629
------------
TOTAL CANADIAN DOLLAR........... 3,920,865
------------
COLOMBIAN PESO--0.7%
GOVERNMENT OBLIGATION
Cargil BA Colombia, 0.00%,
10/17/96...................... COP 900,000,000 766,869
------------
CZECH KORUNA--1.6%
CORPORATE BONDS
CEZ AS, 11.30%, 6/6/05.......... CZK 23,000,000 833,043
Skofin, 11.625%, 2/9/98......... 25,000,000 901,392
------------
TOTAL CZECH KORUNA.............. 1,734,435
------------
DANISH KRONE--1.6%
CORPORATE BONDS
Kreditforen Denmark, 10.20%,
4/15/04 (a)................... DKK 9,590,000 1,818,638
Nykredit, 6.00%, 10/1/26........ 34,480 4,761
------------
TOTAL DANISH KRONE.............. 1,823,399
------------
DUTCH GUILDER--0.6%
CORPORATE BOND
Koninklijke Nedlloyd Groep NV,
4.25%, 3/15/01................ NLG 1,094,000 612,589
------------
GERMAN MARK--0.6%
CORPORATE BOND
Autobahn Tank & Rast, 6.00%,
10/16/00...................... DEM 1,050,000 701,611
------------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
GREEK DRACHMA--0.9%
GOVERNMENT OBLIGATIONS
Greek Treasury Bill, 0.00%,
7/17/96....................... GRD 130,000,000 $ 537,341
Greek Treasury Bill, 0.00%,
1/31/97....................... 110,000,000 421,286
------------
TOTAL GREEK DRACHMA............. 958,627
------------
HUNGARIAN FORINT--0.9%
CORPORATE BOND
Unilever, 0.00%, 8/16/96........ HUF 90,000,000 582,172
GOVERNMENT OBLIGATION
Hungarian Treasury Bill, 0.00%,
10/11/96...................... 75,900,000 471,421
------------
TOTAL HUNGARIAN FORINT.......... 1,053,593
------------
INDONESIAN RUPIAH--1.5%
CORPORATE BONDS
Bakrie & Brothers, 0.00%,
9/9/96........................ IDR 3,000,000,000 1,249,979
Medco Energi Corp., 0.00%,
1/13/97....................... 1,000,000,000 391,536
------------
TOTAL INDONESIAN RUPIAH......... 1,641,515
------------
ITALIAN LIRA--2.6%
GOVERNMENT OBLIGATIONS
Republic of Italy, 12.00%,
1/17/99....................... ITL 2,405,000,000 1,688,879
Republic of Italy, 12.00%,
9/1/01........................ 1,700,000,000 1,247,981
------------
TOTAL ITALIAN LIRA.............. 2,936,860
------------
JAPANESE YEN--1.3%
CONVERTIBLE BOND
Sumitomo Bank, 0.75%, 5/31/01... JPY 85,000,000 839,391
CORPORATE BOND
Isveimer, 4.15%, 3/23/99........ 64,000,000 604,332
------------
TOTAL JAPANESE YEN.............. 1,443,723
------------
MEXICAN PESO--1.0%
GOVERNMENT OBLIGATION
Mexican Cetes, 0.00%,
7/18/96....................... MXN 8,506,070 1,105,329
------------
NEW ZEALAND DOLLAR--1.3%
GOVERNMENT OBLIGATION
Government of New Zealand,
10.00%, 7/15/97............... NZD 2,035,000 1,405,893
------------
NORWEGIAN KRONE--1.5%
CORPORATE BOND
Sparebanken Norway, 10.25%,
6/23/03 (a)................... NOK 10,000,000 1,637,207
------------
POLISH ZLOTY--1.3%
GOVERNMENT OBLIGATIONS
Poland Treasury Bill, 0.00%,
8/14/96....................... PLZ 2,460,000 884,291
Poland Treasury Bill, 0.00%,
11/13/96...................... 1,800,000 612,653
------------
TOTAL POLISH ZLOTY.............. 1,496,944
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 20
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C>
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
PORTUGUESE ESCUDO--0.7%
GOVERNMENT OBLIGATION
Republic of Portugal, 11.875%,
2/23/00....................... PTE 106,500,000 $ 760,585
------------
SOUTH AFRICAN RAND--0.7%
GOVERNMENT OBLIGATION
Republic of South Africa,
11.50%, 5/30/00............... ZAR 3,632,200 768,621
------------
SPANISH PESETA--2.9%
GOVERNMENT OBLIGATION
Government of Spain, 9.40%,
4/30/99....................... ESP 394,080,000 3,214,705
------------
THAILAND BAHT--0.8%
CORPORATE BONDS
Peregrine, 0.00%, 10/22/96...... THB 10,000,000 382,732
Peregrine THB Note, 0.00%,
1/6/97........................ 3,000,000 112,860
Thai Fuji Finance, 0.00%,
12/20/96...................... 10,000,000 376,600
------------
TOTAL THAILAND BAHT............. 872,192
------------
TURKISH LIRA--0.7%
GOVERNMENT OBLIGATION
Turkish Treasury Bill, 0.00%,
9/25/96....................... TRL 81,000,000,000 819,084
------------
UNITED STATES DOLLAR--50.1%
COLLATERALIZED MORTGAGE OBLIGATIONS
Asset Securitization Corp.,
Series 1995-MD4, Class ACS2,
2.417%, 8/13/29 (a)........... USD $ 3,971,012 704,234
Asset Securitization Corp.,
Series 1996-D2, Class ACS2,
1.608%, 2/28/26 (a)........... 5,720,000 574,681
Federal National Mortgage
Association,
Series 23, Class 2, 10.00%,
9/1/17...................... 5,030,262 1,631,691
Series 70, Class 2, 10.00%,
1/15/20..................... 3,073,492 1,043,911
Lennar Central Partners Ltd.
144A, Series 1994-1, Class D,
9.89%, 9/15/04................ 370,000 369,787
Merrill Lynch Mortgage
Investments Inc. 144A, Series
1996-C1, Class I0, 0.567%,
4/25/28 (a)................... 15,384,617 474,770
CONVERTIBLE BOND
Burns Philp 144A, 5.50%,
4/30/04....................... 800,000 674,000
CORPORATE BONDS
Alpine Group, Inc. 144A, 12.25%,
7/15/03....................... 1,098,000 1,106,235
Americold Corp., 12.875%,
5/1/08........................ 195,000 198,900
AMF Group, Inc., 144A, 10.875%,
3/15/06....................... 950,000 935,750
Argentina Bocon, 6.25%, 9/1/02
(a)........................... 1,250,000 1,187,500
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
Argosy Gaming Co., 144A, 13.25%,
6/1/04........................ $ 462,000 $ 467,775
Asia Invest Interest, Ltd.,
0.00%, 1/13/97................ 1,025,000 958,214
BE Aerospace, Inc., 144A,
9.875%, 2/1/06................ 845,000 830,213
Big 5 Holdings, Inc., 13.625%,
9/15/02....................... 200,000 187,000
Cablevision Systems Corp.,
10.50%, 5/15/16............... 250,000 241,875
Calpine Corp. 144A, 10.50%,
5/15/06....................... 380,000 380,950
Carrols Corp., 11.50%, 8/15/03.. 820,000 828,200
Ce Casecnan Water & Energy Inc.
Series B 144A, 11.95%,
11/15/10...................... 1,150,000 1,157,187
Cobb Theaters, 144A, 10.625%,
3/1/03........................ 1,000,000 1,015,000
Comcast Corp., 9.50%,
1/15/08....................... 479,000 462,235
Commodore Media, Inc. 144A,
7.50%, 5/1/03 (a)............. 900,000 931,500
County Seat Stores Inc., 12.00%,
10/1/02....................... 650,000 539,500
Courtyard By Marriott II Ltd.,
144A, 10.75%, 2/1/08.......... 900,000 879,750
Croatia Principal, 6.375%,
12/31/10 144A (a)............. 1,000,000 875,000
Crown Paper Co., 11.00%,
9/1/05........................ 210,000 200,025
CRV Finance Jersey Ltd., 10.21%,
2/14/97 (a)................... 1,519,090 1,601,121
Dade International, Inc. 144A,
11.125%, 5/1/06............... 200,000 207,000
Den Norske Credit, 5.75%,
11/29/49 (a).................. 800,000 657,000
Dynacare, Inc., 10.75%,
1/15/06....................... 1,215,000 1,218,037
Eagle Food Centers, Inc.,
8.625%, 4/15/00............... 200,000 174,000
Export-Import Bank of Japan,
8.00%, 6/4/00................. 391,875 390,170
Fundy Cable Ltd., 11.00%,
11/15/05...................... 475,000 479,750
G I Holdings, Inc. 144A, 10.00%,
2/15/06....................... 250,000 248,750
Harris Chemical North America,
Inc., 10.75%, 10/15/03........ 368,000 359,720
Hayes Wheels International,
Inc., 11.00%, 7/15/06......... 915,000 927,581
Haynes International, Inc.,
13.50%, 8/15/99............... 240,000 243,600
Hills Stores Co., 144A, 12.50%,
7/1/03........................ 170,000 166,600
Hollywood Casino, Corp., 12.75%,
11/1/03....................... 1,391,000 1,391,000
Hong Kong & Shanghai Bank,
5.563%, 8/29/49 (a)........... 1,200,000 1,015,320
ICF Kaiser International, Inc.,
13.00%, 12/31/03 (a).......... 200,000 191,000
ING Ecuador Note, 0.00%,
4/17/97....................... 765,000 688,714
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 21
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C>
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
Isveimer, 6.347%, 12/18/97 (a).. $ 475,000 $ 470,488
KCS Energy, Inc., 144A, 11.00%,
1/15/03....................... 565,000 596,075
Mothers Work, Inc. 144A,
12.625%, 8/1/05............... 492,000 519,060
Paribas LBP Participation,
0.00%, 11/28/96............... 839,441 781,855
Pathmark Stores, Inc., 11.625%,
6/15/02....................... 850,000 845,750
Paxson Communications Corp.
144A, 11.625%, 10/1/02........ 805,000 837,200
Plains Resources, Inc. 144A,
10.25%, 3/15/06............... 315,000 311,063
Poindexter J.B., Inc., 12.50%,
5/15/04....................... 345,000 296,700
Pueblo Xtra International,
9.50%, 8/1/03................. 476,000 428,400
Reliance Industries Ltd. 144A,
8.125%, 9/27/05............... 100,000 94,500
Reliance Industries Ltd. 144A,
9.375%, 6/24/26............... 1,000,000 1,010,000
Reliance Industries, Ltd. 144A,
8.125%, 9/27/05............... 600,000 567,000
Remington Product Co. 144A,
11.00%, 5/15/06............... 925,000 920,375
Silgan Corp., 11.75%, 6/15/02... 767,000 778,505
Smith's Food & Drug Centers,
Inc., 11.25%, 5/15/07......... 710,000 715,325
Sullivan Broadcasting, 10.25%,
12/15/05...................... 400,000 381,000
Terex Corp. 144A, 13.75%,
5/15/02....................... 325,000 339,219
Unisys Corp., 15.00%, 7/1/97
(a)........................... 600,000 634,500
Unisys Corp. 144A, 12.00%,
4/15/03....................... 761,000 778,123
Univision Network Holding LP,
7.00%, 12/17/02............... 440,000 365,200
Walbro Corp. 144A, 9.875%,
7/15/05....................... 260,000 254,800
Waxman Industries, Inc. 144A,
12.75%, 6/1/04................ 220,000 147,400
Williamhouse Regency Delaware
Inc. 144A, 13.00%,
11/15/05...................... 575,000 651,188
FOREIGN GOVERNMENT OBLIGATIONS
Morocco Restructuring &
Consolidation Agreement,
6.438%, 1/1/09 (a)............ 1,500,000 1,083,750
Republic of Ecuador, 6.625%,
12/21/04 (a).................. 475,000 349,125
Republic of Slovenia 144A,
6.50%, 12/11/06 (a)........... 1,000,000 992,500
Republic of Venezuela, 6.375%,
3/31/07 (a)................... 1,750,000 1,268,750
Venezuela FLIRB, 6.50%, 3/31/07
(a),(b)....................... 250,000 182,187
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE BACKED SECURITIES
Federal Home Loan Mortgage
Corp.,
7.556%, 2/1/24 (a)............ $ 1,349,815 $ 1,385,669
8.00%, 5/1/25................. 1,396,678 1,408,452
Federal National Mortgage
Association, 11.50%,
2/1/20........................ 3,455,308 3,894,754
Government National Mortgage
Association,
6.00%, 7/20/25 (a)............ 271,314 274,112
6.00%, 10/20/25 (a)........... 1,706,039 1,713,512
6.00%, 11/20/25 (a)........... 954,027 958,205
U.S. GOVERNMENT OBLIGATIONS
United States Treasury Notes,
6.875%, 3/31/97............... 510,000 514,381
------------
TOTAL UNITED STATES DOLLAR...... 55,564,369
------------
VENEZUELAN BOLIVAR--0.5%
CORPORATE BOND
ING VEB Note, 0.00%, 7/19/96
(a)........................... VEB 260,000,000 538,687
------------
TOTAL CURRENCY DENOMINATED BONDS*
(Identified cost $95,196,319)..... 95,650,414
------------
<CAPTION>
SHARES
--------------
<S> <C> <C> <C>
PREFERRED STOCKS--0.7%
(Identified cost $803,000)
Cablevision Systems Corp.
144A.......................... USD 8,000 776,000
------------
<CAPTION>
PRINCIPAL
AMOUNT
--------------
<S> <C> <C> <C>
COMMERCIAL PAPER--2.9%
Ford Motor Credit Corp., 5.38%,
10/1/96....................... $ 775,000 764,345
General Motors Acceptance Corp.,
5.32%, 7/12/96................ 425,000 424,309
5.32%, 11/27/96............... 450,000 440,091
5.33%, 7/11/96................ 305,000 304,548
5.34%, 7/12/96................ 450,000 449,266
5.37%, 7/19/96................ 415,000 413,886
5.53%, 12/12/96............... 460,000 448,412
------------
TOTAL COMMERCIAL PAPER
(Identified cost $3,244,857)...... 3,244,857
------------
DISCOUNT NOTES--13.5%
(Identified cost $14,950,840)
Federal Home Loan Bank Discount
Notes, 5.28%, 7/12/96......... 14,975,000 14,950,840
------------
TOTAL INVESTMENTS
(Identified cost
$114,195,016)(c)................ 103.3% 114,622,111
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS...................... (3.3) (3,658,008)
---- ----------
NET ASSETS......................... 100.0% $110,964,103
---- ----------
---- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 22
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
LAZARD STRATEGIC YIELD PORTFOLIO (CONTINUED)
</TABLE>
(a) Variable rate security. Interest shown is the current rate.
(b) Front Loaded Interest Reduction Bond.
(c) The aggregate cost for federal income tax purposes is $114,195,016;
aggregate gross unrealized appreciation is $1,669,902 and aggregate gross
unrealized depreciation is $1,242,807, resulting in net unrealized
appreciation of $427,095.
* Percentages of holdings are presented in the portfolio by currency
denomination.
Percentages by country are as follows:
Argentina 2.5%, Australia 2.0%, Brazil 3.0%, Canada 5.0%, Colombia 0.7%,
Czech Republic 1.6%, Denmark 1.6%, Ecuador 0.9%, Germany 0.6%, Greece 0.9%,
Hong Kong 1.8%, Hungary 0.9%, Indonesia 1.5%, Italy 3.0%, Japan 1.7%, Mexico
1.0%, Morocco 1.0%, Netherlands 0.6%, New Zealand 1.3%, Norway 2.1%,
Philippines 1.0%, Poland 1.3%, Portugal 0.7%, South Africa 0.7%, Spain 2.9%,
Thailand 0.8%, Turkey 0.7%, United Kingdom 3.2%, United States 39.4%,
Venezuela 1.8%.
Percentages by industry are as follows:
Aerospace & Defense 0.7%, Automotive 1.7%, Banking 5.4%, Broadcasting &
Media 2.6%, Building & Building Materials 1.6%, Chemicals & Chemical
Manufacturing 1.8%, Communications 0.8%, Computers & Computer Equipment
1.3%, Electronics 1.0%, Energy Services 1.0%, Entertainment 3.4%,
Environmental Services 0.2%, Finance 11.7%, Food & Beverages 2.3%, Holdings
Company 1.1%, Hotels 0.8%, Household Products 0.5%, Industrial & Machinery
0.3%, Manufacturing 1.8%, Medical & Health Care 1.3%, Miscellaneous 0.9%,
Oil & Gas Equipment 1.2%, Paper Manufacturing & Products 0.8%, Retail 2.7%,
Utilities 0.8%, Collateralized Mortgage Obligation 1.2%, Mortgage Backed
Securities 1.2%, U.S. Government Obligations 11.6%, Foreign Government
Obligations 24.5%
Forward Foreign Currency Contracts open at June 30, 1996:
<TABLE>
<CAPTION>
In Unrealized
Contracts Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ------------------- ---------------- ------------ ------------------
<S> <C> <C> <C>
$ 510,000 CNY 4,502,331 3/26/97 $ 17,224
$ 460,000 COP 539,175,200 12/12/96 12,936
$ 450,000 CLP 196,326,000 11/29/96 8,441
AUD 3,439,011 2$,715,000 9/12/96 23,968
CAD 5,370,936 3$,942,965 9/12/96 2,867
$ 139,400 DEM 210,634 9/12/96 (238)
DEM 8,171,751 5$,346,500 9/12/96 (52,409)
$ 1,219,195 DKK 7,146,797 9/12/96 4,780
DKK 17,950,023 3$,038,000 9/12/96 (36,156)
ESP 411,035,539 3$,162,041 9/12/96 (36,612)
GBP 1,910,140 2$,935,357 9/12/96 (29,756)
ITL 4,479,745,500 2$,862,000 9/12/96 (44,569)
$ 50,000 JPY 5,386,250 9/12/96 (217)
JPY 247,398,660 2$,292,049 9/12/96 5,459
$ 293,288 NLG 499,205 9/12/96 997
NLG 1,459,486 8$54,000 9/12/96 (6,377)
NOK 11,424,907 1$,742,000 9/12/96 (20,993)
XEU 1,270,857 1$,569,000 9/12/96 (18,022)
$ 2,319,053 JPY 222,420,361 9/3/96 (265,706)
JPY 222,420,361 2$,364,916 9/3/96 311,569
$ 415,000 CLP 170,797,856 7/22/96 (1,544)
$ 868,585 SKK 26,544,820 7/12/96 (11,388)
$ 326,000 CLP 135,384,540 7/11/96 2,803
$ 611,258 JPY 66,850,222 7/10/96 0
$ 3,258,937 ESP 418,196,616 7/5/96 8,096
$ 112,950 THB 2,865,648 7/5/96 (62)
$ 105,367 ZAR 459,335 7/5/96 642
ESP 331,266,917 2$,581,509 7/5/96 (5,397)
--------------
$ (129,664)
================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------
<CAPTION>
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO
COMMON STOCKS--90.5%
AEROSPACE & DEFENSE--1.2%
Alliant Techsystems, Inc. (a)........... 219,900 $ 10,362,788
-------------
AIRLINE--1.1%
USAir Group, Inc. (a)................... 516,400 9,295,200
-------------
APPAREL & TEXTILES--0.4%
Fab Industries, Inc. ................... 8,600 234,350
Garan, Inc. ............................ 80,000 1,360,000
Superior Surgical Manufacturing
Co., Inc. ............................ 100,000 1,187,500
Weyco Group, Inc. ...................... 10,000 395,000
-------------
3,176,850
-------------
AUTOMOTIVE--0.1%
Oshkosh Truck Corp. Class B............. 22,000 310,750
Wynn's International, Inc. ............. 26,250 741,563
-------------
1,052,313
-------------
AUTO PARTS--1.2%
Durakon Industries, Inc. (a)............ 430,000 6,288,750
Republic Automotive Parts, Inc. (a)..... 15,000 221,250
Standard Motor Products, Inc. Class A... 215,000 3,843,125
-------------
10,353,125
-------------
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
BANKING & FINANCIAL SERVICES--3.7%
ALBANK Financial Corp. ................. 202,800 $ 5,348,850
Coast Savings Financial, Inc. (a)....... 310,000 10,152,500
Cullen/Frost Bankers, Inc. ............. 272,000 7,548,000
Hibernia Corp. Class A.................. 899,600 9,783,150
North Fork Bancorp., Inc. .............. 2,900 75,768
-------------
32,908,268
-------------
BROADCASTING--2.0%
Cablevision Systems Corp. Class A (a)... 169,600 7,844,000
Home Shopping Network, Inc. (a)......... 648,900 7,786,800
Katz Media Group, Inc. (a).............. 150,300 2,160,563
-------------
17,791,363
-------------
BUSINESS SERVICES AND SUPPLIES--0.2%
Ennis Business Forms, Inc. ............. 90,000 1,023,750
Grey Advertising, Inc. ................. 4,000 884,000
-------------
1,907,750
-------------
CHEMICALS & PLASTICS--1.5%
Aceto Corp. ............................ 50,000 762,500
MacDermid, Inc. ........................ 19,700 1,369,150
Mississippi Chemical Corp. ............. 478,000 9,560,000
NCH Corp. .............................. 22,000 1,413,500
-------------
13,105,150
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 23
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------
<CAPTION>
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
COMMERCIAL SERVICES--0.8%
AFA Protective Systems, Inc. ........... 15,100 $ 1,698,750
Pittston Brink's Group.................. 183,300 5,338,613
-------------
7,037,363
-------------
COMMUNICATIONS--2.9%
Associated Group, Inc. Class A (a)...... 56,650 1,713,662
Associated Group, Inc. Class B (a)...... 256,650 7,667,419
Cellular Communications of Puerto Rico,
Inc. (a).............................. 230,058 7,476,885
International CableTel, Inc. (a)........ 296,000 8,732,000
-------------
25,589,966
-------------
COMPUTERS & BUSINESS EQUIPMENT--3.6%
Lexmark International Group, Inc. Class
A (a)................................. 545,100 10,970,137
Stratus Computer, Inc. (a).............. 407,300 11,811,700
Wang Laboratories, Inc. (a)............. 476,000 8,984,500
-------------
31,766,337
-------------
CONSTRUCTION MATERIALS--0.1%
Florida Rock Industries, Inc. .......... 3,500 90,563
Puerto Rican Cement Co., Inc. .......... 35,000 1,089,375
-------------
1,179,938
-------------
CONSUMER DURABLES--1.4%
Boston Acoustics, Inc. ................. 40,000 850,000
Briggs & Stratton Corp. ................ 289,300 11,897,463
-------------
12,747,463
-------------
CONTAINERS & PACKAGING--0.8%
American Filtrona Corp. ................ 15,000 453,750
Ball Corp. ............................. 220,700 6,345,125
-------------
6,798,875
-------------
COSMETICS & TOILETRIES--1.3%
Alberto Culver Co. Class A.............. 276,900 11,076,000
-------------
DRUGS & HEALTH CARE--5.8%
FHP International Corp. (a)............. 267,100 7,311,862
Integrated Health Services, Inc. ....... 378,200 8,982,250
Lincare Holdings, Inc. (a).............. 367,000 14,404,750
Magellan Health Services, Inc. (a)...... 577,800 12,422,700
Perrigo Co. (a)......................... 699,000 7,863,750
-------------
50,985,312
-------------
ELECTRICAL EQUIPMENT--5.2%
American Power Conversion Corp. (a)..... 1,184,300 12,139,075
Amphenol Corp. Class A (a).............. 683,800 15,727,400
Anixter International, Inc. (a)......... 667,600 9,930,550
Belden, Inc. ........................... 252,900 7,587,000
-------------
45,384,025
-------------
ELECTRONICS--1.4%
Allen Organ Co. Class B................. 35,000 1,321,250
Lattice Semiconductor Corp. (a)......... 459,800 11,092,675
-------------
12,413,925
-------------
FOOD & BEVERAGE--0.2%
Farmer Brothers Co. .................... 15,000 2,010,000
-------------
HOUSEHOLD APPLIANCES & HOME
FURNISHINGS--1.7%
Ethan Allen Interiors, Inc. (a)......... 298,000 7,375,500
Haverty Furniture Co., Inc. ............ 12,500 128,125
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
National Presto Industries, Inc. ....... 42,000 $ 1,596,000
Sunbeam Corp., Inc. .................... 364,100 5,370,475
Virco Manufacturing Corp. .............. 80,000 770,000
-------------
15,240,100
-------------
INDUSTRIAL & MACHINERY--4.7%
Astec Industries, Inc. (a).............. 18,000 157,500
Brenco, Inc. ........................... 20,000 320,000
Duriron Co., Inc. ...................... 410,100 9,842,400
Manitowoc Co., Inc. .................... 313,000 11,228,875
Measurex Corp. ......................... 250,200 7,318,350
Paul Mueller Co. ....................... 10,000 317,500
Penn Engineering & Manufacturing
Corp. ................................ 12,000 283,500
Penn Engineering & Manufacturing Corp.
(a)................................... 36,000 679,500
United Dominion Industries, Ltd......... 500,000 11,500,000
-------------
41,647,625
-------------
INSURANCE--5.4%
American Bankers Insurance Group,
Inc. ................................. 208,600 9,100,175
Hilb, Rogal & Hamilton Co. ............. 45,500 631,312
NAC Re Corp. ........................... 240,000 8,040,000
Penncorp Financial Group, Inc. ......... 339,300 10,772,775
Reliance Group Holdings, Inc. .......... 1,180,000 8,850,000
Western National Corp. ................. 531,000 9,757,125
-------------
47,151,387
-------------
LEISURE TIME--1.3%
Polaris Industries, Inc. ............... 330,000 11,261,250
-------------
MANUFACTURING--8.1%
Alltrista Corp. (a)..................... 358,400 8,512,000
Amtrol, Inc. ........................... 20,000 390,000
Carlisle Companies, Inc. ............... 186,000 9,881,250
Crane Co. .............................. 271,400 11,127,400
Graco, Inc. ............................ 4,000 81,000
Herman Miller, Inc. .................... 276,700 8,473,937
Mark IV Industries, Inc. ............... 479,985 10,859,661
Robbins & Myers, Inc. .................. 9,500 422,750
Standex International Corp. ............ 3,000 85,500
Tranzonic Co. Class A................... 80,000 990,000
Tranzonic Co. Class B................... 40,000 460,000
TRINOVA Corp. .......................... 380,400 12,695,850
Varlen Corp. ........................... 343,970 7,223,370
-------------
71,202,718
-------------
MEDICAL SUPPLIES--1.2%
Dentsply International, Inc. ........... 240,000 10,200,000
Isomedix, Inc. (a)...................... 10,000 148,750
-------------
10,348,750
-------------
METALS--1.2%
Titanium Metals Corp. (a)............... 400,000 10,350,000
-------------
OIL & GAS--3.1%
Diamond Shamrock, Inc. ................. 200,000 5,775,000
Helmerich & Payne, Inc. ................ 306,500 11,225,562
RPC, Inc. (a)........................... 18,500 212,750
Vintage Petroleum, Inc. ................ 410,500 10,467,750
-------------
27,681,062
-------------
PUBLISHING--3.1%
Banta Corp. ............................ 437,650 11,050,662
Scientific Games Holdings Corp. (a)..... 171,100 4,961,900
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 24
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD SMALL CAP PORTFOLIO (CONTINUED)
Value Line, Inc. ....................... 20,000 $ 680,000
World Color Press, Inc. (a)............. 402,000 10,200,750
-------------
26,893,312
-------------
REAL ESTATE--5.3%
Alexander's, Inc. (a)................... 80,000 5,810,000
Avalon Properties, Inc. ................ 238,600 5,189,550
Bay Apartment Communities, Inc. ........ 175,000 4,528,125
Crescent Real Estate Equities, Inc. .... 193,900 7,125,825
FelCor Suite Hotels, Inc. .............. 330,000 10,065,000
Liberty Property Trust.................. 271,500 5,396,062
Reckson Associates Reality Corp. ....... 260,000 8,580,000
-------------
46,694,562
-------------
RESTAURANTS, LODGING & ENTERTAINMENT--2.4%
IHOP Corp. (a).......................... 297,500 8,032,500
Players International, Inc. (a)......... 570,000 5,557,500
Sbarro, Inc. ........................... 301,300 7,570,162
-------------
21,160,162
-------------
RETAIL--4.0%
Fingerhut Cos., Inc. ................... 452,200 7,065,625
Fred Meyer, Inc. (a).................... 388,000 11,397,500
Revco D.S., Inc. (a).................... 261,362 6,240,018
Sotheby's Holdings, Inc. Class A........ 693,200 10,051,400
-------------
34,754,543
-------------
RETAIL TRADE--1.7%
Carson Pirie Scott & Co. (a)............ 431,200 11,534,600
Dress Barn, Inc. (a).................... 120,000 1,260,000
Proffitts, Inc. (a)..................... 48,800 1,732,400
-------------
14,527,000
-------------
SERVICES--0.8%
GTECH Holdings Corp. (a)................ 237,700 7,041,863
-------------
STEEL--2.9%
Huntco, Inc. Class A.................... 308,600 5,709,100
Lukens, Inc. ........................... 356,600 8,513,825
Pitt-Des Moines, Inc. .................. 1,500 63,750
UCAR International, Inc. (a)............ 275,000 11,446,875
-------------
25,733,550
-------------
TECHNOLOGY--0.8%
Intelligent Electronics, Inc. .......... 855,600 7,272,600
Verbex Voice Systems, Inc. (a),(b)...... 103,840 0
Verbex Voice Systems, Inc. (a),(b)...... 76,661 0
-------------
7,272,600
-------------
TELECOMMUNICATION EQUIPMENT--4.1%
Allen Group, Inc. ...................... 541,700 11,781,975
Oak Industries, Inc. (a)................ 455,900 13,506,037
Scientific-Atlanta, Inc. ............... 710,000 11,005,000
-------------
36,293,012
-------------
TEXTILES, SHOES AND APPAREL--0.8%
Warnaco Group, Inc. Class A............. 265,000 6,823,750
-------------
TRANSPORTATION--2.1%
Air Express International Corp. ........ 388,600 10,977,950
Rollins Truck Leasing Co. .............. 685,800 7,115,175
-------------
18,093,125
-------------
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
TRUCKING & FREIGHT FORWARDING--0.9%
Kysor Industrial Corp. Delaware......... 9,000 $ 218,250
Pittston Burlington Group............... 353,700 7,648,763
-------------
7,867,013
-------------
TOTAL COMMON STOCKS
(Identified cost $689,234,533)............ 794,979,395
-------------
PREFERRED STOCKS--0.0%
(Identified cost $1,500,000)
TECHNOLOGY--0.0%
Verbex Voice Systems, Inc. Series F
(conv.) (a),(b)....................... 687,285 0
-------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
CORPORATE BONDS--0.6%
(Identified cost $5,589,000)
COMMUNICATIONS--0.6%
International CabelTel, Inc., 7.00%,
6/15/08............................... $ 5,589,000 5,519,138
-------------
CONVERTIBLE BONDS--0.5%
COMMUNICATIONS--0.5%
International CableTel, Inc. 144A,
7.25%, 4/15/05........................ 3,400,000 4,071,500
-------------
RESTAURANTS, LODGING & ENTERTAINMENT--0.0%
Interactive Light Holdings, Inc., 8.00%,
1/25/99 (a),(b)....................... 1,000,000 500,000
-------------
TECHNOLOGY--0.0%
Verbex Voice Systems, Inc., 10.00%,
6/30/96 (a),(b)....................... 100,000 0
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $4,644,040).............. 4,571,500
-------------
DISCOUNT NOTES--8.1%
Federal Home Loan Bank Discount Notes,
5.24%, 7/1/96......................... 20,000,000 20,000,000
5.28%, 7/12/96........................ 51,315,000 51,232,212
-------------
TOTAL DISCOUNT NOTES
(Identified cost $71,232,212)............. 71,232,212
-------------
TOTAL INVESTMENTS
(Identified cost $772,199,785)(c)......... 99.7% 876,302,245
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES............................... 0.3 2,682,354
---- ----------
NET ASSETS................................. 100.0% $ 878,984,599
---- ----------
---- ----------
</TABLE>
(a) Non-income producing security.
(b) Private placement (note 6).
(c) The aggregate cost for federal income tax purposes is $772,199,785;
aggregate gross unrealized appreciation is $127,530,438 and aggregate gross
unrealized depreciation is $23,427,978, resulting in net unrealized
appreciation of $104,102,460.
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 25
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
COMMON STOCKS* --82.7%
ARGENTINA--3.1%
Capex SA, 144A (a),(c)................. 218,800 $ 3,610,200
-------------
AUSTRALIA--3.6%
Bibury Ltd. (a),(d).................... 472,100 0
Energy Equity Corp. Ltd. (a)........... 1,506,000 840,283
Pacific Mutual Ltd..................... 991,200 1,822,718
Pasminco Ltd........................... 1,084,500 1,525,544
-------------
TOTAL AUSTRALIA........................ 4,188,545
-------------
BELGIUM--3.2%
Audiofina.............................. 46,500 2,228,327
Quick Restaurants SA................... 14,400 1,426,130
-------------
TOTAL BELGIUM.......................... 3,654,457
-------------
CANADA--0.9%
Maple Leaf Foods, Inc. ................ 202,200 1,036,695
-------------
DENMARK--2.3%
Spar Nord Holding...................... 51,000 1,488,606
Sparekassen Bikuben Girobank........... 36,200 1,235,811
-------------
TOTAL DENMARK.......................... 2,724,417
-------------
FINLAND--5.2%
Finnair OY............................. 159,700 1,096,481
Huhtamaki Group........................ 65,200 2,181,967
Sampo Insurance Company Ltd. .......... 46,500 2,700,687
-------------
TOTAL FINLAND.......................... 5,979,135
-------------
FRANCE--3.7%
Axime (Ex Segin) (a)................... 9,000 1,259,818
Klepierre.............................. 14,600 1,788,242
Societe des Immeubles de France........ 19,300 1,245,742
Societe des Immuebles de France (a).... 315 20,332
-------------
TOTAL FRANCE........................... 4,314,134
-------------
GERMANY--2.1%
Cewe Color Holding AG.................. 3,600 1,314,041
Wuerttembergische Metallwarenfabrik
AG................................... 5,700 1,162,118
-------------
TOTAL GERMANY.......................... 2,476,159
-------------
HONG KONG--2.3%
China Apollo Holdings Ltd. (a)......... 4,041,000 522,039
Peregrine Investment................... 1,499,000 2,159,189
-------------
TOTAL HONG KONG........................ 2,681,228
-------------
IRELAND--2.6%
Fitzwilton PLC......................... 2,289,400 2,192,912
Unidare PLC (a)........................ 241,600 875,530
-------------
TOTAL IRELAND.......................... 3,068,442
-------------
ITALY--3.5%
Arnoldo Mondadori Editore SPA.......... 245,300 1,858,273
Editoriale L' Espresso SPA (a)......... 429,800 1,199,931
Mediolanum SPA (a)..................... 100,000 995,918
-------------
TOTAL ITALY............................ 4,054,122
-------------
JAPAN--8.1%
Aderans Company Ltd. .................. 90,000 2,402,963
Cowboy Company Ltd. ................... 131,000 1,772,779
Dowa Fire & Marine Insurance Co. ...... 190,000 1,038,906
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
FCC Company Ltd. ...................... 23,000 $ 855,941
Kanamoto Company Ltd. ................. 70,000 1,164,907
Nisshin Fire & Marine Insurance Co. ... 217,000 1,071,458
Zenitaka Corp. (a)..................... 146,000 1,065,313
-------------
TOTAL JAPAN............................ 9,372,267
-------------
NEW ZEALAND--6.2%
Fisher & Paykel Industries Ltd. ....... 575,516 1,853,054
Tranz Rail Holdings Ltd. (a)........... 82,600 1,146,075
Warehouse Group Ltd. .................. 1,140,800 2,040,647
Wrightson Ltd. ........................ 2,873,200 2,115,118
-------------
TOTAL NEW ZEALAND...................... 7,154,894
-------------
NORWAY--3.3%
Aker AS Class B........................ 94,700 1,692,870
Fokus Bank AS (a)...................... 390,800 2,131,932
-------------
TOTAL NORWAY........................... 3,824,802
-------------
PAKISTAN--0.0%
Lever Brothers Ltd. ................... 540 12,341
Packages............................... 750 2,078
-------------
TOTAL PAKISTAN......................... 14,419
-------------
SOUTH KOREA--1.9%
Chosun Brewery (a)..................... 32,000 1,020,592
Shinhan Bank........................... 50,900 1,142,238
-------------
TOTAL SOUTH KOREA...................... 2,162,830
-------------
SPAIN--3.5%
Acerinox SA............................ 10,400 1,084,645
Corporacion Financiera Reunida
SA (a)............................... 1,070,400 2,993,658
-------------
TOTAL SPAIN............................ 4,078,303
-------------
SWEDEN--4.8%
Althin Medical AB...................... 55,000 1,287,745
Getinge Industries AB.................. 66,198 1,249,944
TV 4 AB Series A....................... 172,900 3,055,739
-------------
TOTAL SWEDEN........................... 5,593,428
-------------
SWITZERLAND--6.2%
Attisholz Holding AG (a)............... 2,600 1,218,685
Liechtenstein Global Trust............. 5,000 2,439,610
Logitech International SA (a).......... 14,300 1,795,793
Swisslog Holding AG.................... 5,690 1,683,970
-------------
TOTAL SWITZERLAND...................... 7,138,058
-------------
TAIWAN--3.3%
ASE Test Ltd. (a)...................... 20,000 1,046,250
Yageo Corp. (a),(c).................... 371,000 2,830,730
-------------
TOTAL TAIWAN........................... 3,876,980
-------------
UNITED KINGDOM--12.9%
Anglian Group PLC...................... 491,350 1,488,014
Bell Cablemedia PLC (a),(b)............ 75,400 1,262,950
Berisford PLC.......................... 740,000 2,057,152
Greycoat PLC........................... 1,018,175 2,221,674
London Clubs International PLC......... 121,300 1,654,824
McDonnell Information Systems PLC...... 1,347,000 1,527,116
School PLC............................. 736,400 2,962,069
Takare PLC............................. 869,000 1,756,282
-------------
TOTAL UNITED KINGDOM................... 14,930,081
-------------
TOTAL COMMON STOCK
(Identified cost $95,356,097)............ 95,933,596
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 26
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD INTERNATIONAL SMALL CAP
PORTFOLIO (CONTINUED)
PREFERRED STOCKS* --8.2%
AUSTRIA--1.8%
Bau Holdings AG........................ 32,000 $ 2,031,436
-------------
GERMANY--4.5%
Hornbach Holding AG.................... 34,300 2,953,146
Moebel Walther AG...................... 50,770 2,305,933
-------------
TOTAL GERMANY.......................... 5,259,079
-------------
UNITED KINGDOM--1.9%
Signet Group PLC (a),(b)............... 23 2,208,000
-------------
TOTAL PREFERRED STOCKS
(Identified cost $7,341,607)............. 9,498,515
-------------
WARRANTS--0.0%
(Identified cost $0)
HONG KONG--0.0%
Peregrine Investment Holdings
Ltd. (a)............................. 149,900 18,590
-------------
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
CONVERTIBLE BONDS* --3.4%
PHILIPPINES--1.6%
Bacnotan Consolidated Industries 144A,
5.50%, 6/21/04....................... $ 2,000,000 1,880,000
-------------
UNITED STATES--1.8%
International CableTel Inc. 144A,
7.25%, 4/15/05....................... 1,700,000 2,035,750
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $3,700,000)............. 3,915,750
-------------
DISCOUNT NOTES--2.8%
(Identified cost $3,244,757)
Federal Home Loan Bank Discount Notes,
5.28%, 7/12/96....................... 3,250,000 3,244,757
-------------
TOTAL INVESTMENTS
(Identified cost $109,642,461)(e)........ 97.1% 112,611,208
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES.............................. 2.9 3,383,846
---- ----------
NET ASSETS................................ 100.0% $ 115,995,054
---- ----------
---- ----------
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) Global Depository Receipts.
(d) Bankrupt security valued at zero.
(e) The aggregate cost for federal income tax purposes is $109,642,461;
aggregate gross unrealized appreciation is $10,007,606 and aggregate gross
unrealized depreciation is $7,038,859, resulting in net unrealized
appreciation of $2,968,747.
* Percentages of common stocks, preferred stocks, and convertible bonds are
presented in the portfolio by currency denomination.
Percentages by industry are as follows:
Agriculture 1.8%, Auto Parts 0.7%, Banks 1.0%, Brewery 0.9%, Broadcasting
5.6%, Building & Construction 0.9%, Computers & Business Equipment 3.9%,
Construction Materials 4.4%, Cosmetics & Toiletries 2.6%, Electrical
Equipment 0.8%, Electronics 4.9%, Engineering & Construction 1.8%,
Entertainment 1.4%, Financial Services 11.2%, Food & Beverage 5.1%, Health
Care 1.5%, Hotel & Restaurant 1.2%, Household Products 1.0%, Industrial &
Machinery 2.6%, Insurance 5.0%, Leisure Time 1.1%, Medical Supplies 1.1%,
Metals 2.2%, Miscellaneous 8.6%, Oil & Gas Exploration 0.7%, Paper Products
1.1%, Real Estate 3.0%, Retailing 8.3%, Retail Trade 2.0%, Telecommunication
1.8%, Telephone 1.1%, Transportation & Freight Services 1.9%, Venture
Capital 3.1%.
Forward Foreign Currency Contracts open at June 30, 1996:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ----------------- ----------------- -------- --------------
<S> <C> <C> <C>
BEL 191,296,000 $ 6,100,000 9/13/96 $ (40,516)
DEM 10,451,210 $ 6,860,000 9/13/96 (45,298)
FIM 28,641,330 $ 6,100,000 9/13/96 (108,747)
FRF 24,170,244 $ 4,676,000 9/13/96 (39,694)
$ 52,328 NZD 76,114 7/5/96 37
$ 1,162,283 FRF 5,971,812 7/3/96 (1,266)
$ 2,336,182 JPY 255,087,674 7/2/96 (3,738)
$ 711,014 NZD 1,040,254 7/2/96 4,675
JPY 179,266,978 $ 1,637,739 7/1/96 (1,422)
--------------
$ (235,969)
================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
------------
<S> <C> <C>
LAZARD EMERGING MARKETS PORTFOLIO
COMMON STOCKS* --78.8%
ARGENTINA--4.3%
Capex SA.............................. 224,900 $ 1,822,419
Metrogas SA Class B (b)............... 103,400 1,085,700
Quilmes Industrial Quinsasa (b)....... 61,900 634,475
YPF Sociedad Anonima Class D (b)...... 46,300 1,041,750
-------------
TOTAL ARGENTINA....................... 4,584,344
-------------
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
BRAZIL--1.3%
Light Participacoes SA (a)............ 1,200,000 $ 193,850
Pao de Acucar 144A (a),(c)............ 73,800 1,199,250
-------------
TOTAL BRAZIL.......................... 1,393,100
-------------
CHILE--5.5%
AFP Provida SA (b).................... 59,300 1,445,437
Banco BHIF (a),(b).................... 97,400 1,960,175
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 27
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS PORTFOLIO (CONTINUED)
Chilectra SA (a),(b).................. 21,500 $ 1,182,992
Compania De Telecomunicaciones de
Chile (b)........................... 13,500 1,324,688
-------------
TOTAL CHILE........................... 5,913,292
-------------
COLOMBIA--1.1%
Banco De Bogota....................... 226,401 1,198,534
-------------
CZECH REPUBLIC--1.3%
Komercni Banka AS 144A (a),(c)........ 51,700 1,395,900
-------------
ECUADOR--1.2%
La Cemento Nacional CA
144A (a),(c)........................ 7,300 1,292,100
-------------
GREECE--2.5%
Ergo Bank SA.......................... 19,100 1,052,156
Papastratos Cigarette SA (a).......... 24,300 692,034
Titan Cement Co. SA................... 19,300 954,047
-------------
TOTAL GREECE.......................... 2,698,237
-------------
HONG KONG--5.9%
Chen Hsong Holdings................... 2,936,000 1,574,049
Guangshen Railway Co., Ltd. ADS
(a),(b)............................. 78,800 1,507,050
Peregrine Investment Holdings, Ltd.... 846,000 1,218,595
Tingyi (Cayman Island) Holdings Co.
(a)................................. 4,600,000 1,262,790
Yue Yuen Industrial Holdings.......... 2,862,000 813,404
-------------
TOTAL HONG KONG....................... 6,375,888
-------------
HUNGARY--3.4%
Cofinec (a)........................... 16,400 783,100
Egis Gyogyszergyar.................... 21,400 1,279,282
MOL Magyar Olaj-es Gazipari 144A
(a),(c)............................. 105,700 1,167,985
Zagrebacka Banka (a),(c).............. 36,200 412,680
-------------
TOTAL HUNGARY......................... 3,643,047
-------------
INDIA--1.4%
Ashok Leyland Ltd. 144A (a),(c)....... 58,600 820,400
Hindalco Industries Ltd. 144A
(a),(c)............................. 19,200 729,600
-------------
TOTAL INDIA........................... 1,550,000
-------------
INDONESIA--11.5%
Astra International................... 1,141,500 1,655,236
Bank Bali............................. 591,750 1,271,214
Citra Marga Nusaphala Persada......... 1,014,000 1,546,595
Kawasan Industries Jababeka........... 707,250 1,033,147
Matahari Putra Prima.................. 380,000 693,878
Ramayana Lestari (a).................. 1,215 3,883,824
Steady Safe........................... 927,000 1,194,844
Trias Sentosa......................... 558,500 1,091,805
-------------
TOTAL INDONESIA....................... 12,370,543
-------------
MALAYSIA--5.4%
Edaran Otomobil Nasional Berhad....... 160,000 1,532,973
IOI Properties Berhad................. 343,000 1,079,395
Rashid Hussain Berhad................. 389,000 1,426,879
Sistem Televisyen Malaysia Berhad
(a)................................. 238,000 486,590
Sistem Televisyen Malaysia Berhad A
Shares (a).......................... 140,000 286,230
Southern Bank Berhad.................. 417,000 1,019,723
-------------
TOTAL MALAYSIA........................ 5,831,790
-------------
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
MEXICO--7.5%
Cemex SA de CV........................ 435,900 $ 1,563,148
Corporacion Geo SA de CV 144A
(a),(b)............................. 75,000 1,312,500
Elamex SA de CV (a)................... 111,100 1,111,000
Fomento Economico Mexicano SA de CV
Series B............................ 551,000 1,583,626
Grupo Embotelladoras de Mexico SA de
CV (a),(b).......................... 139,500 1,482,187
Pan American Beverages, Inc. Class A
(b)................................. 21,700 971,075
-------------
TOTAL MEXICO.......................... 8,023,536
-------------
MOROCCO--1.3%
Banque Marocaine de Commerce 144A
(a),(c)............................. 100,000 1,400,000
-------------
PAKISTAN--0.9%
Hub Power Ltd. 144A (a),(c)........... 38,000 921,500
-------------
PERU--1.2%
Cerveceria Backus & Johnston.......... 1,014,041 1,282,598
-------------
PHILIPPINES--3.3%
Alaska Milk Corp. (a)................. 8,624,000 1,053,313
Benpres Holdings Corp. 144A (a),(c)... 134,600 1,094,298
Fil-Estate Land Inc................... 1,080,000 1,380,916
-------------
TOTAL PHILIPPINES..................... 3,528,527
-------------
PORTUGAL--3.3%
Banco Totta e Acores.................. 61,900 1,211,500
Investec-Consultadoria Internacional
SA (a).............................. 37,200 1,236,038
Portugal Telecom SA (a),(b)........... 40,400 1,060,500
-------------
TOTAL PORTUGAL........................ 3,508,038
-------------
RUSSIA--0.8%
First NIS Regional Fund (a)........... 88,000 880,000
-------------
SOUTH AFRICA--6.9%
Amalgamated Banks of South Africa..... 275,000 1,523,194
Barlow Ltd. .......................... 148,400 1,549,758
JD Group Ltd. ........................ 295,354 1,601,851
Kersaf Investments Ltd. .............. 100,800 1,032,892
Malbak Ltd. .......................... 324,390 1,609,597
Malbak Ltd. 144A (c).................. 8,610 40,897
-------------
TOTAL SOUTH AFRICA.................... 7,358,189
-------------
SOUTH KOREA--6.5%
Chosun Brewery (a).................... 29,569 943,059
Korea Chemical Company, Ltd. ......... 3,760 406,383
Korea Mobile Telecom Corp. ........... 1,106 1,352,505
New Korea Trust (a)................... 50,000 819,000
Pohang Iron & Steel Co., Ltd. ........ 12,000 978,846
Samsung Electronics Ltd. 144A
(a),(d)............................. 13,900 333,600
Samsung Electronics Ltd. 144A
(a),(e)............................. 4,189 75,402
Samsung Electronics Ltd. (Bonus
Shares) 144A (a),(c)................ 62 2,418
Samsung Electronics Ltd. 144A
(a),(f)............................. 204 10,404
Seoul City Gas Co. ................... 16,400 1,283,777
Shinhan Bank.......................... 35,800 803,382
-------------
TOTAL SOUTH KOREA..................... 7,008,776
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 28
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD EMERGING MARKETS PORTFOLIO (CONTINUED)
TAIWAN--1.6%
Siliconware Precision Industries Inc.
144A (a),(c)........................ 58,720 $ 462,420
Yageo Corp. (a),(c)................... 167,300 1,276,499
-------------
TOTAL TAIWAN.......................... 1,738,919
-------------
VENEZUELA--0.7%
Venezolana de Cementos................ 392,000 747,852
-------------
TOTAL COMMON STOCKS
(Identified cost $76,315,521)........... 84,644,710
-------------
PREFERRED STOCKS* --7.5%
ARGENTINA--0.5%
Quilmes Industrial Quinsasa (a),(b)... 55,650 570,412
-------------
BRAZIL--6.0%
Banco Itau SA......................... 3,300,000 1,340,736
Cemig Cia Energetica de Minas Gerais.. 47,908,000 1,273,793
Companhia Cervejaria Brahma (a)....... 2,814,400 1,678,775
Companhia Cimento Portla Itau......... 4,100,000 1,159,530
Dixie Toga SA......................... 1,004,500 970,290
-------------
TOTAL BRAZIL.......................... 6,423,124
-------------
COLOMBIA--1.0%
Gran Cadena de Almacenes Class B 144A
(b)................................. 77,400 1,025,550
-------------
TOTAL PREFERRED STOCKS
(Identified cost $7,504,483)............ 8,019,086
-------------
WARRANTS--0.0%
HONG KONG--0.0%
Peregrine Investment Holdings Ltd.
(a)................................. 65,900 8,258
-------------
INDONESIA--0.0%
Bank Bali (a)......................... 29,000 15,575
-------------
TOTAL WARRANTS
(Identified cost $0).................... 23,833
-------------
RIGHTS--0.0%
(Identified cost $0)
MALAYSIA--0.0%
South Bank Berhad..................... 63,750 0
-------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
BONDS* --1.7%
(Identified cost $1,770,750)
SOUTH AFRICA--1.7%
Republic of South Africa, 11.50%,
5/30/00............................. $ 8,725,000 1,852,374
-------------
CONVERTIBLE BONDS* --1.2%
PHILIPPINES--0.8%
Bacnotan Consolidated Industries,
5.50%, 6/21/04...................... 950,000 893,000
-------------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
TAIWAN--0.4%
United Micro Electronics (a), 1.25%,
6/8/04.............................. $ 285,000 $ 363,375
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $1,406,575)............ 1,256,375
-------------
DISCOUNT NOTES--16.1%
(Identified cost $17,327,001)
Federal Home Loan Bank Discount Notes,
5.28%, 7/12/96...................... 17,355,000 17,327,001
-------------
TOTAL INVESTMENTS
(Identified cost $104,324,330) (g)...... 105.3% 113,123,379
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS.................................. (5.3) (5,695,242)
---- ----------
NET ASSETS............................... 100.0% $ 107,428,137
---- ----------
---- ----------
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) Global Depository Receipts ("GDR").
(d) GDR. One GDR represents 1/2 of a non-voting share.
(e) GDR. One GDR represents 1/2 of a non-voting preferred share.
(f) GDR. One GDR represents 1/2 of a common share.
(g) The aggregate cost for federal income tax purposes is $104,324,330;
aggregate gross unrealized appreciation is $11,178,633 and aggregate gross
unrealized depreciation is $2,379,584, resulting in net unrealized
appreciation of $8,799,049.
* Percentages of stocks and bonds are presented in the portfolio by currency
denomination.
Percentage by industry are as follows:
Apparel & Textiles 0.8%, Automotive 1.4%, Banks 10.0%, Brewery 3.0%,
Broadcasting 0.8%, Business Services & Supplies 1.1%, Chemicals & Plastics
1.4%, Commercial Services 1.4%, Communications 5.2%, Conglomerates 3.0%,
Construction Materials 5.5%, Domestic Oil 1.0%, Drugs & Health Care 1.2%,
Electronics 2.4%, Financial Services 8.4%, Food & Beverages 7.1%, Holding
Company--Diversified 2.6%, Homebuilders 1.2%, Industrial & Machinery 3.5%,
International Oil 2.1%, Leisure Time 1.0%, Metals 0.7%, Miscellaneous 4.9%,
Real Estate 2.3%, Registered Investment Company 0.8%, Retailing 7.7%, Steel
0.9%, Tobacco 0.6%, Transportation 1.4%, Trusts 0.8%, Utilities 3.3%,
Foreign Government Obligations 1.7%.
Forward Foreign Currency Contracts open at June 30, 1996:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ----------- ----------------- -------- --------------
<S> <C> <C> <C>
$3,890,000 IDR 9,039,600,000 7/17/96 $ (6,176)
$ 514,442 IDR 1,195,563,578 7/3/96 (773)
$ 52,590 IDR 122,323,639 7/2/96 (34)
$ 84,322 MYR 210,637 7/2/96 118
$3,890,000 IDR 9,039,600,000 7/1/96 (6,176)
$ 141,246 MYR 352,196 7/1/96 (56)
$2,008,862 ZAR 8,658,196 7/1/96 (10,664)
--------------
$(23,761)
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 29
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD GLOBAL EQUITY PORTFOLIO
COMMON STOCKS--95.8%
AUSTRALIA--1.1%
Westpac Bank Corp. .......................... 12,100 $ 53,535
-----------
FINLAND--0.9%
Kymmene OY (a)............................... 2,212 45,896
-----------
FRANCE--7.6%
Accor SA..................................... 340 47,593
Alcatel Alsthom (Cie Gen El)................. 750 65,470
Cie de Saint Gobain.......................... 330 44,204
Generale des Eaux............................ 630 70,427
Rhone-Poulenc A.............................. 48 1,263
Rhone-Poulenc SA............................. 2,800 73,489
Societe Nationale Elf Aquitaine.............. 1,100 80,967
-----------
TOTAL FRANCE................................. 383,413
-----------
GERMANY--8.0%
Daimler Benz AG (a).......................... 180 96,422
Hoechst AG................................... 2,500 84,841
Mannesmann AG................................ 235 81,296
Siemens AG................................... 1,350 72,183
Veba AG...................................... 1,320 70,206
-----------
TOTAL GERMANY................................ 404,948
-----------
HONG KONG--1.5%
HSBC Holdings, Ltd. ......................... 4,863 73,503
-----------
JAPAN--17.4%
DDI Corp. ................................... 8 69,931
Honda Motor Co. ............................. 3,000 77,904
Matsushita Electric Industrial Co. .......... 4,000 74,613
Mitsubishi Heavy Ind. ....................... 6,000 52,284
Mitsui Marine & Fire......................... 3,000 23,892
NKK Corp. (a)................................ 19,000 57,678
Omron Corp. ................................. 2,000 42,610
Promise Company Ltd. ........................ 1,000 49,376
Ricoh Company, Ltd. ......................... 7,000 74,247
Rohm Company, Ltd. .......................... 1,000 66,200
Sekisui Chemical Co. ........................ 4,000 49,010
Sony Corp. .................................. 1,300 85,704
Sumitomo Trust & Banking..................... 6,000 82,293
Toyota Motor Corp. .......................... 3,000 75,161
-----------
TOTAL JAPAN.................................. 880,903
-----------
NETHERLANDS--4.1%
Heineken NV.................................. 330 73,798
ING Groep NV................................. 2,050 61,181
Royal Dutch Petroleum Co. (b)................ 480 73,800
-----------
TOTAL NETHERLANDS............................ 208,779
-----------
SPAIN--0.9%
ENDESA....................................... 740 46,190
-----------
SWEDEN--2.0%
Astra AB Series B............................ 1,180 51,513
Nackebro Fastighets AB (a)................... 150 1,858
Svenska Handelsbanken Series A............... 2,400 50,211
-----------
TOTAL SWEDEN................................. 103,582
-----------
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
SWITZERLAND--3.5%
Baloise Holdings Ltd. ....................... 21 $ 45,689
Ciba Geigy AG................................ 60 73,188
Nestle SA.................................... 50 57,151
-----------
TOTAL SWITZERLAND............................ 176,028
-----------
UNITED KINGDOM--11.2%
Allied Domecq PLC............................ 6,900 48,543
British Aerospace PLC........................ 4,850 73,552
Cadbury Schweppes PLC........................ 8,951 70,757
General Electric Co. PLC..................... 8,600 46,279
Lloyds Abbey Life PLC........................ 7,700 60,749
Mirror Group PLC............................. 16,200 51,199
National Power P/P Ord. PLC.................. 10,700 63,811
Redland PLC.................................. 5,500 33,996
Sears PLC.................................... 33,300 51,199
Thorn EMI PLC................................ 870 24,240
Unilever PLC................................. 2,180 43,336
-----------
TOTAL UNITED KINGDOM......................... 567,661
-----------
UNITED STATES--37.6%
Aetna Life & Casualty Co. ................... 1,000 71,500
Allied Signal, Inc. ......................... 1,100 62,838
Amoco Corp. ................................. 990 71,650
AMR Corp. (a)................................ 500 45,500
Archer Daniels Midland Co. .................. 2,750 52,594
AT&T Corp. .................................. 1,960 121,520
BankAmerica Corp. ........................... 930 70,447
Champion International Corp. ................ 980 40,915
Chase Manhattan Corp. ....................... 1,550 109,469
Columbia/HCA Healthcare Corp. ............... 980 52,308
Deere & Co. ................................. 1,200 48,000
Digital Equipment Corp. (a).................. 1,730 77,850
Du Pont (E.I.) De Nemours & Co. ............. 1,060 83,872
General Electric Co. ........................ 900 77,850
International Business Machines Corp. ....... 820 81,180
ITT Industries, Inc. ........................ 1,780 44,723
Kimberly-Clark Corp. ........................ 980 75,705
Lockheed Martin Corp. ....................... 1,400 117,600
Mobil Corp. ................................. 900 100,912
Philip Morris Companies, Inc. ............... 1,100 114,400
Sears Roebuck & Co. ......................... 1,620 78,772
Travelers Group, Inc. ....................... 1,650 75,281
U S West, Inc. (a)........................... 2,130 38,873
UST, Inc. ................................... 1,600 54,800
Viacom, Inc. Class B (a)..................... 1,270 49,371
Xerox Corp. ................................. 1,590 85,065
-----------
TOTAL UNITED STATES.......................... 1,902,995
-----------
TOTAL COMMON STOCKS
(Identified cost $4,652,678)................... 4,847,433
-----------
PREFERRED STOCKS--1.0%
(Identified cost $51,492)
ITALY--1.0%
Fiat SPA..................................... 27,000 47,432
-----------
RIGHTS--0.0%
(Identified cost $0)
GERMANY--0.0%
Daimler Benz AG (a).......................... 80 11
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE> 30
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD GLOBAL EQUITY PORTFOLIO (CONTINUED)
DISCOUNT NOTES--3.9%
(Identified cost $199,677)
Federal Home Loan Bank Discount Notes, 5.28%,
7/12/96.................................... $ 200,000 $ 199,678
-----------
TOTAL INVESTMENTS
(Identified cost $4,903,847)(c)................ 100.7% 5,094,554
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS......................................... (0.7) (36,103)
---- --------
NET ASSETS...................................... 100.0% $ 5,058,451
---- --------
---- --------
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) The aggregate cost for federal income tax purposes is $4,903,847; aggregate
gross unrealized appreciation is $272,706 and aggregate gross unrealized
depreciation is $81,999, resulting in net unrealized appreciation of
$190,707.
* Percentages of common and preferred stocks are presented in the portfolio by
country.
Percentages by industry are as follows:
Aerospace & Defense 5.0%, Agricultural Machinery 0.9%, Airline 0.9%,
Automotive 5.9%, Banks 6.5%, Broadcasting 1.0%, Business Services & Supplies
1.4%, Chemicals & Plastics 7.3%, Computer & Business Equipment 6.3%,
Conglomerates 0.9%, Construction Materials 0.7%, Containers & Glass 0.9%,
Drugs & Health Care 2.1%, Electrical Equipment 6.0%, Electronics 1.3%,
Energy 4.9%, Financial Services 5.9%, Food & Beverages 6.0%, Forest Products
& Paper 0.9%, Gas Exploration 1.6%, Household Appliances & Home Furnishings
3.6%, Household Products 0.9%, Industrial & Machinery 2.6%, Insurance 4.0%,
Leisure Time 0.9%, Newspapers 1.0%, Paper Products 2.3%, Retail Trade 2.6%,
Steel 1.1%, Telephone 4.6%, Tobacco 3.3%, Utilities 3.5%.
Forward Foreign Currency Contracts open at June 30, 1996:
<TABLE>
<CAPTION>
Unrealized
Contracts In Exchange Delivery Appreciation
to Deliver For Date (Depreciation)
- ---------- -------------- -------- --------------
<S> <C> <C> <C>
$ 69,561 FRF 358,563 7/31/96 $150
$ 19,670 GBP 12,759 7/2/96 116
---
$266
---
---
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD BANTAM VALUE PORTFOLIO
COMMON STOCKS--96.3%
AEROSPACE & DEFENSE--3.0%
AAR Corp.................................... 12,500 $ 254,688
Power Control Technologies, Inc. (a)........ 33,400 304,775
------------
559,463
------------
AIRLINE--2.0%
World Airways, Inc. (a)..................... 53,700 375,900
------------
AUTO PARTS--3.6%
APS Holding Corp. (a)....................... 18,400 404,800
Keystone Automotive Industries, Inc. (a).... 25,000 259,375
------------
664,175
------------
CHEMICALS & PLASTICS--2.4%
Mississippi Chemical Corp................... 21,900 438,000
------------
COMPUTER SOFTWARE--2.3%
BancTec, Inc. (a)........................... 21,100 427,275
------------
CONSUMER GOODS--4.7%
Fedders Corp................................ 74,500 437,688
Toro Co..................................... 13,000 430,625
------------
868,313
------------
CONTAINERS & GLASS--1.9%
United States Can Corp. (a)................. 21,400 347,750
------------
DRUGS & HEALTH CARE--2.3%
Integrated Health Services, Inc............. 18,000 427,500
------------
ELECTRICAL EQUIPMENT--4.5%
Berg Electronics Corp. (a).................. 17,800 422,750
Esterline Technologies Corp. (a)............ 16,600 415,000
------------
837,750
------------
FINANCIAL SERVICES--10.6%
ALBANK Financial Corp....................... 8,400 221,550
Bay View Capital Corp....................... 12,800 435,200
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
Coast Savings Financial, Inc. (a)........... 13,500 $ 442,125
National Auto Credit, Inc. (a).............. 39,350 447,606
Trans Financial, Inc........................ 24,000 420,000
------------
1,966,481
------------
HOTELS & RESTAURANTS--3.2%
Bally's Grand, Inc. (a)..................... 5,000 212,500
Davco Restaurants, Inc. (a)................. 43,000 376,250
------------
588,750
------------
INDUSTRIAL & MACHINERY--9.8%
Applied Power, Inc.......................... 16,900 473,200
Gardner Denver Machinery, Inc. (a).......... 16,500 435,187
Graco, Inc. ................................ 22,500 455,625
Scotsman Industries, Inc.................... 22,000 442,750
------------
1,806,762
------------
INSURANCE--4.8%
Delphi Financial Group, Inc. Class A (a).... 16,400 442,800
MMI Cos., Inc............................... 14,700 453,862
------------
896,662
------------
MANUFACTURING--6.7%
ABC Rail Products Corp. (a)................. 20,500 443,312
Regal-Beloit Corp........................... 22,900 452,275
Varlen Corp................................. 16,500 346,500
------------
1,242,087
------------
MEDICAL SUPPLIES--4.0%
SpaceLabs Medical, Inc. (a)................. 14,000 325,500
Sunrise Medical, Inc. (a)................... 21,100 406,175
------------
731,675
------------
PETROLEUM EQUIPMENT & SERVICES--2.3%
Coflexip SA (a), (b)........................ 24,500 425,688
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 31
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LAZARD BANTAM VALUE PORTFOLIO (CONTINUED)
PUBLISHING--5.0%
Mecklermedia Corp. (a)...................... 25,000 $ 506,250
Scientific Games Holdings Corp. (a)......... 14,300 414,700
------------
920,950
------------
REAL ESTATE--1.3%
JDN Realty Corp............................. 11,000 246,125
------------
RETAIL--2.4%
Big B, Inc. ................................ 47,200 448,400
------------
STEEL--4.5%
Schnitzer Steel Industries, Inc. Class A.... 17,200 460,100
The Carbide/Graphite Group, Inc. (a)........ 20,000 375,000
------------
835,100
------------
TELECOMMUNICATION EQUIPMENT--4.1%
Allen Group, Inc. .......................... 14,400 313,200
Elamex SA de C.V. (a)....................... 45,200 452,000
------------
765,200
------------
TOYS & AMUSEMENTS--2.4%
Toy Biz, Inc. (a)........................... 21,800 441,450
------------
TRANSPORTATION--5.9%
Genesee & Wyoming Inc. Class A (a).......... 30,000 615,000
RailTex, Inc. (a)........................... 18,600 478,950
------------
1,093,950
------------
TRUCKING & FREIGHT FORWARDING--2.6%
Pittston Burlington Group................... 22,300 482,238
------------
TOTAL COMMON STOCKS
(Identified cost $16,926,068)................. 17,837,644
------------
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
DISCOUNT NOTES--3.7%
(Identified cost $678,903)
Federal Home Loan Bank Discount Notes,
5.28%, 7/12/96............................ $ 680,000 $ 678,903
------------
TOTAL INVESTMENTS
(Identified cost $17,604,971)(c).............. 100.0% 18,516,547
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS........................................ 0.0 (2,132)
---- ---------
NET ASSETS..................................... 100.0% $ 18,514,415
---- ---------
---- ---------
</TABLE>
(a) Non-income producing security.
(b) American Depository Receipts.
(c) The aggregate cost for federal income tax purposes is $17,604,971; aggregate
gross unrealized appreciation is $1,190,801 and aggregate gross unrealized
depreciation is $279,225, resulting in net unrealized appreciation of
$911,576.
The accompanying notes are an integral part of these financial statements.
29
<PAGE> 32
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL
EQUITY EQUITY FIXED-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value*..................... $ 249,564,315 $1,559,423,679 $ 56,552,556
Cash..................................................... 20,636 18,547,320 --
Net foreign currency contracts (note 2).................. -- -- 32,147
Receivables for:
Investments sold....................................... -- 5,675,928 7,890,584
Dividends and interest................................. 399,320 10,480,038 1,372,035
Capital stock sold..................................... 203,197 1,986,343 1,088,260
Due from Manager (note 3)................................ -- -- --
Deferred organizational expenses (note 2)................ -- 4,531 4,962
------------- -------------- ------------
Total assets............................................. 250,187,468 1,596,117,839 66,940,544
------------- -------------- ------------
LIABILITIES
Payables for:
Investments purchased.................................. -- 17,199,931 8,817,482
Capital stock repurchased.............................. 44,100 1,207,486 124,885
Dividends declared..................................... 788 4,276 54,885
Investment management fees payable (note 3).............. 166,672 951,480 58,373
Net foreign currency contracts (note 2).................. -- 24,160 --
Due to Custodian......................................... -- -- 120,317
Due to Manager........................................... -- -- --
Accrued directors fees payable........................... 2,875 2,875 2,878
Accrued expenses and other payables...................... 74,340 1,553,564 64,651
------------- -------------- ------------
Total liabilities........................................ 288,775 20,943,772 9,243,471
------------- -------------- ------------
Net assets, at value..................................... 249,898,693 1,575,174,067 57,697,073
------------- -------------- ------------
------------- -------------- ------------
NET ASSETS
Paid in capital.......................................... 205,839,631 1,331,638,375 57,446,598
Undistributed investment income--net..................... 719,348 19,654,932 24,128
Unrealized appreciation (depreciation) on:
Investments--net....................................... 34,269,831 182,494,106 373,109
Foreign currency--net.................................. -- 18,973 30,699
Accumulated realized gain (loss)--net.................... 9,069,883 41,367,681 (177,461)
------------- -------------- ------------
NET ASSETS, AT VALUE..................................... $ 249,898,693 $1,575,174,067 $ 57,697,073
------------- -------------- ------------
------------- -------------- ------------
Shares of capital stock outstanding**.................... 13,517,069 116,861,655 5,514,213
------------- -------------- ------------
------------- -------------- ------------
NET ASSET VALUE PER SHARE................................ $ 18.49 $ 13.48 $ 10.46
------------- -------------- ------------
------------- -------------- ------------
</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.
30
<PAGE> 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD LAZARD LAZARD
LAZARD STRATEGIC LAZARD INTERNATIONAL EMERGING GLOBAL BANTAM
BOND YIELD SMALL CAP SMALL CAP MARKETS EQUITY VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 81,942,356 $ 114,622,111 $ 876,302,245 $ 112,611,208 $ 113,123,379 $ 5,094,554 $ 18,516,547
42,972 639,581 2,473,300 1,472,707 4,083,584 24,285 2,860
-- -- -- -- -- 266 --
2,510,314 4,247,750 8,076,106 6,814,070 -- -- --
757,845 2,062,329 771,485 284,071 300,118 19,267 12,230
21,402 1,469,335 1,296,357 276,114 588,149 -- 60,337
-- -- -- -- -- 63,501 8,632
5,034 3,487 4,567 8,523 12,171 -- --
------------ ------------- ------------- ------------- ------------- ----------- ------------
85,279,923 123,044,593 888,924,060 121,466,693 118,107,401 5,201,873 18,600,606
------------ ------------- ------------- ------------- ------------- ----------- ------------
20,932,101 11,325,419 9,023,068 5,061,364 10,405,115 90,571 47,616
155,000 337,339 157,220 18,668 -- -- --
63,978 102,696 160 -- 98 -- --
57,889 102,111 527,384 62,187 128,796 -- --
-- 129,664 -- 235,969 23,761 -- --
-- -- -- -- -- -- --
-- -- -- -- 20,680 -- --
2,875 2,875 5,956 2,875 2,875 2,875 1,689
34,368 80,386 225,673 90,576 97,939 49,976 36,886
------------ ------------- ------------- ------------- ------------- ----------- ------------
21,246,211 12,080,490 9,939,461 5,471,639 10,679,264 143,422 86,191
------------ ------------- ------------- ------------- ------------- ----------- ------------
64,033,712 110,964,103 878,984,599 115,995,054 107,428,137 5,058,451 18,514,415
------------ ------------- ------------- ------------- ------------- ----------- ------------
------------ ------------- ------------- ------------- ------------- ----------- ------------
65,443,626 111,967,798 717,289,979 109,911,662 98,972,674 4,831,252 16,445,547
40,199 64,096 2,546,589 889,397 767,415 42,524 9,210
(214,296) 427,095 104,102,460 2,968,747 8,799,049 190,707 911,576
-- (140,838) -- (245,875) (39,799) (204) --
(1,235,817) (1,354,048) 55,045,571 2,471,123 (1,071,202) (5,828) 1,148,082
------------ ------------- ------------- ------------- ------------- ----------- ------------
$ 64,033,712 $ 110,964,103 $ 878,984,599 $ 115,995,054 $ 107,428,137 $ 5,058,451 $ 18,514,415
------------ ------------- ------------- ------------- ------------- ----------- ------------
------------ ------------- ------------- ------------- ------------- ----------- ------------
6,597,785 11,503,057 49,674,109 10,118,936 9,663,479 480,216 1,572,762
------------ ------------- ------------- ------------- ------------- ----------- ------------
------------ ------------- ------------- ------------- ------------- ----------- ------------
$ 9.71 $ 9.65 $ 17.70 $ 11.46 $ 11.12 $ 10.53 $ 11.77
------------ ------------- ------------- ------------- ------------- ----------- ------------
------------ ------------- ------------- ------------- ------------- ----------- ------------
</TABLE>
31
<PAGE> 34
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL
EQUITY EQUITY FIXED-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest......................................................... $ 363,074 $ 2,128,418 $ 1,720,203
Dividends........................................................ 2,201,147 24,170,469 --
------------ ------------- -------------
Total investment income*........................................... 2,564,221 26,298,887 1,720,203
------------ ------------- -------------
EXPENSES:
Management fees (note 3)......................................... 829,443 5,490,910 189,480
Administration fees (note 3)..................................... 40,793 138,761 23,638
Custodian fees (note 2).......................................... 40,993 860,808 47,067
Professional services............................................ 19,122 66,486 11,115
Registration fees................................................ 35,733 74,310 21,371
Shareholder services............................................. 15,977 24,056 8,716
Directors' fees and expenses..................................... 6,912 6,911 6,915
Shareholders' reports............................................ 2,986 5,314 1,523
Amortization of organizational expenses (note 2)................. -- 6,734 6,734
Other............................................................ 5,599 37,293 2,108
------------ ------------- -------------
Total expenses before fees waived and expenses reimbursed.......... 997,558 6,711,583 318,667
Management fees waived and expenses reimbursed (note 3).......... -- -- (53,394)
Administration fees waived (note 3).............................. -- -- --
Fees paid indirectly (note 2).................................... (3,302) (4,327) --
------------ ------------- -------------
Expenses--net...................................................... 994,256 6,707,256 265,273
------------ ------------- -------------
INVESTMENT INCOME--NET............................................. 1,569,965 19,591,631 1,454,930
------------ ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NET
Realized gain (loss) on:
Investments--net++............................................ 9,069,883 47,514,915 7,990
Foreign exchange transactions--net............................ -- (1,463,261) (181,661)
Net unrealized appreciation (depreciation) during the period on:
Investments--net.............................................. 9,113,322 55,583,927 (1,390,147)
Foreign currency--net......................................... -- 54,720 17,023
------------ ------------- -------------
Realized and unrealized gain (loss) on investments--net.......... 18,183,205 101,690,301 (1,546,795)
------------ ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.... $ 19,753,170 $ 121,281,932 $ (91,865)
------------ ------------- -------------
------------ ------------- -------------
*Net of foreign withholding taxes of:.............................. $ 66,440 $ 4,633,653 $ 14,654
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
+ Does not include the operations of the Special Equity Portfolio from January
1, 1996 through June 28, 1996 (acquisition date). See note 8.
++ Net of foreign withholding taxes of $91, $1,128, and $13 for the
International Fixed-Income Portfolio, Strategic Yield Portfolio, and
Emerging Markets Portfolio, respectively.
+++ For the period January 4, 1996 and March 5, 1996 (commencement of
operations) through June 30, 1996 for the Global Equity Portfolio and the
Bantam Value Portfolio, respectively.
The accompanying notes are an integral part of these financial statements.
32
<PAGE> 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD LAZARD LAZARD LAZARD
LAZARD STRATEGIC LAZARD INTERNATIONAL EMERGING GLOBAL BANTAM
BOND YIELD SMALL CAP SMALL CAP MARKETS EQUITY VALUE
PORTFOLIO PORTFOLIO PORTFOLIO+ PORTFOLIO PORTFOLIO PORTFOLIO+++ PORTFOLIO+++
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,795,841 $ 4,386,028 $ 1,399,938 $ 232,433 $ 283,940 $ 10,459 $ 26,042
-- -- 4,328,579 1,297,584 940,874 52,446 31,471
------------ ----------- ------------ ------------ ------------- ------------ ------------
1,795,841 4,386,028 5,728,517 1,530,017 1,224,814 62,905 57,513
------------ ----------- ------------ ------------ ------------- ------------ ------------
136,565 347,296 2,870,644 419,233 351,846 14,558 34,502
24,221 28,052 96,205 29,833 25,864 19,127 13,664
31,322 76,091 73,718 114,055 114,835 34,598 14,945
11,910 13,047 38,613 14,255 12,259 9,950 6,564
13,531 16,220 48,891 8,670 28,567 22,319 17,800
8,893 10,582 22,730 14,473 9,838 7,979 8,983
6,911 6,911 7,046 6,911 6,911 5,685 4,417
1,624 2,516 6,130 4,162 2,421 1,538 911
6,734 6,734 6,734 1,760 2,503 -- --
1,598 3,246 19,074 4,743 1,734 1,529 2,582
------------ ----------- ------------ ------------ ------------- ------------ ------------
243,309 510,695 3,189,785 618,095 556,778 117,283 104,368
(14,182) -- -- -- (90,226) (78,059) (43,134)
(9,375) -- -- -- (6,250) (18,750) (12,500)
(1,248) (4,829) (7,857) -- (2,903) (93) (431)
------------ ----------- ------------ ------------ ------------- ------------ ------------
218,504 505,866 3,181,928 618,095 457,399 20,381 48,303
------------ ----------- ------------ ------------ ------------- ------------ ------------
1,577,337 3,880,162 2,546,589 911,922 767,415 42,524 9,210
------------ ----------- ------------ ------------ ------------- ------------ ------------
(1,206,315) 1,461,307 56,732,742 3,101,116 823,993 (1,047) 1,148,082
-- 574,445 -- 625,500 (70,682) (4,781) --
(557,950) (780,188) 26,726,788 5,408,735 9,738,091 190,707 911,576
-- (148,897) -- (272,969) (38,230) (204) --
------------ ----------- ------------ ------------ ------------- ------------ ------------
(1,764,265) 1,106,667 83,459,530 8,862,382 10,453,172 184,675 2,059,658
------------ ----------- ------------ ------------ ------------- ------------ ------------
$ (186,928) $ 4,986,829 $ 86,006,119 $ 9,774,304 $ 11,220,587 $227,199 $ 2,068,868
------------ ----------- ------------ ------------ ------------- ------------ ------------
------------ ----------- ------------ ------------ ------------- ------------ ------------
$ -- $ 13,618 $ 4,683 $ 166,745 $ 97,015 $ 5,728 $ --
------------ ----------- ------------ ------------ ------------- ------------ ------------
------------ ----------- ------------ ------------ ------------- ------------ ------------
</TABLE>
33
<PAGE> 36
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD INTERNATIONAL INTERNATIONAL
EQUITY EQUITY FIXED-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------- ------------------------------- --------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
------------ ------------ -------------- -------------- ----------- ------------
1996+ 1995 1996+ 1995 1996+ 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net.............. $ 1,569,965 $ 1,900,843 $ 19,591,631 $ 19,111,995 $ 1,454,930 $ 2,523,430
Realized gain (loss) on investments
and foreign exchange
transactions...................... 9,069,883 17,975,165 46,051,654 17,969,742 (173,671) 2,718,341
Unrealized appreciation
(depreciation)--net............... 9,113,322 20,838,939 55,638,647 104,009,885 (1,373,124) 1,908,806
---------- ----------- ------------ ------------ --------- -----------
Net increase (decrease) in net assets
resulting from operations........... 19,753,170 40,714,947 121,281,932 141,091,622 (91,865) 7,150,577
---------- ----------- ------------ ------------ --------- -----------
Distributions to shareholders:
From investment income--net......... (850,617) (1,412,326) -- (6,515,474) (1,454,839) (2,523,430)
From realized gains--net............ (6,665,393) (11,452,652) (7,553,725) (14,115,900) (160,803) (801,842)
In excess of investment
income--net....................... -- -- -- -- -- (1,799,275)
In excess of realized gains--net.... -- -- -- -- -- --
---------- ----------- ------------ ------------ --------- -----------
(7,516,010) (12,864,978) (7,553,725) (20,631,374) (1,615,642) (5,124,547)
---------- ----------- ------------ ------------ --------- -----------
Capital stock transactions:
Net proceeds from sales............. 78,238,020 55,622,979 440,160,153 497,338,051 16,001,828 13,752,209
Net proceeds from reinvestment of
distributions..................... 7,006,802 12,294,787 7,029,897 19,395,497 1,265,527 4,630,486
Cost of shares redeemed............. (11,370,277) (21,085,965) (285,293,637) (169,521,331) (3,487,078) (10,587,176)
---------- ----------- ------------ ------------ --------- -----------
Net increase (decrease) in net assets
from capital stock transactions..... 73,874,545 46,831,801 161,896,413 347,212,217 13,780,277 7,795,519
---------- ----------- ------------ ------------ --------- -----------
Total increase in net assets......... 86,111,705 74,681,770 275,624,620 467,672,465 12,072,770 9,821,549
Net assets at beginning of period.... 163,786,988 89,105,218 1,299,549,447 831,876,982 45,624,303 35,802,754
---------- ----------- ------------ ------------ --------- -----------
Net assets at end of period*......... $249,898,693 $163,786,988 $1,575,174,067 $1,299,549,447 $57,697,073 $45,624,303
---------- ----------- ------------ ------------ --------- -----------
---------- ----------- ------------ ------------ --------- -----------
Shares issued and repurchased:
Shares outstanding at beginning of
period.............................. 9,405,110 6,482,310 103,988,517 74,103,632 4,204,312 3,499,078
---------- ----------- ------------ ------------ --------- -----------
Shares sold......................... 4,355,109 3,491,105 34,364,883 42,535,462 1,520,689 1,219,616
Shares issued to shareholders from
reinvestment of distributions..... 379,567 710,986 526,284 1,554,544 120,541 418,379
Shares repurchased.................. (622,717) (1,279,291) (22,018,029) (14,205,121) (331,329) (932,761)
---------- ----------- ------------ ------------ --------- -----------
Net increase......................... 4,111,959 2,922,800 12,873,138 29,884,885 1,309,901 705,234
---------- ----------- ------------ ------------ --------- -----------
Shares outstanding at end of
period.............................. 13,517,069 9,405,110 116,861,655 103,988,517 5,514,213 4,204,312
---------- ----------- ------------ ------------ --------- -----------
---------- ----------- ------------ ------------ --------- -----------
* Includes undistributed
(overdistributed) net investment
income of:.......................... $ 719,348 $ -- $ 19,654,932 $ 63,301 $ 24,128 $ 24,037
---------- ----------- ------------ ------------ --------- -----------
---------- ----------- ------------ ------------ --------- -----------
<CAPTION>
LAZARD
BOND
PORTFOLIO
--------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
----------- ------------
1996+ 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net.............. $ 1,577,337 $ 1,992,173
Realized gain (loss) on investments
and foreign exchange
transactions...................... (1,206,315) 1,538,947
Unrealized appreciation
(depreciation)--net............... (557,950) 1,262,427
--------- ----------
Net increase (decrease) in net assets
resulting from operations........... (186,928) 4,793,547
--------- ----------
Distributions to shareholders:
From investment income--net......... (1,577,337) (1,992,173)
From realized gains--net............ (398,228) (16,046)
In excess of investment
income--net....................... -- --
In excess of realized gains--net.... -- --
--------- ----------
(1,975,565) (2,008,219)
--------- ----------
Capital stock transactions:
Net proceeds from sales............. 24,564,990 24,539,689
Net proceeds from reinvestment of
distributions..................... 1,730,049 1,820,886
Cost of shares redeemed............. (6,182,237) (7,556,034)
--------- ----------
Net increase (decrease) in net assets
from capital stock transactions..... 20,112,802 18,804,541
--------- ----------
Total increase in net assets......... 17,950,309 21,589,869
Net assets at beginning of period.... 46,083,403 24,493,534
--------- ----------
Net assets at end of period*......... $64,033,712 $46,083,403
--------- ----------
--------- ----------
Shares issued and repurchased:
Shares outstanding at beginning of
period.............................. 4,560,693 2,650,557
--------- ----------
Shares sold......................... 2,482,443 2,500,066
Shares issued to shareholders from
reinvestment of distributions..... 176,103 186,028
Shares repurchased.................. (621,454) (775,958)
--------- ----------
Net increase......................... 2,037,092 1,910,136
--------- ----------
Shares outstanding at end of
period.............................. 6,597,785 4,560,693
--------- ----------
--------- ----------
* Includes undistributed
(overdistributed) net investment
income of:.......................... $ 40,199 $ 40,199
--------- ----------
--------- ----------
</TABLE>
+ Unaudited
The accompanying notes are an integral part of these financial statements.
34
<PAGE> 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LAZARD LAZARD
LAZARD LAZARD INTERNATIONAL EMERGING
STRATEGIC SMALL CAP SMALL CAP MARKETS
YIELD PORTFOLIO PORTFOLIO PORTFOLIO
PORTFOLIO ----------------------------- --------------------------- ---------------------------
- -------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
------------ ------------ ------------- ------------- ------------ ------------ ------------ ------------
1996+ 1995 1996+ 1995 1996+ 1995 1996+ 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 3,880,162 $ 5,620,832 $ 2,546,589 $ 4,858,913 $ 911,922 $ 1,529,624 $ 767,415 $ 288,483
2,035,752 (216,880) 56,732,742 48,772,968 3,726,616 (214,539) 753,311 (1,803,813)
(929,085) 3,498,234 26,726,788 45,544,351 5,135,766 502,925 9,699,861 591,707
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
4,986,829 8,902,186 86,006,119 99,176,232 9,774,304 1,818,010 11,220,587 (923,623)
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
(3,879,034) (5,620,832) -- (4,858,913) -- -- (3,727) (136,100)
-- -- (1,555,291) (48,772,968) -- -- -- --
-- (88,052) -- -- -- -- -- --
-- -- -- (778,930) -- (594,717) -- --
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
(3,879,034) (5,708,884) (1,555,291) (54,410,811) -- (594,717) (3,727) (136,100)
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
52,747,178 22,589,307 257,509,908 239,938,336 17,550,514 45,713,631 62,467,781 28,211,253
3,620,310 5,445,026 1,227,607 54,147,470 (5,114) 584,483 3,240 113,328
(24,985,104) (15,082,042) (110,574,748) (122,152,846) (26,859,089) (15,419,174) (1,476,002) (9,073,505)
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
31,382,384 12,952,291 148,162,767 171,932,960 (9,313,689) 30,878,940 60,995,019 19,251,076
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
32,490,179 16,145,593 232,613,595 216,698,381 460,615 32,102,233 72,211,879 18,191,353
78,473,924 62,328,331 646,371,004 429,672,623 115,534,439 83,432,206 35,216,258 17,024,905
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
$110,964,103 $78,473,924 $ 878,984,599 $ 646,371,004 $115,995,054 $115,534,439 $107,428,137 $35,216,258
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
8,245,403 6,846,915 40,536,196 29,940,743 10,986,319 8,034,455 3,812,846 1,727,237
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
5,481,189 2,439,621 15,286,027 14,336,125 1,591,539 4,381,937 5,992,504 3,079,834
376,308 590,779 68,373 3,421,484 (492) 56,201 300 12,192
(2,599,843) (1,631,912) (6,216,487) (7,162,156) (2,458,430) (1,486,274) (142,171) (1,006,417)
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
3,257,654 1,398,488 9,137,913 10,595,453 (867,383) 2,951,864 5,850,633 2,085,609
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
11,503,057 8,245,403 49,674,109 40,536,196 10,118,936 10,986,319 9,663,479 3,812,846
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
$ 64,096 $ 62,968 $ 2,546,589 $ -- $ 889,397 $ (22,525) $ 767,415 $ 3,727
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
---------- ----------- ----------- ----------- ---------- ----------- ---------- ----------
<CAPTION>
LAZARD LAZARD
GLOBAL BANTAM
EQUITY VALUE
PORTFOLIO PORTFOLIO
- ---- ------------ ------------
PERIOD ENDED PERIOD ENDED
JUNE 30, JUNE 30,
------------ ------------
1996+ 1996+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C<C> <C>
$ 42,524 $ 9,210
(5,828) 1,148,082
190,503 911,576
--------- ----------
227,199 2,068,868
--------- ----------
-- --
-- --
-- --
--
--------- ----------
-- --
--------- ----------
4,869,175 16,679,956
-- --
(37,923) (234,409)
--------- ----------
4,831,252 16,445,547
--------- ----------
5,058,451 18,514,415
-- --
--------- ----------
$5,058,451 $18,514,415
--------- ----------
--------- ----------
-- --
--------- ----------
484,072 1,592,475
-- --
(3,856) (19,713)
--------- ----------
480,216 1,572,762
--------- ----------
480,216 1,572,762
--------- ----------
--------- ----------
$ 42,524 $ 9,210
--------- ----------
--------- ----------
</TABLE>
35
<PAGE> 38
- --------------------------------------------------------------------------------
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, INVESTMENT AND UNREALIZED MENT IN EXCESS OF FROM VALUE,
BEGINNING INCOME- GAIN (LOSS) OPERA- INVESTMENT REALIZED END OF
PERIOD OF PERIOD NET ON INVESTMENTS TIONS INCOME- NET GAINS PERIOD
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
Six months ended
6/30/96+++............... $ 17.41 $ 0.122 $ 1.568 $ 1.690 $(0.069) $(0.541) $18.49
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)(a) -- 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
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
-------------------- NET
INVEST- ASSETS,
MENT PORTFOLIO AVERAGE END OF
TOTAL INCOME- TURNOVER COMMISSION PERIOD
PERIOD RETURN++ EXPENSES NET RATE RATE** (000'S)
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO
Six months ended
6/30/96+++............... 9.7 % 0.90%+,(i) 1.42%+ 25.68% $0.0588 $249,899
Year ended
12/31/95................. 37.7 0.92(g) 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(d) 1.31 63.92 47,123
12/31/92................. 5.3 1.05(c) 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
Six months ended
6/30/96+++............... 12.50 0.168 0.877 1.045 -- (0.065) 13.48
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
Six months ended
6/30/96+++............... 10.85 0.298 (0.357) (0.059) (0.299) (0.032) 10.46
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
Six months ended
6/30/96+++............... 10.10 0.280 (0.318) (0.038) (0.282) (0.070) 9.71
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
Six months ended
6/30/96+++............... 9.52 0.388 0.132 0.520 (0.390) -- 9.65
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
Six months ended
6/30/96+++***............ 15.95 0.051 1.733 1.784 -- (0.034) 17.70
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
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LAZARD INTERNATIONAL EQUITY
Six months ended
6/30/96+++............... 8.4 0.92+,(i) 2.68+ 24.99 0.0216 1,575,174
Year ended
12/31/95................. 13.1 0.95(g) 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(c) 2.13 60.37 176,005
10/29/91* to 12/31/91.... 3.2 1.05+,(b) 2.19+ 0.18 4,967
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL FIXED-I
Six months ended
6/30/96+++............... (0.5) 1.05+,(h) 5.76+ 159.81 -- 57,697
Year ended
12/31/95................. 19.4 1.05(f),(g) 5.99 189.97 45,624
12/31/94................. 4.2 1.05(e) 5.68 65.90 35,803
12/31/93................. 15.7 1.05(d) 5.50 115.84 13,546
12/31/92................. 2.0 1.05(c) 6.08 256.20 8,183
11/8/91* to 12/31/91..... 3.9 1.05+,(b) 4.82+ 6.43 1,427
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD BOND PORTFOLIO
Six months ended
6/30/96+++............... (0.4) 0.80+, h),(i) 5.78+ 166.78 -- 64,034
Year ended
12/31/95................. 16.2 0.80(f),(g) 6.07 244.28 46,083
12/31/94................. (4.2) 0.80(e) 6.11 120.51 24,494
12/31/93................. 8.6 0.80(d) 5.22 174.63 13,562
12/31/92................. 5.7 0.80(e) 5.59 131.38 8,532
11/12/91* to 12/31/91.... 3.9 0.80+,(b) 5.50+ 10.46 3,256
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD STRATEGIC YIELD PORTF
Six months ended
6/30/96+++............... 5.5 1.09+,(i) 8.25+ 96.85 -- 110,964
Year ended
12/31/95................. 13.6 1.09(g) 8.02 205.33 78,474
12/31/94................. (2.3) 1.05(e) 8.03 195.18 62,328
12/31/93................. 15.6 1.05(d) 6.36 215.60 34,943
12/31/92................. 6.0 1.05(c) 10.57 122.88 9,641
10/1/91* to 12/31/91..... 2.1 1.05+,(b) 9.52+ 11.26 4,256
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO
Six months ended
6/30/96+++***............ 11.1 0.83+,(i) 0.67+ 27.73 0.0570 878,985
Year ended
12/31/95................. 21.5 0.84(g) 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(c) 0.29 106.91 168,171
10/30/91* to 12/31/91.... 4.5 1.05+,(b) 2.47+ 5.50 2,512
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE> 39
- --------------------------------------------------------------------------------
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, INVESTMENT AND UNREALIZED MENT IN EXCESS OF FROM VALUE,
BEGINNING INCOME- GAIN (LOSS) OPERA- INVESTMENT REALIZED END OF
PERIOD OF PERIOD NET ON INVESTMENTS TIONS INCOME- NET GAINS PERIOD
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO
Six months ended
6/30/96+++............... $ 10.52 $ 0.090 $ 0.850 $ 0.940 $ -- $ -- $11.46
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
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORTFOLIO
Six months ended
6/30/96+++............... 9.24 0.079 1.802 1.881 (0.001) -- 11.12
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
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD GLOBAL EQUITY PORTFOLIO
1/4/96* to 6/30/96+++.... 10.00 0.089 0.441 0.530 -- -- 10.53
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD BANTAM VALUE PORTFOLIO
3/5/96* to 6/30/96+++.... 10.00 0.006 1.764 1.770 -- -- 11.77
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
-------------------- NET
INVEST- ASSETS,
MENT PORTFOLIO AVERAGE END OF
TOTAL INCOME- TURNOVER COMMISSION PERIOD
PERIOD RETURN++ EXPENSES NET RATE RATE** (000'S)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD INTERNATIONAL SMALL C
Six months ended
6/30/96+++............... 9.1 % 1.11%+ 1.63%+ 52.50% $0.0148 $115,995
Year ended
12/31/95................. 1.9 1.13(g) 1.56 117.53 115,534
12/31/94................. (4.5) 1.05(e) 0.95 112.92 83,432
12/1/93* to 12/31/93..... 8.7 1.05+,(d) 1.76+ 0.84 13,522
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD EMERGING MARKETS PORT
Six months ended
6/30/96+++............... 20.4 1.31+, h),(i) 2.18+ 28.00 0.0048 107,428
Year ended
12/31/95................. (5.9) 1.30(f),(g) 1.22 102.22 35,216
7/15/94* to 12/31/94..... (1.4) 1.30+,(e) 0.31+ 30.68 17,025
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD GLOBAL EQUITY PORTFOL
1/4/96* to 6/30/96+++.... 5.3 1.05+, h),(i) 2.19+ 23.77 0.0305 5,058
- -------------------------------------------------------------------------------------------------------------------------------
LAZARD BANTAM VALUE PORTFOLI
3/5/96* to 6/30/96+++.... 17.7 1.06+, h),(i) 0.20+ 48.14 0.0535 18,514
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
** The average commission rate paid is applicable for Portfolios that invest
greater than 10% of average assets in equity security transactions on which
commissions are charged. This disclosure is required for fiscal periods
beginning on or after September 1, 1995.
*** Does not include the operations of the Special Equity Portfolio from January
1, 1996 through June 28, 1996 (acquisition date). See Note 8.
+ Annualized.
++ Total return represents aggregate total return for the periods indicated.
+++ Unaudited.
(a) Includes $.032 per share of distributions from paid-in capital, none of
which is a return of capital for tax purposes.
(b) 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.
(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 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.
(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 1.18% ($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.
(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 1.26% ($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.
(f) 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, and 2.00% ($0.034) for the
Emerging Markets Portfolio.
(g) Includes fees paid indirectly. Excluding fees paid indirectly, 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, and 1.30% for the Emerging Markets Portfolio.
(h) 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 1.26% ($0.287) for the International Fixed-Income
Portfolio, 0.89% ($0.275) for the Bond Portfolio, 1.58% ($0.069) for the
Emerging Markets Portfolio, 6.04% (-$0.113) for the Global Equity Portfolio,
and 2.27% (-$.030) for the Bantam Value Portfolio.
(i) Includes fees paid indirectly. Excluding fees paid indirectly the expense
ratio would have been 0.90% for the Equity Portfolio, 0.92% for the
International Equity Portfolio, 0.80% for the Bond Portfolio, 1.08% for the
Strategic Yield Portfolio, 0.83% for the Small Cap Portfolio, 1.30% for the
Emerging Markets Portfolio, 1.05% for the Global Equity Portfolio, and 1.05%
for the Bantam Value Portfolio.
37
<PAGE> 40
- --------------------------------------------------------------------------------
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. On June
28, 1996, the Small Cap Portfolio acquired the net assets of the Special Equity
Portfolio (see Note 8). The per share data for the Equity Portfolio includes per
share data for the Old Fund and New Fund.
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 and Lazard Bantam Value Portfolio commenced
investment operations on January 4, 1996, and March 5, 1996, respectively.
The Equity Portfolio is 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 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.
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. Interest income is accrued
daily. The Portfolios
38
<PAGE> 41
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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, Emerging Markets Portfolio and the Global
Equity 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 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 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 daily on shares of the International Fixed-Income Portfolio,
the Bond Portfolio and the Strategic Yield Portfolio 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, Global Equity Portfolio and the
Bantam Value Portfolio will be declared and paid annually. During any particular
year, net realized gains from investment transactions in excess of available
capital loss carry forwards would be taxable to the Fund if not distributed. The
Fund intends to declare and distribute these amounts annually to shareholders;
however, to avoid taxation a second distribution may be required.
Income distributions and capital gains distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles. These differences which may result in
distribution reclassifications are primarily due to differing treatments of
foreign currency transactions. Permanent book and tax differences relating to
shareholder distributions will result in reclassifications and may affect the
allocation between investment income--net and realized gains--net, and paid in
capital.
39
<PAGE> 42
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
(G) ORGANIZATIONAL EXPENSES--Costs incurred by the Fund in connection with its
organization 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%; Emerging Markets Portfolio, 1.00%; Global Equity Portfolio,
0.75% and Bantam Value Portfolio, 0.75%. The investment management fees are
accrued daily and payable monthly.
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 not to exceed 1.30%; Bond Portfolio not to exceed
0.80%; Global Equity Portfolio not to exceed 1.05% and Bantam Value Portfolio
not to exceed 1.05% 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 six months ended June 30, 1996, the Manager did not impose all or part
of its management fee amounting to $53,394 for International Fixed-Income
Portfolio, $14,182 for Bond Portfolio, $90,226 for Emerging Markets Portfolio,
$14,558 for Global Equity Portfolio and $34,502 for Bantam Value Portfolio. For
the same period the Manager reimbursed expenses amounting to $63,501 and $8,632
for Global Equity Portfolio and Bantam Value Portfolio, respectively.
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, Emerging Markets, Global Equity and Bantam Value 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
40
<PAGE> 43
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
expenses incurred in connection with the distribution of shares.
Certain Directors of the Fund are Managing Directors of the Manager. The Fund
pays each director who is not an officer of the Manager or an interested
Director, $20,000 per year, plus $1,000 per meeting attended, and reimburses
them for travel and out of pocket expenses.
4. SECURITY TRANSACTIONS AND TRANSACTIONS
WITH AFFILIATES
Purchase and sales of portfolio securities, (excluding short-term securities),
for the six months ended June 30, 1996 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------- -------------
<S> <C> <C>
Equity $ 116,275,870 $ 53,369,942
International Equity 523,000,932 350,816,495
International Fixed-
Income 92,555,910 77,996,222
Bond(1) 110,007,690 88,995,319
Strategic Yield(2) 105,114,932 83,369,193
Small Cap 329,087,327 200,710,614
International Small Cap 55,965,943 64,783,249
Emerging Markets 71,675,697 18,229,793
Global Equity 5,521,528 816,368
Bantam Value 21,306,467 5,528,506
</TABLE>
(1) Includes purchases and sales of U.S. Government securities of $65,495,269
and $66,187,881 respectively.
(2) Includes purchase and sales of U.S. Government securities of $1,670,856 and
$2,345,974 respectively.
For the period, the Global Equity Portfolio and Bantam Value Portfolio paid
brokerage commissions of $86 and $2,635, respectively, to Lazard Freres & Co.
LLC for portfolio transactions executed on behalf of the Portfolios.
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
elected 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 International Equity
Portfolio redesignated $2,679,708 of ordinary income dividends to long-term
capital gain distributions.
6. PRIVATE PLACEMENTS
At June 30, 1996, the Small Cap Portfolio held the following securities which
were private placements and therefore restricted as to resale, and represented
0.06% (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 0
Verbex Voice Systems, Inc. 6/7/94 0
Verbex Voice Systems, Inc.
10.00%, 6/30/96 3/17/95 0
--------
$500,000
--------
--------
</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.
7. LINE OF CREDIT
The Fund has entered into a $50 million Line of Credit Agreement (the
"Agreement") with State Street Bank and Trust Company effective April 24, 1996,
primarily for temporary or emergency purposes, including the meeting of
redemption requests that otherwise might require the untimely disposition of
securities. Interest on borrowings is payable at the bank's Cost of Funds plus
0.75%, on an annualized basis. Under this Agreement, the Fund has agreed to pay
a 0.125% per annum fee on the unused portion of the commitment, payable
quarterly in arrears. At June 30, 1996, the Fund had no borrowings under this
Agreement.
8. REORGANIZATION
On June 28, 1996, the Lazard Special Equity Portfolio transferred its net assets
to the Small
41
<PAGE> 44
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Cap Portfolio in exchange for Small Cap Portfolio shares having an aggregate net
asset value equal to the value of the net assets of the Special Equity Portfolio
acquired, pursuant to a plan of reorganization approved by the Special Equity
Portfolio's shareholders on June 21, 1996. The total shares issued by the Small
Cap Portfolio were 1,717,733, and, prior to the acquisition, the total net
assets of the Special Equity Portfolio and Small Cap Portfolio were $30,392,878
and $848,629,559, respectively. The total net assets of the Small Cap Portfolio
after the acquisition were $879,022,437.
The following is financial information for the Lazard Special Equity Portfolio
for the period January 1, 1996 through June 28, 1996 (acquisition date):
<TABLE>
<S> <C>
Investment income:
Dividends $ 431,270
Interest 86,177
-------------
Total investment income 517,447
-------------
Expenses:
Management fees* 269,813
Administration fees* 22,348
Custodian fees 21,854
Professional services 30,465
Registration fees 8,543
Shareholder services 34,412
Directors' fees and expenses 6,983
Shareholders' reports 1,526
Other 14,800
Management fees waived and expenses
reimbursed* (139,117)
Fees paid indirectly (1,849)
-------------
Total expenses 269,778
-------------
Net investment income 247,669
-------------
Net realized gain on investments 2,288,120
Net unrealized depreciation (1,780,657)
-------------
Net realized and unrealized gain on
investments 507,463
-------------
Net increase in net assets resulting
from operations $ 755,132
===========
Net increase in net assets resulting
from operations $ 755,132
Distributions to shareholders:
From net investment income (247,669)
From net realized gains (4,548,049)
Capital stock redemptions in excess
of sales and reinvestment of
distributions (12,586,739)
-------------
Total decrease in net assets (16,627,325)
Net assets at beginning of period 47,020,203
-------------
Net assets at end of period 30,392,878
-------------
Net assets transferred to Small Cap
Portfolio (30,392,878)
-------------
Ending net assets $ 0
-------------
</TABLE>
* For the period indicated, the Manager did not impose part of its management
fee amounting to $116,769 and reimbursed $22,348 for Administration fees.
42
<PAGE> 45
- --------------------------------------------------------------------------------
The Lazard Funds, Inc.
PROXY VOTING RESULTS
- --------------------------------------------------------------------------------
The following proposal was voted upon at a Special Meeting of Shareholders of
the Lazard Special Equity Portfolio on June 21, 1996, with the results shown
below.
PROPOSAL
To approve an amendment to the Fund's Charter providing for the reclassification
of the Lazard Special Equity Portfolio ("Special Equity Portfolio") as shares of
the Lazard Small Cap Portfolio ("Small Cap Portfolio") and an Agreement and Plan
of Reorganization between the Special Equity Portfolio and the Small Cap
Portfolio of the Fund, providing for the transfer of substantially all of the
assets of the Special Equity Portfolio, subject to its liabilities.
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C>
Affirmative 1,990,898
Against 15,760
Abstain 0
</TABLE>
43
<PAGE> 46
This page left blank intentionally
<PAGE> 47
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 10018
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 offer-
ing of the Fund's shares is authorized only in the case of a
concurrent or prior delivery of the Fund's current prospectus.
[LOGO]
